Directors Report of I G Petrochemicals Ltd.
Mar 31, 2022
On behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Thirty Third Annual Report together with the Audited Financial Statements for the year ended 31st March, 2022:
1. Financial Results
|
('' in lakhs) |
||
|
2021-22 |
2020-21 |
|
|
Total revenue |
189,190.74 |
112,835.52 |
|
Profit before interest, |
41,574.53 |
30,333.11 |
|
depreciation and tax |
||
|
Finance cost |
1,288.10 |
1,455.70 |
|
Depreciation and amortization |
4,434.87 |
3,410.37 |
|
expenses |
||
|
Profit before tax |
35,851.56 |
25,467.04 |
|
Provision for tax |
9,179.67 |
6,453.73 |
|
Profit after tax |
26,671.89 |
18,951.67 |
|
Earnings per share (?) |
86.60 |
61.54 |
The Board of Directors has recommended a dividend of 100% i.e. '' 10/- per equity share of the face value of '' 10/- each for the year ended 31st March, 2022 aggregating to '' 3,079.49 lakhs.
In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("the Listing Regulations") the Board of Directors has formulated a Dividend Distribution Policy and the same can be accessed at www.igpetro.com/ corporate-governance/
3. Operating & Financial Performance
During the year under review, the Phthalic Anhydride market as well as other downstream products witnessed a strong traction in demand. The Company generated a total revenue of '' 1,89,190.74 lakhs as compared to '' 1,12,835.52 lakhs in the year 2020-21, a sharp rise of 68% over 2020-21. The Company has recorded the highest ever EBITDA in its history to '' 41,574.53 lakhs from '' 30,333.11 lakhs in 2020-21.
Our prudent management of funds, keeping in mind the turmoil happening in the external environment, have helped us in reducing the overall finance costs. We continue to strengthen our balance sheet and are on net zero debt. The profit after tax stood at '' 26,671.89 lakhs growing by 41% compared to the previous year. The tax expenses stood at '' 9,179.67 lakhs.
The Directors confirm that no material changes or commitments have occurred between the end of the financial year and the date of this report, which may affect the financial statements of the Company.
During the year under review, the Company successfully commissioned and introduced the downstream product i.e. Advance Plasticizers with a capacity of 8,400 MTPA.
The Company also initiated further brownfield expansion of Phthalic Anhydride by upto 53,000 MTPA which is expected to commission in CY 2023.
5. Contribution to the Exchequer
The Company has contributed '' 38,369.86 lakhs to the exchequer by way of income tax, customs duty, goods and service tax, etc.
a) Share Capital
The paid-up Equity Share Capital remained unchanged at '' 3,079.81 lakhs as at 31st March, 2022. The shareholdings of the Promoters and Persons Acting in Concert with Promoters are 68.74%.
The borrowings of the Company comprises of external commercial borrowings, term loan and working capital facilities. The debts (including interest) are being serviced regularly.
The Credit Ratings of the Company are âINDAA-/Stableâ (term loan and fund based working capital) and âIND A1 â (non-fund based working capital) issued by India Ratings & Research.
During the year, the Company has not accepted or invited any deposits from the public.
e) Particulars of Loans, Guarantees or Investments
Details of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 (âthe Actâ) are given in the notes to the financial statements.
7. Transfer to General Reserves
The Company do not propose to transfer any amount to the General Reserves.
8. Subsidiaries / Associates / Joint Ventures
The Companyâs wholly owned subsidiary i.e. IGPL International Ltd. is yet to commence its operations and the present activities relates to investments. The consolidated financial statements of the Company are prepared in accordance with the applicable provisions of the Act and the Ind AS. The audited consolidated financial statements together with the Auditorsâ report thereon forms part of the Annual Report.
In accordance with the provision of Section 129 of the Act, a statement containing salient features of the financial statements of the subsidiary in Form AOC-1 is annexed herewith.
The financial statements of the wholly owned subsidiary are placed on the website of the Company and available for inspection by the members of the Company. A copy of the audited accounts shall be made available to the member upon request.
9. Corporate Social Responsibility (CSR) Initiatives
The functions of the CSR Committee are guided by the CSR Policy of the Company in accordance with which the projects are selected and implemented vis-a-vis approval by the Board of Directors of the Company. The CSR obligation of the Company for the year 2021-22 was '' 314.96 lakhs excluding an amount of '' 2.75 lakhs which was to be set-off against the excess amount spent in 2020-21. During the year, the Company spent '' 337.00 lakhs.
In respect of the âongoing projectâ of the previous year i.e. construction of school by Saraswati Shishu Mandir Trust, the Company had transferred '' 99.47 lakhs to a special bank account out of which '' 50 lakhs has been spent towards utilization for the said project.
An annual report on CSR activities containing prescribed details is annexed herewith as âAnnexure-Iâ.
The CSR Policy of the Company can be accessed at www.igpetro.com/csr/
Pursuant to the provisions of Section 92(3) and 134(3)(a) of the Act, the Annual Return of the Company as at 31st March, 2022 is uploaded on the website of the Company at www.igpetro. com/corporate-announcement/
The Vigil Mechanism Policy of the Company deals with instances of actual or suspected unethical behavior, fraud, etc. The Audit Committee reviews the functioning of the Policy. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Companyâs website www.igpetro.com/corporate-governance/
12. Transfer of shares to IEPF Authority
In accordance with the provisions of Sections 124, 125 of the Act, read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as âIEPF Rulesâ) the amount of dividend or any other amount remaining unclaimed or unpaid for a period of seven consecutive years is required to be transferred to the IEPF Authority. The shares in respect of which dividend remained unclaimed or unpaid for seven consecutive years or more, shall also be liable for transfer to the demat account of the IEPF Authority.
The shareholders may note that the dividend declared by the Company for the financial year 2014-15 and remaining unclaimed shall be transferred to IEPF on 22nd September, 2022. Further, if the shareholders have not claimed dividend for any of the seven consecutive years i.e. between FY 2014-15 to FY 2020-21, the underlying shares shall also be transferred to IEPF. The shareholders are advised to forthwith claim their dividend by writing to the Company/ RTA.
The Company has uploaded the details of unclaimed dividend on its website at www.igpetro.com/investor-information/ and the same is also available at www.iepf.gov.in/ IEPF/services.html
The members whose shares and dividend have been transferred to the IEPF Authority may claim the same by making an online application in Form IEPF-5 available at www.iepf.gov.in. The application for the claiming of shares along with the supporting documents are required to be submitted in an online mode only, as required under the IEPF Rules.
The Company Secretary of the Company has been designated as the Nodal Officer who can be contacted for any guidance/assistance to claim the dividend and shares from IEPF Authority.
13. Board of Directors & Key Managerial Personnel
Shri J K Saboo retires by rotation and being eligible offered himself for re-appointment.
The term of Shri Nikunj Dhanuka and Shri J K Saboo expired on 26th April, 2022 and 31st March, 2022 respectively.
Subject to the approval of the members of the Company, the Board of Directors re-appointed Shri Nikunj Dhanuka and Shri J K Saboo as Managing Director & CEO and Executive
Director of the Company for a period of three years and two years effective 27th April, 2022 and 1st April, 2022 respectively as per the terms, conditions and remuneration more particularly set out in the Notice.
All Independent Directors of the Company have furnished declarations under Section 149(7) confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and the SEBI Listing Regulations.
In the opinion of the Board of Directors of the Company, all Independent Directors possess high integrity, expertise and experience including the proficiency to discharge their respective duties and responsibilities.
There is no change in the Key Managerial Personnel of the Company during the financial year 2021-22 and they are Shri Nikunj Dhanuka, Managing Director & CEO, Shri Pramod Bhandari, Chief Financial Officer and Shri Sudhir R Singh, Company Secretary.
None of the Directors have attained the age of seventy five years except Shri M M Dhanuka who shall attain in the year 2023 and approval of the shareholders is being sought.
13.1 Meetings of Board and Committees
In accordance with the regulatory requirements, the Board of Directors has constituted Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee.
The details with respect to the composition, terms of reference, number of meetings held, etc. of the Board and that of the Committees are disclosed in the Report on Corporate Governance, which forms part of the Annual Report.
The annual evaluation of the performance of the Board of Directors, Committee of
the Directors individually has been made as more particularly specified in the Corporate Governance Report.
The details of the Remuneration Policy forms part of the Corporate Governance Report.
The information relating to remuneration as required pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2021-22 -
Shri Nikunj Dhanuka, Managing Director & CEO - 64:1
Shri J K Saboo, Executive Director -7:1
b. The percentage increase in the
remuneration of Managing Director, Chief Financial Officer and Company Secretary for the financial year -
Shri Nikunj Dhanuka, Managing Director & CEO - 30.50%
Shri J K Saboo, Executive Director -19.87%
Shri Pramod Bhandari, Chief
Financial Officer - 12%
Shri Sudhir R Singh, Company
Secretary - 10%
c. The percentage increase in the
median remuneration of employees in the financial year - 8.20%
d. Number of permanent employees on the rolls of the Company - 461
e. Average percentile increase made in the salaries of employees other than the managerial personnel in the last
financial year was 9.90% whereas the percentile increase in the managerial remuneration was 7.30%.
It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.
The disclosures pertaining to remuneration and other details under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given above.
Statement containing the particulars of top ten employees and the employees drawing remuneration in excess of limits prescribed under Section 197(12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in annexure forming part of this Report. In terms of the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid annexure. The said statement is available for inspection with the Company. Any Member interested in obtaining a copy of the same may write to the Company at [email protected].
15. Directorsâ Responsibility Statement
To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Act, we state:
a. that in the preparation of the annual financial statements for the year ended 31st March 2022, all the applicable accounting standards have been followed and no material departures have been made from the same;
b. that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial
year ended 31st March, 2022 and of the profit of the Company for that year;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing/ detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
16. Related Party Transactions
In compliance with the provisions of the SEBI Listing Regulations and the Act, the transactions with related parties are entered into with the approval of the Audit Committee and the Board of Directors. The omnibus approval of the Audit Committee are obtained for transaction which are repetitive in nature.
The Policy on Related Party Transactions can be accessed at www.igpetro.com/corporate-governance/
All transactions with related parties were on armâs length basis and in the ordinary course of business and necessary approvals were obtained, wherever required. There were no material related party transactions. The necessary disclosures regarding the transactions are given in the notes to the financial statements.
None of the Directors and the KMP has any pecuniary relationships or transactions vis-avis the Company other than those disclosed in the financial statements.
The Audit Committee defines the framework for the audit based on the areas identified in discussion with the Internal Auditors. The Audit Committee lays out the audit plan at the start of the financial year in consultation with the Internal Auditor and the management. The Internal Audit function is designed to cover all the major areas of operations and strives to evaluate the efficacy and adequacy of internal control systems, adherence to SOPs and manuals, compliance with applicable rules and regulations, etc. The Internal Auditor participates in all meetings of and reports directly to the Audit Committee. The internal audit reports dwells on the detailed observations and its rating, the recommendation and corrective action proposed to be initiated. These are being followed-up in subsequent audit period.
During the period under review no material observation is reported by the Internal Auditor.
The Companyâs internal financial control systems commensurate with its nature of business, size and operations.
The Board of Directors has constituted a Risk Management Committee which meets as often as required. The Committee has defined the risk management framework and manual which outlines the risk management approach, risk perception and implementation of the risk mitigation measures. It also identifies and analyzes the risks to the business, risk assessment and control and implementation of risk management practices in order to ensure that all activities are conducted in accordance with the defined principles. The Companyâs risk management practices aims to limit the business risk through its operations and finance activities.
The Board of Directors reviews the discussions of the Risk Management Committee.
19. Auditors19.1 Statutory Auditors
M/s Uday & Co. and M/s SMMP & Associates are the Statutory Auditors of the Company.
The Members of the Company at the 28th AGM held on 20th September, 2017 had appointed M/s Uday & Co. as Joint Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the 33rd AGM. Accordingly M/s Uday & Co. will hold office upto the conclusion of this AGM.
The Audit Committee and the Board of Directors have recommended to appoint M/s MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W) (member of BDO Group) as the Joint Statutory Auditors of the Company to hold office from the conclusion of the 33rd AGM till the conclusion of the 38th AGM to be held in the year 2027 subject to the approval of the shareholders. The Statutory Auditors have confirmed their independence and eligibility for the said appointment.
The Auditorsâ Report does not contain any qualification, reservation or adverse remark. The Statutory Auditors have not reported any incident of fraud to the Audit Committee pursuant to Section 143(12) of the Act.
The cost accounts and records are required to be maintained under Section 148(1) of the Act, which are duly made and maintained. In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of the Company has, on the recommendation of the Audit Committee, appointed M/s Krishna S & Associates, Cost Accountants (Firm Registration No.
100939) as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2022-23.
A resolution seeking membersâ ratification for the remuneration payable to M/s Krishna S & Associates is included in the Notice of AGM.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) as Secretarial Auditor to conduct the Secretarial Audit.
The report of the Secretarial Auditor is given in âAnnexure-IIâ. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
20. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure-IIIâ.
21. Business Responsibility Report
Pursuant to the Regulation 34 of the SEBI Listing Regulations, Business Responsibility Report for the year ended 31st March, 2022 is provided separately and annexed to the Directorsâ Report as âAnnexure-IVâ.
During the year under review, the Company has complied with the requirements of Corporate Governance and a report on the same along with the Auditorsâ Certificate confirming compliance
is attached with and forms part of this report.
A report on Management Discussion and Analysis for the year under review is presented in a separate section and forms an integral part of this report.
23. Prevention of Sexual Harassment
The Company is an equal opportunity provider and has zero tolerance in any form or manner towards the sexual harassment of women at work place. In accordance with the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a policy on prevention, prohibition and redressal of sexual harassment of women at work place.
The Company has constituted Internal Complaints Committee which meets as and when required.
No complaints pertaining to sexual harassment of women employees were received during the
year.
24. ISO 9001:2015 and ISO 14001:2015 Certification
Your Company continued to be certified under ISO 9001:2015 for quality management systems and ISO 14001:2015 for environment management systems by Bureau Veritas.
Your Directors convey their sincere appreciation to the business partners for their unstinted support and contribution and thank the customers, members, employees, bankers and all stakeholders for their co-operation and confidence reposed in the Company.
For and on behalf of the Board of Directors
Chairman
Mumbai, 20th May, 2022 DIN 00193456
Mar 31, 2018
To the Members
The behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Twenty Ninth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2018:
1. FINANCIAL RESULTS
(Rs. in Lakhs)
|
2017-18 |
2016-17 |
|
|
Total Revenue |
117,489.21 |
113,892.91 |
|
Profit before interest, depreciation and tax |
27,142.41 |
17,162.93 |
|
Finance Cost |
1,487.96 |
1,824.07 |
|
Depreciation and Amortization expenses |
2,569.58 |
2,112.25 |
|
Profit before tax |
23,084.88 |
13,226.61 |
|
Provision for tax |
8,430.39 |
3,033.02 |
|
Profit for the year |
14,654.49 |
10,193.59 |
|
Balance brought forward from previous year |
30,823.94 |
23,371.63 |
|
Profit available for appropriations |
45,478.43 |
33,565.22 |
|
Earnings per share |
47.59 |
33.10 |
2. DIVIDEND
Your Board of Directors have recommended a dividend of Rs. 4/- per equity share having face value of Rs. 10/each (40%) for the year ended 31st March, 2018. The total outgo (including dividend distribution tax) for the current year amounts to Rs. 1,484.99 lakhs (Rs. 1,111.92 lakhs).
3. FINANCIALS
During the financial year 2017-18, the total revenue of your Company was Rs. 117,489.21 lakhs against Rs. 113,892.91 lakhs in the previous year registering a marginal growth of 3.16%. The finance cost continues to be under constant review which has now been brought down by apprx. 18.43% from Rs. 1,824.07 lakhs in the previous year to Rs. 1,487.96 lakhs during the year. The continuous efforts of the Company to focus on operational efficiency at all levels has helped in the increase of margins on a sustained basis. The profit before interest, depreciation and tax increased from Rs. 17,162.93 lakhs to Rs. 27,142.41 lakhs during the current year and the profit after tax increased from Rs. 10,193.59 lakhs to Rs. 14,654.49 lakhs registering a growth of over 43%.
During the year, the export turnover of the Company was Rs. 21,677.53 lakhs as against Rs. 23,139.61 lakhs in the previous year.
4. OPERATIONAL REVIEW
The Phthalic Anhydride (PA) market continues to witness the momentum in its demand across all sectors where it finds its application thus benefiting the PA industry as such. The PA prices remained buoyant through most of the year which resulted in higher realization and better margins supported by the economical cost of production. The Companyâs derives operational benefit by its self-sufficiency in steam/power which economize expensive furnace oil for operation.
The Asia-Pacific region is the largest market for PA for industries using it in plasticizers, alkyd resins, unsaturated polyester resins, etc. and India is one of the fastest growing PA markets. Rising private and government spending in infrastructure has pushed up demand for PVC, which in turn, has spurred PA demand.
The acquisition of Maleic Anhydride (MA) business from Mysore Petro Chemicals Limited has given a more value addition to the existing portfolio. Further there is high operating leverage from this acquisition due to the fact that raw material for MA viz. wash water is a derivative of PA.
5. EXPANSION
During the year under review, the Company has embarked on an expansion which is expected to come on stream in the next fiscal. The domestic consumption of PA continues to grow and the Companyâs operational capacities are optimally utilized. Your Company is also simultaneously working to foray into the downstream products. With all the plants at the same location (including the undergoing expansion), this will create economies of scale and enhance the Companyâs competitiveness in the PA market which is expected to further improve its performance in the years to come.
The expansion will also lead to the improvement in the revenue and margins from the operation of MA.
6. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 24,106.24 lakhs to the exchequer by way of excise duty, central sales tax, income tax, customs duty, goods and service tax, etc.
7. INDIAN ACCOUNTING STANDARDS (IND AS)
The Company has adopted Ind AS with effect from 1st April, 2017 and accordingly the financial statements of the Company (along with its subsidiaries) for the year ended 31st March, 2018 were prepared in compliance with Ind AS.
8. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES
IGPL International Limited and IGPL (FZE) are the wholly owned subsidiaries of the Company.
The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride is under implementation.
Pursuant to the provisions of Section 136 of the Companies Act, 2013 (âthe Actâ), the audited accounts of subsidiaries are placed on the website of the Company and available for inspection by the members of the Company. A copy of the audited accounts shall be made available to the member upon request.
The consolidated financial statements of the Company are prepared in accordance with the applicable Ind AS together with the report of the Auditorsâ thereon forms part of this Annual Report.
A statement containing salient features of the financial statements of the subsidiary in Form AOC-1 is available in this Annual Report.
9. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
In accordance with the provisions of Section 135 of the Act and the Rules framed thereunder, the CSR Committee reviews and monitors the projects and expenditures incurred by the Company which are mainly for education, old age homes, environment, etc. The Report on CSR activities containing prescribed details are annexed to the Directorsâ Report as âAnnexure-Aâ
During the year, the Company spent Rs. 143.70 lakhs towards CSR activities as against the budged allocation of Rs. 146.42 lakhs. The Company has initiated some projects which are under implementation.
10. VIGIL MECHANISM POLICY
The Company has a Vigil Mechanism Policy in place to report instances of actual or suspected unethical behavior, fraud, etc. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Companyâs website www.igpetro.com
11. transfer of shares to iepf
In compliance with the provisions of Section 124(6) of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe IEPF Rulesâ) and amendments thereto, the Company has transferred shares to IEPF Authority in respect of shares on which dividend has not been paid or claimed for seven consecutive years.
Members whose shares are so transferred can claim their dividend and shares from the IEPF authority by filing Form IEPF-5 available at www.iepf.gov.in. Member should also note that only one consolidated claim can be filed in a financial year as per the IEPF Rules. Members are advised to claim any unencashed dividends.
The Company Secretary of the Company has been designated as the Nodal Officer who can be contacted for any guidance/assistance to claim the dividend and shares from IEPF Authority.
12. DIRECTORS & KEY MANAGERIAL PERSONNEL
At the forthcoming annual general meeting, Shri J K Saboo retires by rotation and being eligible has offered himself for re-appointment.
AllIndependent Directors of the Company have furnished declarations under Section 149(7) of the Act confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) (âSEBI Listing Regulationâ).
There is no change in the Key Managerial Personnel.
12.1 Meetings
During the year, four meetings of the Board of Directors and Audit Committee were held as more particularly disclosed in the attached Report on Corporate Governance.
12.2 Board Evaluation
The performance evaluation of Directors individually vis-a-vis the Board and its Committees have been carried out, the details of which are disclosed in the Corporate Governance Report.
12.3 Remuneration Policy
The details of the Remuneration Policy forms part of the Corporate Governance Report.
The information relating to remuneration as required pursuant to Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (âthe said Rulesâ) are given below:
a) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year -
Shri Nikunj Dhanuka, Managing Director & CEO - 65:1
Shri J K Saboo, Executive Director - 8:1
b) The percentage increase in the remuneration of Managing Director, Chief Financial Officer and Company Secretary for the Financial Year
Shri Nikunj Dhanuka, Managing Director & CEO - 672%
Shri R Chandrasekaran, Chief Financial Officer - 157%
Shri Sudhir R Singh, Company Secretary -21%
c) The percentage increase in the median remuneration of employees in the Financial Year - 8%
d) Number of permanent employees on the rolls of the Company - 211
e) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year was 8% whereas the increase in the managerial remuneration was 283%. The increase in the remuneration is on account of commission paid.
It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.
The information under Rule 5(2) of the said Rules will be provided to the members upon request in terms of the first proviso to Section 136 of the Act.
13. DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Act, we state:
a. that in the preparation of the annual financial statements for the year ended 31st March, 2018, allthe applicable accounting standards have been followed and no material departures have been made from the same;
b. that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2018 and of the profit of the Company for that year;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing/detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
14. RELATED PARTY TRANSACTIONS
All transactions entered into with related parties during the year were on armâs length basis and in the ordinary course of business.
There were no material related party transactions. The necessary disclosures regarding the transactions are given in the notes to accounts. The Company has formulated a policy on dealing with the Related Party Transactions and necessary approval of the Audit Committee and Board of Directors were taken wherever required in accordance with the Policy.
15. RISK ASSESSMENT
The internal control mechanism of the Company enables it to identify, assess and mitigate the risk related to its business. Risks are being evaluated on various parameters and these parameters are being reviewed at regular intervals.
The Company monitors its risk assessment programs to identify and curb the extent of exposure which the risk poses.
16. AUDITORS
16.1 Statutory Auditors
M/s ASA & Associates LLP and M/s Uday & Co. were appointed as Statutory Auditors of the Company by the members of the Company at the respective annual general meetings.
Pursuant to the amendment to Section 139 of the Act vide Companies (Amendment) Act, 2017, the proviso relating to the ratification of the appointments of the Statutory Auditors at every annual general meeting has been removed.
In accordance with the above provisions, the ratification of the appointments of the Statutory Auditors shall not be placed at the annual general meeting.
16.2 Cost Auditors
M/s Krishna S & Associates, Cost Accountants was appointed as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2018-19.
16.3 Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) to conduct the Secretarial Audit and their Report on the Secretarial Audit for the year 2017-18 is annexed herewith as âAnnexure-Bâ There are no qualifications in the said report.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, are given in the notes to the Financial Statements.
18. DEPOSITS
The Company has not accepted any deposits from the public during the year under review.
19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure-Câ.
20. EXTRACT OF ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 is attached herewith as âAnnexure-Dâ and forms part of this report.
21. CORPORATE GOVERNANCE
The report on Corporate Governance along with the Auditorsâ Certificate confirming thereon are attached to this report.
22. PREVENTION OF SEXUAL HARASSMENT
The Company has adopted a policy on prevention and redressal of sexual harassment at work place in accordance with the provisions of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. No complaints of sexual harassment were received during the year.
23. ISO 9001 : (2008) AND ISO 14001:(2004) CERTIFICATION
Your Company continued to be certified under ISO 9001:2008 for quality management systems and ISO 14001:2004 for environment management systems by Beaureu Veritas.
24. ACKNOWLEDGEMENTS
Your Directors convey their sincere appreciation to the business partners for their continued support and contribution and thank the customers, members, dealers, employees, bankers and all stakeholders for their co-operation and confidence reposed in the Company.
For and on behalf of the Board of directors
Mumbai M M Dhanuka
28th May, 2018 Chairman
Mar 31, 2017
To the Members
The behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Twenty Eighth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2017:
1. FINANCIAL RESULTS
(Rs. in lakhs)
|
2016-17 |
2015-16 |
|
|
Revenue from Operations (Net) |
1,03,747.53 |
95,283.83 |
|
Other Income |
281.43 |
356.74 |
|
Total Revenue |
1,04,028.96 |
95,640.57 |
|
Gross Profit |
16,688.88 |
11,692.54 |
|
Finance Cost |
1,804.56 |
2,267.18 |
|
Depreciation and Amortization expenses |
1,718.70 |
1,753.72 |
|
Profit before Tax |
13,165.62 |
7,671.64 |
|
Current Tax |
3,102.51 |
1,637.25 |
|
MAT Credit |
(3,957.22) |
- |
|
Tax provision for earlier year |
- |
(2.07) |
|
Deferred tax |
3,864.22 |
- |
|
Profit for the year |
10,156.11 |
6,036.46 |
|
Balance brought forward from previous year |
22,705.22 |
17,910.04 |
|
Profit available for appropriations |
32,861.33 |
23,946.50 |
2. DIVIDEND
Your Directors are pleased to recommend a dividend of Rs.3/- per equity share of Rs.10/- each. The total outgo (including dividend distribution tax) for the current year amounts to Rs.1,111.92 lakhs (Rs.741.28 lakhs).
3. OPERATIONAL REVIEW
The general economic conditions drive the demand for the Phthalic Anhydride (PA). PA is a downstream product of Orthoxylene (OX), a basic petrochemical. During the year, the Company witnessed a strong demand for Phthalic Anhydride (PA) which led to the prices of PA firming up. The continued surge in the demand for PA resulted in the operating margins increasing substantially.
The plasticiser and Pigment industry grew at 7% and 8% respectively. The effect of the same was reflected in the consumption of PA in the speciality chemicals segment. This led to the increase in the spread between the prices for Orthoxylene and PA.
The Company procures its raw materials mainly from the domestic market which is generally available and the prices remain stable.
PA finds application in the production of Plasticizers, Unsaturated Polyster Resins, Alkyd Resins & Polyols. It is used in a variety of application in both consumer durables to non-consumer durables. The increasing use of phthalate plasticizers in automotive manufacturing coupled with growing automotive industry drives the demand for PA which is further expected to continue. The improved stability in the PA demand and prices will fuel the growth opportunities for the Company given its present operational capacity.
The total revenue increased marginally by 8.77% from Rs.95,640.57 lakhs during FY 2015-16 to Rs.1,04,028.96 lakhs during FY 2016-17. The year has seen an unprecedented growth in the profitability of the Company on the back of improved margins (spread) due to increase in demand, better recovery process, increased operational efficiency and stringent cost control measures. This resulted in the EBIDTA increasing from Rs.11,692.55 lakhs in FY 2015-16 to Rs.16,688.87 lakhs in FY 2016-17. These factors led to increase in profit by 68.24% from Rs.6,036.46 lakhs during FY 2015-16 to Rs.10,155.58 lakhs in FY 2016-17, an increase by 347 bps.
4. ACQUISITION OF MA BUSINESS
Your Company has acquired the Maleic Anhydride Business from Mysore Petro Chemicals Limited situated at T-1, MIDC Industrial Area, Taloja, Dist. Raigad, Maharashtra as a going concern on Slump sale basis with effect from 1st April, 2017 for consideration of Rs.74.48 crores (Rupees Seventy Four Crores Forty Eight Lakhs Only) as per valuation carried out by M/s. Haribhakti & Co LLP.
The product portfolio of the Company now comprises of Maleic Anhydride apart from Phthalic Anhydride and Benzoic Acid.
The wash water which was erstwhile sold to MPCL shall now be used by the Company to produce MA. The revenue from the MA business shall be consolidated with the Company with effect from all financial reporting effective 1st April, 2017.
5. SHARE CAPITAL & FINANCE
5.1 Share Capital
The paid-up Equity Share Capital of the Company remained unchanged at Rs.3079.81 lakhs as at 31st March, 2017. The shareholdings of the Promoters and Persons Acting in Concert with Promoters are 72.22 %.
5.2 Finance
The working capital facilities largely remained underutilized which meant that the dependence on external sources of funds to be at all time low. The Company continuously monitors its receivables, inventories, etc. The Company continues to service its debts regularly.
5.3 Credit Rating
The Credit Ratings of the Company were upgraded to âIND A â (long term) and âIND A1 â (short term) by India Ratings & Research.
5.4 Deposits
During the year, the Company has not accepted or invited any deposits from the Public.
5.5 Particulars of Loans, Guarantees or Investments
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
6. TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs.2,000.00 lakhs to the General Reserves.
7. MATERIAL CHANGES
There were no material changes or commitments which occurred between the end of the financial year and the date of this Report affecting the financial statements of the Company in respect of the reporting period.
8. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs.17,525.70 lakhs to the exchequer by way of excise duty, central sales tax, income tax, customs duty, etc.
9. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES
During the year, the Company formed a wholly owned subsidiary (WOS) i.e. IGPL International Limited with Jebel Ali Free Zone and the investment in IGPL (FZE) was dis-invested in favour of IPGL International Limited. As a result, IGPL (FZE) became WOS of IGPL International Limited and a step-down subsidiary of the Company.
The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride is under implementation.
Pursuant to the provisions of Section 136 of the Companies Act, 2013, the audited accounts of subsidiaries are placed on the website of the Company and not enclosed in the Annual Report. A copy of the audited accounts shall be made available to the member upon request.
10. CONSOLIDATED FINANCIAL STATEMENTS
As required pursuant to the provisions of Section 129 of the Companies Act, 2013 and the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements of the Company are prepared in accordance with the Accounting Standards AS21 issued by the Institute of Chartered Accountants of India on the basis of the audited financial statements of the Company and its subsidiary,
A statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is attached to this Annual Report.
11. CORPORATE SOCIAL RESPONSIBILIY (CSR) INITIATIVES
During the year, the Company spent only Rs.26.01 lakhs. The Company has initiated some projects which are under implementation and the disbursement has been kept behind for the implementation of the project by the agencies. The Report on CSR activities is annexed herewith as âAnnexure Aâ.
12. VIGIL MECHANISM POLICY
The Vigil Mechanism Policy established by the Board provides a channel for reporting the genuine concerns about the actual or suspected unethical behavior, fraud, etc. The Audit Committee reviews the functioning of the vigil mechanism and there was no complaint received. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Companyâs website www.igpetro.com
13. DIRECTORS & KEY MANAGERIAL PERSONNEL
Upon the recommendation of the Nomination & Remuneration Committee and in accordance with the provision of the Companies Act, 2013 read with the Rules framed thereunder, Shri J K Saboo was re-appointed as Executive Director of the Company for a period of 3 years with effect from 1st April, 2017. The terms, conditions and remuneration of his re-appointment is stated in the Notice. It is proposed to re-appoint Shri J K Saboo as Executive Director of your Company to hold office upto 31st March, 2020.
The Company has received necessary declarations from all Independent Directors of the Company as required under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.
Shri Nikunj Dhanuka retires by rotation and being eligible has offered himself for re-appointment.
There is no change in the Key Managerial Personnel.
13.1 Meetings
During the year, four meetings of the Board of Directors and Audit Committee were held as more particularly disclosed in the attached Report on Corporate Governance. The intervening gap between any two meetings was within the prescribed period.
13.2 Board Evaluation
As mandated under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual performance evaluation of the Directors individually vis-a-vis the Board and its committees have been carried out. The manner of such evaluation has been disclosed in the Corporate Governance Report.
13.3 Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors and Senior Management personnel and their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.
14. DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Companies Act, 2013, we state:
a. that in the preparation of the annual financial statements for the year ended 31st March 2017, all the applicable accounting standards have been followed and no material departures have been made from the same;
b. that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2017 and of the profit of the Company for that year;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing/detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
15. RELATED PARTY TRANSACTIONS
All transactions entered into with related parties during the year were on armâs length basis, in the ordinary course of business and with the approval of the Audit Committee, Board of Directors and Members of the Company, wherever required.
There were no material related party transactions i.e. those exceeding 10% of the annual consolidated turnover during the year. The related party transactions is hosted on the website of the Company.
16. RAISING OF FUNDS
The members of the Company at an extra-ordinary general meeting held on 2nd June, 2017 have approved the raising of funds by way of long term borrowings/equity or a combination thereof to replace the existing debt, working capital facilities, fund the growth plan, etc.
17. AUDITORS
17.1 Statutory Auditors
M/s Hariharan & Co., Chartered Accountants, whose term of office was liable to determination by rotation at the ensuing Annual General Meeting (AGM) have resigned vide their letter dated 7th July, 2017.
The Directors place on record their sincere appreciation and gratitude for their diligence and independence in the course of their audit during their stint with the Company. M/s Uday & Co., Chartered Accountants, (Firm Regn No. 004440S) were appointed as Joint Statutory Auditors of the Company with effect from 11th July, 2017 subject to the approval of the members to fill the casual vacancy. The Directors have also recommended their appointment as Joint Statutory Auditors for a term of five consecutive years from the conclusion of this AGM until the conclusion of the AGM to be held in the year 2022.
The office of M/s ASA & Associates HR Chartered Accountants as Statutory Auditors is subject to the ratification by the Members at the AGM.
17.2 Cost Auditors
The Board of Directors of the Company have appointed M/s Krishna S & Associates, Cost Accountants as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2017-18.
The remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Memberâs ratification for the remuneration payable to M/s. Krishna S & Associates, Cost Auditor is included in the Notice convening the Annual General Meeting.
17.3 Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) to conduct the Secretarial Audit and their Report on the Secretarial Audit for the year 2016-17 is annexed herewith as âAnnexure-Bâ.
In respect of the observation made by the Secretarial Auditor, the Company had filed compounding application with the Reserve Bank of India and the same has been compounded.
18. LISTING OF SHARES
Your Companyâs shares are listed on BSE Limited under Scrip Code No. 500199 and the National Stock Exchange Ltd. under the symbol âIGPLâ. The ISIN code is INE 204A01010.
19. ISO 9001 : (2008) AND ISO 14001 (2004)
CERTIFICATION
Your Company continued to be certified under ISO 9001:2008 for quality management systems and ISO 14001:2004 for environment management systems by Beaureu Veritas.
20. CORPORATE GOVERNANCE
The disclosures as required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are attached with and forms part of this report.
21. PREVENTION OF SEXUAL HARASSMENT
The Company has adopted a policy on prevention and redressal of sexual harassment at work place in accordance with the provisions of Sexual Harassment of Women at Work Place (Prevention, Prohbition and Redressal) Act, 2013. No complaints of sexual harassment were received during the year,
22. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure-Câ.
23. EXTRACT OF ANNUAL RETURN
An extract of the Annual return in Form MGT-9 is annexed herewith as âAnnexure-Dâ to the Directorsâ Report.
24. PARTICULARS OF EMPLOYEES
During the year, there are no employees who are in receipt of the remuneration exceeding the limit specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The information relating to remuneration in respect of directors/employees of the Company as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided to the members upon request.
25. ACKNOWLEDGEMENTS
Your Directors convey their sincere appreciation to the business partners for their unstinted support and contribution and thank the customers, members, dealers, employees, bankers and all stakeholders for their co-operation and confidence reposed in the Company.
For and on behalf of the Board of Directors
M M Dhanuka
Chairman
Mumbai, 24th July, 2017
Mar 31, 2015
Dear Members
The Directors hereby present the Twenty Sixth Annual Report together
with the Audited Financial Statements of the Company for the year ended
31st March 2015 :
1. FINANCIAL RESULTS Rs. in Lacs
2014-2015 2013-2014
Revenue from Operations (Gross) 29,727.37 132,153.75
Less: Excise duty 10,921.75 11,724.16
Revenue from Operations (Net) 18,805.62 120,429.59
Other Income 790.40 968.25
Total Revenue 19,596.02 121,397.84
Gross Profit 8692.85 7,016.76
Less:
Finance Cost 3,816.53 3,036.22
Depreciation and
Amortisation expenses 1,639.36 1,803.34
Profit/(Loss) before
exceptional item & Tax 3,236.96 2,177.20
Exceptional Item -
Exchange Loss (Net) - 1,785.85
Profit/(Loss) before
extraordinary item & Tax 3,236.96 391.35
Extraordinary item -
Depreciation relating
to earlier years 2,111.10 -
Profit before Tax 1,125.86 391.35
Tax Expenses:
Current Tax Net (MAT) 236.19 78.27
Profit for the year 889.67 313.08
Balance brought forward
from previous year 18,007.70 17,694.62
Profit available for appropriations 18,897.37 18,007.70
Appropriations
Proposed Equity Dividend @ 10% 307.95 -
Tax on Equity Dividend 62.69 -
General Reserve 500.00 -
Depreciation in respect
of Assets whose use 116.69
Surplus carried to the
next year''s account 17,910.04 18,007.70
2. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs. 1/- per
equity share of Rs. 10/- each. The total outgo for the current year
amounts to Rs. 370.64 Lacs, including dividend distribution tax of Rs.
62.69 Lacs (previous year - Nil).
During the year, the unclaimed interim dividend for the year 2007-2008
was transferred to the Investor Education and Protection Fund after
giving due notice to the Members.
3. OPERATIONAL REVIEW
The Company''s expansion project was completed during September 2013 and
had stabilized operations during the previous year. The Company
delivered a solid performance and achieved a Net Sales Turnover from
operations of Rs. 118,805.62 Lacs as against Rs. 120,429.59 Lacs for
the previous year 2013-2014. The production was marginally lower due to
closure of one of its Plant for change of Catalyst during September
2014. However the Profit before extraordinary item and Tax was
substantially higher at Rs. 3236.96 Lacs as against Rs. 2177.20 Lacs in
the previous year. After providing for arrears of Depreciation of Rs.
2111.10 Lacs for the previous years, the Net Profit during the year was
Rs. 889.67 Lacs as against Rs. 313.08 Lacs during the previous year
2013-2014.
The operating margins were stable during the first half of the year.
However due to steep fall in international crude oil prices since
September 2014, all the downstream product prices plunged during the
period which resulted in heavy inventory pile ups and losses during the
third quarter of the year. The customers deferred their procurements
till the crude oil prices stabilized during January 2015 and there were
no imports during the period. However due to arrest of downfall of oil
prices there was sudden reversal in trend with upward movement of oil
prices, thereby pushing up prices of downstream petro products
including Phthalic Anhydride (PA) prices. This led to steady price rise
and heavy order position during the last quarter of the year thereby
increasing the margins substantially.
The positive situation continues despite imports of PA as customers are
still facing shortage of product and require to build up minimum
inventory levels for their stable operations. The international markets
are also picking up and the Company exports surplus stocks as and when
available after meeting the domestic demand in India.
4. SHARE CAPITAL & FINANCE
4.1 Share Capital
The Paid-up Equity Share Capital of the Company as on 31st March, 2015
is Rs. 3079.81 Lacs. During the year under review, the Company has
neither issued any shares nor granted stock options or sweat equity. As
at 31st March, 2015 the Promoters and Persons Acting with Promoters
hold 72.22% of equity capital of the Company.
4.2 Finance
The Company continues to focus on judicious management of its Working
Capital requirements from Banks which were Rs. 371.20 Lacs (both fund
based and non-fund based) during the year (previous year Rs. 228.23
Lacs). The Company had also availed Rupee Term Loan of Rs. 65 crores of
which an amount of about Rs. 9.22 crores is converted into Foreign
Currency loan and External Commercial Borrowings (ECB) of  8.70
million outstanding as on 31st March 2015 for its PA-3 expansion
project. There is continuous monitoring of the requirement of funds and
the efforts to keep the interest outgo at the minimum.
4.3 Deposits
The Company has not accepted deposits from the Public falling within
the ambit of Section 73 of the Companies Act, 2013 and The Companies
(Acceptance of Deposits) Rules, 2014.
4.4 Particulars of Loans, Guarantees or Investments
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
5. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 15,654.03 Lacs to the Central and State
exchequer by way of Excise Duty, Central Sales Tax, MVAT, VAT, Income
Tax, Wealth Tax, Professional Tax and Customs Duty.
6. ECONOMIC SCENARIO AND OUTLOOK
The macro-economic situation of India improved during 2014 thereby
helping the economy rise to 5.12% from 4.7% in the previous year. The
proactive measures taken by the Government coupled with the falling oil
prices has resulted in improving the wholesale and consumer price
inflation to 4.12% and 7.4% from the previous year''s figures of 6.3%
and 10.1% respectively. The agricultural growth was strong at 4.5% in
2014, however the slow pace of reforms, lack of impetus for
infrastructure projects, high interest rates, sluggish industrial
growth and tightening of fiscal policies adversely impacted the
industrial sector.
The low economic growth appears to have bottomed out and a gradual
increase in economic activity is expected in 2015. The medium term to
long term prospects look positive in view of the Government''s
determination to bring in reforms. For the year 2015, the economy is
expected to grow at a higher rate than in 2014. The long term prospects
for the economy is optimistic.
7. PA INDUSTRY - OPPORTUNITIES, CONCERNS AND FUTURE OUTLOOK
The Indian PA industry has an installed capacity of 340,000 MT and the
domestic consumption during the calendar year 2014 was about 3,00,000
MT. The overall PA demand is estimated to grow at the rate of 8 % in
2015. With more thrust and investment in infrastructure segment the
consumption is expected to grow. With the gradual reduction in fiscal
deficits and consumer price index, it is expected that the interest
rates would gradually come down which would stimulate demand in the
consumer sector. The Company''s continued focus on cost reduction and
increasing the sale of product and various other customer satisfaction
initiatives should help in presenting an improved performance.
The business operations of the Company is exposed to general commercial
risks viz. volatility in demand and supply, raw material prices,
logistic issues, government policies, exchange rate risk, increasing in
dumping of PA and other environmental and technical risks.
With the completion of expansion and stability achieved in production,
the company is the largest producer of PA in India and amongst the top
five producers of PA in the world. The integration of three units and
advantages of economies of scale, the Company is one of the lowest cost
producers of PA in the world which has helped in improving the
profitability and hope to sustain in the years to come.
In view of the large production capacity the Company is exploring
opportunities to de-risk its existing business by captive consumption
of PA for certain value added products for further growth.
8. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
As part of its commitment towards being a responsible corporate
citizen, the Company has continued its efforts seamlessly by initiating
various measures as a part of its CSR by undertaking projects in the
field of education, healthcare and livelihood in the areas where its
major operations are carried out i.e. Taloja. The Company, from time to
time, has also contributed to the NGO''s involved in the medical and
child welfare schemes apart from the donations to the schools for
purchase of education materials and computers. The contributions have
been in accordance with Schedule VII of the Companies Act, 2013.
The Annual Report on CSR activities is annexed herewith as "Annexure
A".
9. RISK MANAGEMENT
The Company manufactures a single product PA which is produced by
consumption of single raw material Orthoxylene (OX) by oxidation route.
Hence there are only the general business risks which are inherent to
any business. The Board of Directors do a periodic assessment of risks
through properly defined framework and its mitigation resulting in
minimization of risks.
The key business risks identified by the Company and its mitigation
plans are as under:
9.1 Operational/Price Risk:
The Company''s Plants operated uninterruptedly during the year except
for minor technical interruptions and during the month of
September/October for about four weeks for change of Catalyst. Also
there was a steep fall in the international crude oil price from a high
of about 115 US$ to 45 US$ during the period September 2014 to January
2015 due to which all the downstream petro products witnessed a sharp
fall in their prices. The Company''s Plants are adequately insured viz.
Fire Policy, Loss of Profit Policy, etc. The preventive and predictive
maintenance activities are carried out on a day to day basis. The down
time during shut downs is utilized for carrying out routine maintenance
work. Also the Company maintained minimum inventory of raw materials
and finished goods which helped in minimizing the loss due to steep
fall in the petro products feedstock which was witnessed during that
period.
9.2 Exchange Rate Risk (raw material procurement and sale of finished
goods):
The Company procures 75% of the raw material from local source at
monthly Contract rate. The balance is either imported or bought
domestically on spot basis. About 20% is exported and 80% is sold in
DTA market. As Company procures 75% of its raw material requirement
from local source, forex hedging is not required. As regards import of
raw material, foreign exchange is booked whenever necessary. All the
exports of goods are booked by forward cover. There is continuous
monitoring of the price of Orthoxylene (raw material) and Phthalic
Anhydride (finished goods) in the local and international markets due
to fluctuation in prices.
9.3 Interest Rate Risk:
The Company has availed External Commercial Borrowings (ECB), Rupee
Term Loans (RTL) and Working Capital Loans (WCL) for its project and
working capital needs. Some of the RTL is converted to Foreign currency
loan in order to save on interest cost. The loans are strictly repaid
as per the repayment schedules. The Company reviews the loan position
on regular basis to keep the interest cost at minimum levels.
9.4 Economic and Geo-political Risk:
The political situation and the Government policies viz. import duty,
taxes etc. and the international situation have an impact on the
overall corporate growth. The Government has Notified the Anti-dumping
duty during December 2012 for a period of five years on Korea, Taiwan
and Israel. Application is made to the Directorate General, Safeguards
for extension of Safeguard Duty on PA. Also Writ Petition has been
filed with the Hon''ble High Court, Delhi in the matter of Anti-Dumping
duty on imports of PA from Korea, Taiwan and Israel. The Company keeps
abreast with the domestic and international economic developments and
works on the strategies favourable to it.
10. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Board has established a Vigil Mechanism Policy which would help
identify and deal with instances of actual or suspected unethical
behavior, etc., if any. The details of the vigil mechanism have been
elaborated in the Corporate Governance Report and posted on the
Company''s website www.igpetro.com.
11. DIRECTORS
On the basis of the the recommendation of the Nomination and
Remuneration Committee, the Board of Directors have appointed Dr.
Vaijayanti Pandit (DIN-06742237) as an Additional Director -
Independent effective 30th March 2015. The Company has received a
notice under Section 160 of the Companies Act, 2013 from a member
signifying Dr. Vaijanti Pandit for the office of Director. In terms of
Section 149 read with Section 152 of the Companies Act, 2013 and the
Companies (Appointment and Qualification of Directors) Rules, 2014, the
Independent Directors can hold office for a term of up to five (5)
consecutive years on the Board of the Company and are not liable to
retire by rotation. Accordingly it is proposed to appoint Dr.
Vaijayanti Pandit as Independent Director of your Company for a term of
five (5) consecutive years i.e. up to 29th March, 2020.
Shri M M Dhanuka retires by rotation and being eligible has offered
himself for re-appointment.
The brief profile of the Directors seeking appointment/re-appointment
has been given in the notice conveing the Annual General Meeting.
All Independent Directors have given declarations that they meet the
criteria of independence as prescribed under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
11.1 Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an evaluation of its
own performance, the directors individually as well as the working of
the Committees. The manner in which the evaluation has been carried out
has been explained in the Corporate Governance Report.
11.2 Remuneration Policy
The Board has, on the recommendation of the Nomination and Remuneration
Committee framed a policy for selection and appointment of Directors
and Senior Management personnel and determination of their
remuneration. The Remuneration Policy forms part of the Corporate
Governance Report.
11.3 Meetings
During the year four Board Meetings and an equal number of Audit
Committee Meetings were convened and held. The details of the same are
given in the Corporate Governance Report. The intervening gap between
any two Meetings was within the period prescribed under the Companies
Act, 2013.
12. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the
information and explanation obtained by us, in terms of Section
134(3)(c) of the Companies Act, 2013, we state:
a) that in the preparation of the annual financial statements for the
year ended 31st March 2015, all the applicable accounting standards
have been followed and no material departures have been made from the
same;
b) that appropriate accounting policies have been selected and applied
consistently and have made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended 31st March 2015
and of the profit of the Company for that year;
c) that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing/ detecting fraud and other irregularities;
d) that the annual financial statements have been prepared on a going
concern basis;
e) that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively;
f) that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
13. RELATED PARTY TRANSACTIONS
The Company has certain long term related party transactions which are
on arm''s length basis and in the ordinary course of business. During
the year under review, there were no related party transactions within
the meaning of Section 188 of the Companies Act, 2013 read with Rule 15
of the Companies (Meeting of the Board and its Powers) Rules, 2014 and
Clause 49 of the Listing Agreement. The Board has framed a policy on
Related Party Transactions which is hosted on the Company''s website
www.igpetro.com.
14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
The Company received a boost when in respect of a case pending before
the Supreme Court with regard to the valuation of Domestic Tariff Area
(DTA) sales was decided in the Company''s favour. This Order absolves
the Company of the contingent liabilities related to Excise and Customs
duties to the extent of Rs. 128.75 Crores pending before the Supreme
Court, disputes in appeals and show cause notices received from the
concerned departments.
Other than the above there are no significant material orders passed by
the Regulators/courts which would impact the going concern status of
the Company and its future operations.
15. AUDITORS
15.1 Statutory Auditors
The Statutory Auditors, M/s. Hariharan & Co. Chartered Accountants,
Bengaluru (Firm''s Registration No. 001083S) retire at the ensuing
Annual General Meeting and are eligible for re-appointment for the
financial year 2015-2016. The Company has obtained a written
confirmation from M/s. Hariharan & Co. to the effect that they are
eligible for re-appointment and that their re-appointment, if made,
would be in conformity with the limits specified in Section 141 of the
Companies Act, 2013. As required under Clause 49 of the Listing
Agreement, the Auditors have also confirmed that they hold a valid
certificate issued by the Peer Review Board of the Institute of
Chartered Accountants of India (ICAI).
Your Directors recommend their re-appointment as the Statutory Auditors
to hold office for a term of two consecutive years from the conclusion
of this Annual General Meeting (AGM) until the conclusion of the 28th
AGM of the Company to be held in the year 2017 subject to the
ratification of their appointment at the next AGM to be held in the
year 2016.
Observations made by the auditors under "Emphasis of Matter" has been
dealt with in Note No. 23 regarding certain disputed excise duty and
custom duty matters amounting to Rs. 6383.84 Lacs ( Previous Year Rs.
7672.89 Lacs) pending before the Honourable Supreme Court.
15.2 Appointment of Joint Statutory Auditor
M/s ASA & Associates LLP Chartered Accountants, Mumbai (Firm
Registration No. 009571N/N500006) have been appointed as Joint
Statutory Auditors of the Company for the financial year 2015-16 and to
hold office, subject to the approval of the members, for a term of five
consecutive years i.e. until the conclusion of the AGM to be held in
the year 2020 (subject to the ratification of their appointment at each
AGM).
The Joint Statutory Auditor have signified their assent and confirmed
their eligibility in terms of the provisions of Section 141 of the
Companies Act, 2013 and Rule 4 of the Companies (Audit and Auditors)
Rules, 2014 and that they hold a valid certificate issued by the Peer
Review Board of the ICAI.
Your Directors recommend their appointment as Joint Statutory Auditors
for the financial year 2015-16 to hold office for a term of five
consecutive years i.e. until the conclusion of AGM of the Company to be
held in the year 2020 subject to the ratification of their appointment
at each AGM.
15.3 Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with the
Companies (Cost Records and Audit) Rules, 2014, the cost audit records
maintained by the Company in respect of Phthalic Anhydride is required
to be audited. Your Directors had, on the recommendation of the Audit
committee, appointed M/s. Krishna S & Associates, Cost Accountant,
Mumbai, to audit the cost records of the Company for the financial year
2015-2016 at a remuneration of Rs. 40,000/-. As required under the
Companies Act, 2013, members approval is sought for the remuneration
payable to the Cost Auditor.
15.4 Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules 9 of The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, the Board of Directors has appointed
M/s. Makar and M Joshi & Associates, a firm of Company Secretaries in
Practice to conduct the Secretarial Audit and their Report on the
Secretarial Audit for the financial year 2014-15 is annexed herewith as
"Annexure B".
16. LISTING OF SHARES
Your Company''s shares are listed on BSE under Scrip Code No. 500199 and
the NSE under the symbol "IGPL"''. The ISIN code is INE 204A01010.
17. ISO 9001: (2008) AND ISO 14001 (2004) CERTIFICATION
Your Company continued to be certified under ISO 9001 : (2008) for
quality management systems and ISO 14001 : (2004) for environment
management systems by Beaureu Veritas as per their prescribed
standards.
18. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Company''s Auditors
confirming compliance forms an integral part of this Report.
19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m)
of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts)
Rules, 2014 is annexed herewith as "Annexure C".
20. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Companies Act, 2013
read with Rule 12 of the Companies (Management and Administration)
Rules, 2014, an extract of the Annual return in Form MGT-9 is annexed
herewith as "Annexure D".
21. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office/ Corporate
Office of the Company during business hours on working days of the
Company up to the date of the ensuing Annual General Meeting. If any
Member is interested in obtaining a copy thereof, such Member may write
to the Company Secretary in this regard..
22. ACKNOWLEDGEMENTS
Your Directors sincerely thank the Central and State Government
Departments and various Organizations for their continued help and
co-operation extended by them. The Directors also gratefully
acknowledge all stakeholders of the Company viz. customers, members,
dealers, vendors, banks and other business partners for their excellent
support. The Directors place on record their sincere appreciation to
all employees of the Company for their unstinted commitment and
continued contribution to the Company.
For and on behalf of the Board
Place : Mumbai M M Dhanuka
Date : 10th July 2015 Chairman
Mar 31, 2014
The Members
The Directors hereby present the Twenty Fifth Annual Report together
with Audited Accounts of the Company for the year ended 31st March
2014:
1. FINANCIAL RESULTS Rs. in Lacs
2013-2014 2012-2013
Revenue from Operations (Gross) 132,153.75 106,718.64
Less: Excise duty 11,724.16 9,684.73
Revenue from Operations (Net) 120,429.59 97,033.91
Other Income 968.25 528.37
Total Revenue 121,397.84 97,562.28
Gross Profit 7,016.76 6,197.08
Less:
Finance Cost 3,036.22 1,667.29
Depreciation and Amortisation Expenses 1,803.34 1,375.02
Profit/(Loss) before exceptional item & Tax 2,177.20 3,154.76
Exceptional Item  Exchange Loss (Net) 1,785.85 --
Profit/(Loss) before extraordinary
item & Tax 391.35 3,154.76
Extraordinary item  Depreciation relating
to earlier years -- 2,765.78
Profit before Tax 391.35 388.98
Tax Expenses:
Current Tax Net (MAT) 78.27 79.68
Tax provision for earlier year -- 1.41
Profit for the year 313.08 307.89
Balance brought forward from previous year 17,694.62 17,386.73
Profit available for appropriation 18,007.70 17,694.62
2. DIVIDEND
The Directors do not recommend any dividend in order to conserve
resources.
3. OPERATIONAL REVIEW
The expansion project of 50,000 MT was completed during September 2013
thereby increasing the total production capacity to 1,66,110 MT. The
Company delivered sustainable performance and achieved a production of
1,28,076 MT. for the year 2013-2014 as compared to 1,06,662 MT. during
the previous year 2012-2013. The production was marginally lower due to
closure of one of its Plant for change of Catalyst. The Net Sales
Turnover from operations was Rs. 120,429.59 Lacs as against Rs. 97,033.91
Lacs for the previous year 2012 -2013, an increase of 24.11 % over the
previous year. Net Profit during the year was Rs. 313.08 Lacs as against
Rs. 307.89 Lacs during the previous year 2012-2013
The operating margins were stable during most part of the year. However
due to significant movement and volatility in value of Indian Rupee
against US Dollar the Company suffered foreign exchange loss to the
tune ofRs. 1,785.85 Lacs which affected the performance and profitability
of the Company. The crude oil prices remained high during the first
three quarters due to which the raw material prices were high. However
the last quarter witnessed easing of raw material prices due to which
the margins were better and are expected to remain so.
In view of the increased production due to expansion, the Company has
increased the export sales which helps in hedging the volatility of the
Rupee. The international markets are gradually picking up and the
realizations are better compared to the previous years
The Company continues to avail the Working Capital limits from various
banks of around Rs. 288 crores (both fund based and non-fund based)
during the year (Previous year Rs. 170 crores). The Company has also
availed Rupee Term Loan of Rs. 65 crores (Previous year Rs. 41 crores) from
Banks and External Commercial Borrowings (ECB) of EURO 11.329 million
(Previous year EURO 10.140 million) as project finance to fund the PA-3
project which was completed during September 2013.
4. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 17475.26 Lacs to the Central and State
Exchequer by way of Excise Duty Sales Tax (including Surcharge), Income
Tax, Wealth Tax, Professional Tax and Customs Duty.
5. OPPORTUNITIES, CONCERNS AND FUTURE OUTLOOK
The global economic slowdown that started a few years ago increased the
complexity and volatility in the environment. Even though the Indian
economy was able to sustain the growth momentum during that year, the
stress on the economy had started to show during 2011. In subsequent
years the growth rate for GDP continued to slide even lower. Various
factors, both internal and external have contributed to this including
the political environment, high fiscal deficit, consistently high
inflation, and volatility in currency.
The environment continued to remain challenging during the year.
Despite a good monsoon the manufacturing indices declined. Commodity
prices continued peaking with food inflation hitting all time highs,
resulting in high overall inflation Rupee depreciated significantly
before reviving a little, and the consumer sentiment remained subdued
as well. These are the areas of serious concern but the general
consensus remains optimistic about long term growth. The Government and
the Reserve Bank managed to control the exchange rate fluctuation to
some extent with appropriate monetary and fiscal policies during the
latter part of the year. The economic potential of India remains
promising. The current state of economic and social turmoil in the
country indicates a desire for balanced growth. We hope that the
transformation will lead to greater stability and future growth,
thereby strengthening and unlocking India''s economic potential
The business operations of the Company are susceptible to risks which
are inherent to any petrochemical business as well as to those inherent
to international operations. Apart from these, there is always an
exposure to general commercial risks which accrue to any commercial
organization. The PA industry in particular continues to remain under
severe pricing pressures, high raw material costs, volatility in demand
and supply, government policies, exchange rate risk, increase in
dumping of PA into the country and other technical and environmental
risks. The Board of Directors do a periodic assessment of the risks
through a means of properly defined framework resulting in minimization
of risk involved
The Company''s expansion project of 50,000 MT was completed during the
year and commercial production commenced during September 2013. In view
of the same the Company is the largest producer of PA in India and one
of the largest in the world. Due to the integration of three units at
one place by optimum utilization of existing facilities and the
advantages of economies of scale, the Company would be one of the
lowest cost producers of PA in the world. In view of the increased
production and reduction in costs the performance of the Company will
improve in the years to come.
The Company is exploring to add certain value added products to
captively utilize the large production capacities to de-risk the
existing business and fuel growth
6. CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act, 2013
the Company has constituted the Corporate Social Responsibility (CSR)
Committee of Directors comprising of Shri Rajesh Muni (Independent
Director) as Chairman and Shri M M Dhanuka and Shri J K Saboo as other
Members.
The terms of reference:
The Company''s CSR Policy shall ensure the following -
a) To identify core areas where social activities are required to be
done i.e. eradicating hunger, poverty and malnutrition promoting
preventive health care and sanitation and making available safe
drinking water.
b) promoting education among children, women, elderly, and the
differently abled and livelihood enhancement projects.
c) rural development projects.
7. LISTING OF SHARES
Your Company''s shares are listed on the Bombay Stock Exchange (BSE)
under Scrip Code No. 500199 and National Stock Exchange Ltd. (NSE)
under the symbol "IGPL". The ISIN code is INE 204A01010
8. ISO 9001 : (2008) AND ISO 14001 (2004) CERTIFICATIONS
Your Company continued to be certified under ISO 9001 : (2008), for
quality management systems, and ISO 14001: (2004) for environment
management systems, by Beaureu Veritas as per their prescribed
standards.
9. DIRECTORS
Shri M M Dhanuka retires by rotation and being eligible has offered
himself for reappointment.
Shri P H Ravikumar was co-opted on the Board w.e.f. 30th October 2012
due to the casual vacancy created by resignation of Shri Premjit Singh
Marwah. In terms of Section 161 of the Companies Act, 2013, Shri P H
Ravikumar would have held office up to the date of the ensuing Annual
General Meeting and accordingly, the term of Shri P H Ravikumar as a
Director appointed in casual vacancy will expire at the ensuing Annual
General Meeting. Shri P H Ravikumar is being appointed as the Director
of your Company at the ensuing Annual General Meeting.
In terms of Sections 149, 152, Schedule IV and other applicable
provisions, if any, of the Companies Act, 2013 read with Companies
(Appointment and Qualification of Directors) Rules, 2014, the
Independent directors can hold office for a term of up to five (5)
consecutive years on the Board of your Company and are not liable to
retire by rotation. Accordingly, it is proposed to appoint Shri P H
Ravikumar, Shri Rajesh Muni and Dr. A K A Rathi as Independent
Directors of your Company up to five (5) consecutive years for the term
up to the conclusion of the 30th Annual General Meeting of the Company
in the calendar year 2019
Shri J K Saboo, Executive Director is being re-appointed for a further
period of three (3) years in the forthcoming Annual General Meeting of
the Company.
10. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of
Directors of the Company hereby state and confirm that -
a) in the preparation of the annual accounts, all the applicable
accounting standards have been followed and no material departures have
been made from the same;
b) appropriate accounting policies have been selected and applied
consistently and have made judgements and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended 31st March 2014
and of the profit of the Company for that year;
c) proper and sufficient care has been taken 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/detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis.
11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
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 the Board of Directors) Rules, 1988, information on conversation of
energy, technology absorption and foreign exchange earnings and outgo
is given in the annexure forming part of this report.
12. PARTICULARS OF EMPLOYEES
There is no employee drawing the requisite remuneration, in terms of
section 217(2A) of the Companies Act, 1956
13. CORPORATE GOVERNANCE
In compliance with the requirements of Clause 49 of the Listing
Agreement with the Stock Exchanges, a separate report on Corporate
Governance, along with Auditors'' Certificate on its compliance, forms a
part of this Annual Report.
14. AUDITORS AND AUDITOR''S REPORT
The Company''s Auditors, M/s. Hariharan & Company, Chartered
Accountants, Bengaluru (Firm''s Registration No.001083S) retire at the
ensuing Annual General Meeting and are eligible for reappointment for
the financial year 2014-15. As per the requirement of Section 139 of
the Companies Act, 2013 the Company has obtained written confirmation
from M/s. Hariharan & Company that their appointment, if made, would be
in conformity with the limits specified in the said Section. Your
Directors commend their appointment for the ensuing year.
Observations made in para ''Basis for qualified opinion'' has been dealt
with in Note 5 - Fixed Assets, Note No. 4.
15. COST AUDITORS
As per the requirements with the Central Government and pursuant to the
provisions of section 233B of the Companies Act, 1956 your Company has
been carrying out an audit of cost records relating to Phthalic
Anhydride.
The Company has appointed M/s. Krishna S & Associates, Cost
Accountants, Mumbai, as Cost Auditors to audit the cost accounts of the
Company for the financial year 2014-15
The Cost Audit Report for the financial year 2012-13 was filed with the
Ministry of Corporate Affairs on 27th September 2013
16. ACKNOWLEDGEMENT
The Board expresses its sincere gratitude to the shareholders, Bankers,
State and Central Government authorities and the valued customers for
their continued support. The Board also wholeheartedly acknowledges and
appreciates the dedicated efforts and commitment of all employees of
the Company.
For and on behalf of the Board
Place : Mumbai M M Dhanuka
Date : 22nd May 2014 Chairman
Mar 31, 2013
To The Members
The Directors hereby present the Twenty Fourth Annual Report, together
with Audited Accounts of the Company for the year ended 31st March
2013:
1. FINANCIAL RESULTS
Rs.in Lacs
2012-2013 2011-2012
Revenue from Operations (Gross) 106,718.64 95.537.44
Less: Excise duty 9,684.73 6,930.24
Revenue from Operations (Net) 97,033.91 88,607.20
Other Income 528.37 389.32
Total Revenue 97,562.28 88,996.52
Gross Profit 6,197.08 4,614.96
Less:
Finance Cost 1,667.29 1,464.94
Depreciation and
Amortisation Expenses 1,375.02 1,490.18
Profit/(Loss) before
extraordinary item & Tax 3,154.76 1,659.84
Extraordinary item - Depreciation
relating to earlier years 2,765.78
Profit before Tax 388.98 1,659.84
Tax Expenses:
Current Tax Net (MAT) 79.68 330.81
Tax provision for earlier year 1.41
Profit for the year 307.89 1,329.03
Balance brought forward
from previous year 17,386.73 16,057.70
Profit available for
appropriation 17,694.62 17,386.73
2. DIVIDEND
The Directors do not recommend any dividend in order to conserve
resources.
3. OPERATIONAL REVIEW
The Company has delivered a sustainable and healthy performance during
the year with Gross Revenue from Operations - crossing the ONE THOUSAND
CRORE MARK amounting to Rs. 1,067.18 Crores as against t 955.37 Crores
during the previous year 2011-2012 recording a growth of 11.70%. The
production of Phthalic Anhydride (PA) was 1,06,662 MT at 91.86% during
the year, as against 1,15,673 MT at 99.62% during 2011-2012. The
production was marginally less during the year due to closure of Plants
on a couple of occasions. Net Profit before extraordinary item was
higher at Rs. 3,154.76 Lacs as against Rs. 1,659.84 Lacs in the previous
year 2011- 2012. The Net Profit after extraordinary item was Rs. 307.89
Lacs.
The operating margins increased during first half of the year on
account of improved realizations due to healthy growth in the domestic
market as imports become dearer due to Safeguard duty from January 2012
for one year. However due to high international crude oil prices the
downstream products including the raw material prices rose to
exponential heights and the margins for PA saw declining trends
especially during the third quarter of the year. Though there is some
easing of raw material prices the current situation remains sluggish
due to huge dumping of PA from Korea, Israel, Taiwan and other
countries.
The export market remains subdued though there are some signs of the
international markets gradually picking up.
In furtherance to the efforts taken by the PA manufacturers association
for making representation to the Government for imposing anti-dumping
duty, the Government has during December 2012 implemented the
anti-dumping duty for a period of five years on PA originating/exported
from Korea RR Taiwan and Israel.
The Company has sold 1,06,065 MT of PA during the year, of which 82,982
MT is sold in DTA, 12,641 MT in exports and 10,442 MT in deemed
exports. The Company sells nearly 75% in the local market and rest is
sold in export and deemed export market.
The Company continues to avail the Working Capital limits from various
banks of around Rs. 170 Crores (both fund based and non-fund based)
during the year,
4. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 16,405 Lacs to the Central and State
exchequer by way of Excise Duty, Sales Tax (including Surcharge),
Income Tax, Wealfh Tax, Professional Tax and Customs Duty.
5. OPPORTUNITIES, CONCERNS AND FUTURE OUTLOOK
The Indian economic environment during, the year has been tough and the
growth has moderated due to various internal and external factors. The
uncertainty and recessionary trends in the global economies has
affected and compounded the complexity in the domestic environment. The
GDP growth rate remained positive despite of economic sentiment
remaining subdued on account of widening fiscal deficit, spiraling
inflation and high interest rates. The emerging focus on corruption
issues has further dampened the sentiments. These are the areas of
serious concern but the general consensus remains optimistic about the
long term growth.
The Company anticipates that the growth rates will show steady recovery
and the momentum will revive soon. The Governments thrust on
infrastructure development continues with the result that the
construction industry and all the related industries should grow
steadily. PA is the raw material for various industries, such as
paints, PVC, plasticizers, resins, transportation, construction and
marine, plastic products, textile dyes, printing inks and other
chemicals. The major demand for PA is in the western and northern India
as the users are clustered in these areas. The Company has the
advantage of procuring raw material and selling finished goods in this
area due to which the conversion cost is one of the lowest in the
world.
The Company''s expansion project for increase in capacity by 50,000 MT.
is progressing as per schedule and the commencement of commercial
production of the Plant is expected during the second quarter-of the
current financial year 2013-2014. After expansion the Company would be
the largest producer of PA in India and one of the largest in the world
at a single location. It would be one of the lowest cost producers of
PA in the world and the profitability is expected to considerably
improve due to optimum utilization of the existing facilities.
As a forward integration measure the Company is looking to add certain
value added products to captively utilize the large capacities which
would be available after expansion to fuel growth and help in derisking
the existing business.
6. CORPORATE SOCIAL RESPONSIBILITY
A strong pillar of the Company''s foundation, its Social Responsibility
initiatives are focused on activities related to customers, employees,
shareholders, communities and the environment in all aspects of its
operations. The Company goes beyond the requirements of applicable
environmental laws through:
- Optimizing usage of Raw Material and Chemicals
- Conserving Power arid Water
- Adopting preventive measures to reduce waste and air emissions
- Waste minimization
- Ensuring a safe working environment
- Employee education on environment issues
- Educating suppliers & buyers to become environmentally responsible
Aforestation and Rain Water Management: The manufacturing site at
Taloja, Maharashtra has good aforestation and green belts.
ISO 14001 (2004): Environment Management System certification acquired
by the Company is an endorsement of its continuous and relentless
environmental initiatives.
The Company encourages its employees to contribute to their communities
in a manner of their choice.
7. LISTING OF SHARES
Your Company''s shares are listed on the Bombay Stock Exchange (BSE)
under Scrip Code No. 500199 and National Stock Exchange Ltd. (NSE)
under the symbol "IGPC. The ISIN code is INE204A01010.
8. ISO 9001 : (2008) AND ISO 14001 (2004) CERTIFICATIONS
Your Company continued to be certified under ISO 9001 : (2008), for
quality management systems, and ISO 14001: (2004), for environment
management systems, by Beaureu Veritas as per their prescribed
standards.
9. DIRECTORS
Shri Premjit Singh resigned from the directorship of the Company. The
Directors wish to place on record their appreciation of the valuable
services rendered by Shri Premjit Singh during his long association as
Director of the Company.
Shri P H Ravikumar has been appointed as a Director in the casual
vacancy caused by the resignation of Shri Premjit Singh.
Shri Rajesh Mu''ni retires by rotation and, being eligible, has offered
himself for reappointment.
10. DIRECTORS''RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of
Directors of the Company hereby state and confirm that -
a) in the preparation of the annual accounts, all the applicable
accounting standards have been followed and no material departures have
been made from the same;
b) appropriate accounting policies have been selected and applied
consistently and have made judgements and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended 31si March 2013
and of the profit of the Company for that year;
c) proper and sufficient care has been taken 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/detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis.
11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
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 the Board of Directors) Rules, 1988, information on conversation of
energy, technology absorption and foreign exchange earnings and outgo
is given in the annexure forming part of this report.
12. PARTICULARS OF EMPLOYEES
There is no employee drawing the requisite remuneration, in terms of
section 217(2A) of the Companies Act, 1956.
13. CORPORATE GOVERNANCE
In compliance with the requirements of Clause 49 of the Listing
Agreement with the Stock Exchanges, a separate report on Corporate
Governance, along with Auditors'' Certificate on its compliance, forms a
part of this Annual Report.
14. AUDITORS AND AUDITOR''S REPORT
The Company''s Statutory Auditors, M/s, Hariharan & Co., Chartered
Accountants, Bengaluru retire at the forthcoming Annual General Meeting
and are eligible for reappointment. Your Directors recommend their
appointment for the ensuing year.
Observations made in paragraphs 4(vi) have been dealt with in Schedule
5 - Fixed Asgets Note No. 4(b).
15. COST AUDITORS
Pursuant to the provisions of Section 233B of the Companies Act, 1956
and with the prior approval of the Central Government, Mr. Krishna S
(Membership No. 27415), Practising Cost Accountant, Mumbai has been
appointed to conduct audit of cost records of Phthalic Anhydride for
the financial year ending 31st March 2014.
The Compliance Report for Phthalic Anhydride for the year ended 31s1
March 2012 was filed with the Central Government on 11,,h January,
2013. The Cost Audit Report for the year ended 31Et March 2013 shall be
filed with the Central Government within the stipulated time.
16. ACKNOWLEDGEMENT
The Directors wish to thanks all the employees of the Company for their
dedicated service during the year and also like to place on record
their appreciation for the continued co-operation and support received
during the year from bankers, financial institutions, business partners
and other stakeholders.
For and on behalf of the Board
Place : Mumbai MM Dhanuka
Date : 20th May 2013 Chairman
Mar 31, 2012
The Directors hereby present the Twenty Third Annual Report, together
with Audited Accounts of the Company for the year ended 31st March
2012:
1. FINANCIAL RESULTS Rs.in lacs
2011-2012 2010-2011
Revenue from Operations (Gross) 95,537.44 68,088.29
Less: Excise duty 6,930.24 4,958.77
Revenue from Operations (Net) 88,607.20 63,129.52
Other Income 389.32 93.96
Total Revenue 88,996.52 63,223 48
Gross Profit 4,614.96 4,488.70
Less:
Finance Cost 1,464.94 1,415.76
Depreciation/Amortization Expenses 1,490.18 1,420.59
Profit before Taxation 1,659.84 1,652.35
Tax Expenses:
Current Tax (MAT) 330.81 329.32
Profit for the year 1,329.03 1,323.03
Balance brought forward
from previous year 16,057.70 14,734.67
Profit available for
appropriation 17,386.73 16,057.70
2. DIVIDEND
The Directors do not recommend any dividend this year in order to
conserve resources.
3. OPERATIONAL REVIEW
It has been a good year for the Company, which has delivered a stellar
performance by achieving a production of 115673 MT at 99.62% during the
year, as against 109147 MT at 94% during 2010-2011, This performance
came despite the closure of one of the PA plants for about 10 days
during November 2011, causing production losses. The Net Revenues were
higher at Rs 88,607.20 lacs as against Rs 63,129.52 lacs. Net Profit was
Rs 1,329.03 lacs as against Rs 1,323.03 lacs.
Though the Company operated at nearly 100% and sold almost all its
produce, the PA market was sluggish, especially during the third
quarter of the year, as the market conditions were unfavorable due to
heavy dumping in the local markets. This led to a squeeze on margins,
thereby affecting profitability for the first three quarters. Further,
the high international crude oil price caused prices of downstream
products including, Orthoxylene (OX) to be on the rise throughout the
financial year. The declining rupee rate added to the Company's woes.
In an effort to combat the problem, the PA manufacturers association
made a representation to the Government for imposing Safeguard duty on
PA to avoid dumping of PA at cheap rates, and to ease the margin
pressure and achieve sustainability. Responding to the PA
manufacturers' 13163, the Government introduced a Safeguard Duty, in
January 2012, of 10% ad-valorem for a period of one year. This resulted
in imports becoming dearer and the industry started showing some signs
of improvement. Boosted by these developments, the Company expects
sustainable growth with improved margins in the current year.
The Company has sold 117207 MT of PA during the year, of which 82052 MT
is sold in DTA, 18863 MT in exports and 16292 MT in deemed exports. The
Company sells nearly 70% in the local market and rest is sold in export
and deemed export market.
The Company has been sanctioned the Working Capital limits from various
banks ofRs 14,900 lacs (both fund based and non-fund based) during the
year.
4. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs 10,450.81 lacs to the Centra! and State
exchequer by way of Excise Duty, Sales Tax (including Surcharge),
Income Tax, Wealth Tax, Professional Tax and Customs Duty.
5. OPPORTUNITIES, CONCERNS AND FUTURE OUTLOOK
With greater and continued thrust on infrastructure, the Indian economy
is expected to grow at 7% in the current year. The macro-economic
environment continues to cause concern on account of various factors,
such as high fiscal deficit, widening Balance of Payment position,
inflationary pressures, forex volatility, etc. which pose a serious
threat and challenge to sustained growth. The Company hopes that the
Government will address these issues suitably.
Till the time, however, that .strong policy decisions are taken to
tackle these challenges, the overall industrial scenario, and the PA
industry in particular, faces a tough and challenging situation. On the
positive side, however, the Safeguard Duty on PA would help tide over
the crisis and enable the industry to sail through smoothly. In the
long term, the macro-economic fundamentals are conducive for business
growth and sustainability. There is a strong demand for PA, which we
are well placed to leverage on the back of our focused strategies to
expand capacities. This, going forward, shall form the foundation for
the Company's sustainable growth.
The Company's expansion project is well on stream and should be
completed within the targeted timeline of first quarter of the
Financial year 2013-2014. On completion of the project, the total
expanded PA capacity of the Company would be 166110 MT. This would help
the Company mitigate some of the challenges of the increasing cost
pressures arising out of volatile raw material prices, thus
strengthening our gross margins. With this expanded capacity, the
Company would be one of the largest and the lowest cost producers of PA
in the world. Besides, the Reserve Bank has softened the interest rates
to fuel growth in the economy and the commercial banks are expected to
follow suit, thereby improving the margins.
PA is a vital industrial material and is growing steadily at 8-10% in
tandem with the growth of user industries viz. plasticizers, resins,
paints, unsaturated polyster resins and dyes/pigments and other
industries.
The Company is also exploring certain opportunities to captively
utilize the huge capacity which would be available after expansion as a
forward integration process, and add certain value added products to
de-risk its existing business.
6. CORPORATE SOCIAL RESPONSIBILITY
A strong pillar of the Company's foundation, its Social Responsibility
initiatives are focused on activities related to customers, employees,
shareholders, communities and the environment in all aspects of its
operations.
The Company goes beyond the requirements of applicable environmental
laws through:
* Optimizing usage of Raw Material and Chemicals
* Conserving Power and Water
* Adopting preventive measures to reduce waste and air emissions
* Waste minimization
* Ensuring a safe working environment
* Employee education on environment issues
* Educating suppliers & buyers to become environmentally responsible
Forestation and Rain Water Management: The manufacturing site at
Taloja, Maharashtra has good forestation and green belts.
ISO 14001 (2004): Environment Management System' certification acquired
by the Company is an endorsement of its continuous and relentless
environmental initiatives.
The Company encourages its employees to contribute to their communities
in a manner of their choice.
7. LISTING OF SHARES
Your Company's shares are listed on the Bombay Stock Exchange (BSE)
under Scrip Code No. 500199 and National Stock Exchange Ltd. (NSE)
under the symbol IGPL', The ISIN code is INE 204A01010. "
8. ISO 9001 : (2008) AND ISO 14001 (2004) CERTIFICATIONS
Your Company continued to be certified under ISO 9001 : (2008), for
quality management systems, and ISO 14001: (2004), for environment
management systems, by Beaureu Veritas as per their prescribed
standards.
9. DIRECTORS
Dr. A K A Rathi retires by rotation and, being eligible, has offered
himself for reappointment.
10. DIRECTORS'RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of
Directors of the Company hereby state and confirm that - .
a) in the preparation of the annual accounts, all the applicable
accounting standards have been followed;
b) appropriate accounting policies have been selected and applied
consistently and have made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended 31s' March 2012
and of the profit or loss of the Company for that year;
c) proper and sufficient care has been taken 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/detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis.
11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
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 the Board of Directors) Rules, 1988, information on conversation of
energy, technology absorption and foreign exchange earnings and outgo
is given in the annexure forming part of this report.
12. PARTICULARS OF EMPLOYEES
There is no employee drawing the requisite remuneration, in terms of
Section 217(2A) of the Companies Act, 1956.
13. CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement, a separate section on
Corporate Governance Report, together with the Auditors' Certificate
on compliance of the conditions of Corporate Governance, forms a part
of this Annual Report.
14. AUDITORS AND AUDITOR'S REPORT
The Company's Statutory Auditors, M/s. Hariharan & Co., Chartered
Accountants, Bengaluru retire at the forthcoming Annual General Meeting
and are eligible for reappointment. Your Directors recommend their
appointment for the ensuing year.
Observations made in paragraphs 4(vi) have been dealt with in Note No.
5 of Notes on Financial Statements.
15. COST AUDITORS
As per the requirement of the, Central Government and pursuant to
Section 233B of the Companies Act, 1956, the Company is required to
maintain the cost accounting records relating to Phthalic Anhydride for
the year 2011-2012 and submit Compliance Report for that year.
Accordingly the Company had appointed M/s. Krishna S & Associates, Cost
Accountants, Mumbai as Cost Accountant for the year 2011 -2012 who
shall submit the Compliance Report for that year by 30th September
2012.
Further in terms of the Notification No. G S R 430(E) dt. 3Id June 2011
issued by the Central Government, the Company is required to carry
out an audit of cost records relating to Phthalic Anhydride every year
commencing 2012-2013. Subject to the approval of the Central
Government, the Company has appointed M/s. Krishna S & Associates, Cost
Accountants, Mumbai as Cost Auditors to audit the cost accounts of the
Company for the financial year 2012-2013.
16. ACKNOWLEDGEMENT
The Directors express their appreciation for the support received from
the Central and State Governments, banks, stakeholders including
shareholders, customers, suppliers and business partners and the
contribution made by the employees at all levels in the operations of
the Company. '
For and on behalf of the Board
Place : Mumbai M M Dhanuka
Date : 14 May 2012 Chairman
Mar 31, 2010
The Directors hereby present the Twentyfirst Annual Report together
with Audited Accounts of the Company for I the year ended 31st March
2010 :
Financial Results
2009-2010 2008-2009
Rs. in lacs
Gross Sales 57398.95 59474.75
Less: Excise Duty 3212.53 3825.74
Net Sales 54186.42 55649.01
Other Income 697.06 195.90
54883.48 55844.91
Gross Profit 6106.88 3654.23
Less :
Interest & Finance Charges 1451.32 2135.55
Depreciation/ Amortisation 1364.59 1343.47
Profit/(Loss) before Taxation 3290.97 175.21
Taxation
Current Tax (MAT) 559.30 17.86
Fringe Benefit Tax - 17.56
Tax provision for earlier years - 7.11
Profit after Taxation 2731.67 132.68
Balance brought forwarded 12003.00 11870.32
from previous year
Profit available for 14734.67 12003.00
appropriation
Dividend
The Directors do not recommend any dividend in order to conserve
resources.
Management Discussion and Analysis
Operations and Performance Review
The overall performance of the Company during the year was satisfactory
with a production of 97870 MT. at 84.29% as against 106471 MT. at
91.70% during the previous year 2008-2009. The production was lower due
to stoppage of one of the plants on account of Catalyst change and a
fire during the 3rd quarter of 2009. The gross sales value was Rs.
57398.95 lacs as against Rs. 59474.75 lacs in the previous year. The
Gross Profit was Rs. 6106.88 lacs as against Rs. 3654.23 lacs and Net
Profit was higher at Rs. 2731.67 lacs as against Rs. 132.68 lacs during
the previous year.
The Company has converted itself from 100% EOU into a domestic unit
since 6th November 2008. As such the sale in the domestic market has
increased since that period. Out of the total sales of 100315 MT.
(106696 MT.), local sales was 64532 MT. (48093 MT.), deemed exports
17837 MT. (18479 MT.) and export sales was 17946 MT. (40124 MT.). The
emphasis has therefore been on local markets which has resulted in
better realizations. The balance quantity is sold to deemed exporters
and overseas customers in view of the established contacts in the
international markets all these years.
The Company has sold 15,06,240 units (17,31,000 units) of power to the
Maharashtra State Electricity Board (MSEB) and generated revenue of Rs.
45.19 lacs (Rs. 51.93 lacs) during the year.
The Company received the Best Vendor Award for the year 2009-10 from
Kansai Nerolac Paints Ltd. for its marketing efficiency.
Contribution to exchequer
The Company has contributed Rs. 5615.23 lacs to the Central and State
exchequer by way of Excise Duty, Sales Tax (including Surcharge),
Income Tax, Wealth Tax, Professional Tax and Customs Duty.
Opportunities and Future Outlook
The year 2008-2009 witnessed abnormal situation caused by the drastic
fluctuations of crude oil price coupled with an economic upheaval
globally. Due to the financial mess in US and other European Countries
there was recession all over the globe and it affected the asian
markets including India very badly. However the year 2009-2010 saw
revival in the industry and business operations were normalized. The
improved market environment provides an assurance to growth in
industrial activities.
The Phthalic Anhydride (PA) industry is growing at the moment with
rising demand. The end users of the products like PVC, paints,
constructions, phthalate plasticizers are getting expanded and
broadbased and are expected to grow at 10-12% cumulatively and the
Alkyd resins, Unstaurated Polyester Resins (UPR), Dyes and Pigments,
CPC and Speciality Chemicals segments and other related products are
expected to grow at over 20%.
The Company after getting converted into a domestic unit during
November 2008 is well placed to take advantage of the growth
opportunities in the domestic and international arena. The crude oil
price is stable and is expected to remain so in the near future. As a
result the Companys performance is expected to post a healthy
operating scenario. The situation improved from the first quarter of
2009 and the demand has been increasing alongwith the price of the
product.
Also the safeguards duty imposed by the Government, of 25% and 15% in
two tranches from January to June 2009 and July to December 2009
respectively added to further improvements in product prices. The
safeguards duty was upto 31.12.2009 and thereafter there has been a
surge in imports and the prices of PA are steadily declining. However
due to the increased demand for PA in the user industry, the increase
in supply has been absorbed and hence the price of PA is expected to
remain stable in the near future.
The Indian economy is expected to grow over 8% in the current year with
continued thrust on infrastructure which would result in increased
construction and other activities. As a result the related industries
would also witness a stable growth prospects. The recessionary trend in
the US and other European markets has been a cause of concern for the
growth prospects of Indian economy. However analysts are of the view
that both US and European Union will stabilize by 2010-2011 which will
result in improved market conditions worldwide including India.
Risks and Concerns
Our country has been relatively insulated from the global recession
without any significant impact on the growth of the industries in
general and the petrochemical industry in particular. There are signs
of recovery due to the stable crude oil prices. The PA industry
continues to remain under pricing pressures and volatility, demand
supply mismatch, government policies, exchange rate risk and other
technical and environmental risks. The Board of Directors do a periodic
assessment of the risks through a means of properly defined framework
resulting in minimization of risks involved.
Risk Management
Exchange rate risk (Raw material procurement and sale
of finished goods)
The Company has been converted into a domestic unit w.e.f. 6.11.2008.
The Company procures 70% of the raw material requirement locally and
the balance is imported. The finished product is sold locally to the
extent of 80% out of which majority is sold on monthly contract basis
based on the formula i.e. raw material cost plus profit. The balance is
sold on spot price. The Company enjoys a dual market advantage and
exports to various countries to an extent of 20% of the total produce
and gets natural hedge on the material imported.
Mitigation : As a business policy, the Company minimizes the exposure
to foreign exchange risk by forward booking of dollars whenever it is
necessary.
Interest rate risk
At present the Company has only Rupee term loan of Rs. 18.56 crores and
Working Capital limits from Banks (including receivables factoring
facilities) to the extent of Rs. 24.66 crores. Since there is no
foreign currency loan involved there is no exchange rate risk. As the
long term loan is very less the interest out flow is minimum and is
serviced from current realisations.
Mitigation : The Company reviews the loan and working capital
requirements position on a regular basis and alternative funding
arrangements are being negotiated with banks to keep the interest cost
at the minimum possible levels.
Product risk
As the Indian economy is growing and has recovered faster than the
other global markets the overall demand position and the Companys
product in particular is quite good and would continue to grow for some
time with better price realization. Also the global markets now
recovering the export market is expected to follow suit. However our
exposure to the export market is minimal.
Mitigation : The Company takes advantage of the dual market policy and
sells the product in those markets i.e. domestic, deemed exports or
exports depending on the price realization to the maximum possible
extent.
Operational risk
The Company has continuous process plants and are operated at optimal
capacity through out the year bearing temporary shut downs for change
of catalysts and routine maintenance jobs. The plants are subject to
production and operational hazards viz. accidents and/or occurance of
fire, storage, electricity, insurance, toxic and corrosive nature of
chemicals etc. There was a fire in the PA-II Plant during October 2009
due to which there was stoppage of production for some time.
Mitigation : The Companies Plants and other assets and stocks are
adequately insured. The Company has the Fire policy, Loss of Profit
Policy etc. As there was a fire in the Plant there was loss of
production and damage to the machinery. Hence the Company requires
coverage of the
Machinery Breakdown Policy for which enquiries are being done. The
plants have adequate supply of electricity from State Grid / DG sets
and maintenance of plants is done on day to day basis by trained
technical personnel.
Economic and Geo Political risk
The political situation in the Country as regards the | government
policies viz. import duty, taxes etc. and the j international
situation will have an impact on the overall corporate growth and the
PA industry in particular. Any change in Government policies will have
its repercussions | on the corporate sectors.
Mitigation : The Company keeps abreast with the domestic and
international economic developments and works on the strategies
favourable to the Company.
Internal Control System
The Company conducts its business with integrity and in compliance with
the laws and regulations that govern the business. The Company has an
established framework of internal controls in operation, including
suitable monitoring procedures and self-assessment exercises. In
addition to external Audit, the financial and operating controls at
various locations are reviewed by the Internal Auditors who report
their findings to the Audit Committee of the Board. Compliance with
laws and regulations is also monitored. Additionally the Directors and
Senior management personnel are required to certify on an annual basis
the adherence to the Code of Conduct adopted by the Company.
Human Resources Development / Industrial Relations
Your Companys employees have played a key role in contributing to the
growth and maintenance of its status as one of the reputed companies in
PA industry and emphasis has been laid on capability building and
towards enhancing the effectiveness of the personnel. On the industrial
front your Company has had a cordial and harmonious relationship with
its employees and Unions throughout the year. The total staff strength
is 285 as on 31st March 2010.
Corporate Social Responsibility
The Company considers the interests of the society by taking
responsibility for the impact of the organizations activities on
customers, employees, shareholders, communities and the environment in
all aspects of its operations. The Company inherently believes that the
Corporate Social Responsibility (CSR) should be an integral focus area
for our organization and thus honouring people, planet and profit.
The Company goes beyond the requirements of applicable environmental
laws through :
- Optimizing usage of Raw Material and other Chemicals
- Conserving Power and Water
- Adopting preventive measures to reduce waste and air emissions
- Maximizing the recycling of waste
- Ensuring a safe working environment
-Employee education on environmental issues
-Educating suppliers & buyers to become environmentally responsible
Aforestation and Rain Water Management : The manufacturing site at
Taloja has good aforestation and green belts.
Safety of people in neighboring villages, plants, etc. : The Company
acknowledges its responsibility towards Environment and complies with
applicable Environmental legislation and statutory regulatory
requirements.
ISO 14001 (2004) : Environment Management System certification acquired
by the Company is the recognition of continuous and relentless
Environmental initiative.
The Company encourages the employees to contribute to their communities
in a manner of their choice.
Cautionary Note
Certain statements made in the Management Discussion and Analysis
section may be forward looking and are stated as required by applicable
laws and regulations. Many factors may affect the actual results, which
could be different from what the Directors envisage in terms of future
performance and outlook.
Listing of shares
Your Companys shares are listed on the Bombay Stock Exchange Limited
(BSE) under Scrip code No. 500199 and the National Stock Exchange of
India Limited (NSE) under the symbol IGPL. The ISIN code is INE
204A01010.
ISO 9001: (2008) and ISO 14001: (2004) Certifications
Your Company continued to be certified under ISO 9001: (2008) for
quality management systems and ISO 14001 : (2004) for environment
management systems by Beaureu Veritas as per their prescribed
standards.
Directors
The Board of Directors has appointed Dr. A K A Rathi as Additional
Director of the Company with effect from 28.7.2009. A proposal for his
appointment as Non-Executive and Independent Director is being placed
for the members for approval at the ensuing Annual General Meeting.
Shri M M Dhanuka and Shri J K Saboo retire by rotation and being
eligible offer themselves for re-appointment.
Group
Pursuant to intimation from the Promoter(s) and in accordance with
Regulation 3(l)(e) of the SEBI (Substantial Acquisition and Takeovers)
Regulations, 1997 regarding identification of persons constituting
"Group" (within the meaning as defined in the Monopolies and
Restrictive Trade Practices Act, 1969) are disclosed in this Annual
report as separate disclosure.
Directors Responsibility Statement
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of
Directors of the Company hereby state and confirm that:
a. in the preparation of the annual accounts, all the applicable
accounting standards have been followed;
b. appropriate accounting policies have been selected and applied
consistently and have made judgements and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended 31st March 2010
and of the profit of the Company for that year;
c. proper and sufficient care has been taken 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/detecting fraud and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
Particulars of employees
Except Shri Nikunj Dhanuka, Managing Director, there is no other
employee drawing the requisite remuneration in terms of Section 217(2A)
of the Companies Act, 1956. The statement of remuneration of Shri
Nikunj Dhanuka is annexed to this report.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
As required under Section 217(1) of the Companies Act, 1956 read with
rule 2 of the Companies (Disclosure of particulars in the Report of the
Board of Directors) Rules, 1988 information on conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the annexure forming part of this report.
Corporate Governance
As per Clause 49 of the Listing Agreement, a separate section on
Corporate Governance forms part of this Annual Report. A certificate
from the Auditors of the Company regarding compliance of conditions of
Corporate Governance is given as Annexure B and forms part of this
Annual Report.
Auditors and Auditors Report
The Companys Statutory Auditors M/s. Hariharan & Co., Chartered
Accountants, Bangalore retire at the conclusion of the forthcoming
Annual General Meeting and are eligible for reappointment. Your
Directors recommend their appointment for the ensuing year.
The auditors have qualified the financial statement for the year ended
31.03.2010 regarding depreciation on Plant & Machinery w.e.f. 1.4.2006
on the basis of useful life of the assets as determined by an approved
valuer as against the rates specified in Schedule XIV of the Companies
Act, 1956. The Company continues to provide depreciation on the same
basis in order to reflect the proper Value of the Assets.
The same has been dealt with in Note No.5 of Schedule 19.
Acknowledgements
The Directors express their appreciation for the contribution made by
the employees at all levels to the significant improvement in the
operations of the Company and for the support and co-operation received
from all the stakeholders, Banks, various Regulatory and Government
authorities and business partners.
For and on bebalf of the Board
Mumbai M M Dhanuka
Date : 20th May, 2010 Chairman
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