To The Members
On behalf of the Board of Directors of your Company it gives me pleasure in presentingthe Thirtieth Annual Report together with the Audited Financial Statements for the yearended 31st March 2019:
1. FINANCIAL RESULTS
| || ||(Rs. in lakhs) |
| ||2018-19 ||2017-18 |
|Total Revenue ||131128.07 ||117489.23 |
|Profit before interest depreciation and tax ||23370.48 ||27142.41 |
|Finance Cost ||1143.53 ||1487.96 |
|Depreciation and ||2646.41 ||2569.58 |
|Amortization expenses || || |
|Profit before tax ||18630.54 ||23084.88 |
|Provision for tax ||6982.39 ||8430.39 |
|Profit for the year ||11648.16 ||14654.49 |
|Balance brought forward from previous year ||42366.51 ||30823.94 |
|Profit available for appropriations ||50529.68 ||45478.43 |
|Earnings per share ||37.82 ||47.58 |
The Board of Directors have recommended a dividend of Rs. 4/- per equity sharehaving face value of Rs. 10/- each (40%) for the year ended 31st March 2019aggregating to Rs. 1484.99 lakhs (including dividend distribution tax).
The revenue from operations grew by 14% to Rs. 131128.07 lakhs during thefinancial year 2018- 19. The total expenditures rose by 18.15% mainly on account of higherraw material prices which led to the fall in the profit before tax by 15.18% at Rs. 18630.54 lakhs. Profit Rs. 11648.16 lakhs is lower than the previous yearon account of the volatility in oil price movements during the year. There were nomaterial changes or commitments that have occurred between the end of the financial yearand the date of this Report which affects the financial statements of the Company inrespect of the reporting year.
4. OPERATIONAL REVIEW
The Orthoxylene prices remained volatile for most part of the year due to crude pricesthus affecting the overall conversion cost of Phthalic Anhydride (PA).
The anti-dumping duty levied on imports of PA from Taiwan Korea and Israel was removedduring the year and this led to the intensified competition in the domestic market. As aresult of this the conversion of PA has come down because of competition on account ofimport from the overseas market.
The above factors contributed to the sustained pressure on margins throughout the yearand eventually leading to the drop in profitability of the Company by 20.61% to Rs. 11648.16 lakhs.
The brownfield expansion of PA plant by 53000
MTPA is on and is expected to get commissioned in the current year. With this theCompany shall become one of the largest producer of PA at a single location globally andwill achieve substantial economies of scale. The expansion will also provide the Companywith additional raw materials for the production of MA which will improve the overallrevenue and margins of the Company. The downstream expansion into specialty plasticizersis also expected to commission in the current year.
6. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 26906.24 lakhs to the exchequer by way of incometax customs duty goods and service tax etc.
7. SHARE CAPITAL & FINANCE
7.1 Share Capital
The Company's paid-up Equity Share Capital remained unchanged at Rs. 3079.81lakhs as at 31st March 2019. The shareholdings of the after tax at Promoters and PersonsActing in Concert with Promoters are 68.90%.
The Company optimally utilizes its working capital facilities and continuously monitorsits receivables inventories etc. The Company has raised external commercial borrowingsof 15.77 million from the foreign lenders and a term loan upto Rs. 75 croresto partially fund the expansion of plant. The debts (including interest) are beingserviced regularly.
7.3 Credit Ratings
The Credit Ratings of the Company are IND A+ (long term) and INDA1+ (short term) issued by India Ratings & Research.
During the year the Company has not accepted or invited any deposits from the Public.
7.5 Particulars of Loans Guarantees or
Details of Loans Guarantees or Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to the Financial Statements.
8. TRANSFER TO GENERAL RESERVES
The Company proposes to transfer an amount of Rs. 2000.00 lakhs to theGeneral Reserves.
9. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES
IGPL International Limited and IGPL (FZE) are the wholly owned subsidiaries of theCompany.
The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for themanufacture of Maleic Anhydride has been called-off during the year due to it becomingeconomically unviable.
The financial statements of subsidiaries are placed on the website of the Company andavailable for inspection by the members of the Company. A copy of the audited accountsshall be made available to the member upon request.
The consolidated financial statements of the Company are prepared in accordance withthe applicable Ind AS together with the report of the Auditors' thereon forms part of thisAnnual Report. A statement containing salient features of the financial statements of thesubsidiaries in Form AOC-1 is attached with this Annual Report.
10. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
In accordance with the provisions of Section 135 of the Companies Act 2013 (theAct) and the Rules framed thereunder the CSR Committee reviews and monitors theprojects and expenditures incurred by the Company which are mainly for education old agehomes environment etc. The Report on CSR activities containing prescribed details areannexed to the Directors' Report as Annexure-A.
During the year the Company spent Rs. 136.16 lakhs towards CSR activities asagainst the budgeted allocation of Rs. 293.24 lakhs. The Company has initiated someprojects which are under implementation.
11. ANNUAL RETURN
The Annual Return of the Company in Form MGT-7 for the year 2018-19 is available on thewebsite of the Company and can be accessed at www.igpetro.com
12. VIGIL MECHANISM POLICY
The Company has a Vigil Mechanism Policy in place to report instances of actual orsuspected unethical behavior fraud etc. The Audit Committee reviews the functioning ofthe Policy. The details of the Vigil Mechanism has been elaborated in the CorporateGovernance Report and posted on the Company's website www.igpetro.com
13. TRANSFER OF SHARES TO IEPF
In compliance with the provisions of Section 124(6) of the Act read with the InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 (the IEPF Rules) and amendments thereto the Company had during thefinancial year 2017-18 transferred 779342 shares to IEPF Authority in respect of shareson 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 theIEPF authority by filing Form IEPF-5 available at www.iepf.gov.in. Member should also notethat 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 canbe contacted for any guidance/assistance to claim the dividend and shares from IEPFAuthority.
14. DIRECTORS & KEY MANAGERIAL PERSONNEL
Upon the recommendation of the Nomination and Remuneration Committee and in accordancewith the provision of the Act read with the Rules framed thereunder Shri Nikunj Dhanukawas re-appointed as Managing Director & Chief Executive Officer of the Company for aperiod of three years with effect from 27th April 2019. Shri M M Dhanuka retires byrotation and being eligible offered himself for re-appointment.
Shri Rajesh Muni Shri P H Ravikumar and Dr. A K A Rathi were appointed as IndependentDirectors of the Company by the members at an Annual General Meeting held on 26th July2014 for a term of five years each with effect from 26 th July 2014. In accordance withthe provisions of Section 149 of the Act the Independent Directors shall be eligible toseek re-appointment for a second term of five years subject to the approval of the membersby special resolution. The said Independent Directors have given their consent forre-appointment.
The Company has received notices under Section 160 of the Act from a Member proposingthe re-appointment of Shri Rajesh Muni Shri P H Ravikumar and Dr. A K A Rathi asIndependent Directors of the Company. Approval of the Members are being sought by specialresolutions for reappointment as Independent Directors for a second term of fiveconsecutive years.
All Independent Directors of the Company have furnished declarations under Section149(7) of the Act confirming that they meet the criteria of independence laid down inSection 149(6) of the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Shri R Chandrasekaran resigned as Chief Financial Officer of the Company with effectfrom 7th February 2019 and Shri Pramod Bhandari is appointed as Chief Financial Officerof the Company with effect from 7th February 2019.
During the year four meetings of the Board of Directors and Audit Committee were heldas more particularly disclosed in the attached Report on Corporate Governance.
14.2 Board Evaluation
The Board of Directors have carried out its annual performance evaluation as well as ofthe Directors individually and their respective Committees as required under the Act andSEBI Listing Regulations. The details of which are disclosed in the Corporate GovernanceReport.
14.3 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 Actread with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (the Rules) are given below:
a) Ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial year Shri Nikunj Dhanuka Managing Director& CEO 45:1 Shri J K Saboo Executive Director 7:1
b) The percentage increase in the remuneration of Managing Director Chief FinancialOfficer and Company Secretary for the Financial Year Shri Nikunj Dhanuka ManagingDirector & CEO (16%)@ Shri R Chandrasekaran Chief Financial Officer N.A*ShriSudhir R Singh Company Secretary 10% @ decline in commission due to lower profits.
* Since resigned during the year
c) The percentage increase in the median remuneration of employees in the
Financial Year 9.80%
d) Number of permanent employees on the rolls of the Company 413
e) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year was 11.50% whereas the increase in themanagerial remuneration was 8.25%. The increase in the remuneration is on account ofcommission paid.
It is hereby affirmed that the remuneration paid during the year is as per theRemuneration Policy of the Company.
The information under Rule 5(2) of the Rules will be provided to the members uponrequest in terms of the first proviso to Section 136 of the Act.
15. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information andexplanation obtained by us in terms of Section 134(3)(c) of the Companies Act 2013 westate: a. that in the preparation of the annual financial statements for the year ended31st March 2019 all the applicable accounting standards have been followed and nomaterial departures have been made from the same; b. that appropriate accounting policieshave been selected and applied consistently and have made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year ended 31st March 2019 and of the profit of theCompany for that year; c. that proper and sufficient for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing/ detecting fraud and otherirregularities; d. that the annual financial statements have been prepared on a goingconcern basis; e. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively; f. that systems to ensurecompliance with the provisions of all applicable laws were in place and were adequate andoperating effectively.
16. RELATED PARTY TRANSACTIONS
All transactions entered into with related parties during the year were on arm's lengthbasis and in the ordinary course of business.
There were no material related party transactions. The necessary disclosures regardingthe transactions are given in the notes to accounts. The Company has formulated a policyon dealing with the Related Party Transactions and necessary approval of the AuditCommittee and Board of Directors were taken wherever required in accordance with thePolicy.
17. INTERNAL CONTROL
The scope of Internal Audit is reviewed by the Audit Committee at regular intervals. Aframework of the audit is generally defined at the beginning of the year based on thediscussion with the Internal Auditor. The Internal Auditor submits its report to the AuditCommittee. The Company's internal control systems commensurate with its nature ofbusiness size and operations. The Internal Audit strives to evaluate the efficacy andadequacy of internal control system and processes accounting policies and procedurescompliance with laws and regulations concerning the operations of the Company. Theinternal control mechanism of the Company enables it to identify assess and mitigate therisk related to its business. Risks are being evaluated on various parameters and theseparameters are being care has been taken reviewed at regular intervals.
18.1 Statutory Auditors
M/s ASA & Associates LLP and M/s Uday & Co. are the Statutory Auditors of theCompany appointed by the members of the Company at the annual general meetings.
18.2 Cost Auditors
M/s Krishna S & Associates Cost Accountants have been appointed as the CostAuditor to conduct an audit of the cost records of the Company for the year 2019-20. Aresolution seeking Members' ratification the remuneration payable to M/s Krishna S &Associates is included in the Notice convening the Annual General Meeting.
18.3 Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s MakarandM Joshi & Associates Practicing Company Secretaries (Membership No. 5533) to conductthe Secretarial Audit and their Report on the Secretarial Audit for the year 2018-19 isannexed herewith as Annexure-B. There are no qualifications in the saidreport.
19. ENERGY CONSERVATION TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure-C.
20. CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance and a report onthe same along with the Auditors' Certificate compliance is attached with and forms partof this report.
A report on Management Discussion and Analysis forms an integral part of this report.
21. PREVENTION OF SEXUAL HARASSMENT
The Company is an equal opportunity provider and has zero tolerance in any form ormanner towards the sexual harassment of women at workfor place. In accordance with theSexual Harassment of Women at Work Place (Prevention Prohibition and Redressal) Act2013 the Company has formulated a policy on prevention prohibition and redressal ofsexual harassment of women at work place.
The Internal Complaints Committee has been constituted with majority of them beingfemale who is also the Presiding Officer. The Committee meets as and when required. Nocomplaints pertaining to sexual harassment of women employees were received during theyear.
22. ISO 9001 : (2008) AND ISO 14001 (2004)
Your Company continued to be certified under ISO
9001:2008 for quality management systems and ISO 14001:2004 for environment managementsystems by Bureau Veritas.
Your Directors convey their sincere appreciation to the business partners for theirunstinted support and contribution and thank the customers members dealers employeesbankers and all stakeholders for their co-operation and confidencereposed in the Company.
For and on behalf of the Board of directors confirming
| ||M M Dhanuka |
|Mumbai 22nd May 2019 ||Chairman |