Your Directors present the Statement of Profit and Loss for Financial Year (FY) endedon 31st March 2019 (FY 2018-19) and Balance Sheet as on that date along with Notes CashFlow Statement and Auditor's Report forming part thereof.
Summary of Financial Results on Consolidated and Standalone basis for FY 2018-19 areas follows :
| || ||(Rs. in Millions) |
| ||Consolidated ||Standalone |
|Revenue from Operations ||9402.62 ||4791.27 |
|Other Income ||57.87 ||37.63 |
|Total Revenue ||9460.49 ||4828.90 |
|Profit before Depreciation Interest and Tax (PBDIT) ||1145.16 ||755.21 |
|Depreciation and Amortisation ||460.20 ||388.70 |
|Finance Cost ||44.47 ||40.98 |
|Profit before Tax ||640.49 ||325.53 |
|Tax Expense ||135.89 ||65.90 |
|Profit for the year after Tax ||504.60 ||259.63 |
|Other Comprehensive Income for the year Net of Tax ||(1.22) ||(3.81) |
|Total Comprehensive Income for the year ||503.38 ||255.82 |
|Proposed Dividend Proposed Dividend @ ' 2.50 per Equity Share || ||900.98 |
|Basic and Diluted Earnings per Share ||14.00 ||7.20 |
|Disclosures under Regulation 34(3) read with Clause B of Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBI LODR 2015) || || |
|i) Debtors Turnover Ratio ||3.7:1 ||2.7:1 |
|ii) Inventory Turnover Ratio ||3.6:1 ||3.6:1 |
|iii) Interest Coverage Ratio ||15.4:1 ||8.9:1 |
|iv) Current Ratio ||2.6:1 ||2.1: 1 |
|v) Debt Equity Ratio ||0.11 ||0.13 |
|vi) Operating Profit Margin (%) ||6.7% ||6.9% |
|vii) Net Profit Margin (%) ||5.4% ||5.4% |
|viii) Return on Net Worth (%) ||6.3% ||5.1% |
Aforesaid Financial Results achieved in the opinion of your Directors aresatisfactory. Although there has been an increased demand in India and abroad forrefractories manufactured by your Company the margins were under pressure due to sellingprice and cost of raw materials.
PAT is higher by 7.1% and 15.0% on Consolidated and Standalone basis compared to thoseof preceding FY 2017-18. Correspondingly EPS on Consolidated and Standalone basis has alsobeen higher.
Following your Company's policy of distributing profits your Directors haverecommended payment of Dividend @ 25% i.e. ' 2.50 per Equity Share for FY 2018-19 whichis higher by 5% i.e. ' 0.50 per Equity Share than that paid for preceding FY 2017-18. Ifapproved at the ensuing Annual General Meeting scheduled to be held on Saturday 27th July2019 will be distributed amongst eligible Shareholders on and after Thursday 1st August2019. Dividend including Dividend Distribution Tax (DDT) will entail outflow of ' 108.62millions.
Industry Review Future Outlook and Expansion Plans
During FY 2018-19 your Company having its manufacturing facilities in India and abroadin Peoples Republic of China UK and USA continued primarily to be a manufacturer ofSpecialized Refractories and Operating Systems for the Iron and Steel Industry and theGerman Subsidiary focused on foundry ceramics. With such a spread of manufacturingfacilities your Company has been catering to customers across the Globe selling in 58Countries spanning 6 continents.
There has been a turnaround in the Steel sector during FY 2018-19 because of severalremedial and proactive measures taken by the Governments in India and abroad. This hasresulted in increased production as well as demand for Steel products particularly in Asia
Pacific. In India Steel sector has also been a major beneficiary of Insolvency andBankruptcy Code (IBC) which has resulted in release of idle capacities of several debtridden entities. Improved plant utilisation and increased demand for Steel products alsoaugurs well for your Company.
Uncertainty about BREXIT ongoing global trade frictions weakening of demandespecially in Europe and China are some of the concerns for FY 2019-20 and being closelymonitored by your Company. However your Directors are of view that the positives outweighthe negatives in as much as Global Refractories market is expected to grow at CAGR of morethan 5.2% till 2023. These have led your Directors to increase commitments towards capitalexpenditure inasmuch as your Company is now in the process of setting up new greenfieldmanufacturing facility in Visakhapatnam (India) and expanding manufacturing facility atKandla Special Economic Zone Gujarat (India) by creating additional capacities.
This optimism is also supported by World Steel Association's projection that Steelproduction will increase over next 3 to 5 years. Demand for Steel in India is alsoprojected to grow by 7% or more in near term as the economy is expected to achieve fastergrowth from second half of FY 2019-20 post General Elections.
Your Company during FY 2018-19 derived 55.7% of Revenue from Operations on Standalonebasis from exports. On Consolidated basis 51.4% only of Revenue from Operations has beenfrom Asia Pacific Region including India.
All subsidiaries of your Company performed satisfactorily during FY 2018-19. TotalRevenue and PBT on consolidated basis for FY 2018-19 of your Company's immediatesubsidiary IFGL Worldwide Holdings Limited Isle of Man are higher by 12.5% and 5.2%respectively than those of immediately preceding FY 2017-18. Further steps are being takenby the Management of your German and one of the US subsidiaries to improve theirperformance. As a part of ongoing corporate simplification UK non-operating subsidiaryHofmann Ceramic Limited was dissolved during FY 2018-19.
Corporate Governance/Vigil Mechanism etc
Report on Corporate Governance (CG Report) and related Report of the Statutory Auditorsform part of this Report and are annexed hereto as Annexure 'A'. CG Report is inconformity with provisions of Regulation 34 of the SEBI LODR 2015 amended to date.
Your Company has adopted and put in place several Policies including on Vigil Mechanism(Whistle Blower) Prevention of Sexual Harassment Insider Trading Internal ControlRisks Management and Transfer Pricing etc commensurate to nature and size of business ofyour Company. These Policies have been hosted on your Company's website www.ifelref.com and are reviewed and updated from time totime. During FY 2018-19 no complaint and or alert was received either under VigilMechanism (Whistle Blower) or for Sexual Harassment. The Internal Complaints Committee inplace is following provisions of Sexual Harrassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
Extract of Annual Return being Form MGT 9 form part of this Report as Annexure 'B' -this has also been hosted on your Company's website www.ifelref.com . Informationregarding Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo are given in Annexure 'C'. Your Company entered into transactions with relatedparties in ordinary course of its business and at arms length only. Thus Form AOC-2 hasnot been annexed with details of these transactions. During FY 2018-19 your Company didnot give loans guarantees or investments under Section 186 of the Companies Act 2013(the Act). Evaluation of performance of your Company's Board of Directors and itsCommittees and Individual Directors including Independent Directors and Chairman of Boardhas been carried out. Outcome of such evaluation is that the Board and its Committeescontinued to function satisfactorily and flow of information thereto has been befittingnature of business and size of your Company. From time to time Directors receivedbriefings on key matters including regulatory which furthered their performance.
Following Announcement of Quarterly and Annual Results your Company made quarterlypresentations conference calls and interactions resulting in enhanced confidence ofInvestors in your Company. Investor Relations Advisor Strategic Growth Advisors PrivateLimited co-ordinated and/or facilitated these. As on 31st March 2019 16.21% of yourCompany's shares was held by Mutual Funds.
A statement in Form AOC-1 having financial information of Subsidiary Companies formpart of this Report as Annexure 'D'. Your Company does not have any Indian Subsidiary.Shareholders of your Company who are desirous of having complete Statement of Accounts andrelated detailed information of Subsidiary Companies may send their request therefor toyour Company's Registered Office. They are being kept for inspection at Registered Officeof your Company and its Subsidiaries Companies and also available on Company's website www.ifglref.com .
Information including those to be provided following Section 134(3) of the Act readwith relevant provisions of the Companies
(Accounts) Rules 2014 and Regulation 34 and 53 of SEBI LODR 2015 have been includedin Annexures hereto including Audited Financial Statements and notes forming part thereofand have not been reproduced herein again. During FY 2018-19 your Company neither invitednor accepted Deposits.
Particulars of meetings of the Board of Directors and Committees held during FY 2018-19and attendance are given in CG Report. Gap between two meetings of your Directors did notexceed one hundred twenty days. Between end of FY 2018-19 and date of this Report therehas been no material changes and commitments if any in financial position of yourCompany. There have also not been Orders save those mentioned in Audited Statements andReport of the Statutory Auditors passed by the regulators or courts or tribunals likelyto impact going concern status or operations in future of your Company.
Following Regulation 17(8) read with Part B of Schedule II of SEBI LODR 2015Certificate on Financial Statements has been received from Director and Chief ExecutiveOfficer and Chief Financial Officer of your Company.
Directors Responsibility Statement Your Directors state that :
a) in preparation of Annual Accounts applicable Accounting Standards have beenfollowed.
b) Accounting Policies selected and applied are consistent and judgements and estimatesmade are reasonable and prudent so as to give a true and fair view of the state of affairsof your Company at the end of the financial year and of the Profit and Loss of yourCompany for that period.
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the Assets of yourCompany and for preventing and detecting fraud and other irregularities.
d) the Annual Accounts have been prepared on a Going Concern basis.
e) Internal Financial Controls i.e. policies and procedures for ensuring orderly andefficient conduct of business including adherence to Company's Policies safeguarding ofassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and timely preparation of reliable financial information have beenlaid down and that such controls are adequate and operating effectively.
f) proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems are adequate and operating effectively.
Financial Statements for FY 2018-19 have been audited in accordance with GenerallyAccepted Accounting Principles as indicated in Report of Statutory Auditors.
CSR Human Resource and Industrial Relations
CG Report include details of your Company's CSR Committee and Annual Report incompliance of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules 2014is forming part as Annexure 'E'.
Particulars of Nomination and Remuneration Committee have also been included in CGReport. Nomination and Remuneration Policy adopted by your Directors based onrecommendation of the Committee is hosted on your Company's website www.ifglref.com . SaidPolicy inter-alia provide for matters concerning Directors appointment and remunerationincluding criteria for determining qualifications positive attributes Independence ofDirectors and those provided in Section 178(3) of the Act. For the sake of brevity saidPolicy has not been reproduced here.
An Annexure having information following provisions of Section 197(12) of the Act readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 form part of this Report as Annexure 'F'. Said Annexure as per provisions of Section136 of the Act is not being circulated amongst Shareholders. However Shareholdersdesirous of having said Annexure may write to the Company Secretary at the RegisteredOffice of your Company and obtain copies thereof.
During FY 2018-19 4(Four) persons (including Executive Directors) employed with yourCompany received remuneration of ' 102 lacs per annum or more or ' 8.50 lacs per month ormore. As on 31st March 2019 your Company have had 627 regular employees in India and 921worldwide.
During FY 2018-19 also Industrial Relations in your Company remained cordial. Workingenvironment provided to employees was conducive. Trainings were imparted wherebyemployees achieved skills befitting their roles and responsibilities ultimately resultingin increased productivity. Compensation packages and benefits provided have beencomparable with those of the peers and continued to motivate employees at large.
Consolidated Financial Statements
In accordance with IND AS 110 and other relevant provisions particularly Section 129(3)of the Act Consolidated Financial Statements duly audited by Statutory Auditors M/sDeloitte Haskins & Sells form part of this Annual Report. Consolidated FinancialStatements have been prepared considering Financial Statements of Subsidiary Companies andReports of Auditors relating thereto.
Directors and Key Managerial Personnel (KMP's)
Following provisions of Section 203 of the Act your Company have Key ManagerialPersonnel particulars whereof are appearing at Note 35 of Audited Statement of Accounts.During FY 2018-19 your approval was obtained through postal ballot for uninterruptedholding of office of Independent Director by Mr D G Rajan (DIN : 00303060) Mr K S BSanyal (DIN : 00009497) Prof B Ray (DIN : 06965340) and Prof S Munshi (DIN : 03558948)till completion of their term i.e. upto conclusion of 15th Annual General Meeting of yourCompany following provisions of Regulation 17 of SEBI LODR 2015. All of the IndependentDirectors have given their statement of declaration under Section 149(7) of the Act. TheBoard is also of the opinion that Independent Directors continue to fulfil independencecriteria and all conditions specified in the Act and SEBI LODR 2015.
At the ensuing Annual General Meeting of your Company Managing Director Mr P Bajoria(DIN : 00084031) and Director and Chief Executive Officer Mr K Sarda (DIN : 03151258)will retire by rotation and being eligible have offered themselves for re-appointment forfurther period also liable to retire by rotation. Your Board and Nomination andRemuneration Committee have recommended said re-appointments and commended passing ofresolutions proposed for the said purpose and more fully included in Notice of forthcomingAnnual General Meeting.
All of your Directors and Senior Management Personnel as on 31st March 2019 haveconfirmed having complied with Code of Conduct for Board of Directors includingIndependent Directors and Senior Management Personnel of your Company. This code hascontinued to help your Company maintain standard of ethics and ensure compliance of legalrequirements applicable.
For FY 2018-19 your Company has maintained accounts and records to the extentprovisions of Section 148 of the Act were applicable. Your Directors have re-appointed M/sMani & Co. as Cost Auditors of your Company for FY 2019-20 too and are seeking yourapproval for payment of remuneration not exceeding ' 3 lacs to them for that FY. In thisregard your Directors commend passing of Ordinary Resolution proposed and included inNotice of forthcoming Annual General Meeting.
Secretarial Audit Report in Form MR-3 following provisions of Section 204 of the Act ofM/s S M Gupta & Co. Practicing Company Secretaries forming part hereof as Annexure'G'. Following Regulation 24A of SEBI LODR 2015 they have also carried out SecretarialCompliance Audit for FY 2018-19. Both of said Report and Certificate are free ofqualifications reservations or adverse remarks. Auditors' Report and Auditors
Report of the Statutory Auditors M/s Deloitte Haskins & Sells (Regn No. 302009E)Chartered Accountant on Statement of Accounts for FY 2018-19 is self-explanatory. Theyhave made no qualification reservation or adverse remark or disclaimer in their Report.They have not reported any frauds under Section 143(12) of the Act. They will retire atconclusion of forthcoming Annual General Meeting and have not communicated theirwillingness to be re-appointed for further period possibly because of provisions relatingto rotation of Statutory Auditors in the Act and Rules framed thereunder. They prior tobeing appointed as Statutory Auditors of your Company were also Statutory Auditors oferstwhile IFGL Refractories Limited.
Your Board based on recommendation of Audit Committee commend that in the vacancycaused following retirement of M/s Deloitte Haskins & Sells as Statutory Auditors ofyour Company M/s S R Batliboi & Co. LLP (Regd No. 301003E/E300005) are appointed asStatutory Auditors of your Company for a period of five years i.e. from immediately afterconclusion of ensuing 12th Annual General Meeting to conclusion of 17th Annual GeneralMeeting. M/s S R Batliboi & Co. LLP have confirmed in writing their willingness to beso appointed and that they comply with all requirements and criteria specified andqualified to act as Auditors of your Company. Your Directors place on record theirappreciation for services and professional advise received from M/s Deloitte Haskins &Sells over the years.
Your Directors thank all concerned particularly you the Shareholders for your continuedsupport.
On behalf of the Board of Directors
| ||S K Bajoria ||P Bajoria |
|Kolkata ||(DIN : 00084004) ||(DIN : 00084031) |
|11th May 2019 ||Chairman ||Managing Director |