Assam Petrochemicals Ltd.
|BSE: 506267||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE277D01010|
|BSE 05:30 | 01 Jan||Assam Petrochemicals Ltd|
|NSE 05:30 | 01 Jan||Assam Petrochemicals Ltd|
|BSE: 506267||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE277D01010|
|BSE 05:30 | 01 Jan||Assam Petrochemicals Ltd|
|NSE 05:30 | 01 Jan||Assam Petrochemicals Ltd|
Your Directors have the pleasure in presenting their 46th Annual Report of the companytogether with the audited standalone Financial Statements for the Financial Year ended on31st March 2017.
Financial Highlights (Standalone)
The Company's summarized financial performance (standalone) for the financial yearending on 31st March 2017 is as under:
(Rs in Lakhs)
The Financial Year 2016-17 was a year of recovery as the company turned it around byearning net profit i.e. PAT of Rs285.92 lakhs after incurring loss in tune of Rs2866.72lacs in previous two consecutive financial years. During the year 2016-17 the turnover ofthe company increased by Rs 1091.70 lakhs over the previous year's turnover of Rs 8080.81lakhs. The company recorded growth in turnover by 13.5% mainly because of Methanol pricerecovery in the international market in the later part of the Financial Year 2016-17.
During the Financial Year 2016-17 the company could reduce the manufacturing expensesby 30.38% over the previous year on account of reduction of Natural Gas price in thedomestic market. Your Directors had taken all possible effective steps to contain theexpenditure during the year under reference.
The company has a subsidiary named Pragjyotish Fertilizers and Chemicals Ltd. (PFCL)incorporated in 2004. This subsidiary has been a defunct company since its year ofincorporation as the company could not implement the project successfully for which it wasincorporated. Although the company is required to consolidate the financial statements ofits subsidiary company in accordance with the Section 129(3) of the Companies Act 2013but same was not possible as the financial statements of that company have not beenupdated for last few years. It is therefore only the standalone financial statements ofthe company are placed before the shareholders for adoption in the 46th AnnualGeneral Meeting. The company has already written off entire investment made in PragjyotishFertilizers and Chemicals Ltd. in the successive financial statements over the years.
State of Company's Affairs and Future Outlook
The company has been in petrochemical business for last four decades. The company ispresently producing and marketing Methanol and Formalin in globally competitive price. Thecompany is having annual 33000 MT installed production capacity for Methanol and 41250 MTinstalled production capacity for Formalin in the plants located in Namrup. Indianpetrochemical demand has been increasing by 10% per annum but the domestic annualproduction hasnRst been increased in same pace. The deficit of the domestic demand hasbeen catered by import from middle East Assam countries. Considering the increasing demandof the petrochemicals in the domestic market and to exploit the advantage of the CentralGovernment's "Act East Policy" the company is implementing a new 500 TPDMethanol 200 TPD Formalin project on standalone basis along with a 7 MW Captive PowerPlant at an estimated revised capital investment of Rs 133700 lakhs. The Methanol plant isbeing set up at Namrup and Formain plant will be set up in western Assam. This will notonly help to bridge the gap of demand and supply of Methanol in the country but alsoexport to South East Asian countries Nepal Bhutan and Bangladesh. There has been aproposal of Govt. of India for blending upto 15% Methanol in gasoline in India in theshort
run. In this regard the Niti Aayog of the Central Government has constituted an ExpertCommittee to examine and recommend to the Central Government on the matter The ExpertCommittee after detailed deliberations proposed to the Govt. of India to consider blendingupto 15% Methanol in gasoline and locomotive fuel. If the Central Government accepts therecommendation of the Expert Committee of Niti Aayog then the demand of Methanol in thecountry will increase many fold and all the Methanol to be produce by the company will beabsorbed by the oil refineries located in the state itself.
The existing Methanol plant of the company has completed twenty eight years against itsnormal life of fifteen years. Frequent maintenance of its equipments erratic Natural Gassupply due to drop of pressure and power supply interruptions by Assam Power DistributionCorporation Ltd. (APDCL) affected optimum utilization of the Methanol Plant during theFinancial Year 2016-17.
The company remained in its same business of manufacturing and marketing of Methanoland Formalin during the Financial Year 2016-17.
Sales & Marketing:
The company is marketing its products in North Eastern States West Bengal BiharOdisha and North India and also exporting to neighbouring countries viz. Nepal Bhutanand Bangladesh. The Company is giving importance to export its products for earningforeign exchange and better product price realization.
The Company sold 11022.74 MT Methanol during the FY 2016-17 against 9410.94 MT of theprevious Financial Year The total quantity of Methanol sold has increased by 17.13% in thecurrent year compared
to previous year sales quantity due to better capacity utilization of the Methanolplant and lesser conversion to Formalin. The company sold 43881.17 MT of Formalin duringthe FY 2016-17 as compared to 43354.50 MT in the previous financial year The area wisesales quantity of the company's products in the year 2016-17 vis-a-vis in the previousyear are as follows;
In our previous report to the shareholders we informed that the company wasimplementing a 500 TPD Methanol and 200 TPD Acetic Acid project with a capital cost ofRs102800 lakhs. There have been some changes in project implementation as the projectproponents i.e. Govt. of Assam Oil India Ltd. and Assam Gas Co. Ltd. decided to drop theimplementation of 200 TPD Acetic Acid project and substitute it by installing a 200 TPDFormalin plant in western Assam. The total estimated project cost
is Rs133700 lakhs. The capital requirement to meet the project cost will be raised atdebt equity ratio of 2:1. The Govt. of Assam alongwith Assam Industrial DevelopmentCorporation Ltd. and Assam Gas Company Limited will hold 51 % of share capial in thecompany and the remaining 49% will be held by Oil India Ltd.
Engineers India Ltd. (EIL) has been executing the 500 TPD Methanol plant with LEPCMresponsibility with technology supply from Halder Topsoe Denmark. Till this date EIL hascompleted 100% basic engineering and 43% of the detailed engineering works of the MethanolPlant. Regarding the setting up of Formalin plant in western Assam the company hasidentified the proposed project site and waiting for allocation of the land to the companyby the State Government. Your directors have decided to implement the formalin project on"Lump Sum Trunkey" (LSTK) basis. The Company is proposed to issue NIT forengagement of a LSTK contractor shortly. The estimated project cost of the formalin plantis Rs5200 lakhs.
All the project proponents have made their firm commitments for equity contributionsfor the revised project cost. The company has been in discussion with a consortium ofschedule commercial banks led by State Bank of India for debt capital of Rs89000 lakhs.The company has already received in-principle sanction from the banks against the earliersanction mount of Rs63500 lakhs for the debt capital and will enter into loan agreementsshortly.
Human Resource Management and Industrial Relations:
In order to optimize the human resource of the Company the Human Resource ManagementDepartment has been continuously playing a very pivotal role in terms of sourcingcompetent personnel through manpower planning recruitment of appropriate and competenthuman resource train and develop the workforce and to align the work force with theobjectives of the organization. In this regard the company signed a Memorandum ofUnderstanding with the Government of Assam. Focus has been given on providing varioustechnical and behavioral in house training or outside training for enhanment the
existing level of skills and competencies of employees working across all levels. Thecompany provided 20 nos. of Technical & Non Technical Training program in-house orexternally during the year 2016-17.
The manpower strength of the Company as on 31st March 2017 was 341 out ofwhich 196 were Unionised cadre and remaining 145 nos. were Executive cadre employees. Thetotal nos. of woman employees were 37 nos. on rolls of the Company as on 31stMarch 2017.
The industrial relations scenario of the Company during Financial Year 2016-2017 washarmonious and cordial. Most of the issues raised by the APL WorkersRs Union and the APLOfficersRs Association were resolved amicably through mutual discussions. However inspite of putting best effort by the Management for maintaining cordial industrialrelation there was an industrial dispute raised by APL Worker's Union before the labourauthorities of the Government of Assam demanding release of pay revision arrear for the FY2009-10 & 2010-11 and outstanding Dearness Allowance arrear amount. This matter wasaddressed and resolved subsequently.
Dividend and transfer to Reserves:
Although the company earned a net profit of Rs 285.92 lakhs during the Financial Year2016-17 but your directors couldnRst recommend for any dividend as there was unabsorbeddepreciation and carry forward loss of the preceding financial years.
Unpaid and unclaimed dividend for the previous Financial Years:
Unpaid and unclaimed dividend for the Financial Year 2009-10 2012-13 and 2013-14 arelaying unclaimed by few members of the Company. The details are given as under:
According to Section 124(5) of the Companies Act
2013 the company is required to transfer the above amount to the Investors Educationand Protection Fund (IEPF) set up by the Central Government after expiry of 7 (seven)years from its transfer to Unpaid and Unclaimed account. Accordingly the companytransferred unpaid and unclaimed dividend amount of?38706/- belonging FY 2008-09 to theIEPF on 18th February 2017. We therefore appeal to members who havenRst yetclaim dividend for those years to claim their dividend to the company.
Changes in Share Capital:
There was no change in the share capital of the company during the Financial Year2016-17. The company didnRst issue any fresh share capital during the financial year underreview.
Disclosure regarding Issue of Equity Shares with Differential Rights/ Employee StockOptions/ Sweat Equity Shares:
The Company didnRst issue any shares with differential rights or Employee Stock Optionsor Sweat Equity Shares during the Financial Year 2016-17.
Extract of Annual Return:
Pursuant to Section 92 (3) of the Companies Act 2013 and rule 12(1) of the Companies(Management & Administration) Rules 2014 an extract of Annual Return in form MGT -9for the Financial Year ended on 31st March 2017 is enclosed with this report as RsAnnexureARs.
Board of Directors and the Number of Board Meetings:
The Board of Directors of the Company is constituted as per the requirement of Section149 of the Companies Act 2013. Although the company is not required to appoint any womandirector as per the above mentioned provisions the company appointed Mrs. Shehla Rahman(DIN- 06786580) as woman director during the year.
There were several changes in the Board of Directors of the company. The Members areaware that being a State Government PSU the holding company changes the composition ofthe members of the Board of Directors with the instruction of the Governor of Assam fromtime to time. There were several changes
in the Board of Directors of the company since 1st April 2016. LateRameswar Dhanowar (DIN-02357978) former Chairman relinquished the office of Director andChairman of the company w.e.f. 30th September
2016 and Shri Ravi Capoor IAS (DIN-00744987) took over the charge of the Chairman ofthe company w.e.f. 1st October 2016. Shri Capoor continued as the Chairman ofthe company till 7th March 2017. The Governor of Assam by notification relivedShri Ravi Capoor as Chairman and appointed Shri Jagadish Bhuyan (DIN-01308520) as theChairman of the company effective from 7th March 2017.
Pursuant to the notifications of the Governor of Assam the holding company appointedDr. Ravi Kota IAS (DIN- 07090704) w.e.f. 3rd June 2017 and Shri Sanat Kalita(DIN-07845004) as directors of the company in places of Shri V B Pyarelal IAS (DIN-07125837) and Shri P K Das (DIN-01667150) respectively.
The members may be aware that the Ministry of Corporate Affair (MCA) Government ofIndia vide Gazette Notification no. G.S.R. 582(E) dated 13th June
2017 exempted the applicability of Section 152(6) and (7) of the Companies Act 2013 tothe Government Companies which are not listed company in which not less than 51% ofpaid-up share capital of the company held by the Central Government or by any StateGovernment or Governments or by the Central Government and one or more State Government ora subsidiary company of a Government Company.
Since the Central Government has exempted the applicability of the above provisions toa subsidiary company of a Government Company the compulsory retirement of one third ofthe retireable directors in every Annual General Meeting is not applicable to the company.Hence no members of the Board of Directors are retireable in the 46th AnnualGeneral Meeting of the company.
Number of Meetings of the Board of Directors:
During the Financial Year 2016-17 the company convened total 4 (four) meetings of theBoard of Directors and the gap between two consecutive meetings of the Board of Directorsnever exceeded 120 days.
The details of the meetings of the Board of Directors
held during the Financial Year 2016-17 are given under para Board of Directorsin the Corporate Governance Disclosure enclosed as RsAnnexure BRs.
Particulars of Loan Guarantees and Investments under Section 186:
The Company has not given any loan or guarantee covered under the provisions of section186 of the Companies Act 2013 during the Financial Year 201617.
Particulars of Contracts or Arrangements with Related Parties:
The company didnRst enter any related party transaction with Promoters Key ManagerialPersonnel or other designated persons which may have potential conflict of interest withthe company.
Material Changes Affecting the Financial Position of the Company:
There was no such material changes and commitments in the company which could affectthe financial position from the date of the financial statements of the company for theFinancial Year 2016-17 till the date of signing this report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:
The details of Energy Technology Absorption Foreign Exchange Earnings and Outgo areas under:
I. Conservation Of Energy-
A. Energy conservation measures taken :-
The process technology adopted in our plants is energy efficient. The Company selectedthe most developed I.C.I. Low Pressure Methanol Technology and Humphreys and GlasgowReformation process for manufacture of Methanol & Derivados Forestales Nederland'stechnology for manufacture of Formaldehyde. The waste heat has been recovered to producesteam required for the process. Hence heat is not radiated to atmosphere. Heat exchangersare well insulated to prevent any heat loss. Cooling waters used is heat exchangers aretotally recycled to prevent Pollution and loss. Steam condensate are recovered andrecycled back
from Turbo Generator. The plants are being operated to the full satisfaction ofPollution Control Board Assam.
B. Additional investments and proposals if any being implemented for reduction ofconsumption of energy:-
There is no such proposal in the year under review.
C. Additional investments and proposals if any being implemented for reduction of theconsumption of energy:
There was no such proposal in the year under review
D. Impact of the measures (A) & (B) above :
The specific consumption of electricity and fuel natural gas is well within thetolerance limit. We could have pollution free environment.
E. Total energy consumption and energy consumption per unit of production power andFuel consumption
b. Consumption per Unit of production
II. Technology Absorption: Research and Development (R & D)-
1. Specific area in which R & D carried out by the company:
The company so far has not started full time R & D activities except in plantimprovement of process and debottlenecking. The company will start R & D activitiesshortly to identify future diversification.
2. Benefit derived as a result of above R & D: Does not arise
3. Future Plan of Action: The company donRst have the plan to establish any in houseresearch and development facilities as on this date.
4. Expenditure of R & D:
III. Technology Absorption and Adaptation-
i) The efforts made towards technology absorption adaptation and innovation: APL
has been operating the plant supplied by foreign supplier.
ii) The benefits derived like product improvement cost reduction product developmentor import substitution etc.:
Product quality improved & no pollution related issues faced. Cost of productionincreased due to higher price of raw material.
iii) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)
IV. Foreign Exchange Earnings and Outgo-
a) Activities relating to exports: Initiative taken to increase export development ofnew export market for products and services and export plans.
b) Total Foreign exchange used and earned:
**the company earns foreign exchange on the export sale to Bangladesh only. The exportto Nepal and Bhutan were done in Indian Currency only.
Details of Subsidiary:
Your company has a subsidiary company viz. Pragjyotish Fertilizers & ChemicalsLtd. (PFCL). This company was incorporated in 2004 jointly with another State Governmentundertaking Assam State Fertilizer Corporation Ltd. PFCL has not been carrying out anybusiness since its incorporation. This company is under winding-up process. The financialstatements for the Financial Year 2016-17 havenRst been prepared and therefore thefinancial statements of the company could not be consolidated with the financialstatements of the company as prescribed in Section 129(3) & 134(1) of the Act andCompanies (Accounts) Rules 2014.
Business Risk Management:
Although the company doesnRst have any specific risk management policy as on this datethe Board of Directors of the company deliberate on threats risks and concerns which inopinion of the Board may threaten the continuation of its business or pose threat itsexistence in its meetings.
The Board reviews the means adopted by the company to mitigate the risk from time totime. The details of risk and concerns of the company are discussed in the ManagementDiscussion and Analysis Report and enclosed as Annexure-C.
Details of Directors and Key Managerial Personnel:
During the financial year there were no changes in Key Managerial Personnel of thecompany. Details of the Directors of the company along with the
Directors who were appointed or have ceased as Director during the year have alreadybeen discussed elsewhere in this report in details and also stated in the CorporateGovernance Disclosure.
The company does not have any outstanding deposit at beginning of the financial yearnor did it accept any deposits from the public during the year.
Statement in Respect of Adequacy of Internal Financial Control with Reference to theFinancial Statements:
Your directors believe that the Company has adequate internal financial control systemin place and same is commensurate with the nature and size of the business of the company.The company also appoints Chartered Accountant firm as internal auditor of the company tocarry out audit. This enhances the effectiveness of the internal control system further. Receiptof any commission by Managing Director from Company or for receipt of commission /remuneration from it holding or subsidiary:
The company didnRst pay any commission to its Managing Director nor did the ManagingDirector receive any commission from its holding or subsidiary company.
Declaration by Independent Director:
All the Independent Directors have given declarations in the beginning of the FinancialYear 2017-18 that they meet the criteria of independence as laid down under section 149(6)of the Companies Act 2013.
As per the declaration given and noted by the Board of Directors none of theIndependent Director was disqualified to be appointed or continue as Independent Directorof the company as on 31st March 2017.
The present term of the Independent Auditors SPRK & Co. Chartered Accountants isup to conclusion of the ensuing Annual General Meeting of the company. The company being aGovernment Company as per section 139(5) of the Companies Act 2013 the Comptroller andAuditor General of India (C&AG) appointed SPRK & Co. Chartered Accountants asIndependent
Auditors for the FY 2017-18 vide letter no. (A.V/COY/ Assam APETRO (1)/80 dt.13/07/2017.
Appointment of Secretarial Auditor is not necessary for the company as the provisionsof Section 204 of the Companies Act 2013 and the Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014 are no longer applicable for the companyafter being delisted from stock exchange. Hence your Board of Director didnRst appointedany Secretarial Auditor for the FY 2016-17.
Pursuant to the Companies (Cost Records and Audit) Rules 2014 the Company hasappointed M/s Subhadra Dutta and Associates Cost Accountants to undertake the Audit ofthe Cost Records of the Company for the Financial Year 2017-18.
Corporate Social Responsibility (CSR) Policy:
The Corporate Social Responsibility Committee of the Board of Directors has beenconstituted as per requirements of the Companies Act 2013. The shareholders are awarethat the company didnRst earned average net profit not exceeding Rs5 crore in last threefinancial years therefore the Section 135 of the Companies Act 2013 is not applicable forthe company for the FY 2016-17. However being a public sector organization the companycontinues to discharge its social responsibilities. The shareholders are aware that thecompany is imparting free education to the students of the neighbouring areas of theCompany's plant in Namrup.
The Audit Committee of the Company is constituted under the Chairmanship of anIndependent Director in terms of the Section 177 of the Companies Act 2013.
During the Financial Year 2016-17 the company convened 4 (four) meetings of AuditCommittee of the company. The details of the meetings of the Audit Committee held duringthe financial year 2016-17 and the roles and power of the Audit Committee are given in theCorporate Governance Disclosure.
Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013:
The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 is a comprehensive piece of legislature covering all the aspects to provideprotection against sexual harassment of women at workplace prevention and redressal ofcomplaints of sexual harassment and for matters connected therewith or incidental thereto.In order to ensure compliance of the provisions of the said Act the Management hasconstituted an Internal Complaint Committee on 29.05.2015. The Internal ComplaintCommittee didnRst receive any complaint and/or incidence of sexual harassment receivedduring the financial year 2016-17.
Corporate Governance Disclosure and Management Discussion and Analysis Report:
The Corporate Governance Disclosure and Management Discussion & Analysis Report areenclosed as annexure with this Report.
Delisting of Equity Shares:
In accordance with the Regulation 10 (1) of the Securities and Exchange Board of India(Delisting of Equity Shares) Regulations 2009 [referred as SEBI delisting regulations] asamended from time to time Assam Industrial Development Corporation Limited (AIDC) hadgiven a delisting offer through a Public Announcement on 30th December 2016that delisting bid will be opened from 10th January 2017 to 16th January2017. During the bid period four shareholders participated in bid by offering 8 98400shares of the company at exit price of Rs76/- per share. The Board of Directors of AIDCaccepted the shares tendered by the shareholders and paid the considerations to themthrough the stock exchange mechanism as per the SEBI delisting regulations.
On the basis of receipt of requisite numbers of shares from the shareholders during thedelisting bidding period the company applied to BSE Ltd. for final approval of delistingof shares. BSE Ltd. approved the delisting application of the company and finally delistedthe shares from their exchange w.e.f. 20th February 2017.
The Board of Directors of the company would like to remind the members of the companythat pursuant to Regulation 21 of the SEBI delisting regulations AIDC has given an exitoffer to all the residue shareholders of the company who couldnRst or didnRst participatein the bid during the bidding period to tender their shares to AIDC at ?76/-per sharebefore 19th February 2018.
Directors Responsibility Statement:
Pursuant to the requirement under Section 134 (5) of the Companies Act 2013 withrespect to the DirectorsRs Responsibility Statement it is hereby confirmed that:
(i) In the preparation of the annual accounts for the Financial Year ended 31st March2017 all applicable accounting standards had been followed along with properexplanations relating to material departures;
(ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as on 31st March 2017 and of the profitand losses of the Company for that perod;
(iii) The Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) The Directors had prepared the accounts for the Financial Year ended 31st March2017 on a Rsgoing concernRs basis.
(v) The Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and
were operating effectively.
(vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operatingeffectively.
Reply to the comments of the Auditors The Auditors of the company including theComptroller and Auditor General of India have made certain adverse comments or remarks onthe financial statements of the Company. According to the Section 134(3)(f) of theCompanies Act 2013 it is duty of the Board to give its reply on the same to the members.Accordingly the reply of the Board is given as RsAnnexure DRs.
Your Directors place on record their appreciation of the unstinted support andencouragement extended by the Government of Assam Assam Industrial DevelopmentCorporation Ltd. banks the valued shareholders customers and the employees of thecompany.
Your Directors also place on record their sincere appreciation to Oil India Limited forcontinous supply of Natural Gas as main feedstock for production of Methanol and Assam GasCompany Ltd. for transporting natural gas to the plant.
Your directors also like to express sincere thanks and gratitude to the dealerstransporters customers and all other stakeholders for their continuous fait and supporton the company.
For and on behalf of the Board of Directors