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I G Petrochemicals Ltd.

BSE: 500199 Sector: Industrials
NSE: IGPL ISIN Code: INE204A01010
BSE LIVE 15:58 | 08 Dec 764.55 56.40
(7.96%)
OPEN

701.05

HIGH

773.10

LOW

701.05

NSE 15:57 | 08 Dec 765.40 58.90
(8.34%)
OPEN

711.10

HIGH

774.00

LOW

710.15

OPEN 701.05
PREVIOUS CLOSE 708.15
VOLUME 32144
52-Week high 796.10
52-Week low 217.00
P/E 19.00
Mkt Cap.(Rs cr) 2,354
Buy Price 764.55
Buy Qty 268.00
Sell Price 0.00
Sell Qty 0.00
OPEN 701.05
CLOSE 708.15
VOLUME 32144
52-Week high 796.10
52-Week low 217.00
P/E 19.00
Mkt Cap.(Rs cr) 2,354
Buy Price 764.55
Buy Qty 268.00
Sell Price 0.00
Sell Qty 0.00

I G Petrochemicals Ltd. (IGPL) - Director Report

Company director report

To the Members

Your Directors hereby present the Twenty Seventh Annual Report together with theAudited Financial Statements of the Company for the year ended 31st March 2016:

1. FINANCIAL RESULTS Rs. in Lacs
2015-16 2014-15
Revenue from Operations (Net) 95283.83 118664.97
Other Income 356.74 666.56
Total Revenue 95640.57 119331.53
Gross Profit 11692.54 8692.85
Finance Cost 2267.18 3816.53
Depreciation and Amortization expenses 1753.72 1639.36
Profit/(Loss) before extraordinary item & tax 7671.64 3236.96
Extraordinary item - Depreciation relating to earlier years - 2111.10
Profit before tax 7671.64 1125.86
Current Tax Net (MAT) 1635.18 236.19
Profit for the year 6036.46 889.67
Balance brought forward from previous year 17910.04 18007.70
Profit available for appropriations 23946.50 18897.37
Appropriations
Equity Dividend 0 20% (previous year 0 10%) 615.90 307.95
Tax on Equity Dividend 125.38 62.69
General Reserve 500.00 500.00
Depreciation in respect of Assets whose useful life is over - 116.69
Surplus carried to the next year's account 22705.22 17910.04

2. DIVIDEND

Your Directors are pleased to recommend a dividend of ' 2/- per equity share of ' 10/-each. The total outgo for the current year amounts to ' 741.28 lacs (' 370.64 lacs)including dividend distribution tax of ' 125.38 lacs.

3. OPERATIONAL REVIEW

The year began with the robust growth in the bottom line of the Company by posting abest ever performance on the back of the rising crude prices and long term demand on trackin the first half of the fiscal. The Company continued to excel in its performance allthroughout the year and resultantly ended the year with a record 578% rise in the profitsof the Company from ' 889.67 lacs in the previous year to ' 6036.46 lacs during thecurrent year The ability of the Company in effectively managing its finance facilitiesduring the year led to the overall reduction in the finance cost by ' 1548.71 lacs or 41%from ' 3816.56 lacs to ' 2267.18 lacs.

The commissioning of PA-3 during the last year started to yield results and coupledwith other factors such as better

management of input cost production efficiency favourable demand and supply betterrealization high capacity utilization etc. were some of the prime drivers for thestupendous improvement in the margins.

The total revenue of the Company fell by 19.85% from ' 119331.53 lacs to ' 95640.57lacs mainly on account of the sharp fall in the global crude oil prices which directlyimpacted the realization of PA. The Company continues to focus on the overall improvementin its production efficiency and services for the benefit of the end users of itsproducts.

Detailed information on the operations of the Company is contained in the ManagementDiscussion and Analysis which form part of the Annual Report.

4. SHARE CAPITAL & FINANCE

4.1 Share Capital

The Paid-up Equity Share Capital of the Company as on 31st March 2016 is ' 3079.81lacs. During the year under review the Company has neither issued any shares nor grantedstock options or sweat equity. The shareholdings of the Promoters and Persons Acting inconcert with Promoters remained unchanged at 72.22%.

4.2 Finance

The judicious mix of debt and equity has enabled the Company to tread its growthtrajectory with controlled aggression. The debt: equity ratio of the Company stood at 0.32which signifies a predominantly less reliance on debt.

The working capital facilities increased marginally from ' 35300 lacs to ' 38000 lacswhereas the outstanding term loan was ' 2961.97 lacs and the External CommercialBorrowings as at year end were ' 5529.61 lacs. During the year the Company made a partpre-payment of the term loan amounting to ' 325.1 1 lacs.

The Company continues to service its debts regularly.

4.3 Credit Rating

During the year the Credit Ratings of the Company were upgraded by India Ratings &Research. The long term and short term borrowings of the Company now stand upgraded to”IND A-’’ and ”IND A1" respectively.

4.4 Deposits

During the year the Company has not accepted or invited any deposits from the Public.

4.5 Particulars of Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

5. CONTRIBUTION TO THE EXCHEQUER

The Company has contributed ' 13826.14 lacs to the Central and State exchequer by wayof Excise Duty Central Sales Tax MVAT VAT Income Tax Wealth Tax Professional Tax andCustoms Duty.

6. SUBSIDIARIES / ASSOCIATES /JOINT VENTURES

During the year the Company has formed a wholly owned subsidiary (WOS) namely IGPL(FZE) with Sharjah Airport International Free Zone Authority UAE by investment of AED150000 in the equity capital of WOS to explore the opportunities to manufacture MaleicAnhydride (MA) through Joint Venture.

The WOS entered into a Joint Venture (JV) with M/s Dubai Natural Gas Co. Ltd. (DUGAS)a limited liability company incorporated under the taws of UAE. DUGAS is a wholly ownedsubsidiary of the Emirates National Oil Company (ENOC) Group which is wholly owned by theGovernment of Dubai and has established presence for over 30 years in the oil gas andpetrochemicals industry in the Gulf and Middle East. The JV is called ENOC-IGPetrochemicals LLC and shall engage in the business of production of MA at an annualcapacity of 45000 MT. The commercial operation is yet to commence.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the auditedaccounts of Subsidiary is placed on the website of the Company and not enclosed in theAnnual Report. A copy of the audited accounts shall be made available to the member uponrequest.

7. CONSOLIDATED FINANCIAL STATEMENTS

As required pursuant to the provisions of Section 129 of the Companies Act 2013 theconsolidated financial statements of the Company are prepared in accordance with theAccounting Standards AS21 issued by the Institute of Chartered Accountants of India on thebasis of the audited financial statements of the Company and its subsidiary.

A statement containing salient features of the financial statements of the subsidiaryin Form AOC-1 is attached to this Annual Report.

8. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

During the year the Company spent ' 26.87 lacs which were marginally higher than thestatutory requirement.

The Corporate Social Responsibility (CSR) policy of the Company aims to channelize itsresources towards providing equitable relief to the needy section of the public and thedeprived ones. The CSR initiatives are still in its primitive stages of its enforcement.The well being of the companies would co-relate and have direct impact on theimplementation of various CSR initiatives. During the year the CSR Committee of theCompany directed its spending on the sectors primarily in healthcare and education whichis in accordance with its CSR Policy.

The Report on CSR activities is annexed herewith as Annexure 'A'.

9. INTERNAL FINANCIAL CONTROLS

The Company has an established 'Internal Financial Control' which commensurate with itssize and operations and the same was operating effectively. The Audit Committee reviewsthe effectiveness of the Internal Financial Controls. The Internal Financial Controls aimsto ensure that proper and sufficient care is being taken for the maintenance of accountingrecords in accordance with the provisions of the Companies Act 2013 safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.

10. VIGIL MECHANISM POLICY

The Vigil Mechanism Policy established by the Board provides a channel for reportingthe genuine concerns about the actual or suspected unethical behavior fraud etc. TheAudit Committee reviews the functioning of the vigil mechanism and there was no complaintreceived. The details of the Vigil Mechanism has been elaborated in the CorporateGovernance Report and posted on the Company's website www.igpetro.com

11. DIRECTORS & KEY MANAGERIAL PERSONNEL

Shri Nikunj Dhanuka was re-appointed as Managing Director of the Company for a periodof 5 years with effect from 27-04-2011 by the members of the Company at the Annual GeneralMeeting held on 24-09-201 1. His term expired on 26-04-2016.

On the recommendation of the Nomination & Remuneration Committee and in accordancewith the provision of the Companies Act 2013 read with the Rules framed thereunder theBoard of Directors re-appointed him as Managing Director & CEO for a further period of3 years w.e.f. 27-04-2016 subject to the approval of the shareholders. The termsconditions and remuneration is stated in the Notice. It is proposed to re-appoint ShriNikunj Dhanuka as Managing Director & CEO of your Company for a period of 3 years i.e.upto 26-04-2019.

The Company has received necessary declarations from all Independent Directors of theCompany as required under Section 149(7) of the Companies Act 2013 that they meet thecriteria of independence laid down in Section 149(6) of the Companies Act 2013.

Shri M M Dhanuka retires by rotation and being eligible has offered himself forre-appointment.

11.1 Board Evaluation

As mandated under the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the annual performance evaluation of theDirectors individually vis-a-vis the Board and its committees have been carried out duringthe year. The manner of such evaluation has been disclosed in the Corporate GovernanceReport.

11.2 Key Managerial Personnel

During the year Shri R Chandrasekaran stepped down as Company Secretary and he wasre-designated as Chief Financial Officer of the Company. Shri Sudhir R Singh was appointedas Company Secretary of the Company w.e.f. 1 1-07-2015.

11.3 Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors and Senior Management personneland their remuneration. The Remuneration Policy forms part of the Corporate GovernanceReport.

11.4 Meetings

During the year six meetings of the Board of Directors and four meetings of the AuditCommittee were held as more particularly disclosed in the attached Corporate GovernanceReport. The intervening gap between any two meetings was within the prescribed period.

12. 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 ended 31stMarch 2016 all the applicable accounting standards have been followed and no materialdepartures have been made from the same;

b. that appropriate accounting policies have been selected and applied consistently andhave made judgments and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial yearended 31st March 2016 and of the profit of the Company for that year;

c. that proper and sufficient care has been taken 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 going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;

f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

13. RELATED PARTY TRANSACTIONS

The Company has an existing tong term contract with a related party as defined underthe provisions of Companies Act 2013 read with SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 which is on an arm's length basis and in the ordinarycourse of business. During the year related parties were appointed to an office in theCompany. The disclosures as required pursuant to Section 134(3)(h) of the Companies Act2013 in Form AOC-2 is attached to this report as an Annexure 'B'.

During the year there were no material related party transactions i.e. those exceeding10% of the annual consolidated turnover of the company as per the last audited financialstatements.

The Related Party Transaction Policy is hosted onto the website of the Company.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

In September 2015 the matter relating to the Catalyst came up before the Supreme Courtfor hearing and was adjudicated in the Company's favour thus absolving the Company of thecontingent liabilities amounting to ' 75.30 crores relating to excise and customs dutiespending before the Supreme Court disputes in appeals and show cause notices received fromthe concerned departments.

Thus along with the case pertaining to Domestic Tariff Area (DTA) sales which too waspronounced by the Supreme Court in the Company's favour in April 2015 the totalcontingent liabilities to the extent of ' 204.05 crores was extinguished.

15. AUDITORS

15.1 Statutory Auditors

M/s Hariharan & Company Chartered Accountants (Firm's Registration No. 001083S)was re-appointed as Statutory Auditors of the Company at the last Annual General Meeting(AGM) to hold office until the conclusion of the 28th AGM of the Company to be held in theyear 2017. M/s ASA & Associates LLP Chartered Accountants (Firm Registration No.009571N/N500006) was appointed as Joint Statutory Auditors of the Company at the last AGMto hold office until the conclusion of the 31st AGM of the Company to be held in the year2020. The said appointments were subject to the ratification by the Members at every AGMtill the expiry of their present tenure. The Auditors have provided a written confirmationto the effect that their appointment if ratified would be in conformity with the limitsspecified in Section 141(3)(g). The Statutory Auditors have also confirmed that they holda valid certificate issued by the Peer Review Board of the Institute of CharteredAccountants of India.

The Members are requested to ratify the appointment of the Statutory Auditors asaforesaid and fix their remuneration. The Auditors' Report does not contain anyqualification reservation or adverse remark.

15.2 Cost Auditors

M/s Krishna S & Associates Cost Accountants (Firm Registration No. 100939) wasappointed as Cost Auditor to audit the cost records of the Company for the financial year2015-16. The Cost Auditor submitted their report for the financial year 2014-15 in FormCRA-4 and the same was filed with the Registrar of Companies within the prescribed time.

The Audit Committee at their meeting held on 23-05-2016 recommended the appointment ofM/s Krishna S & Associates Cost Accountants as Cost Auditors of the Company for thefinancial year 2016-17 under Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014.

As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in a general meeting for their ratification.Accordingly a resolution seeking Member's ratification for the remuneration payable toM/s Krishna S & Associates Cost auditors is included at item no. 6 of the Noticeconvening the Annual General Meeting.

15.3 Secretarial Audit

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 Directorshad appointed M/s Makarand M Joshi & Associates Practicing Company Secretaries(Membership No. 5533) to conduct the Secretarial Audit for financial year 2015-16 andtheir Report on the Secretarial Audit is annexed herewith as Annexure 'C'.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark.

16. LISTING OF SHARES

Your Company's shares are listed at BSE under Scrip Code No. 500199 and NSE under thesymbol “IGPL”. The ISIN code is INE 204A01010.

17. ISO CERTIFICATION

Your Company is certified under ISO 9001:(2008) for quality management systems and ISO14001 : (2004) for environment management systems by Beaureu Veritas as per theirprescribed standards.

18. MANAGEMENT DISCUSSION AND ANALYSIS

As required under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis forms part of theAnnual Report

19. CORPORATE GOVERNANCE

The disclosures as required under Schedule V to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are attached with and forms part of thisreport.

20. PREVENTION OF SEXUAL HARASSMENT

The Company has adopted a policy on prevention and redressal of sexual harassment atwork 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 werereceived during the year.

21. 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 Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure 'D'.

22. EXTRACT OF ANNUAL RETURN

An extract of the Annual return in Form MGT-9 is annexed herewith as Annexure 'E' tothe Directors' Report.

23. PARTICULARS OF EMPLOYEES

During the year there are no employees who are in receipt of the remunerationexceeding the limit specified in Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014.

The information relating to remuneration in respect of directors/employees of theCompany as required pursuant to Section 197(12) of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014will be provided to the members upon request.

24. ACKNOWLEDGEMENTS

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 confidence reposed in the Company.

For and on behalf of the Board
Place : Mumbai M M Dhanuka
Date : 23-05-2016 Chairman