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IFB Agro Industries Ltd.

BSE: 507438 Sector: Consumer
BSE 00:00 | 25 Apr 794.70 -15.95






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OPEN 812.10
52-Week high 938.90
52-Week low 366.00
P/E 25.66
Mkt Cap.(Rs cr) 745
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 812.10
CLOSE 810.65
52-Week high 938.90
52-Week low 366.00
P/E 25.66
Mkt Cap.(Rs cr) 745
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IFB Agro Industries Ltd. (IFBAGRO) - Director Report

Company director report

To the Members

The directors have pleasure in presenting the Annual Report together with the AuditedFinancial Statements for the financial year ended 31st March 2017.

Economic Environment

During the last couple of years India has emerged as one of the most preferredinvestment destination of the World due to its improving macro-economic fundamentals anddemographic profile. Softened commodity prices coupled with increase in tax revenues ofGovernment has helped in improving the public finances. Good monsoon in 2016 and itsbenevolent effect in food prices have helped in controlling the inflation during the yearunder review. Economic survey for 2016-17 estimates the Indian economy to grow between6.75% to 7.5% during 2017-18 despite the initial impact of demonetization.

The global economic environment continues to be mixed with USA improving its economicfundamentals but Europe continues to experience low growth. The year under review has seenBrexit change of guard in USA budget deficits in oil producing countries and rising ofprotectionist measures in some of the larger economies. The low interest rate regimecontinued in Europe and Japan. The World has not seen in the past such a prolonged regimeof low interest rate.

Financial Results & Performance Review

The financial results for the year and for the previous year are summarized below:

Year Ended 31.03.2017 Year Ended 31.03.2016
Revenue from Operations 82931 62131
Other Income 1295 672
Total Revenue 84226 62803
Profits prior to Finance Charges and Depreciation (EBITDA) 6229 5918
Less: Finance Charges 174 136
Depreciation & Amortisation 2033 2170
Profit Before Tax 4022 3612
Less: Provision for Taxation 816 679
Profit After Tax 3206 2933

During the year under review your Company has recorded net operational revenue of Rs82931 lacs (as against Rs 62131 lacs in 2015- 16) recording a growth of 33.5%.

Operational profit (EBITDA) has recorded an increase of 5.2% during 2016-17 as comparedto the previous year.

Your Company has achieved a higher profit before tax of Rs 4022 lacs (as against Rs3612 lacs in 2015-16) and net profit of Rs 3206 lacs (as against Rs 2933 lacs in2015-16).

During the year under review your company as part of the repayment schedule hasrepaid USD 0.9 million out of USD 7.5 million ECB loan availed from HDFC Bank Bahrain forfinancing the modernization project at Distillery division.

During the year under review India Ratings and Research (IND-Ra) has maintained yourCompany's Long Term issuer rating to 'IND A+'.

Your Company operates in two segments: (1) Spirit Liquor and Spirituous Beverages and(2) Marine Products

Spirit Liquor and Spirituous Beverages:

Your Company operates grain-based distilleries in the state of West Bengal. The newstate of the art plant based on "Eco Smart" multi pressure distillationtechnology operated for the first full year of expanded capacity during the year 2016-17.The Distillers Dried Grain Solubles (DDGS) capacity was also expanded during the yearunder review.

The grain distilleries along with CO and DDGS plants operated at optimum capacityduring the year under review. Competition in the Distillery space in West Bengal hasincreased due to the commissioning of a new distillery during the current financial year.The excess spirit production capacity in India continues to put pressure on margins of thedistillery business due to import of spirit from other states of India. It may bementioned that due to "nil" import fees import from spirit production capacitysurplus states like Uttar Pradesh Punjab etc. puts your Company into unfair competition.

EBITDA margin at the distilleries suffered due to significant increase in input costs.The cost increases could not be passed on fully to the buyer's due to competition.

Indian Made Indian Liquor (IMIL) business continues to face competition due toexcess capacity created by the new bottling plants. During 2016-17 the IMIL businessregistered a revenue growth of 6% only due to low level of Industrial activity resultingin lower disposable income in the hand of consumers. Demonetization has also impacted thesales of IMIL products during 2016-17. The increase in spirit prices during the year haveimpacted the margins. Excess capacity created in the market place resulted in highretailer schemes and increased logistics costs. Recent decision of the Hon'ble SupremeCourt of India on banning of sale of liquor within the 500 meters radius of highway willimpact the revenue of IMIL business. During the year under review your Company hasentered into tie up arrangement with M/s Herald Beverages Pvt. Ltd Jiancha West Bengalfor bottling of Company's Brands for expansion of business in the district of 24 Parganas(South) West Bengal.

Marine Products:

Marine exports have registered 64% growth in revenue during the current year due tofull functioning of the tie-up plant in Andhra Pradesh. Operating margins fellsignificantly during the year under review due to the increase in the raw material pricesand severe competition from South East Asia and Latin American countries. Economicuncertainties in many of our exporting countries has also impacted the sales.

Revenue from Marine aqua feed business increased by 46% during the year under reviewbut the operating margins remained at previous year level despite higher input costs andinvestments made in Aquashops (retail venture of feed division). Risk in the form ofunsecured credit continued.

Marine domestic food business could register a revenue growth of 4%during the yearunder review. We continued to invest in this business in terms of manpower marketing andinfrastructure. The business as yet is not cash positive.

Your Company has incorporated a Wholly Owned Subsidiary in the name and style of IFBAgro Marine(FZE) a limited liability Company in the Sharjah Airport International FreeZone Sharjah United Arab Emirates on 20 April 2017. The purpose of setting up thisentity is to establish a marketing and trading outfit to explore untapped markets inMiddle East countries Eastern Europe CIS countries etc. for marine products.


The current financial year will again be a year of challenges for almost all ourbusiness verticals. The threat of "liquor ban" continues as being experienced infew states of India. Recent notification by the Government of West Bengal to convert thedistribution of IMIL products under "Corporation Model" may impact margins andvolumes during 2017-18. The excess distillery capacity in India will continue to poseserious competition to us on account of duty free spirit imports to West Bengal. Marineexports will continue to have margin pressure due to competitions from South East Asianand Latin American countries. The high level of raw material prices and exchangefluctuations will continue to weigh on Marine exports.

Entry of new players in the Aqua feed business in West Bengal may affect growth andmargin. The competitive pressures may force us to offer extended credit in the unorganizedmarket.

Your Company will focus on margin improvement plans across the verticals through betterprocurement of its key raw materials like broken rice shrimps etc. Consolidation in theIMIL space has started and it may create an opportunity for us.

During 2017-18 the effort will be to ensure improved returns from the past capitalexpenditures.

Your company is continuing its efforts to attain further efficiencies byprocess/technological improvements reduction of wastages and optimal use of humanresources in all the divisions.

Your Company is closely monitoring and evaluating the important regulatory change inthe form of implementation of GST during 2017-18.

Any major fluctuation in the exchange rates may pose serious challenges for us w.r.t toour export business and exposure in foreign currency loan in the form of existingborrowing (ECB).


The Board has adopted a risk management policy whereby a proper framework is set up toidentify evaluate business risks and opportunities. This framework seeks to createtransparency minimize adverse impact on the business objectives and enhance the Company'scompetitive advantage.


No material changes and commitments have occurred after the close of the financial yeartill the date of this report which affect the financial position of the Company.


In order to conserve resources for the proposed geographical expansion and higherworking capital requirements your Directors have decided not to recommend any dividendfor the financial year under review.


The Company did not propose to transfer any amount to Reserve.


During the year ended 31 March 2017 five meetings of the Board were held.


The extracts of the Annual Return for the financial year 2016-17 as stipulated in MGT-9 pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 is given in Annexure I which forms part ofthis Report.


Mr. Arup Kumar Banerjee retires by rotation and being eligible offers himself forre-appointment. The details about his qualification other directorships etc. as per SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are provided in theexplanatory statement under Section 102 of the Companies Act 2013.

Mr. Arup Kumar Banerjee an Honours Graduate in Commerce and Diploma in BusinessManagement from IIM Calcutta is having experience of more than 43 years in the industry.Before joining the Company in the year 1995 he worked with IFB Industries Limited invarious positions. He was appointed as a Whole-time Director at the Nineteenth AnnualGeneral Meeting of the Company held on 31 August 2001 for a period of three years witheffect from 28 July 2001 and thereafter reappointed from time to time. He was appointed asManaging Director on 30 July 2008. Thereafter he was elevated as Vice Chairman andManaging Director on 23 September 2015. The existing term of Mr Arup Kumar Banerjee willexpire on 29 July 2017.

The Board of Directors in its meeting held on 17 May 2017 on the recommendations ofthe Nomination and Remuneration Committee reappointed Mr. Arup Kumar Banerjee (subject tothe approval of members in the ensuing Annual General Meeting) for a further period of 3years with effect from 30 July 2017.

Appropriate resolutions seeking the re-appointment of Directors are appearing in theNotice convening the ensuing Annual General Meeting of the Company.


All the Independent Directors have submitted a declaration that each of them meets thecriteria of independence as provided in section 149(6) of the Companies Act 2013. Thedeclarations were placed and noted by the Board in its meeting held on 17 May 2017.


There was no change in the Key Managerial Personnel of your Company.


According to Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Schedule IV of the Companies Act 2013 a meeting of the IndependentDirectors was held to review the performance of the Non-Independent Directors and theBoard as a whole. Accordingly a meeting of Independent Directors was held on 24 March2017 wherein the performance of the Non-Independent Directors Chairman and the Board as awhole was evaluated.

In the Board meeting that followed the meeting of the Independent Directors theperformance of the Board its committees and individual Directors was also discussed.Performance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated.


Pursuant to the provisions of Section 134(5) of the Companies Act 2013 your Directorsstate that:

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. the Directors had 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 at the end of the financial year and ofthe profit of the Company for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. the Directors had prepared the annual accounts on a going concern basis;

e. the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f. the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.


A Nomination and Remuneration Policy has been formulated pursuant to the provisions ofSection 178 and other applicable provisions of the Companies Act 2013 and rules theretoand Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 stating therein the Company's policy on Directors'/Key ManagerialPersonnel/other employees appointment and remuneration by the Nomination and RemunerationCommittee and approved by the Board of Directors.

The said policy may be referred to at the Company's official website at


Your Company did not accept any deposit from the public / members under Section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposit) Rules 2014 during theyear.


The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is given in Annexure II which forms part of this Report.


The Company has not given any loans guarantees or made any investments exceeding sixtyper cent of its paid-up share capital free reserves and securities premium account or onehundred per cent of its free reserves and securities premium account whichever is moreas prescribed in Section 186 of the Companies Act 2013.


All contracts or arrangements with related parties entered into or modified during thefinancial year were on an arm's length basis and in the ordinary course of business. Allsuch contracts or arrangements have been reviewed and approved by the Audit Committee. Nomaterial contracts or arrangements with related parties were entered into during the yearunder review. Accordingly no transactions are being reported in Form No. AOC-2 in termsof Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules 2014.

Your Company's Policy on Related Party Transactions as adopted by your Board can beaccessed on the corporate website at


As required under Section 134(3) (m) of the Companies Act 2013 read with rules madethere under the information relating to Conservation of Energy Technology Absorption andForeign Exchange earnings & outgo is given in Annexure III which forms a part of thisReport.


The Company did not have any subsidiary/associate/joint venture Company during thisyear 2016-17.


For the development of the human resources number of training programmes wereorganized during the year. Internal personnel as well outside faculty members conductedthese programmes. Your Company plans to organize more such training programmes fortheoverall development of its people. Total number of employees in the Company stood at 370as on 31 March 2017.


The Company maintains a website where detailed information of theCompany and its products are provided.


The composition and terms of reference of the Audit Committee has been furnished in theCorporate Governance Report forming part of this Annual Report. The Board has accepted therecommendations of the Audit Committee.


In pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns have beenestablished. The said policy may be referred to at the Company's official website at theweblink


Your Company has in place adequate internal control procedures which is commensuratewith the size and nature of business. Detailed procedural manuals are in place to ensurethat all the assets are safeguarded protected against loss and all transactions areauthorized recorded and reported correctly. Further such controls have been tested duringthe year and no reportable material weakness in the design or operation was observed.Nonetheless your Company recognizes that any internal financial control framework nomatter how well designed has inherent limitations and accordingly regular audit andreview processes ensure that such systems are reinforced on an ongoing basis.


Your Company is listed with the Bombay Stock Exchange Limited and National StockExchange of India Limited and the Company has paid the Annual listing fee for the year2017-18 to each of the said Exchanges. The Annual Custody/ Issuer fee for the year 2017-18has been paid by the Company to NSDL and CDSL.


In terms of Section 135 and Schedule VII of Companies Act 2013 the Board of Directorsof your Company had constituted a CSR Committee. The Committee comprises of IndependentDirectors and Executive Director. The brief outline of the Corporate Social Responsibility(CSR) policy of the Company and the initiative undertaken by the Company on CSR activitiesduring the year are set out in Annexure IV of this report in the format prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014.The said policy may bereferred to at the Company's official website at

Your Company has identified the activities and accordingly projects mainly relating toa) eradicating hunger malnutrition and sanitation b) promoting education and c)promoting healthcare were undertaken in line with the CSR policy. The necessary budgetoutlay were assigned to the aforesaid projects. However due to multi year project andcertain procedural delay at the implementation level the Company could not spend theallocated budget outlay. The Company made an expenditure of Rs. 51.06 lacs against thestipulated amount of Rs. 74.01 lacs.


Your Company attaches considerable significance to good Corporate Governance as animportant step towards building investor confidence improving investors' protection andmaximizing long-term stakeholders value. The certificate of the Auditors Walker Chandiok& Co LLP ( Firm Registration No : 001076N/N500013) Chartered Accountants confirmingcompliance of conditions of Corporate Governance as stipulated under Regulation 25 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of thisAnnual Report.


The Auditors of the Company Walker Chandiok & Co LLP Chartered Accountants (FirmRegistration No. 001076N/N500013) have been appointed at the Annual General Meeting on 30July 2014 for a term of 3 years. The Company has received consent of the auditors forre-appointment of office for the Second term. Their re-appointment to the office issubject to the approval by the members at 35 Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments.


The provisions of Section 204 read with Section 134(3) of the Companies Act 2013mandates Secretarial Audit of the Company. The Board in its meeting held on 24 March2017 appointed Mr. Jitendra Patnaik Proprietor of M/s J. Patnaik & Associates Practising Company Secretary (Certificate of Practice No. 3102) as the Secretarial Auditorfor a term of two years commencing from the financial year 2016-17.

The Secretarial Auditors' Report for the financial year ending 31 March 2017 is givenin Annexure V which forms part of this report.


Directors take this opportunity to express their thanks to various departments of theCentral and State Government Bankers Customers and Stakeholders for their continuedsupport.

The Directors wish to place on record their appreciation for the dedicated efforts putin by the employees of the Company at all levels. Cautionary Statement: Statement inthe Directors' Report and Management Discussion & Analysis Report describing theCompany's expectations may be forward-looking within the meaning of applicable securitieslaws & regulations. Actual results may differ materially from those expressed in thestatement. Important factors that could influence the Company's operation include globaland domestic demand and supply conditions affecting selling prices new capacityadditions availability of critical materials and their costs changes in governmentpolicies and tax laws.

On behalf of the Board
Registered Office: Bikram Nag Arup Kumar Banerjee
Plot No. IND-5 Sector - 1 Joint Executive Chairman Vice Chairman and Managing Director
East Calcutta Township
Kolkata - 700 107
CIN: L01409WB1982PLC034590
Website :
Kolkata 17 May 2017