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. () - Director Report
Company director report
Report to the Shareholders
Your Directors present the 27th Annual Report together with Statement of Profit andLoss for Financial Year ended on 31st March 2016 (FY 2015-2016) and Balance Sheet as onthat date along with Notes Cash Flow Statement and Auditors' Report forming part thereof.
Performance of your Company for FY 2015-2016 on Consolidated and Standalone basis is asfollows :
(Rs in Millions)
*including Minority Interest of Rs 32.35 Global Scenario and Future Outlook
The year 2015-2016 saw some macro economic contradictions. The Chinese economy whichwas hitherto growing well experienced a slowing down both on the external and internalfronts. This resulted in sizeable excess capacities. Export of steel from China reached110 Millions tonnes in 2015 recording a growth of 22% over the previous year.
On the energy front crude oil experienced one of the lowest selling prices in recenttimes. While this ordinarily would have been a big benefit to most countries importingoil the prices reached a point that while the direct outgo on account of oil importsreduced substantially but so did the export of goods and services as the entiredevelopment work in the oil exporting countries reduced substantially.
The steel production in USA was negatively impacted on both the counts the Chineseexport at prices much below the US levels and the reduction in demand for steel pipes asthe shell oil and gas became unviable due to very low crude oil prices.
The World Economic Outlook was reduced to 3.2% for the year 2016 but some optimism hasbeen built in for 2017 at 3.5%. Similar optimism is derived from the World SteelAssociation which has projected a growth of 1.8% and 4.8% in 2016 and 2017 respectivelyoutside of China.
Your Directors are of the view that globally economies are going through a phase ofconsolidation which is likely to stabilize going forward. Your Company is poised to dowell and prospects and outlook of your Company for the future therefore appear to beencouraging. Various opportunities for both organic and inorganic growth are also beinglooked at.
Following your Company's Policy of distributing available profits amongst theShareholders your Directors had declared an Interim Dividend of 20% i.e. Rs 2/- perEquity Share for FY 2015-2016 on 13th March 2016. The amount involved together withDividend Distribution Tax aggregated to Rs 83.31 Millions. Your Directors are notrecommending payment of any further Dividend for FY 20152016. The Dividend declared andpaid for the year 2015-2016 is similar to the previous year 2014-2015 (20%) despite a lowProfit after Tax.
Due to the prevailing market scenario the performance of the steel and other relatedindustries remained weak. This got further aggravated by a big increase in exports ofsteel by China at very low prices. This led to substantial reduction/closure of steelproduction capacities and thereby affected performance of your Subsidiaries exceptingGerman Subsidiary Hofmann Ceramic GmbH and Indian Subsidiary IFGL Exports Limited. TotalRevenue PBT and PAT on consolidated basis of IFGL Worldwide Holdings Limited which holdall overseas subsidiaries have been GBP 40.96 Millions GBP 2.32 Millions and GBP 1.75Millions respectively.
Performance of Hofmann Ceramic has been better than that of immediately precedingfinancial year inasmuch as Total Revenue PBT and PAT are Euro 10.6 Millions Euro 0.9Millions and Euro 0.7 Millions respectively.
IFGL Exports Limited recorded a robust performance. While the Total Income was Rs465.68 Millions in 2015-2016 against Rs 438.67 Millions in 2014-2015 an increase of 6%over previous year. The PBT for the year jumped to Rs 65.53 Millions a PBT margin of14.1% on Total Income as against Rs 3.64 Millions in the previous year. EBIDTA rose to Rs114.71 Millions for the year (24.6% of Total Income) as against Rs 66.10 Millions (15.1%of Total Income). The plant is now fully stabilized and has been able to reduce in processrejections. The plant is running full capacity and has undertaken work on expanding thecapacity which is scheduled to be completed in the first half of the current year.
Expansion New Products and Other Measures
During FY 2015-2016 capacity expansion of Iso Statically pressed (ISO) ContinuousCasting Refractories (CCR) from 85000 pcs to 126000 pcs per annum and facilities set upfor manufacture of 10000 pcs of Clay Graphite Stopper Rods for foundries by USSubsidiary EI Ceramics LLC were stabilized. Similarly second phase of capacity expansionat Company's Indian Subsidiary for manufacture of CCR from 80000 pcs to 160000 pcs perannum is going on and orders for key equipments have already been placed. Hofmann CeramicGermany Subsidiary is in the process of seffing up facilities for manufacture of Feeders.Several initiatives have been taken for costs reduction. Besides this it has beencontinued endeavor of your Company to further synergies resources available within theGroup thereby optimize revenues and increase margins.
Corporate Governance/Internal Control System and their adequacy
Report on Corporate Governance duly certified by your Company's Statutory Auditors formpart of this Report as Annexure 'A'. Corporate Governance Policies and Procedurespracticed by your Company are following continued philosophy for effective management anddistribution of wealth and discharge of social responsibility for sustainable developmentof all stakeholders.
Vigil Mechanism/Whistle Blower Policy and Policy for Prevention of Sexual Harassment ofWomen at work place have also been implemented. During FY 2015-2016 no complaint wasreceived under these Policies. Policies and Systems for Internal Control includingFinancial Risk Management and Transfer Pricing in place are commensurate to nature ofbusiness and size of your Company and are reviewed and updated from time to time as andwhen necessary.
Disclosure of Information
Form MGT 9 being extract of Annual Return form part of this Report as Annexure 'B'.Several matters including those provided at Section 134(3) of the Companies Act 2013 readwith relevant provisions of the Companies (Accounts) Rules 2014 and Regulation 34 and 53of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI LODR 2015) required to be included herein havebeen dealt in Annexures hereto including Audited Financial Statements and Notes formingpart thereof and thus have not been included herein again for brevity. Informationregarding Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo is given in Annexure 'C'. Transactions with related parties have been in ordinarycourse of your Company's business and at arms length and hence details thereof have notbeen given in Form AOC-2. Formal Annual Evaluation has been made by your Board of itsperformance and that of its Committees and Individual Directors - further details areappearing in Report on Corporate Governance being Annexure 'A' hereto
Your Directors are now regularly doing Quarterly Presentations Conference Calls andInteraction following Announcement of Quarterly and Annual Results and this has enhancedInvestors confidence in your Company.
Accounts of Subsidiary Companies
A statement in Form AOC-1 having financial information of Subsidiary Companies formpart of this Annual Report as Annexure 'D'. Shareholders of the Company and those ofSubsidiary Companies who are desirous of having complete Statement of Accounts and relateddetailed information of Subsidiary Companies may send their request there for either tothe Company's Registered Office or to Head and Corporate Office. The same are being keptfor inspection at Head Offices of your Company and Subsidiary Companies and also availableon your Company's website i.e. www.ifglref.com.
Directors Responsibility Statement
Your Directors state that :
a) in preparation of Annual Accounts the applicable Accounting Standards have beenfollowed.
b) Accounting Policies selected and applied are consistent and judgments and estimatesmade are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the Profit and Loss of the Companyfor 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 theCompany 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.
Your Company's Statutory Auditors M/s Deloitte Haskins & Sells CharteredAccountants have Audited the Statement of Accounts in accordance with Generally AcceptedAccounting Standards and Practices as indicated in their Report.
CSR Human Resources and Industrial Relations
Your Company has a Committee of the Directors on Corporate Social Responsibility. Fordetails regarding constitution reference is drawn to Corporate Governance Report i.e.Annexure 'A'. Annual Report in compliance of Rule 8 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 is forming part hereof as Annexure 'E'.
Your Company also has a Nomination and Remuneration Committee of Directors followingprovisions of Section 178(1) of the Act and brief details thereof are also contained inCorporate Governance Report. Based on recommendation of this Committee your Board hasadopted a Nomination and Remuneration Policy which is hosted on your Company's website
4 persons employed throughout FY 2015-2016 were in receipt of remuneration of Rs 60lacs per annum or more. None was employed for part of the year and received remunerationof Rs 5 lacs per month or more. Whole-time Directors Mr S K Bajoria and Mr P Bajoria havebeen paid "minimum remuneration" for FY 2015-2016 in accordance with SpecialResolutions passed by you in Annual General Meeting held on 22nd August 2014 and approvalof the Central Government as per provisions of Section 197(3) and other relevantapplicable Sections of the Act. As on 31st March 2016 your Company have had 380 permanentemployees in India. An Annexure having information following provisions of Sections134(3)(q) and 197(12) of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 form part of this Report. This Annexureis however not being sent to Members as per provisions of Section 136 of the Act. Membersdesirous of having the Annexure may write to the Company Secretary at the RegisteredOffice and or Head & Corporate Office. However the Annexure will also be available forinspection by the Members at Company's Registered Office upto conclusion of forthcomingAnnual General Meeting. None of the Employees listed in the Annexure is a relative of anyDirector of the Company. None of the Employees excepting your Chairman hold (by himselfor along with his spouse) more than two percent of Total Equity Share Capital of yourCompany.
During FY 2015-2016 Industrial Relations remained cordial. Your Company continued toprovide conducive working environment to its team members and empowered them by trainingson latest techniques and practices. Compensation packages and benefits provided comparefavourably with those offered by others in the Refractory Industry.
Consolidated Financial Statements
In accordance with Accounting Standard 21 and other relevant provisions particularlySection 129(3) of the Act Consolidated Financial Statements duly audited by StatutoryAuditors M/s Deloitte Haskins & Sells form part of this Annual Report. ConsolidatedFinancial Statements have been prepared based on Financial Statements (includingConsolidated) of immediate two Subsidiary Companies i.e. IFGL Worldwide Holdings Limitedand IFGL Exports Limited as approved by their respective Boards.
Director due to retire at ensuing Annual General Meeting is Mr S K Bajoria (DIN :00084004) who consented to retire by rotation for compliance with the requirements ofSection 152 of the Act and being eligible has offered himself for re-appointment. HisProfile is also forming part of Notice of ensuing Annual General Meeting.
M/s S M Gupta & Co. Practicing Company Secretaries have carried out SecretarialAudit following provisions of Section 204 of the Act. Their Report in MR 3 free ofqualifications form part hereof as Annexure 'F'.
Auditors' Report and Auditors
Report of the Auditors including references made therein to the Notes forming part ofthe Statement of Accounts are self explanatory.
Auditors M/s Deloitte Haskins & Sells (Regn No. 302009E) Chartered Accountantswill retire at conclusion of 30th Annual General Meeting. Following provisions of Section139 of the Act their appointment as Auditors of your Company is required to be ratifiedat ensuing Annual General Meeting.
Your Directors place on record their sincere appreciation for continued supportreceived from all stakeholders particularly you the Shareholders.
Information under Section 134(3)(m) of the Companies Act 2013 read with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules 1988 and Rule 8(3)of Companies (Accounts) Rules 2014 and forming part of the Directors' Report forfinancial year ended on 31st March 2016
A. Conservation of Energy
Steps taken or impact on conservation of energy steps taken for utilizing alternatesources of energy and capital investment on energy conservation equipments.
For conservation of energy the Company have taken several steps and using energy tothe extent necessary only. Wastage of energy is strict no-no. Energy efficient systemsnamely LED lights CFL lamps drive control and dampers voltage stabilizers etc. havebeen installed to reduce consumption. Use of compressed air has also been optimized.Investments made have generally been regular in nature and during FY 2015-2016 no amountwas capitalized. Steps for use of solar energy have also been taken and few fiffings forillumination have been installed on trial basis
Details of total energy consumption and energy consumption per unit of production aregiven in enclosed Form A.
B. Technology Absorption
Efforts made towards technology absorption benefits derived therefrom details ofimported technologies and expenditure incurred on Research & Development.
Improvement in product quality and performance development of indigenous source of rawmaterials including quality upgradation and substitutes enhancement of productioncapacity and capability and other important areas like customers satisfaction costcompetitiveness cost control etc. are looked into by Company's in-house Research andDevelopment facility. These efforts and inputs received from time to time from variousstakeholders including providers of technologies bring about and foster requisite desiredadvantages to keep pace with rapid changes taking place in dynamic market in the productssegment the Company is operating in.
During last 3 FYs including FY 2015-2016 the Company have not imported any technology.
R & D activities are an integral part of the manufacturing activities carried outby the Company. Expenditure incurred on R & D are not captured separately unlesssubstantial in nature.
C. Foreign Exchange Earnings and Outgo
Total Foreign Exchange used and earned : ( in Millions)
Form - A
Disclosure of particulars with respect to conservation of energy