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India Glycols Ltd.

BSE: 500201 Sector: Industrials
BSE 00:00 | 25 May 509.20 -0.45






NSE 00:00 | 25 May 509.65 -1.80






OPEN 514.45
VOLUME 29906
52-Week high 619.90
52-Week low 153.00
P/E 16.07
Mkt Cap.(Rs cr) 1,576
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 514.45
CLOSE 509.65
VOLUME 29906
52-Week high 619.90
52-Week low 153.00
P/E 16.07
Mkt Cap.(Rs cr) 1,576
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

India Glycols Ltd. (INDIAGLYCO) - Director Report

Company director report


The Memers

Your Directors are pleased to present the 33rd Annual Report on the businessand operations of the Company together with the Audited Financial Statements of yourCompany for the financial year ended 31st March 2017.


(Rs. in Crores) (except earnings per share)

Particulars Year ended 31.03.2017 Year ended 31.03.2016
Gross Sales and other income 3590 3282
Earnings before interest taxes depreciation and amortization 244 193
Profit/(loss) before depreciation and amortization exceptional item and tax 122 60
Exceptional item (net) - 61
Depreciation and amortization 68 65
Profit /(loss) before tax 54 (66)
Provision for tax 9 (24)
Net profit/(loss) 45 (42)
Earnings per share (in ') 14.38 (13.67)
Proposed dividend on Equity Shares 3.10 -
Tax on dividend 0.63


Figures for FY 2015-16 have been restated as per Indian Accounting Standards(‘Ind-AS') and therefore may not be comparable with financials for FY 2015-16approved by the Directors and disclosed in the financial statement of previous year.


Your Directors are pleased to recommend a dividend of Rs.1/- ( Rupee One Only) perequity share of face value of Rs.10/- each (i.e.10%) for the financial year ended 31stMarch 2017 subject to the approval of the Shareholders in the ensuing Annual GeneralMeeting. The total outgo on account of dividend will be Rs.3.73 Crores including dividendtax.


The year ended on 31st March 2017 remained a good year for the Company.During the FY 2016-17 on a standalone basis your Company recorded total revenue ofRs.3590 Crores as compared to Rs.3282 Crores in FY 2015-16 an increase of about 9.38%.Your Company registered a healthy financial performance with profit after depreciationexceptional items and tax for FY 2016-17 was Rs.45 Crores as compared to a loss of Rs.42Crores incurred during the FY 2015-16. With an increase sale/ revenue from Nutraceuticaland potable liquor business adoption of several operational efficiency measures resultingin savings in power & fuel cost and a focus on cost management the Company couldachieve this performance inspite of pricing pressure.

Also after a long gap Mono Ethylene Glycol prices have shown increasing trend due toincrease in the global crude prices. The Company has increased reliance on importedalcohol instead of domestic alcohol due to diversion of alcohol towards Ethanol Blendingin Gasoline given the exorbitant price offered by the Government for procurement ofethanol.

The Company expects to continue with the existing trend in the coming years.

During the year under review no amount was transferred to the reserves.


There were no material changes and commitments affecting the financial position of theCompany between the end of financial year and date of this report. There has been nochange in the nature of the business of the Company.


During the year under review your Company has been awarded/conferred the followingawards:

1. 'Grand Gold Award' for seventh year in a row by Monde Selection Committee Belgiumfor attaining high level of quality for Extra Neutral Alcohol (ENA).

2. ‘Award for Product Innovator of The Year' in Petrochemical Sector at IndiaChem. 2016 by FICCI (Chemicals & Petrochemicals Division).

3. 'BIRAC Innovator Award 2016' in recognition of the significant contributions made bythe Company towards the high level of innovative research for validation of technology forproduction of 3000 Litre ethanol/day.

4. 'ICC Award for Excellence in Energy Conservation and Management' for the year 2015.


The Company is the largest manufacturer of Bio-Mono Ethylene Glycol (Bio-MEG) in theworld made out of renewable feedstock i.e. Molasses and Ethanol. Bio-MEG has anapplication inter-alia in making PET bottles which is used for packaging ofbeverage products.

Sales of Glycols [Monoethylene Glycol (MEG) Diethylene Glycol (DeG) TriethyleneGlycol (tEg) and Heavy Glycols] have decreased from 94268 MT in fY 2015-16 to 88294 MTin FY 2016-17. Resultantly the sales value also decreased from Rs.700 Crores to Rs.649Crores respectively. Sales under Ethylene Oxide Derivatives (EOD) business increased to98107 MT in FY 2016-17 from 95000 MT during previous year and accordingly the salesvalue also increased to Rs.981 Crores from Rs.974 Crores respectively. The Company haswitnessed an increase in Sales as a result of growth in performance.

During the year your Company produced 82847 MT of Glycols compared to 96245 MT lastyear. Ethylene Oxide Derivatives (EODs) production has been 130912 MT compared to108528 MT last year.


Due to persistent pressure in external environment total export sales value wasregistered at Rs.864 Crores during the FY 2016-17 as compared to Rs.873 Crores duringprevious year. The primary reasons for lower exports were on account of lower Glycol Ether(EGA) sales to China as their local prices were low. The Company holds the ‘ThreeStar Export House' status as granted by Government of India.


During the year your Company registered total sales value of Rs.1301 Crores ascompared to Rs.1150 Crores last year in the Ethyl Alcohol (Potable) division. Due topersistent efforts for export of high quality Extra Neutral Alcohol (ENA) the Company hasgained the position of premium quality ENA suppliers in the international markets.

Your Company has a tie-up with Bacardi for bottling of their products at our Kashipurbottling unit and Bacardi has also started the bottling of more brands at our bottlingfacility at Kashipur.

Your Company is having license for operations in and sale of Country Liquor and IndianMade Foreign Liquor (IMFL) in the States of Uttar Pradesh and Uttarakhand. In the recentpast your Company had launched its premium products under the brand name of "V2OVodka" in three different flavors in Vodka category and Soulmate in Whisky category.With a view to have more penetration and in continuation with existing trend during theyear under review the Company launched ‘Soulmate Blu' a Premium Whisky insemi-premium segment in the states of Uttarakhand and Haryana and intends to launch thesame in other states as well. Your Company also plans to launch its branded products inother states in the near future.

Further post approval of Beach House Premium Rum for supply to Indian Defense forcesthrough CSD during the year under review your Company started the supplies.


Your Company has a business division Ennature Biopharma operating in the space ofNutraceuticals Phytochemicals & health supplement ingredients. The manufacturingfacility is located at Dehradun and is accredited with EU written confirmation WHO GMPCurrent Good Manufacturing Practices (cGMP) ISO 9001 ISO 22000 Hazard Analysis andCritical Control Points (HACCP) Kosher and Halal. The unit is an EOU however seeing thesurging growth in domestic market and with GST paving the way for ensuring level playingthe unit has applied to cease to be an EOU.

The unit has an advanced production facility including organic certified supercritical fluid extraction & ethanol extraction facility for production ofStandardized Botanical Extract Phytochemicals food supplements Spice Extracts andActive Pharmaceuticals ingredients (API) of natural plant origin.

Your Company's strength in R&D backed by stringent Quality Control (QC) andQuality Assurance (QA) controls in place has the privilege of getting qualified worldover by most trusted companies.

Your Company has been dynamic in implementing and adopting several initiatives that hasled to a robust growth of 114 % over previous year & the division Ennature Biopharmaregistered a sales of Rs.148 Crores for FY 201617 as compared to Rs.69 Crores overprevious year. Both domestic & exports sales have shown marked improvement existingproducts sales have increased with increase in the customer base and more usage from theold customers. Your Company is constantly working in development of new products to meetthe ever changing market requirement and shall introduce Natural Liquid Nicotine forNicotine replacement therapy in addition to organic Natural Astaxanthin. Your Company isgrowth oriented with an objective & concern for environment transforming livesthrough green technology for isolation & purification of phytochemicals.


During the year under review the Company from its Air separation unit produced 22915MT of Liquid Oxygen and 576 MT of Liquid Nitrogen. Both Liquid Oxygen and Liquid Nitrogenwere sold in the market and also used for in house requirements. In addition Argon of3091 MT was also produced and its sales were 3059 MT.

Industrial Gas Division also produced Beverage and Industrial Grade Liquid CarbonDi-oxide (LCO2) at Kashipur. During the year your Company has produced 34699MT of LCO2 and its sale was 34583 MT.

Your Company also produced ETO (Ethylene Oxide & Carbon Dioxide Gas Mixtures) underthe trade name IGL- STERI GAS at its Kashipur Plant. It is suitable for sterilization ofDisposable Surgical & Medical Devices spices and packing substances like rubberplastic etc. The Company has in house facility for production of EO and LCO2which are also used in production of ETO and as such it is the only plant in India to havesuch manufacturing facility which gives us a distinct edge over other suppliers in themarket. During the year under review the Company has sold 1013 MT of Steri Gas ascompared to 928 MT in the last year. Further the Industrial Gases segment registeredtotal sales of all gases of Rs.39 Crores during FY 2016-17 against a sale of Rs.38 Croresduring the last year.


India's first multi feedstock continuous flow plant has been commissioned at IndiaGlycols Ltd. Kashipur site with a capacity of 10 ton per day biomass processing based ondBt-ICT Technology.

This Technology is designed for handling all types of agricultural residues likeBagasse Rice Straw Wheat Straw Bamboo Cotton Stalk Corn Stover Wood chips etc. withoptimum product yields.

So far your Company has determined optimal plant performance and finally validatedthis technology for feed stocks like Bagasse Rice Straw & Wheat Straw. The Companyhas also generated detailed performance data sufficient to transform into full scalecommercial plant. Altogether this plant is capable of building a sugar platform which canfurther be transformed into various value added sugar based chemicals through biotech(green) route other than Alcohol.


Your Company has continuously been focusing on innovations for products as well as forprocesses to maintain market leadership and competitive advantage. Your Company has beendevoting itself for achieving reduction of cost of production improvements in theefficiency of its operations product differentiation and development of novel productswith Green Chemistry. Your Company has been moving from being supplier of commodityproducts to a supplier of performance-driven specialty products. Emphasis is being givento maximize consumption of Ethylene Oxide (EO) for production of high value products forniche markets. Manufacture of Bio-MEG/ Green MEG going into packaging products with greenlabel used in niche markets such as processed food health care including pharmaceuticaland personal care etc. is one of the most prominent successes stories of your Company.Present trends have resulted in rising demand for use of environment friendly surfactantsand specialty chemicals based on renewable resources like Rice bran oil Coconut oilGroundnut oil Soyabean oil Palm oil Cashewnut shell liquid etc. A large number ofproducts based on Alkyl Phenols (APEO) will have to be replaced with base materials fromrenewable resources. Your Company has developed specialty surfactants to replace APEO-free products. Some of the products introduced recently includes (a) ‘EtherCarboxylates' the specialty surfactants for applications such as cosmetics and personalcare high-end formulations of pesticides emulsion adhesives etc. (b) ‘SpecialtyEthoxylates' with unique properties such as low surface tension high dispersing highwetting and low foaming etc. (c) IG Goldsurf a series of products based on sugarcane andcoconut for applications in home and personal care and pharmaceuticals. All these productsare suitable for niche markets.

Simultaneously greater efforts have also been made to widen the product portfolio(Natural Health Products) using green supercritical fluid extraction technology &phytochemicals as APIs with application in pharmaceutical industry.

The Marigold Lutein ester development work augmented to make Lutein with green solventEthanol unlike the industry using hexane. With stringent checks on pesticides the westernworld has come heavily on Indian extracts and herbs. The Company envisioned the change& strengthened its base to be the first to work on cultivation with restrictedpesticides & evolving technology to eliminate use of pesticides at farm level.

Your Company developed Curcumin (turmeric) involving green solvent ethanol for advancedmarkets for use in health drinks and the technology for manufacturing Vinpocetine fromTabersonine a neuronal tonic working on Nicotine API for tobacco replacement.


During the year under review your Company has not raised any term loan. The Companyhas obtained USD 114 million (' 726.42 Crores) through long term export advances for aperiod of 10 years in terms of Reserve Bank of India (RBI) guidelines in the recent past.Out of which an amount of USD 22.80 million (' 145.33 Crores) to one of the customer waspaid against the commitment for the 2 years in full reducing the total liability to USD91.20 million (' 581.09 Crores) which was also renewed with in the due dates. Further theCompany has re-paid upon maturity term loan of Rs.18 Crores during the year. The Companyhas been regular in meeting its obligations towards payment of principal/interest toFinancial Institutions/ Banks. With funding from competitive sources the Company was ableto reduce the interest cost during the year under review. Details of the Loans Guaranteesand Investments covered under the provisions of Section 186 of the Companies Act 2013 areprovided in the notes to the standalone financial statements which form part of the AnnualReport.

The Company had discontinued its fixed deposits scheme in the FY 2009-10 and has notaccepted any fresh deposits covered under Chapter V of the Companies Act 2013 during theyear. There are no overdue deposits except unclaimed deposits amounting to Rs.0.72 lacs.During the year unclaimed deposit of Rs.0.81 lacs was transferred to Investor Educationand Protection Fund (IEPF).

Indian Accounting Standards

The Ministry of Corporate Affairs vide its notification dated 16th February2015 has made applicable the Ind-AS to certain class of Companies. For the CompanyInd-AS is applicable from 1st April 2016 with a transition date of 1stApril 2015. The financial statements of the Company (including subsidiaries) have beenprepared in accordance with the recognition and measurement principles laid down underInd-AS as presented under Section 133 of the Companies Act 2013 read with the relevantrules issued thereunder and the other accounting principles generally accepted in India asapplicable.

The principal differences between GAAP and Ind-AS have been set out in Note no. 64 inthe notes to the standalone financial statement and in Note no. 63 in the notes to theconsolidated financial statement.


The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. The Company periodically discusses andreviews at its Audit Committee and with its auditors the effectiveness of the internalfinancial control measures implemented by the Company including with reference to theFinancial Statements of the Company.

The Company has a proper and adequate system of internal financial controls whichincludes the policies and procedures for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information.


The shares of the Company are listed on BSE Limited (BSE) and the National StockExchange of India Limited (NSE). The respective stock code no. and symbol of the Companyare 500201 and INDIAGLYCO. The annual listing fees for the year 2017-18 have been paid inadvance to the Stock Exchanges.


As on 31st March 2016 the Company had four (4) subsidiaries and one (1)Joint Venture Company. During the year under review there were no changes in subsidiaryand Joint Ventures of the Company. A brief of each of them is given below:

Shakumbari Sugar and Allied Industries Limited

The Company has a sugar manufacturing plant in the state of Uttar Pradesh through itssubsidiary Company Shakumbari Sugar and Allied Industries Ltd. (SSAIL) with a crushingcapacity of 5500 tons crushed per day (TCD) along with a modern distillery of 65 KL perday (KLPD) producing high quality rectified spirit and an internal bagasse firedcogeneration plant of 11 MW catering to the captive power needs of the sugar anddistillery units.

The net worth of SSAIL has been completely eroded due to accumulated losses andtherefore SSAIL has been declared a Sick Industrial Company under the provisions ofsection 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act 1985 (SICA)after obtaining necessary consents from its secured lenders including Central Bank ofIndia IDBI Bank Ltd. Axis Bank etc. IDBI Bank Ltd. being the Operating Agency hasprepared and submitted the draft revival scheme for SSAIL and the final order of the BIFRon revival of SSAIL were awaited. On date of transition to Ind-AS the Property Plant& Equipment of SSAIL have been valued on the basis of the fair valuation in line withthe Holding Company. The details of the same has been provided in note no. 63 of theconsolidated financial Statement. With the abolition of BIFR SSAIL continues to evaluateand explore options in consutation with expert(s) and stakeholders forrestructuring/revival/ disinvestment. During the year no operations at the sugarmanufacturing plant were carried out due to debt burden of SSAIL and lack of adequateworking capital. During the year ended 31st March 2017 SSAIL has suffered aloss of Rs.10.42 Crores.

IGL Finance Limited

IGL Finance Ltd. (IGLFL) is a 100% subsidiary of the Company. IGLFL had invested fundsin short term commodity financing contracts of the National Spot Exchange Ltd. (NSEL).NSEL has defaulted in settling the contracts on due dates for which IGLFL has initiatedlegal and other action. On date of transition to Ind-AS based on the expected credit losspolicy and other estimation made by the IGLFL management IGLFL has made a provision ofRs.11719.71 lacs against the total outstanding of Rs.14444.43 lacs from NSEL.Simultaneously the same amount has been provided for against ICD's received from theHolding Company. IGLFL is confident of recovery of its dues from NSEL over a period oftime in view of the measure which have so far been taken for and pending before theGovernment and other agencies. During the year ended 31st March 2017 IGLFLhas registered a loss of Rs.0.02 lacs.

IGL Chem International Pte. Ltd.

IGL Chem International Pte. Ltd. is a 100% subsidiary of the Company in Singapore toaugment its activities in South Eastern region and help the marketing of products fromChemical Plant Natural Gums Plant and Supercritical Fluid Extraction facility to largebuyers in US Europe and South East Asia. During the year ended 31st March2017 IGL Chem International Pte. Ltd. suffered a loss of Rs.12.06 lacs.

IGL Chem International USA LLC

Your Company has also set up a 100% subsidiary Company in USA named as IGL ChemInternational USA LLC with the main objective of marketing of the Company's products andrelated activities in the American and Latin American regions. During the year ended 31stMarch 2017 IGL Chem International Pte. Ltd. has suffered a loss of Rs.29.29 lacs.

Kashipur Infrastructure and Freight Terminal Private Limited

Your Company has a Joint Venture with Apollo Logisolutions Limited ("ALS")under the name Kashipur Infrastructure and Freight Terminal Pvt. Ltd. (KIFTPL) throughwhich a Private Freight Terminal (PFT) and Inland Container Depot (I CD) have been set upfor providing railway based logistic services and other facilities at Bazpur RoadKashipur Uttarakhand as provided under extant guidelines of the Indian Railways.

ALS is engaged in the business of offering complete and comprehensive services relatingto container freight station transportation of containers cargo handling and has therequisite technical expertise to operate and manage inland container depot. The Companycontinue to hold 48.90% of the share capital of KIFTPL while 51% of the share capital isheld by ALS.

The facility on receipt of all approvals has become fully operational w.e.f. 26thApril 2017. The facility shall provide multi-modal logistics solutions to our Company andexternal customers and enhance its service delivery capacity. With the commissioning ofthis facility logistics movement for both inbound and outbound cargo would become moredependable reliable and economical would also ensure on-time delivery of goods andenable better inventory management. During the year ended 31st March 2017KlFTPL has suffered a loss of Rs.31.01 lacs. The consolidated financial statements of theCompany and its subsidiaries joint venture for the FY 2016-17 prepared in accordancewith the applicable provisions of the Act and applicable accounting standards issued bythe Institute of Chartered Accountants of India (ICAI) forms part of this Annual Report.Pursuant to the provisions of Section 136 of the Act financial statements of thesubsidiary companies are not required to be sent to the members of the Company. TheCompany will provide a copy of separate annual accounts in respect of each of itssubsidiary/associate to any member of the Company if so desired and said annual accountswill also be kept open for inspection at the registered office of the Company. Furtherthe audited annual accounts of the subsidiary companies are also available on the websiteof the Company viz.

A separate statement containing salient features of the financial statements ofsubsidiaries and Joint venture under first proviso to sub-section (3) of section 129 inForm AOC-1 forms part of the financial statements.


During the year under review Shri R.C. Misra a veteran Board member demised on 28thApril 2016 and accordingly ceased to be director w.e.f. 28th April 2016.Further the Shareholders at their 32nd Annual General meeting held on 24thSeptember 2016 approved the reappointment of Shri Uma Shankar Bhartia (DIN: 00063091) asChairman and Managing Director of the Company for a further period of five (5) years w.e.f1st April 2016 up to 31st March 2021 along with proposedremuneration for a period of three years.

Shri Uma Shankar Bhartia (DIN:00063091) Chairman and Managing Director of the Companyis retiring by rotation at the forthcoming Annual General Meeting and being eligibleoffers himself for re-appointment. Your Directors recommend the re-appointment of Shri UmaShankar Bhartia the retiring Director for your approval. Brief resume of the Directorseeking re-appointment along with the other details as stipulated under Regulation 26 and36 of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 [SEBIListing Regulations] and Secretarial Standards on General Meetings (SS-2) are provided inthe Notice for convening Annual General Meeting and Corporate Governance Report.

Further during the year under review Shri Kapil Bhalla resigned as Company Secretary/KMP with effect from 15th April 2016 and Shri Ankur Jain was appointed asCompany Secretary and Compliance Officer/KMP with effect from 1st July 2016.

All the Independent Directors have furnished declarations that they fulfill thecriteria of Independence as prescribed under Section 149(6) of the Act.

During the Financial Year 2016-17 Four (4) Board Meetings were held. The details ofthe Board meetings and the attendance of the Directors are provided in the CorporateGovernance Report and forms part of this Report.


Pursuant to the applicable provisions of the Companies Act 2013 and SeBi ListingRegulations the Board has carried out the annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of Committees. Theevaluation was carried out based on parameters such as level of engagement andcontribution independence of judgement safeguarding the interest of the Company and allstakeholders etc.

The performance evaluation of the Independent Directors was done by the entire Boardexcluding the Directors being evaluated. The performance evaluation of the Chairman Boardas a whole and the Non-Independent Directors was carried out by the Independent Directors.The Board of Directors expressed their satisfaction with the evaluation process.


The Nomination and Remuneration Policy containing inter-alia guiding principles forpayment of remuneration to Directors Senior Management Key Managerial Personnel andother employees along with criteria for determining qualifications positive attributesindependence of Directors and Board evaluation are provided in the Corporate GovernanceReport and forms part of this Report.


In accordance with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has constituted an InternalComplaints Committee where any grievance of sexual harassment at workplace can bereported. No complaint pertaining to sexual harassment at workplace has been reported tothe Committee during the financial year ended 31st March 2017.

The Company has also adopted policy on prevention of Sexual Harassment at workplace.The objective of the policy is to provide its women employees a workplace free fromharassment/discrimination and that every employee is treated with dignity and respect. Thesaid policy is available on the website of the Company i.e. underlink: women-at-workplace.pdf.


In terms of provisions of Section 177 of the Companies Act 2013 read with Rulesthereunder and SEBI Listing Regulations the Company has established a VigilMechanism/Whistle Blower Policy to deal with the instances of fraud and mismanagement.

The details of the Vigil Mechanism/ Whistle Blower Policy are provided in the CorporateGovernance Report and also hosted on the website of the Company( investors/downloads/vigil-mechanism-policy.pdf).

The Audit Committee comprises three Non-Executive Independent Directors namely ShriPradip Kumar Khaitan (Chairman) Shri Ravi Jhunjhunwala Shri Jagmohan N. Kejriwal and oneExecutive Director Shri M.K. Rao. The details of the Audit Committee meetings and theattendance of the members thereat are provided in the Corporate Governance Report andforms part of this Report. During the year all the recommendations made by AuditCommittee were accepted by the Board.


In terms of provisions of Section 134(5) of the Act to the best of their knowledge andability your Directors confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March2017 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(b) they have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2017 and theprofit and loss of the Company for that period;

(c) they have taken proper and sufficient care 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 and detecting fraud and otherirregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down the internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


The Management Discussion and Analysis Report as required under SEBI ListingRegulations forms part of this Report.


The Corporate Governance Report as stipulated under Schedule V(C) of SEBI ListingRegulations forms part of this Report.

The requisite certificate from the Statutory Auditors of the Company M/s Lodha &Co. Chartered Accountants confirming compliance with the conditions of corporategovernance as stipulated under the aforesaid clause is attached to Corporate GovernanceReport.


Statutory Auditors

As per Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the term of M/s Lodha & Co. Chartered Accountants(Registration No. 301051E) as the Statutory Auditors of the Company expires at theconclusion of the ensuing Annual General Meeting of the Company.

The Board of Directors of the Company at their meeting held on 16th May2017 on the recommendation of the Audit Committee have recommended the appointment of M/sK. N. Gutgutia & Co. Chartered Accountants (Registration No. 304153E) as theStatutory Auditors of the Company in place of M/s Lodha & Co. Chartered Accountants(Registration No. 301051E) the retiring statutory Auditors to hold the office for a termof 5 (five) years from the conclusion of 33rd Annual General Meeting (AGM)untill the conclusion of the 38th AGM subject to ratification of theirappointment by the members at every AGM if so required. The Company has received theConsent letter and a certificate u/s 139 of the Companies Act 2013 from M/s K.N. Gutgutia& Co. Chartered Accountants to the effect that their appointment if made shall bein accordance with the applicable provisions of the Act and the Rules issued thereunder.

The Board places on record its appreciation for the services rendered by M/s Lodha& Co. as the Statutory Auditors of the Company.

Audit Report

The Report given by M/s Lodha & Co. Chartered Accountants (Registration No.301051E) Statutory Auditors on the financial statements of the Company for the Financialyear 2016-17 is part of the Annual Report. There has been no qualification reservation oradverse remark or disclaimer in their Report on standalone financial statements for FY2016-17. However the Auditors in their report on the consolidated financial statementsfor the financial year 2016-17 have invited the attention of the Shareholders towards thenon-provisioning of interest amounting to Rs.3340.88 Lacs [Previous year Rs.2079.64Lacs] (excluding penal interest charges etc. -amount unascertained) and pendingconfirmation of secured loans fixed deposits with the bank and bank balance related withShakumbari Sugar and Allied Industries Limited (SSAIL) a subsidiary Company. Also onpreparation of financial statements of SSAIL on going concern basis.

The Company has also provided its explanation/clarification as contained in Note no.47(b) (iii) of the consolidated financial statements i.e. Interest on borrowings (whichhas been categorized as NPA) from Bank Rs.3340.88 Lacs (including previous yearRs.2079.64 Lacs) has not been provided as rehabilitation scheme with Operating Agency(OA) are in process and balance of loan fixed deposit with bank and bank balance aresubject to confirmation. The Company has also provided its explanation/clarification ascontained in Note no. 47(a) of the consolidated financial statements i.e. SSAIL had beenincurring cash losses due to which its net worth has been completely eroded and itscurrent liabilities are far in excess of its current assets.

Accordingly in the Year 201213 SSAIL had filed application with the Board forIndustrial and Financial Reconstruction (BIFR). The BIFR vide its order dated 4thApril 2013 has declared SSAIL as a Sick Industrial Company in terms of Sec 3(1)(o) ofSick Industrial Companies (Special Provisions) Act 1985. Further BIFR has appointed IDBIas the Operating Agency (OA) with directions to prepare a revival scheme for SSAIL andalso SSAIL has filed draft rehabilitation scheme with BIFR in the year 2013-14.

With the abolition of BIFR SSAIL continues to evaluate and explore options inconsultation with expert(s) and stakeholders for restructuring/revival/ disinvestmenthence the management of SSAIL considers it appropriate to prepare Financial Statements onGoing Concern basis despite the negative net worth on the balance sheet date. During theyear under review the Auditors had not reported any matter under Section 143 (12) of theAct.


The Board appointed Ms. Sushma Chhabra Practicing Company Secretary (Registration No.-15832) as Secretarial Auditor for the Financial Year 2016-17 in terms of provisions ofSection 204 of the Companies Act 2013. The Secretarial Audit Report for the financialyear ended 31st March 2017 was considered by the Board in its meeting held on16th May 2017 and is enclosed as "Annexure A" to this report.The Secretarial Audit Report does not contain any qualification reservation or adverseremark which needs any explanation or comment of the Board.


The Company has appointed M/s R.J. Goel & Co. Cost Accountants (FRN 000026) asCost Auditors of the Company for the financial year 2017-18 under section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 includingamendments if any. Cost Auditors have confirmed that they are eligible under Section 141(3) of the Companies Act 2013 for reappointment.

The Cost Auditors' Report for the year 2015-16 was filed with Central Government withinthe prescribed time.


During the FY 2015-16 Related Party transactions(RPTs) as defined under Section 188 ofthe Act read with rules made thereunder and the SEBI listing Regulations were at arm'slength and in ordinary course of business. Pursuant to the provisions of Section 177 ofthe Act read with Regulation 23 of SEBI listing Regulations all RPTs were placed beforethe Audit Committee for its approval. Your Company has in place a Related PartyTransactions Policy. During the year under review your Company did not enter into any RPTwhich may be considered material in terms of Section 188 of the Act read with rules madethereunder and thus disclosure in Form AOC-2 is not required to be made by the Company.The disclosures pertaining to RPTs in compliance with the applicable Accounting Standardshave been given in Note no. 58 of the Standalone financial statements forming part of theAnnual Report.


Your Company is working actively on various projects efficiently approaching andtargeting towards Clean Development Mechanism (CDM) and reduction in Green House Gases(GHG) emissions.

The Company has installed unique technology for converting distillery spent wash intofuel at both the plants viz. Kashipur and Gorakhpur. Through this technology the spentwash is concentrated through five effect evaporator. The concentrate is utilized as fuelto substitute coal in a specifically designed boiler.

The high pressure steam so generated is passed through the turbine for power generationand low pressure steam after turbine is utilized in the plant for operation. Due to thisyour Company is saving fossil fuel in terms of coal and substituting the essential powergeneration through DG sets.

The Biomass based Cogeneration Project activity taken up by the Company at itsGorakhpur U.P. plant is successfully registered under Clean Development Mechanism (CDM)project by United Nations Framework Convention on Climate Change (UNFCCC) for ten yearfixed crediting period 16th December 2010 to 15th December 2020.Under the Clean Development Mechanism emission reduction (or emission removal) projectsin developing countries can earn certified emission reduction credits. Your Company hasreceived certification of Energy Management System (ISO 50001:2011) under integratedmanagement system.

The information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with the Rule 8 of the Companies (Accounts) Rules 2014 is given at "AnnexureB" to this report.


Corporate Social Responsibility (CSR) is a way of conducting business by whichcorporate entities visibly contribute to the social good. The essence of CSR is tointegrate economic environmental and social objectives with the Company's operations andgrowth. CSR is the process by which an organization thinks about and evolves itsrelationships with society for the common good and demonstrates its commitment by givingback to the society for the resources it used to flourish by adoption of appropriatebusiness processes and strategies.

As the Company had incurred losses during the last 3 financial years (i.e. tillfinancial year 2015-16) accordingly in terms of the provisions of Section 135 of theAct the Company was not required to spend any amount towards CSR activities during thefinancial year 2016-17. However keeping in view its social responsibility commitmentsthe Company has voluntarily contributed to the CSR activities during the financial yearended 31st March 2017 amounting to Rs.20.57 lacs.

In accordance with the provisions of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the annual report on CorporateSocial Responsibility activities is given at "Annexure C" to this Report.

The CSR Committee comprises two Executive Directors namely Shri U.S. Bhartia (Chairman)and Shri M. K. Rao and one Non Executive Independent Director namely Shri Pradip KumarKhaitan. The details of the CSR Committee meetings and the attendance of the membersthereat are provided in the Corporate Governance Report and forms part of this Report.


The Company has constituted a Risk Management Committee to monitor the Risk ManagementPlan and to mitigate the risks attached to the business of the Company. The RiskManagement Committee consists of Directors and the senior management personnel of theCompany details whereof are provided in the Corporate Governance Report and forms part ofthis Report.

Your Company's objective of risk management is to have a meaningful identificationmeasurement prioritization of risks or exposures to potential losses on a continual basisthrough active participation of all members of the Company and accordingly establishcontrols and procedures to build a visible & structured enterprise-wide riskmanagement framework; reduce the risk levels and mitigate their effects in the likelihoodof a risk event with an aim to protect our

Company from harm; and have a contingency plan to manage risks having high probabilityand high impact.

Risk management framework is created to ensure that risk management principles areimplemented and integrated all over the organization and that information retrieved fromthe risk management process are correctly reported. This framework provides a stablefoundation for the risk management work orient the organizational arrangements properlyin order to have a clear risk strategy across the organization & share informationexperiences amongst different sites of the Company.

Considering the importance of keeping the risk management process dynamic a quarterlyreview of the risks is carried out across sites and departments for necessary key risksand risk management strategies are communicated to the Board of Directors for theirassessment for minimization of effects of risk. The details of the Risk Management meetingare provided in the Corporate Governance Report.


The extract of the Annual Return in form MGT-9 is enclosed at "Annexure D"to this Report.


During the year under review there were no significant material orders passed by theregulators or courts or tribunals impacting the going concern status of the Company andits future operations.


The required information as per Section 197 of the Companies Act 2013 read with Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isgiven at "Annexure E" to this Report.


Your Director would like to take the opportunity to place on record their appreciationfor the committed services and contribution made by the employees of the Company at alllevels. Also your Directors wish to express their sincere appreciation for the continuedsupport and cooperation extended by the Central Government the State Governments ofUttarakhand and Uttar Pradesh other governmental authorities Banks vendors and otherbusiness associates. The Company look forward for their continued support in the future.

For and on behalf of the Board
Place : Noida U.S. Bhartia
Dated : 16th May 2017 Chairman and Managing Director
DIN: 00063091

Annexure B



(a) Steps taken or impact on Energy Conservation:

1. Installation of feed preheater in Glycol Ether Acetate plant utilizing LP steaminstead of MP steam resulting in increased power generation from steam turbine.

2. Installation of alcohol feed heater utilizing flash steam from process in Glycolether plant resulting in steam saving.

3. Utilization of MP steam for loop reactor instead of HP steam through letdown system.

4. Utilization of LP steam instead of MP steam for DEGEE Column Reboiler resulting inincreased power generation from steam turbine.

5. Preheating of DEG column feed with product stream resulting in steam savings incolumn.

6. Provision of VFD for MEGEE Acetate Reactors Agitators resulting in power savings.

7. Installation of LED lamps (Phase -2) in a phase manner resulting in energy savingsin lightning system.

8. Installed the VFD at cooling tower fan of Distillation cooling tower to save thepower.

9. Installation of flash steam recovery from steam boiler drums resulting in LP steamsavings.

10. Slop Boilers SA fan motor replacement - power saving by replacement with lower sizemotor.

(b) Steps taken by the Company for utilizing alternate sources of energy:

1. Solar lights installed-Phase 2.

(c) Capital Investment on energy conservation equipments:

During the year the Company invested Rs.71.03 lacs in energy conservation equipments.


a) The efforts made towards technology absorption:

Sugar based GREEN surfactants.

b) Benefits derived like product improvement cost reduction product development orimport substitution

1. Speciality Alcohol Ethoxylate for Construction chemicals.

2. Development of biodegradable and user friendly surfactants for Textile processing.

3. Speciality Additives for Continuous Processing (Textiles).

4. Development of low temperature & low dosage demulsifiers for crude oilproduction.

5. Development of speciality surfactants for pigment dispersion and defoamer in paints.

6. Development of Emulsifiers for newly introduced combo pesticides for export.

7. Development of emulsifier package for multi Toxicant for agrochemicals.

8. Development of wetting and dispersing agents for powder formulations in pesticides.

9. Adjuvants for the Herbicides formulations.

10. Development of green and ecofriendly household cleaning and personal caresurfactants.

c) In case of imported technology (imported during the last 3 years reckoned from thebeginning of the financial year) :

(a) Details of technology imported Nil
(b) Year of import Nil
(c) Whether the technology been fully absorbed NA
(d) If not fully absorbed areas where absorption has not taken place and the reasons thereof NA

d) Expenditure incurred on Research and Development-

Sl. No. Division/Place/Plant for which incurred

Nature of expenses (Rs. In lacs)

Capital Recurring
1. Chemical Kashipur 641.58 749.27
2 Ennature Bio Pharma Dehradun 6.38 148.25
Total 647.97 897.52

(C) Foreign Exchange Earning and Outgo:

(Rs. In lacs)

Sl. No. Particulars 2016-17 2015-16
1. Foreign Exchange earnings 81030.83 81575.12
2. Foreign Exchange outgo 105047.38 75246.45


For and on behalf of the Board
Place : Noida U.S. Bhartia
Dated : 16th May 2017 Chairman and Managing Director
DIN: 00063091