Your Directors hereby present the Forty Seventh Annual Report alongwith AuditedFinancial Statements of the Company for the financial year ended 31st March 2017.
1. Financial Results
Rs in Lakhs
| ||2016-17 ||2015-16 |
|Revenue from Operations (Gross) ||3352.50 ||2621.86 |
|Less: Excise duty ||322.74 ||293.26 |
|Revenue from Operations (Net) ||3029.76 ||2328.60 |
|Other Income ||93.65 ||100.26 |
|Total Revenue ||3123.41 ||2428.86 |
|Gross Profit ||652.17 ||713.15 |
|Less: || || |
|Finance Cost ||73.69 ||76.68 |
|Depreciation and Amortisation expenses ||293.23 ||276.81 |
|Profit/(Loss) before Tax ||285.25 ||359.66 |
|Tax Expenses: || || |
| Current Tax ||135.76 ||167.20 |
| Deferred Tax ||(53.14) ||- |
|Profit for the year ||202.63 ||192.46 |
2. Operational Review
The Gross Sales amounted to Rs 3352.50 lakhs (previous year Rs 2621.86 lakhs) and NetSales was Rs 3029.76 lakhs (previous year Rs 2328.60 lakhs). After providing forDepreciation Finance cost and Taxes the Net Profit was
Rs 202.63 lakhs as against Rs 192.46 lakhs in the previous year 2015-2016.
3. Sale of Maleic Anhydride (MA) Business Taloja Maharashtra
During the year under review the Board of Directors decided to transfer the MA Businessof the Company by way of slump sale as a "going concern" to M/s. I GPetrochemicals Ltd. at a consideration of
Rs 74.48 crores effective from 1st April 2017. The Special Resolution was approved bythe shareholders by way of Postal Ballot the results of which were declared on 17thDecember 2016. Thereafter the Agreement to sell was executed on 1st April 2017. Theconsideration would be received by the Company in tranches over a period of five (5)years.
4. PA Plant Status
The PA Plant at Raichur Karnataka was closed since July 2013 due to economicunviability and the management staff and a few workmen accepted the retrenchmentcompensation offered by the Company. 52 (fifty two) workmen had not accepted the offer andhave approached the Labour Department Government of Karnataka for further demands and thematter is pending before the Industrial Tribunal Hubballi Karnataka. The management isawaiting the outcome of the Tribunals judgement in this regard. Meanwhile theCompany has filed a Writ Petition in the Honble High Court of Karnataka BengaluruGulbarga Bench. The hearings are awaited.
Your Directors are pleased to recommend dividend of Re. 1/- (10%) per equity share ofRs . 10/- each. The total outgo on account of dividend (including dividend distributiontax) for the current year amounts to
Rs 79.24 lakhs (previous year Rs 79.24 lakhs).
6. Share Capital & Finance 6.1 Share Capital
The paid up Equity Share Capital as on 31st March 2017 was Rs 658.76 lakhs. During theyear under review the Company has neither issued any shares or granted any stock optionsor sweat equity. The Promoter shareholding as on 31st March 2017 is 72.99%.
The Company does not have any secured debts as on date.
6.3 Fixed Deposits
The Company has not accepted any Fixed Deposits from the public falling within theambit of Section 73 of the Companies Act 2013 and the Rules framed thereunder.
6.4 Particulars of Loans Guarantees or Investments
The Company has not given any loans or guarantees within the meaning of the provisionsof Section 186 of the Companies Act 2013.
The details of the investments made by the Company are given in the notes to theFinancial Statements.
7. Taxes and Duties
The Company has contributed Rs 545.85 lakhs (Rs 533.89 lakhs) to the Central and Stateexchequer by way of Excise Duty Sales Tax Income Tax and Professional Tax.
8. Economic Scenario opportunities concerns and future outlook
The Indian economy continues to be robust even though there was a slight fear ofslowdown due to the demonetisation implemented during the year. The GDP is expected to bearound 7-7.2% in the current year 2016-17 which is still one of the highest in the world.The Governments continued thrust for infrastructure sector will be a big boost for theeconomy as a whole and for the manufacturing sector in particular. The outlook forIndias national economy in the year 2017 and beyond shows a strong emergingpotential. This will encourage a good growth for industrial activities in the years tocome. The Company is exploring options on various parameters in order to establish itsbusiness activities in future.
9. Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) Policy of the Company aims to bring adifference in the lives of the needy under privileged persons of the society includingchildren women and senior citizens. During the year the CSR Committee of the Companydirected its spending on the sectors primarily in education and community services inaccordance with its CSR Policy.
The Report on CSR activities is annexed herewith as "Annexure A".
10. Risk Management
The Company manufactured a single product MA in the previous year which is recoveredfrom the Wash Water. MA is sold in local markets and there are no exports. Hence there areonly the general business risks which are inherent to any business viz.Technical/Operational risk Interest rate risk Economic and Geo-political risk etc. TheBoard of Directors do a periodic assessment of risks through properly defined frame workand its mitigation resulting in minimization of risks.
The MA business is now sold to I G Petrochemicals Limited (IGPL) and hence there are norisks related to the manufacturing activities. The Company is evaluating options toestablish its business activities in future.
11. Vigil Mechanism/Whistle Blower Policy
The Company has a Vigil Mechanism Policy to deal with instance of fraud andmismanagement if any. The details of the Policy is explained in the Corporate GovernanceReport and also posted on the Companys website www.mysorepetro.com. There was nofraud or irregularity noticed during the year under review.
12. Directors & Key Managerial Personnel
Shri S N Maheshwari Director retires by rotation and being eligible has offeredhimself for re-appointment. The Company has received necessary declarations fromall Independent Directors of the Company as required under Section 149(7) of the CompaniesAct 2013 that they meet the criteria of independence laid down in Section 149(6) of theCompanies Act 2013.
There were no changes in the Key Managerial Personnel during the year under review.However Mr. Paras Jain Chief Financial Officer resigned on 31st May 2017 and Mr. NileshPanchal has been appointed as Chief Financial Officer and authorized as Key ManagerialPersonnel of the Company w.e.f. 25th July 2017.
12.1 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--vis the Board and its committees have been carried outduring the year. The manner of such evaluation has been disclosed in the CorporateGovernance Report.
12.2 Remuneration Policy
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management anddetermination of their remuneration. The Remuneration Policy forms part of the CorporateGovernance Report.
During the year four Board Meetings and four Audit Committee Meetings were convened andheld. The details of the same are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the Act.
13. 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 ended31st March 2017 all the applicable accounting standards have been followed and nomaterial departures have been made from the same; b) that appropriate accounting policieshave been selected and applied consistently and have made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year ended 31st March 2017 and of the profit of theCompany for that year; c) that proper and sufficient care has been taken for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and forpreventing/detecting fraud and other irregularities; d) that the annual financialstatements have been prepared on a going concern basis; e) that proper internal financialcontrols were in place and that the financial controls were adequate and were operatingeffectively; f) that systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.
14. Related Party Transactions
All transactions entered into with related parties and which were material in naturewere on arms length basis in the ordinary course of business and with the approvalof the Audit Committee Board of Directors and members of the Company wherever required.In view of the sale of MA Business the long term related party transactions have beenterminated w.e.f. 1st April 2017.
Information on Related Party Transaction is given in Annexure B.
15.1 Statutory Auditors
The retiring Auditors M/s. Hariharan & Co. Chartered Accountants Bengaluru(Firms Registration No. 001083S) term expires at the forthcoming AGM. TheBoard appreciates the contributions of M/s. Hariharan & Co. for their diligence andindependence during their long association with the Company.
In terms of the provisions of Section 139(2) of the Companies Act 2013 read with theCompanies (Audit & Auditors) Rules 2014 the Board of Directors have appointed M/s.MSKA & Associates Chartered Accountants Mumbai (Firms Registration No.105047W) as Statutory Auditors of the Company in the meeting held on 25th July 2017subject to the approval of the shareholders in the forthcoming Annual General Meeting(AGM) to hold office for five (5) consecutive years from the conclusion of this AGM tillAGM of the Company to be held in the year 2022. The said appointment shall be ratified bythe Members at every AGM till the expiry of their tenure. The Auditor has provided awritten confirmation to the effect that their appointment if ratified would be inconformity with the limits specified in Section 141(3)(g). Also they have confirmed theireligibility under Section 141 of the said Act and the Rules framed thereunder forappointment as Auditors of the Company. As required under Regulation 33 of the SEBIListing Regulations the Statutory Auditor has also confirmed that they hold a validcertificate issued by the Peer Review Board of the Institute of Chartered Accountants ofIndia (ICAI).
Your Directors recommend their appointment as the Statutory Auditors to hold office fora term of five (5) consecutive years subject to ratification of their appointment at everyAGM upto the end of their tenure.
15.2 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 and Associates Practicing Company Secretaries (CP No.3662) to conduct the Secretarial Audit of the Company for the Financial Year 2016-17. Thesaid Report is annexed herewith as "Annexure C".
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
16. Listing of Shares
Your Companys shares are listed on BSE Limited under Scrip Code No. 506734. TheISIN code is INE741A01011.
17. Corporate Governance
The disclosures as required under Schedule V to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are attached herewith and forms part of thisreport.
18. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
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 "AnnexureD".
19. Extract of Annual Return
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 read with Rule12 of the Companies (Management and Administration) Rules 2014 an extract of the Annualreturn in Form MGT-9 is annexed herewith as "Annexure E".
20. Internal Control System
The Company has internal controls commensurate with the size of its business and hasestablished framework of internal controls to ensure that the assets are safeguarded andare productive. Necessary checks and balances are in place to ensure that transactions areadequately authorized and reported correctly. The Company is following all the AccountingStandards for properly maintaining the books of accounts and the reporting of financialstatements. The Company has appointed the Internal Auditors to review various areas of theoperations of the Company. The audit reports are reviewed by the management and the AuditCommittee of the Board and corrective actions are taken by the Company when needed.
21. Human Resource Development/Industrial Relations
The PA Plant at Raichur Karnataka has closed down its operations since July 2013 andthe settlement with the workers is in progress.
Industrial relations was cordial at the MA Unit at Taloja Maharashtra upto 31st March2017.
22. Cautionary Statement
Statements made in this report describes the Companys objectives projections andestimates and may be forward looking and are stated as required by applicable laws andregulations. Actual results may differ substantially or materially from those expressed orimplied. Important developments that could affect the Companys operations includemarket conditions Government regulations exchange rate fluctuations interest and othercosts.
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.
Your Directors sincerely thank the various Central and State Government Departments andvarious Organizations for their continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for their excellent support.The Directors place on record their sincere appreciation to all employees of the Companyfor their unstinted commitment and continued contribution to the Company.
| ||For and on behalf of the Board of Directors |
|Mumbai ||M M Dhanuka |
|25th July 2017 ||Chairman & Managing Director |
ANNEXURE A TO THE DIRECTORS REPORT
ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES
1. A brief outline of the Companys CSR Policy including overview of projects orprogrammes proposed to be undertaking and a reference to the web-link to the CSR policyand projects or programmes: CSR Policy of the Company is available onhttp://www.mysorepetro.com
2. Composition of the CSR Committee:
The CSR Committee was constituted by the Board of Directors effective 25th May 2015.The composition of the Committee is given below:
|Name of the Director ||Position ||Category |
|Shri Nikunj Dhanuka ||Chairman ||Non-Executive Director |
|Shri Shrikant Somani ||Member ||Non-Executive & Independent Director |
|Shri S N Maheshwari ||Member ||Non-Executive Director |
|Smt. Uma Acharya ||Member ||Non-Executive & Independent Director |
3. Average net profit of the Company for the last three financial years: Rs 667.21lakhs.
4. Prescribed CSR expenditure (two per cent of the amount as in item No. 3 above): Rs13.34 lakhs.
5. Details of amount spent on CSR during the financial year 2016-17: a. Total amountspent: Rs 13.34 lakhs b. Amount unspent if any: Nil c. Manner in which the amount spentduring the financial year is detailed below:
(Amount in Rs)
| || || || || || || || |
| || || ||Projects or program ||Amount outlay ||Amount spent on the Project ||Cumulative Expenditure || |
| || || ||1. Local area or other ||(Budget) ||or Programs Sub-heads ||upto the reporting period ||Amount spent: Direct or through implementing agency |
|Sr. No. ||CSR Project or Activity identified ||Sector in which the project is covered ||2. Specify the State and district where projects or Programs was undertaken ||Project or Programs- wise ||1. Direct expenditure on projects or programs || || |
| || || || || ||2. Overheads || || |
|1. ||Social Welfare ||Community Organisation ||Mumbai ||51000/- ||51000/- ||51000/- ||Donation to Kalki Tejomaya Social Welfare Trust |
|2. ||Society ||Education/ Community Organisation ||Vrindaban U.P. ||1283000/- ||1283000/- ||1283000/- ||Donation to H P Dhanuka Charity Trust |
| || ||TOTAL || ||1334000/- ||1334000/- ||1334000/- || |
The CSR Committee hereby confirms that the implementation and monitoring of CSR Policyis in compliance with CSR objectives and Policy of the Company.
|Sd/- ||Sd/- |
|M M Dhanuka ||Nikunj Dhanuka |
|Managing Director & CEO ||ChairmanCSR Committee |
ANNEXURE B TO DIRECTORS REPORT
(Pursuant to Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of theCompanies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arms length transaction under third provisothereto.
1. Details of contracts or arrangements or transactions not at arms lengthbasis:
2. Details of contracts or arrangements or transactions at arms length basis:
|Name of the related party and nature of relationship ||Nature of contracts/ arrangements/ transactions ||Duration of the contracts/ arrangements/ transactions ||Salient terms of the contracts or arrangements or transactions including the value if any. ||Justification for entering into such contracts or arrangements or transactions ||Date of approval by the Board ||Amount paid as advances if any. |
| ||a) Supply of Goods & Services. ||a) Contract Agreement dt. 1.3.2014 for five(5) years upto 28.2.2019. ||a) Purchase of Wash Water Steam and Orthoxylene from IGPL. ||a) Wash Water available only from IGPL being its effluent in the process of manufacture ||a. 23.5.2014 ||NIL |
|I G Petrochemicals Limited (IGPl) Co-Promoter ||b) Office premises on Lease ||b) Leave and License Agreement dt. 21.3.2014 for five (5) years upto 28.2.2019. ||b) Let on lease to IGPL on security deposit of Rs. 6.25 crores. ||b) To put the premises to optimum use. ||b. 13.2.2014 ||NIL |