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I G Petrochemicals Ltd.

BSE: 500199 Sector: Industrials
NSE: IGPL ISIN Code: INE204A01010
BSE 00:00 | 20 Sep 182.40 17.15
(10.38%)
OPEN

175.00

HIGH

185.00

LOW

165.40

NSE 00:00 | 20 Sep 182.45 16.40
(9.88%)
OPEN

166.35

HIGH

185.00

LOW

166.05

OPEN 175.00
PREVIOUS CLOSE 165.25
VOLUME 9084
52-Week high 487.00
52-Week low 129.90
P/E 6.58
Mkt Cap.(Rs cr) 562
Buy Price 180.00
Buy Qty 43.00
Sell Price 182.40
Sell Qty 336.00
OPEN 175.00
CLOSE 165.25
VOLUME 9084
52-Week high 487.00
52-Week low 129.90
P/E 6.58
Mkt Cap.(Rs cr) 562
Buy Price 180.00
Buy Qty 43.00
Sell Price 182.40
Sell Qty 336.00

I G Petrochemicals Ltd. (IGPL) - Director Report

Company director report

To The Members

On behalf of the Board of Directors of your Company it gives mepleasure in presenting the Thirtieth Annual Report together with the Audited FinancialStatements for the year ended 31st March 2019:

1. FINANCIAL RESULTS

(र in lakhs)
2018-19 2017-18
Total Revenue 131128.07 117489.23
Profit before interest depreciation and tax 23370.48 27142.41
Finance Cost 1143.53 1487.96
Depreciation and 2646.41 2569.58
Amortization expenses
Profit before tax 18630.54 23084.88
Provision for tax 6982.39 8430.39
Profit for the year 11648.16 14654.49
Balance brought forward from previous year 42366.51 30823.94
Profit available for appropriations 50529.68 45478.43
Earnings per share 37.82 47.58

2. DIVIDEND

The Board of Directors have recommended a dividend of र 4/- perequity share having face value of र 10/- each (40%) for the year ended 31st March2019 aggregating to र 1484.99 lakhs (including dividend distribution tax).

3. FINANCIALS

The revenue from operations grew by 14% to र 131128.07lakhs during the financial year 2018-

19. The total expenditures rose by 18.15% mainly on account of higherraw material prices which led to the fall in the profit before tax by 15.18% at र 18630.54 lakhs. Profit र 11648.16 lakhs is lower than the previous year on accountof the volatility in oil price movements during the year. There were no material changesor commitments that have occurred between the end of the financial year and the date ofthis Report which affects the financial statements of the Company in respect of thereporting year.

4. OPERATIONAL REVIEW

The Orthoxylene prices remained volatile for most part of the year dueto crude prices thus affecting the overall conversion cost of Phthalic Anhydride (PA).

The anti-dumping duty levied on imports of PA from Taiwan Korea andIsrael was removed during the year and this led to the intensified competition in thedomestic market. As a result of this the conversion of PA has come down because ofcompetition on account of import from the overseas market.

The above factors contributed to the sustained pressure on marginsthroughout the year and eventually leading to the drop in profitability of the Company by20.61% to र 11648.16 lakhs.

5. EXPANSION

The brownfield expansion of PA plant by 53000

MTPA is on and is expected to get commissioned in the current year.With this the Company shall become one of the largest producer of PA at a single locationglobally and will achieve substantial economies of scale. The expansion will also providethe Company with additional raw materials for the production of MA which will improve theoverall revenue and margins of the Company. The downstream expansion into specialtyplasticizers is also expected to commission in the current year.

6. CONTRIBUTION TO THE EXCHEQUER

The Company has contributed र 26906.24 lakhs to the exchequer byway of income tax customs duty goods and service tax etc.

7. SHARE CAPITAL & FINANCE

7.1 Share Capital

The Company's paid-up Equity Share Capital remained unchanged atर 3079.81 lakhs as at 31st March 2019. The shareholdings of the after tax atPromoters and Persons Acting in Concert with Promoters are 68.90%.

7.2 Finance

The Company optimally utilizes its working capital facilities andcontinuously monitors its receivables inventories etc. The Company has raised externalcommercial borrowings of € 15.77 million from the foreign lenders and a term loanupto र 75 crores to partially fund the expansion of plant. The debts (includinginterest) are being serviced regularly.

7.3 Credit Ratings

The Credit Ratings of the Company are “IND A+” (long term)and “IND A1+” (short term) issued by India Ratings & Research.

7.4 Deposits

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

7.5 Particulars of Loans Guarantees or

Investments

Details of Loans Guarantees or Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements.

8. TRANSFER TO GENERAL RESERVES

The Company proposes to transfer an amount of र 2000.00lakhs to the General Reserves.

9. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES

IGPL International Limited and IGPL (FZE) are the wholly ownedsubsidiaries of the Company.

The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co.Ltd. for the manufacture of Maleic Anhydride has been called-off during the year due to itbecoming economically unviable.

The financial statements of subsidiaries are placed on the website ofthe Company and available for inspection by the members of the Company. A copy of theaudited accounts shall be made available to the member upon request.

The consolidated financial statements of the Company are prepared inaccordance with the applicable Ind AS together with the report of the Auditors'thereon forms part of this Annual Report. A statement containing salient features of thefinancial statements of the subsidiaries in Form AOC-1 is attached with this AnnualReport.

10. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

In accordance with the provisions of Section 135 of the Companies Act2013 (“the Act”) and the Rules framed thereunder the CSR Committee reviews andmonitors the projects and expenditures incurred by the Company which are mainly foreducation old age homes environment etc. The Report on CSR activities containingprescribed details are annexed to the Directors' Report as “Annexure-A”.

During the year the Company spent र 136.16 lakhs towards CSRactivities as against the budgeted allocation of र 293.24 lakhs. The Company hasinitiated some projects which are under implementation.

11. ANNUAL RETURN

The Annual Return of the Company in Form

MGT-7 for the year 2018-19 is available on the website of the Companyand can be accessed at www.igpetro.com

12. VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism Policy in place to report instancesof actual or suspected unethical behavior fraud etc. The Audit Committee reviews thefunctioning of the Policy. The details of the Vigil Mechanism has been elaborated in theCorporate Governance Report and posted on the Company's website www.igpetro.com

13. TRANSFER OF SHARES TO IEPF

In compliance with the provisions of Section 124(6) of the Act readwith the Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 (“the IEPF Rules”) and amendments thereto the Company hadduring the financial year 2017-18 transferred 779342 shares to IEPF Authority in respectof shares on which dividend has not been paid or claimed for seven consecutive years.

Members whose shares are so transferred can claim their dividend andshares from the IEPF authority by filing Form IEPF-5 available at www.iepf.gov.in. Membershould also note that only one consolidated claim can be filed in a financial year as perthe IEPF Rules. Members are advised to claim any unencashed dividends.

The Company Secretary of the Company has been designated as the NodalOfficer who can be contacted for any guidance/assistance to claim the dividend and sharesfrom IEPF Authority.

14. DIRECTORS & KEY MANAGERIAL PERSONNEL

Upon the recommendation of the Nomination and Remuneration Committeeand in accordance with the provision of the Act read with the Rules framed thereunderShri Nikunj Dhanuka was re-appointed as Managing Director & Chief Executive Officer ofthe Company for a period of three years with effect from 27th April 2019. Shri M MDhanuka retires by rotation and being eligible offered himself for re-appointment.

Shri Rajesh Muni Shri P H Ravikumar and Dr. A K A Rathi were appointedas Independent Directors of the Company by the members at an Annual General Meeting heldon 26th July 2014 for a term of five years each with effect from 26 th July 2014. Inaccordance with the provisions of Section 149 of the Act the Independent Directors shallbe eligible to seek re-appointment for a second term of five years subject to the approvalof the members by special resolution. The said Independent Directors have given theirconsent for re-appointment.

The Company has received notices under Section 160 of the Act from aMember proposing the re-appointment of Shri Rajesh Muni Shri P H Ravikumar and Dr. A K ARathi as Independent Directors of the Company. Approval of the Members are being sought byspecial resolutions for reappointment as Independent Directors for a second term of fiveconsecutive years.

All Independent Directors of the Company have furnished declarationsunder Section 149(7) of the Act confirming that they meet the criteria of independencelaid down in Section 149(6) of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Shri R Chandrasekaran resigned as Chief Financial Officer of theCompany with effect from 7th February 2019 and Shri Pramod Bhandari is appointed as ChiefFinancial Officer of the Company with effect from 7th February 2019.

14.1 Meetings

During the year four meetings of the Board of Directors and AuditCommittee were held as more particularly disclosed in the attached Report on CorporateGovernance.

14.2 Board Evaluation

The Board of Directors have carried out its annual performanceevaluation as well as of the Directors individually and their respective Committees asrequired under the Act and SEBI Listing Regulations. The details of which are disclosed inthe Corporate Governance Report.

14.3 Remuneration Policy

The details of the Remuneration Policy forms part of the CorporateGovernance Report. The information relating to remuneration as required pursuant toSection 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 (“the Rules”) are given below: a) Ratio ofthe remuneration of each Director to the median remuneration of the employees of theCompany for the financial year Shri Nikunj Dhanuka Managing Director & CEO –45:1 Shri J K Saboo Executive Director – 7:1 b) The percentage increase in theremuneration of Managing Director Chief Financial Officer and Company Secretary for theFinancial Year Shri Nikunj Dhanuka Managing Director & CEO – (16%)@ Shri RChandrasekaran Chief Financial Officer N.A*Shri Sudhir R Singh Company Secretary –10% @ decline in commission due to lower profits.

* Since resigned during the year

c) The percentage increase in the median remuneration of employees inthe

Financial Year – 9.80%

d) Number of permanent employees on the rolls of the Company – 413

e) Average percentage increase made in the salaries of employees otherthan the managerial personnel in the last financial year was 11.50% whereas the increasein the managerial remuneration was 8.25%. The increase in the remuneration is on accountof commission paid.

It is hereby affirmed that the remuneration paid during the year is asper the Remuneration Policy of the Company.

The information under Rule 5(2) of the Rules will be provided to themembers upon request in terms of the first proviso to Section 136 of the Act.

15. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to theinformation and explanation obtained by us in terms of Section 134(3)(c) of the CompaniesAct 2013 we state: a. that in the preparation of the annual financial statements for theyear ended 31st March 2019 all the applicable accounting standards have been followed andno material departures have been made from the same; b. that appropriate accountingpolicies have been selected and applied consistently and have made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year ended 31st March 2019 and of theprofit of the

Company for that year; c. that proper and sufficient for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing/detecting fraud and other irregularities; d. that the annual financial statements havebeen prepared on a going concern basis; e. that proper internal financial controls were inplace and that the financial controls were adequate and were operating effectively; f.that systems to ensure compliance with the provisions of all applicable laws were in placeand were adequate and operating effectively.

16. RELATED PARTY TRANSACTIONS

All transactions entered into with related parties during the year wereon arm's length basis and in the ordinary course of business.

There were no material related party transactions. The necessarydisclosures regarding the transactions are given in the notes to accounts. The Company hasformulated a policy on dealing with the Related Party Transactions and necessary approvalof the Audit Committee and Board of Directors were taken wherever required in accordancewith the Policy.

17. INTERNAL CONTROL

The scope of Internal Audit is reviewed by the Audit Committee atregular intervals. A framework of the audit is generally defined at the beginning of theyear based on the discussion with the Internal Auditor. The Internal Auditor submits itsreport to the Audit Committee. The Company's internal control systems commensuratewith its nature of business size and operations. The Internal Audit strives to evaluatethe efficacy and adequacy of internal control system and processes accounting policiesand procedures compliance with laws and regulations concerning the operations of theCompany. The internal control mechanism of the Company enables it to identify assess andmitigate the risk related to its business. Risks are being evaluated on various parametersand these parameters are being care has been taken reviewed at regular intervals.

18. AUDITORS

18.1 Statutory Auditors

M/s ASA & Associates LLP and M/s Uday & Co. are the StatutoryAuditors of the Company appointed by the members of the Company at the annual generalmeetings.

18.2 Cost Auditors

M/s Krishna S & Associates Cost Accountants have been appointed asthe Cost Auditor to conduct an audit of the cost records of the Company for the year2019-20. A resolution seeking Members' ratification the remuneration payable to M/sKrishna S & Associates is included in the Notice convening the Annual General Meeting.

18.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Makarand M Joshi & Associates Practicing Company Secretaries(Membership No. 5533) to conduct the Secretarial Audit and their Report on the SecretarialAudit for the year 2018-19 is annexed herewith as “Annexure-B”. There are noqualifications in the said report.

19. ENERGY CONSERVATION TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the Actread with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as“Annexure-C”.

20. CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governanceand a report on the same along with the Auditors' Certificate compliance is attachedwith and forms part of this report.

A report on Management Discussion and Analysis forms an integral partof this report.

21. PREVENTION OF SEXUAL HARASSMENT

The Company is an equal opportunity provider and has zero tolerance inany form or manner towards the sexual harassment of women at workfor place. In accordancewith the Sexual Harassment of Women at Work Place (Prevention Prohibition and Redressal)Act 2013 the Company has formulated a policy on prevention prohibition and redressal ofsexual harassment of women at work place.

The Internal Complaints Committee has been constituted with majority ofthem being female who is also the Presiding Officer. The Committee meets as and whenrequired. No complaints pertaining to sexual harassment of women employees were receivedduring the year.

22. ISO 9001 : (2008) AND ISO 14001 (2004)

CERTIFICATION

Your Company continued to be certified under ISO

9001:2008 for quality management systems and ISO 14001:2004 forenvironment management systems by Bureau Veritas.

23. ACKNOWLEDGEMENTS

Your Directors convey their sincere appreciation to the businesspartners for their unstinted support and contribution and thank the customers membersdealers employees bankers and all stakeholders for their co-operation andconfidencereposed in the

Company.

For and on behalf of the Board of directors confirming

M M Dhanuka
Mumbai 22nd May 2019 Chairman