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IFGL Refractories Ltd.

BSE: 540774 Sector: Engineering
NSE: IFGLEXPOR ISIN Code: INE133Y01011
BSE 00:00 | 20 Sep 160.00 1.00
(0.63%)
OPEN

155.30

HIGH

163.95

LOW

155.30

NSE 00:00 | 20 Sep 160.30 2.30
(1.46%)
OPEN

158.35

HIGH

168.25

LOW

155.00

OPEN 155.30
PREVIOUS CLOSE 159.00
VOLUME 239
52-Week high 271.50
52-Week low 125.00
P/E 21.25
Mkt Cap.(Rs cr) 577
Buy Price 160.00
Buy Qty 21.00
Sell Price 168.00
Sell Qty 5.00
OPEN 155.30
CLOSE 159.00
VOLUME 239
52-Week high 271.50
52-Week low 125.00
P/E 21.25
Mkt Cap.(Rs cr) 577
Buy Price 160.00
Buy Qty 21.00
Sell Price 168.00
Sell Qty 5.00

IFGL Refractories Ltd. (IFGLEXPOR) - Director Report

Company director report

Directors' cum

Management Discussion and Analysis Report

Deal ShaReAoid&ts

Your Directors have pleasure in presenting 11th Annual Report together with Statementof Profit and Loss for Financial Year (FY) ended on 31st March 2018 (FY 2017-2018) andBalance Sheet as on that date along with Notes Cash Flow Statement and Auditors' Reportforming part thereof.

Financial Statements for FY 2017-2018 have been audited by Statutory Auditors M/sDeloi#e Haskins & Sells and highlights thereof are the following :

Consolidated Standalone
Total Revenue 8436.88 4492.05
Total Expenses 7333.78 3737.27
EBIDTA 1103.10 754.78
Finance Costs 39.68 35.73
Depreciation and Amortisation Expense 437.96 379.72
Profit before Tax 625.46 339.33
Provision for Current Tax/Deferred Tax 154.25 113.53
Profit after Tax 471.21 225.80
Earning per Share ( Rs. ) 13.08 6.27
Cash EPS per Share ( Rs. ) 25.23 16.80

Financial Results include results of operation of erstwhile IFGL Refractories Limited(IFGL) amalgamated with your Company following passing of an Order by the Hon'bleNational Company Law Tribunal Kolkata Bench on 3rd August 2017 after write off of Rs.266.99 million towards amortisation of goodwill useful life of which has been estimated tobe ten years. These Financial Results are best ever achieved by your Company. Severalfactors have contributed in achieving these results. All round improvement in theperformance in the Indian factories and also in the overseas Subsidiaries. This wasfurther helped by the overall performance of the Steel Industry resulting in increasedrefractory off take.

Dividend

Your Directors following the Company's policy of distributing profits recommendedpayment of Dividend at the rate of 20% i.e. Rs. 2/- per Equity Share for FY 2017-2018. Ifapproved at ensuing Annual General Meeting scheduled to be held on Saturday 25th August2018 Dividend including Dividend Distribution Tax will result in outflow of Rs. 86.89million.

Amalgamation

During FY 2017-2018 your Company completed all formalities relating to amalgamation ofIFGL referred above. Equity Shares of your Company were listed both on BSE Limited andNational Stock Exchange of India Limited and trading thereof commenced on and from 14thNovember 2017. Name of your Company was changed to IFGL Refractories Limited w.e.f 25thOctober 2017 and Registrar of Companies West Bengal issued a Fresh Certificate ofIncorporation. Consequent to change of name the Registered Office of your Company wasshifted from the State of West Bengal to State of Odisha on and from 24th November 2017.

Industry Review Future Outlook and Expansion Plans

Your Company and its Subsidiaries are engaged in manufacture of products primarily forIron and Steel producers and foundries. Anything concerning Iron and Steel Industry have abearing on the performance of your Company.

In the year 2017-2018 the steel production recorded a positive growth in all regionsof the world. This happened after a gap of many years. In the recent years the growth wasmainly in China and India with other regions negative. The World Steel Association hasforecasted the steel demand to grow by 1.8% in 2018 and once again in all the regions.

On the Indian front the economy has been growing at a steady rate and after marginallyloosing the 'fastest growing big economy' tag for a short while it is well poised toregain the same at 7.7%. The forecast is to achieve a growth rate of 8% during the year2018-2019. This rate of growth is likely to generate an additional demand of approximately15 million tonnes per annum.

The World Bank forecasts is the World Domestic Product would grow at 3.1% in 2018thereby maintaining the 2017 growth. All this augurs well for the refractory industry.

The only dampener is the rise in oil prices. While on one hand demand for energy wentup with the all round growth but other political factors also caused a reduction in crudeoutput resulting in a spurt in price. While increase in energy cost is a dampener but thishas also resulted in a collateral advantage for the Steel Industry in the USA due toincrease in shale oil & gas out resulting in additional demand for steel.

Subsidiaries

Your Company has operational subsidiaries in Peoples Republic of China Germany UK andUSA. As a part of corporate restructuring and simplification the non operatingsubsidiaries in USA and Germany have been amalgamated with their respective operatingCompanies. Performance of your Company's immediate overseas subsidiary IFGL WorldwideHoldings Limited Isle of Man has been satisfactory inasmuch as Total Revenue PBT and PATon consolidated basis for FY 2017-2018 have been GBP 47.40 million GBP 3.27 million andGBP 2.81 million respectively.

Corporate Governance/Vigil Mechanism etc

As required under Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (SEBI LODR 2015) a Report onCorporate Governance along with a Certificate of Compliance from the Statutory Auditorsform part of this Report as Annexure 'A'.

Your Company has adopted and put in place policies and procedures including VigilMechanism (Whistle Blower) Policy Policy for Prevention of Sexual Harassment etc. YourDirectors are pleased to report that no complaint was received during FY 2017-2018. YourCompany follows philosophy for effective management and discharge of social responsibilityfor sustainable development especially of the areas where it undertake manufacturing.Policies and Systems for Internal Control including Financial Risk Management andTransfer Pricing commensurate to nature of business and size of your Company are also inplace and are reviewed and updated as and when necessary.

Disclosures

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 SEBI LODR 2015 required to be included herein have been dealt in Annexures heretoincluding Audited Financial Statements and Notes forming part thereof and have not beenincluded herein again for brevity. Information regarding Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure 'C'.Transactions with related parties have been in ordinary course of business of your Companyand at arms length and hence details thereof have not been given in Form AOC-2. FormalAnnual Evaluation of your Company's Board of Directors and its Committees and IndividualDirectors (including Independent Directors) was carried out at Board Meeting held onSaturday 19th May 2018. Further details are appearing in Report on Corporate Governancebeing Annexure 'A' hereto.

Your Company made Quarterly Presentations Conference Calls and Interactions followingAnnouncement of Quarterly and Annual Results and these enhanced confidence of Investorstherein.

Your Company does not have any Indian Subsidiary. A statement in Form AOC-1 havingfinancial information of Subsidiary Companies form part of this Report as Annexure 'D'.Shareholders of your Company who are desirous of having complete Statement of Accounts andrelated detailed information of Subsidiary Companies may send their request therefor toyour Company's Registered Office. The

same are being kept for inspection at Registered Office of your Company and itsSubsidiaries Companies and also available on Company's website i.e. www.ifglref.com.

Directors Responsibility Statement

Your Directors state that :

a) in preparation of Annual Accounts 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 affairs of your Company at the end of thefinancial year and of the Profit and Loss of your Company for 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 yourCompany 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.

Audit of the Statement of Accounts is in accordance with Generally Accepted AccountingPrinciples as indicated in Report of Statutory Auditors.

CSR Human Resource and Industrial Relations

Your Company has a CSR Committee and details have been mentioned in CorporateGovernance Report i.e. in Annexure 'A'. Annual Report in compliance of Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 is forming part as Annexure'E'.

Your Company also has a Nomination and Remuneration Committee of the Directors detailsare contained in Corporate Governance Report i.e. in Annexure 'A' hereto. Based onrecommendation of the Committee your Board has adopted a Nomination and RemunerationPolicy which is hosted on your Company's website www.ifglref.com. For the sake of brevitysaid Policy has not been reproduced here.

During FY 2017-2018 3 (three) persons employed (including one employee for part of theyear) with your Company received remuneration of Rs. 102 lacs per annum or more or Rs.8.50 lacs per month or more. Your Company have had 605 permanent employees in India as on31st March 2018.

An Annexure having information following provisions of Section 134(3)(q) and 197(12) ofthe Act read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 form part of this Report. Remuneration paid has been as perNomination and Remuneration Policy of your Company. As per provisions of Section 136 ofthe Act this Annexure is not being sent to Members.However Members desirous of havingthe Annexure may write to Company Secretary at the Registered Office. The Annexure willalso be available for inspection by the Members at Company's Registered Office uptoconclusion of forthcoming Annual General Meeting. None of the person mentioned in saidannexure is relative of any Director of the Company. None of the Employees either directlyor indirectly held/hold more than two percent of Total Equity Share Capital of yourCompany other than your Chairman Mr S K Bajoria.

Industrial Relations in your Company remained cordial during FY 2017-2018. Conduciveworking environment was continued to be provided and employees were empowered by training.Compensation packages and benefits provided were more or less favourable than those of thepeers.

Consolidated Financial Statements

In accordance with IND AS 110 and other relevant provisions particularly Section 129(3)of the Act Consolidated Financial Statements duly audited by Statutory Auditors M/sDeloitte Haskins & Sells form part of this Annual Report. Consolidated FinancialStatements have been prepared based on Financial Statements (including Consolidated) ofimmediate Subsidiary Company i.e. IFGL Worldwide Holdings Limited Isle of Man.

Directors and Key Managerial Personnel (KMP's)

During FY 2017-2018 Mr Hisatake Okumura ceased to be a Director of your Company on andfrom 6th May 2017. In the vacancy arising Mr Yuzo Kawatsu a Senior Executive of KrosakiHarima Corporation Japan (KHC) was appointed as an Additional Director of your Company onand from 11th May 2017. He was appointed as a Director liable to re!re by rotation at yourlast general meeting held on Saturday 23rd December 2017. Mr Kiyotaka Oshikawa anotherSenior Executive of KHC was appointed as an Additional Director on 9th December 2017 andthereafter on 23rd December 2017. He will cease to hold office of Director at ensuingAnnual General Meeting and being eligible has offered himself for re-appointment forfurther period liable to retire by rotation. Your Board and Nomination and RemunerationCommittee have recommended re-appointment of Mr Oshikawa.

Following the Amalgamation becoming effective from 5th August 2017 your Board ofDirectors was re-constituted effective that date and requisite resolutions in connectiontherewith were passed at the last Annual General Meeting. Chairman Mr S K Bajoria isretiring by rotation at ensuing Annual General Meeting and being eligible has offeredhimself for re-appointment for further period liable to retire by rotation. YourNomination and Remuneration Committee and also the Board have recommended re-appointmentof Mr Bajoria.

Details of meetings of the Board of Directors held during FY 2017-2018 and theattendance details are given in Corporate Governance Report - Annexure 'A'. Followingprovisions of Section 173(1) of the Act gap between two Board Meetings did not exceed onehundred twenty days.

Independent Directors Mr KSB Sanyal Mr D G Rajan Mr Debal Kumar Banerji Prof Bhara!Ray Prof Surendra Munshi and Mr Sudhamoy Khasnobis of your Company have given theirstatement of declaration under Section 149(7) of the Act that they continue to meet thecriteria of Independence as provided in Section 149(6) of the Act and their declarationshave been taken on record.

Following provisions of Section 203 of the Act your Company have appointed KeyManagerial Personnel details whereof are appearing at Note 35 of Audited Statement ofAccounts. During FY 2017-2018 Mr Sikander Yadav FCA was appointed as Chief FinancialOfficer on and from 10th February 2018.

The Board of Directors have adopted a Code of Conduct for the Board Members (includingIndependent Directors) and Senior Management Employees of your Company. This Code helpsyour Company to maintain standard of Business Ethics and ensure compliance with legalrequirements applicable to your Company. All Board Members and Senior Management Personnelas on 31st March 2018 have confirmed compliance with this Code.

Cost Auditor

Cost Auditor M/s Mani & Co. have been appointed as Cost Auditor of your Companyfor FY 2018-2019 too. Your Directors are seeking your approval for payment of remunerationnot exceeding Rs. 3 lacs per annum for FY 2018-2019 at ensuing Annual General Meeting.

Secretarial Auditor

M/s S M Gupta & Co. Practicing Company Secretaries have carried out SecretarialAudit following provisions of Section 204 of the Act for FY 2017-2018. Their Report inForm MR-3 free of qualifications form part hereof as Annexure 'F'.

Auditors' Report and Auditors

Report of the Auditors including references made to the Notes forming part of theStatement of Accounts are self explanatory. Auditors M/s Deloitte Haskins & Sells(Regn No. 302009E) Chartered Accountant will retire at conclusion of 12th Annual GeneralMeeting of your Company.

Acknowledgement

Your Directors place on record their sincere appreciation for continued supportreceived from all stakeholders particularly you the Shareholders.

On behalf of the Board of Directors
S K Bajoria P Bajoria
Kolkata (DIN : 00084004) (DIN : 00084031)
19th May 2018 Chairman Managing Director