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Southern Petrochemicals Industries Corporation Ltd.

BSE: 590030 Sector: Agri and agri inputs
NSE: SPIC ISIN Code: INE147A01011
BSE 00:00 | 08 Dec 67.45 0.20
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NSE 00:00 | 08 Dec 67.35 0
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OPEN 67.95
PREVIOUS CLOSE 67.25
VOLUME 175824
52-Week high 93.05
52-Week low 40.80
P/E 5.85
Mkt Cap.(Rs cr) 1,374
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 67.95
CLOSE 67.25
VOLUME 175824
52-Week high 93.05
52-Week low 40.80
P/E 5.85
Mkt Cap.(Rs cr) 1,374
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Southern Petrochemicals Industries Corporation Ltd. (SPIC) - Director Report

Company director report

Your Directors present their 51st Annual Report togetherwith the Audited Financial Statements of the Company for the year ended 31stMarch 2022.

FINANCIAL SUMMARY

(? in crores)

Particulars 31.03.2022 31.03.2021
Revenue from Operations 1874.92 1527.01
Add: Other Income 23.39 28.58
Total Income 1898.31 1555.59
Profit before interest depreciation and tax 199.03 99.00
Less: Finance Cost 14.19 14.15
Less: Depreciation & amortisation expenses 44.41 38.23
Profit Before Tax 140.43 46.62
Less: Tax expenses / (benefit) -- (5.23)
Profit After Tax 140.43 51.85
Add: Net Comprehensive Income 14.06 7.55
Total Comprehensive Income 154.49 59.40

The Company's performance has improved during the last 5 years and theaccumulated losses which stood at ?14.45 Crs as on 31st March 2021 has beenwiped off. The profit as on 31st March 2022 was ?140.43 Crs after providingfor depreciation. All the series of Preference Shares of aggregate value ?12.50 Crs havebeen redeemed and the Dividend dues to Preference shareholders were also paid in full.Accordingly ?12.50 Crs was transferred to Capital Redemption Reserve from the Statementof Profit and Loss as required under the provision of the Companies Act 2013. TheCapital Redemption Reserve can be utilised for issue of bonus shares.

DIVIDEND

Taking into account the financial position of the Company and the normsof your Company's Dividend Distribution Policy the Directors have recommended a Dividendof Re. 0.50 per equity share of ?10 each fully paid-up for the year 2021-22 on thepaid-up equity share capital.

STATE OF COMPANY'S AFFAIRS

Production

During the year under review despite the challenges faced due to thesecond wave of Covid pandemic the Plants were in operation for 326 on stream days.Planned shutdowns were taken for Annual Turnaround Maintenance Reliability improvementactivities and balance NG Conversion activities and associated energy consumptionimprovements. Supply of High pressure Natural Gas commenced from 2nd Aug 2021and full allotted quantity of 0.9MMSCMD commenced from 16th Oct 2021. Duringthe year under review your Company manufactured 620408 MTs of Neem Coated Urea and sold629306 MTs. The Plants were operated using Natural Gas (NG) imported Naphtha and FurnaceOil and achieved energy efficiency levels of 6.521 Gcal/MT of Urea for 2021-22 as against6.454 Gcal/MT of Urea during the previous year.

Handling of Imported Naphtha

Your Company has an arrangement with Indian Oil Corporation (IOC) forusing their tank farm facility at Tuticorin Port premises for handling a part of SPIC'sImported Naphtha shipments. This has facilitated SPIC for faster discharge of cargo andthereby minimizing the ship demurrage to a large extent. This arrangement will becontinued until such time the reliable supply of full quantum of NG is assured.

Progress of NG Supply Pipelines.

IOC authorized to lay the Natural Gas Pipeline from Ennore toTuticorin has completed the 145 km Natural Gas pipeline in Ramanathapuram - Tuticorinsector in the first phase and laying of the pipeline from Ennore to Ramnad line merging atSayalkudi is in progress and expected to be ready by this year end. On completion of thispipeline your Company will get the full requirement of 1.5 MMSCMD. All the fourcompressors are made ready compressor station at Ramnad is ready for operation and yourCompany is getting high pressure gas with a quantity of 0.9 MMSCMD. To adhere to thePolicy of the Government various modifications are being done in a phased manner to be agas based plant to maintain Urea production level of 2080 MTPD.

Status of the Project Activities

In line with the Plants to be gas based NG conversion and improvementactivities have been completed as on March 2022. Environmental clearance and Consent toOperate the modernized facility to produce 7.592 lakhs MTPA of Neem coated Urea has beenobtained and it is valid for next 5 years.

Your Company has an arrangement with an associate Company for puttingup a 10 MLD Desalination Plant. In view of Covid Pandemic and other project prioritiesthe implementation of this project has been delayed. However this delay will not have anyadverse impact on your Company's water requirements since rainfall has been adequate andwater supply position is comfortable. However the project activities have commenced andwhen commissioned it is expected to reduce the risk associated with supply of water fromGovernment source.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act2013 (the Act) during the year 2021-22 the details of which are required to be furnished.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared inaccordance with Ind AS and forms part of the Annual Report.

FINANCIAL STATEMENTS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATECOMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies(Accounts) Rules 2014 the statement containing salient features of the FinancialStatements of the Company's Associates and Joint Ventures (in Form AOC-1) is attached tothe Financial Statements. The Company has no Subsidiaries.

TAMILNADU PETROPRODUCTS LIMITED (TPL)

During the year 2021-22 revenue from operations was ?1805.58 croresas compared to ?1145.21 crores in 2020-21. The Company's net profits registered anincrease at ?170.64 crores as compared to ? 121.65 crores in the previous fiscal. LinearAlkyl Benzene (LAB) the main product sustained its contribution despite increase in oilprices and the increase in income came from Chlor-alkali business and Propylene oxidehelped by increase in product prices and optimal production. Both revenue and ProfitBefore Tax (PBT) in the current year are the highest in the history of the Company. TheBoard of TPL has recommended a dividend of ?3 per equity share of ? 10 each fully paid-upfor the year 2021-22 (25% in the previous year) subject to the approval of Members.

TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LIMITED (TFL)

Refurbishment of defective systems and installation of newer onescontinued this year also to stabilise the production. To overcome the shortage of salt alarge shipment of 45000 Mts of salt was brought from Gujarat. The year witnessed hugeincrease in price of ammonia a major raw material and to offset that the price rise ofsoda ash and ammonium chloride helped the Company to record a significant profit in thelast quarter of the year. With production being stabilised improved results are expectedin the next financial year.

GREENAM ENERGY PRIVATE LIMITED (GREENAM)

25.33 MW DC / 22.0 MW AC Floating Solar Project was successfullycommissioned on 7th March 2022 by Greenam an Associate of your Company. Thefinal project cost is ?148.58 crore against the original projection of ?126 croreestimated in 2019 due to Pandemic related delays and consequent enhanced interest paidduring construction. Your Company's contribution towards equity in this project is ?9.09crore. Greenam is expected to make profit from the current financial year onwards.

The unit is supplying green power to your Company as envisaged at itsfull capacity thus meeting the renewable power obligation of your Company. Further thefresh water loss by evaporation from the Company's water reservoirs has been brought downby 60% saving scarce natural resource. This project would also result in lowering theemission of Green House Gas Carbon dioxide equivalent by 38705MT every year.

SAFETY HEALTH AND ENVIRONMENT

DNV (Det Norske Veritas) conducted the periodical audit for QMS.ISO9001:2015 EMS - ISO 140001:2015 and OHS - ISO 45001:2018 during May 2021. DNV have

certified that all the requirements as per the standards are beingpracticed and there is no non-conformity points. The Certificates are valid till 28thMay 2023 for QMS and EMS systems and for OHS system till 14th Jan 2023.

Premedical and periodical medical examination for employees areconducted on regular basis. Green Belt development is being given top most importance andis a continuing activity with about 814 tree saplings planted during this year. YourCompany has obtained Consent to Operate with mixed feed stock namely Natural Gas andNaphtha valid up to 30th September 2022.

HUMAN RESOURCE AND INDUSTRIAL RELATION

Your Company continues to provide a conducive work environment andopportunities for development of its employees. Industrial Relations in the Company havebeen cordial during the year under review. The number of employees as on 31stMarch 2022 is 617. Your Company continues with the regular campus recruitment programme asa process of building the organisation from the bottom.

ANNUAL RETURN

Annual Return in Form MGT-7 for the year 2020-21 as required underSection 92 of the Act has been placed on the website of the Company. The Form MGT-7 forthe year 2021-22 shall be filed with Registrar of Companies within the prescribed timeafter the date of 51st Annual General Meeting (AGM) of your Company. Thereafterit can be accessed using the web link: https://www.spic.in/investors/annual-return/.

DIRECTORS

Since the date of last Report the Board of Directors had appointed Mr.Pankaj Kumar Bansal IAS Nominee Director of TIDCO with effect from 11thNovember 2021 and Ms. A R Rajalakshmi Nominee Director of TIDCO with effect from 21 stJuly 2022. Mr. R Madhusudhan and Mr. Pankaj Kumar Bansal IAS Nominee Directors of TIDCOresigned with effect from 4th July 2022 and 5th August 2022respectively. The Board of Directors placed on record the invaluable services rendered byM/s. Pankaj Kumar Bansal IAS and R Madhusudhan during their tenure.

Ms. Vandana Garg IAS Nominee Director of TIDCO shall retire byrotation at the ensuing Annual General Meeting of the Company and being eligible offersherself for re-appointment.

The Board of Directors at their Meeting held on 11thNovember 2021 appointed Mr. T K Arun as Independent Director for a period of 5 years from11th November 2021 and the approval of the Shareholders is being sought at theensuing 51st AGM. In the opinion of the Board Mr. T K Arun appointed asIndependent Director during the year is a person of integrity with expertise experience& proficiency. He is independent of the Management.

All the Independent Directors of the Company on the date of this Reporthave duly submitted the disclosures to the Board stating that they have fulfilled therequirements set out in Section 149 (6) of the Act and the SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 (Listing Regulations) as amended so as toqualify themselves to act as Independent Directors.

TRANSFER OF SHARES IN RESPECT OF UNCLAIMED DIVIDEND TO INVESTOREDUCATION AND PROTECTION FUND (IEPF) AUTHORITY

Pursuant to Section 124 (6) of the Act read with the Investor Educationand Protection Fund (Accounting Audit Transfer and Refund) Rules 2016 the Companyduring March 2018 transferred to IEPF Authority 166454 equity shares in respect of 1008shareholders. The Company had not declared dividend after the Financial Year 2001 andhence transfer of shares to IEPF Authority was not required to be made after 2018-19.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Independent Directors are familiar with their roles responsibilitiesin the Company nature of the industry business model etc. through familiarisationprogrammes. Documents / Brochures Reports and Internal Policies of your Company areprovided to them. Presentations are made at the Board / Committee Meetings on Company'sPerformance business strategy risks involved and global business environment. Details ofmeans of familiarization of the business to Independent Directors are disclosed on theCompany's website under the following web link:https://www.spic.in/wp-content/uploads/2022/07/ Familiarization-Programmes-2021-22.pdf

PARTICULARS OF REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDEMPLOYEES

The information required under Section 197(12) of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 for the yearended 31st March 2022 is given in Annexure I to this Report.

STATUTORY AUDITORS

M/s. MSKA & Associates Chartered Accountants (Firm RegistrationNo.: 105047W) Chennai the Statutory Auditors appointed by the shareholders for a periodof five years from 2017-18 will hold office until the conclusion of 51st AGM ofthe Company. There is no qualification reservation or adverse remark or disclaimer madeby the Statutory Auditors in their Report on the Financial Statements of your Company for2021-22.

The Board of Directors at their Meeting held on 27th May2022 on the recommendation of the Audit Committee have re-appointed M/s. MSKA &Associates Chartered Accountants for the second term of five years from financial year2022-23 to 2026-27 on such terms as approved by the Board subject to approval ofshareholders.

COST AUDITOR

M/s. B Y & Associates Cost Accountant (Firm Registration No.003498) was appointed as the Cost Auditor of the Company for the year 2021-22 to carry outthe audit of your Company's Cost Accounts and Records of fertilizer business. The Companyis required to maintain Cost Records as specified by the Central Government under Section148 (1) of the Act and that accordingly such accounts and records were made andmaintained. The Cost Audit Report for the previous year ended 31st March 2021was duly filed within the time stipulated under the Act.

The Board of Directors at their Meeting held on 27th May2022 on the recommendation of the Audit Committee have re-appointed M/s. B Y &Associates Cost Accountant as Cost Auditor for the year 2022-23 at a remuneration of?150000/- plus reimbursement of actual out-of-pocket expenses subject to ratification byMembers.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act Regulation 24A of ListingRegulations your Company has appointed Ms. B Chandra Practicing Company SecretaryChennai as Secretarial Auditor. The Secretarial Audit Report for the year 2021-22 asfurnished is given as Annexure II to this Report. There is no qualificationreservation or adverse remark or disclaimer made by the Secretarial Auditor in theirReport.

The Company has complied with the requirements of the SecretarialStandards with respect to General and Board Meetings specified by the Institute of CompanySecretaries of India constituted under Section 3 of the Company Secretaries Act 1980 andapproved as such by the Central Government.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Actyour Directors to the best of their knowledge and belief and according to information andexplanations obtained from the Management confirm that:

a) in the preparation of the annual financial statements for the yearended 31st March 2022 the applicable Ind AS had been followed along withproper explanation relating to material departures;

b) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31stMarch 2022 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) they have laid down proper internal financial controls to befollowed by the Company and such controls are adequate and operating effectively;

f) Proper systems have been devised to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

REPORTING OF FRAUDS BY AUDITORS

During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditors have not reported any instances of frauds committed in the Company byits Officers or Employees to the Audit Committee formed as per the requirements ofCompanies Act 2013.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

No loans or guarantees were given by the Company under Section 186 ofthe Act during the year under review. During the year your Company invested 1500000equity shares of ?10 each at par in Greenam Energy Private Limited (Greenam) offered onrights basis. Your Company on 6th May 2022 pledged 340000 equity shares of?10/- each held in Greenam in favour of Indian Renewable Energy Development Agency Limited(IREDA) to secure the Term loan of ?88 crores and the Additional loan of ?7 croressanctioned to Greenam to meet its capital expenditure for its Floating Solar PowerProject.

RELATED PARTY TRANSACTIONS

The transactions entered into during the year 2021-22 with RelatedParties as defined under the Act were in the ordinary course of business and at arm'slength basis. Details of contracts / arrangements with related parties as required underSection 188 (1) and 134 (h) of the Act in Form AOC-2 is attached as Annexure IV.

As required under Regulation 23 of Listing Regulations approval of theMembers is being sought at this Annual General Meeting for the transaction entered intowith a Related Party considered material in nature.

The details of transactions with any person or entity belonging to thePromoter/Promoter Group which holds 10% or more shareholding in the Company in the formatprescribed under IND AS are furnished in Note No. 32 of Notes on Accounts.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY THAT HAS OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THEDATE OF THIS REPORT.

There has been no material changes or commitments affecting thefinancial position of your Company that has occurred between the end of the financial year

i.e. 31st March 2022 and the date of this Report. Furtherthere has been no major impact due to Covid pandemic.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

Conservation of Energy

Your Company has an Energy Audit group which identifies potentialareas for improvement scans the environment for innovative and reliable solutions andconsiders proposal for implementation. Efforts are continuously being taken to reduceenergy consumption in the plants.

Some of the activities implemented during the year:

• Improvement to the efficiency of the Turbo Generator I has beencarried out.

• New boiler at the downstream of ammonia converter generating60mTPH of steam from the heat available with the gas has been installed.

• Heat Recovery & Steam Generation system which recovers theheat from the Gas Turbine flue gas has been installed.

• Critical turbines were overhauled to improve the efficiency.

• Periodical Steam system audit was carried out and the faultytraps and leaks were addressed immediately.

Technology Absorption - Nil

Foreign Exchange Earnings and Outgo

The foreign exchange earned in terms of actual inflows and the foreignexchange outgo in terms of actual outflows during the year:

(? in Lakhs)

Particulars 2021 - 22 2020 - 21
Foreign Exchange earnings 35.78 2.55
Foreign Exchange expenditure 2119.28 47296.42

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

Your Company has adequate internal financial control systems to monitorbusiness processes financial reporting and compliance with applicable regulations. Thesystems were reviewed by Statutory / Internal Auditors and reported to the Audit Committeeof the Board for identification of deficiencies and necessary time bound actions weretaken to improve efficiency at all levels. The Committee also reviews the internalauditors' report key issues significant processes and accounting policies. RiskManagement is an integral part of the business process. Your Company pursuant to theCompanies Act 2013 and Listing Regulations has a Risk Management Committee and a Policyon Risk Management to identify and draw mitigation plans to manage risk. The Board ofDirectors reviews the Risk Management Report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and Company's operations infuture.

CORPORATE GOVERNANCE

Corporate Governance Report 2021-22 along with the Certificate of theStatutory Auditors M/s. MSKA & Associates Chartered Accountants confirmingcompliance to conditions of Corporate Governance as stipulated in the Listing Regulationsforms part of this Report.

PERFORMANCE EVALUATION OF THE BOARD COMMITTEES AND DIRECTORS

Your Company has a structured framework for evaluation of theIndividual Directors Chairperson the Board as a whole and its Committees. TheIndependent Directors at their Meeting held on 10th March 2022 evaluated theperformance of Non-Independent Directors Board as a whole the Chairperson and assessedthe quality quantity and timeliness of flow of information between the Company Managementand the Board that is necessary for the Board to effectively and reasonably perform theirduties. The Board of Directors at their Meeting held on 27th May 2022 evaluatedthe performance of

all Independent Directors and the Board as a whole and its Committeesand assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board through circulation of questionnaires on selectparameters relating to roles responsibilities and obligations of the Board andfunctioning of the Committees. The evaluation criteria was based on the participationcontribution and guidance offered and understanding of the business etc. which arerelevant to the Directors in their capacity as Members of the Board/Committees.

NUMBER OF MEETINGS OF THE BOARD / AUDIT COMMITTEE

The details of the Meetings of Board and Audit Committee held and itscomposition are provided in the Corporate Governance Report.

POLICIES

POLICY ON MATERIAL SUBSIDIARY

The Company has a Policy on Material Subsidiary approved by the Boardof Directors as per the Listing Regulations and is available on the Company's websiteunder the web link: https://www.spic.in/wp-content/uploads/2021/02/MATERIAL-SUBSIDIARY-POLICY.pdf

NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy as required underSection 178(3) of the Act and the Listing Regulations and is available on the Company'swebsite under the web link: https://www.spic.in/wp-content/uploads/2022/08/Nomination-and-Remuneration-Policy-23-05-2019.pdf

POLICY ON RELATED PARTY TRANSACTIONS

The Policy on Related Party Transactions as required under the ListingRegulations and the Companies Act 2013 is available on the Company's website under theweb link: https://www.spic.in/wp-content/uploads/2021/02/Policy-on-Related-Parties-30th-Mar-2022.pdf

POLICY ON INSIDER TRADING

Your Company has a Code of Conduct for Prevention of Insider Tradingwith a view to regulate trading in securities by the Directors and designated employees ofthe Company in line with SEBI (Prohibition of Insider Trading) Regulations 2015 asamended. The details of the Policy are available on the website of the Company underweblink: https://www. spic.in/wp-content/uploads/2021/02/Policy-for-DeterminingMaterial-Events.pdf

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013. (POSH)

The Company has zero tolerance for sexual harassment at workplace. Apolicy is in place and an Internal Complaints Committee has been constituted which ismonitoring the prevention prohibition and redressal of sexual harassment at workplace inline with the provisions of POSH and the Rules made thereunder. There were no complaintsreported under the POSH during the year under review.

VIGIL MECHANISM

Pursuant to the provisions of Section 177 of the Act and the ListingRegulations Whistle Blower Policy as amended for Directors and employees to reportgenuine concerns or grievances including reporting of instances of leakage of UnpublishedPrice Sensitive Information (UPSI) is in place and a Vigil Mechanism established thedetails of which are available on the website of the Company under weblink:https://www.spic.in/wp-content/uploads/2021/02/Whistle-Blower-Policy-and-Vigil-Mechanism-24.03.2020.pdf.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has a CSR Policy in line with the provisions of the Act.As a responsible corporate citizen your Company in its endeavour to contribute for thesustained development and growth of the Society has taken several initiatives. YourCompany is not required to spend towards CSR activities in view of absence of profitscomputed under Section 198 of the Act. However the details of CSR initiatives undertakenvoluntarily by your Company are given in Annexure III to this Report. The detailsof the Policy are available on the website of the Company under weblink:https://www.spic.in/wp-content/ uploads/2021/02/Corporate-Social-Responsibility-Policy.pdf

DIVIDEND DISTRIBUTION POLICY

Dividend Distribution Policy has been formulated as required underListing Regulations. The details of the Policy are available on the website of the Companyunder weblink: https://www.spic.in/wp-content/uploads/2021/08/Dividend-Distribution-Policy.pdf.

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