IGPL Directors Report

To the Members


The behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Twenty Eighth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2017:


1. FINANCIAL RESULTS


(Rs. in lakhs)

















































































2016-17



2015-16



Revenue from Operations (Net)



1,03,747.53



95,283.83



Other Income



281.43



356.74



Total Revenue



1,04,028.96



95,640.57



Gross Profit



16,688.88



11,692.54



Finance Cost



1,804.56



2,267.18



Depreciation and Amortization expenses



1,718.70



1,753.72



Profit before Tax



13,165.62



7,671.64



Current Tax



3,102.51



1,637.25



MAT Credit



(3,957.22)



-



Tax provision for earlier year



-



(2.07)



Deferred tax



3,864.22



-



Profit for the year



10,156.11



6,036.46



Balance brought forward from previous year



22,705.22



17,910.04



Profit available for appropriations



32,861.33



23,946.50



2. DIVIDEND


Your Directors are pleased to recommend a dividend of Rs.3/- per equity share of Rs.10/- each. The total outgo (including dividend distribution tax) for the current year amounts to Rs.1,111.92 lakhs (Rs.741.28 lakhs).


3. OPERATIONAL REVIEW


The general economic conditions drive the demand for the Phthalic Anhydride (PA). PA is a downstream product of Orthoxylene (OX), a basic petrochemical. During the year, the Company witnessed a strong demand for Phthalic Anhydride (PA) which led to the prices of PA firming up. The continued surge in the demand for PA resulted in the operating margins increasing substantially.


The plasticiser and Pigment industry grew at 7% and 8% respectively. The effect of the same was reflected in the consumption of PA in the speciality chemicals segment. This led to the increase in the spread between the prices for Orthoxylene and PA.


The Company procures its raw materials mainly from the domestic market which is generally available and the prices remain stable.


PA finds application in the production of Plasticizers, Unsaturated Polyster Resins, Alkyd Resins & Polyols. It is used in a variety of application in both consumer durables to non-consumer durables. The increasing use of phthalate plasticizers in automotive manufacturing coupled with growing automotive industry drives the demand for PA which is further expected to continue. The improved stability in the PA demand and prices will fuel the growth opportunities for the Company given its present operational capacity.


The total revenue increased marginally by 8.77% from Rs.95,640.57 lakhs during FY 2015-16 to Rs.1,04,028.96 lakhs during FY 2016-17. The year has seen an unprecedented growth in the profitability of the Company on the back of improved margins (spread) due to increase in demand, better recovery process, increased operational efficiency and stringent cost control measures. This resulted in the EBIDTA increasing from Rs.11,692.55 lakhs in FY 2015-16 to Rs.16,688.87 lakhs in FY 2016-17. These factors led to increase in profit by 68.24% from Rs.6,036.46 lakhs during FY 2015-16 to Rs.10,155.58 lakhs in FY 2016-17, an increase by 347 bps.


4. ACQUISITION OF MA BUSINESS


Your Company has acquired the Maleic Anhydride Business from Mysore Petro Chemicals Limited situated at T-1, MIDC Industrial Area, Taloja, Dist. Raigad, Maharashtra as a going concern on Slump sale basis with effect from 1st April, 2017 for consideration of Rs.74.48 crores (Rupees Seventy Four Crores Forty Eight Lakhs Only) as per valuation carried out by M/s. Haribhakti & Co LLP.


The product portfolio of the Company now comprises of Maleic Anhydride apart from Phthalic Anhydride and Benzoic Acid.


The wash water which was erstwhile sold to MPCL shall now be used by the Company to produce MA. The revenue from the MA business shall be consolidated with the Company with effect from all financial reporting effective 1st April, 2017.


5. SHARE CAPITAL & FINANCE


5.1 Share Capital


The paid-up Equity Share Capital of the Company remained unchanged at Rs.3079.81 lakhs as at 31st March, 2017. The shareholdings of the Promoters and Persons Acting in Concert with Promoters are 72.22 %.


5.2 Finance


The working capital facilities largely remained underutilized which meant that the dependence on external sources of funds to be at all time low. The Company continuously monitors its receivables, inventories, etc. The Company continues to service its debts regularly.


5.3 Credit Rating


The Credit Ratings of the Company were upgraded to “IND A ” (long term) and “IND A1 ” (short term) by India Ratings & Research.


5.4 Deposits


During the year, the Company has not accepted or invited any deposits from the Public.


5.5 Particulars of Loans, Guarantees or Investments


Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.


6. TRANSFER TO RESERVES


The Company proposes to transfer an amount of Rs.2,000.00 lakhs to the General Reserves.


7. MATERIAL CHANGES


There were no material changes or commitments which occurred between the end of the financial year and the date of this Report affecting the financial statements of the Company in respect of the reporting period.


8. CONTRIBUTION TO THE EXCHEQUER


The Company has contributed Rs.17,525.70 lakhs to the exchequer by way of excise duty, central sales tax, income tax, customs duty, etc.


9. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES


During the year, the Company formed a wholly owned subsidiary (WOS) i.e. IGPL International Limited with Jebel Ali Free Zone and the investment in IGPL (FZE) was dis-invested in favour of IPGL International Limited. As a result, IGPL (FZE) became WOS of IGPL International Limited and a step-down subsidiary of the Company.


The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride is under implementation.


Pursuant to the provisions of Section 136 of the Companies Act, 2013, the audited accounts of subsidiaries are placed on the website of the Company and not enclosed in the Annual Report. A copy of the audited accounts shall be made available to the member upon request.


10. CONSOLIDATED FINANCIAL STATEMENTS


As required pursuant to the provisions of Section 129 of the Companies Act, 2013 and the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements of the Company are prepared in accordance with the Accounting Standards AS21 issued by the Institute of Chartered Accountants of India on the basis of the audited financial statements of the Company and its subsidiary,


A statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is attached to this Annual Report.


11. CORPORATE SOCIAL RESPONSIBILIY (CSR) INITIATIVES


During the year, the Company spent only Rs.26.01 lakhs. The Company has initiated some projects which are under implementation and the disbursement has been kept behind for the implementation of the project by the agencies. The Report on CSR activities is annexed herewith as “Annexure A”.


12. VIGIL MECHANISM POLICY


The Vigil Mechanism Policy established by the Board provides a channel for reporting the genuine concerns about the actual or suspected unethical behavior, fraud, etc. The Audit Committee reviews the functioning of the vigil mechanism and there was no complaint received. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Company’s website www.igpetro.com


13. DIRECTORS & KEY MANAGERIAL PERSONNEL


Upon the recommendation of the Nomination & Remuneration Committee and in accordance with the provision of the Companies Act, 2013 read with the Rules framed thereunder, Shri J K Saboo was re-appointed as Executive Director of the Company for a period of 3 years with effect from 1st April, 2017. The terms, conditions and remuneration of his re-appointment is stated in the Notice. It is proposed to re-appoint Shri J K Saboo as Executive Director of your Company to hold office upto 31st March, 2020.


The Company has received necessary declarations from all Independent Directors of the Company as required under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.


Shri Nikunj Dhanuka retires by rotation and being eligible has offered himself for re-appointment.


There is no change in the Key Managerial Personnel.


13.1 Meetings


During the year, four meetings of the Board of Directors and Audit Committee were held as more particularly disclosed in the attached Report on Corporate Governance. The intervening gap between any two meetings was within the prescribed period.


13.2 Board Evaluation


As mandated under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual performance evaluation of the Directors individually vis-a-vis the Board and its committees have been carried out. The manner of such evaluation has been disclosed in the Corporate Governance Report.


13.3 Remuneration Policy


The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors and Senior Management personnel and their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.


14. DIRECTORS’ RESPONSIBILITY STATEMENT


To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Companies Act, 2013, we state:


a. that in the preparation of the annual financial statements for the year ended 31st March 2017, all the applicable accounting standards have been followed and no material departures have been made from the same;


b. that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2017 and of the profit of the Company for that year;


c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing/detecting fraud and other irregularities;


d. that the annual financial statements have been prepared on a going concern basis;


e. that proper internal financial controls were in place 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 place and were adequate and operating effectively.


15. RELATED PARTY TRANSACTIONS


All transactions entered into with related parties during the year were on arm’s length basis, in the ordinary course of business and with the approval of the Audit Committee, Board of Directors and Members of the Company, wherever required.


There were no material related party transactions i.e. those exceeding 10% of the annual consolidated turnover during the year. The related party transactions is hosted on the website of the Company.


16. RAISING OF FUNDS


The members of the Company at an extra-ordinary general meeting held on 2nd June, 2017 have approved the raising of funds by way of long term borrowings/equity or a combination thereof to replace the existing debt, working capital facilities, fund the growth plan, etc.


17. AUDITORS


17.1 Statutory Auditors


M/s Hariharan & Co., Chartered Accountants, whose term of office was liable to determination by rotation at the ensuing Annual General Meeting (AGM) have resigned vide their letter dated 7th July, 2017.


The Directors place on record their sincere appreciation and gratitude for their diligence and independence in the course of their audit during their stint with the Company. M/s Uday & Co., Chartered Accountants, (Firm Regn No. 004440S) were appointed as Joint Statutory Auditors of the Company with effect from 11th July, 2017 subject to the approval of the members to fill the casual vacancy. The Directors have also recommended their appointment as Joint Statutory Auditors for a term of five consecutive years from the conclusion of this AGM until the conclusion of the AGM to be held in the year 2022.


The office of M/s ASA & Associates HR Chartered Accountants as Statutory Auditors is subject to the ratification by the Members at the AGM.


17.2 Cost Auditors


The Board of Directors of the Company have appointed M/s Krishna S & Associates, Cost Accountants as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2017-18.


The remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Member’s ratification for the remuneration payable to M/s. Krishna S & Associates, Cost Auditor is included in the Notice convening the Annual General Meeting.


17.3 Secretarial Auditor


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 Directors had appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) to conduct the Secretarial Audit and their Report on the Secretarial Audit for the year 2016-17 is annexed herewith as “Annexure-B”.


In respect of the observation made by the Secretarial Auditor, the Company had filed compounding application with the Reserve Bank of India and the same has been compounded.


18. LISTING OF SHARES


Your Company’s shares are listed on BSE Limited under Scrip Code No. 500199 and the National Stock Exchange Ltd. under the symbol “IGPL”. The ISIN code is INE 204A01010.


19. 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 for environment management systems by Beaureu Veritas.


20. CORPORATE GOVERNANCE


The disclosures as required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are attached with and forms part of this report.


21. PREVENTION OF SEXUAL HARASSMENT


The Company has adopted a policy on prevention and redressal of sexual harassment at work place in accordance with the provisions of Sexual Harassment of Women at Work Place (Prevention, Prohbition and Redressal) Act, 2013. No complaints of sexual harassment were received during the year,


22. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO


The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as “Annexure-C”.


23. EXTRACT OF ANNUAL RETURN


An extract of the Annual return in Form MGT-9 is annexed herewith as “Annexure-D” to the Directors’ Report.


24. PARTICULARS OF EMPLOYEES


During the year, there are no employees who are in receipt of the remuneration exceeding the limit specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.


The information relating to remuneration in respect of directors/employees of the Company as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided to the members upon request.


25. ACKNOWLEDGEMENTS


Your Directors convey their sincere appreciation to the business partners for their unstinted support and contribution and thank the customers, members, dealers, employees, bankers and all stakeholders for their co-operation and confidence reposed in the Company.


For and on behalf of the Board of Directors


M M Dhanuka


Chairman


Mumbai, 24th July, 2017

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