Equity Analysis

Directors Report

    I G Petrochemicals Ltd
    Industry :  Chemicals
    BSE Code
    ISIN Demat
    Book Value()
    500199
    INE204A01010
    415.645457
    NSE Symbol
    P/E(TTM)
    Mar.Cap( Cr.)
    IGPL
    28
    1615.96
    EPS(TTM)
    Face Value()
    Div & Yield %:
    18.74
    10
    1.43
     

DIRECTORS' REPORT

To the Members,

On behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Thirty Fifth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2024:

1. FINANCIAL RESULTS

(Rs. in lakhs)
2023-24 2022-23
Total Revenue 2,12,984.38 2,37,455.66
Profit before interest, depreciation and tax 13,613.12 33,994.54
Finance Cost 3,040.77 2,391.39
Depreciation and Amortization expenses 5,211.34 4,741.21
Profit before tax 5,361.01 26,861.94
Provision for tax 1,389.62 6,829.21
Profit after tax 3,971.39 20,032.73
Earnings per share (H) 12.89 65.05

2. DIVIDEND

The Board of Directors have recommended a dividend of C 7.50/- per equity share having face value of C 10/- each (75%) for the year ended 31st March, 2024 aggregating to C 2,309.61 lakhs.

The dividend distribution is in accordance with the Company's Dividend Distribution Policy and the policy can be accessed at http://www.igpetro.com/corporate- governance/

As per the provisions of the Income Tax Act, 1961, the dividend, if declared, will be taxable in the hands of the shareholders at the applicable rates.

3. OPERATING AND FINANCIAL PERFORMANCE

During the year under review, the Company recorded a total revenue of C 2,12,984.38 lakhs as against C 2,37,455.66 lakhs during the previous year resulting in a marginal drop by 10%. The export for the year was C 24,193.73 lakhs. The revenue from non-Phthalic Anhydride business was C 15,600 lakhs. The profit before interest, depreciation and tax was down by 60% to C 13,612.12 lakhs. The profit after tax fell by 80% from C 20,032.73 lakhs during 2022-23 to C 3,971.39 lakhs in the year 2023-24 on account of lower demand for Phthalic Anhydride and reduction in the spread between the finished goods and raw materials.

The Directors confirm that no material changes or commitments have occurred between the end of the financial year and the date of this report, which may affect the financial statements of the Company.

4. NATURE OF BUSINESS

The Company is engaged in the manufacturing of Phthalic Anhydride, Maleic Anhydride and Di-ethyl Phthalate. During the year under review, there was no change in nature of the business of the Company.

5. CAPACITY EXPANSION AND NEW PROJECTS

During the year, the Company successfully commissioned the expansion of Phthalic Anhydride plant by 53,000 MTPA. With this, the Company also increased its capacity for Maleic Anhydride and other by-products. Further, the Company has also initiated to set-up plasticizer plant for forward integration to manufacture products such as Di-Octyl Phthalate (DOP), Di-Isononyl Phthalate (DINP) and other plasticizers.

6. CREDIT RATING

The Company is regular in the repayment of its debts including interest thereon and the same is reflected in the Credit Ratings affirmed by India Ratings & Research which are "INDAA-/Stable" (term loan and fund based working capital) and "IND A1+" (non-fund based working capital).

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees given or investments made during the year pursuant to Section 186 of the Companies Act, 2013 ('the Act') and Schedule V to the SEBI Listing Regulations are given in the notes to the financial statements.

8. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES

IGPL Energy Ltd. was incorporated as a wholly owned subsidiary of the Company with Jebel Ali Free Zone Authority, Dubai on 30th November, 2023. During the year, the Company also acquired 99% equity stake in IGPL Charitable Foundation and it became a subsidiary of the Company with effect from 9th June, 2023. The said subsidiaries have not commenced any business. The Company's existing wholly owned subsidiary i.e. IGPL International Ltd. is yet to commence its operations. The consolidated financial statements of the Company are prepared in accordance with the applicable provisions of the Act and the Ind AS. The audited consolidated financial statements together with the Auditors' report thereon forms part of this Annual Report.

In accordance with the provisions of Section 129 of the Act, a statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is attached with this Report.

Pursuant to Section 136 of the Act, the financial statements of the subsidiaries are available for inspection by the members of the Company at the corporate office of the Company. A copy of the audited accounts are placed on the website of the Company and shall be made available to the member upon request.

9. CORPORATE SOCIAL RESPONSIBILITIES (CSR) INITIATIVES

The CSR activities of the Company revolved around education, skill development, environment protection and water conservation. The Skill Development Centre was set-up in association with Tata Community Initiatives Trust and was inaugurated on 11th July, 2023. During the year, the Company also collaborated with Enviro Forest Creators and Anarde Foundation for the plantation of Miyawaki trees and watershed projects respectively, amongst others.

The Company's CSR projects with Tata Community Initiatives Trust, Enviro Forest Creators and Anarde Foundation were classified as 'on-going projects' in accordance with the provisions of the Act and the rules.

For the year 2023-24, the Company's CSR obligation was of C 573.57 lakhs against which the Company had spent C 575.98 lakhs which includes the transfer of C 67.24 lakhs to the special bank account opened by the Company as provided under Section 135(6) of the Act. The Annual Report on CSR activities carried out during the year is provided as Annexure-1 to this Report and the CSR Policy is available on the website of the Company http://www.igpetro.com/csr/

For the 'ongoing project' of 2022-23 in respect of which the Company had transferred C 98.76 lakhs to a special bank account, an amount of C 97.47 lakhs has been utilized towards the respective project. The balance amount of C 1.29 lakhs is proposed to be utilized during the current year.

10. ANNUAL RETURN

Pursuant to the provisions of Section 92 and 134 of the Act, the Annual Return of the Company as at 31st March, 2024 is uploaded on the website of the Company at https://www.igpetro.com/corporateannouncement1/

11. VIGIL MECHANISM POLICY

The Vigil Mechanism Policy provides for the directors, employees and third parties dealing with the Company to report any instances of illegal or unethical conduct, actual or suspected incidents of fraud, actions that effects the operational and financial integrity and actual or suspected instances of leak of unpublished price sensitive information that could adversely impact operations, business performance and/or reputation.

The Policy provides for adequate safeguards to ensure that no employee or any other person is victimised or harassed for reporting and bringing up such incidents in the interest of the Company.

The Audit Committee reviews the functioning of the Policy and no person has been denied access to the Committee for this purpose. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Company's website http://www.igpetro. com/corporate-governance/

12. TRANSFER OF SHARES TO IEPF AUTHORITY

In accordance with the provisions of Sections 124, 125 of the Act, read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as "IEPF

Rules") the amount of dividend or any other amount remaining unclaimed or unpaid for a period of seven consecutive years is required to be transferred to the IEPF Authority. The shares in respect of which dividend remained unclaimed or unpaid for seven consecutive years or more, shall also be liable for transfer to the IEPF Authority.

In terms of Section 124(6) of the Act read with the IEPF Rules, the Company had, during the financial year 202324, transferred the shares to IEPF Authority in respect of which dividend has not been paid or claimed for seven consecutive years. The Company also transferred the unpaid/unclaimed dividend amount pertaining to 2015-16 to the Investor Education and Protection Fund.

The shareholders may note that the dividend declared by the Company for the financial year 2016-17 and remaining unclaimed shall be liable to be transferred to IEPF on 26th October, 2024. Further if the shareholders have not claimed dividend for any of the seven consecutive financial years i.e. between FY 2016-17 to FY 2022-23, the underlying shares related to the dividend of FY 2016-17 shall also be transferred to IEPF. The shareholders are advised to forthwith claim their dividend by writing to the Company/RTA.

The Company has uploaded the details of unclaimed dividend on the Company's website at https://www. igpetro.com/investorinformation1/ and the same is also available on the website of the Ministry of Corporate Affairs http://www.iepf.gov.in/IEPF/services.html

Members whose shares have been transferred to the IEPF can claim their shares and dividend from the IEPF Authority by filing an online web based Form IEPF-5 available at https://www.iepf.gov.in/content/iepf/global/master/ Home/Home.html. The application for the claiming of shares along with the supporting documents are required to be submitted in an online mode only as required under the IEPF Rules.

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

13. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The term of Shri J K Saboo as an Executive Director ended on 31st March, 2024. He did not seek re-appointment upon the completion of his term and hence, retired from the Board. The Board placed on record their sincere appreciation for the contribution made by Shri J K Saboo.

Upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Shri Sagar Jadhav as an Additional Director in the category of Executive Director w.e.f. 1st April, 2024. The appointment of Shri Sagar Jadhav was confirmed by the members of the Company by way of postal ballot passed on 4th April, 2024. The members may note that the term of Shri Rajesh R Muni and Dr. A K A Rathi as an Independent Director shall end on 25th July, 2024. The Board is in the process of identifying suitable candidates to replace the outgoing Independent Directors.

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

All Independent Directors of the Company have furnished declarations under Section 149(7) confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and SEBI Listing Regulations.

In the opinion of the Board of Directors of the Company, all Independent Directors possess high integrity, expertise and experience including the proficiency to discharge their respective duties and responsibilities.

Shri Nikunj Dhanuka, Managing Director & CEO, Shri Pramod Bhandari, Chief Financial Officer and Shri Sudhir R Singh, Company Secretary are the Key Managerial Personnel of the Company. During the year under review, there was no change in the Key Managerial Personnel of the Company.

13.1 Meetings of Board and Committees

During the year, four meetings of the Board of Directors were held. The details with respect to the composition, terms of reference, attendance thereat, etc. of the Board and that of the Committees are disclosed in the attached Report on Corporate Governance, which forms part of the Annual Report.

13.2 Board Evaluation

The annual evaluation of the performance of the Board of Directors, Committee and of the Directors individually was conducted in accordance with the provisions of the Act and the SEBI Listing Regulations. The evaluation form covered criteria such as transparency, flow of information, competency, diversity, experience, knowledge, adequacy of time, independence, decision making, deliberations at the meeting, etc. The evaluation guidelines were designed after taking into account the suggestions from the directors.

13.3 Remuneration Policy

The details of the Remuneration Policy forms part of the Corporate Governance Report.

The information relating to remuneration as required pursuant to Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ("the Rules") are given below:

a. Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2023-24 - Shri Nikunj Dhanuka, Managing Director & CEO - 37:1

Shri J K Saboo, Executive Director - 13:1

b. The percentage increase in the remuneration of Managing Director, Chief Financial Officer and Company Secretary for the financial year - Shri Nikunj Dhanuka, Managing Director & CEO : (58.77%)

Shri Pramod Bhandari, Chief Financial Officer : 8% Shri Sudhir R Singh, Company Secretary : 8%

c. The percentage increase in the median remuneration of employees in the financial year - Median remuneration decreased by 33%

d. Number of permanent employees on the rolls of the Company - 513

e. Average percentile increase made in the salaries of employees other than the managerial personnel in the last financial year was 8.83% whereas the percentile increase in the managerial remuneration was 8%.

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

14. PARTICULARS OF EMPLOYEES

The disclosures pertaining to remuneration and other details under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given above.

In accordance with the provisions of Sections 197(12) and 136(1) of the Act, the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, is kept open for inspection during working hours at the corporate office of the Company upto the date of the ensuing annual general meeting and the report and accounts as set out therein are being sent to all the members of the Company excluding the aforesaid information. The said information will be provided to the members upon receipt of the request.

15. DIRECTORS' RESPONSIBILITIES 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 Act, we state:

a. that in the preparation of the annual financial statements for the year ended 31st March 2024, 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, 2024 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 Act 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.

16. RELATED PARTY TRANSACTIONS

In compliance with the provisions of the SEBI Listing Regulations and the Act, all transactions with related parties were on arm's length basis and in the ordinary course of business. Wherever required, approval of the Audit Committee and the Board of Directors were obtained for all related party transactions. Omnibus approval of the Audit Committee is obtained before the commencement of the financial year for transaction which are repetitive in nature. There were no material related party transactions during the year.

The Policy on Related Party Transactions can be accessed at http://www.igpetro.com/corporate-governance/.

The necessary disclosures regarding the transactions are given in the notes to accounts.

None of the Directors and the KMP has any pecuniary relationships or transactions vis-a-vis the Company other than those disclosed in the financial statements.

17. AUDITORS

17.1 Statutory Auditors

M/s S M M P & Company, Chartered Accountants (Firm's Registration No.: 120438W) and M/s M S K A & Associates, Chartered Accountants (Firm's Registration No.: 105047W) were appointed as the Statutory Auditors of the Company for a period of five years and accordingly their term shall conclude with the conclusion of 36th Annual General Meeting and 38th Annual General Meeting respectively.

The Auditors have also furnished a declaration confirming compliance with maintaining independence, ethical requirements and that they have not provided any prohibited services. The Audit Committee reviews the independence of the Auditors and the effectiveness of the Audit process. The Auditors attend the Annual General meeting of the Company.

The Statutory Auditors' Report does not contain any qualification, reservation or adverse remark and are self-explanatory and therefore do not require any further explanation or comments from the Board under Section 134(3)(f) of the Act.

17.2 Cost Auditor

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules 2014 ("Cost Audit Rules'1), the Board of Directors of the Company has, on the recommendation of the Audit Committee, appointed M/s Krishna S & Associates, Cost Accountants (Firm's Registration No.: 100939) as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2024-25 and has recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting.

M/s Krishna S & Associates have given their consent to act as Cost Auditors and confirmed that their appointment is within the limits prescribed under Section 141 of the Act. They have also certified about maintaining their independence and arm's length relationship with the Company and that they are free from any disqualifications specified under Section 141 of the Act.

As per the requirements of Section 148 of the Act read with the Cost Audit Rules, 2014, the Company has maintained cost accounts and records for the year 2023-24.

A resolution seeking Members' ratification for the remuneration payable to M/s Krishna S & Associates is included in the Notice convening the AGM.

17.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s Makarand M Joshi & Co., Company Secretaries as Secretarial Auditor to conduct the Secretarial Audit for the year 2023-24.

The report of the Secretarial Auditor is given in "Annexure-M". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

18. REPORTING OF FRAUD BY AUDITORS

During the financial year under review, the Auditors have not reported any fraud as specified under the provisions of Section 143(12) of the Act read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014 to the Audit Committee

19. CONSERVATION OF ENERGY, 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 Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure-IN".

20. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to the Regulation 34 of the SEBI Listing Regulations, Business Responsibility and Sustainability Report for the year 2023-24 describing the initiatives undertaken by the Company from an environment, social and governance perspective is provided separately and annexed to the Directors' Report as "Annexure-IV".

21. SIGNIFICANT AND MATERIAL ORDERS PASSED

In pursuance to the Writ Petition filed by the Company against the order of Income Tax Appellate Tribunal dated 5th September, 2022, the Karnataka High Court vide its order dated 23rd September, 2023 has set aside the demand of income tax for C 4,626.65 lakhs. The Department of Income Tax had filed an appeal against the said order before Karnataka High Court which was dismissed.

Other than the aforesaid, there are no significant and material orders passed by the courts or regulators or tribunals impacting the ongoing concern status and the Company's operations. However, members' attention is drawn to the statement on contingent liabilities and commitments in the notes forming part of the financial statements.

22. CORPORATE GOVERNANCE

During the year under review, the Company has complied with the requirements of Corporate Governance and a report on the same along with the Statutory Auditors' Certificate confirming compliance is attached with and forms part of this report.

A report on Management Discussion and Analysis for the year under review is presented in a separate section and forms an integral part of this report.

23. OTHER DISCLOSURES

a. There is no change in the share capital structure during the year under review.

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

c. The Company do not propose to transfer any amount to the General Reserves.

d. The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

e. There are no proceedings initiated/pending against the Company under the Insolvency and Bankruptcy Code, 2016.

24. PREVENTION OF SEXUAL HARASSMENT

The Company is an equal opportunity provider and has zero tolerance in any form or manner towards the sexual harassment of women at work place. In accordance with 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 of sexual harassment of women at work place. All employees (permanent, contractual, temporary, trainees) are covered under the said Policy.

The Company has constituted Internal Complaints Committee to redress complaints received on sexual harassment.

No complaints pertaining to sexual harassment of women employees were received during the year.

25. ISO 9001:2015 AND ISO 14001:2015 CERTIFICATION

Your Company is certified under ISO 9001:2015 for quality management systems and ISO 14001:2015 for environment management systems by Bureau Veritas.

26. ACKNOWLEDGEMENT

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
DIN 00193456
Place : Mumbai
Date : 22nd May, 2024