The Directors present their 37th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2023.
Financial Results
The highlights of the financial results for the year are given below:
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(Rs. in Crore)
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DESCRIPTION
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2022-23
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2021-22
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Profit Before Interest,
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97.44
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532.49
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Depreciation and Tax*
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|
|
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Interest
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8.45
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9.06
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Depreciation
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21.79
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18.83
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Profit Before Tax
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67.20
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504.60
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Provision for Taxation
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16.39
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127.91
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Profit After Tax
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50.81
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376.69
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Total Comprehensive
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52.17
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375.00
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Income
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|
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* including exceptional items Operational Highlights
Total Income during the year was ' 1,056 crore, about 28% lower than the ' 1,461 crore in 2021-22. Continuing the previous year's trend, the international and domestic market conditions were favorable till the second quarter of the year under review. However, unlike in 2021-22, sales volumes and values of your Company dropped significantly from the third quarter and more imports dumped into the market at cheaper prices. With the Russia-Ukraine conflict and other global markets fearing recession, prices were continuously dropping, and the volumes were also affected. During the 4th quarter of FY 2022-23, even though the demand was slightly better than the previous two quarters but still the prices were at the pre-pandemic levels. In sum, though the overall sales volume was relatively similar to that of the previous year, product prices have reduced drastically to pre-pandemic levels which eroded our margins during the financial year under review.
During the year total additions to fixed assets was ' 33.48 crore, mainly comprising plant and equipment.
The project for capacity augmentation of Propylene Glycol is in progress. Out of the proposed additional capacity of 50,000 TPA, in the first phase 32,000 TPA would be added, within 18-21 months from the start date. Necessary regulatory clearances were obtained from MoEF & CC and the State Pollution control Board. Detailed engineering activities have been completed close to 70% and floating of offer for civil jobs under initiation.
The Company continues to source power from TANGEDCO. Due to shortage of coal, power supply by third party got withheld from August 2022 and as an alternate power consumed through IEX was about 11.43% of the power on consumption was sourced. This has impacted significantly, resulting in lower savings. As a long-term measure your company planned to source power from Renewable Energy from Group Captive power / 3rd party power and necessary agreements have been executed subsequent to the close of the financial year.
R-LNG supplies to Plant 1 continued, but contrary to the expectations, supplies to Plant 2 did not commence during the year under review and have now been rescheduled to FY 2023-24. The delay is attributed to completing the pipeline for extending the supplies, which would pass through railway lines, highways and some private properties, requiring additional approvals by IOCL.
Financial Review
During the year, the Finance cost has reduced from ' 9.06 crore in FY 2021-22 to ' 8.45 crore. The Finance Cost on lease reduced from ' 6.63 crore in FY 2021-22 to ' 6.48 crore. The actual interest and related payout for the year was only ' 1.97 crore against ' 2.42 crore in previous year.
As in the earlier years, capital expenditure for projects including for the PG expansion Project are being/will be met from internal sources and your Company has been operating without any longterm debt.
Credit Rating
During September 2022, Care Ratings Limited re-affirmed the ratings for banking facilities aggregating to ' 100 crore. For long term bank facilities of ' 50.00 crore, the rating has been reaffirmed at CARE A ; Stable (Single A Plus; Outlook: Stable) and CARE A1 (A One Plus) for short-term bank facilities of ' 50.00 crore.
Dividend
Your Company has a consistent dividend track record of 17 years till the last year and follows a consistent dividend policy to ensure that dividend payments are sustained even when the earnings are relatively lower. In this regard, parameters for distribution of dividend have been outlined in the Dividend Distribution Policy approved by the Board, pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, as amended (“the Regulations”). The policy can be accessed on the website of the Company in the link: https://www.manalipetro.com/ investors/policies/.
As regards the distribution for the year under review, to determine the amount that could be paid out to the shareholders as dividend, the Directors have followed the guidelines enumerated in the said policy and also considered other relevant factors, such as profitability of the relevant financial year, plans for long term deployment of the funds
- including projects under implementation, drastic changes in the domestic and global market scenario
- throwing up questions on the sustenance of the sales, pricing and higher margins and similar facts.
Considering all these developments, your Directors are happy to recommend a dividend of 15% i.e., seventy-five paise per equity share of ' 5/- each fully paid-up, for the year 2022-23, aggregating to ' 12.90 crore, subject to applicable withholding tax. Industry Structure and Development Your company operates in the Polyurethanes (PU) industry. In chemical terms PU is a polymer containing carbamate or urethane linkage formed by reaction of Isocyanates with polyol. It is a mixture of compounds containing urethane, urea, Isocyanates, allophanates etc.
PU is a versatile plastic polymer available in various forms right from rigid foam, flexible foam to strong and hard elastomers. PU can be customized in various combinations and structures for applications in a wide range of products for improving energy efficiency and improved physical and chemical properties.
PU is used in wide variety of consumer and industrial applications such as thermal insulation in buildings, refrigerators, household furniture, shoes, packaging plastics etc.
PU offers unique properties like good abrasion and wear resistance, elongation, resilience, flexibility, scratch resistance, mechanical strength, adhesion,
low temperature, thermal insulation, electrical insulation etc. Owing to these, PU can be moulded to any shape to enhance its industrial applications by providing comfort, style and convenience to one's needs. Due to wider range of properties and forms, it finds applications in rigid and flexible foam, fibre, film, composites, elastomers, coatings, adhesives and mainly caters to industries like Automotive, Appliances, Building & Construction, Energy, Defence, Paints and Coatings, Soft furniture, etc.
PU is becoming popular in construction and infrastructure activities owing to its characteristics such as durability, low thermal conductivity, ability to withstand external impacts, etc. Increasing expectations of high performance, lightweight interior components and cushion foams in automotive parts to achieve energy saving also contribute for further polyurethane market growth.
Products of MPL
Your Company specializes in manufacture of Propylene Glycol, Polyether Polyol and related substances. Your Company is the only domestic manufacturer of Propylene Glycol. Also, it is the first and largest Indian manufacturer of Propylene Oxide, the input material for the aforesaid derivative products.
Polyols are made in four grades, viz., Flexible Slabstock, Flexible Cold Cure, Rigid and Elastomers and used in the automobile, refrigeration and temperature control, adhesive, sealant, coatings, furniture and textile industries. Use of Polyols is g aining popularity in footwear and roofing applications in India.
Propylene Glycol (PG) is a colourless, clear, nearly odourless, viscous liquid with a faint sweet taste chemical produced by reaction of propylene oxide with water. It is chemically neutral and so does not react with other substances. PG when mixed with water, chloroform and acetone can form a homogenous mixture and it tends to absorb moisture from air. PG remains without affecting the properties of the substances that are required to react. Thus, it is useful in mixing contrasting elements and is also consumed as solvent in a wide variety of applications.
PG is used most commonly as drug solubilizer in tropical, oral and injectable medications, stabilizer for vitamins and also as a water miscible co solvent. The Food and Drug Administration (FDA) has recognized PG as a safe additive for human consumption, especially for pharmaceutical and
food formulations. In addition to the above, PG is also used as moisturizer in cosmetic products and as a dispersant in fragrances. PG also has industrial applications like manufacture of resins and other products.
PG is widely utilized in pharmaceuticals, food & flavor and fragrance industries and also for manufacture of polyester resins, carbonless paper and automobile consumables like brake fluid and anti-freeze liquid. Some of the major applications of PG include medicines, canned food, body sprays, perfumes, cosmetics, soaps and detergents. The offtake of PG for industrial purposes is generally low due to availability of alternate cheaper materials. Your Company supplies more of food and pharmaceutical grade PG to the Indian market, which like the Polyols is dominated by imports. In addition to PG, the by- products such as DPG are also bought by smaller players for food, flavors and related applications mainly as preservatives.
The other products of your Company include Propylene Glycol Mono Methyl Ether (PGMME), an environment-friendly solvent used in paints and coatings and electronics industries.
To mitigate the dependency on Propylene Oxide, the company is investing in setting up a plant to produce polyester polyol which doesn't require Propylene oxide as feed stock. It is expected to be commissioned by December 2023.
Indian Market Scenario
Post pandemic, Indian PU industry has been growing steadily thanks to rapid urbanization, higher disposable incomes and flexible financing options. In the present age, refrigerators, mattresses and similar life style goods have come to be considered as essentials.
PU is a preferred material in the coatings segment on account of its superiority and other advantages over similar products. Thus, there has been major growth in the demand, but the Indian market has been dominated by imports.
Indian PG market also has all along been dominated by imports, except during the pandemic period.
During the year under review, for the most part, demand for Polyols and PG continued to fluctuate, with imports reaching the pre-pandemic levels. Logistics issues have been sorted out with ease of material availability at cheaper prices. Initially, downturn started with higher inflation arising from the Russia-Ukraine stand-off, China's zero covid
policy, weakening rupee etc. Later on, with European countries fearing recession and economic turmoil in Sri Lanka and other neighboring countries impacted heavily on our pricing as more imports came into the market at cheaper prices and brought down our margins considerably from second quarter onwards and it was even worse in the third and fourth quarters.
Opportunities and Threats
Polyurethane materials, due to their versatility, perform extremely well as part of any application that is subject to dynamic stress. They provide many advantages including resilience, high tear resistance, and low heat build-up. Polyurethane can be used for varied applications like building insulations, refrigeration, furniture, footwear, automotive, coatings and adhesives, sealants etc. The development of polyurethane materials is still evolving, and new applications are regularly being created. It is a polymer that helps in smart designing and achieving more with less. So, its popularity has been on the rise for the past several years with infinite opportunities.
Increasing demand for lightweight and durable products in the automotive, construction, and electronics industries and PU applications for insulation purposes in various end-use industries are the major factors aiding the growth of PU market.
The alignment of Notedome and Penn-White's (Company's WOS) green tech product focus, along with Company's commitment to Environmental, Social and Governance (ESG) goals, offers synergistic potential for shared strategy and global achievement.
Technology and Knowledge transfer from the acquisition of subsidiaries could unlock the growth potential in burgeoning markets in the Eastern world. This strategy has already been implemented with the production of Notedome's Polyurethane in Chennai, India, enabling access to South-East Asian markets.
It has been reported that the global polyurethane market size was valued at USD 75.19 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 4.4% from 2023 to 2030. Reports suggest that increased use of polyurethane in refrigeration applications and the revival of the bedding segments are driving the market growth rate. Furthermore, the numerous applications
provided by flexible foam, such as upholstered furniture, rigid foam for insulation in walls and roofs, TPU used in medical devices and footwear, to coatings, adhesives, sealants, and elastomers used on floors and automotive interiors, will pave the way for market growth.
The Asia Pacific accounted for the largest revenue share of more than 45.10%. The construction application segment dominated the global market and accounted for more than 25.0% share of the global revenue.
In India, PU Market and application developments continue to be dominated by automotive, whitegoods, furniture and insulation segments. Potentials exist in the footwear and building segments, but these are yet to mature fully. So, Indian PU market would continue to be dependent more on the traditional segments and it may take a few more years for the other sectors to go for higher PU usage.
The major threat to your Company has been lower margins due to imports. To overcome the problems posed by imports, options for imposition of AntiDumping Duty on imports from certain countries has been resorted to. However, there had been little relief as the suppliers manage to bear the additional burden themselves. Your Company continues with the actions for cost reduction and product development, but these have inherent limitations and hence it may take a longer time to reap the benefits.
The complicated landscape of geo-political dynamics has introduced challenges for manufacturers worldwide, in securing raw materials for production. Such uncertainties may impact operational efficiency, potentially impacting the anticipated returns. The strategic acquisition of subsidiaries offer a spectrum of strengths and opportunities, such as innovation leadership, diversification and sustainability alignment. These advantages, however, must be managed within the context of intensified competition and geopolitical uncertainties, urging a prudent strategic planning and adaption.
Risk Management Policy and Process
The Company has established a structured framework for addressing business risk management issues. A risk management plan has been framed, implemented and monitored by the
Board through the Risk Management Committee of Directors (RMC).
The Company has two employee-level Committees viz., a sub-committee and an Apex Committee, headed by the Wholetime Director to review and assess the risks that could affect the Company's business. The Sub-Committee brings out the matters that could affect the operations and the Apex Committee determines the issues that could become business risks. The mitigation actions are also suggested by the Committees and the report of the Head of the Apex Committee is submitted to the RMC. The RMC meets periodically, reviews the reports, recommends and monitors actions to be taken in this regard.
During the year based on market capitalization as on 31st March 2022, it became mandatory for the Company to have a Risk Management Committee under the Regulation. The RMC constituted by the Board already fulfils the requirements and so there was no need for changing the composition of then existing Committee. The details of the composition of the Committee, meetings and other relevant information are furnished in the Corporate Governance Report (CGR) annexed to this Report. As per the amended Regulations, a Risk Management Policy has been framed and the roles and responsibilities of the Committee are as prescribed under the Regulations. As required under Section 177 of the Act, the Audit Committee also reviews the risk management process periodically.
Risks and Concerns
Barring a few quarters in 2021 and 2022, the Indian Polyol and PG markets have always been dominated by imports. High-capacity composite PU plants established by major players like DOW, Sadara, BASF, across the world enjoy subsidies from the local governments. They have been offering Polyols to Indian market at very low prices. Imposition of Anti-Dumping Duties has not been very effective, as the MNCs either supply the materials from places not covered under ADD or able to bear the additional cost continue the dumping. The PU industry is concentrated globally, and a major portion of the supplies are controlled by smaller number of producers. Across the globe, the top manufacturers control over 60% of the total PU production giving them enormous control over product pricing and other strategies. Such major multinationals enter into strategic alliances across countries to ensure
that they have an upper hand in select regions. These arrangements jeopardize the interest of the smaller, domestic players in the industry with modest facilities. The domestic refiners have been mulling proposals for tie-up with MNCs to enter the Polyol segment. If these plans are implemented, the product availability would go up further and create more pressure on the margins, unless demand increases, and imports also get curtailed.
In addition to the market threats, the chemical and petrochemical segments face issues from frivolous actions with ulterior motives by the self-styled environment protectors. Without understanding the ground realities and the economic contributions that these units bring in for overall growth of the country, sensational reports are released which gain attention through social media propaganda. Some of them go to the extent of opposing the applications of the industries for statutory clearances without any basis. This delays the process as the applicants are burdened with the task of disproving something which do not exist. Unworkable suggestions, like ZLD processes are mooted, which could actually endanger the industries due to huge and unviable capital outlays and operating cost. In view of the above, the Company is unable to enhance the capacity of the feedstock for the derivative plants and hence there could be stagnation of the production capacity, giving room for more imports. This could affect the pricing power of the Company in the medium and long run. To overcome this, the Company has been exploring possibilities to make Polyols without PO for which it is taking up a polyester polyol project and also signed up with Econic, UK to explore the possibility of switching over to CO2 for polyol production. The new and improved process for effluent treatment developed by the Company continues to meet the stipulated norms for marine discharge. Being biological based, sustainability in the long run could be an issue, though the Company is closely monitoring the developments in this area. Further, the norms are upgraded periodically by the Regulators, imposing tougher conditions. The Company would have to be very watchful on these developments and may be required to allocate additional resources to meet exigencies arising therefrom. The case filed with the Southern Zonal Bench (SZB) of the National Green Tribunal (NGT) against the marine disposal of the treated effluent by an association of fishermen was disposed off by the Bench in February 2022. The allegations of the petitioner were not substantiated,
but the Bench, citing higher COD/BOD values in the past ordered the Company to pay ' 2 crore as interim environment compensation and also made certain other directions, which have been duly complied with.
Based on some unverified news reports about stack emission violations by industries in Ennore - Manali area, the NGT-SZB has filed a Suo Moto application on certain industries, including on the Company. The Company filed its statement to prove that the allegations are wrong and sought discharge from the case based on facts. Further the report of an independent agency commissioned by the Bench as also shown that the Company is in compliance with the emission norms. During July 2023, the National Green Tribunal, Southern Zone, Chennai issued its judgment on the Suo Motu case filed against the industries at the Manali location (including the Company) in relation to an environmental issue for the period from April 2019 to December 2020. In the said judgment, the Tribunal has given certain directions/recommendations to the industries at Manali, Tamilnadu Pollution Control Board and Central Pollution Control Board which include collection of environmental compensation and creation of corpus fund for the improvement of environmental standards in Manali Industrial area.
There was no environmental compensation levied on the Company as the Company was in adherence to the prescribed environmental norms. With regard to NGT recommendation on the creation of a Corpus fund, the Company is unable to quantify the impact of this judgment at this juncture, on the business and operations of the Company.
Company will continue to comply and adhere to the environmental obligations as required under the law.
During the year 2017, the period of lease relating to Plant 2 expired. Though the Company filed its request for extension well in advance with the Government of Tamilnadu, the same is yet to be renewed.
Outlook
The update to World Economic Outlook(WEO) released in July 2023 by International Monetary Fund (IMF) stated that the global recovery is slowing amid widening divergences among economic sectors and regions. Global growth is projected to fall from an estimated 3.5 % in 2022 to 3.0 % in both 2023 and 2024. Global headline inflation is expected to fall from 8.7 % in 2022 to
6.8 % in 2023 and 5.2 % in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward. While the emerging market & developing economies are projected to grow at 4.0% and 4.1% in 2023 and 2024 respectively.
In case of India, Gross Domestic Product (GDP) to moderate to 6.1% in fiscal year FY 2023 and rise to 6.3% in FY 2024, driven by private consumption and stronger-than-expected growth in the fourth quarter of 2022 because of stronger domestic investment.
Inflation will likely moderate to 5% in FY 2023, assuming moderation in oil and food prices, and slow further to 4.5% in FY 2024 as inflationary pressures subside. However, geopolitical tensions and weather-related shocks are key risks to India's economic outlook.
Subsidiaries
As on 31st March 2023, the Company has one Wholly Owned Subsidiary (WOS) and 5 (Five) Step Down Subsidiaries (SDS), all of which are incorporated outside India. The financials of all these subsidiaries have been consolidated as applicable and the financial and other information have been furnished in the Consolidated Financial Statement (CFS) attached to this Report.
AMCHEM, Singapore
AMCHEM Speciality Chemicals Private Limited, Singapore, set-up by the Company in 2015-16, to expand its global footprint, holds the foreign assets of the Company. The Company invested US$ 16.32 million (' 110.32 crore) in the WOS to part fund the acquisition of Notedome Limited, UK and also for further exploratory work. During the year 2016-17 the WOS set up AMCHEM Speciality Chemicals UK Limited as its WOS which acquired Notedome Limited. Thus, AMCHEM, UK and Notedome are the SDS of MPL. As at 31st March 2023, AMCHEM, Singapore is a material subsidiary of the Company.
During the year under review, the Company made further investment of US$ 35 million (equivalent to about ' 288 crore) during November 2022. With this, the aggregate investment in the subsidiary is US$ 51.42 million (equivalent to about ' 398 crore).
For FY 2022-23, the total income of AMCHEM, Singapore was US$ 3.48 million (' 28.03 crore) and the profit for the year was US$ 0.24 million (' 1.95 crore). AMCHEM, Singapore continues to explore further opportunities for acquisition of overseas facilities for enhancing MPL's global
presence, and also has interests in trading, transaction facilitations, business and project consultancy.
AMCHEM, UK
During the year, as part of group re-organisation, necessary filings and formalities for liquidation have been made with Statutory Authorities in UK by AMCHEM Speciality Chemicals UK Limited (AMCHEM, UK). As part of this process the entire shares (3916) of Notedome Limited, UK held by AMCHEM, UK have been transferred to AMCHEM, Singapore. With this AMCHEM Singapore has become direct holding Company of Notedome Limited, UK with effect from 19th January 2023. Liquidation approval is awaited from the authority. Notedome Limited, UK
Notedome, established in 1979, is a System House with more than 30 years' experience, manufacturing Neuthane Polyurethane Cast Elastomers catering to customers across 45 countries. Neuthane polyurethanes are used in diverse range of industries and applications, in the automotive sector for anti-roll bar, suspension and shock bushes for buses, trucks and other high-performance vehicles, limit or bump stops, material handling etc. and in the agriculture sector for Rollers, Harvester components and idler wheels on track laying tractors. The total revenue of Notedome for the year was £ 10.32 million (' 99.97 crore) and profit £ 0.35 million (' 3.36 crore).
Penn Globe Limited, UK
The Company, through its WOS AMCHEM Speciality Chemicals Private Limited, Singapore acquired Penn Globe Limited, UK (PGL) on 30th November 2022 by acquiring its entire stake (100%) for a consideration of GBP 24.98 Million. With this acquisition by AMCHEM, SG, PGL along with its two subsidiaries in UK viz., Penn-White Limited and Pennwhite Print Solutions Limited have become wholly owned step down subsidiaries of the Company.
PennWhite Limited, based in Middlewich (UK) is a leading manufacturer of antifoam chemistry under the FoamDoctor® brand which is sold in more than 50 countries. A wide range of other speciality chemicals are also manufactured to service the needs of long-term customers in a wide range of applications, like food and food processing, wastewater treatment, upstream and downstream oil, and increasingly in the coatings and adhesives industry.
Pennwhite Print Solutions Limited, UK (PPSL) -printing solutions company - is a manufacturer of a range of high performance silicone emulsions, antistatics and consumables developed specifically for the needs of commercial printers.
The consolidated revenue for Penn Globe Group for the reporting period (30th November 2022 to 31st March 2023 was £ 4.83 Million (' 48.30 Crore) and reported a profit of £ 0.62 Million (' 6.19 Crore)
As part of Group's restructuring plan, the trade, assets and liabilities of Pennwhite Print Solutions Limited (PPSL) as at 31st March 2023 were transferred to PennWhite Limited (PWL) and the directors of Pennwhite Print Solutions intend to liquidate the company during the financial year 2023-24. As at 31st March 2023 there are no assets or liabilities.
After the close of the FY, the Company has incorporated a WOS in India viz., Manali Speciality Private Limited on 23rd June 2023 which will be engaged in the business of Speciality Chemicals. Similarly, the Company's overseas step-down subsidiary Notedome Limited, UK has incorporated a wholly owned subsidiary in Germany viz., Notedome Europe GmbH which will be engaged in the business of Chemicals including Polyurethane Casting Elastomer systems and related products and services.
Environment and Safety
Your Company has laid down clear policies for quality, environment and safety and has set-up various teams and committees to monitor and improve observance of the said policies. Besides periodical in-house reviews and audits, surveillance audits of ISO 9001 and ISO 14001 have been done regularly, ensuring proper adherence to the quality, environment and safety requirements. World Environment Day is celebrated and to mark the occasion tree planting and similar activities are undertaken.
The Company has also taken up a project for planting about 10,000 trees in and around Manali area, under the social afforestation programme of the Government. Your Company pays special attention to safety of men and material and various competitions are held during the Safety Week to create awareness among the employees about the need to adhere to safe manufacturing practices. Training is provided to the employees in safety related matters and first aid and mock
drills are conducted to ensure that the systems and processes are in place to meet any eventualities. In addition to strictly adhering to all the prescribed safety standards, your Company has, Suo Moto, taken additional safety measures for handling hazardous chemicals like chlorine at a cost of about ' 1.50 crore.
Audit Committee
The details about the Committee are furnished in the Corporate Governance Report (CGR). All the recommendations of the Committee were accepted by the Board.
Vigil Mechanism
As required under Section 177 of the Act and Regulation 22 of the SEBI Listing Regulations 2015, the Company has established a vigil mechanism for directors and employees to report their genuine concerns through the Whistle Blower Policy is available on the website of the Company. As prescribed under the Act and the SEBI Listing Regulations 2015, provision has been made for direct access to the Chairperson of the Audit Committee in appropriate/exceptional cases.
Human Resources
Your Company believes that perpetual succession is indispensable to move forward in highly competitive business conditions and has taken various efforts to improve diversity, equity and inclusiveness factor in all business functions and employed capable young female professionals with relevant expertise and deployed them in core technical functions.
Your company has ensured to implement and meet all basic safety and welfare needs of these young workforce, on leadership front, a capable talent development effort has paved way to enable next generation of young leaders take over various functions in the organisation.
Your company has taken various initiatives to improve its ability to prepare the workforce through cultural and behavioural interventions in promoting inclusive decision-making culture. The industrial relations have generally been cordial, except in relation to a wage dispute with the workmen from 2001, being contested earlier in the Supreme Court and now in the Madras High Court. The Management's efforts to settle the issue through dialogue have succeeded largely with most of the workmen, barring a few, accepting the offer. The minority workmen are persisting with the case which is pending before the Madras High Court.
To focus on betterment of health and safety of the employees, various health awareness sessions and fitness programs were offered to improve awareness and promote a healthy lifestyle. As on 31st March 2023, your company had 386 employees on its roll at different locations including Executive Directors, Senior Management Personnel, Engineers, Technicians and Trainees.
Related Party Transactions
During the year under review, there were no transactions not at arms' length within the meaning of Section 188 of the Act. The policy on related party transaction is available on the website of the Company viz., https://www.manalipetro.com/ wpcontent/uploads/2022/02/RPT-Policy-2022.pdf As required under Regulation 23(2) of the SEBI Listing Regulations 2015, approval of the Members was obtained for transactions with Tamilnadu Petroproducts Limited during the year 2022-23 at the 36th Annual General Meeting. Based on professional advice and for administrative convenience, it has been proposed that such prior approvals could be for 12 months from October to September and hence a fresh proposal seeking prior approval of the Members for the same is being placed for consideration of the Members at the ensuing AGM. Board of Directors and related disclosures
As on the date of the Report, the Board comprises of ten directors including three Woman directors. There are six Independent Directors, and all of them have furnished necessary declaration under Section 149(7) of the Act and under Regulation 25(8) of the Regulations. As per the said declarations, they meet the criteria of independence as provided in Section 149(6) of the Act and the SEBI Listing Regulations 2015. All of them have confirmed that they have registered themselves with the Indian Institute of Corporate Affairs under Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended and all of them have been exempted from or passed the proficiency test.
The Board met five times during the year under review and the relevant details are furnished in the CGR. The Board has approved a Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC), which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.
The following changes took place in the composition of the Board and KMPs since the last AGM held on 28th September 2022 until the date of this report.:
a. Mr. Anis Tyebali Hyderi, Chief Financial Officer of the Company resigned with effect from close of work on 12th October 2022.
b. Mr. R Chandrasekar (DIN: 06374821) was appointed as a Whole Time Director (in the capacity of an Additional Director) and Chief Financial Officer of the Company on 2nd November 2022 by Board of Directors w.e.f. 3rd November 2022. Subsequently he was appointed as a Director by the Members through postal ballot on 28th December 2022 for a period of three years.
c. Mr. R Kothandaraman, Company Secretary was relieved from the service of the Company from close of business hours on 02nd November 2022, consequent to his retirement.
d. Mr. R Swaminathan was appointed as the Company Secretary of the Company on 2nd November 2022 by the Board of Directors with effect from 03rd November 2022.
e. Members approved the Reappointment of Mr. Govindarajan Dattatreyan Sharma (DIN: 08060285) as an Independent Director of the Company for the second term with effect from 5th February 2023 by way of postal ballot on 28th December 2022.
f. Ms. Devaki Ashwin Muthiah (DIN: 10073541) was appointed as an Additional Director of the Company on 25th May 2023 by Board of Directors. Subsequently she was appointed as a Director liable to retire by rotation by the Members through postal ballot on 05th August 2023.
g. Mr. M Karthikeyan (DIN: 08747186), Wholetime Director (Operations), has retired from the services of the Company on conclusion of his tenure i.e., on the closing of business hours of 27th May 2023.
h. Mr. Muthukrishnan Ravi (DIN: 03605222), Managing Director has retired from the services of the Company on conclusion of his tenure i.e., on the closing of business hours of 28th July 2023.
The Board places on record its appreciation for the invaluable services rendered by KMP's during their association with the Company.
Annual Evaluation of the Board, Committees and Directors
The formal evaluation of the Board was done taking into account the various parameters such as the structure, meetings, functions, risk evaluation, management of conflict of interests, stakeholder value & responsibility, corporate culture & value, facilitation to the Independent Directors to function impartially and other matters. The evaluation of the Committees was done based on the mandate, composition, effectiveness, structure and meetings, independence and contribution to the decisions of the Board.
The evaluation of the individual directors, including the independent directors was done taking into account their qualification, experience, competency, knowledge, understanding of their respective roles (as a Director, Independent Director and as a Member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc. In compliance with the requirements of Schedule IV to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year under review.
Directors’ Responsibility Statement Pursuant to the requirement of sub-sections 3(c) and 5 of Section 134 of the Act it is hereby confirmed that:
a. in the preparation of the annual accounts for the financial year ended 31st March 2023, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.
b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 and of the profit of the Company for the year under review.
c. the Directors had taken proper and sufficient care 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 and detecting fraud and other irregularities.
d. the Directors had prepared the accounts for the financial year ended 31st March 2023 on a “going concern” basis.
e. the Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and
f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Details of Unclaimed Share Certificates In accordance with the requirements of Clause 5A of the erstwhile Listing Agreement, during the year 2012-13 shares remaining unclaimed even after 3 reminders have been transferred and held in a separate demat account. As per the information provided by the Registrars and Share Transfer Agent, out of the 82,649 shares, which remained unclaimed by 349 shareholders at the beginning of the FY, 2,700 shares were released to 9 shareholders during the year. Further, 7,425 shares relating to 38 shareholders were transferred to the Investor Education and Protection Fund in compliance with the requirements of Section 126(6) of the Act. As at the end of the FY, 72,524 shares remained unclaimed by 302 shareholders. As specified under the Regulations, the voting right on the above shares remain frozen.
Auditors
Brahmayya & Co., Chartered Accountants, Chennai were Re-appointed as the Auditors of the Company for the second term at the 36th Annual General Meeting held on 28th September 2022 for a period of five years, viz. till the conclusion of 41st AGM.
Maintenance of Cost Records & Cost Audit
The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and is also covered under Cost Audit, which are duly complied with. M Krishnaswamy & Associates, Cost Accountants, Chennai were appointed as the Cost Auditors of the Company for the financial year 2022-23 on a remuneration of ' 3.00 lakh plus applicable taxes and reimbursement of out-of-pocket expenses which was ratified by the Members at the AGM held on 28th September 2022.
Based on the recommendation of the Audit Committee, Board has reappointed the said Firm as the Cost Auditors for the year 2023-24 to hold office till 30th September 2024 or submission of the report for the year 2023-24, whichever is earlier. The remuneration will be ' 3.00 lakh, plus applicable
taxes and reimbursement of out of pocket expenses subject to ratification of the Members at the ensuing AGM.
Adequacy of Internal Financial Controls
Your Company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by Internal Audit and management review with documented policies and procedures. In the past the system was also reviewed by an external agency, and no major weaknesses were reported. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings discussed by the Audit Committee and with the Statutory Auditors. The Statutory Auditors of the Company have also furnished certificates in this regard, which are attached to their Reports.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance stipulated under the Regulations. A Report on Corporate Governance is given in Annexure A. Declaration of the Whole Time Director on compliance with the Code of Conduct of the Board and Senior Management and compliance certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance are given in Annexure B. Secretarial Audit Report as required under Section 204 of the Act, was issued by Ms. B Chandra, Company Secretary in Practice is annexed to this Report as Annexure C.
Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
a. The ratio of remuneration of Whole Time Director to the median remuneration of other employees of the Company was 12.22.
b. The increase in remuneration of Whole Time Director, Company Secretary and Chief Financial Officer during the year was 3.93%, 9.34% and 1.67% respectively.
c. The increase in the median remuneration of the employees was 9.49%.
d. As at the year end, there were 353 permanent employees, including MD and WTD and excluding trainees.
e. During the year, the average increase in the salaries other than managerial remuneration
was 3.98% and the increase in managerial remuneration was 13.91%. Considering the performance of the Company and respective individuals during the year under review, the increases in managerial and other remuneration are deemed reasonable which have been determined based on the appraisal process adopted by the Company.
f. Information stipulated under Rule 5(2) are given in Annexure D to this Report.
g. The remuneration paid to the employees are as per the remuneration policy of the Company.
Note: Wages to workmen covered under the wage
settlements have not been considered for (c) and (e)
above.
Other disclosures
a. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable are given in Annexure E.
b. Pursuant to Section 92(3) of the Act, the Annual Return filed during the year under review has been uploaded on the website of the Company under the link https://www.manalipetro.com/ annual-return/
c. The Company has not accepted any deposits from the public during the year under report.
d. The information under Section 186 of the Act relating to investments, loans, etc. as at the year end has been furnished in Notes to the Financial Statements.
e. The annual report on CSR is given in Annexure F.
f. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No cases were filed under the said Act.
g. The Company has complied with the requirements of all the applicable Secretarial Standards.
h. Significant changes in key financial ratios
During the year under review, net margin and the operating margin decreased by 81% and 60% respectively. The current ratio and inventory
turnover ratio decreased by about 21% and 9% respectively. The Return on Net worth decreased from 38.22% in 2021-22 to 7.19%. All these were as a result of reduction in price realizations during the year.
The complete details of Ratios along with Variance are provided in Note 50, clause xii of Standalone Financial Statements.
Acknowledgement
Your Directors express their sincere gratitude to the Government of India, the Government of Tamilnadu, the Promoters and the Banks for the assistance, co-operation and support extended to the Company. The Directors thank the Shareholders for their continued support. The Directors also place on record their appreciation of the consistent good work put in by all cadres of employees and especially for raising up to the occasion and ensuring sustained operations during the year, in spite of the challenges during the pandemic periods.
Disclaimer
The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Company's performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.
For and on behalf of the Board
Ashwin C. Muthiah Place: London DIN: 00255679
Date: 09-08-2023 Chairman
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