Dear Shareholders,
Your Directors have pleasure in presenting the Thirty Eighth Annual Report together
with the Audited Financial Statements of the Company for the year ended 31st
March 2023. The Management Discussion & Analysis Report which is required to be
furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
("the Listing Regulations") is also presented as part of this Report.
FINANCIAL RESULTS
The summary of the financial results prepared per the Indian Accounting Standards (Ind
AS) is given below:
( In crore)
Description |
2022-23 |
2021-22 |
Earnings Before Interest, Depreciation and Tax |
147.25 |
260.95 |
Interest |
6.80 |
5.80 |
Depreciation |
21.30 |
23.63 |
PBT (before exceptional item) |
119.15 |
231.52 |
Exceptional item |
- |
- |
PBT (after exceptional item) |
119.15 |
231.52 |
Tax expenses |
29.84 |
60.88 |
Profit After Tax |
89.32 |
170.64 |
HIGHLIGHTS OF OPERATIONS
Your Company achieved revenue from operations of 2,150.25 crore up by 19% over
previous year figure of 1,805.58 crore.
Linear Alkyl Benzene (LAB), the major product of the Company increased its topline due
to optimal sales volume and improved prices. However, the contributions reduced
substantially with equivelant increase in raw material cost due to high crude price that
prevailed in FY 2022-23 and low-priced imports, consequent to expiry of Anti-dumping duty
on imports from China, Iran & Qatar in April 2022. Average crude price prevailed
during the year was at peak of USD 96/bbl. Further, the LAB Plant was under maintenance
for a period of 19 days during the year, which also had its own impact on production and
profitability.
Your Company is the first in the Country to receive BIS certification for LAB product.
Chlor-alkali business improved its contribution substantially compared to previous year
due to improved prices.
Your Company continued its policy of prudent sourcing & inventory management,
sustaining margins achieved during the pre-pandemic period, despite increase in crude
prices.
Your Company in its efforts to augment the capacity of LAB Plant from its existing 120
KTA to 145 KTA, has obtained Environment Clearance from Ministry of Environment, Forest
and Climate Change of India. As on 31st March, 2023, the Company had spent a
sum of 38.82 crore majorly towards the cost of the design Engineering. The estimated
cost of revamp of LAB facility is 240 crore and expected to be put on stream in 24
months.
As an initiative towards decarbonization, two new Gas Engines (2 x 7.8 MW) have been
procured to meet the power requirement of LAB Plant and the same were put into service.
Your Company in order to modernise the existing Caustic Soda plant from its 150 TPD to
250 TPD has estimated an outlay of 165 crore to be incurred over a period of 18 months
from the date of receipt of all statutory clearances. Towards this, the Company has
incurred a sum of 0.62 crore for initial feasibility study.
FINANCIAL REVIEW
Your Company's top line increased due to higher prices in LAB keeping in trend with
crude price combined with improved Caustic Soda Lye price realisation. Net Profits
achieved was 89.32 crore as compared to 170.64 crore in the previous year. FY 2021-22 was
exceptional in nature due to pandemic resulting in average crude USD 46/bbl as against USD
96/bbl during FY 2022-23.
Chlor-alkali business contribution more than doubled compared to previous year owing to
better prices. Propylene Oxide contribution sustained in line with the previous year.
In order to meet the project expansion cost of LAB & HCD, the board of directors
had approved the proposal for availing of term loan upto 50% of the project cost and your
company had received a sanction from HDFC Bank Ltd towards funding of the project helping
in financial closure of these envisaged projects.
Your Company's debt is lower as it is currently restricted to working capital
borrowings and lease liabilities.
CARE Ratings Limited has upgraded Company rating to CARE A+; Stable (Single A Plus;
Outlook: Stable) for Long Term Bank facilities (term loans and fund-based working capital
facilities) and CARE A+; Stable / CARE A1+ (Single A Plus; Outlook: Stable / A One Plus)
ratings for Short Term Bank facilities (non-fund based working capital facilities).
DIVIDEND
Pursuant to Regulation 43A of the Listing Regulations, the Company has a Dividend
Distribution Policy approved by the Board, a copy of which is available on the website of
the Company:
https://www.tnpetro.com/wp-content/uploads/2021/07/Dividend-Distribution-Policy-2021.pdf.
In line with the parameters in the policy, your directors are pleased to recommend a
dividend of 15% i.e. 1.50 per equity share of face value of 10/- each fully paid up,
for the year 2022-23, aggregating to 13.50 crore subject to witholding taxes.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Linear Alkyl Benzene (LAB) is an organic compound primarily used as an intermediate in
the production of surfactant linear alkylbenzene sulphonate (LAS), also known as linear
alkylbenzene sulphonic acid (LABSA) which is the key ingredient for producing
biodegradable detergents. LAB is consumed chiefly to produce laundry detergents,
light-duty dishwashing liquids, industrial cleaners, household cleaners, other
applications like crop protection, Enhanced crude oil recovery etc.
Due to increase in population and lifestyle changes, the detergent industry is expected
to grow at a better rate. Asia is the world's largest producer and consumer of LAB. The
leading manufacturers are presently India, China, and the Middle East. In the Middle East
and India, new capacity has been developed during the year under review.
The Indian LAB sector began in 1978 with the opening of IPCL's first LAB facility in
Vadodara Following which, Reliance Industries Limited (RIL) acquired IPCL. TPL, RIL,
Nirma, and IOC later had set up plants around India as the import substitution sector
grew. However, due to globalization and legislative developments such as the Free Trade
Agreement (FTA), the sector has faced stiff competition from imports primarily from Middle
East, Thailand and China until last year. The expiration of anti-dumping charges against
Iran, Qatar, and China has forced the industry to contend with severe competition from
low-cost imports, which has affected the contribution margins during FY 2022-23.
The Indian government made BIS certification mandatory for LAB in the Indian market
effective 3rd April 2023. This has given temporary relief as low-cost LAB
imports from Iran, China and Korea have not come in post implementation of BIS. The global
LAB market has reached approximately 4 million Tons and is expected to grow at a CAGR of
4.36% i.e., approximately 6.5 million Tonnes by 2032.
Based on demand across the globe, Asia Pacific happens to be the biggest consumer of
LAB. This region accounted for a demand of approximately 50% of the global LAB
consumption. With rising concerns over cleanliness and personal hygiene, government-led
campaigns like Swachh Bharat Mission in India to promote wellness, well-being, and welfare
of the citizens, are expected to stimulate the growth of the LAB market.
The UOP Technique, which is widely recognized as the best and most cost-effective
technology has been applied by more than 95 percent of all LAB manufacturers,
including TPL. Regardless, the cost of making LAB in India exceeds international standards
due to the high cost of essential components and feedstock quality.
Domestic firms with standalone units constantly struggle to compete with offshore
suppliers and factories integrated with refineries, which allow them to achieve lower
production costs.
Caustic soda is an inorganic bulk chemical, strongly alkaline and odourless, having
application in various industries like pulp and paper manufacturing, viscose yarn, staple
fibre, aluminium, textiles, soaps & detergent, dyestuffs, drugs and pharmaceuticals,
petroleum refining, etc.
It is available in two forms, liquid form which is called lye & solid form which is
called Flakes or pellets. Caustic soda is used to extract alumina from the bauxite ore.
The product's annual demand was stable. Despite the power-intensive process, national
capacity utilization of the aggregate capacity of roughly 5 million tons are high
and expected to further grow at a CAGR of 6.50% by FY2035.
Global increase in power/coal costs, exports from India to Europe increased in H1 FY'23
and hence the price of Caustic soda improved, and shipments began from the west, clearing
the path for domestic market price sustenance at higher levels. From January 2023
situation turned normal, as the coal costs started reducing. This has curbed down the
export orders from India thus resulting in the price drop of Caustic Lye from the fourth
quarter of FY 2022-23.
Chlorine, a co-product of Caustic Soda, is widely utilized in industries such as Vinyl
Chloride, Chlorinated Paraffin Wax (CPW), pulp and water treatment, chlorinated solvents,
and so on. The lack of integrated plants and downstream Chlorine utilization initiatives
are key barriers to Chlorine disposal.
Propylene oxide is a colorless liquid that is organic, volatile, and flammable. It is
soluble in ether alcohol. It is primarily utilized in the production of propylene glycol,
polyols, and other industrial intermediates. It is a chiral epoxide, even though it is
widely used in combination. PO derivatives are most used in the automotive, household home
appliances, and industrial insulation industries. The import lines into India are clear
after the pandemic, but market prices are under pressure due to the massive influx of
imported products available Indian purchasers.
OPPORTUNITIES AND THREATS
Global economic growth remains sluggish as financial concerns mount. However, India
stands as a bright spot in the global economy. With 75 years of freedom under its belt,
India is rapidly advancing to become one of the world's major economies. The country is
witnessing unprecedented social and economic development. It recently become the world's
fifth largest economy, with the goal surpassing the $5 trillion GDP threshold.
Your company is indirectly involved in the Fast-Moving Consumer Goods (FMCG)
industry, which remains one of our country's most significant long-term sustainable
business potential. Despite being one of the fastest growing FMCG markets in the world,
India's per capita FMCG consumption remains among the lowest in the world, providing a
vast runway for growth. We operate in two key FMCG categories (detergent and dishwashing)
and continue to be the lead player in South Indian market.
A solid talent pool, a diverse client base that spans the price-benefit spectrum,
unrivalled distribution that covers nearly all households, and an agile supply chain all
contribute to our enormous competitive advantage in South. Consumer preferences and
purchasing paths are fast changing because of changing demographics such as rising
prosperity, a big youthful working population, developing nuclear-family structures,
urbanisation, and increased usage of technology.
Consumers are growing more discerning, seeking superior products, making informed
decisions, and demanding brands with a purpose and a point of view. We recognise shifting
customer needs and believe that businesses that help people and the earth will thrive in
the future. LAB demand is altering with a portion of detergent powder market moving to
Liquid detergent. The Content of LAB is lower in liquids than Powder. As a company, we are
continually looking ahead, adapting and changing to stay one step ahead. Consumers,
government agencies, and investors looking for enterprises to invest in are increasingly
accepting of the commercial case for sustainability.
India is on a path towards sustainable and inclusive growth, and all businesses are
required to conduct themselves properly. Our objective is to produce consistent,
competitive, profitable, and responsible growth. Urban markets drove FMCG growth, aided by
a return to normalcy in economic activity following a couple of years of COVID-induced
disturbances. We remained laser-focused on serving our customers' increasing needs while
also protecting our business model. As economic activity returned to normal after a couple
of years of COVID, we saw consumers prioritise fundamentals above discretionary spending
in a high inflationary environment. In the last three years, our Home Care business's
liquid detergent and dishwashing portfolio has been growing steadily.
Rapid industrialization and urbanisation because of population increase are also
predicted to contribute to market expansion. The global market for Linear Alkyl Benzene is
profitable, and it is predicted rise steadily because of key players' expansion,
collaboration, and partnership initiatives. The increased need for sanitizers induced by
the pandemic crises has expanded the potential for LAB usage.
Detergent makers have found it simpler to reach out to rural locations with the use of
video marketing. Furthermore, customers have the option of selecting from a large choice
of items, thus businesses are continually upgrading their products and attempting to
increase their market share through inventive advertising strategies. The LAB business has
a lot of room to develop because these companies cater to the bottom of the pyramid
consumer. However, India being a desirable market considering its population and
consumption, it is being pursued by global LAB companies, resulting in higher imports to
India. The addition of new factories in the Middle East poses a significant threat to
India's LAB industry, as large portion of output is projected to migrate into the country.
Pricing and margins may continue to be influenced by this. All of this is on top of the
fact that LAB's anti-dumping tariff has expired. This is a challenging macroeconomic
climate typified geopolitical uncertainty, high commodity prices, and lacklustre market
growth. We live in a complicated and volatile world. Our plan of action is continually
evolving to respond to the trends and forces driving our industry and affecting our
stakeholders.
The operational environment remained tough this year. Food, energy, and commodity
prices rose at an unprecedented rate due to geopolitical instability in Europe and
worldwide supply chain disruptions. Global central banks' aggressive monetary tightening
efforts put further strain on emerging economies. With prices of various commodities
ballooning to decadal highs, widespread inflation caused significant issues for the
economy and the FMCG industry. This had a huge influence on FMCG consumption as consumers
attempted to manage their household budgets by modifying volume and prioritising
necessities over discretionary categories. The decline had a greater impact in rural
areas.
Caustic soda is a key industrial intermediate with numerous applications. The market
for Caustic Soda is expected to grow further as demand for textiles and apparel increases
due to urbanization and increased expenditure on personal care products. The import volume
of Caustic decreased during the fiscal year under review since prices in all international
sectors are high for suppliers. The situation has been changing recently resulting in free
flow of imports coupled with an overstock position in India affecting the prices of
caustic lye.
The conversion of the former ECH facility into a Propylene Oxide (PO) manufacturing
facility has proven beneficial in many ways, including the beneficial use of a defunct
facility and the opening of a new avenue for the advantageous use of Chlorine, which has
paved the way for higher capacity utilisation of the Chlor Alkaline Division.
OUTLOOK LAB
Soap and detergent demand have risen in recent years because of improved hygiene
awareness and a greater emphasis on cleanliness. A shift in lifestyle is transferring a
large portion of the population from semi-urban to metropolitan areas, and detergent usage
is keeping up, causing demand to climb continuously.
Despite fierce competition from overseas vendors, TPL remains the market leader in
south India. Over the previous three decades, TPL has established a reputation as a
trusted LAB supplier to MNCs and others.
The increase in Saudi Arabian imports is concerning. In addition, IOCL debottlenecked
its Baroda facility in September 2022, by repositioning loading bays, enabling for an
additional 42 kt/year of production.
CAUSTIC SODA /CHLOR ALKALI
The Caustic Soda industry's survival and expansion are dependent on the avenues of
Chlorine utilization potential. There is currently no anti-dumping tariff on caustic soda
entering India. Due to COVID-19 in the last fiscal, manufacturing activities affected
caustic exports from China and Russia-Ukraine war escalated power costs in Europe
affecting their production, paving way for more exports from West India and our domestic
prices of the alkali have witnessed highest ever prices.
There have been new additions in domestic caustic soda production, like the Grasim
plant in Balabhadrapuram, AP in South, and GNalco in West increasing availability of this
inorganic chemical. Your Company is also expanding the caustic plant capacity adopting the
cost effective bi-polar technology within a couple of years. Despite a drop in demand in
the textile industry, businesses such as alumina, paper, vinyl, and color intermediates
are thriving, making caustic sales simpler than ever. However, greater supply than demand
due to China's return to the export market, and Europe's production normalization will
have a significant impact on Caustic Lye prices, with margin erosion projected for Caustic
margin-dependent enterprises like us.
PROPYLENE OXIDE
The long-awaited conversion of our former ECH facility to make Propylene Oxide was
completed in 2018-19. The new PO Plant has given your company an additional possibility to
dispose of chlorine more advantageously, allowing for higher caustic production. While
there would be no difficulty in selling the product, as previously increasing output is
contingent on the recovery of end consumers of PO derivatives, such as the automobile
industry, from the recent depression, which has been exacerbated by the pandemic crisis.
RISK MANAGEMENT PROCESS
Your Company has a structured methodology to effectively monitor and manage the risks
by setting up two-employee level Committee and one Board level Committee to identify the
risks, suggest mitigation actions and monitor implementation. The employee-level
sub-committee has senior personnel from each function and the Apex Committee is headed by
the WTD(Operations) with functional heads as other Members.
As part of the risk mitigation process, the Board has constituted a Risk Management
Committee of Directors, which comprises of Ms. Sashikala Srikanth as the
Chairperson, Mr. C S Shankar, Ms. R Bhuvaneswari and Mr. D Senthi Kumar as
its Members. During the year, the Committee met four times viz. 20th May 2022,
4th August 2022, 31st October 2022 and 3rd
February 2023. As required under Section 177 of the Act, the Audit Committee also reviews
the risk management process periodically.
RISKS AND CONCERNS
As previously stated, the biggest risk that TPL faces is the import of LAB, Caustic
Soda, and Chlorine (in indirect form) into the country. Aside from the new Farabi
capacity, IOCL's expansion has enhanced the market's accessible quantity. This is
projected to exacerbate competitiveness in the domestic market. Your Company is
considering minimising this risk by increasing contract volumes with large LAB buyers.
Because large-scale imports would have an influence on product pricing, addressing the
possibility of lower margins would be an important issue to handle, as spot price stress
has a significant impact on the bottom line.
To address the concerns, your Company is focusing on boosting production and
productivity to control per-unit costs while providing for product price flexibility.
Furthermore, reliance on spot markets is being gradually reduced to expand and secure
direct customer committed volumes. Also, anti-dumping duty case has been filed and in
progress with trade remedies agencies of government to tackle the low-cost imports. Your
company jointly filed an application on the Under valuation of low-cost imports and
seeking help, guidance from Department of Chemicals and Petrochemicals, Government of
India for the Production linked Incentive Schemes for the new LAB Expansion project which
is underway. Your organization continues to conduct risk assessments and corresponding
mitigations for the hazardous chemicals used in the Plants with the assistance of
technical experts. Adequate measures are being taken to address this risk.
In the year 2020, NGT on Suo Motu basis registered a case against few industries
situated at Manali (including your Company), based on the newspaper report published in
November 2020 regarding emission from the industries affecting air quality in Manali,
Chennai during the period April 2019 to December 2020. NGT vide its order dated 20.07.2023
had given certain directions/ recommendations to the industries at Manali, Tamilnadu
Pollution Control Board and Central Pollution Control Board which includes collection of
environmental compensation and creation of corpus fund for improvement of environmental
standards in Manali Industrial area. Your Company is addressing these issues and taking
appropriate action in this regard. Your Company is in adherence to the prescribed
environmental conditions and will continue to adhere the same.
SAFETY, HEALTH & ENVIRONMENT
TPL plants are accredited with International Organization for Standardization (ISO)
certificates for Occupational Health & Safety Management System (ISO 45001-2018) and
Environmental Management System (ISO 14001-2015) and Quality Management System (ISO
9001-2015).
Your Company has replaced the old fire engines with two latest high capacity fire
engines of BS VI model to TPL's fleet of emergency preparedness Also, two fire water
pumps' with Diesel engines as prime mover were replaced with new BS VI model engines.
Your Company continue to utilize treated city sewage water after Tertiary Treatment
Reverse Osmosis (TTRO) for industrial purpose. Regassified Liquefied Natural Fuel (RLNG)
is being used as fuel in the process heaters and boilers. These two major changes have
come up as a natural resource conservation measure and efforts towards cleaner
environment.
Your Company already achieved Zero Liquid Discharge in LAB and HCD plants. Significant
level of green belts developed, around 31000 Tree saplings were planted in and around
Manali and at Thiruvallur District during the period 2021, 2022 & 2023.
Leak Detection and Repair (LDAR) programme is being implemented to control HC/VOC
emissions. 3-Dimensional Risk Assessment has been carried out for LAB plant, for inclusion
of vertical Assessment.
New gas based CPP (2 X 7MW Engines) are being installed to reduce emission to new low
level. As part of National Safety Day (4th March), various competitions were
conducted for employees and other contractors to reiterate the Company's commitment
towards safety. Participation by employees and contractors were encouraging. World
Environment day is also celebrated every year and tree plantation programs are organized
for planting saplings towards green initiative to promote carbon offset.
Adequate safety standards have been prescribed and are being followed without any
compromise. Utmost importance is given to the protection of employees, assets and
environment at all times. All legal and statutory requirements are complied, by planning
well in advance without any deviation. Regular training is arranged for workers as a
refreshment on safety, environment & health.
SUBSIDIARIES
As at the year end, your Company had one Wholly-Owned Subsidiary (WOS) and one Step
down Subsidiary (SDS) which were incorporated outside India. The financials of these
subsidiaries have been consolidated and the salient features of financial and other
information have been furnished in the Consolidated Financial Statement (CFS) attached to
this Report.
Certus Investment and Trading Ltd
Certus Investment and Trading Ltd. (CITL), Mauritius was promoted as a Special Purpose
Vehicle (SPV) to set up LAB and NP projects in Middle East and South East Asia. However,
due to changed business environment, the projects could not be taken up. At present, the
WOS is not carrying on any major activity. Since your Company has enhanced the NP capacity
to meet the entire requirement in-house, there may not be scope for taking up NP project.
Certus Investment and Trading (S) Private Limited
In the past, TPL was exporting large quantity of LAB and importing various materials,
such as NP, Benzene, etc. Therefore, CITL, Mauritius had set up CITL, Singapore as a WOS,
in order, to function as a coordinator for TPL's overseas procurement and marketing
activities. At present, there are no significant exports or imports and so the above SDS
is not engaged in any activities.
As explained above, the subsidiaries were floated several years ago for specific
purposes. Due to change in circumstances and also opportunities opening up in India, it is
being examined if other opportunities would be available for the subsidiaries. A decision
on the usefulness of these subsidiaries would be taken in due course, after judiciously
reviewing the situation.
HUMAN RESOURCES
Your Company strongly believes that its strength is directly proportional to the
strength of its employees in terms of knowledge, experience, and decision-making
skills. Your Company has been practicing various HR initiatives such as recognition,
empowerment, personality development, decentralisation, delegation of powers etc., to
retain talent and to enhance capabilities. A balanced staffing system has been adopted in
your wherein competent fresh talent has been infused into the stream of experienced hands.
The training needs of employees have been identified at regular intervals through
performance appraisal systems and necessary training is being imparted through in-house
and external programs. The manpower strength as on 31st March 2023 was 394.
BOARD OF DIRECTORS AND RELATED DISCLOSURES
As on the date of this Report, the Board comprises of 12 Directors of whom six are
Independent, including 3 Woman Directors.
The Board met five times during the year and the relevant details are furnished as part
of Corporate Governance Report.
The following changes took place in the composition of the Board since the date of last
Annual General Meeting: Mr. S Krishnan, IAS (DIN: 03439632) and Ms. Jayashree
Muralidharan, IAS (DIN:03048710) nominees of TIDCO were appointed as Non-Executive
Directors of the Company at the 37th Annual General Meeting held on 29th
September 2022.
Ms. R Bhuvaneswari, Director (DIN: 06360681) retires by rotation at the ensuing AGM and
being eligible, has offered herself for re-appointment and is recommended for approval of
the Shareholders.
Declaration from Independent Directors:
All the Independent Directors (IDs) have submitted necessary declarations under Section
149(7) of the Act and Regulation 25(8) of the Listing Regulations. As per the said
declarations, they meet the criteria of independence as per Section 149(6) of the Act and
the Listing Regulations. In the opinion of the Board, the IDs fulfil the conditions
specified in the Act and the rules made thereunder for appointment as IDs including the
integrity, expertise and experience and confirm that they are independent of the
management. All the IDs have confirmed their registration 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.
As required under Section 178(3) of the Act, your Company has a Board approved policy
on remuneration which is available on the website of the Company :
https://www.tnpetro.com/investors/ policies/.
KEY MANAGERIAL PERSONNEL
As on 31st March 2023, Mr. D Senthi Kumar and Mr. KT Vijayagopal, Whole-time
Directors and Ms. Sangeetha Sekar, Company Secretary were the Key Managerial
Personnel of the Company. During the year, Ms. Sangeetha Sekar was appointed as Company
Secretary and Compliance Officer of the Company effective th February 20236 in
the place of Mr. V Balamurugan who ceased to be the Company Secretary and Compliance
Officer effective close of business hours of 31st January 2023.
ANNUAL EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS
The performance of the Board was evaluated taking the following aspects into account
viz., Structure, Meetings, Functions, Risk Evaluation Process adopted, Grievance Redressal
Mechanism, Stakeholder Value and Responsibility, Corporate Culture and Ethics and other
matters. Board also took into account facilitation to the Independent Directors to
function independently and perform their roles as another important parameter for
evaluation.
The performance of each of the Committees was evaluated taking into account the
composition, mandate, working procedures, effectiveness, independence and contribution to
the Board in the decision making process.
The evaluation of the two Executive Directors was done based on their assigned roles
and responsibilities. As regards the other Directors, including the Independent Directors,
the evaluation was carried out taking into account the following parameters, viz.,
qualification, experience, competency, adequacy of knowledge about the Company and its
sector of operation, understanding about the strategic direction, ethical behavior,
participation in the risk evaluation process, resolving conflict of interests, attendance
and preparation for the meetings, ability to work as a team player and voluntary sharing
of information for the larger benefit of the Company and the like.
In compliance with the requirements of Schedule IV of the Act and the Listing
Regulations, a separate meeting of the Independent Directors was held on 21st
March 2023 at which the Directors evaluated the performance of the Non-Independent
Directors, the Chairperson and also the adequacy of flow information to the Board and
Committees.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of sub-section 3(c) and 5 of Section 134 of the Companies
Act, 2013, it is hereby confirmed that
a) in the preparation of the annual accounts for the financial year ended 31 st
March 2023, the applicable Accounting Standards had been followed along with proper
explanation relating to material departures, if any;
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 profits of the Company for the year;
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 31 st
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 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.
CORPORATE GOVERNANCE
Your Company has complied with the requirements of Corporate Governance stipulated
under Regulation 27 of the Listing Regulations. A Report on Corporate Governance forms
part of this Report and a Certificate from the Secretarial Auditors regarding compliance
with the requirements of Corporate Governance is given in Annexure I of this
report.
AUDITORS
M/s. RGN Price & Co., Chartered Accountants, Chennai having Firm Registration No.
002785S was appointed as the Statutory Auditors of the Company. As per the extant
provisions of the Act, they will hold office for a period of five years till conclusion of
42nd AGM. The report of Auditors on the financial statements is attached and
forms part of this report and does not contain any qualification, reservation or adverse
remarks.
SECRETARIAL AUDIT REPORT
As required under Section 204 of the Act read with Rule 9 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report issued
by Ms. B Chandra (CP No.7859), Company Secretary in Practice, Chennai is given in Annexure
II to this report. The Secretarial Audit Report is attached and forms part of this
report and does not contain any qualification, reservation or adverse remarks.
Your Company has complied with the requirements of all the applicable Secretarial
Standards.
MAINTENANCE OF COST RECORDS & COST AUDIT
Your Company is required to maintain cost records as specified by the Central
Government under Section 148(1) of the Act which is duly complied with, by your Company.
Your Company is also covered under Cost Audit.
M/s. M Krishnaswamy and Associates, Cost Accountants, Chennai have been appointed as
the Cost Auditors of the Company for conducting the audit of cost records for the
financial year 2022-23 and 2023-24 on a remuneration of 2.75 lakh plus applicable
taxes and duties (for each financial year) andthey will hold office submission of their
Report or 30th September of the respective year for which they are appointed,
whichever is earlier.
As required under Section 148 of the Act, read with the relevant Rules, ratification of
the remuneration to the Cost Auditor for the year 2022-23 and 2023-24 will be considered
by the Members at the ensuing AGM of the Company.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial control systems with periodical
review the process. The control system is also supported by ERP, internal audits and
management reviews with documented policies and procedures. The system was also earlier
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 are discussed by the Audit Committee with the Auditors. The Auditors of the
Company have also furnished certificates in this regard, which attached to their Reports.
CONSERVATION OF ENERGY AND OTHER DISCLOSURES
As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the
Companies (Accounts) Rules, 2014, information on conservation of energy, technology
absorption, foreign exchange earnings and outgo, to the extent applicable are given in Annexure
- III and form part of this Report.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
During the year under review, Debt service coverage (in times) (56)%, Return on equity
(in %) (55)%, Net profit (in %) (56)%, Return on capital employed (in %) (51)% ratios
significantly altered as earnings compared to the previous financial year substantially
reduced on account of increased raw material costs which is a factor of abnormal crude
price (average USD 96/bbl.) prevailed in FY 2022-23. The accounting ratios are
given under Note: 40 of the Standalone Financial Statements.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Information on loans, guarantees and investments till covered under Section 186 of the
Companies Act, 2013, forms part of the Notes to Financial Statements.
RELATED PARTY TRANSACTIONS
All transactions with related parties entered into by the Company during the year were
on arms' length basis and were approved by the Audit Committee at the beginning of the
financial year. There were no contracts or arrangements entered into with the related
parties covered under section 188(1) of the Act that is required to be disclosed in Form
AOC-2. The policy on materiality of transactions with related party as approved by the
Board is available in the website of the Company : https://www.tnpetro.com/
investors/policies/.
As required under Regulation 23(2) of the Listing Regulations, prior approval of the
Members was obtained at the 37th AGM held on September 29, 2022, for
transactions with Manali Petrochemicals Limited upto 425 crore plus taxes for the period
October 2022 to September 2023.
AUDIT COMMITTEE
The Composition of the Committee and particulars of its meetings are disclosed under
the Corporate Governance Report annexed to this Report. During the year, the Board had
accepted all the recommendations made by the Committee.
VIGIL MECHANISM
As required under Section 177 of the Act and Regulation 22 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations 2015, your Company has established a
vigil mechanism for its directors and employees to report genuine concerns through the
Whistle Blower Policy of the Company as published in the website of the Company. As
prescribed under the Act and the Listing Regulations, provision has been made for direct
access to the Chairperson of the Audit Committee in appropriate / exceptional cases.
ANNUAL RETURN
Pursuant to Section 92(3) of the Act, the Annual Return in Form MGT-7 is available in
the website of the Company: https://www.tnpetro.com/investors/annual-return/.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013 (POSH)
The Company has complied with the provisions relating to framing of policy and
constitution of Internal Complaints Committee (ICC) under the POSH Act. There were no
referrals received by ICC during the year.
PARTICULARS OF EMPLOYEES AND OTHER DISCLOSURES
The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with
Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are given in Annexure - IV to this Report.
It is hereby affirmed that the remuneration to employees is as per the remuneration
policy of the Company.
CSR POLICY AND RELATED DISCLOSURES
The brief outline of CSR policy of your Company and such other details and disclosures
as per the prescribed format are furnished in Annexure V to this report.
BUSINESS RESPONSIBILTY AND SUSTAINABILITY REPORT
The report on Business Responsibility and Sustainability in compliance with Regulation
34 of the Listing Regulations is given as Annexure VI of this report.
Other Disclosures:
- There was no fraud reported by the Auditors of the Company as per Section 143(12) of
the Act read with the Companies (Audit and Auditors) Rules, 2014;
- There were no significant and material orders passed by any of the regulators /
courts / tribunals impacting the going concern status and company's operations; Your
Company has not accepted any deposits from the public during the year.
Acknowledgement
Your Directors are grateful to the Government of India, the Government of Tamilnadu,
financial institutions, banks, other lending institutions, the promoters, technical
collaborators, suppliers, customers, joint venture partners and marketing agents for their
assistance, co-operation and support. The Directors thank the shareholders for their
continued support.
The Directors also place on record their high appreciation for the contributions by all
cadres of employees of the Company.
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 of Directors
|
D Senthi Kumar |
KT Vijayagopal |
8th August 2023 |
DIN: 00202578 |
DIN: 02341353 |
Chennai 600068 |
Whole-time Director (Operations) |
Whole-time Director (Finance) & CFO |
|