BOARD'S REPORT TO THE 'MEMBERS Your Directors are pleased to present the Thirty First Annual Report together with the Audited Financial Statements of the Company for the year ended 31 st March, 2015. DIVIDEND In view of the financial performance of your Company, your Directors have not recommended any dividend for the financial year 2014-15. PERFORMANCE During the year under review, performance of the Company has been adversely affected on account of depressed global economic situation which has resulted in reduction of commodity demand. The performance of the Company has been adversely affected due to steep fall in prices of the Chemical products and the demand for Guar Gum. The performance was further adversely affected as domestic prices of our feedstock viz. molasses and alcohol, were high on account of poor availability of alcohol and diversion of alcohol towards the implementation of Ethanol Blending with Petrol (EBP) Program of Government of India at an unrealistic price resulting in a sharp increase in the prices of alcohol. Sales and other income for the year under review has decreased to Rs. 2601 Crores as compared to Rs. 2914 Crores last year. Loss after depreciation, exceptional items and tax for the year has been Rs. 61 Crores as compared to loss of Rs. 120 Crores last year. CHEMICALS The Company is the largest manufacturer of Bio-Mono Ethylene Glycol (Bio-MEG) in the world made out of renewable feedstock i.e. Molasses and Ethanol. Bio-MEG has an application, apart from other products, in PET bottles, which is used for packaging of beverage products. Sales of Glycols [Monoethylene Glycol (MEG), Diethylene Glycol (DEG), Triethylene Glycol (TEG) and Heavy Glycols] have decreased from 95,342 MT in FY 2013-14 to 90,140 MT in FY 2014-15 and in Sales Value from Rs. 758 Crores in FY 2013-14 to Rs. 706 Crores in FY 2014-15. Sales under Ethylene Oxide Derivatives (EOD) business decreased to 99,034 MT in FY 2014-15 from 1,03,713 MT during previous year. However, in value terms it has increased from X1,106 Crores in FY 2013-14 to Rs. 1,109 Crores in FY 2014-15. EOD business has witnessed improvement due to higher prices of Ethylene and Ethylene Oxide in the world market. During the year, your Company produced 93,029 MT of Glycols compared to 96,275 MT last year. Ethylene Oxide Derivatives (EODs) production has been 1,36,837 MT compared to 1,05,510 MT last year. EXPORTS During the year under review, your Company has achieved total export turnover of Rs. 1,030 Crores as compared to Rs. 1,195 Crores last year. The decline in exports can be attributed to the steep fall in demand and price of guar gum. Your Company hopes to achieve reasonable growth in the overall export sales in the current year though the market conditions remain extremely challenging. Company has been granted 'One Star Export House' status by Government of India. ETHYL ALCOHOL (POTABLE) & EXTRA NEUTRAL ALCOHOL During the year, your Company registered total sales of X691 Crores as compared to X 657 Crores last year in the Ethyl Alcohol (Potable) division. During the year thrust was given on the export of high quality Extra Neutral Alcohol (ENA) and IGL has gained the position of premium quality ENA suppliers in the international markets. Monde Selection Committee is conducting evaluation sessions for different categories of consumer products & accordingly provides quality awards. Our Company has won fifth time in a row the prestigious GRAND GOLD AWARD from MONDE SELECTION, Belgium for its high quality of Extra Neutral Alcohol and also the GOLD AWARD for Soulmate Premium Whiskey for the first time. Company has a tie-up with Bacardi for bottling of their products at our Kashipur bottling unit and Bacardi has also started the bottling of more brands at our bottling facility at Kashipur. Company is having license for operations in and sale of Country Liquor and Indian Made Foreign Liquor (IMFL) in the States of Uttar Pradesh and Uttarakhand. During the year under review, Company has launched its premium products under the brand name of "V2O Vodka" in three flavors viz. Orange, Green Apple and Smooth. We have also extended the launch of Beach House Premium XXX Rum. During the year, the IMFL brands of the Company have been supplied to Canteen Stores Department (CSD) of Indian Defence Forces. The Company is also in the process of introducing its IMFL brands in the higher range market and a brand building program shall be introduced in the current financial year. ENNATURE BIO-PHARMA DIVISION (100% EXPORT ORIENTED UNDERTAKING) Company has a 100% Export Oriented Unit (100% EOU) by the name of Ennature Bio-pharma division. The unit has established Supercritical Fluid Extraction- CO2 and solvent extraction facility at Dehradun. The unit is Current Good Manufacturing Practices (CGMP), ISO 9001, ISO22000, Hazard Analysis and Critical Control Points (HACCP), Kosher and Halal certified. The R&D center at Ennature Bio-Pharma plant at Dehradun is working vigorously on the process of stabilizing and developing various Phytopharmaceutical and Nutraceutical products for the developed markets. During the year, Company has become a qualified supplier to many large conglomerates worldwide for natural colors, nutraceuticals, health supplements and plant based Active Pharmaceuticals Ingredients (APIs). Company has established its name as a quality manufacturer and supplier with stringent Quality Control (QC) and Quality Assurance (QA) controls in place. During the year 2014-15, Company has taken several initiatives and improved functioning of the division and reported much better results. Sales turnover of Ennature Bio-Pharma division has increased to Rs. 68 Crores as compared to Rs. 43 Crores last year and registered a growth of over 60%. Both domestic & export sales have increased and existing product sales have increased with increase in the customer base and more usage from the old customers. Company has also been able to develop new products like Vinpocetine EP/BP*. Variety in Product Folio available with the Company has created better business opportunities to deeply penetrate into domestic as well as international markets. (*EP/BP - European Pharmacopoeia/British Pharmacopoeia) Company is working towards creating value for its generic products by branding, repositioning & generating technical backup with the help of professional institutes. INDUSTRIAL GASES During the year under review, the Company produced approximately 19,195 MT of Oxygen and 1,428 MT of Nitrogen. Both Oxygen and Nitrogen were sold in the market and also used for in house requirement. In addition, Argon of 2,864 MT was also produced and its sales were 2,770 MT. Industrial Gas Division also produced Beverage and Industrial Grade Liquid Carbon Di-oxide (LCO2) at Kashipur. During the year the Company has produced 36,331 MT of LCO2 and its sale was 35,477 MT. Company also produced ETO (Ethylene Oxide & Carbon Dioxide Gas Mixtures) under the trade name IGL-STERI GAS at its Kashipur Plant. It is suitable for sterilization of Disposable Surgical & Medical Devices, spices and packing substances like rubber plastic etc. The Company has in house facility for production of EO and LCO2 which are also used in production of ETO and as such it is the only plant in India to have such manufacturing facility, which gives us a distinct edge over other suppliers in the market. During the year the Company has sold 913 MT of Steri Gas as compared to 722 MT in the last year. During the year, the Industrial Gases segment registered total sales of all gases of Rs. 38.00 Crores as compared to Rs. 40.00 Crores in the last year. JOINT VENTURE FOR PRIVATE FREIGHT TERMINAL (PFT) The Company has entered into a Joint Venture with Apollo Logisolutions Limited ("ALS") for setting up a Private Freight Terminal (PFT) and Inland Container Depot (ICD) providing railway based logistic services and other facilities at Bazpur Road, Kashipur, Uttarakhand, as provided under extant guidelines of the Indian Railways. The facility is coming up at the area adjacent to the existing plant of Company at Kashipur. ALS is engaged in the business of offering complete and comprehensive services relating to container freight station, transportation of containers, cargo handling and has the requisite technical expertise to operate and manage inland container depot. India Glycols Limited holds 48.9% of the capital contribution of the JV Company. The Joint Venture Company will develop, manage and operate Private Freight Terminal (PFT) and Inland Container Depot (ICD) at Kashipur, Uttarakhand. The facility is expected to be operational by Q3 of this financial year. The facility shall provide multi-modal logistics solutions to our Company and external customers and enhance its service delivery capacity. With the commissioning of this facility, logistics movement for both inbound and outbound cargo would become more dependable, reliable and economical, would also ensure on-time delivery of goods and enable better inventory management. EXPANSION / MODERNISATION / DIVERSIFICATION PLANS Your Company is actively pursuing growth opportunities and looking at areas to reduce its cost of production. The Company is also evaluating plans to further expand its Ethoxylates capacity to improve its product portfolio. At Dehradun Herbal plant, Diesel boiler has been replaced with green herbal waste/briquette based boiler, which would result in significant fuel cost saving. With the Commissioning of 12 MW Bio-mass based co-generation plant based on Multi-fuel i.e. Rice Husk & Concentrated Spent Wash (Slop) for Power generation, the Company has started sale of the surplus power to the Power Grid. This new setup is designed to supply approx. 8 MW per hour Power to the Grid after meeting the in-house requirements. With the successful commissioning of this Power Project, we are contributing towards reduction of the power deficit in the Uttar Pradesh State and also meeting our commitment of zero effluent discharge from our distillery Plant. The Company is setting up a 10 ton biomass/day capacity pilot plant to convert lignocellulosic agricultural waste biomass to ethanol by using the bench-scale process developed at DBT-ICT Centre for Energy Bio-Sciences, Mumbai. The Pilot Plant will use agricultural non-fodder lignocellulosic waste (i.e. Rice Straw, Wheat Straw & Bagasse) as feedstock to manufacture ethanol. The plant will aim at solving technical roadblocks in Lignocellulosic Ethanol Technology in order to improve the overall situation with regard to alcohol availability. The plant is being set-up with the Department of Bio-Technology aid/loan. The Company has started manufacturing of special spirits, maturation and bottling of high proof brands. The Company has started to produce Bacardi brands including Superior white rum, flavoured rum in five variants, black rum, Eristoff Vodka in four variants and Bacardi whisky. The Company is in the process of developing a new premium range Whisky. The Company is also introducing its premium range Rum for supply to the CSD of Indian Defence Forces. The Company has also set up a guar-gum based Propylene Oxide (PO) derivatives plant for oil field industry. The Company in its Board Meeting held on 18th December, 2014 granted approval for the Segregation of the non core rental business of the Company for reducing the debt and improving the liquidity position of the Company. The Shareholders have approved, through Postal Ballot, by way of a special resolution under Section 180(1)(a) and 188 of the Companies Act, 2013 for sale of "Rental Business" of the Company to IGL Infrastructure Private Limited for a consideration of Rs. 184.20 Crores being enterprise value. The said segregation shall also help to achieve the other objectives such as reduce business complexity and release management time, provide impetus to future growth and create structure amenable for raising funds through leverage of assets and income. FINANCE During the year under review, Company has raised Term Loans of X 239 Crores and repaid total loans of Rs. 286 Crores. The Company has been regular in meeting its obligations towards payment of principal/interest to Financial Institutions/Banks. Details of the Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. The Company had discontinued its fxed deposits scheme in the financial year 2009-10 and has not accepted any fresh deposits covered under Chapter V of the Companies Act, 2013 during the year. There are no overdue deposits except unclaimed deposits amounting to Rs. 3.36 Lacs. During the year, unclaimed deposit of Rs. 1.24 Lacs was transferred to IEPF. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY The Company periodically discusses and reviews at its Audit Committee and with its auditors the effectiveness of the internal financial controls measures implemented by the Company including with reference to the Financial Statements of the Company. The Company has a proper and adequate system of internal financial controls which includes the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. LISTING OF SECURITIES The shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited (NSE). SUBSIDIARY COMPANIES Shakumbari Sugar and Allied Industries Limited The Company operates a sugar manufacturing plant in the state of Uttar Pradesh through its subsidiary Company M/s Shakumbari Sugar and Allied Industries Ltd. (SSAIL) with a crushing capacity of 7,500 tons crushed per day (TCD) alongwith a modern distillery of 65 KL per day (KLPD) producing high quality rectified spirit and an internal bagasse fired co-generation plant of 11 MW catering to the captive power needs of the sugar and distillery units. The net worth of Shakumbari Sugar and Allied Industries Limited (SSAIL) has been completely eroded due to accumulated losses and, therefore, the Company has been declared a Sick Industrial Company under the provisions of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) after obtaining necessary consents from its secured lenders including Central Bank of India, IDBI Bank Ltd., etc. IDBI Bank Ltd. being the Operating Agency has prepared and submitted the revival scheme for SSAIL, and the final order of the BIFR on revival of SSAIL is awaited. During the year the operations of the sugar manufacturing plant ceased to operate due to mounting debt burden of the Company and the uneconomical sugar scenario in the State of Uttar Pradesh. During the year ended 31 st March, 2015, SSAIL suffered a loss of X 25.42 Crores. IGL Finance Limited IGL Finance Ltd. (IGLFL) is a 100% subsidiary of the Company. IGL Finance Ltd. had invested funds in short term commodity financing contracts by the National Spot Exchange Ltd. (NSEL). Even though NSEL has defaulted in settling the contracts on due dates we are confident of recovery of our dues from NSEL over a period of time in view of the action taken by the Government and other investigating agencies. Company has so far recovered X 10.31 Crores from NSEL. During the year ended 31st March, 2015, IGLFL suffered a loss of X 0.74 Lacs. IGL Chem International Pte. Ltd. IGL Chem International Pte. Ltd., a 100% subsidiary in Singapore to augment its activities in South Eastern region & help the marketing of products from Chemical Plant, Natural Gums Plant and Supercritical Fluid Extraction facility to large buyers in US, Europe and South East Asia. During the year ended 31 st March, 2015, IGL Chem International Pte. Ltd. suffered a loss of X 182.19 Lacs. IGL Chem International USA LLC Company has also set up a 100% subsidiary company in USA, named as IGL Chem International USA LLC with the main objective of trading in the Company's products and related activities in the American and Latin American regions. IGL Infrastructure Private Limited During the year under review, Company has incorporated IGL Infrastructure Pvt. Ltd. as a 100% subsidiary company, with the objectives of acquiring land, estates, buildings, tenements and other property of every description whether freehold or leasehold or other tenure by purchase, lease, exchange, hire or otherwise. During the year under review, the Company has transferred its Rental business on slump sale basis to IGL Infrastructure Pvt. Ltd. for an enterprise value of Rs. 184.20 Crores. Statement containing salient features of the financial statement of subsidiaries/associate company/Joint ventures under first proviso to sub-section (3) of Section 129 in Form AOC-1 forms part of the financial statements. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand. BOARD OF DIRECTORS The Board of Directors of your Company comprises of eight directors including five Independent Directors, one Woman Director who is a Non-executive, Promoter Director, one Managing Director and one Executive Director. In the 30th Annual General Meeting held on 20th September, 2014, the Company had appointed Shri Pradip Kumar Khaitan, Shri Ravi Jhunjhunwala, Shri Jitender Balakrishnan, Shri R. C. Misra and Shri Jagmohan N. Kejriwal as Independent Directors for a period of 5 years with effect from 1 st October, 2014 till 30th September, 2019 in terms of the provisions of Companies Act, 2013 and the Listing Agreement entered into with the Stock Exchanges. The terms and conditions of appointment of the Independent Directors are posted on the website of the Company. In terms of provisions of Section 149(7) of the Companies Act, 2013, all the Independent Directors of the Company have furnished a declaration to the Compliance Officer of the Company at the meeting of the Board of Directors held on 28th May, 2015 stating that they fulfill the criteria of Independent Director as prescribed under Section 149(6) of the Companies Act, 2013 and are not disqualified to act as Independent Director. During the year under review, five Board Meetings were held on 22nd May, 2014, 4th August, 2014, 8th November, 2014, 18th December, 2014 and 14th February, 2015. Smt. Jayshree Bhartia, Non Executive, Promoter Director is retiring by rotation at the forthcoming Annual General Meeting and being eligible, offers herself for reappointment. Your Directors recommend the reappointment of Smt. Jayshree Bhartia, the retiring Director, for your approval. The Company has a policy, namely, the "Nomination, Remuneration and Evaluation Policy", which applies to the Board of Directors, Key Managerial Personnel (KMPs) and the Senior Management Personnel of the Company and contains therein the policy followed by the Company regarding directors' and KMPs' appointment and determination of their remuneration and other matters provided under sub-section (3) of section 178. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges, the Independent Directors in their meeting held on 8th November, 2014 evaluated the performance of the Board of Directors of the Company as a whole, the performance of non independent directors individually on the evaluation criteria approved in the Nomination, Remuneration and Evaluation Policy of the Company and evaluated the quality, quantity, timeliness of the flow of information between the Management and the Board. Pursuant to provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges, the Board has carried out an annual performance evaluation of its own performance as well as the evaluation of the working of its Committees including Audit Committee and Nomination and Remuneration Committee. The Board followed a mechanism of annual evaluation of the Independent Directors in the Board on the basis of the evaluation criteria approved in the Nomination, Remuneration and Evaluation Policy of the Company. The Independent Directors of the Company have been appointed for a period not exceeding five consecutive years commencing from 1 st October, 2014 to 30th September, 2019. The Non - Independent Directors have in their meeting held on 14th February, 2015 evaluated the performance of the Independent Directors during the year. The Board of Directors of the Company endeavor to perform their job and discharge their duties towards the Company in the best possible manner keeping in mind the highest standards of corporate governance. The Board of your Company follows a mechanism of continuous evaluation of its performance in terms of decision making and ensuring transparency. Nomination, Evaluation and Remuneration Policy The Company formulated and adopted Nomination, Remuneration and Evaluation Policy (the "Policy") to provide a framework and set standards for the nomination, remuneration and evaluation of the directors, Key Management Personnel and officials comprising of the senior management. The basis for the Nomination and Remuneration Committee to select a candidate for appointment to the Board are enhancing the competencies of the Board and attracting as well as retaining talented employees for role of KMP/Senior Officials. When recommending a candidate for appointment, the Nomination and Remuneration Committee has regard to: a) assessing the appointee against a range of criteria which includes but not be limited to qualifications, skills, regional and industry experience, background and other qualities required to operate successfully in the position, with due regard for the benefits from diversifying the Board; b) the extent to which the appointee is likely to contribute to the overall effectiveness of the Board, work constructively with the existing directors and enhance the efficiencies of the Company; c) the skills and experience that the appointee brings to the role of KMP/Senior Official and how an appointee will enhance the skill sets and experience of the Board as a whole; d) the nature of existing positions held by the appointee including directorships or other relationships and the impact they may have on the appointee's ability to exercise independent judgment; e) Personal specifications. The guiding principle for the Remuneration of Directors, Key Managerial Personnel and Senior Management is that the level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate Directors, Key Management Personnel and other senior officials. The Directors, Key Management Personnel and other senior officials' salary shall be based & determined on the individual person's responsibilities and performance and in accordance with the limits as prescribed statutorily, if any. The Nominations & Remuneration Committee determines individual remuneration packages for Directors, KMPs and Senior Officials of the Company taking into account factors it deems relevant, including but not limited to market, business performance and practices in comparable companies, having due regard to financial and commercial health of the Company as well as prevailing laws and government/other guidelines. The Committee consults with the Chairman of the Board as it deems appropriate. The Non Executive Directors shall be entitled to receive remuneration by way of sitting fees for attending every meeting of the Board/ committees as approved by the Board of Directors, profit related commission as may be recommended by the Committee to the Board and subsequently approved by the members. The remuneration payable to the Directors shall be as per the Company's policy and shall be valued as per the Income Tax Rules. The evaluation/assessment of the Directors, KMPs and the senior officials of the Company is to be conducted on an annual basis. Following are the criteria that may assist in determining how effective the performances of the Directors / KMPs / Senior officials have been: • Leadership & stewardship abilities • contributing to clearly define corporate objectives & plans • communication of expectations & concerns clearly with subordinates • obtain adequate, relevant & timely information from external sources. • review & approval achievement of strategic and operational plans, objectives, budgets • regular monitoring of corporate results against projections • identify, monitor & mitigate significant corporate risks • assess policies, structures & procedures • direct, monitor & evaluate KMPs, senior officials • review management's succession plan • effective meetings • assuring appropriate board size, composition, independence, structure • clearly defining roles & monitoring activities of committees • review of corporation's ethical conduct Evaluation on the aforesaid parameters will be conducted by the Independent Directors for each of the Executive/ Non-Independent Directors in a separate meeting of the Independent Directors. The Executive Director/Non-Independent Directors along with the Independent Directors will evaluate/assess each of the Independent Directors on the aforesaid parameters. Only the Independent Director being evaluated will not participate in the said evaluation discussion. The criteria of making payment to the non-executive Directors of the Company are provided in the Nomination and Remuneration Policy placed on the website of the Company (<http://www.indiaglycols.com/investors/downloads/> appointment-remuneration-evaluation-policy.pdf). KEY MANAGERAL PERSONNEL During the year under review, the Board of Directors of the Company has designated following Directors/Officials of the Company as Key Managerial Personnel (KMP) of the Company in terms of provisions of Section 203 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges: 1. Shri U.S. Bhartia, Chairman & Managing Director 2. Shri M.K. Rao, Whole time Director 3. Shri Rakesh Bhartia, Chief Executive Officer 4. Shri Anand Singhal, Chief Financial Officer 5. Shri Lalit Kumar Sharma, Company Secretary No Key Managerial Personnel (KMP) of the Company has resigned during the financial year ended 31st March, 2015. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 In compliance to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company adopted the guidelines & procedures to prevent, prohibit and punish sexual harassment of women at the workplace. The Company constituted an Internal Complaints Committee under the provisions of the Act and the Rules thereunder. The Internal Complaints Committee submitted the Annual Report dated 2nd February, 2015 to the Company pertaining to the status of complaints received and resolved by the Company. The Board considered the said report in its meeting held on 14th February, 2015. No complaint pertaining to Sexual harassment at workplace has been reported to the Company during the year ended March 31st, 2015. VIGIL MECHANISM/ WHISTLE BLOWER POLICY The Company has established a Vigil Mechanism / Whistle Blower Policy, in accordance with the provisions of the Companies Act, 2013 read with Rules thereunder and the Listing Agreement with the Stock Exchanges to deal with the instances of fraud and mismanagement. The details of the Vigil Mechanism/ Whistle Blower Policy are provided in the Corporate Governance Report and also posted on the website of the Company (<http://www.indiaglycols.com/> investors/downloads/vigil-mechanism-policy.pdf). DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013 and to the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (b) appropriate accounting policies have been selected and applied consistently and 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 and of the profit and loss of the company for that period; (c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the annual accounts have been prepared on a going concern basis; (e) proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively; and (f) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and were operating effectively. MANAGEMENT DISCUSSION AND ANALYSIS A separate report on Management Discussion and Analysis is appended herewith, which shall form part of this Board's Report. CORPORATE GOVERNANCE The Board of Directors supports the broad principles of Corporate Governance. The report on Corporate Governance for the year ended 31st March, 2015 as stipulated in clause 49 of the Listing Agreement entered into with the Stock Exchanges and Auditor's Certificate on Corporate Governance are appended with this Board's Report. STATUTORY AUDITORS & AUDIT REPORT The Auditors, M/s. Lodha & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and offer themselves for reappointment. The Board recommends the appointment of M/s. Lodha & Co., as the Statutory Auditors from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. M/s. Lodha & Co., Chartered Accountants, have confirmed that they are eligible under Section 139 and Section 141 of the Companies Act, 2013 and Rules framed thereunder for appointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Auditors in their Audit Report have invited the attention of the Shareholders towards non provisioning by the Company against the investment in its Subsidiary Company, Shakumbari Sugar and Allied Industries Limited (SSAIL) amounting to Rs. 54.28 Crores, loans and advances amounting to Rs. 103.69 Crores. The Auditors have also invited the attention of the Shareholders towards Corporate Guarantee extended by the Company on behalf of SSAIL against outstanding amount of Financial Institutions and Banks as stated in Note no. 27(A)(iii) and 32(A)(iii) of the Financial Statements. The Company has already provided its clarification as contained in note no. 32(A) of the Financial Statements i.e. considering the intrinsic value of the investment in Shakumbari Sugar and Allied Industries Limited, (based on valuation report, future projections and long term in nature) and direction issued by the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) for preparation of revival scheme by the operating agency as appointed, which has been filed with BIFR on 11th January, 2014 and also filed TEV (Technical Evaluation Study) with IDBI (Operating Agency) on 9th February, 2015, no provision at this stage is considered necessary by the management against investments and Loans & advances made/given as stated above. The Auditors have also invited the attention of the Shareholders towards non provisioning by the Company against total exposure of amounting to Rs. 147.75 Crores in its 100% Subsidiary Company IGL Finance Limited in its report on Standalone Financial Statements and towards the non provisioning of Rs. 144.44 Crores in its report on Consolidated Financial Statements. The Company has also provided its clarification as contained in Note no. 32 (B) of the Financial Statements and Note no. 32 of the Consolidated Financial Statements i.e. Company has total exposure of Rs. 147.75 Crores (including Investment in capital of Rs. 1.25 Crores) in IGL Finance Ltd. (IGLFL). IGLFL in turn had invested funds for short term in commodity financing contracts offered by National Spot Exchange Ltd. (NSEL). NSEL has defaulted in settling the contracts on due dates and for which IGLFL has initiated legal and other action. Considering the arrangement of merger of NSEL with Financial Technologies (India) Limited (FTIL) and other measure which have so far been taken for and pending before the Govt. and other authorities, the management is confident of recovery of dues from NSEL over a period of time. Accordingly, no provision has been considered necessary at this stage by the company and shown as good and recoverable. The Auditors have also invited the attention of the Shareholders towards non provisioning by the Company against total exposure of Rs. 5.05 Crores in its 100% Subsidiary Company IGL Chem Intll. Pte. Limited, Singapore. The Company has also provided its clarification as contained in Note no. 32(D) of the Financial Statements i.e. considering the strategic and long term nature of investment of Rs. 5.05 Crores no provision against the same has been considered necessary by the management. The Auditors in their report on the Consolidated Financial Statements have invited the attention of the Shareholders towards the non provisioning of interest, penal interest, charges etc. amounting to Rs. 9.78 Crores related with a subsidiary company i.e. SSAIL. The Company has also provided its clarification as contained in Note no. 45(a) of the Consolidated Financial Statements i.e. considering that Hon'ble Board for Industrial and Financial Reconstruction (BIFR) has declared Shakumbari Sugar and Allied Industries Limited (SSAIL) as a sick industrial company on 4th April, 2013 and direction issued by them for preparation of revival scheme by the operating agency as appointed, which has been filed with BIFR on 11th January, 2014 and also filed TEV (Technical Evaluation Study) with IDBI (Operating Agency) on 9th February, 2015, management is confident that the said interest amount will be waived under the revival scheme, accordingly no provision at this stage is considered necessary by the management against the same. The Auditors in their report on the Consolidated Financial Statements have further invited the attention of the Shareholders towards non provision against impairment loss on the fixed assets of the Subsidiary Company i.e. SSAIL. The Company has also provided its clarification as contained in Note no. 42 of the Consolidated Financial Statements i.e. considering the future cash flows and based on the Technical Evaluation Study, management is confident that the expected recoverable value is more than its carrying value, hence no provisioning for impairment loss on its Fixed Assets/Cash Generating Units (CGU) is considered necessary at this stage. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT The Board appointed M/s P.P. Agarwal & Co., Practicing Company Secretaries as Secretarial Auditor for the Financial Year 2014-15 in terms of provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report dated 26th May, 2015 of M/s P. P. Agarwal & Co., Practicing Company Secretaries, for the financial year ended 31st March, 2015 in the prescribed form MR-3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 was considered by the Board in its meeting held on 28th May, 2015 and is enclosed as "Annexure A" to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark which needs any explanation or comment of the Board. COST AUDITORS Company has appointed M/s R J Goel & Co., Cost Accountants (FRN 000026) as Cost Auditors of the Company for the financial year 2015-16 under section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 including amendments, if any, subject to the approval of the Shareholders at their ensuing Annual General Meeting and the Central Government. Cost Auditors have confirmed that they are eligible under Section 141 (3) of the Companies Act, 2013 for reappointment. The Cost Auditors have attended the Audit Committee Meeting, where their Report was discussed. Due date for filing of the Cost Auditors' Report in XBRL mode for the year 2014-15 with Central Government is 31.10.2015. The due date for filing of the Cost Auditors Report in XBRL mode for the year 2013-14 with Central Government was 30.09.2014, however, the Company had filed the same on 26.09.2014. RELATED PARTY TRANSACTIONS Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in the prescribed form enclosed as "Annexure B" forms part of this report. All Related Party Transactions entered into by the Company were granted prior approval of the Audit Committee at its meetings. During the year under review, following two related party transactions were entered into by the Company which were either not in the ordinary course of the business or were not at arm's length price: 1 Discontinuation of charging of Interest on the Intercorporate Deposits of X 160 Crores (X 147 Crores Oustanding as on 31.03.2015) provided to its 100% Subsidiary Company, IGL Finance Limited, since these ICDs were invested by IGL Finance Ltd. in short term commodity financing contracts by the National Spot Exchange Ltd. (NSEL). NSEL had defaulted in settling the contracts on due dates, as a result of which IGL Finance could not get the funds back from NSEL. Therefore, IGL Finance Ltd. was unable to service the interest payment to the Company. 2 Transfer of Rental Business on slump sale basis by the Company to its 100% Subsidiary Company IGL Infrastructure Pvt. Ltd. for an enterprise value of Rs. 184.20 Crores. All the other related party transactions entered into by the Company were in the ordinary course of business and at arm's length basis. No material related party transaction i.e. a transaction constituting of 10% of the annual consolidated turnover of the Company was entered into by the Company. The details of related party transactions with the Company as required by Accounting Standard (AS-18) on Related Party Transactions have been given in Notes to Accounts. Besides this, Company has no materially significant transaction with the related parties viz. Promoters, Directors, Key Managerial Personnel, their relatives and their subsidiaries, etc. that may have a potential conflict with the interest of the Company at large. The Policy for Related Party Transactions as approved by the Board has been uploaded on the website of the Company under the link <http://www.indiaglycols.com/> investors/downloads/Related-party-transactions-Nov-2014.pdf. ENVIRONMENT, ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, ETC. Your Company is working actively on various projects efficiently, approaching and targeting towards Clean Development Mechanism (CDM) and reduction in Greenhouse Gases (GHG) emissions. The Company has installed unique technology for converting distillery spent wash into fuel at both the plants viz. Kashipur (Uttarakhand) and Gorakhpur (Uttar Pradesh). Through this technology, the spent wash is concentrated through five effect evaporator. The concentrate is utilized as fuel to substitute coal in a specifically designed boiler. The high pressure steam so generated is passed through the turbine for power generation and low pressure steam after turbine is utilized in the plant for operation. Due to this your Company is saving fossil fuel in terms of coal and substituting the essential power generation through DG sets. Estimated saving due to Slop utilized during the year under review is as under: Slop Equivalent Coal savings (net of Evaporator) - 30185 MT Slop Equivalent Power units savings (net of evaporator) - 3420 MW The Biomass based Cogeneration Project activity taken up by the Company at its Gorakhpur, U.P. plant is successfully registered under Clean Development Mechanism (CDM) project by United Nations Framework Convention on Climate Change (UNFCCC) for ten year fixed crediting period 16/12/2010 to 15/12/2020. Under the Clean Development Mechanism, emission-reduction (or emission removal) projects in developing countries can earn certified emission reduction credits. Your Company has received certification of Energy Management System (ISO 50001:2011) under integrated management system. The information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8 of the Companies (Accounts) Rules, 2014 is given in "Annexure C" to the Board's Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) Corporate Social Responsibility (CSR) is a way of conducting business, by which corporate entities visibly contribute to the social good. The essence of CSR is to integrate economic, environmental and social objectives with the company's operations and growth. CSR is the process by which an organization thinks about and evolves its relationships with society for the common good and demonstrates its commitment by giving back to the society for the resources it used to flourish by adoption of appropriate business processes and strategies. Your Company, Directors and its dedicated employees continue to contribute towards society by several worthwhile causes. Your Company aims to enhance the quality of life of the community in general and has a strong sense of social responsibility. Even before the issue of CSR became obligatory, India Glycols Limited was fulfilling the aspiration of the society through voluntary CSR activities for the areas around the periphery of the plant and office sites. As part of its initiative under Corporate Social Responsibility, the Company has undertaken projects and programmes in the areas of Education promotion, Health and Sanitation, Safe drinking water, Livelihood. Some of the Corporate Social activities undertaken by the Company during the year under review are as follows: 1 Installed Hand Pumps in a phased manner in near by villages of Kashipur and Gorakhpur to provide continuous water facility. 2 Promoted sanitation by Construction of public toilets. 3 Provided Ambulance Services (Ambulance and Driver) for community health care. 4 Organized medical camps where villagers can avail of medical assistance, free of cost; 5 Blanket distribution to poor during winter 6 Contributed for the infrastructure in Govt. Girls High School in Kashipur. 7 Contributed for the infrastructure in Govt. Primary School, a community school in Kashipur. Your Company is also supporting a community school at Dwarka, New Delhi through charitable organization Nirmal Society for Education Promotion. The school is equipped with modern facilities and also has a good infrastructure. The school possesses qualified and experienced faculties, which enable children to make a great future. The Company lent financial assistance to the underprivileged children under its CSR activity. Your Company is also extending educational and on-the-job training to the students of many professional Institutions and the professionals of many other Management and Engineering Institutions, which helps them to start a new beginning for their future professional career. The aforesaid activities are in accordance with Schedule VII of the Companies Act, 2013. In accordance with the provisions of Section 135 of the Companies Act 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on Corporate Social Responsibility activities is enclosed as "Annexure D" and forms part of the Board's Report. Your Company constantly strives hard to serve the society by implementing such other policies which benefited people at large. The company always endeavors to give back the Society for the support the Company has received to rise and flourish. During the year 2014-15, the Company has spent Rs. 109.65 Lacs against the budget for CSR of Rs. 109.63 Lacs. RISK MANAGEMENT POLICY Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Company has constituted a Risk Management Committee in its Board Meeting held on 14th February, 2015. The Committee is authorised to monitor the Risk Management Plan and to mitigate the risks attached to the business of the Company. The Risk Management Committee consists of Directors and the senior management personnel of the Company details whereof are provided in the Corporate Governance Report forming part of the Board's Report. Your Company's objective of risk management is to have a meaningful identification, measurement, prioritization of risks or exposures to potential losses on a continual basis through active participation of all members of the Company and accordingly establish controls and procedures to build a visible & structured enterprise-wide risk management framework; reduce the risk levels and mitigate their effects in the likelihood of a risk event with an aim to protect our company from harm; and have a contingency plan to manage risks having high probability and high impact. Risk management framework is created to ensure that risk management principles are implemented and integrated all over the organization and that information retrieved from the risk management process are correctly reported. This framework provides a stable foundation for the risk management work, orient the organizational arrangements properly in order to have a clear risk strategy across the organization & share information, experiences amongst different sites of the Company. Considering the importance of keeping the risk management process dynamic, a quarterly review of the risks will be carried out across sites and departments for necessary key risks and risk management strategies are to be communicated to the Board of Directors for their assessment for minimization of effects of risk. EXTRACT OF ANNUAL RETURN A separate report on the details of the extract of the Annual Return in form MGT-9 is enclosed as "Annexure E", which shall form part of the Board's Report. AWARDS AND RECOGNITIONS The Company with great pride is pleased to inform to you that the Company has been honoured with the Silver award selected by Federation of Indian Export Organisation, set up by Ministry of Commerce, Govt. of India for being Second highest foreign exchange earners in the Chemicals, Drugs, Pharma and allied sectors -Non MSME (Micro, Small and Medium Enterprises). The Prestigious award was presented to the Company by Hon'ble President of India in November 2014. Shri U.S. Bhartia, Chairman and Managing Director of the Company has been conferred with highly prestigious "BUSINESS LEADER OF THE YEAR - INNOVATION" CHEMTECH CEW LEADERSHIP & EXCELLENCE AWARDS 2013", wherein he has been recognized as "An Industrialist with Extraordinary achievements in the core sectors of Indian Economy in conceiving & implementing projects sustainable through value creation and value addition and has always strived for an all-inclusive growth". He has been recognized as an industrialist with visionary concepts based on research and innovation. He has been awarded for his entrepreneurial endeavors, of putting India on the world map by establishing industries based on green technologies in the rural areas, utilizing local resources to produce products of global standards. HUMAN RESOURCES Your Directors wish to place on record their deep appreciation to employees at all levels for their all-round efforts, dedication, commitment and loyal services which helped your Company sustain even in a tough year and achieve satisfactory performance during the year. The required information as per Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in "Annexure F" to this report. Further, Information regarding employees in accordance with the provisions of Rule 5(2) and Rule 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in "Annexure G" to the Board's Report. ACKNOWLEDGEMENT Your Directors place on record their deep appreciation of the support given by the Central Government, the State Government of Uttarakhand and the State Government of Uttar Pradesh, Financial Institutions and Banks and looks forward to their continued support. For and on behalf of the Board U.S. Bhartia Chairman and Managing Director Place : NOIDA, U.P. Dated : 28.05.2015 |