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Director's Report
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INEOS Styrolution India LtdIndustry : Petrochemicals
BSE Code:506222
ISIN Demat:INE189B01011
Book Value(Rs):354.33
NSE Symbol:INEOSSTYRO
Div & Yield %:0.31
Market Cap (Rs Cr.):1131.21
P/E(TTM):0
EPS(TTM):0
Face Value(Rs):10
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Dear Members,

Your directors take pleasure in presenting the 45th annual report of your Company together with audited financial statements for the year ended on 31 March 2018.

FINANCIAL PERFORMANCE

The financial performance of your Company for the year ended 31 March 2018 is highlighted below:

(INR in Lakhs)
Particulars 2017-18 2016-17
Period 12 months 12 months
Revenue from Operations 195,068.55 166,918.41
Other Income 691.72 406.76
Profit before Tax 10,313.10 10,029.59
Tax Expense (3,690.56) (3,101.61)
Profit for the year 6,622.54 6,927.98
Other Comprehensive Income (28.94) (44.58)
Total Other Comprehensive Income for the year 6,593.60 6,883.40
Retained Earnings
Opening Balance 47,327.39 41,290.62
Add:
Total comprehensive income for the year 6,593.60 6,883.40
Less:
Dividends including dividend tax (846.63) (846.63)
Transfer to General Reserve - -
Depreciation transfer for fixed assets - -
Closing Balance 53,074.36 47,327.39
EPS (Basic) 37.66 39.40
EPS (Diluted) 37.66 39.40

The above figures are extracted from the financial statements of the Company as per Indian Accounting Standards (Ind AS).

INDIAN ACCOUNTING STANDARDS

The Company has adopted Ind AS with effect from 01 April 2016 with the transitional date as 01 April 2015 pursuant to the Ministry of Corporate Affairs notification dated 16 February 2015, notifying the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, the financial statements for the year ended 31 March 2018 have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 prescribed under section 133 of the Act and other recognized accounting practices and policies to the extent applicable.

OPERATING HIGHLIGHTS

Revenues

Growth across all segments in line with the market has resulted in increase in overall sales turnover of your Company to INR 1,951 crores from INR 1,669 crore in the previous year. Your Company observed growth momentum and positive sentiments in the core industries namely automotive, household & electronics distribution. The Company's total income (including other income) was placed at INR 1,958 crore for the financial year 2017-18.

Profits

Your Company's Profit before Tax (PBT) in financial year 2017-18 is INR 103 crores as compared to INR 100 crores in previous year. Profit after Tax (PAT) in financial year 2017-18 is INR 66 crores as compared to INR 69 crores in previous year. Increase in raw material prices impacted profit, however, partially offset by better cost control.

DIVIDEND

Considering the performance, and to appropriately reward the Members while conserving resources to meet future financial requirements, the board of directors recommends a dividend of INR 4/- per equity share of INR 10 each (40%). This dividend is subject to the approval of the Members at the forthcoming annual general meeting and if approved, Members whose name appear on the register of Members on 02 August 2018 will be entitled to dividend. In the previous year, the Company paid a dividend of INR 4/- per equity share of INR 10/- each of the Company.

TRANSFER TO RESERVES

The Company is not required to transfer any amount to its reserves. Hence, no amount is transferred to reserves during the year under review.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

The Company does not have any subsidiary companies, associate companies or joint venture during the year under review.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and operations of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments/ Re-appointments

During the year under review:

1. Mr. Anil Shankar was appointed as an independent director by the shareholders of the Company at their annual general meeting held on 10 August 2017 for a period of three years effective from 12 August 2016.

2. Mr. Jal R. Patel was re-appointed as an independent director by the shareholders of the Company at their annual general meeting held on 10 August 2017 for a period of three years effective from 01 January 2018.

3. Mr. Nitankumar Duggal was appointed as an additional director and was designated as whole-time director for a period of three years from 31 August 2017 for which approval was accorded by the shareholders of the Company through postal ballot dated 27 October 2017.

4. Mr. Sanjeev Madan was appointed as Chief Financial Officer (CFO), on recommendation of nomination and remuneration committee, effective from 29 January, 2018.

At the 45th annual general meeting following appointments / re-appointments are being proposed:

1. Mr. Sanjiv Vasudeva who retires by rotation and being eligible, offers himself for re-appointment in terms of the Articles of Association of the Company. A brief profile of Mr. Sanjiv Vasudeva is given separately in the notice convening AGM. Your directors recommend his appointment for your approval.

Retirement/ Resignations

Following directors resigned / retired from their office of directorship in the Company:

Mr. Bhupesh P. Porwal resigned as chief financial officer (CFO) and whole-time director of the Company effective from 01 September 2017. The board thanked him for providing valuable guidance to the Company during his tenure.

Key Managerial Personnel

Mr. Sanjiv Vasudeva, managing director and chief executive officer, Mr. Nitankumar Duggal, whole-time director, Mr. Sanjeev Madan, chief financial officer and Mr. Haresh Khilnani, company secretary, head – legal and compliance were the key managerial personnel of the Company as on 31 March 2018.

MEETINGS OF BOARD OF DIRECTORS OF THE COMPANY

During the financial year under review, the board of directors duly met four times. The details of the board meetings with regard to their dates and attendance of each of the directors thereat have been set out in the report on corporate governance.

DECLARATION BY INDEPENDENT DIRECTORS

Mr. Jal R. Patel, Mr. Anil Shankar and Ms. Ryna Karani were the independent directors of the Company as on 31 March 2018.

The board of directors of the Company hereby confirms that all the independent directors duly appointed by the Company have given the declaration to the effect that they meet the criteria of independence as provided under section 149(6) of the Act.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act and the Listing Regulations the formal annual evaluation has been carried out by the board of its own performance and that of its committees, chairman of the board and individual directors through oral assessment as well as collective feedback. Board members were requested to evaluate the effectiveness of the board dynamics and relationships, information flow, decision-making of the directors, relationship to stakeholders, company performance, company strategy, and the effectiveness of the whole board and its various committees.

Independent directors were evaluated on the following performance indicators:

• Ability to contribute to and monitor our corporate governance practices;

• Ability to contribute by best practices to address top-management issues;

• Ability to actively contribute towards positive growth of the organization;

• Ability to create positive image of our Company and help our Company wherever possible;

• Commitment to the fulfillment of a director's obligations and fiduciary responsibilities, including participation in board and committee meetings

Your directors have expressed their satisfaction over the evaluation process.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of section 134(3)(c) and 135(5) of the Act, the board of directors of the Company confirms that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) they have selected such accounting policies and applied them 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 financial year and of the profit of the Company for that period;

iii) they have 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;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal finance controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

AUDIT COMMITTEE

The audit committee consists of all independent directors with Mr. Jal R. Patel as chairman and Mr. Anil Shankar and Ms. Ryna Karani as members. The terms of reference of the audit committee, details of meetings held during the year and attendance of members are set out in the corporate governance report.

During the year under review, the board has accepted all recommendations of audit committee and accordingly no disclosure is required to be made in respect of non-acceptance of any recommendation of the audit committee by the board.

DEPOSITS

The Company has not accepted any deposit, within the meaning of section 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans, guarantees and investments covered under Section 186 of the Act form part of the notes to the financial statements provided in this annual report.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of section 124 and 125 of the Act, the unpaid and unclaimed dividend pertaining to the year ended on 31 December 2010 which was lying in the Company's separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

Pursuant to the provisions of Section 124(5) and 124(6) of the Act, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules") and amendments thereto, all shares on which dividend has not been paid or claimed for seven consecutive years or more shall be transferred to the demat account of the IEPF authority.

CORPORATE GOVERNANCE

Your Company observes high standards of corporate governance in all areas of its functioning with strong emphasis on transparency, integrity and accountability. As required under the Listing Regulations a detailed report on corporate governance along with the auditors' certificate thereon forms part of this report as Annexure – I. A detailed review of the operations, performance and future outlook of the Company and its businesses is given in the management discussion and analysis report, which forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with the requirements of section 135 of the Act, the Company has constituted a ‘Corporate Social Responsibility (CSR) Committee' and has also framed a CSR Policy. The details of the policy, composition of the committee, CSR initiatives, CSR spending during the year etc., have been provided as Annexure - II to this report, as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The amount required to be spent on CSR activities during the year ended 31 March 2018 in accordance with the provisions of section 135 of the Act was INR 141.74 lakhs and your Company had spent INR 112.00 lakhs. The said amount was spent on the CSR activities undertaken by your Company mostly in the vicinity of its plants as well as around Vadodara, where the registered office and corporate office of your Company are located. The shortfall in the amount spent on CSR activities during the year on 31 March 2018 was due to lack of proper and need worthy sources for allocation of the funds.

REMUNERATION POLICY

The details of the remuneration policy adopted by the board of directors of your Company are mentioned in the corporate governance report.

A statement of disclosure of remuneration pursuant to section 197 of the Act read with rule 5(1) and rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided as Annexure – III forming part of this report.

RISK MANAGEMENT POLICY

The details of the risk management policy adopted by the board of directors and details of the risk management committee of the Company are mentioned in the corporate governance report.

EXTRACT OF ANNUAL RETURN

The extracts of annual return in Form MGT-9 as required under section 92(3) of the Act read with rule 12 of the Companies (Management and Administration) Rules, 2014 forms part of this report as Annexure - VI

PARTICULARS OF CONTRACTS AND AGREEMENTS MADE WITH RELATED PARTIES TRANSACTIONS

All related party transactions which were entered into during the year under review were on arm's length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with the promoters, directors and key managerial personnel, which may have a potential conflict with the interests of the Company at large.

The particulars of contracts or arrangements with related parties referred to in section 188(1) of the Act in the prescribed Form AOC - 2, is provided as Annexure – IV forming part of this report.

REPORTING OF FRAUDS

There have been no instances of fraud reported by the statutory auditors under section 143(12) of the Act and rules framed thereunder either to the Company or to the central government.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT

There have been no material changes which have occurred between the end of financial year till the date of this report affecting the financial position of the Company.

BOARD DIVERSITY

Your Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, regional and industry experience, age, ethnicity, race and gender, which will help us retain our competitive advantage. The board of directors has adopted the ‘Board Diversity Policy' which sets out the approach to diversity of the board. The board diversity policy is available on our website www.ineosstyrolutionindia.com.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls in place. It has documented procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well.

The Audit committee of the board of directors, comprising independent directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any.

ENVIRONMENTAL HEALTH, SAFETY AND PROTECTION

Your Company gives highest importance to Safety, Health and Environment (SHE), and encourages and promotes safety awareness in true letter and spirit as an integral part of its work culture.

Process Safety Management (PSM) is an integral part of all changes taking place in the process. Onsite emergency plans have been reviewed and updated by all divisions. Periodic mock drills are conducted at various divisions and reports indicate improved preparedness of employees.

To further strengthen the safety of overall operations and to promote a positive safety culture and transparency, your Company has introduced site specific behavioral based safety (BBS) process at all its manufacturing locations and substantially invested for the improvement of process safety.

Apart from employees, the contractors and workmen are also given exhaustive training on safety, first-aid and fire fighting. The Company has appointed and trained safety stewards to promote safety in all divisions. A green belt in and around all factory premises has been maintained to enhance eco-friendliness.

POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has in place a policy on prevention of sexual harassment at workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules framed thereunder and complaints committee has also been set up to redress complaints received regarding sexual harassment. During the year, no complaint with allegations of sexual harassment was received by the Company.

STATUTORY AUDITORS

The statutory auditors of the Company M/s. Price Waterhouse Chartered Accountants LLP, Chartered Accountants, (Firm registration number: 012754N/N500016) were appointed as the statutory auditors of the Company from the conclusion of 43rd annual general meeting until the conclusion of 47th annual general meeting of the Company.

The Company has received necessary eligibility certificate and consent under Section 141 of the Act to act as statutory auditors of the Company.

AUDITORS' REPORT

The observations made by the auditors in their report read with the relevant notes as given in the notes to the financial statement for the year ended 31 March 2018 are self- explanatory and are devoid of any reservation, qualification or adverse remarks.

SECRETARIAL AUDITOR

M/s. Devesh Vimal & Co., Practising Company Secretaries, Vadodara were appointed to conduct the secretarial audit of the Company for the financial year 2017-18, required under section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, framed thereunder. The secretarial audit report received from them is annexed as

Annexure - VII.

COST AUDITORS

The board of directors, on recommendation of the audit committee, has appointed M/s. Kailash Sankhlecha and Associates, (Firm's registration no. 100221), Cost Accountants, as cost auditors of the Company, for the financial year 2018-19, for conducting the audit of the cost records maintained by the Company for the various products as mandated by the central government at a remuneration as mentioned in the notice convening the annual general meeting of the Company.

A resolution seeking member's ratification for the remuneration payable to the cost auditors for the financial year 2018-19 forms part of the notice of the 45th annual general meeting of the Company and the same is recommended for your consideration and approval.

A certificate from M/s. Kailash Sankhlecha and Associates has been received, confirming their appointment as cost auditors of the Company, if made, would be in accordance with the limits specified under section 141 of the Act and rules framed thereunder.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A statement highlighting details of the conservation of energy, technology absorption, and foreign exchange earnings and outgo, in accordance with section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure - V and forms part of this report.

VIGIL MECHANSIM

As per the provisions of section 177(9) of the Act read with clause 22(1) of the Listing Regulations, the Company is required to establish an effective vigil mechanism for directors and employees to report genuine concerns. The Company has a policy for prevention, detection and investigation of frauds and protection of whistleblowers ("Whistleblower Policy") in place and the details of the whistleblower policy are provided in the report on corporate governance forming part of this report.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Our employees are the most valuable assets of the Company. We encourage innovation, meritocracy and the pursuit of excellence. The human resource development function of the Company is guided by a spirit of corporate team building and dedication towards strengthening the Company's systems thereby improving efficiencies and registering growth. All personnel continue to have a healthy, cordial and harmonious approach in problem solving and enhancing Company value at all levels. Despite uncertain economic conditions, the enthusiasm and unstinting efforts of the employees have enabled the Company to maintain leadership in its business areas. The industrial relations during the year remained cordial.

The Company has drawn up a comprehensive human resource strategy ("Human Resource Strategy") which addresses key aspects of human resource development such as:

- Code of conduct and fair business practices.

- A fair and objective performance management system linked to the performance of the businesses.

- Creation of a common pool of talented managers across the organization with a view to increasing their mobility through inter-company job rotation.

- Evolution of performance based compensation packages to attract and retain talent within the organization.

- Development of comprehensive training programs to impart and continuously upgrade the industry / function specific skills, etc.

EMPLOYEE BENEFIT MEASURES UNDERTAKEN DURING THE YEAR

In order to achieve a highly streamlined and productive organization, a transparent and uniform HR policy with a well-defined reporting structure and clear roles and responsibilities will be put in place. An employee survey together with a top leadership workshop was also conducted to assess the current cultures of INEOS group Companies in India and to identify an ideal common culture across the two entities for better implementation of the respective strategic initiatives.

Necessary trainings based on identified needs are being set-up across all functions by the respective heads of departments to enhance the knowledge and competencies of our employees. Other initiatives including an improvement of the working environment, the automation of HR processes including the outsourcing of the payroll processor and the installation of a new attendance system, are in progress.

STATEMENT ON COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

The Company has complied with all the applicable provisions of secretarial standard 1 and 2 issued by the Institute of Company Secretaries of India, during the year under review.

CODE OF CONDUCT

The Company has suitably laid down the code of conduct for all board members and senior management personnel of the Company. The declaration by CEO of the Company relating to the compliance of aforesaid code of conduct forms an integral part of this annual report.

ACKNOWLEDGEMENTS

We thank our customers, vendors, dealers, investors, business partners and bankers for their continued support during the year which made the Company grow successfully. We also place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support. We also acknowledge our gratitude to M/s. INEOS Styrolution Holdings Ltd, United Kingdom for their valuable assistance through their subsidiary companies.

For and on behalf of the Board
18 June 2018 Stephen Mark Harrington
Vadodara Chairman

   

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