I G Petrochemicals Ltd

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I G Petrochemicals Ltd. FY18 Annual Report Notes

  • Revenues increased by 10% during the year from Rs. 1035 cr to Rs. 1147 cr. EBIDTA improved by 58% to 271 crores, while PAT grew by 44% to 147 crores. The remarkable results are owing to strong domestic demand, efficient operations, better realisations and cost optimisation from expansion.
  • During the year, the export turnover of the Company was 21,677.53 lakhs as against 23,139.61 lakhs in the previous year.
  • Gross margins have improved quite substantially from 27.57% to 36.39%. Major gains in profitability is coming from increase in chemical prices.
  • Company is one of the lowest cost producers of PA globally.
  • IGPL has three state-of-the art manufacturing units strategically located at Taloja, Maharashtra. Capcity of PA as per AR17 was 169110 mtpa. Company is the largest PA manufacturer in India.
  • As a part of its strategic initiatives, the Company acquired Maleic Anhydride (MA) business of Mysore Petro Chemicals Ltd. in 2017. Further there is high operating leverage from this acquisition due to the fact that raw material for MA viz. wash water is a derivative of PA.
  • The demand growth in the Indian PA industry is around 6% annually and is considered to amongst the fastest.
  • A strong domestic demand of PA of 3,75,000 MTPA will strongly position domestic manufacturers like us. Currently, India’s MA demand is around 60,000 MTPA.
  • We further plan to increase PA capacity through brownfield expansions which will come on stream by 2019. Besides, the Company is also planning to introduce specialty plasticizers as a part of downstream expansion. This will further strengthen the Company’s positioning in the industry.
  • Capex done during the year is Rs. 117 cr. on a Gross Block of Rs. 740 cr.
  • Invested Rs. 28 cr in it’s wholly owned subsidiary IGPL International Ltd.
  • Company has cash and mutual funds of Rs. 70 cr. They are debt free on net basis.
  • Company has contingent liabilities of Rs. 95 cr. approx.
  • Foreign currency liability of 4,077.11 lakhs (31st March, 20173,501.89 lakhs, 1st April, 2016 `3,792.62 lakhs) shown under Trade Payables (Current liabilities) has been disputed. A counter claim has been made, however this liability has been converted by applying exchange rate at the close of the year as per Accounting Standard.
  • Investment in additional capacity expansion will place IGPL amongst the top three PA manufacturers in the world.
  • IGPL has strengthened its manufacturing processes with strict quality control and sharpened its R&D capabilities to compete across geographies. The world class quality product with Six-sigma technique to improve processes, has placed IGPL to further capitalise on growth opportunities.
  • Phthalic Anhydride (PA) is a versatile intermediate in organic chemistry and a downstream product of a basic petrochemical, Orthoxylene (OX). It is used as an intermediate to produce Plasticizers, Unsaturated Polyster Resins, Alkyd Resins & Polyols. It finds application in both consumer durables to non-consumer durables. Its end users are paints, inks, coatings, boxes, containers and packaging films industries among others.
  • Major challenges include competition from global players in terms of dumping their products in India. There is an antidumping duty imposed by the government on Taiwan, Korea, Russia, Japan & Israel. These anti-dumping measures ensure fair trade and provide a level-playing field to the domestic industry. Also, there is an import duty of 7.5% levied on Phthalic Anhydride, to protect the domestic industry.
  • Rising private and government spending in infrastructure has pushed up demand for PVC, which in turn, has spurred PA demand.
  • The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride is under implementation.

Regards
Harshit

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