On behalf of the Board of Directors of Assam Petro-Chemicals Ltd. and on my personal behalf, I welcome you all to this 45th Annual General Meeting of the Company for the Financial Year 2015-16. The Notice of the Annual General Meeting, Director's Report, report of the Secretarial Auditors, Independent Auditor's report, the Comments of the Comptroller and Auditor General of India and Audited Financial Statements of the company for the financial year ending on 31st March, 2016 have been circulated amongst you. With your kind permission, I consider them as read.
Financial and Operational Performance:
The year 2015-16 was one of the worst financial year for the company as the price of methanol was extremely low in the international market, availability of cheap imported methanol in the domestic market, impact of low methanol price in Indian formalin market and higher operating expenses. During the financial year 2015-16, the turnover of the company was Rs. 80.81 Crore only as compared to Rs. 92.63 Crore in the previous Financial Year. The turnover of the company declined by 14.61% over that of the previous financial year due to decline in price of Methanol in the international market which has direct impact in the domestic market of Methanol and Formalin. The company incurred loss of Rs. 22.18 Crore during the year 2015-16. The loss incurred by the company primarily due to unprecedented low price of Methanol in the international market and higher feedstock cost. We expect that the market price of methanol will be increased during the remaining period of current financial year and the years to come.
The existing Methanol plant of the company has completed twenty eight years of successful operations against its normal life of 15 years. The Methanol Plant requires regular maintenance of its equipments for keeping the plant healthy and continue the production. Disruptions in power supply from the grid affected optimum utilization of the Methanol Plant during the Financial Year 2015-16. The Methanol and Formalin plants of the company were operated at 91.43% and 102.55% respectively of installed capacity during the year.
The members are aware that the company is presently implementing a 500 TPD Methanol and 200 TPD Acetic Acid Project at Namrup. The Project capital is being arranged through equity and loan from banks in Debt to equity ratio of 1.616:1. The Govt. of Assam with Assam Industrial Development Corporation Ltd. and Assam Gas Company Limited to hold 51 % of the total shareholding of the company and the remaining 49% will be held by Oil India Ltd. The contracts for execution of the project viz. Methanol and Acetic Acid plants with technology supply have long since been awarded. Engineers India Ltd. has been executing the Methanol plant with LEPCM responsibility with technology supply from Halder Topsoe, Denmark and Beijing Zehua Chemical Engineering Co. Ltd, China is executing the Acetic Acid plant with LECM responsibility with the use of their own patented technology. Project implementation job is in progress and about 98% of basic and 43% of detail engineering job for Methanol plant has been completed. For Acetic Acid plant the consultant has started the initial basic engineering job.
However, due to non- viability of the integrated Methanol and Acetic Acid Project for substantial increase of the project cost and fall in price of Acetic Acid, your board has deferred the implementation of Acetic Acid project for the time being and decided to install 200 TPD Formalin plant in western Assam with a lesser capital cost. The total cost of standalone 500 TPD Methanol and standalone 200TPD Formalin plant has been estimated at Rs. 1340 crore. The decision of the Board is subject to approval of appropriate authority of the Government of Assam and other equity participants.
Delisting of Equity Shares:
The members are aware that Assam Industrial Development Corporation Ltd. (AIDC) initiated the delisting of shares as per SEBI (Delisting of Equity Shares) Regulations, 2009. The public shareholders of the company passed a special resolution through postal ballot on 23rd April, 2015 as per Regulation 8 (1) (a) of SEBI Delisting Regulations, 2009. As per the Delisting Regulations, the company filed an application to BSE seeking in-principle approval for delisting of shares on 3rd September, 2015 but BSE expressed its inability to grant in-principle approval under the SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2015 and advised the company or promoter to approach the Securities and Exchange Board of India for exemption of certain provisions of the amended SEBI delisting regulations.
Accordingly, AIDC has moved to Securities and Exchange Board (SEBI) of India in March 2016 seeking exemption from adhering the amended delisting regulations and also to extend validity of the Special Resolution passed by the public shareholders beyond one year. Now the matter is under active consideration of the Securities and Exchange Board of India. I sincerely believe that SEBI will pass a favourable order in this regard and delisting of shares of the company will be completed in due course.
Present Market Scenario:
The members are aware that the price of Methanol in India is controlled by the imported Methanol in the western Coast of the country. The petrochemicals market witnessed down turn after falling of crude price internationally and lifting of US sanctions on Iran.
During the financial year 2015-16 the imported price of Methanol at West Coast was in the range of 317.50 to 170.00 US Dollar per MT against 360 USD/MT to 207.5 USD/MT during the preceding year. The above shows that the Methanol price was very volatile and downward too.
Due to downtrend of imported Methanol price, Assam Petro-Chemicals Ltd couldn't recover its cost of production in financial year 2015-16 but continue to produce Methanol to realize positive contribution towards the fixed costs. During the period the average basic price of Methanol was at Rs. 19,891.00 per MT and Formalin at Rs. 12,807.00 per MT. Formalin sector has not been doing well due to slow-down in construction and real estate sectors as formalin is mainly used for the manufacturing of plywood and coating.
In the current year also downtrend of imported Methanol price was exist till August 2016. However, a slight uptrend in Methanol market price is being seen in the current month. It is presumed that the uptrend of price will continue and market will increase.
APL is planning to import Methanol at Kandla Port, Gujarat and trade the same to earn more revenue. A storage point of Formalin cum marketing office will be opened at Purnea in the State of Bihar, this will enable the company to increase direct Formalin sale in the said region and yield better realization.
The company complied with the all the main Corporate Governance requirements during the year 2015-16 as prescribed in clause 49 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The company obtained ISIN for the shares of the company bearing no. INE277D01010 last year. I appeal to all of you to dematerialize your shares of the company for convenience of holding of shares and transact the same. The trading of shares of the company has been resumed w.e.f. 22nd February, 2016 at BSE.
Corporate Social Responsibility:
Being a responsible corporate citizen, Assam Petro-Chemicals Ltd. recognizes its responsibility and has been discharging the same in letters and spirits. The company has been imparting free education to the needy students of the neighborhood villages of the factory site in the schools run by the company for long. The company also continued to do the same in year 2015-16. The company has also been providing free drinking water to the people living in the neighboring villages.
I along with my fellow colleagues in the Board convey our sincere appreciation to all the members of APL family for their sincerity and devotion exhibited towards the organization for smooth running of the company.
The Board of your company gratefully acknowledges the continuous support received from the Government of Assam, the holding company Assam Industrial Development Corporation Ltd., various Ministries and Departments of the Central Government for successful running the company during the FY 2015-16.
The Directors of the Board also express sincere thanks towards each and every shareholders of the company for reposing confidence and support to the company's Board and the management.
At last not the least I convey my sincere thanks and appreciations to each and every members of the Board of Directors of the company for their valuable contributions, support, guidance and co-operation throughout the year.
As I conclude, I sincerely thank each and every one of you, our stake holders for the confidence and trust reposed upon us. We remain committed to sustain and continuously improve our performance and live upto your expectations.
Chairman of 45th AGM
Dated: 30th September, 2016
Place: 4th Floor, Orion Place, G.S. Road,