Bhansali Engineering Polymers Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis covers the key aspects of BEPL’s annual report for the fiscal year 2023-24, focusing on financial performance, business segments, risks, and ESG initiatives.

I. Financial Performance:

BEPL reported strong financial results for FY2023-24, despite a slight decline in gross sales compared to the previous year. Key highlights include:

• Revenue: Total income decreased slightly year-on-year to ₹126.24 crore (FY23: ₹139.15 crore). This reduction is primarily due to a decrease in gross sales, likely reflecting broader market conditions. Net sales (excluding GST and excise) also decreased to ₹122.17 crore (FY23: ₹136.26 crore).

• Profitability: Profitability metrics showed significant improvement. Profit Before Tax (PBT) increased substantially to ₹24.28 crore (FY23: ₹19.48 crore), resulting in a PBT margin of 19.87% (FY23: 14.30%). Profit After Tax (PAT) also rose significantly to ₹17.97 crore (FY23: ₹13.59 crore), with a net profit margin of 14.71% (FY23: 9.98%). This improvement suggests enhanced operational efficiency and pricing strategies. Earnings Per Share (EPS) increased to ₹7.22 (FY23: ₹5.46), reflecting the profitability growth.

• Dividend: BEPL declared three interim dividends of ₹1 each (300%) and recommended a final dividend of ₹1 (100%), totaling ₹4 (400%) per share. This is a significant increase from the previous year’s total dividend of ₹17 (1700%), which included a one-time special dividend. This illustrates a commitment to shareholder returns, although the strategy appears less aggressive than in FY23.

• Balance Sheet: The company’s net worth decreased to ₹92.14 crore (FY23: ₹106.63 crore). This reduction is largely explained by the distribution of dividends. The company maintained a “zero debt” status, highlighting its strong financial position and low financial risk. The current ratio decreased from 10.88 to 7.30, potentially indicating a shift in working capital management. The total liability-to-net worth ratio increased slightly to 0.14 (FY23: 0.09).

• Bonus Shares: The issuance of bonus shares (1:2 ratio) increased the equity share capital, impacting the EPS and book value per share.

II. Business Segments:

BEPL operates primarily in a single business segment: the manufacturing and sale of Acrylonitrile Butadiene Styrene (ABS) and Styrene Acrylonitrile (SAN) resins. This focus on specialized engineering thermoplastics is a key characteristic of the company’s strategy. A small portion of revenue is generated from trading activities.

III. Risks:

The annual report identifies many key risks:

• Raw Material Dependence: BEPL heavily relies on imported raw materials (styrene and acrylonitrile monomers), making it vulnerable to fluctuations in global prices and supply chain disruptions. The war in Ukraine and geopolitical instability are highlighted as potential threats. This is a significant risk that requires effective mitigation strategies, including hedging and long-term contracts.

• Foreign Exchange Fluctuations: The dependence on imported raw materials exposes BEPL to foreign exchange rate volatility, which directly impacts its profitability.

• Industry Competition: While the report highlights a significant market opportunity due to under-capacity in the Indian ABS market, BEPL still faces competition from other domestic and international players.

• Economic Slowdown: A general economic slowdown could negatively impact demand for BEPL’s products, especially in sectors like automotive and consumer electronics.

IV. ESG Initiatives (Environmental, Social, and Governance):

BEPL demonstrates a commitment to ESG through its Business Responsibility and Sustainability Report (BRSR). Key initiatives include:

• Environmental: The Company focuses on energy conservation through various measures like leak detection and repair in compressed air systems, replacement of inefficient equipment, and improved temperature control in cooling towers. There is a strong commitment to waste management, including responsible disposal of hazardous waste and striving for zero liquid discharge. Air emission levels are monitored, and independent assessments are conducted at both plants. The Company is committed to sustainable sourcing of raw materials but lacks specific disclosure on percentage of sustainably sourced inputs beyond mentioning that “majority of the key raw materials are sustainably sourced”. The company has obtained BIS certification for ABS grades.

• Social: BEPL emphasizes employee well-being through training programs, safety measures, and health insurance. They promote a safe and healthy workplace, emphasizing incident reporting and investigation, regular safety training, and risk assessment. There is mention of a whistle-blower policy. The report also discusses initiatives focused on community development. The company notes that it provided training programs on safety and business ethics across all employee and worker segments.

• Governance: BEPL highlights its commitment to ethical and transparent governance, including the establishment of various board committees (Audit, Nomination & Remuneration, Stakeholders’ Relationship, CSR, and Risk Management). The report details the composition and functioning of these committees, demonstrating compliance with corporate governance regulations. The company’s policies emphasize compliance, business ethics, and a strong internal control system.

V. Overall Assessment:

BEPL demonstrates a financially strong and stable company with a focus on a niche market segment. The company’s financial results reveal a robust profitability but also highlight potential concerns with respect to foreign exchange fluctuations, raw material price volatility and dependence, and competitive pressures. The company has made progress on implementing ESG initiatives, especially concerning workplace safety, but more detailed reporting on supply chain sustainability is needed for a complete understanding of their ESG performance. The disclosure regarding greenhouse gas emissions is incomplete, requiring further clarifications. Further detail on the specific metrics and targets associated with these initiatives is needed for complete assessment. Overall, the report provides a positive but incomplete picture of the company’s performance and future prospects. Further analysis may be warranted by independent researchers.

Detailed Analysis #

Liability Analysis #

The provided annual report does not explicitly break down liabilities into “long-term debt” as a separate line item. This is likely because BEPL has no long-term debt, as repeatedly stated in the report.

Here’s what the report does show:

• Total Liabilities: ₹11,178.49 lakhs (Standalone) and ₹11,178.49 lakhs (Consolidated). Note that Consolidated Liabilities should generally be higher than Standalone if there were any liabilities of subsidiaries or joint ventures added. However, here they are equal.

• Current Liabilities: ₹11,178.49 lakhs (Standalone) and ₹11,178.49 lakhs (Consolidated). This represents the majority of the company’s liabilities, and since there is no long-term debt, it is equal to the total liabilities.

• Long-Term Debt: ₹0 (The company explicitly states it has zero debt.)

• Accounts Payable (Trade Payables): ₹9,032.29 lakhs (Standalone) and ₹9,032.29 lakhs (Consolidated). This is a significant component of the current liabilities.

It’s important to note that the consolidated figures should ideally be a sum of the parent company and its subsidiaries. In this case, the consolidated and standalone figures are the same. This implies that either the joint venture, Bhansali Nippon A&L Private Limited, holds no debt or that its liabilities are not included in the consolidated report for some reason, which is unclear from the document alone.

Equity Analysis #

Here’s a breakdown of the shareholder’s equity, retained earnings, and share capital values from BEPL’s standalone financial statements, as reported in the annual report:

• Shareholders’ Equity (Standalone): ₹92,137.97 lakhs as of March 31, 2024.

• Retained Earnings (Standalone): ₹87,276.90 lakhs as of March 31, 2024. This represents the accumulated profits of the company after deducting dividends and other distributions.

• Share Capital (Standalone): ₹2,488.58 lakhs as of March 31, 2024. This increased significantly due to the issuance of bonus shares during the fiscal year. Prior to the bonus issue, the share capital was ₹1,659.06 lakhs.

These figures represent the standalone financial position of BEPL. The consolidated financial statements would include the equity of any subsidiaries and joint ventures, but in this case, the consolidated and standalone numbers are nearly identical for the equity and liability accounts. This suggests limited or zero consolidation of the jointly controlled entity’s balance sheet information.

Income Statement #

Operating Performance #

The provided annual report presents the financial information in a slightly different format than the standard revenue, cost of revenue, gross profit breakdown. However, we can extract the relevant figures to calculate these metrics from the Standalone Statement of Profit and Loss:

• Revenue: ₹122,173.60 lakhs (This is “Revenue from operations (Net of GST)” - the report does not provide a total revenue figure including GST separately)

• Cost of Revenue: ₹77,942.79 lakhs + ₹6,274.17 lakhs - ₹1,026.08 lakhs = ₹83,190.88 lakhs. This is calculated by adding Cost of materials consumed and Purchase of traded goods, and subtracting the positive change in inventory (a reduction in inventory increases cost of revenue)

• Gross Profit: ₹122,173.60 lakhs - ₹83,190.88 lakhs = ₹38,982.72 lakhs. This is calculated by subtracting the cost of revenue from the revenue.

• Operating Expenses: ₹5,473.96 lakhs (Employee benefits expense) + ₹20.49 lakhs (Finance costs) + ₹969.72 lakhs (Depreciation and amortization expense) + ₹12,306.39 lakhs (Other Expenses) = ₹18,770.56 lakhs. Note that the finance costs are usually excluded from operating expenses, making them potentially lower.

• Operating Income (EBITDA): The report directly provides the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) as ₹25,266.62 lakhs. This is before the deduction of interest and taxes. If you want operating income after deducting interest and depreciation but before taxes, this will be the EBITDA less the finance cost less depreciation. In this case 25,266.62 - 20.49 - 969.72 = ₹24,276.41 lakhs. This is equivalent to the Profit before tax value provided in the report.

It’s essential to note that these calculations rely on inferring certain line items from the report’s presentation. A strictly formatted income statement would be preferable for greater clarity.

Bottom Line Metrics #

Here are the values you requested from the BEPL standalone financial statements:

• Net Income (Profit for the Year): ₹17,863.56 lakhs. This is the bottom line profit after all expenses and taxes have been deducted.

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹25,266.62 lakhs. This is a key profitability metric that shows earnings before the impact of financing and accounting adjustments.

• Basic EPS (Earnings Per Share): ₹7.22. This reflects the earnings per share based on the weighted average number of outstanding shares.

• Diluted EPS: ₹7.22. In this case, the basic and diluted EPS are the same, indicating no potentially dilutive securities were outstanding during the year.

These values are from BEPL’s standalone financial statements. Consolidated figures would include the financial performance of any subsidiaries or joint ventures, but as noted previously, the consolidated report presents only minimal additional information which does not alter these key figures significantly.

Cash Flow #

Cash Flow Components #

Based on BEPL’s Standalone Statement of Cash Flows:

• Cash Flow from Operating Activities: ₹22,987.52 lakhs. This represents the cash generated from the company’s core business operations.

• Cash Flow from Investing Activities: ₹4,511.53 lakhs. This reflects the cash flows related to investments in long-term assets (property, plant, and equipment), loans provided, and other investing activities.

• Cash Flow from Financing Activities: -₹32,351.60 lakhs. This shows the cash flows related to financing activities, primarily driven by dividend payments to shareholders in this case. The negative sign indicates a net outflow of cash.

It is important to note that these figures are from the standalone statement of cash flows. Consolidated cash flows would include the cash flows from any subsidiaries or joint ventures but the consolidated statement is largely identical here.

Financial Ratios #

Profitability Ratios #

We need to calculate these profitability ratios using the figures extracted from BEPL’s financial statements. Remember that some values were inferred due to the report’s presentation style, leading to potential minor discrepancies if a perfectly formatted income statement were available.

• Gross Margin: (Gross Profit / Revenue) * 100 = (₹38,982.72 lakhs / ₹122,173.60 lakhs) * 100 = 31.9%

• Operating Margin: (Operating Income / Revenue) * 100 = (₹24,276.41 lakhs / ₹122,173.60 lakhs) * 100 = 19.87% (Using Profit Before Tax as a proxy for operating income as discussed previously).

• Net Profit Margin: (Net Income / Revenue) * 100 = (₹17,863.56 lakhs / ₹122,173.60 lakhs) * 100 = 14.61%

• Return on Equity (ROE): (Net Income / Average Shareholder’s Equity) * 100. To calculate average shareholder’s equity, we need the beginning and ending equity values, but the prior-year standalone figure is not clearly provided in the standalone statements (it is only provided in the combined statements). We will therefore use the figures provided in the combined statements (₹106,626.01 lakhs and ₹92,137.97 lakhs) to approximate the average. Average Shareholder’s Equity ≈ (₹106,626.01 lakhs + ₹92,137.97 lakhs) / 2 = ₹99,381.99 lakhs. Therefore, ROE ≈ (₹17,863.56 lakhs / ₹99,381.99 lakhs) * 100 ≈ 17.97%.

• Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similarly, to compute average total assets, we need the prior year’s figure, but it’s not clearly provided in the standalone statements. Using the consolidated figures instead (₹116,532.44 lakhs and ₹105,436.90 lakhs) to approximate the average, Average Total Assets ≈ (₹116,532.44 lakhs + ₹105,436.90 lakhs) / 2 = ₹110,984.67 lakhs. ROA ≈ (₹17,863.56 lakhs / ₹110,984.67 lakhs) * 100 ≈ 16.1%.

Important Note: These calculations use the reported net profit and revenue figures which exclude the effect of bonus shares. The values for ROE and ROA are approximations due to the absence of standalone prior-year figures for net worth and total assets. The consolidated numbers have been used to estimate the average figures for these calculations. Using the standalone numbers may yield slightly different results. The financial statements themselves should be consulted for the most accurate figures.

Liquidity Ratios #

The annual report provides the current ratio, but we need to calculate the quick ratio and cash ratio. Remember that we will be using approximations here because the complete prior-year standalone figures for current assets are not explicitly given in the standalone statements.

• Current Ratio: 7.30 (This is directly reported in the annual report). This is calculated as Current Assets / Current Liabilities.

• Quick Ratio (Acid-Test Ratio): (Current Assets - Inventories) / Current Liabilities. Using the Standalone figures: (₹81,605.44 lakhs - ₹13,583.39 lakhs) / ₹11,178.49 lakhs ≈ 6.07. This ratio is a more stringent measure of liquidity, excluding inventories which may not be quickly converted to cash.

• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities). Using the Standalone figures: ₹10,377.96 lakhs / ₹11,178.49 lakhs ≈ 0.93. This is the most conservative liquidity ratio, considering only the most liquid assets.

Important Note: These liquidity ratios are calculated using standalone figures from the current year’s report and an approximation of the average of the prior-year standalone data based on the reported consolidated figures. Different results might be obtained if perfectly formatted and complete standalone financial statements for prior years were available. The financial statements themselves should be consulted for complete accuracy.

Efficiency Ratios #

To calculate these efficiency ratios, we need to use figures from BEPL’s financial statements. Remember that we will use approximations for Average Inventory and Average Receivables since the complete prior year standalone numbers for these line items are not explicitly provided. We will therefore use the consolidated numbers to approximate the averages.

• Asset Turnover: (Revenue / Average Total Assets). Using the consolidated figures to approximate average total assets as previously discussed: ₹122,173.60 lakhs / ₹110,984.67 lakhs ≈ 1.10. This ratio measures how efficiently a company uses its assets to generate sales.

• Inventory Turnover: (Cost of Goods Sold / Average Inventory). Using the consolidated numbers to estimate Average Inventory ≈ (₹17,081.41 lakhs + ₹13,583.39 lakhs)/2 = ₹15,332.40 lakhs. Inventory Turnover ≈ ₹83,190.88 lakhs / ₹15,332.40 lakhs ≈ 5.43. This indicates how many times, on average, the company’s inventory is sold and replenished during the year.

• Receivables Turnover: (Revenue / Average Accounts Receivable). Using the consolidated numbers to estimate Average Accounts Receivable ≈ (₹23,796.23 lakhs + ₹22,993.06 lakhs)/2 = ₹23,394.65 lakhs. Receivables Turnover ≈ ₹122,173.60 lakhs / ₹23,394.65 lakhs ≈ 5.22. This shows how efficiently the company collects its receivables.

Important Note: These efficiency ratios are based on approximations of the average values for inventories and receivables using consolidated figures because complete standalone figures for the previous year are unavailable in the provided report. Using the standalone numbers alone may yield slightly different results. The financial statements themselves should be consulted for precise values and more accurate calculations.

Leverage Ratios #

BEPL’s financial statements highlight a “zero debt” status. This significantly simplifies the calculation of use ratios, as it eliminates any debt-related components.

• Debt-to-Equity Ratio: 0. (Total Debt / Shareholders’ Equity). Since there’s no debt, this ratio is zero.

• Debt-to-Assets Ratio: 0. (Total Debt / Total Assets). Similarly, with no debt, this ratio is also zero.

• Interest Coverage Ratio: This ratio is not calculable from the provided information. While finance costs are reported, they are minimal (₹20.49 lakhs) and do not represent interest expense on a significant level of debt. The interest coverage ratio (EBIT / Interest Expense) is typically used to assess a company’s ability to meet its interest obligations. Since BEPL has negligible interest expense, the ratio would be extremely high and not especially meaningful in this context. It is generally not calculated for companies with minimal debt.

In summary, BEPL’s use ratios reflect its very low financial risk profile due to its lack of debt.

Market Analysis #

Market Metrics #

The provided annual report does not contain market capitalization, price-to-earnings (PE) ratio, price-to-book (PB) ratio, or other market-based metrics. These values are derived from the stock’s market price and require information not included in the financial statements. Annual reports generally only contain the company’s financial data. Market data, such as the share price, is obtained from stock exchanges.

We can calculate the dividend yield and dividend payout ratio using data from the annual report provided the current market price is known:

• Dividend Yield: (Annual Dividend per Share / Current Market Price per Share) * 100. We know the annual dividend per share (₹4 based on declared and recommended dividends). To calculate this, you need to find the current market price of BEPL’s shares from a financial website or stock exchange.

• Dividend Payout Ratio: (Total Dividends Paid / Net Income) * 100. Using the standalone figures: (₹32351.60 lakhs / ₹17863.56 lakhs) * 100 ≈ 181%. This ratio exceeds 100%, which indicates that dividends paid were greater than net income in the fiscal year. This usually occurs when the company’s reserves are used for dividend payments.

In short, you can’t determine market cap, PE, or PB ratios from the annual report alone; only the dividend yield and payout ratios are calculable given the current market price. You’ll need to look up the current market price of BEPL shares to calculate the dividend yield.

Business Analysis #

Segment Analysis #

BEPL’s annual report indicates a primary focus on a single business segment, making the analysis straightforward. However, some data points requested (market share, precise geographic presence) are not explicitly provided.

• Business Segment Name: Manufacturing and sale of Acrylonitrile Butadiene Styrene (ABS) and Styrene Acrylonitrile (SAN) resins. A secondary, smaller segment involves trading in raw materials for ABS and SAN production.

• Revenue: The annual report presents “Revenue from operations (Net of GST)” as the primary revenue figure. For FY2023-24, this was ₹122,173.60 lakhs for the ABS and SAN manufacturing segment. The precise revenue breakdown between ABS and SAN isn’t explicitly given. Additionally, trading revenue (₹7,593.94 lakhs) should be included in overall total revenue.

• Growth Rates: The report provides that sales volume for ABS and SAN in FY2024 increased by 2.36% compared to the previous year (75,143 TPA vs. 73,388 TPA). However, the growth rate in revenue is negative year-on-year, indicating price decreases or reduced volume in some product lines. Precise growth rate calculations are complicated by the lack of a complete revenue figure including GST from the prior year.

• Operating Margins: The operating margin for the primary manufacturing segment (ABS and SAN) can be approximated using the PBT margin of 19.87% since finance costs are minimal and the total revenue is known.

• Market Share: The annual report does not provide explicit market share data for BEPL’s products in India. This would need to be sourced from external market research reports.

• Key Products: Acrylonitrile Butadiene Styrene (ABS) and Styrene Acrylonitrile (SAN) resins. These are specialized engineering thermoplastics used in various applications.

• Geographic Presence: The report states that BEPL serves 25 states in India and exports to 2 countries. However, precise details regarding the revenue distribution across these regions are not disclosed.

In summary, BEPL’s business is highly concentrated on the production and sale of ABS and SAN resins within India, with a minor contribution from trading activities and limited exports. More detailed segment-specific data is not provided in the available report.

Risk Assessment #

BEPL’s annual report mentions many key risk factors, but a structured analysis according to your categories requires some inference and interpretation from the text. The report doesn’t explicitly provide numerical likelihood or impact severity ratings.

I. Key Risk Factors:

II. Missing Information:

The provided annual report lacks a quantitative assessment of the likelihood and impact severity of these risks. This is a common limitation in many annual reports, where risk discussion remains mainly qualitative. A detailed risk assessment using techniques like probability and impact matrices would provide a more detailed view. The report also needs more detailed descriptions of mitigation strategies to assess their effectiveness.

III. Risk Trends:

The description of trends attempts to characterize the evolution of the above risk factors. The impact and likelihood of many of these risks are closely tied to macroeconomic and geopolitical factors which are inherently uncertain. More frequent updates on the risk assessment performed by the company would be beneficial.

Strategic Overview #

Management Assessment #

BEPL’s management highlights many key aspects of its business strategy, competitive advantages, market conditions, and future prospects in the annual report. Let’s break it down:

I. Key Strategies:

• Focus on Specialized Grades: BEPL emphasizes developing and producing specialized grades of ABS and SAN resins tailored to specific customer applications. This allows them to command premium prices and build strong customer relationships. This strategy differentiates them from commodity producers.

• Optimal Capacity Utilization: The company prioritizes maximizing production capacity utilization to achieve economies of scale and improve profitability. They report achieving near-100% capacity utilization in FY2023-24.

• Investment in R&D: BEPL recognizes the importance of innovation and invests in its in-house R&D center to develop new grades and improve existing product properties. This is a key driver of its specialized grade strategy.

• Capacity Expansion: BEPL is planning a significant capacity expansion project to increase its ABS production capacity from 75,000 TPA to 200,000 TPA. This highlights a commitment to future growth. Internal accruals will be used to fund the project, preserving its zero-debt status.

• Joint Venture Collaboration: The joint venture with Nippon A&L provides technical support and access to expertise in application development and new recipes. This collaborative approach supports BEPL’s innovation efforts.

II. Competitive Advantages:

• In-House R&D: BEPL’s in-house R&D center is a key competitive differentiator, enabling the development of specialized ABS and SAN grades catering to niche customer needs.

• Cost Leadership (Aspirational): Management aims to become the lowest-cost ABS producer in India, maintaining global quality standards. While the annual report does not present data to confirm that this has been achieved, it demonstrates a strong focus on cost efficiency.

• Strong Customer Relationships: The strategy of developing specialized grades and collaborating directly with customers builds loyalty and long-term contracts.

• Zero Debt: This strong financial position provides flexibility and resilience in the face of market fluctuations.

III. Market Conditions:

• High Demand: The report indicates a large and growing market for ABS and SAN resins in India, exceeding the combined output of all domestic producers. This signals a substantial opportunity for growth.

• Import Dependency: A high percentage of key raw materials (Styrene and Acrylonitrile monomers) are imported. This creates vulnerability to global price and supply chain disruptions but also creates an opportunity to improve sustainability.

• Automotive and Consumer Electronics Growth: The market conditions are also highlighted as positive in the consumer electronics and automobiles markets in India, which are BEPL’s key customer segments.

IV. Challenges:

• Raw Material Price Volatility and Supply Chain Disruptions: The dependence on imported raw materials presents a significant challenge.

• Foreign Exchange Rate Fluctuations: Exchange rate volatility impacts profitability.

• Intense Competition: BEPL faces competition from both domestic and international players.

• Maintaining Cost Leadership: Achieving and sustaining cost leadership in the face of raw material price volatility and competition requires continuous operational efficiency and cost control.

V. Opportunities:

• Significant Market Gap: The substantial demand for ABS and SAN resins in India, exceeding domestic production capacity, represents a large opportunity for BEPL.

• Capacity Expansion: The planned capacity expansion provides a pathway to significantly increase market share and revenue.

• Innovation in Specialized Grades: Developing innovative and specialized products for niche applications opens avenues for growth and premium pricing.

• Sustainability Initiatives: This is presented as an opportunity to improve efficiency and access new customer segments.

In summary, BEPL’s strategy centers on producing high-quality specialized ABS and SAN resins, leveraging R&D to gain a competitive advantage in a growing Indian market. The company must effectively manage risks related to raw material sourcing and global economic conditions to fully realize its growth potential.

ESG Ratings #

The provided annual report does not include ESG ratings from any external agencies. While the report contains a Business Responsibility and Sustainability Report (BRSR) detailing BEPL’s ESG initiatives, it does not provide scores or ratings from organizations like MSCI, Sustainalytics, Refinitiv, etc., which are commonly used to assess a company’s ESG performance. To find ESG ratings for BEPL, you would need to consult those rating agencies directly or utilize financial databases that provide such information.

ESG Initiatives #

BEPL’s annual report, especially the Business Responsibility and Sustainability Report (BRSR), details various ESG initiatives. However, the level of detail and quantification varies across different areas.

I. Environmental Initiatives:

• Energy Conservation: The company focuses on reducing energy consumption through many measures, including: leak detection and repair in compressed air systems, replacing inefficient equipment (battery chargers, cooling tower fans), and improving natural lighting. However, specific energy savings figures and targets are not provided.

• Water Stewardship: BEPL aims for zero liquid discharge, utilizing treated wastewater for gardening. They employ digital groundwater level recorders and flow meters for water monitoring. Again, quantitative data on water usage reduction is not present.

• Waste Management: The company focuses on waste segregation, responsible disposal of hazardous waste (via authorized channels as per regulations), and recycling initiatives. Data on waste generated and recycled is provided but lacks specific targets and is not fully broken down by type of waste. The report notes the use of radioactive sources and their eventual disposal, a significant environmental and safety consideration.

• Air Emissions: The report includes air emission data (NOx, SOx, PM) for both plants, which have been independently assessed. However, it’s unclear what these values mean in terms of compliance with standards. No GHG emission data is provided.

• Sustainable Sourcing: The report notes a focus on sustainable sourcing of raw materials but lacks specific data or targets regarding the percentage of sustainably sourced inputs.

II. Carbon Footprint:

The annual report does not provide a quantified carbon footprint for BEPL. This is a significant omission, considering the increasing importance of carbon accounting and disclosure.

III. Social Initiatives:

• Employee Well-being: BEPL highlights initiatives focused on employee health, safety, and well-being, including training programs (covering health and safety, skill upgrades, and business ethics), various insurance schemes (health, accident), and grievance redressal mechanisms. However, the effectiveness of these initiatives is not quantitatively assessed.

• Community Development: The report mentions contributions to community development but lacks specific details of projects or their impact.

IV. Governance Practices:

• Board Committees: BEPL has established many board committees (Audit, Nomination & Remuneration, Stakeholders’ Relationship, CSR, and Risk Management) to oversee various aspects of the business.

• Compliance: The report emphasizes compliance with relevant laws and regulations, but specific details are limited.

• Code of Conduct: A code of conduct is in place for directors and senior management, promoting ethical behavior.

• Whistleblower Policy: A whistleblower policy is implemented to encourage reporting of unethical behavior and non-compliance.

V. Sustainability Goals:

The annual report doesn’t explicitly define specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals. While many sustainability initiatives are detailed, they lack quantified targets and timelines against which to measure success. The general aims mentioned are: Zero Liquid Discharge, energy conservation, waste reduction, sustainable sourcing, and community development. However, the report doesn’t specify quantitative targets or timelines for any of these aims, nor does it discuss their financial implications.

In summary, BEPL’s annual report shows a degree of commitment to ESG, but many aspects lack essential quantitative data, clearly defined goals, and detailed reporting frameworks (specifically lacking for carbon footprint and supply chain sustainability). The BRSR disclosure is primarily qualitative in nature. A more structured and quantitatively focused approach would improve the report’s transparency and allow for better assessment of the company’s ESG performance.

Additional Information #

Operational Metrics #

Based on the provided annual report:

• R&D Expenditure: ₹71.21 lakhs (This is the recurring R&D expenditure; the report does not provide a separate figure for capital expenditure on R&D.)

• Employee Count: 478 permanent employees as of March 31, 2024 (this figure does not include contract workers). The report also lists 313 workers, bringing the total to 791. However, the exact number of contract or temporary employees is not specified.

Key Events #

Several significant events are reported in BEPL’s annual report for FY2023-24:

• Highest Ever Production: The company achieved its highest-ever production levels of ABS and SAN, reaching almost 100% capacity utilization.

• Bonus Share Issuance: A bonus share issue was approved and executed, increasing the number of outstanding shares.

• Dividend Payments: Three interim dividends and a recommended final dividend were paid to shareholders.

• Brownfield Expansion Project: BEPL engaged Toyo Engineering India Private Limited as a consultant for a front-end engineering design (FEED) and CAPEX cost estimation for a major capacity expansion project aimed at increasing ABS production capacity. This expansion is a major strategic initiative.

• Board Changes: Several directors (including some Independent Directors) either resigned or completed their term, leading to changes in the composition of the board. New Independent Directors were appointed.

• BIS Certification: The company obtained BIS certification for ABS grades, demonstrating compliance with quality and safety standards.

• Zero Debt Status Maintained: The company continued to maintain a zero-debt position, highlighting its strong financial health.

These events reflect both the company’s operational performance and strategic direction for the future. The capacity expansion project, in particular, is a significant undertaking that will likely shape BEPL’s trajectory in the coming years.

Audit Information #

Auditor’s Opinion:

The independent auditors, Azad Jain & Co. Chartered Accountants, expressed an unmodified (clean) opinion on both the standalone and consolidated financial statements. This means the auditors found the financial statements to be presented fairly and in accordance with the applicable accounting standards (Ind AS) and other generally accepted accounting principles in India.

Key Accounting Policies:

The annual report outlines many key accounting policies used in preparing the financial statements. Key highlights include:

• Basis of Preparation: The financial statements are prepared using the accrual basis of accounting and in accordance with Indian Accounting Standards (Ind AS).

• Classification of Current and Non-Current Assets and Liabilities: Assets and liabilities are classified as current or non-current based on criteria defined by Ind AS, related to the operating cycle, and whether the items are expected to be realized or settled within 12 months.

• Property, Plant, and Equipment (PPE): PPE is recognized at cost less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method, with useful lives determined for each asset class.

• Intangible Assets: These are measured at cost less accumulated amortization.

• Inventories: Inventories are valued at the lower of cost and net realizable value. Cost is determined using the weighted average method.

• Cash and Cash Equivalents: Include cash on hand and short-term, highly liquid investments.

• Retirement Benefits: The accounting for employee retirement benefits is detailed, differentiating between defined contribution plans (provident fund and superannuation fund) and defined benefit plans (gratuity). Actuarial valuations are used for defined benefit plans.

• Foreign Currency Transactions: Transactions are translated using the exchange rates at the transaction dates, while monetary items are translated at the closing exchange rates.

• Revenue Recognition: The company follows Ind AS 115 for revenue recognition, recognizing revenue when control of goods or services is transferred to the customer.

• Taxes on Income: Both current and deferred taxes are recognized, using applicable tax rates and the balance sheet method for deferred taxes.

• Leases: The company recognizes right-of-use assets and lease liabilities for leases that do not meet the criteria for short-term or low-value leases.

• Provisions: Provisions are recognized when a present obligation is probable and can be reliably measured.

• Segment Reporting: Only one operating segment is reported due to the company’s focused operations in the manufacturing and sale of ABS and SAN resins and Trading in Styrene.

• Financial Instruments: The company details its accounting policies for financial assets and liabilities, covering initial recognition, measurement, and derecognition. They also describe their approach to impairment.

• Fair Value Measurement: The report outlines the fair value hierarchy used for measuring and disclosing fair values of financial instruments.

• Related Party Disclosures: The company provides detailed disclosures of related party transactions in accordance with Ind AS 24.

• Earnings Per Share (EPS): The calculation of basic and diluted EPS is described, with adjustments made for the bonus share issue.

These key accounting policies provide a framework for understanding how BEPL accounts for its transactions and assets in the preparation of its financial statements. A complete understanding requires careful review of the entire section on accounting policies within the annual report.