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Borosil Glass Works Ltd.

BSE: 502219 Sector: Industrials
NSE: BOROGLASS ISIN Code: INE666D01022
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OPEN 1015.05
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VOLUME 26900
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52-Week low 600.00
P/E 59.78
Mkt Cap.(Rs cr) 2,255
Buy Price 976.25
Buy Qty 54.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1015.05
CLOSE 1012.50
VOLUME 26900
52-Week high 1048.00
52-Week low 600.00
P/E 59.78
Mkt Cap.(Rs cr) 2,255
Buy Price 976.25
Buy Qty 54.00
Sell Price 0.00
Sell Qty 0.00

Borosil Glass Works Ltd. (BOROGLASS) - Director Report

Company director report

To

The Members of

BOROSIL GLASS WORKS LIMITED

Your Directors present their Fifty Fourth Annual Report and the Audited FinancialStatement for the year ended March 31 2017.

FINANCIAL RESULTS

(Rs. in lacs)

Year ended 31.03.2017 Year ended 31.03.2016
Revenue from Operations 26700 22221
Other Income 3498 3540
Profit for the year before Finance cost Depreciation and exceptional items 5403 2150
Less: Finance Cost 117 116
Less: Depreciation & Amortization Expenses 581 532
Profit before Exceptional Items 4704 1502
Less: Exceptional Item (9088) -
Profit Before Tax 13792 1502
Less: Tax expenses 1123 (55)
Profit for the year 12669 1557
Other Comprehensive Income 885 833
Total Comprehensive Income for the year 13555 2390

DIVIDEND

The Board of Directors recommends a dividend of Rs. 25/- per equity share of Rs. 10/-each for the year ended March 31 2017 aggregating Rs. 5.78 crores.

REVIEW OF OPERATIONS

During FY17 your Company achieved Revenue from Operations of Rs. 267.0 crores asagainst Rs. 222.2 crores in FY16 registering a strong growth of 20.2%.

The Company's Operational Profit Before Tax (PBT) grew by 67% from Rs. 22.6 crores inFY16 to Rs. 37.6 crores in FY17.

The Company earned Other Income of Rs. 35.0 crores during FY17 (mainly frominvestments) as compared to Rs. 35.4 crores in FY16. The Company recorded a Profit BeforeTax of Rs. 47.0 crores (before exceptional item) as compared to Rs. 15.0 crores in FY16 agrowth of 213%. During FY17 the Company made a one-time exceptional net gain of Rs. 90.9crores from the acquisition of a piece of land from the company by Municipal Corporationof Greater Mumbai (MCGM).

Profit After Tax (PAT) recorded a growth of 130% from Rs. 15.6 crores in FY16 to Rs.35.8 crores in FY17. After including the one-time gain in FY17 the growth in PAT was714%.

A detailed Management Discussion and Analysis which inter-alia covers the followingforms part of the Annual Report.

• Industry Structure and Development

• Risks and Concerns

• Adequacy of Internal Controls

• Analysis of Segment Wise Performance

• Scheme of Amalgamation

• Other Corporate Developments

• Outlook

• Material Development in Human Resources and Industrial Relations includingnumber of people employed

MANAGEMENT DISCUSSION AND ANALYSIS

This discussion covers the financial results and other developments during April 2016- March 2017 in respect of the Consolidated Results of Borosil comprising its Scientific& Industrial Products Division (SIP) and its Consumer Products Division (CPD). Theseinclude the financials of Borosil Glass Works Limited Hopewell Tableware Private Limited(100% subsidiary) Klasspack Private Limited (60.3% subsidiary) Borosil Afrasia FZE (100%subsidiary) and Fennel Investment and Finance Private Limited (an associate company). Theconsolidated entity has been referred to hereinafter as "Company" or"Borosil". A brief overview of the business of Gujarat Borosil Limited isprovided separately.

The financials of the company have been prepared in accordance with Indian AccountingStandards (IND ASs). The financials of FY16 have been restated accordingly wherevernecessary.

Some statements in this discussion pertaining to projections estimates expectationsor outlook may be forward looking. Actual results may however differ materially from thosestated on account of various factors such as changes in government regulations taxregimes economic developments exchange rate and interest rate movements impact ofcompeting products and their pricing product demand and supply constraints within Indiaand other countries where the Company conducts business. Estimates made with regard tomarket size of various segments and their respective rates of growth are internalestimates made by the management.

INDUSTRY STRUCTURE AND DEVELOPMENT

Notwithstanding sluggish global growth in recent years the Indian economy has shownrobust growth. It continues to be one of the fastest growing large economies. A largedomestic market and sector diversity helps to insulate the country from external shocks.Both the World Bank and the International Monetary Fund have projected growth rates ofover 7.0% in India's GDP over each of the next three years. India could thus be consideredone of the engines for global growth. On a US$ 2.3 trillion base India would add US$600-900 billion over the next 5 years even with a modest 5% - 7% growth rate.

Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) won a sweeping mandate inthe last general elections in 2014 resulting in a single party rule at the centralgovernment as opposed to coalition rule for the first time in 30 years. This has giventhis administration the opportunity to govern without the drag of coalition politics. Itis seen as pro-business and pro-reform. A stable and forward looking government isexpected to drive several positive economic changes. Current and fiscal deficits have beenlowered and inflation has been moderate this year aided by better agricultural output aswell as lower international crude oil prices. Prevalence of high inflation had preventedIndia from softening interest rates. Interest rates had reached a high of 14.5% duringCY13. These have since declined to about 11% and are expected to come down further toabout 10% giving a boost to investment demand.

Public and private investment driven GDP growth is expected to see a rise in the percapital income. On a Purchasing Power Parity (PPP) basis its per capital income is about $6000 per year. Rising income is leading to an upward mobility with about 150 millionexpected to be added to the middle class by 2025 creating a large consumer market in India(Source: Boston Consulting Group). India has the largest youth population with about 356million between 10-24 years of age. It is expected that 64% of the population will beworking age by 2021 giving India the advantage of a demographic dividend. The reducedexpenditure on dependents will increase the ability to save as well as enable individualsto spend more on discretionary consumption education entertainment with a wider varietyand higher value of purchases. India is seeing a rapid trend in urbanization. Its urbanpopulation is expected to increase by about 300 million over the next 30 years. India hasthe second largest base of internet users and an explosion in mobile phone penetration hasbrought in large numbers of mobile first internet users. This is leading to a rapidlygrowing trend of online consumption.

From the financial year 2017-18 India is expected to witness the benefit of two verysignificant economic policy developments.

A constitutional amendment has paved the way for the long awaited and transformationalGoods and Services Tax (GST). It is expected to be implemented by July 2017. It willcreate a common Indian market leading to a simplification of taxation eliminate thecascading effect of multiplicity of taxation and widen the tax base through improvedcompliance. On November 8 2016 the government "demonetized" the two largestdenomination currency notes. This 86% of the currency in circulation ceased to be legaltender. These were to be deposited in banks by December 30 2016. The aim was to curbcorruption counterfeiting and accumulation of "black money" generated fromincome that had not been declared to tax authorities. While this led to short terminconvenience and hardship demonetization has the long term potential of reducingcorruption greater digitization of the economy and greater formalization of the economy.

Borosil Glass Works Limited conducts its operations in two business segments namelyits Scientific & Industrial Products Division (SIP) and its Consumer Products Division(CPD).

SIP caters to the needs of the Pharmaceutical Research and Development Education andHealthcare segments of the market. These industries are seeing a rapid move towardsautomation. This shift is improving productivity multifold and exponentially increasingthe volumes of tests and analyses being conducted. New methodologies are being developedfor sample preparation enabling multiple analyses. Consequently there is a large marketemerging for new equipment and other products. Traditionally the Company used to marketglassware including a wide variety of scientific industrial and pharmaceutical glassitems sourced both from international and domestic markets. Changing with market needs ithas now begun to see itself evolve from a glassware manufacturer to a solutions providerto its customers for their laboratory and product needs. A beginning has been made throughthe marketing of HPLC vials Liquid Handling Systems as well as Bench Top Equipment underthe brand Labquest by Borosil.

CPD has been marketing microwaveable glassware products to consumers. There is adefinite trend in terms of increased disposable income of households more nuclearfamilies and changes in consumer lifestyle. Kitchen designs are improving (even as theymight get smaller) and consumers are entertaining at home more often. This gives rise tothe need for kitchen and serving products that perform more efficiently and are at thesame time more elegant. Borosil products seek to empower their consumers with just thatin accordance with our tag-line "performs beautifully". With a rise in healthconsciousness in the country there is a gradual shift from storage of food items inplastic to glass containers. The Company now markets Larah by Borosil a range of opaltableware products a glass storage range and has introduced a range of kitchen appliancesto exploit these opportunities.

RISKS AND CONCERNS

(a) Macro Economic Factors: In situations of economic constraints items which are inthe nature of discretionary spending are the first to be curtailed. Factors such as lowGDP growth and high food inflation can result in postponement of purchase or down-tradingfrom premium to mass market products.

(b) Changing Customer Preferences: Demand can be adversely impacted by a shift incustomer and consumer preferences. The Company keeps a close watch on changing trends andidentifies new product lines that it can offer its existing customers.

(c) Competition: With low entry barriers there could be an increase in the number ofcompeting brands. Counter campaigning and aggressive pricing by competitors (includinge-commerce players buying sales through heavy discounting) have the potential of creatinga disruption. China could be a source of low cost products in addition to grey marketimports. The Company brand "BOROSIL" enjoys a first mover advantage andsignificant brand equity. Marketing investments to further strengthen the brand maymitigate the impact of aggressive competition.

(d) Growth of Online as a new channel: New brands are being launched online. Withincreased online penetration distributor relationships may no longer remain a criticalsuccess factor. The Company has listed its products on major e-tailor marketplaces and hasalso launched its own e-commerce portal www.myborosil.com.

(e) New Product Launches: New products may not find very favorable acceptance byconsumers or may fail to achieve sales targets. The Company has a systematic outside-ininsighting and new product development process which helps in increasing the chances ofnew product success.

(f) Acquisitions: Acquisitions entail deployment of capital and may increase thechallenge of improving returns on investment particularly in the short run. Integrationof operations may take time thereby deferring benefits of synergies of unification. TheCompany contemplates acquisitions with a high strategic fit where it envisages a clearpotential to derive synergistic benefits. (g) Input Costs: Unexpected changes in commodityprices resulting from global demand and supply fluctuations as well as variations in thevalue of the Indian Rupee versus foreign currencies could lead to an increased cost basewith a consequent impact on margins.

(h) Counterfeits: Counterfeits pass-offs and lookalikes are a constant source ofunfair competition for leadership brands.

(i) Volatility in Financial Markets: Investments in equity debt and real estatemarkets are always subject to market fluctuation risks. The Company has reduced the sizeof its investment portfolio and is expected to park surplus funds primarily in safeliquid assets.

Adequacy of Internal Financial Controls

The Company has adequate Internal Control Systems commensurate with its size and natureof business. Internal Audits are periodically conducted by an external firm of CharteredAccountants who monitor and evaluate the efficiency and adequacy of internal controlsystems in the Company its compliance with operating systems accounting procedures andpolicies at all locations of the Company. Based on the report of internal audit functionsuitable corrective actions are taken and thereby controls are strengthened. TheseInternal Audit reports are reviewed by the Audit Committee.

Review of Operations – Consolidated for SIP and CPD

During FY17 Borosil achieved Revenue from Operations of Rs. 388.8 crores as against Rs.234.7 crores a strong growth of 66%. FY17 includes inorganic revenue of Rs. 121.8 crores.The organic growth during FY17 was a robust 20.2%.

During FY17 Borosil achieved an EBITDA of Rs. 43.2 crores a growth of 60% over theprevious year in line with revenue growth.

CPD made significant investments in brand building in FY17. EBITDA margin during theyear was 11.5%. The Company expects to improve its EBITDA margin as it scales itsoperations in the coming years.

Other Income during FY17 was at Rs. 35.7 crore (mainly from investments) as compared toRs. 35.1 crore in FY16.

Borosil's Profit Before Tax (PBT) excluding profit from investments and exceptionalitems also grew by 3% from Rs. 24.0 crore in FY16 to Rs. 24.9 crore in FY17. During FY17Borosil made a one-time exceptional gain of Rs. 90.9 crores from the acquisition of apiece of land from the company by Municipal Corporation of Greater Mumbai (MCGM).

Profit After Tax (PAT) recorded a growth of 37% from Rs. 23.5 crore in FY16 to Rs. 32.2crore in FY17. After including the one-time gain (shown as exceptional item) the growthin PAT was 424%.

The Effective Tax Rate during FY17 was 6.5%. This was lower primarily on account ofnon-taxable earnings from the sale of long-term investments and Profit on Sale ofProperty Plant and Equipments (shown as exceptional item).

ANALYSIS OF SEGMENT WISE PERFORMANCE

Scientific & Industrial Products Division (SIP)

Over the years Borosil's SIP division has established leadership in the Rs. 220 crorelab glassware segment (internal estimates) with nearly 60% market share. The Company'sclient list includes most well-known pharmaceutical players in the country apart fromgovernment laboratories microbiology biotechnology and food & soil testingorganizations and institutions of higher education. Its large network of customers ensuresthat the company has virtually no client concentration risk. The nature of businessrequires servicing clients with a very large range of SKUs (the company has a range ofover 2000 SKUs). Given low unit price of each item and being a rather small proportion ofthe consumables budget of pharmaceutical labs clients are reluctant to have multiplesupplier brands. Borosil enjoys an incumbent's advantage with these customers. Moreoverthe wide range of SKUs is not easy for a newcomer to offer as customers often demandimmediate delivery with little or no demand forecasts. The Company has developed a strongsales team that keeps in touch with its customers the scientists and technicians in thelaboratories to promote its products take orders assist with usage procedures andunderstand new needs. This reinforces Borosil's branding and increases stickiness for thislow-value but critical range of items in laboratories across the country.

As part of its strategy to market more products to existing customers the Companyintroduced LabQuest its brand of lab instrumentation during the previous year. Asignificant portion of the approximately Rs. 150 crore market (growing at ~8% to 10%) iscurrently serviced by expensive imports. Borosil's SIP has a strong team of over 50 salespersons who are trained to talk to customers about product and secure periodic contractsfor Borosil lab glass as well as to discuss and introduce new products. The team has beenable to generate trials and interest in LabQuest products such as Micro CentrifugesShakers and Magnetic Stirrers. Many new products will be introduced over the next fewyears as we understand our customers' instrumentation needs better. While the assembly ofthese instrumentation products is outsourced Borosil uses its technical expertise inassisting with product design. The Company has begun to build an additional avenue forgrowth through exports of its lab glassware products. It intends to market the Borosilrange in The Middle East Africa and South East Asia. These markets do not have dominantlocal brands as yet and

Borosil benefits from a favourable India-based cost structure. With Indianpharmaceutical companies expanding operations in these geographies lab personnel fromIndia are expected to prefer using the brand that they are familiar with. As a result ofthis focus export revenues for the SIP division have grown from Rs. 1.4 crores in FY13 toRs. 9.2 crores in FY17.

Acquisition of 60.3% stake in Klasspack

On July 29 2016 the Company acquired 60.3% Equity Shares of Klasspack Private Limiteda Nashik based manufacturer and marketer of Glass Ampoules and Tubular Glass Vials.Hitherto Borosil was marketing lab glassware to pharmaceutical companies for theirresearch lab and quality control lab needs. With the addition of the Klasspack range toits portfolio the Company can now service the product manufacturing glass packaging needsof their customers. With Borosil's technological expertise in specialty glass productionand Klasspack's experience in world-class ampoule and tubular glass production theCompany's pharmaceutical company customers get a high quality choice for sourcing theirglass packaging needs.

During FY16 Klasspack had achieved a turnover of about Rs. 28 crore. The industry isquite fragmented and Klasspack is one of the leading players. It is the #2 player in theestimated Rs. 500 crore market for Glass Ampoules and Tubular Glass Vials. Klasspackprovides Borosil's pharmaceutical customers a credible alternative supplier. Its existingrelationship with several pharmaceutical manufacturers helps the Company gain access tothese customers and the equity of Borosil facilitates an evaluation opportunity. Borosilplans to invest to upgrade Klasspack's production facility to world class standards withclean rooms automatic manufacturing and camera inspection systems. Given the long leadtimes required to pass the stringent quality specifications to become an approved supplierthere is a significant barrier to entry for future players. The Company has commenced theregistering process with a number of potential customers. The approval cycles could takebetween 6 months to 18 months.

During FY17 the SIP division achieved Net Revenue of Rs. 136.6 crore a growth of14.7% over the previous year. Revenue from the international business was about Rs. 9.2crore. The net revenue from Klasspack an acquisition made in July 2016 during FY17 wasabout Rs. 22.6 crore.

Consumer Products Division (CPD)

Borosil India's most well-known and trusted brand in microwaveable kitchenware hasevolved in its products offering over the past few years. In the traditional microwaveablekitchenware segment Borosil maintains a stronghold on the estimated Rs. 100 croresegment. It commands a 60% national market share (internal estimate). An establishednetwork of over 10000 retail outlets as well as presence through key Modern Retail storesgives this homemakers' favourite brand a nationwide reach.

The modern homemaker is looking for convenience in the kitchen and is also moreconscious about how she presents / serves meals at home. This is leading to a strong tailwind in the categories of storage tableware and kitchen appliances. These products alsohave everyday use as opposed to the occasional use of microwaveable glass kitchenware. Thecompany has introduced a range of products that cover the entire process of cooking andserving that empower its consumers to perform more efficiently and present morebeautifully.

The kitchen storage market is estimated to be Rs. 700 crore (organised only) andgrowing between 15% and 20% annually. This is currently dominated by steel and plastics.Steel suffers from being aesthetically inferior and being opaque is less convenient touse.

Plastics are light and durable but there is a growing awareness about the hazards ofusing plastics for storage of foods and worse to microwave in it. Glass inert propertymakes it safe. It can be aesthetically designed and containers can be used for storage bemicrowaved easily cleaned and look as good as new over long periods of time as it doesnot stain with Indian spices. Glass storage products can be designed without being undulyheavy. The company has introduced a range of storage products and has received a goodresponse. These include lunch boxes that have made it very convenient for office goers tomicrowave and eat their meals at office. Glass jars with a vacuum sealing function arehelping to keep foods fresh on the kitchen shelves in consumers' homes.

Borosil's strategy is to create a shift towards adopting glass for storage throughbuilding awareness about the advantages of glass.

Acquisition of Hopewell Tableware Pvt Ltd ("Larah")

In January 2016 the Company acquired 100% share in Hopewell Tableware Pvt Ltd ownersof the brand Larah. With Larah the Company has gained participation in the fast growth Rs.300 crore opal glass market. The modern homemaker is looking for elegantly designed andfashionable products that can be used frequently (daily use) without fear of damage. Larahoffers a light strong and chip resistant product range that caters to this consumer need.Additionally the products are bone-ash free making them vegetarian friendly.

Hitherto the category has been dominated by a single player La Opala. Borosil sees anopportunity to invest in and grow Larah into a strong brand of choice for the consumer. Ithas launched an advertising campaign which highlights the beauty and utility of Larahdinnerware. The tag line of this campaign is "Khaane ko banaaye khaas".

During FY16 Larah had achieved a turnover of about Rs. 55 crore. The advertisingcampaign together with leveraging the company's distribution reach of ~10000 retailersand relationships with large format stores has gave Larah a fillip during FY17 with salesreaching Rs. 99.4 crore.

The market for kitchen appliances is estimated at Rs. 9000 crore and growing at about10% each year. Competitive intensity in the category is also high. The company would thusbe selective in introducing unique and differentiated products. It expects to leverage itskitchenware equity to help it to participate in the growth of the category without havingto play out an aggressive share gain strategy. In order to de-risk its strategy thecompany will use third party manufacturers in the short term to produce the products underBorosil's brand.

Sales Channels

Borosil has established a strong national distribution network for both its SIP and CPDdivisions. The Company sells products to about 200 distributors who in turn service about10000 retailers. The Company's products are available in all major Modern Trade storechains. Sales through Modern Trade comprise about 20% of the consumer products sales. TheCanteen Stores Department (CSD) which is a channel for households of the armed forces is acustomer. With e-commerce as a channel gaining momentum the Company markets its productsthrough marketplaces such as Amazon as well as its own e-commerce site www.myborosil.com

Supply Chain

In the SIP division the Company sources its lab glassware products from Vyline GlassWorks Ltd. (a promoter held company) international companies and other domestic thirdparties. The SIP division is run as a profit center and its management is free to procureproducts from Vyline or anywhere else in the world. The instrumentation range under thebrand LabQuest is manufactured through third parties. The pharma packaging range underthe brand Klasspack is produced at Klasspack's own factory at Nashik. In the CPD divisionthe microwaveable glass products are sourced through third parties including throughimports. Some of the products (comprising glass tumblers decorative glass products etc.)are procured from Vyline. Similar to the SIP division this is done at arm's lengthpricing and Vyline competes with other third party suppliers. The Larah range of opal-wareproducts are manufactured at the facilities of Hopewell at Jaipur.

The Company has proposed a scheme of amalgamation. Under the scheme it is envisagedthat Fennel Investment and Finance Pvt. Ltd. Vyline Glass Works Ltd and HopewellTableware Pvt Ltd will be merged into Borosil Glass Works Ltd.

Klasspack has adequate manufacturing capacity to handle growth in the near to mediumterm. It currently operates on a single shift. Moreover a part of the consideration paidby the company to acquire 60.3% stake has been by way of a primary infusion to carry outbalancing of manufacturing lines and fund working capital.

The Hopewell facility can currently service approximately Rs. 100 crore of sales. TheCompany is making investments to expand capacity and modernise the plant to improveproductivity. An investment of about Rs. 60 crore is planned which would enable the plantto increase its output to about Rs. 150 crore. Simultaneously this investment willimprove the quality of final product and enhanced yields are expected to help in improvingmargins.

The company plans to invest in a new warehouse (approximately Rs. 30 crores). This isexpected to improve freight efficiencies for the CPD division by combining dispatches ofthe Borosil range and the Larah by Borosil range and thus creating full truck-loads. Thesein Larah manufacturing and in freight are likely to get implemented by the fourth quarterof FY18.

Operating Margins (EBITDA)

The EBITDA margin during FY17 was 11.5%. This was achieved after absorbing stepped upits advertising and sales promotion expenses during the year. The ASP to Sales stood at6.4%. Over the next two years the company expects to deliver an expansion in the EBITDAmargin. This is likely to be achieved with increasing scale wherein fixed overheads andmarketing expenses do not increase at the same pace as revenue. In addition the Companyis upgrading its manufacturing facility for Larah which will lead to efficiency and yieldimprovements. Investment is a new warehouse will also result in optimization of freights.A proposed scheme of amalgamation (discussed in a later section) will also lead to EBITDAfrom the Vyline business getting added to the Company's margins. Over the next two tothree years the Company expects to improve its EBITDA to about 15% to 20%.

(These operating margins are stated after excluding expenses which are directlyresulting from the treasury related activities of the Company. A direct comparison withthe profit and loss statement of the Company is thus not possible).

Capital Employed

As on March 31 2017 the Company had operating capital employed of Rs. 300 crore (ascompared to Rs. 230 crore on March 31 2016). This excludes capital employed in non-coreassets and treasury related investments made by the Company and its investment inPreference Shares of Gujarat Borosil Limited. Based on the above the Company turned itscapital employed 1.3X times during FY17.

In the SIP business the Company strategically holds a higher level of inventory. Thisis to ensure that its regional warehouses maintain stocks that enable Borosil to serviceits customers' requirements within 24 hours. This service level differentiates Borosilfrom its competitors. Moreover the cost of holding inventory is lower than the cost oflosing sale.

As of March 31 2017 the Company had Net Fixed Assets of Rs. 219 crores. As mentionedin the section on Supply Chain the company plans to invest Rs. 90 crores in enhancingcapacity of opal-ware and building a new warehouse. This investment is likely to take careof the Company's near to middle term fixed assets requirements.

The Company has decided to release capital from non-core assets. This is in line withthe Company's evolving new thinking on capital allocation. During the year FY17 theMunicipal Corporation of Greater Mumbai (MCGM) acquired a piece of land from the Companyfor which it received a compensation of Rs. 90.9 crore. As of March 31 2017 the Companyhas non-core fixed assets of Rs. 62.2 crore. The Company intends to dispose these assets(primarily real estate) as soon as it can receive appropriately priced valid offers.

Investments / Surplus / Other Income

During FY17 the Company recorded other income of Rs. 35.7 crore as compared to Rs.35.1 crore during FY16. The Company utilized part of its cash surplus to make a buyback ofits shares and acquire Hopewell in Q4FY16. In addition it acquired 60.3% in Klasspack inJuly 2016. In December 2016 the Company realized Rs. 90.9 crore from the acquisition ofa real estate property from it by MCGM. As of March 31 2017 the Company had surplus fundsof Rs. 210 crore. These are invested in financial assets such as fixed income mutualfunds equity mutual funds and real estate funds.

In the past the Company believed that it would not require its surplus funds in thenear to medium term and had hence invested these monies in a mix of debt and equity fundswith the objective of maintaining the purchasing power of the funds (earn a return atleast equal to inflation). Given the Company's growth plans including through theinorganic route the Company intends to retain its war-chest of Rs. 210 crore. It willactively look for opportunities to unwind its positions in equity funds and real estatefunds and maintain all surplus funds primarily in fixed income mutual funds.

SHARE CAPITAL

The Paid-up Capital of the Company is Rs. 23100000/- and Authorised Capital of theCompany is Rs. 120000000/-.

Discussion on Financial Performance with respect to operational performance

Since the Company is debt free the overall financial performance was in line with theoperational performance except that the Company has income from its investible funds.

Scheme of Amalgamation

In Q3FY17 the board of the company approved a scheme of amalgamation to transfer allthe assets and liabilities of Hopewell Tableware Pvt Ltd (HTPL) Fennel Investment andFinance Pvt Ltd (FIFPL) and Vyline Glass Works Ltd (VGWL) into Borosil Glass Works Ltd(BGWL). HTPL engaged in the business of manufacturing and marketing opal tableware itemsis a wholly owned subsidiary of BGWL so no shares will be issued to the shareholders ofHTPL under the scheme.

FIFPL is an associate company of BGWL and registered as a Non-Banking FinancialInstitution. It is held by BGWL and the promoters of BGWL. Shareholders of FIFPL will beissued 10 equity shares of BGWL for every 207 equity shares of FIFPL held. VGWL held bythe promoters of BGWL is in the business of manufacturing glass and glass products whichit supplies primarily to BGWL. Shareholders of VGWL will be issued 4 equity shares of BGWLfor every 65 equity shares of VGWL held.

The share exchange ratio was arrived at as per a valuation report and an addendumthereto by SSPA & Co Chartered Accountant. A fairness opinion including an addendumwas provided by M/s Keynote Corporate Services Ltd.

The amalgamation will eliminate cross holdings among group companies and simplify thegroup structure. A key rationale is the reduction in related party transactions in thecurrent operations. The merger of HTPL FIFPL and VGWL would lead to consolidation of theentities and business operations of HTPL and VGWL with BGWL which will result in reductionin costs for administration legal and compliance and lead to greater generaladministrative efficiency and optimal utilization of various resources.

The scheme of amalgamation is subject to various requisite approvals including that ofshareholders creditors Securities and Exchange Board of India BSE Limited and thejurisdictional High Court. The scheme would become effective thereafter and the Companyexpects this to be accomplished during H2FY18. Consequent to the scheme becomingeffective BGWL's issued and paid up equity shares will increase from 2.31 million to 2.51million leading to a dilution of about 9%. The promoter shareholding in BGWL will increasefrom 74.28% to 76.28%.

After the scheme of amalgamation becomes effective the profits and losses of Vylinewill get consolidated in BGWL. Moreover Gujarat Borosil Ltd. a manufacturer and marketerof solar glass which is held 25.25% by BGWL will become a 58.38% subsidiary of BGWL.Gujarat Borosil Ltd. is listed on BSE and had a market capitalization of Rs. 553 crore atthe close of trading on March 31 2017.

Gujarat Borosil Ltd

Gujarat Borosil is the only manufacturer of solar glass in India. During the year FY17the company recorded a turnover of Rs. 188 crore. There was no growth over the previousyear as the Company was running at full capacity. The EBITDA margin of the company duringFY17 was 25.3% up from 19.1% in FY16. Profit After Tax during FY17 was Rs. 14.1 crore.

The company has a strong R&D team and a state of the art manufacturing facilitylocated at Bharuch. The company has achieved a high degree of innovation to drive downtotal cost of ownership for its end customers. Its glass ensures high light transmissionwith anti-reflective coating to increase efficiency. It has low iron content and thecompany has also developed the world's first antimony free solar glass. Gujarat Borosilfaces competition from Chinese suppliers. Given the government subsidies that Chinesecompanies receive they enjoy the advantage of an uneven playing field. Gujarat Borosil hasa low cost of production and notwithstanding subsidies for Chinese suppliers is able tosell its product at a modest premium to the competition. The company believes that itscustomers would always maintain an alternative source of supply from an Indian company.

India's currently has about 12 GW of solar energy installations. The Government ofIndia is providing a big impetus to solar energy and has set an objective of 100 GW fromsolar by 2022. Gujarat Borosil has a capacity to service about 1 GW per year. The companyhas thus drawn up a plan to increase its capacity to service 2.3 GW per year. The companyis examining a mix of various options to finance this expansion.

Other Corporate Developments

At its meeting held on May 13 2017 the Board of Directors approved a proposal tosub-divide (split) the shares of the Company from a face value of Rs. 10/- per shares to10 shares of a face value of Rs. 1/- per share. The approval is subject to the approval ofthe shareholders of the company. A lower face value per share is expected to bring downthe quoted price per share on the stock exchange and facilitate increased access to thecompany's shares to a larger number of retail investors. This may also provide additionalliquidity to the company's shares on the stock exchange.

People are the Company's critical resource. In order to attract and retain the besttalent relevant to the company's plans and keep them highly motivated it practices andcontinues to evolve best Human Resources strategies. The company has an incentive planthat rewards superior performance. In order to align senior management incentives withlong term shareholder value objectives the Board of Directors at its meeting held on May13 2017 gave its go ahead to the company to develop an Employee Stock Option Plan (ESOP).The plan would be implemented after an approval from the shareholders of the Company.

Outlook

In the SIP business the company expects to maintain its dominant market leadership inthe lab glassware segment in India. The market is expected to grow at 8% to 10%. Thecompany has also begun to grow an international franchise and will focus on The MiddleEast Africa and South East Asia. Two new avenues of growth are being built through theintroduction of LabQuest for lab instrumentation and an entry into the pharma packagingsegment with the acquisition of 60.3% equity stake in Klasspack. Overall the SIP divisionis expected to grow 12% to 15% in the medium term.

In the CPD business the company expects to maintain its share in the kitchenmicrowaveable glass segment. The company expects a significant portion of its growth tocome from the glass storage segment by tapping into conversions from steel and plasticstorage containers to glass and from opalware dining products. In opalware the companywill build the equity of its brand Larah and participate in market growth as well asimprove market share. In the medium to long term the company will experiment with makingintroductions of innovative products in the kitchen appliances segment.

The company has a strong balance sheet and surplus cash on hand. It will leverage thisto look for inorganic opportunities with a strategic fit.

In the solar glass business the company expects to ride the strong tail wind in thesolar power industry. The company's current capacity and planned expansion will service avery small portion of the Government of India's targeted installations. As the onlydomestic supplier of solar glass the company expects to continue to see robust growth.

Material Development in Human Resources Industrial Relations and number of peopleemployed

The Company believes that talent and culture can be nurtured into a source ofcompetitive advantage. The Company has initiated several steps to build a strong cultureand institution.

The Company has prepared and published its Vision Statement & Corporate Values. TheCompany has developed & published an overall organizational strategy to achieve growthaspirations of the organization for the next three years through deliberation by aSteering Committee comprising the Managing Director and Functional heads.

Based on its vision and strategic goals the Company has evolved the desired set ofdeliverables & competencies for all employees.

Employee development plans are being aligned to the defined competencies in order toachieve desired business goals. Similarly all new recruitments will also be made on thebasis of this set of competencies.

The Company is building a performance oriented culture with merit based rewards andrecognition.

The Company as a part of its program for upgrading skills of its employees arrangesvarious training programs for executives at various levels including functional and softskills training. During the year the Company has arranged a number of developmentinitiatives which include:

1. "Leadership Development Program" for Consumer Products Division.

2. Workshop on "MS Excel with an accounting perspective" for SupportDivision.

The Company has also devised various employee benefit policies which are revised fromtime to time. In order to maintain a work life balance and to encourage team interactionbeyond work the Company organizes various events including an event known as‘Unwind' on a bi-monthly basis and various other employee engagement initiativesdriven by team known as "Umang". The Company has also put in place a Code ofBusiness Ethics.

The Company had 217 office staff / managerial personnel employed as on March 312017 in various offices/locations. In addition there were 10 retainers indifferent fields.

SUBSIDIARY & ASSOCIATES

The Company has two wholly owned subsidiaries namely:

Borosil Afrasia FZE (Free Zone Establishment) in Jebel Ali Free Zone situated in Dubaiin United Arab Emirates (UAE).The said FZE is engaged in the business of marketing theCompany's products in the Middle East and African markets; and Hopewell Tableware PrivateLimited engaged in the business of manufacture and marketing of opal glassware with afactory in Jaipur Rajasthan. Further Borosil Afrasia FZE has incorporated a LimitedLiability Company namely Borosil Afrasia Middle East Trading LLC. As per UAE law foreignentities are entitled to hold a maximum of 49% shares in an LLC accordingly BorosilAfrasia FZE holds 49% shares in the said LLC.

During the year the Company acquired 60.3% shares in Klass Pack Private Limited(Klasspack) and with effect from July 29 2016 it became a subsidiary of the Company.Klasspack is engaged in the manufacture and supply of pharmaceutical vials and ampoules tothe Pharmaceutical industry for over 15 years and has its manufacturing facilities atNashik Maharashtra.

The Company has formulated a Policy on material subsidiaries of the Company. The saidpolicy is available on the website of the Company athttp://www.borosil.com/doc_files/Policy%20for%20Determining%20Material%20Subsidiaries.

The Company has two associate companies namely Gujarat Borosil Limited and FennelInvestment and Finance Private Limited by virtue of its holding of more than 20% of therespective equity share capital of those companies.

CONSOLIDATED FINANCIAL STATEMENTS

As per Section 129(3) of Companies Act 2013 the Company has prepared a consolidatedfinancial statement of the Company along with Borosil Afrasia FZE (Subsidiary) HopewellTableware Private Limited (Subsidiary) Klasspack Private Limited (Subsidiary) GujaratBorosil Limited (in which the Company exercises control more than 50% of the voting rightsas per Indian Accounting Standard (Ind- AS) 110) and Fennel Investment and Finance PrivateLimited (associate company). Apart from standalone annual accounts consolidated accountsStatement containing salient features on financial statements of subsidiary in Form AOC 1the individual standalone financial statement of all subsidiary/associate as mentionedabove will be uploaded on the website of the Company as per Section 136 of the CompaniesAct 2013.

The Company will provide a copy of separate audited financial statements in respect ofits subsidiaries to any shareholder of the Company who asks for it and the said annualaccounts will also be kept open for inspection at the Registered Office of the Company andthat of the subsidiary company.

The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards (Ind-AS) viz. Ind-AS 110117112 and 28 issued by theInstitute of Chartered Accountants of India forms part of this Annual Report.

BOARD OF DIRECTORS ITS MEETINGS EVALUATION ETC. Board Meetings

The Board of Directors of the Company met five times during the year on May 30 2016August 11 2016 November 25 2016 February 09 2017 and March 07 2017.

Independent Directors

The Company has four Independent Directors namely Mr. U.K. Mukhopadhyay Mr. NaveenKumar Kshatriya Mr. S. Bagai and Mrs. Anupa R. Sahney all of them having tenure uptoMarch 31 2019.

Declaration by Independent Directors

The Company has received declaration of independence in terms of Section 149(7) ofCompanies Act 2013 from the above mentioned Independent Directors.

Company's Policy on Directors' Appointment and Remuneration etc.

Under Section 178 of the Companies Act 2013 the Company has prepared a policy onDirector's appointment and Remuneration. The Company has also laid down criteria fordetermining qualifications positive attributes and independence of a Director. TheRemuneration policy is attached herewith as an ‘Annexure A' to this report.

Familiarization Programme for Independent Directors

A Familiarization programme was prepared by the Company about roles rights andresponsibilities of Independent Directors in the Company nature of industry in which theCompany operates business model of the Company etc. which was presented to IndependentDirectors on February 09 2017.

The details of the above programme are available on website of the Company athttp://www.borosil.com/doc_ Programme%20for%20Independent%20Director-2017.pdf

Formal Annual Evaluation

The Formal Annual Evaluation has been made as follows:

1. The Company has laid down evaluation criteria separately for the Board IndependentDirectors Directors other than Independent Directors and various committees of the Board.The criteria for evaluation of Directors (including the Chairman) included parameters suchas willingness and commitment to fulfill duties high level of professional ethicscontribution during meetings and timely disclosure of all the notice/details requiredunder various provisions of laws. Based on such criteria the evaluation was done in astructured manner through peer consultation & discussion.

2. Evaluation of the Board was made at a Separate Meeting of Independent Directors heldunder Chairmanship of Mr. U.K. Mukhopadhyay Lead Independent Director (without attendanceof Non–Independent Director and members of the management) on March 07 2017.

3. The performance evaluation of following committees namely:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Share Transfer Committee was done by the Board of Directors at its meeting held onMarch 07 2017. However evaluation of Stakeholders Relationship Committee was done by theBoard of Directors at its meeting held on May 13 2017.

4. Performance evaluation of Non-Independent Directors namely Mr. B. L. Kheruka Mr.P.K. Kheruka Mr. Shreevar Kheruka and Mr. V. Ramaswami was done at a Separate Meeting ofIndependent Directors.

5. Evaluation of Independent Directors namely Mr. U. K. Mukhopadhyay Mr. Naveen KumarKshatriya Mr. S. Bagai and Mrs. Anupa R. Sahney was done (excluding the Director who wasevaluated) by the Board of Directors' of the Company at its meeting held on March 072017.

6. In addition the Nomination and Remuneration Committee has carried out evaluation ofevery Director's performance at its meeting held on March 07 2017 as required underSection 178 (2) of Companies Act 2013.

7. The Directors expressed their satisfaction with the evaluation process. Performanceevaluation of the Board its various committees and directors including IndependentDirectors was found satisfactory.

RE-APPOINTMENT OF DIRECTOR

As per the provisions of the Companies Act 2013 and Articles of Association of theCompany Mr. B. L. Kheruka (DIN 00016861) retires by rotation and being eligible offershimself for re-appointment.

Brief details of the Director being re-appointed have been incorporated in the Noticeof Annual General Meeting. There is no change in the composition of the Board of Directorsduring the year under review.

KEY MANAGERIAL PERSONNEL

There is no change in the Key Managerial Personnel of the Company.

Mr. Shreevar Kheruka is the Managing Director and Chief Executive Officer Mr. SwadhinPadia is the Chief Financial Officer and Ms. Gita Yadav is the Company Secretary &Compliance Officer of the Company.

CORPORATE GOVERNANCE REPORT

A Report on Corporate Governance along with the Compliance Certificate from theAuditors is annexed hereto and forms part of this Report.

The Board of Directors of the Company has evolved and adopted a Code of Conduct andposted the same on the Company's website www.borosil.com '. The Directorsand senior management personnel have affirmed their compliance with the Code for the yearended March 31 2017.

FIXED DEPOSITS

The Company has stopped accepting fresh fixed deposits since July 2006.

There are no unclaimed deposits.

DEVELOPMENT AND IMPLENTATION OF RISK MANAGEMENT POLICY

The Company faces various risks in the form of financial risk operational risks etc.The Company understands that it needs to survive these risks in the market and hence hasmade a comprehensive policy on Risk Management.

RELATED PARTY TRANSACTIONS

The Company entered into various Related Party Transactions during the financial yearwhich were in the ordinary course of business. The Company places before the AuditCommittee all transactions which are foreseen and repetitive in nature on a quarterlybasis. The Company had also obtained approval of shareholders in the previous year forsuch Related Party Transactions which exceeded the threshold limits as mentioned under theCompanies (Meetings of the Board and its Powers) Rules 2013 or which were material innature with Vyline Glass Works Limited and Gujarat Borosil Limited.

The Company has formulated a policy on dealing with Related Party Transactions. This isavailable on the website of the Company at http:// www.borosil.com/doc_files/Related%20Parties%20Transaction%20Policy.pdf

Particulars of Contracts or Arrangements entered into with Related Parties referred toin Section 188(1) of the Companies Act 2013 in prescribed Form AOC-2 is attached as an‘Annexure B' to this Report.

The details of all the transactions with Related Parties are provided in theaccompanying financial statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As part of its initiatives under "Corporate Social Responsibility" (CSR) theCompany has undertaken projects in the areas of Education Health and protection of sitesof historical importance which were in accordance with Schedule VII of the Companies Act2013. The Company contributed:

1. Rs. 1000000/- to a project of Friends of Tribal Society for promoting educationthrough ‘One Teacher School' called ‘Ekal Vidyalaya' for tribal children inrural areas.

2. Rs. 300000/- to Samarth for its Lead India 2020 programme which imparts lifeskills thinking skills global skills positive attitude with vision mission &inculcating values among persons in the age group of 10 to 30 years also known as"Aap Badho Desho Ko Badhao".

3. Rs. 100000/- to Shri Ram Krishna Cancer Hospital Deoband Uttar Pradesh forbuilding construction and infrastructure of the hospital purchasing equipment andaccessories.

4. Rs. 200000/- to Ramakrishna Mission Khetri Rajasthan for renovation of thehistoric ashrama building sanctified by Swami Vivekananda and to protect it fromdestruction.

5. Rs. 5000000/- to JSW Foundation to bear a part of running annual cost of IndianInstitute of Sport a brainchild of JSW group which is a training centre for supportingIndian athletes in Vijayanagar Karnataka.

In terms of Section 135 of the Companies Act 2013 and Rules made thereunder theCompany has constituted CSR committee comprising the following members:

1. Mr. B.L. Kheruka

2. Mr. Shreevar Kheruka

3. Mr. U.K. Mukhopadhyay

4. Mr. Naveen Kumar Kshatriya out of which Mr. U.K. Mukhopadhyay and Mr. Naveen KumarKshatriya are Independent Directors. a. The CSR Committee of the Board of Directorsindicates the activities to be undertaken by the Company (within the framework ofactivities as specified in Schedule VII of the Act) during the particular year. b.recommends to the Board the amount of expenditure to be incurred during the year undersome of the activities covered in the Company's CSR Policy. c. monitors the said Policy.d. ensures that the activities as included in CSR Policy of the Company are undertaken byit in a phased manner depending on the available opportunities.

COMPANY'S CSR POLICY

The Board of Directors of the Company has approved the CSR Policy as recommended by theCSR Committee. This has been uploaded on the Company's website athttp://www.borosil.com/doc_files/Corporate%20Social%20Responsibility.

INITIATIVES TAKEN BY THE COMPANY DURING THE YEAR

The 2% of the net profits of the Company during the immediate three preceding financialyears amounts to Rs. 7312000/-. The Company has contributed a sum of Rs. 6600000/-during the year. As such the Company could not contribute a sum of Rs. 712000/- as theCompany was looking for genuine and socially useful opportunities where the money couldbe fruitfully used. The Company will make every endeavour to utilise its CSR expenditurebudget during the current year.

The Company has jointly with Hopewell Tableware Private Limited (HTPL) wholly ownedsubsidiary and Gujarat Borosil Limited (GBL) a subsidiary of the Company constituted aTrust namely - ‘Borosil Foundation' with the main objective of making CSRcontributions by the Company HTPL and GBL from time to time. Further the Company willcontribute its future CSR contribution through the Borosil Foundation as and when saidtrust is fully operative.

An Annual Report on CSR activities in terms of Section 134 (3) (o) of the CompaniesAct 2013 read with the Companies (Corporate Social Responsibility) Rules 2014 isattached herewith as an ‘Annexure C' to this Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form MGT 9 is attached as an ‘Annexure D' to thisReport.

VIGIL MECHANISM

The Company has Whistle Blower Policy to deal with instances of fraud andmismanagement.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.

AUDITORS' REPORT

The Auditors' Report for the year ended March 31 2017 does not contain anyqualification.

AUDITORS

M/s. Pathak H.D. & Associates Chartered Accountants were appointed as StatutoryAuditors of your Company for a term of five years from the conclusion of the 53rdAnnual General Meeting held on August 11 2016 till the conclusion of the 58thAnnual General Meeting subject to the ratification of Members at each Annual GeneralMeeting.

A written consent from them has been received along with a certificate that theirappointment if made shall be in accordance with the prescribed conditions and the saidAuditors satisfy the criteria provided in Section 141 of the Companies Act 2013.

The resolution seeking ratification of their appointment has been included in theNotice of Annual General Meeting.

COST RECORDS AND AUDIT

Under the Section 148 of the Companies Act 2013 the Central Government has prescribedmaintenance and audit of cost records vide the Companies (Cost Records and Audit) Rules2014 to such class of companies as mentioned in the Table appended to Rule 3 of the saidRules. CETA headings under which Company's products are covered are not included. Hencemaintenance of cost records and cost audit provisions are not applicable to the Company asof now.

SECRETARIAL AUDIT

Secretarial Audit Report dated May 13 2017 by Mr. Virendra Bhatt Practising CompanySecretary (CP no.124) is attached herewith as an ‘Annexure E' to this Report.Secretarial Audit Report dose not contain any qualification.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

There was no amount transferrable to the Investor Education and Protection Fund (IEPF)established by the Central Government in compliance with Section 124 of Companies Act2013 during the financial year 2016-17.

However there is an unpaid dividend for the financial year 2010-11 which is due to betransferred to IEPF on November 26 2017 the last date for claiming the unpaid dividendis on or before October 26 2017. The Company will transfer the amount on the due date.

DIRECTORS' RESPONSIBILITY STATEMENT

Subject to disclosures in the Annual Accounts and also on the basis of the discussionwith the Statutory Auditors of the Company from time to time the Board of Directors stateas under:

(a) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(b) that we had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit and loss of the Company for that period;

(c) that we had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) that we had prepared the annual accounts on a going concern basis;

(e) and that we had laid down Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and were operatingeffectively.

(f) that we had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

A statement on Particulars of Loans Guarantees and Investments is attached as an‘Annexure F' to this Report read with note 8 and 13 to the financial statements.

EMPLOYEES' SAFETY

The Company is continuously endeavoring to ensure safe working conditions for all itsemployees.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has in place a Policy for Prevention Prohibition and Redressal of SexualHarassment at work place which is in line with the requirements of the Sexual Harassmentof women at the Workplace (Prevention Prohibition & Redressal) Act 2013 and Rulesmade thereunder. All employees (permanent contractual temporary and trainees) arecovered under this Policy. The Company has constituted an Internal Complaint Committee forits Head Office and branch/sales offices under Section 4 of the captioned Act. Nocomplaint has been filed before the said committee till date. The Company has filed anAnnual Report with the concerned Authority in the matter.

DISCLOSURE UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONEEL) RULES 2014

The information required pursuant to Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company and Directors is attached as an ‘Annexure G'.

PARTICULARS OF EMPLOYEES

Particulars of Employees as required under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is attached as an ‘Annexure H'.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is engaged in trading activity and it did not carry out any Research &Development activities nor introduced any new technology during the year. Hence Rule 8(3) of the Companies (Accounts) Rules 2014 are not applicable with respect to thosedetails.

Particulars with regard to foreign exchange earnings and outgo during the year are asunder:

(Rs. in lacs)
Foreign exchange earnings 1153.73
Foreign exchange outgo 3270.99

ACKNOWLEDGEMENT

Your Directors record their appreciation for the co-operation received from theEmployees Customers and last but not least the shareholders for their unstinted supportduring the year under review.

For and on behalf of the Board of Directors
B. L. Kheruka
Place : Mumbai Chairman
Date : May 13 2017 DIN 00016861

Annexure A

Policy relating to remuneration for the Directors Key Managerial Personnel and otheremployees OBJECTIVE

The remuneration policy for members of the Board of Directors Key Managerial Personalsand Other Employees has been formulated pursuant to Section 178 of the Companies Act2013 which strive to ensure:

i) the level and composition of remuneration is reasonable and sufficient to attractretain and motivate directors of the quality required to run the Company successfully;

ii) relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

iii) remuneration to directors key managerial personnel and senior management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals.

REMUNERATION OF THE BOARD OF DIRECTORS

The Board of Directors of the Company comprises of Executive and Non-ExecutiveDirectors for which separate policies have been framed:

1. Executive Directors comprising of Promoter Directors and Professional Directors;

2. Non-Executive Directors comprises of Promoter (Non Independent) Director andIndependent Directors

Remuneration of Executive Directors Fixed remuneration:

All Executive Directors viz Executive Chairman Managing Director and Whole-timeDirector will have a component of Fixed Salary which may be fixed for the whole tenure orin a graded pay scale basis. In addition they will be entitled to usual perks which arenormally offered to top level executives such as Furnished/Unfurnished house / House RentAllowance Medical / Hospitalization reimbursement Personal accident insurance clubfees car with driver and retrial benefits including leave encashment at the end of thetenure.

Variable Components: Commission:

Subject to the approval of the shareholders and within the overall limits prescribed inSection 197 of the Companies Act 2013 the Executive Directors shall be paid commissionbased on nature of duties and responsibilities as may be determined by the Board ofDirectors on year to year basis.

Reimbursement of Expenses:

Directors will be entitled for actual entertainment and travelling expenses incurredfor business purposes.

The above payments shall be subject to such approvals as may be necessary under theCompanies Act 2013 and the Listing Agreement.

Remuneration of Non-Executive Directors: Fees:

Shall be entitled to payment of fees for attending each Board and Committee Meetings asmay be decided by the Executive Directors (members) of the Board within the limitprescribed under the Rules made under the Companies Act 2013. The fees may be on uniformbasis as the committee views that all directors affectively contribute to thebenefit/growth of the Company.

Separate fees may be decided in respect of Board Meetings and Committee Meetings.

Variable Components: Commission:

Subject to the approval of the shareholders and within the overall limit of 1% asprescribed by the Companies Act 2013 the Non-Executive Directors may be paid commissionon a pro rata basis.

Reimbursement of Expenses:

For Non-Executive Directors actual expenses in connection with Board and CommitteeMeetings are to be reimbursed. In addition if a Non-Executive Director is travelling onCompany's business as permitted by the Board he/she shall be entitled for his/hertravelling and lodging expenses on actual basis.

Key Managerial Personnel:

Key Managerial Personnel shall be paid salary and perquisites like other employees ofthe Company based on their qualification job experience as may be applicable and as maybe applicable to the grade to which they belong.

Other Employees:

The Company has a performance management system in place in form of software that isknown as ‘Vconnect' for assessing the performance and competence in order to fix theremuneration and determination of increments of the employees.

The Company has various grades starting from Officers Level to Senior Vice President.There are different departments like

Marketing-Consumer Ware & Lab Ware Finance HR & Administration Legal &Secretarial and IT with departmental heads of each departments of the level of VicePresident / General Manager with their respective teams/subordinates of different grades.

Initial remunerations are decided based on an employee's qualification pastexperience suitability for the job and the level for which the position is intended.

At the start of every financial year organizational strategy is converted intodepartment goals which further get converted as individual KRAs & Competencies. At theend of every financial year individual performance is measured against these set KRAs& Competencies. The increments then are decided on the basis of 4 parameters viz.

1) Individual Performance

2) Organizational Performance

3) New year's budgeted Organizational Performance

4) Industry benchmark

The Promotions are decided broadly on the basis of three parameters viz. availabilityof promotable position consistent performance potential of the incumbent to grow to thenext level.

Loans / advances to employees:

The Company have policy for granting loan/advances to its employees containing suchterms & conditions including regarding interest as it may deem fit. The Company mayin special cases grant loan/advances beyond the limit prescribed in the said policy.

The Company may vary said policy from time to time.

CRITERIA FOR DETERMINING QUALIFICATION POSITIVE ATTRIBUTES AND INDEPENDENCE OF ADIRECTOR I QUALIFICATIONS

He/she shall possess appropriate skills experience and knowledge in one or more fieldsof finance law management sales marketing administration research corporategovernance technical operations or other disciplines related to Company's business.

The Company will have a blend of Directors comprising of entrepreneurs professionalsand those having administrative experience like ex-IAS officers.

II POSITIVE ATTRIBUTES

• Clarity of vision

• Originality

• Objectively open to other people's ideas/points of view.

• Is analytical can get to the core issue quickly

Challenges the status quo

• A good communicator both in one-to-one and group situations.

• Has the courage of their convictions - particularly in troubled times.

• Is clear on their direction- knows where they are heading and why andhow to get there

Minimises the casualties from their decisions

• Maintains focus on the strategic direction

• Has high standards of integrity - and insists on the same from others

Intellect - has a high level of intelligence

• Exercises sound judgement - particularly under pressure

• Knows the questions to ask

• Is a good listener emotionally as well

• Is numerate - can read and understand financial statements

• Has a healthy self-esteem - but does not believe they are infallible

• Is strategic in thinking and outlook - but is also aware that successfulimplementation is what counts

Understands the ‘value proposition' of the business

• Is visionary - can see the big picture and read future trends

• Fun to work with i.e. should have good working relationship with other BoardMembers.

• Can make substantial contributions by taking part in deliberations duringMeetings.

III CRITERIA FOR INDEPENDENCE

An independent director is one:

(a) who in the opinion of the Board is a person of integrity and possessesrelevant expertise and experience; (b) (i) who is/ or was not a promoter ofthe company or its holding subsidiary or associate company; (ii) who is notrelated to promoters or directors in the company its holding subsidiary or associatecompany;

(c) who has or had no pecuniary relationship with the company its holdingsubsidiary or associate company or their promoters or directors during the twoimmediately preceding financial years or during the current financial year;

(d) none of whose relatives has or had pecuniary relationship or transactionwith the company its holding subsidiary or associate company or their promoters ordirectors amounting to two percent or more of its gross turnover or total income or fiftylakh rupees or such higher amount as may be prescribed whichever is lower during the twoimmediately preceding financial years or during the current financial year;

(e) who neither himself nor any of his relatives-

(i) holds or has held the position of a key managerial personnel or is or hasbeen employee of the company or its holding subsidiary or associate company in any of thethree financial years immediately preceding the financial year in which he is proposed tobe appointed;

(ii) is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of-

(A) a firm of auditors or company secretaries in practice or cost auditors ofthe company or its holding subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with thecompany its holding subsidiary or associate company amounting to ten percent or more ofthe gross turnover of such firm;

(iii) holds together with his relatives two percent or more of the total votingpower of the company; or

(iv) is a Chief Executive or director by whatever name called of anynon-profit organisation that receives twenty-five percent or more of its receipts from thecompany any of its promoters directors or its holding subsidiary or associate companyor that holds two per cent or more of the total voting power of the company.