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Garware Polyester Ltd.

BSE: 500655 Sector: Industrials
BSE LIVE 15:57 | 13 Dec 203.05 -6.35






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OPEN 200.20
VOLUME 15754
52-Week high 265.90
52-Week low 117.60
P/E 21.04
Mkt Cap.(Rs cr) 474
Buy Price 203.05
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00
OPEN 200.20
CLOSE 209.40
VOLUME 15754
52-Week high 265.90
52-Week low 117.60
P/E 21.04
Mkt Cap.(Rs cr) 474
Buy Price 203.05
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00

Garware Polyester Ltd. (GARWARPOLY) - Director Report

Company director report



Your Directors present the 59th Annual Report together with the AuditedStatement of Accounts of the Company for the year ended 31st March 2016

1. Financial Results

2015-16 2014-15
Operating Profit before Interest & Depreciation 85.11 85.23
Less: Finance Cost 42.93 43.64
Depreciation 16.84 15.08
59.77 58.72
Profit for the year before Exceptional Item 25.34 26.51
Provision for Income Tax 7.95 9.17
Profit After Tax 17.39 17.34
Add: Balance brought forward from previous year 268.86 308.26
Balance available for Appropriation 286.25 325.60
Transferred from Assets whose balance useful life is Nil as per Schedule II of the Companies Act 2013 (Net of deferred tax of ' 117.50 Lakhs) 0.00 2.28
Transferred to Capital Redemption Reserve on Redemption of Preference Shares 0.00 54.46
Balance carried to Balance Sheet 286.25 268.86
Total 286.25 325.60

2. Dividend

Your Directors have not recommended any dividend on the equity share capital for theyear under review with a view to conserve the resources and to plough back profits tostrengthen the net working capital.

3. Company's Performance

On consolidated basis a revenue from operations for the financial year 2015-16 at '863.53 Crores was lower by 6% over the last year (' 923.18 Crores in 2014-15). TheEarnings before interest tax depreciation and amortization (EBITDA) was at ' 87.13Crores against EBITDA of ' 86.56 Crores in 2014-15. The Profit after tax (PAT) for theyear was ' 16.50 Crores against the PAT of '17.81 Crores in 2014-15.

On Standalone basis a revenue from operations for the financial year 2015-16 was at '848.23 Crores is lower by 7% over the last year (' 913.37 Crores in 2014-15) due topressure on selling prices of THIN film. The Earnings before interest tax depreciationand amortisation (EBITDA) was ' 85.11 Crores against EBITDA of ' 85.23 Crores in 2014-15.The Profit after tax (PAT) for the year was ' 17.39 Crores against the PAT of ' 17.34Crores in 2014-15.

4. Operations

The year 2015-16 has ended in line with the year 2014-15 at Profit after tax in spiteof reduction in turnover due to pressure in selling prices of Thin Film. However yourcompany is able to maintain profitability because of better product mix. This was achievedirrespective of decrease in other income.

Your Company is making efforts to divert the spare capacity of Consumer ProductsDivision (CPD Division) for exports. The said capacity has become spare against the banon use of Sun Control Film on motor car windows in Indian market since 2012 pursuant tothe order of the Hon'ble Supreme Court of India.

5. Future Outlook

Due to the overcapacity situation that persists in the Polyester film Industry inIndian as well as in International Market the prices will still remain under pressure andwill face tough competition and oversupply situation. Therefore your Company has shiftedits focus to the Speciality films and has developed new products for the internationalmarket such as digital printable films Films for solar PV application films for Liddingapplication coated films for label Medium & High shrink films for Label and filmswith high Infrared heat rejection for Automobiles etc. These films will mainly cater tothe export markets.

6. Research & Development

Your company is a leader in development of new products and new applications in thefields of Polyester film and solar control window film. Your Company's R&D Departmentis very much focusing on cost reduction measures by introducing cost effective alternativeraw materials and processes in manufacturing method. Your Company's R&D Centre isaccredited by the Department of Scientific and Industrial Research Ministry of Scienceand Technology Government of India etc. since many years. R&D team works hand-in-handwith production team to introduce and establish new products at the plant and to improvethe product quality and output efficiencies in all the plants at Aurangabad.

As on date all the manufacturing plant /pilot plants and laboratories are upgradedwith latest equipment to upgrade the product quality and to achieve the various qualityrequirements of regular customers.

7. Functioning of R & D Department

R&D activities are carried out on continuous basis as an independent importantactivity.

In this center various pilot plants are installed for development of Polymers filmextrusion and different types of coatings.

All new polymers and coatings are first produced in these plants and extensively testedin specially developed test facilities before commencing trials on the main plant. All thenew product trials are taken under supervision of very senior R&D personnel and testmarketing is done before producing them in bulk quantities.

Our laboratories are equipped with state-of-the-art latest testing equipments and manyspeciality test rigs are used as per the end product applications

8. Information Technology (IT)

> Your Company has implemented CCTV security surveillance system in productionmainly covering Chill roll & slitting areas to control and monitor manufacturingprocess.

> Your Company is in process to implement SAP HR Payroll to integrate HR process tothe existing SAP ERP system.

> Your Company is in process to implement SAP BI system to facilitate KPI drivenreporting and Dashboard to management by taking advantage of SAP ERP business database.

> Your Company has implemented Server Virtualization for its Windows and Linux basedservers using VMWare Technology and virtualized its 16 Windows as well as Linux servers.

> Your Company is in the process to upgrade its existing SAP ERP EHP version fromEHP4 to EHP7 including AIX operating system and DB2 database.

9. Awards and Recognitions

During this year your Company has been honoured with Six Safety Awards at State Levelby Maharashtra State Chapter of National Safety Council (NSC - MC).

Out of these six awards three awards were won by the Company's employees for theircontribution in State Level Safety Slogan Competition.

10. Human Resource Development

Your Company's Human Resources team successfully ran its talent acquisition retentionand development agendas during the year.

Company's senior management team was strengthened through hiring of leaders in variousdomains. The Company's HR policies and processes are aligned to effectively drive itsbusiness and other emerging opportunities.

The focus on employee development through training modules that were created in-housecontinued. More than 182 training programs were conducted during the year over 85% ofthem through in-house trainers and business leaders. The programs added up to over 12000man-hours / 1500 man-days of training. This has been achieved by continuously investingin learning and development programs by arranging target oriented training programscreating appropriate work environment and maintaining a structured recognition system.

HR has been working to provide an enabling working environment where innovation andperformance thrive. Employees are empowered and we believe that it is they who ultimatelydeliver the results.

11. Manufacturing and Quality Initiatives

With innovative approaches in manufacturing techniques and product optimization theproductivity in the manufacturing segment has significantly gone up. The quality cultureof your Company ensures that the products are benchmarked as best in class by thecustomers. Our quest for excellence both in Manufacturing and Quality continues as before.Your Company is regarded as best in class for Quality and Reliability.

In order to keep the plants in excellent running condition the company has upgraded themanufacturing plants with various new equipment to produce quality products.

12. Consolidated Financial Statement

The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Accounting Standards AS-21 AS-23 and AS-27 issued by the Institute of CharteredAccountants of India and forms a part of this Annual Report.

13. Subsidiary Companies

Garware Polyester International Limited-UK and Global Pet Films Inc.- USA continue tobe the subsidiaries of your Company. Pursuant to Section 129(3) of the Companies Act 2013read with Rule 5 of the Companies (Accounts) Rules 2014 the statement containing salientfeatures of the financial statements of the Company's Subsidiaries (in Form AOC-1) isattached to the financial statements.

14. Safety Health & Environmental Protection

Being a Responsible Corporate Citizen your Company has regularly undertaken variousinitiatives for the continual improvement in Safety Health and Environment (SHE) at theworks and surrounding areas.

Some of the prominent activities include - Safety audits of Thermic Fluid system andElectrical System by external expertise (M/s Jacobs Engineering) Internal Safety surveyof plants Field Safety rounds after monthly Safety review meetings EMS training andField rounds periodical SHE inspections and trainings schemes on the efficient usage ofenergy and the conservation of natural resources activities for the enhancement ofemployee participation in SHE and the support in emergency management operations at publicplaces.

Your Company is a recipient of various safety laurels from the Regulatory Authoritieson the State level as stated above during the year. Security system has been upgradedlike awareness training evacuation drills to meet the new challenges.

15. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:

a) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards have been followed and there are no material departuresfrom the same;

b) the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 312016 andof the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern' basis;

e) the Directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and operating effectively and

f) the Directors have advised proper systems to ensure compliance with provisionsof applicable laws and that such systems were adequate and operating effectively.

16. Directors and Key Managerial Personnel

In accordance with the provisions of the Act and the Articles of Association of theCompany Mrs. Sarita Garware Ramsay and Ms. Sonia Garware Directors of the Companyretire by rotation at the ensuing Annual General Meeting and being eligible have offeredthemselves for re-appointment.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand under the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015hereinafter referred to as ‘Listing Regulations'.

Key Managerial Personnel

Shri S. B. Garware - Chairman & Managing Director Mrs. Monika Garware Modi - ViceChairperson & Jt. Managing Director Mrs. Sarita Garware Ramsay - Jt. ManagingDirector Mr. M. S. Adsul - Director (Technical) Mr. Gokul D. Naik - Chief FinancialOfficer and Mr. Nimesh S. Shah - Company Secretary are the Key Managerial Personnel ofyour Company in accordance with the provisions of Sections 2(51) 203 of the CompaniesAct 2013 read with Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any statutory modification(s) or re-enactment(s) for the time beingin force).

17. Number of Meetings of the Board

Four meetings of the Board were held during the year. For details of the meetings ofthe Board please refer to the corporate governance report which forms part of thisreport.

18. Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations astructured questionnaire was prepared after taking into consideration of the variousaspects of the Board functioning composition of the Board and its Committees cultureexecution and performance of specific duties obligations and governance. This performanceevaluation of the Independent Directors was completed. The performance evaluation of theChairman and the Non-Independent Directors was carried out by the Independent Directors.The Board of Directors expressed their satisfaction with the evaluation process.

19. Policy on Directors' Appointment and Remuneration and Other Details

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the Directors' Report.

20. Internal Financial Control Systems and their Adequacy

The Company has in place well defined and adequate internal controls commensurate withthe size of the Company and the same were operating effectively throughout the year.

21. Audit Committee

The details pertaining to the composition of Audit Committee are included in theCorporate Governance Report which forms part of this report.

22. Statutory Auditors

M/s. Manubhai & Shah - Chartered Accountants Statutory Auditors of the Companyvide their letter dated April 01 2016 addressed to the Board of Directors of the Companyhave informed about conversion of their firm from Partnership to Limited LiabilityPartnership (LLP) with effect from 1st April 2016. Consequent to conversion ofManubahi & Shah into LLP the name of the LLP will be "Manubhai & ShahLLP".

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. Manubhai & Shah (Now M/s. Manubhai & Shah LLP) Chartered Accountants wereappointed as statutory auditors of the Company from the conclusion of the 57thAnnual General Meeting (AGM) of the Company held on September 25 2014 till the conclusionof the 62nd AGM to be held in the year 2019 subject to ratification of theirappointment at ensuing AGM. Members are requested to ratify their appointment in ensuing59th AGM. M/s. Manubhai & Shah - LLP Chartered Accountants have conveyedtheir eligibility to act as auditors of the Company subject to the ratification of theirappointment as auditors of the Company at the ensuing 59th Annual GeneralMeeting.

Further the Company has received a special notice under Section 115 of the Company'sAct 2013 proposing the name of M/s. Kirtane & Pandit LLP Chartered Accountants asJoint Auditors subject to member's approval at the ensuing 59th Annual GeneralMeeting.

M/s. Kirtane & Pandit - LLP Chartered Accountants have conveyed their eligibilityand willingness to act as a joint auditors of the Company if appointed at the ensuing 59thAnnual General Meeting. Board recommends their appointment as Joint Auditors.

Cost Auditor:

As per the requirement of central government and pursuant to section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your company has been carrying out the audit of cost records.The Board of Directors on the recommendations of audit committee has re-appointed M/s.M. R. Pandit & Co. Cost Accountants Aurangabad as cost auditors to audit the costaccounts of the company for financial year 2016-17. As required under the Companies Act2013 a resolution seeking member's approval for ratification of remuneration payable tothe Cost Auditors forms a part of the notice convening the 59th Annual GeneralMeeting.

Secretarial Auditor:

In terms of Section 204 of the Companies Act 2013 the Board of Directors of yourCompany at its meeting held on August 10 2016 has appointed M/s. Nilesh Shah &Associates Practicing Company Secretary (FCS: 4454 & C.P. 2631) as the SecretarialAuditor to conduct an audit of the secretarial records for the financial year 2016-17.

Your Company has received consent from M/s. Nilesh Shah & Associates to act as theauditor for conducting audit of the Secretarial records for the financial year ending 31stMarch 2017.

23. Auditors' report and Secretarial Auditors' Report

The observations made in the Auditor's Report and Secretarial Auditor's Report are selfexplanatory and therefore do not call for any comments. The auditors' report andsecretarial auditors' report does not contain any qualifications reservations or adverseremarks. Report of the secretarial auditor is given as an annexure which forms part ofthis report.

24. Risk Management

The Board of the Company has formed a Risk Management committee to frame implement andmonitor the risk management plan for the Company. The committee is responsible forreviewing the risk management plan and ensuring its effectiveness. The audit committee hasadditional oversight in the area of financial risks and controls. Major risks identifiedby the businesses and functions are systematically addressed through mitigating actions ona continuing basis.

The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report.

25. Particulars of Loans Guarantees and Investments

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

26. Transactions with Related Parties

All the transactions entered by the Company during the financial year with relatedparties were in the ordinary course of business and on an arm's length pricing basis. TheAudit Committee had given omnibus approval for the transactions (which are repetitive innature) and the same were reviewed by the Board of Directors. There were no materialsignificant transactions with related parties during the financial year 2015-16 which werein conflict with the interest of the Company. The Directors would like to draw attentionof the members to Note No. 33 to the financial statement which sets out related partydisclosure.

Pursuant to the provision of the Section 134(3)(h) of the Companies Act 2013 FormAOC-2 is not applicable to the Company.

27. Corporate Social Responsibility

The CSR expenditure incurred by your Company during the financial year 2015-16 was '60.00 Lakhs (around 3.39% of the average net profits of last three financial years)on CSR activities which does not include the expenses made on the activities carried outby the Garware Community Center and Garware Bal Bhawan. The CSR initiatives of yourCompany were under the thrust areas of health & hygiene education water managementand enhancement of vocational training.

Your Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2016 is in accordance with Section 135 of theCompanies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014 isannexed to this report as Annexure [I].

28. Extract of Annual Return

As provided under Section 92(3) of the Act the extract of Annual Return of the Companyis annexed herewith as Annexure [II] in the prescribed Form MGT-9 which forms partof this report.

29. Adoption of new Articles of Association of your Company During the financialyear 2015-16 new Articles of Association of your Company were adopted in accordance withthe provisions of the Companies Act 2013 read with the Rules issued thereunder.

30. Particulars of Employees and Related Disclosures

Two Whole-time Directors/Employee employed throughout the year were in receipt ofremuneration of ' 60 Lakhs per annum or more amounting to ' 4.29 Crore were relative(s) ofShri S. B. Garware Chairman & Managing Director of the Company. During the FY 2015-16the Company had 1145 permanent employees. The information required under Section 197(12)of the Companies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 and forming part of the Directors' Report for the year ended March31 2016 is given in a separate Annexure [III] to the Report.

31. Other Laws

During the year under review there were no cases filed pursuant to the provisions ofsexual harassment of women at work place (Prevention Prohibition and Redressal) Act2013.

32. Corporate Governance

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements as set out by the SEBI Board. The Companyhas also implemented several best corporate governance practices as prevalent globally.The report on Corporate Governance as stipulated under the Listing regulations forms anintegral part of this Report.

The requisite certificate from the Practicing Company Secretary confirming compliancewith the conditions of corporate governance is attached to the report on CorporateGovernance.

33. Vigil Mechanism

The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing regulations includes an Ethics & Compliance Task Forcecomprising senior executives of the Company. Protected disclosures can be made by awhistle blower through an e-mail or dedicated telephone line or a letter to the TaskForce or to the Chairman of the Audit Committee.

The Policy on vigil mechanism and whistle blower policy is available on the Company'swebsite at the

34. Deposits from Public

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

35. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in Annexure[IV] to this Report.

36. Details on Internal Financial Controls related to Financial Statements

Your Company is having adequate internal financial control system with reference to thefinancial statements some of which are outlined below.

Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions ofthe Companies Act 1956 to the extent applicable. These are in accordance with generallyaccepted accounting principles in India. Changes in policies if any are approved by theAudit Committee in consultation with the Statutory Auditors.

The accounts of the subsidiary companies are audited and certified by their respectiveStatutory Auditors for consolidation.

Your Company operates in SAP an ERP system and has many of its accounting recordsstored in an electronic form and backed up periodically. The ERP system is configured toensure that all transactions are integrated seamlessly with the underlying books ofaccount. Your Company has automated processes to ensure accurate and timely updation ofvarious master data in the underlying ERP system.

Your Company has a robust financial closure self-certification mechanism wherein theline managers certify adherence to various accounting policies accounting hygiene andaccuracy of provisions and other estimates.

Your Company in preparing its financial statements makes judgments and estimates basedon sound policies and uses external agencies to verify / validate them as and whenappropriate.

The Management periodically reviews the financial performance of your Company againstthe approved plans across various parameters and takes necessary action whereverrequired.

Your Company has a code of conduct applicable to all its employees along with a WhistleBlower Policy which requires employees to update accounting information accurately and ina timely manner. Any non-compliance noticed is to be reported and actioned upon in linewith the Whistle Blower Policy.

Your Company gets its Standalone accounts alongwith Limited Review Report reviewedevery quarter by their Statutory Auditors.

37. Industrial Relations

The relations between the Employees and the Management remained cordial during the yearunder review. Your Directors wish to place on record their appreciation of thecontribution made by the Employees at all levels.

38. Acknowledgements

Your Directors wish to place on record their appreciation of the wholeheartedco-operation received by the Company from the various departments of the Central &State Governments Company's Bankers and Financial & Investment Institutions duringthe year under review.

For and on behalf of the Board of Directors
Place: Mumbai S. B. GARWARE
Date: August 10 2016 Chairman & Managing Director