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Godfrey Phillips India Ltd.

BSE: 500163 Sector: Consumer
NSE: GODFRYPHLP ISIN Code: INE260B01028
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VOLUME 24534
52-Week high 1542.00
52-Week low 823.15
P/E 49.30
Mkt Cap.(Rs cr) 5,465
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1047.00
CLOSE 1052.85
VOLUME 24534
52-Week high 1542.00
52-Week low 823.15
P/E 49.30
Mkt Cap.(Rs cr) 5,465
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Godfrey Phillips India Ltd. (GODFRYPHLP) - Director Report

Company director report

Your Directors feel privileged to present the 79th Annual Report on the business andoperations of the Company along with the Audited Accounts for the financial year endedMarch 31 2016.

ECONOMIC ENVIRONMENT

2015 was marked by moderate growth in global economy. IMF estimated a growth of 3.1 percent globally in 2015 and forecasts a 3.2 per cent growth in 2016. Growth was driven by animproved US economy and subdued oil and commodity prices. However the slow growth ofemerging economies primarily China remains a concern at the global level. 2016 augurscaution from economic and political uncertainty due to several undercurrents running inparallel. The US Presidential elections lifting sanctions on Iran Brexit underperformance of the Chinese economy will add to the uncertainty of the economic terrain. Inparticular the US Dollar will be exposed to these volatile factors. Any impact on the USDollar can subsequently affect the local currencies thereby impacting export-import andexternal borrowings.

India is a beacon of hope as its economy grew by 7.6 per cent in 2015-16 amid theprevailing negative sentiments globally. This growth is supplemented by low inflation thatcan potentially boost discretionary spending. Both urban and rural consumer demand islikely to get a forward push from the implementation of higher salaries recommended by the7th Pay Commission and prospects of a better monsoon this year. IMF forecastsIndia’s growth to be 7.4% in 2016-17. But many independent experts reckon that 8%this year is possible and that the signs of uptick are getting stronger. The Goods andServices Tax (GST) appears to be closer to reality than ever. The implementation of GST isexpected to set the stage for improved business conditions and progressively higher taxrevenues at lower cost and uniform pricing across India.

TOBACCO INDUSTRY

The global tobacco industry accounted for a 5 per cent growth in value to USD 698billion in 2015 keeping the value growth intact. The global cigarette volumes declined byabout 2 per cent in 2015 primarily driven by a 2 per cent decline in China.

The new generation tobacco products are gaining adoption as consumers perceive these tobe of reduced harm. Your company has also entered this segment by introducing electronicvaping devices in a few select markets and has ambitious plans both for the domestic andinternational markets.

While taxation has had an impact in the recent past the government appears to havereconciled to the fact that moderate tax increases are better in achieving the dualobjective of revenue growth and tobacco cessation. The last budget witnessed moderateincrease in taxation helping the industry fight illicit trade.

The industry welcomes the latest developments on GST as well as counter measurestowards curbing illicit cigarettes in India. Both these measures will help the industryproduce highest quality cigarettes and compete with illicit cigarettes on price points andgarner share from them leading to growth in tax paid products.

Regulation

The most recently implemented regulation is the 85 per cent graphic health warning(GHW) on both sides of the cigarette package from earlier 40% on one side of the packageand substituted the earlier pictures with more gruesome ones. Success of GHW has beenunder debate globally. Several leading tobacco markets such as the USA Japan and Chinahave not adopted picture based graphic health warning on cigarette packs and have onlytext based warnings.

There exists a high tax differential between cigarettes and other forms of tobacco.This provides a window of opportunity for chewing business to grow rapidly and acquireconsumers in the chewing category. Our products in the premium and mid premium chewingspace have shown stellar growth and we expect this high growth trajectory to continue.

A significant part of the cigarette value comprises excise duty and VAT. The weightedexcise duty increased at 17% year-over-year in the last 5 years. In addition stateadministered VAT rates were also increased across markets. A multi VAT regime promotesarbitrage and cross border smuggling thereby squeezing revenue for both the governmentand legal cigarette industry. Recent developments on GST are welcome and we hope this willhelp create a unified Indian market eliminate tax arbitrage opportunities and curb nontax paid business.

This will usher well for GPI and can potentially provide high growth for many years tocome.

During the last 5 years illicit cigarettes have grown in a big way in India. Today 1in every 5 cigarettes is illicitly sold in the country. The industry and the Governmentboth are losing as a result of growth of illicit trade. It goes without saying that yourCompany will always remain committed to regulatory adherence by being a responsiblecorporate entity. We also request the government to direct its attention towards curbingthe menace of illicit cigarettes.

SEGMENTWISE PERFORMANCE IN 2015-2016

Cigarettes

The domestic cigarette industry faced another challenging year due to tax increases andregulatory strictures. Continued tax increases forced your Company to increase the priceof its popular brands which has resulted in consumer churn part of which is gained byeconomy segment of 64mm brands. This segment has witnessed a growth of 6% despitecompetitive pressures. Overall despite unprecedented competitive pressure your Companyhas earned revenue of Rs. 3278 crores against Rs. 3400 crores in previous financial year.

Even though the operating environment going forward is likely to remain challengingyour Company has laid out plans to ensure growth by directly involving the frontline salespersonnel in developing and implementing the sales strategy. Growth for the Company willbe pursued through the brands placed at economical price points as well as through productinnovations. Our efforts to grow sales volumes through customer centricity superiorproducts and use of technology and to improve productivity through cost control andoptimisation of organisation’s size will continue to be in focus in coming years.

Tea

Our domestic packaged and bulk tea business achieved a turnover of Rs.102 crores whichwas marginally better than previous year. Our efforts were focused on driving businessbasis the regional consumer taste preferences by creating exclusive blends for key marketsof Rajasthan UP and J&K. This has not only been instrumental in driving consumercentricity but also benefitted in building saliency across spectrum of brands.

To maintain the leadership position in the packet green tea premium segment in thestate of J&K your Company has made an impressive entry with the launch of SamovarKandakari Noon Chai. Our business in the institutional segment has shown betterperformance during the year with supplies to prestigious institutions like CSD CPC andASC. In an effort to drive long-term growth your Company is aggressively investing behindpremium products along with strengthening its feet on street in order to increase salesreach.

Chewing Products

Your Company’s Chewing Business showcases encouraging trends after suffering asetback in 2014-15 with an increase in sales revenue from Rs.144 crores to Rs.151 croresin 2015-16. With healthy share both in the premium & mid premium segments and excitingplans for growth in the medium term the business is poised for growth to attain greaterheights in the industry. Your Company is working with the objective of gaining consumerunderstanding and identifying his unfulfilled needs to develop highly customized productofferings.

Pan Vilas your Company’s flagship brand continues to hold strong share in thepremium segment with over 20% segment share in the solus segment. With several innovationsand optimizations in production technology the focus is on improving margins in thisbusiness. In the medium term expansion into new geographies and consolidation of theproduct portfolio have been identified as the critical growth levers for the business.

‘Pan Vilas’ the premium Pan Masala brand has been awarded as"India’s Most Trusted Brand 2015" by India’s most Trusted Brand AwardsCouncil.

Your Company has also launched its presence in the mid premium segment under the brandname of Raag – which continues to be one of the fastest growing Pan Masala brands inthe industry. With an increase in portfolio with Raag the business initiated the forayinto eastern markets with great success with steady revenues from the states of WestBengal Odisha Jharkhand & other North Eastern states. Your Company also made someadvances in the confectionary business on the back of a successful foray into thelucrative Re. 1 candy segment with Pan Vilas candies.

Your Company plans to consolidate its position in the confectionary business with somestrategic launches in the Re. 1 segment to fuel the continuous growth of its business.

Exports

The following table shows the status of exports for different products during the yearunder report:

2015-16 2014-15
Commodity/Product Value Value
(Rs. in crores) (Rs. in crores)
Cigarettes 173.49 159.12
Unmanufactured tobacco 331.85 374.29
Cut tobacco/CLB 38.92 30.51
Tea 61.70 45.65

Overall exports of your Company were at Rs.606 crores as against Rs.610 crores in thepreceding financial year.

Reduced crop size in Karnataka from where we do have a significant volume has impactedperformance in unmanufactured tobacco exports. The Company has connected with some newcustomers across geographies particularly in CIS & European region. The Company isalso exploring possibilities of setting up a warehouse at a strategic location in Europeto gain access to more markets in Europe & CIS region with ready stock and creatingleaf/cut-rag trading hubs in Middle East Africa & South East Asia particularly inlocations around cigarette manufacturing hubs of the world.

In order to penetrate the Company’s brands around the world we have launched ourcigarette brands in Australia Malaysia Hong Kong and some countries of West and EastAfrica. In the current financial year we have planned to extend launches in QatarBahrain Saudi Arabia and Nigeria.

The bulk tea exports turnover has delivered a phenomenal growth of 35% over last yearwith turnover increasing to Rs. 62 crores as against Rs. 46 crores during the precedingyear. The same has been driven by ongoing concentrated efforts to supply premium andconsistent quality teas to our prestigious clients in high tea consumption countries likeUK Kazakhstan Iran and Pakistan.

As part of the growth strategy the branch office in Dubai was converted into awholly-owned subsidiary named ‘Godfrey Phillips Middle East DMCC’ and the sameis fully operational. This is expected to help the Company expand its operations furtheracross the globe.

Retail

In 2015-16 Company’s retail business made a steady progress with turnover at Rs.99 crores as against Rs. 85 crores during previous year. In the current financial yearthe Company is redesigning and refurbishing its stores. At the same time we are alsodeveloping a franchise model using the expertise of our Japanese consultants which willhelp us scale up the business.

HUMAN RESOURCE DEVELOPMENT

During the year your Company extensively worked on maximizing individual productivitythrough better manpower planning and resource allocation. Initiatives such as jobenlargement & additional voluntary responsibilities for capable employees strictcheck on hiring giving project based short term engagements and fostering a leanorganization structure aided in building productivity focus.

Initiatives have also been taken towards cost savings through an integrated approachtargeting areas such as official travel and stay making optimum use of available officesand rationalizing general administrative costs. Your Company has recently taken a steptowards empowering its workforce through a process of bottom-up planning that emphasiseson participation of all levels of salesforce in planning targets and charting out ways andmeans to achieve them. Annual Health check-up continued this year also for all theemployees to make your Company a healthy organization.

CORPORATE DEVELOPMENT

Corporate Development team remains pivotal in executing the growth strategy of yourCompany. It is involved in the business monitoring process to ensure all initiatives andprojects are aligned to their objectives plays a key role in the annual budgeting andlong term planning exercise undertakes strategic projects with a long term growth impactand regularly scans the external environment including regulatory volatility competitivelandscape and the global tobacco industry in order to assess their implications on yourCompany.

INFORMATION TECHNOLOGY (IT)

Your Company is continuously making investments in information technology to improveoperational efficiency and enhance productivity in the organisation. To improveproductivity and service levels coupled with cost optimization IT roadmap for the next 5years has been prepared covering critical initiatives like advanced sales forceautomation enterprise-wise business intelligence supply chain management solutionsinfrastructure migration to cloud based technology data mining etc.

In addition your Company is also leveraging IT in development of more workflow basedapplications to improve productivity as well as response time.

TREASURY OPERATIONS

Your Company continues to enjoy the highest rating of ‘CRISIL A1+’ for ShortTerm Debt Programme ‘CRISIL AA+/Stable’ for Long Term Loan ‘CRISILAA+/Stable’ for fund based Credit Limit and ‘CRISIL A1+’ for non-fund basedfacilities. With these ratings in place your Company is able to raise funds at mostcompetitive terms.

Keeping in view the guiding principles of the policy of earning safe liquid and taxefficient returns the Company has been deploying its long term surplus funds primarily indebt oriented schemes of reputed mutual funds. Also the Company continued to park itstemporary surpluses in liquid schemes of various mutual funds.

FINANCIAL RESULTS

2015-16 2014-15
Rs. in lacs Rs. in lacs
Gross Profit (after exceptional item) 33905.50 37365.53
Less: Depreciation 10220.49 10225.65
Profit before tax 23685.01 27139.88
Less: Provision for tax
- current tax 7042.00 9218.00
- deferred tax charge/(credit) 236.54 (462.76)
- current tax expense relating to prior years (91.89) 76.20
Profit after tax for the year 16498.36 18308.44
Add: Profit brought forward 100261.19 89369.31
Less: Adjustment for depreciation in transition - 410.27
Available for appropriation 116759.55 107267.48
Appropriations
Proposed Dividend 4159.51 4159.51
Corporate Dividend Tax 846.78 846.78
Transfer to General Reserve 2000.00 2000.00
Surplus carried to Balance Sheet 109753.26 100261.19
116759.55 107267.48

During the year ended March 31 2016 the Company registered operating revenue ofRs.4348 crores as against Rs.4453 crores during corresponding previous financial year adecline of 2.4%. The profit after tax was lower at Rs.164.98 crores against Rs.183.08crores last year.

The Union Budget 2016 has yet again increased the excise duty on cigarette which worksout to around 10% on weighted average volume base of your Company and this is apart fromsome State Governments hiking VAT rates.

DIVIDEND

Your Directors are pleased to recommend the same dividend as last year of 400% i.e.Rs.8/- per equity share of face value of Rs.2/- each. The proposed dividend (including taxthereon) will absorb Rs.5006.29 lacs.

DEPOSITS

Your Company has not accepted any deposits covered under Chapter V of the CompaniesAct 2013 and hence no details pursuant to Rules 8(v) and 8(vi) of the Companies(Accounts) Rules 2014 are reported.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return in Form MGT-9 as on 31st March 2016 is attached as‘Annexure - 1’ to this Report.

SUBSIDIARIES ASSOCIATES AND JOINT VENTURES

As on 31st March 2016 your Company had eight subsidiaries and three associatecompanies. The basic details of these companies form part of the extract of Annual Returngiven in ‘Annexure - 1’.

Form AOC-1 containing the salient features of financial statements of theCompany’s subsidiaries and associates is attached as ‘Annexure - 2’. Note43 of the consolidated financial statements shows the share of each subsidiary andassociate company in the consolidated net assets and profits of the Company. The auditedfinancial statements of these entities will be available for inspection during businesshours at the Registered Office of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard 21 - Consolidated Financial Statements GroupAccounts form part of this Annual Report. The Group Accounts have been prepared on thebasis of audited financial statements received from the subsidiary and associatecompanies as approved by their respective Boards.

INTERNAL CONTROL SYSTEMS

Your Company has a robust system of internal controls commensurate with the size of theCompany and the nature of its business which ensures that transactions are recordedauthorised and reported correctly apart from safeguarding its assets against loss fromwastage unauthorised use and disposition.

The internal control systems are supplemented by well documented policies guidelinesand procedures which is in line with the internal financial control frameworkrequirements. There is an extensive programme of internal audit by a firm of charteredaccountants followed by periodic management reviews.

The Audit Committee actively reviews the adequacy and effectiveness of the internalcontrol systems and suggests improvements to strengthen the same.

CORPORATE SOCIAL RESPONSIBILITY

The Companies Act 2013 mandates every company that meets certain eligibility criteriato spend at least 2% of its average net profit for the immediately preceding threefinancial years on corporate social responsibility (CSR) activities.

Our CSR initiatives focus on inclusive growth with the Company striving to enhance thelivelihood of the local communities and contribute to their economic and social well-beingthrough various proactive community partnership programmes.

Your Company with the support of implementing institutions is working with mostvulnerable communities in target areas by way of providing various supports in the fieldof education health skill development etc. As part of various programmes for farmerswomen children and community development your Company is supporting this cause byinstallation of safe drinking water holding health camps extending scholarships formeritorious children connecting children with schools conducting HIV awarenessprogrammes operating skill training centres for adult children improving infrastructureof schools building toilets helping community through drainage construction and othercleanliness drive and thereby improving their living conditions. Higher education is theprime driver for sustainable development and economic growth.

As part of women empowerment initiative the Kashmir women’s program realized itstarget of enabling conflict ridden women with skill development and empowerment throughlivelihood. There were success stories of women moving to entrepreneurial ventures andindependent projects.

The Company has constituted a CSR Committee of the Board in accordance with theprovisions of Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014. The brief outline of the CSR policy overviewof the activities undertaken with amounts spent thereon during the year and composition ofthe Committee have been disclosed in ‘Annexure - 3’.

DIRECTORS

Mr. R.A. Shah (DIN 00009851) and Mrs. Bina Modi (DIN 00048606) are liable to retire byrotation at the ensuing Annual General Meeting in accordance with the provisions ofSection 152 of the Companies Act 2013 and being eligible offer themselves forre-appointment.

Mr. Ruchir Kumar Modi (DIN 07174133) was appointed as Additional Director w.e.f. 19thMarch 2016 and holds office upto the date of the ensuing Annual General Meeting. TheCompany has received a notice pursuant to Section 160 of the Companies Act 2013 from oneof its members proposing his candidature for appointment as a Director.

PERFORMANCE EVALUATION OF THE BOARD ETC.

The details pertaining to the manner in which evaluation of the Board its Committeesand individual Directors has been carried out forms part of Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

Mr. K.K. Modi Managing Director Mr. Samir Kumar Modi Executive Director Mr. R.Ramamurthy Whole-time Director Mr. Sunil Agrawal Chief Financial Officer and Mr. SanjayGupta Company Secretary of the Company are deemed to be Key Managerial Personnel of theCompany as per the provisions of Companies Act 2013 and rules made thereunder.

BOARD MEETINGS

The details of the meetings of the Board held during the year forms part of theCorporate Governance Report.

AUDIT COMMITTEE

The composition functions and details of the meetings of the Audit Committee heldduring the year forms part of the Corporate Governance Report.

RISK MANAGEMENT

Your Company considers that risk is an integral part of its business and therefore ittakes proper steps to manage all risks in a proactive and efficient manner. The Companymanagement periodically assesses risks in the internal and external environment andincorporates suitable risk treatment processes in its strategy and business and operatingplans. The details of practices being followed by the Company in this regard forms partof the Corporate Governance Report.

There are no risks which in the opinion of the Board threaten the very existence ofyour Company. However some of the challenges faced by it have been dealt with underManagement Discussion and Analysis which forms part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 (the‘Act’) the Directors to the best of their knowledge confirm that:

(i) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;

(ii) appropriate accounting policies have been applied consistently and judgements andestimates that are reasonable and prudent have been made 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 of the Company for that period;

(iii) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

(iv) the Annual Accounts have been prepared on a going concern basis;

(v) the internal financial controls to be followed by the Company have been laid downand such internal financial controls are adequate and are operating effectively; and

(vi) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

The above statements were noted by the Audit Committee at its meeting held on 16thAugust 2016.

RELATED PARTY TRANSACTIONS

Form AOC-2 containing particulars of contracts or arrangements entered into by theCompany with related parties referred in Section 188(1) of the Companies Act 2013 areattached as ‘Annexure - 4’.

The details of related party disclosures form part of the notes to the financialstatements.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of loans guarantees and investments covered by the provisions of Section 186of the Companies Act 2013 are given in the notes to the financial statements.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The details of Whistle Blower Policy/Vigil Mechanism forms part of the CorporateGovernance Report.

REMUNERATION AND NOMINATION POLICY

The details of remuneration and nomination policy for the Directors forms part of theCorporate Governance Report.

The remuneration policy for other senior management employees including key managerialpersonnel aims at attracting retaining and motivating high calibre talent and ensuresequity fairness and consistency in rewarding the employees. The remuneration tomanagement grade employees involves a blend of fixed and variable component withperformance forming the core. The components of total remuneration vary for differentemployee grades and are governed by industry practices qualifications and experience ofthe employee responsibilities handled by him his potentials etc.

CORPORATE GOVERNANCE

The Company is committed to maximise the value for its stakeholders by adopting theprinciples of good Corporate Governance in line with the provisions of law and inparticular those stipulated in the Listing Obligations and Disclosure RequirementRegulations. Its objective and that of its management and employees is to manufacture andmarket the Company's products in a way so as to create value that can be sustained overthe long term for consumers shareholders employees business partners and the nationaleconomy in general. Certificate from the auditors of the Company regarding compliance ofthe conditions of Corporate Governance as stipulated in the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is enclosed.

Certificate from Mr. K.K. Modi Managing Director as the Chief Executive Officer (CEO)and Mr. Sunil Agrawal Executive Vice President – Finance as the Chief FinancialOfficer (CFO) in relation to the financial statements for the year along with declarationby the CEO regarding compliance with the code of business conduct of the Company by thedirectors and the members of the senior management team of the Company during the yearwere submitted to and taken note of by the Board.

STATUTORY AUDITOR

M/s. Deloitte Haskins & Sells Chartered Accountants (Firm Registration No.015125N) were appointed as the Statutory Auditor of your Company at the Annual GeneralMeeting held on 23rd September 2014 for a term of three years. However as per theprovisions of Section 139 of the Companies Act 2013 their appointment is required to beratified by the Shareholders at every Annual General Meeting.

Auditors’ Report on the financial statements of the Company forms part of theAnnual Report and doesn’t contain any qualification reservation adverse remark ordisclaimer.

COST AUDIT

M/s. Chandra Wadhwa & Co. Cost Accountants (Firm Registration No.00239) have beenappointed as the Cost Auditor of the Company for the financial year 2016-17 to audit thecost accounting records for ‘Tea’ business at a fee of Rs. 2.50 lacs plusapplicable taxes and out of pocket expenses subject to approval by the Shareholders atthe ensuing Annual General Meeting.

Further the cost audit report for the financial year 2015-16 doesn’t contain anyqualification reservation adverse remark or disclaimer.

SECRETARIAL AUDIT

M/s Chandrasekaran Associates Practicing Company Secretaries have been appointed asthe Secretarial Auditor of the Company.

The Secretarial Audit Report for the year under review is attached as ‘Annexure -5’ and doesn’t contain any qualification reservation adverse remark ordisclaimer.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review no significant and material order was passed by theRegulators/Courts that could impact the going concern status of the Company and its futureoperations.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are attached as ‘Annexure -6’.

Pursuant to the provisions of Section 136(1) of the Act and as advised the statementcontaining particulars of employees as required under Section 197(12) of the Act read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 will be available for inspection at the Registered Office of the Company duringworking hours and Members interested in obtaining a copy of the same may write to theCompany Secretary and the same will be furnished on request. Hence the Annual Report isbeing sent to all the Members of the Company excluding the aforesaid information.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO

The particulars prescribed under Section 143(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 are attached as ‘Annexure -7’.

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

The Company has in place a policy on prevention prohibition and redressal of sexualharassment of women at work place in line with the requirements of the above Act.

Under the said policy an Internal Complaints Committee (ICC) has been set up toredress complaints received relating to sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this policy.

During the year under review no complaint was filed with the Company.

THE FUTURE

Your Company has a strong platform in the form of the state of the art manufacturingfacilities best in class technology vast distribution network adequate financialresources and motivated manpower to drive growth across its various businesses and productcategories both in domestic and international markets. Your Directors are confident thatthe Company will continue to create value for its shareholders in times to come.

ACKNOWLEDGEMENT

Your Directors wish to place on record their sincere appreciation to the Governmentauthorities Company’s bankers customers vendors investors and all otherstakeholders for their continued support during the year. Your Directors are also pleasedto record their appreciation for the dedicated services of employees at all levels ofoperations in the Company.

Respectfully submitted on behalf of the Board
R.A. SHAH
CHAIRMAN
New Delhi
Dated: 16th August2016