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Greenply Industries Ltd.

BSE: 526797 Sector: Others
NSE: GREENPLY ISIN Code: INE461C01038
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OPEN 270.00
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VOLUME 3531
52-Week high 309.00
52-Week low 236.50
P/E 25.39
Mkt Cap.(Rs cr) 3,340
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 270.00
CLOSE 270.40
VOLUME 3531
52-Week high 309.00
52-Week low 236.50
P/E 25.39
Mkt Cap.(Rs cr) 3,340
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Greenply Industries Ltd. (GREENPLY) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting their 26th Annual Report on the business andoperations of the Company along with the Audited Accounts of the Company for the FinancialYear ended March 31 2016.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the year ended March 31 2016 issummarised below:

(Rs.in lacs)

Particulars 2015-16 2014-15
Standalone Consolidated Standalone Consolidated
Turnover 165609.40 165570.93 156058.41 156058.41
Profit before finance charges Tax Depreciation/ Amortisation (PBITDA) 24892.46 24717.70 20600.48 20841.69
Less : Finance Charges 2826.58 2874.29 3591.30 3591.30
Profit before Depreciation/Amortisation (PBTDA) 22065.88 21843.41 17009.18 17250.39
Less : Depreciation 4935.62 5003.09 4706.11 4706.11
Net Profit before Exceptional Item and Taxation 17130.26 16840.32 12303.07 12544.28
Exceptional Items – Loss/(Gain) - - (1575.53) (1575.53)
Net Profit before Extraordinary Item and Taxation 17130.26 16840.32 13878.60 14119.81
Extraordinary Items – Loss/(Gain) (142.72) (142.72) - -
Net Profit before Taxation (PBT) 17272.98 16983.04 13878.60 14119.81
Provision for taxation 4213.86 4213.86 1696.87 1696.87
Profit/(Loss) after Taxation (PAT) 13059.12 12769.18 12181.73 12422.94
Provision for Proposed Dividend 724.09 724.09 724.09 724.09
Dividend Tax 147.41 147.41 147.41 147.41
Transfer to General Reserve 6500.00 6500.00 6500.00 6500.00

RESULT OF OPERATIONS AND THE STATE OF COMPANY’S AFFAIRS

During the year under review your Company posted a stable performance with revenue ofRs.165685.44 lacs as against Rs.156425.04 lacs in the previous year. Profit for the year2015-16 was Rs.13059.12 lacs as against Rs.12181.73 lacs in the previous year.

Exports during the year 2015-16 was Rs.536.57 lacs. The Company is trying to locate newexport markets for its products and see good potential for growth in the exports business.As per the consolidated financial statements the revenue from operation and profit forthe year 2015-16 were Rs.165647.67 lacs and Rs.12769.18 lacs respectively as againstRs.156425.04 lacs and Rs.12422.94 lacs in the previous year.

Your Company is the preferred partner of choice for a large number of office and homebuilders having a comprehensive product portfolio servicing clients at every point of theprice spectrum. Your company also focused on the value added products to improve margin.

During 2015-16 your Company continued its efforts in the area of product integrationand deeper market penetration. Your Company is present across different price points tocater to all customers across the high-end mid-market and value-for-money segments.

OUTLOOK AND EXPANSION

The Company’s outlook remains favourable on account of its product integrationcapabilities increasing brand visibility and the continuous support from itsstakeholders. The Company’s pan-India distribution network ensures easy availabilityof products in almost every part of India. Wood panel market is one of the major verticalsof the interior infrastructure comprising materials used in building furniture. Suchmaterials include plywood engineered wood panels and decorative surface products. YourCompany is currently operating primarily in the structural sphere of interiorinfrastructure domain with almost all the products in its basket catering to thestructural needs of the customers. The demand for readymade furniture manufactured withengineered panels like MDF is rapidly growing. The real estate industry is one of themost significant growth drivers for the plywood sector.

Indian furniture industry is one of the world’s largest furniture markets. It isprimarily driven by a substantial middle-class population rapid urbanisation favourabledemographics increasing per capita income and growing nuclear families. This willencourage strong demand growth for plywood and MDF. Reconstituted wood products such asplywood board and medium density fibreboards are likely to be used increasingly byconsumers real estate developers furniture makers railways and defence among others.Innovations and use of technology shall help the wood industry to grow profitably andleverage opportunities in the future.

Going forward there is an increasing shift being witnessed towards the organisedsector owing to brand and quality awareness. With wider choice product innovation andwarranty being offered by organised players customers are putting more focus on thissegment. However currently the price differential between organised and unorganisedplayers continues to remain high due to high excise duty and VAT being paid by organisedplayers. The inequitable indirect duty structure in favour of unorganised players providesa price advantage over organised manufacturers. GST is likely to be a game changer for thesector. It is expected that the large indirect tax differential between unorganised andorganised sector will narrow thereby providing a level playing field.

Your Company has received permission from the Excise Authorities to avail the benefitof exemption and consequential refund of excise duty under Notification No. 20/2007-CEdated 25.04.2007 for a period of 10 years from July 2015 in respect of theCompany’s unit situated at Tizit (Nagaland).

In respect of setting-up of new MDF manufacturing unit in Andhra Pradesh necessarysteps are being taken to obtain remaining statutory approvals/licenses to setup the Unit.Contracts with the principal Process Equipment Suppliers and contract for the EngineeringConsultancy Services have been executed. Primary layout of the unit has been prepared andthe same will be finalised shortly.

Further in respect of manufacture of new value added products the Company hascommenced commercial production of ‘UV Coated Panels’ at the Company’smanufacturing unit at Pantnagar Uttarakhand.

During the year your Company has started new business venture of trading in wallpaperof different categories sourced from various overseas suppliers and marketed in Indiaunder the Company’s brand.

Your Directors are confident of achieving better results in the coming years.

SUBSIDIARIES AND JOINT VENTURE

During the year under review the Company has transferred its entire shareholding inGreenply Industries (Myanmar) Pvt. Ltd. Myanmar to Greenply Alkemal (Singapore) Pte.Ltd. Singapore (a Joint Venture Company of Greenply Industries Limited India through itswholly owned subsidiary Greenply Trading Pte. Ltd. Singapore and Alkemal Singapore Pte.Ltd. Singapore). Accordingly Greenply Industries (Myanmar) Pvt. Ltd. Myanmar has ceasedto be wholly owned subsidiary company of Greenply Industries Limited.

Presently your Company has one overseas wholly owned subsidiary viz. Greenply TradingPte. Ltd. Singapore engaged in the business of trading and marketing of veneers panelproducts wooden flooring & allied products and also investments in companiesmanufacturing and trading said products. Further your Company has one overseas jointventure namely Greenply Alkemal (Singapore) Pte. Ltd. (a joint venture company of GreenplyIndustries Limited India through its wholly owned subsidiary Greenply Trading Pte. Ltd.Singapore and Alkemal Singapore Pte. Ltd. Singapore) engaged in the business of tradingand marketing of commercial veneers and panel products. Further the joint venture Companyalso control the Myanmar based Company which is engaged in the business of manufacturingand trading of veneer and lumber.

The statement in form AOC-1 containing the salient features of the financial statementof subsidiaries/associate companies/joint ventures pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules 2014 is annexedto this Report.

CHANGE (S) IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company. However during theyear under review your Company has started new business venture of trading in wallpaperof different categories sourced from various overseas suppliers and marketed in Indiaunder the Company’s brand.

CONSOLIDATED FINANCIAL STATEMENTS

For the period under review the Company has consolidated its wholly owned subsidiaryviz.Greenply Trading Pte. Ltd. Singapore. The financial statements of GreenplyIndustries (Myanmar) Pvt. Ltd. Myanmar has not been considered for consolidation in thecurrent year since the Company has transferred its entire shareholding in GreenplyIndustries (Myanmar) Pvt. Ltd. Myanmar to Greenply Alkemal (Singapore) Pte. Ltd.Singapore (a Joint Venture Company of Greenply Industries Limited India through itswholly owned subsidiary Greenply Trading Pte. Ltd. Singapore and Alkemal Singapore Pte.Ltd. Singapore). Accordingly Greenply Industries (Myanmar) Pvt. Ltd. Myanmar has ceasedto be wholly owned subsidiary company of Greenply Industries Limited. In accordance withthird proviso of Section 136(1) of the Companies Act 2013 the Annual Report of theCompany containing therein its standalone and the consolidated financial statements hasbeen placed on the website of the Company www.greenply.com. Further as per fourthproviso of the said section audited annual accounts of the subsidiary company and JointVenture Company have also been placed on the website of the Company www.greenply.com.Shareholders interested in obtaining a copy of the audited annual accounts of thesubsidiary company and Joint Venture Company may write to the Company Secretary at theCompany’s registered office. A statement containing salient features of the financialstatement of subsidiary/associate companies/ joint venture is annexed to this report.

CREDIT RATING

During the year Credit Analysis and Research Ltd. (CARE) has upgraded both long termand short term ratings from CARE A and CARE A1 to CARE AA- and CARE A1+ also IndiaRatings & Research has rated banking facilities and has assigned ratings details ofwhich are mentioned below:

Rating Agency Instrument Rating
CARE Banking Facilities – Long Term CARE AA-
CARE Banking Facilities – Short Term CARE A1+
CARE Short Term Debt (including Commercial Paper) CARE A1+
India Ratings & Research Banking Facilities – Long Term IND AA-
India Ratings & Research Banking Facilities – Short Term IND A1+
India Ratings & Research Short Term Debt (including Commercial Paper) IND A1+

Up-gradation in credit rating reflects Company’s commitment and capability topersistent growth through prudence and focus on financial discipline.

DIVIDEND

Your Directors recommend a final dividend of 60% i.e. Rs.0.60 per equity share(previous year 60% i.e.Rs. 3/- per equity share of Rs.5/-) on the Company’s 120681870equity shares of Rs. 1/- each for FY 2015-16. The final dividend on the equity shares ifdeclared as above would involve an outflow of Rs.724.09 lacs towards dividend andRs.c147.41 lacs towards dividend distribution tax resulting in a total outflow of Rs.871.50 lacs.

TRANSFER TO RESERVES

Your Directors propose to transfer Rs.6500 lacs to the General Reserve.

CHANGE IN SHARE CAPITAL

During the year under review there was no change in the share capital of the Company.However equity shares of the Company were sub-divided from face value of Rs.5/- each toface value of Rs.1/- each and accordingly the number of equity shares in the authorisedshare capital was increased from 32000000 equity shares of Rs.5/- each to 160000000 equityshares of Rs. 1/- each. Also issued subscribed and fully paid-up equity shares of theCompany have been increased from 24136374 of Rs.5/- each to 120681870 of Rs.1/- each.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Shobhan Mittal [DIN: 00347517] Joint Managing Director& CEO of the Company will retire by rotation at the ensuing Annual General Meetingand is eligible for re- appointment.

The Board of Directors at their meeting held on May 24 2016 subject to approval ofmembers of the Company and the Central Government has accorded their approval tore-appoint Mr. Shobhan Mittal [DIN: 00347517] as the Joint Managing Director & CEO ofthe Company for a further period of five years with effect from September 1 2016 tillAugust 31 2021 as the existing tenure of Mr. Shobhan Mittal as the Joint ManagingDirector & CEO of the Company is going to expire on August 31 2016. The same wasrecommended to the Board of Directors by the Nomination and Remuneration Committee at itsmeeting held on May 23 2016. The Company has also received a notice under Section 160 ofthe Companies Act 2013 along with requisite amount from a member proposing hisre-appointment as the Joint Managing Directors & CEO of the Company. The detailedterms and conditions including remuneration have been mentioned in the Notice convening26th Annual General Meeting.

Details of Mr. Shobhan Mittal [DIN: 00347517] as required under Listing Regulations andSS-2 are provided in the Corporate Governance Report and Notice of 26th Annual GeneralMeeting.

During the year Mr. Rajesh Mittal [DIN: 00240900] was re-appointed as the ManagingDirector of the Company for a period of five years with effect from January 1 2016.

None of the Directors of your Company is disqualified under the provisions of Section164(2)(a) & (b) of the Companies Act 2013.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors of the Company have given the declaration to the Company thatthey meet the criteria of independence as provided in Section 149 (7) read with Section149(6) of the Companies Act 2013 and Listing Regulations.

MEETINGS OF THE BOARD OF DIRECTORS

Five (5) Board Meetings were held during the financial year ended March 31 2016. Thedetails of the Board Meetings with regard to their dates and attendance of each of theDirectors thereat have been provided in the Corporate Governance Report.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard has carried out the annual performance evaluation of the Directors individually aswell as evaluation of the working of the Board and of the Committees of the Board by wayof individual and collective feedback from Directors.

Pursuant to Para VII of Schedule IV of the Companies Act 2013 and Listing Regulationsa meeting of the Independent Directors of the Company was convened on March 14 2016 toperform the following:

• review the performance of non- independent directors and the Board as a whole;

• review the performance of the Chairperson of the Company taking into accountthe views of executive directors and non- executive directors;

• Assess the quality quantity and timeliness of flow of information between theCompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

Further the Nomination and Remuneration Committee also evaluated the performance ofall the directors of the Company.

The criteria for evaluation are briefly provided below:

a. For Independent Directors:

- General parameters

- Roles & responsibilities to be fulfilled as an Independent director

- Participation in Board process

b. For Executive & Non-executive Directors:

- Governance

- Strategy

- Stakeholder focus

- Communication & influence

- Quality or capability

- Performance improvement

- Financial & risk awareness

The Directors expressed their satisfaction with the evaluation process.

FAMILIARISATION PROGRAMME

The details of the faimiliarisation programme undertaken have been provided in theCorporate Governance Report along with the web link thereof.

MANAGERIAL REMUNERATION

As per the provisions of Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of managerial personnel) Rules 2014 theCompany is required to disclose the following information in the Board’s Report.

(a) ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year;

Name Designation Ratio to median remuneration of employees
Mr. Shiv Prakash Mittal Executive Chairman 351.59
Mr. Rajesh Mittal Managing Director 343.23
Mr. Shobhan Mittal Joint Managing Director & CEO 301.88
Mr. Moina Yometh Konyak Non-executive Director 6.84
Mr. Susil Kumar Pal Independent Director 6.84
Mr. Vinod Kumar Kothari Independent Director 6.84
Mr. Anupam Kumar Mukerji Independent Director 6.84
Ms. Sonali Bhagwati Dalal Independent Director 6.84
Mr. Upendra Nath Challu Independent Director 6.84

(b) percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;

Name Designation % increase
Mr. Shiv Prakash Mittal Executive Chairman 31.65
Mr. Rajesh Mittal Managing Director 33.30
Mr. Shobhan Mittal Joint Managing Director & CEO 26.68
Mr. Moina Yometh Konyak Non-executive Director 00.00
Mr. Susil Kumar Pal Independent Director 00.00
Mr. Vinod Kumar Kothari Independent Director 00.00
Mr. Anupam Kumar Mukerji Independent Director 00.00
Ms. Sonali Bhagwati Dalal Independent Director 00.00
Mr. Upendra Nath Challu Independent Director 00.00
Mr.Vishwanathan Venkatramani Chief Financial Officer 12.50
Mr. Kaushal Kumar Agarwal Company Secretary & Vice President-Legal 12.60

(c) percentage increase in the median remuneration of employees in the financial year;

16.89

(d) number of permanent employees on the rolls of Company;

3580

(e) explanation on the relationship between average increase in remuneration andcompany performance;

The profit before tax for the financial year ended March 31 2016 increased by 24.46%and the profit after tax for the financial year ended March 31 2016 increased by 7.20%whereas the increase in median remuneration is 16.89%. The average increase in medianremuneration is in line with the performance of the Company.

(f) comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company;

The total remuneration of KMP increased by 29.00% whereas the profit before taxincreased by 24.46% and the profit after tax increased by 7.20%.

(g) average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;

11.46% (non-Managerial personnel)

29.00% (Managerial Personnel)

(h) comparison of remuneration of each of the Key Managerial Personnel against theperformance of the Company;

Name Designation % increase Comparison
Mr. Shiv Prakash Mittal Executive Chairman 31.65 Profit before tax
Mr. Rajesh Mittal Managing Director 33.30 increased by 24.46% and
Mr. Shobhan Mittal Joint Managing Director & CEO 26.68 Profit after tax increased by 7.20%.
Mr. Vishwanathan Venkatramani Chief Financial Officer 12.50
Mr. Kaushal Kumar Agarwal Company Secretary & Vice President-Legal 12.60

(i) the key parameters for any variable component of remuneration availed by thedirectors;

Company’s financial results the performance of the business unit individualperformance skills and competence fulfillment of various improvement targets or theattainment of certain financial objectives.

(j) the ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year; and

Nil

(k) We hereby affirm that the remuneration paid to the managerial and non-managerialpersonnel is as per the Remuneration Policy

of the Company approved by the Board of Directors.

(l) Managing Directors and Whole-time Directors of the Company does not receivecommission from its subsidiary company. However w.e.f. August 25 2015 Mr. ShobhanMittal Joint Managing Director & CEO of the Company is drawing remuneration fromGreenply Trading Pte. Ltd. WOS of the Company of SGD 15000 (Singapore Dollar FifteenThousand only) per month.

(m) Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer are as follows:

Variations in the market capitalisation of the Company price earnings ratio as at theclosing date of the current financial year and previous financial year:

Stock Exchange Closing Market Price per Price Earnings Market Capitalisation
Share (Rs.) Ratio (Rs. in crore)
As on March 31 2016* As on March 31 2015** As on March 31 2016 As on March 31 2015 As on March 31 2016 As on March 31 2015
National Stock Exchange of India Ltd.(NSE) 174.90 944.05 16.16 18.71 2110.73 2278.59
BSE Limited(BSE) 174.05 930.00 16.09 18.43 2100.47 2244.68

* Equity shares of face value of Rs. 1/- each.

** Equity shares of face value of Rs.5/- each.

Percentage increase over/ decrease in market quotations of the shares of the Company incomparison to the rate at which the Company came out with the last public offer:

On 24.03.2011 the Company has allotted 2039694 Equity shares of Rs.5/- each at apremium of Rs.137/- per equity share to the eligible detachable warrant holders on accountof conversion of 2039694 detachable warrants issued and allotted on October 16 2009pursuant to the Letter of Offer dated September 14 2009. An amount of Rs.142/- (WarrantExercise Price) invested in the said conversion would be worth Rs.874.50/-(computed on thebasis of closing market price on NSE multiplied by 5 considering the sub-division ofequity shares from face value of Rs.5/- to face value of Rs. 1/- each) as on March 312016 indicating a Compounded Annual Growth Rate of 43.8%. This is excluding the dividendaccrued thereon and benefit on account of shares received at the time of demerger.

All elements of remuneration package as required under Listing Regulations have beenprovided in the Corporate Governance Report.

STATUTORY AUDITORS AND THEIR REPORT

In compliance with the Companies (Audit and Auditors) Rules 2014 M/s. D. Dhandaria& Company Chartered Accountants (Firm Registration no. 306147E) have been appointedas Statutory Auditors of the Company till the conclusion of Annual General Meeting for FY2016-17 as approved by the members at their 24th Annual General Meeting held on August22 2014. Further pursuant to the requirement of Section 139 of the Companies Act 2013the appointment of Statutory Auditors is to be ratified by the members at every AnnualGeneral Meeting. Members are requested to ratify their appointment for FY 2016-17. TheCompany has received written consent and certificate from M/s. D. Dhandaria & CompanyChartered Accountants in keeping with the requirements of section 139 of Companies Act2013 and allied Rules thereunder.

The Notes on Financial Statements referred to in the Auditors’ Report areself-explanatory and therefore do not call for further clarification. The Auditor’sReport for Financial Year ended March 31 2016 does not have any qualifications.

COST AUDITORS

During the year under review cost audit was not applicable to the Company.

INTERNAL AUDITOR

The Company has in-house Internal Audit team headed by qualified and experiencedExecutive. The scope functioning periodicity and methodology for conducting internalaudit were approved by the Board of Directors and reviewed by the Audit Committee fromtime to time. Further the Audit committee discussed and reviewed the adequacy of internalaudit function including the structure of the internal audit department staffing andseniority of the official heading the department reporting structure coverage andfrequency of internal audit.

SECRETARIAL AUDITOR

The Board of Directors of the Company had appointed M/s. Nidhi Bagri & CompanyPractising Company Secretary (Membership No. ACS 24765/COP No. 9590) Kolkata to conductSecretarial Audit for FY 2015-16. The Secretarial Audit Report of M/s. Nidhi Bagri &Company Practising Company Secretary in Form MR-3 for FY ended March 31 2016 isannexed to this report.

RESPONSE TO SECRETARIAL AUDITOR’S OBSERVATION

It has been observed by the Secretarial Auditor that during FY 2015-16 the Company hasspent Rs.262.19 Lacs (the amount includes transfer of Rs.202.00 Lacs to ‘GreenplyFoundation’ a trust created by the Company under the Provisions of Indian TrustsAct 1882 to carry on its CSR activities) towards CSR activities which is less than 2% ofthe average net profit of last 3 financial years. In response to the same your Companywould like to submit that in view of the time taken for identifying & setting-up theinstitutional framework the Company has unspent amount adding upto Rs.226.33 lacs. Out ofthe same Rs.195.49 lacs has directly been disbursed by the Company to be spent by GREENPLYFOUNDATION for eligible CSR Projects and which is expected to be spent during FY 2016-17.The Company is committed to the underlying intent of CSR and is optimistic of meeting itsobligations under Section 135 of Companies Act 2013 and thereby makes a positive impacton the society.

AUDIT COMMITTEE

The Company’s Audit Committee comprises of four Non-Executive IndependentDirectors viz. Mr. Susil Kumar Pal Mr. Vinod Kumar Kothari Mr. Anupam Kumar Mukerji andMr. Upendra Nath Challu and two Executive-Promoter Directors viz. Mr. Rajesh Mittal andMr. Shobhan Mittal. The Committee inter alia reviews the Internal Control Systemreports of Internal Auditors compliance of various regulations and evaluates the internalfinancial controls and risk management system of the Company. The Committee also reviewsat length the Financial Statements and results before they are placed before the Board.The terms of reference of the Audit Committee and other details have been provided in theCorporate Governance Report.

VIGIL MECHANISM

In pursuance to the provisions of section 177(9) & (10) of the Companies Act 2013and erstwhile equity listing agreement a vigil mechanism or ‘Whistle BlowerPolicy’ for directors and employees to report genuine concerns had been establishedand implemented. The policy safeguards the whistle blowers to report concerns orgrievances and also provides a direct access to the Chairman of the Audit Committee.During the year under review none of the personnel has been denied access to the Chairmanof the Audit Committee. The policy has also uploaded on the website of the Company and isavailable at the weblink at http://www. greenply.com/images/pdf/Vigil_Mechanism_Policy.pdf.

NOMINATION AND REMUNERATION COMMITTEE

The Company’s Nomination and Remuneration Committee comprises of threeNon-Executive Independent Directors viz. Mr. Susil Kumar Pal Mr. Vinod Kumar Kothari Mr.Anupam Kumar Mukerji and one Executive-Promoter Director Mr. Shiv Prakash Mittal.TheRemuneration Policy of the Company prepared in accordance with the provisions of Section178 of the Companies Act 2013 and Clause 49 (IV) of the erstwhile equity listingagreements is uploaded on the website of the Company. The weblink ishttp://www.greenply.com/images/pdf/ Greenply-remuneration-policy.pdf. The terms ofreference and other details of the Nomination and Remuneration Committee has also beenprovided in the Corporate Governance Report. However brief outline of the RemunerationPolicy is as follows:

The Remuneration policy applies to all the "Executives" of the Company. ThePolicy also helps the Company to attain Board diversity and creates a basis for successionplanning. In addition it is intended to ensure that–

a) the Company is able to attract develop and retain high-performing and motivatedExecutives in a competitive international market;

b) the Executives are offered a competitive and market aligned remuneration packagewith fixed salaries being a significant remuneration component as permissible under theApplicable Law;

c) remuneration of the Executives are aligned with the Company’s businessstrategies values key priorities and goals.

In determining the remuneration policy the Nomination and Remuneration Committeeensures that a competitive remuneration package for all Executives is maintained and isalso benchmarked with other companies operating in national and global markets.

The nomination of the Independent Directors of the Company shall be in accordance withthe principles as stated under the policy.

The assessment for Functional head will be done on the basis of below parameters by theconcerned interview panel of the Company –a) Competencies b) Capabilities

c) Compatibility

d) Commitment

e) Character

f) Strong interpersonal skills

g) Culture among others.

The various remuneration components would be combined to ensure an appropriate andbalanced remuneration package.

The five remuneration components are -

• fixed remuneration (including fixed supplements)

• performance based remuneration (variable salary)

• pension schemes where applicable

• other benefits in kind

• severance payment where applicable

The fixed remuneration is determined on the basis of the role and position of theindividual including professional experience responsibility job complexity and localmarket conditions.

The performance-based remuneration motivates and rewards high performers whosignificantly contribute to sustainable results perform according to set expectations forthe individual in question and generates stakeholder value within the Group.

Any fee/remuneration payable to the Non-Executive directors of the Company shall abideby the following norms –

i. If any such director draws or receives directly or indirectly by way of fee/remuneration any such sums in excess of the limit as prescribed or without the priorsanction where it is required under the Applicable law such remuneration shall berefunded to the Company and until such sum is refunded hold it in trust for the Company.The Company shall not waive the recovery of any sum refundable to it;

ii. Such directors may receive remuneration by way of fee for attending meetings of theBoard or Committee thereof or for any other purpose whatsoever as may be decided by theBoard as permissible under Applicable law;

iii. An independent director shall not be entitled to any stock option and may receiveremuneration only by way of fees and reimbursement of expenses for participation inmeetings of the Board or Committee thereof and profit related commission as may bepermissible by the Applicable law.

Apart from above the Policy also entitles Executives to a severance fee.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises two Promoter Directors viz. Mr.Rajesh Mittal and Mr. Shobhan Mittal and two Non-Executive Independent Directors viz. Mr.Anupam Kumar Mukerji and Mr. Susil Kumar Pal. The detailed terms of reference and otherdetails of the Committee has been provided in the Corporate Governance Report.

RISK MANAGEMENT POLICY

On the basis of risk assessment criteria your Company has identified risks asminor/moderate/important/material or severe depending on their impact on turnover profitafter tax and return on capital employed. A risk library wherein the Company has allottedscores to the risks based on risk significance and risk likelihood. On the basis of riskscores the Company has identified few material risks for the organisation. The risksscores were initially done at the level of Operational Heads of Finance & AccountsSales Production and HR and finally assessment was done based on scores given by aninternal committee of the Company. However the risks are dynamic and the Company will beadding new risks and removing some of the existing risks as and when the Company developsolutions for the existing risks. Accordingly the Company has in place a mechanism toidentify assess monitor and mitigate various risks to key business objectives. The AuditCommittee of the Board evaluating risks management policy of the Company on quarterlybasis.

EXTRACT OF THE ANNUAL RETURN

The extract of Annual Return as required under section 134(3) (a) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 inForm No. MGT-9 is annexed to this Report.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments affecting the financial position ofthe Company since the close of financial year i.e. since March 31 2016 till the date ofthis Report. Further it is hereby confirmed that there has been no change in the natureof business of the Company.

Significant and material orders passed by the regulators / courts / tribunals impactingthe going concern status and the Company’s operations in future

As such there is no significant and material order by the regulator/court/tribunalsimpacting the going concern status and the Company’s operation in future.

INTERNAL FINANCIAL CONTROLS

Your Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting are operating effectively based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol. Your Company had laid down guidelines policies procedures and structure forappropriate internal financial controls across the Company. These control processes enableand ensure the orderly and efficient conduct of company’s business includingsafeguarding of assets prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and timely preparation & disclosure offinancial statements. Review and control mechanisms are built in to ensure that suchcontrol systems are adequate and operating effectively. The Audit Committee evaluated theinternal financial controls based on the following criteria:

1. Systems have been laid to ensure that all transactions are executed in accordancewith management’s general and specific authorisation. There are well-laid manuals forsuch general or specific authorisation.

2. Systems and procedures exist to ensure that all transactions are recorded asnecessary to permit preparation of financial statements in conformity with generallyaccepted accounting principles or any other criteria applicable to such statements and tomaintain accountability for aspects and the timely preparation of reliable financialinformation.

3. Access to assets is permitted only in accordance with management’s general andspecific authorisation. No assets of the Company are allowed to be used for personalpurposes except in accordance with terms of employment or except as specificallypermitted.

4. The existing assets of the Company are verified/checked at reasonable intervals andappropriate action is taken with respect to any differences if any.

5. Proper systems are in place for prevention and detection of frauds and errors andfor ensuring adherence to the Company’s policies.

A report on the internal financial controls under clause (i) of sub-section 3 ofSection 143 of the Companies Act 2013 issued by M/s. D. Dhandaria & CompanyChartered Accountants Statutory Auditors of the Company is attached with theirIndependent Auditor’s report and the same is self-explanatory.

INDIAN ACCOUNTING STANDARDS (IND AS) – IFRS CONVERGED STANDARDS

Your Company shall adopt Ind AS with effect from April 1 2016 pursuant to Ministry ofCorporate Affairs notification dated February 16 2015 notifying the Companies (IndianAccounting Standard) Rules 2015. Your Company has substantially completed the assessmentof the impact of the change to Ind AS on reported reserves and surplus and on the reportedprofit for the relevant periods. Your Company has also completed the modification ofaccounting and reporting systems to facilitate the changes.

INSURANCE

Your Company’s properties including building plant machineries and stocksamong others are adequately insured against risks.

PARTICULARS OF LOANS/ADVANCES/ INVESTMENTS AS REQUIRED UNDER SCHEDULE V OF THE LISTINGREGULATIONS

The details of related party disclosures with respect to loans/advances/investments atthe year end and maximum outstanding amount thereof during the year as required under PartA of Schedule V of the Listing Regulations have been provided in the notes to theFinancial Statements of the Company.

LOANS/ADVANCES GUARANTEE AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT 2013

Details of loans/advances granted guarantees given and investments made during theyear under review covered under the provisions of Section 186 of the Companies Act 2013are annexed to this Report.

DEPOSITS

During 2015-16 the Company did not invite or accept any deposits from the public underSection 76 of the Companies Act 2013.

RELATED PARTY TRANSACTIONS

There are no materially significant related party transactions made by the Companywhich may have potential conflict with the interest of the Company. Related partytransactions that were entered into during the year under review were on arm’s lengthbasis and were in ordinary course of business. The Particulars of material related partytransaction is provided in Form AOC-2 as required under section 134(3)(h) of the CompaniesAct 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014. Further suitabledisclosure as required by the Accounting Standards (AS18) has been made in the notes tothe Financial Statements. The Board has approved a policy for related party transactionswhich has been uploaded on the Company’s website. The web link as required underListing Regulations is as under: http://www.greenply.com/images/pdf/Related-Party-Transaction(s)-Policy.pdf

CORPORATE GOVERNANCE

Your Company is committed to observe good Corporate Governance practices. The report onCorporate Governance for the financial year ended March 31 2016 as per Regulation 34(3)read with Schedule V of the Listing Regulations forms part of this Annual Report andannexed to this Report. The requisite certificate from Statutory Auditors M/s. D.Dhandaria & Company Chartered Accountants confirming compliance with the conditionsof corporate governance is attached to this Report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Report on Management Discussion and Analysis Report as required under ListingRegulations forms part of this Annual Report and is annexed to this Report. CertainStatements in the said report may be forward looking. Many factors may affect the actualresults which could be different from what the Directors envisage in terms of the futureperformance and outlook.

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place a Policy on prevention of Sexual Harassment in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. There were no complaints pending for the redressal at thebeginning of the year and no complaints received during the financial year.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under section 134(3) (m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is annexed to this Report.

CORPORATE SOCIAL RESPONSIBILITY

During the year under review your Company has formed and registered a trust namelyGREENPLY FOUNDATION under the provisions of Indian Trusts Act 1882 to carry out CSRactivities of the Company. To maintain the integrity of CSR expenditure for the FY2015-16 the Company has transferred Rs.2.02 crore to the said trust. The trust willutilise the fund for CSR activities approved by the CSR Committee from time to time. Outof Rs.2.02 crore the trust has made expenditure of Rs.6.51 lacs towards administrativeexpenses during FY 2015-16. Going forward all CSR expenditure will be made by the trust.The unutilised fund lying with the trust as on March 31 2016 amounting to Rs.195.49 lacs(net of liabilities) will be used for CSR activities along with fresh funding if anyfrom the Company during FY 2016-17. In view of the time taken for identifying &setting-up the institutional framework the Company has unspent amount adding uptoRs.226.33 lacs. Out of the above Rs.195.49 lacs has directly been disbursed by the Companyto be spent by GREENPLY FOUNDATION for eligible CSR Projects and which is expected to bespent during FY 2016-17.The Company is committed to the underlying intent of CSR and isoptimistic of meeting its obligations under section 135 of the Companies Act 2013 andthereby make a positive impact on the society.In compliance with requirements of Section135 of the Companies Act 2013 the Company has a CSR Policy. The composition of theCommittee contents of CSR Policy and report on CSR activities carried out during theFinancial Year ended March 31 2016 in the format prescribed under Rule 9 of the Companies(Accounts) Rules 2014 is annexed to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of provisions of Section 134(5) of the Companies Act 2013 your directorsstate that:

(i) in the preparation of the annual accounts for the financial year ended March 312016 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(ii) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;

(iii) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the directors had prepared the annual accounts on a going concern basis;

(v) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and

(vi) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

CEO AND CFO CERTIFICATION

Pursuant to the Listing Regulations the CEO and CFO certification is attached with theAnnual Report. The Joint Managing Director &CEO and the Chief Financial Officer alsoprovide quarterly certification on financial results while placing the financial resultsbefore the Board in terms of the Listing Regulations.

CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

The Code of Conduct is posted on the Company’s website. The Joint ManagingDirector &CEO of the Company has given a declaration that all Directors and SeniorManagement Personnel concerned affirmed compliance with the Code of Conduct withreference to the year ended on March 31 2016. Declaration is attached with the annualreport.

COMPLIANCE CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

The certificate received from M/s. D. Dhandaria & Company Chartered Accountants(Firm Registration no. 306147E) Statutory Auditors of the Company to the effect ofcompliance of conditions of Corporate Governance as required under Schedule V of theListing Regulations is annexed with the Report.

FRAUD REPORTING

There have been no frauds reported by the Auditors of the Company to the AuditCommittee or the Board of Directors under sub-section (12) of section 143 of the CompaniesAct 2013 during the financial year.

However during the year under review the Company has noticed and detected a fraudmade by an employee of the Company as mentioned below which was brought to the notice ofthe Auditors by the Company. Your Company is taking necessary steps on the same.

Nature of Fraud Rs.in lacs
Embezzlement of funds by way of payments to unauthorised vendors and false cash payments to vendors 70.50

DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED SUSPENSE ACCOUNT

The relevant details have been provided in the Corporate Governance Report annexed tothis Report.

PARTICULARS OF EMPLOYEES

The information required under section 197 of the Companies Act 2013 read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed to this report.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks and appreciation for the continuingsupport of financial institutions consortium of banks vendors clients investorsCentral Government State Governments and other regulatory authorities. The Directors alsoplace on record their heartfelt appreciation for the commitment and dedication of theemployees of the Company across all the levels who have contributed to the growth andsustained success of the Company.

For and on behalf of the Board of Directors
Shiv Prakash Mittal
Place : Kolkata Executive Chairman
Dated : May 24 2016 DIN: 00237242