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Grindwell Norton Ltd.

BSE: 506076 Sector: Engineering
BSE 00:00 | 24 May 492.50 -8.35






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OPEN 495.10
52-Week high 570.00
52-Week low 346.30
P/E 40.04
Mkt Cap.(Rs cr) 5,453
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Sell Price 0.00
Sell Qty 0.00
OPEN 495.10
CLOSE 500.85
52-Week high 570.00
52-Week low 346.30
P/E 40.04
Mkt Cap.(Rs cr) 5,453
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Grindwell Norton Ltd. (GRINDWELL) - Director Report

Company director report

The Members

Your Directors present the 67th Annual Report of the Company along with theaudited financial statements for the year ended March 31 2017.


(Rs. Crore)



2016-17 2015-16 2016-17 2015-16
Sale of Products (Gross) 1259.43 1154.28 1286.16 1178.54
Service & Other Operating Income 110.38 86.39 108.49 84.97
Less: Excise Duty (100.44) (90.08) (100.44) (90.08)
Revenue from Operations 1269.37 1150.59 1294.21 1173.43
Operating Profit 173.85 155.79 181.72 163.51
Interest 1.10 6.90 2.00 2.42
Profit before Tax 172.75 155.10 179.72 161.09
Provision for Tax 56.74 52.96 58.83 54.70
Profit for the year 116.01 102.14 120.89 106.39
Less: Share of Minority Interest - - (1.49) (115)
Profit for the year after Minority Interest - - 119.40 105.24
Retained Earnings 196.76 192.73 198.47 191.72

The Company proposes to transfer an amount of Rs. 6.05 Crore to the General Reserve. Anamount of Rs.110 Crore is proposed to be retained in the Statement of Profit and Loss.


Your Directors are pleased to recommend dividend of Rs.4/- per equity share of facevalue of Rs.5/- (Rupees Five only) each for the financial year ended March 31 2017. Thedividend on equity shares if approved by the Members would involve cash outflow ofRs.53.31 Crore including dividend tax as against the cash outflow of Rs.43.31 Croretowards dividend in the previous year.


Consequent to the approval of the shareholders through postal ballot and e-voting onJuly 7 2016 your Company has issued 55360000 bonus shares in the ratio of 1:1 ( fully paid equity share of Rs.5/- (Rupees Five only) each for every one fully paidequity shares). The bonus shares were allotted on July 22 2016.

Consequently the issued subscribed and paid-up equity share capital of your Companyhas increased from Rs.276800000 divided into 55360000 equity shares of Rs.5/-(Rupees Five only) each to Rs.553600000 divided into 110720000 equity shares ofRs.5/- (Rupees Five only) each.


In 2016-17 the new recently released Index for Industrial Production("IIP") witnessed an increase of 5% (the increase as per the old Index was lessthan 1%). The new Index where the base year is 2011-12 and the basket of goods has beenchanged is expected to be more representative of the growth of the sector. As per the newIIP growth in 2016-17 is much higher than the preceding three years during which growthaveraged about 3.6% per annum. Investment in the economy however also remained at arecord low level (Gross Capital Formation in 2016-17 was 29.08% of GDP). Reflecting thisyour Company's overall sales growth over the last few years has been lower than in earlieryears.

• Abrasives

The higher growth (compared to the preceding three years) of the industrial sectorbuoyed domestic demand. Meanwhile the business continued to focus on new products and newmarkets. Partly because of improved domestic demand and partly because of market sharegains your Company's Abrasives sales increased by 10% in 2016-17. Most of this growth wason account of volumes which led to an increase of 11% in operating profits while theoperating margin remained at the same level.

• Ceramics & Plastics

The Silicon Carbide business stabilized at a low level in 2016-17 in the face of excessglobal supply and low prices. The business continued to lose market share to imports fromChina and Vietnam. At the same time production at your Company's Tirupati plant continuedto be affected due to reduced power supply from Andhra Pradesh Gas Power CorporationLimited for much of the fiscal year. Consequently production sales prices and operatingprofit witnessed a further decline. The High Performance Refractories business had a yearof mixed fortunes with domestic sales witnessing strong growth even as exports and marginsdeclined. Growth of the Performance Plastics business was much lower than in the previousyear mainly due to softening of demand in certain end-user segments. With improved orderinflow (domestic and exports) the ADFORS business witnessed strong growth on a low base.


The Company has one subsidiary in Bhutan Saint-Gobain Ceramic Materials Bhutan PrivateLimited. It is not a material subsidiary in terms of sub-regulation (1)(c) of Regulation16 of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations").

The operations of your Company's subsidiary in Bhutan were stable. In accordance withSection 129(3) of the Companies Act 2013 ("Act") and Rule 5 of the Companies(Accounts) Rules 2014 and relevant Accounting Standards ("AS") the Company hasprepared consolidated financial statements of the Company and its subsidiary companywhich forms part of the Annual Report. A statement in Form AOC-I containing salientfeatures of the financial statements of the subsidiary company is also included in theAnnual Report. In accordance with provisions of Section 136(1) of the Act the AnnualReport of the Company containing therein the standalone and consolidated financialstatements and audited financial statement of the subsidiary has been placed on thewebsite of the Company Shareholders interested in obtaining acopy of the audited financial statements of the subsidiary may write to the CompanySecretary at the Company's Registered Office.


While the long term outlook for the Indian economy remains very positive the shortterm outlook is uncertain. Investment demand remains low. The order inflow acrossbusinesses remains muted and there is no pull from the channel. While the implementationof the Goods and Services Tax Act will have a positive impact in the medium term it willaccentuate short term uncertainty. With capacity utilization increasing inflationexpected to remain low the Rupee expected to depreciate gradually and the cumulativeimpact of the economic reforms initiated by the Government being positive there are hopesof higher industrial growth in the new fiscal. Under the circumstances your Company'smanagement will continue to focus on new products new markets and exports to sustaingrowth.


There have been no material changes or commitments affecting the financial position ofthe Company which have occurred between end of the financial year and the date of theReport.


Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes forming part of the financialstatements.


Employee relations were cordial at all sites of your Company. At the end of thefinancial year there were 1850 employees. During the year a new productivity-enhancingwage agreement was concluded with the workers Rs.union at Nagpur. Your Directors place onrecord their appreciation for the contribution made by all employees in the progress ofyour Company. The Company follows the best practices in hiring and on-boarding ofemployees. The Company adopts a fair and transparent performance evaluation process. Inorder to improve organizational efficiency and employee engagement various process changeinitiatives were undertaken during the year. To ensure this and also to improve the skilllevels employees participate in various training programmes and complete mandatorye-learning courses.

Your Company is committed to creating and maintaining a healthy working environmentthat enables employees to work without fear of prejudice gender bias and sexualharassment. The Company believes that all employees have a right to be treated withrespect and dignity and has zero tolerance towards violations of its Code of Conduct ingeneral and its sexual harassment policy in particular. During the year no complaintunder the sexual harassment policy has been received by the Compliance Committee.


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is set out in Annexure 1 to this Report.

Your Company is committed to ensure a clean and green pollution-free environment aswell as a safe and healthy work place at all plant locations and work sites. Your Companystrictly abides by the Saint-Gobain Group's Environment Health and Safety Charter and thepolicies and procedures framed under it. All the plants of your Company are certifiedunder ISO 9001:2008 ISO 14001:2004 and OHSAS 18001:2007. These certifications and variousawards are recognition of the efforts made and results achieved by your Company inimproving Environment Health and Safety at all its work sites.


Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) and 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of the AnnualReport.

Having regard to the provisions of the first proviso to Section 136(1) of the said Actthe Annual Report excluding the aforesaid information is being sent to the Members ofthe Company. The said information is available for inspection at the Registered Office ofthe Company during working hours and any Member interested in obtaining such informationmay write to the Company Secretary and the same will be furnished on request. The fullAnnual Report including the aforesaid information is available on the website of theCompany


The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.


In terms of the provisions of the Companies Act 2013 Mr. Pradip Shah Mr. Keki M.Elavia and Mr. Shivanand Salgaocar have been appointed as Independent Directors at theAnnual General Meeting ("AGM") held on July 23 2014 for a term of five (5)consecutive years commencing from July 23 2014.

In accordance with the Companies Act 2013 and the Articles of Association of theCompany Mr. Mikhil Narang Director retires by rotation and being eligible has offeredhimself for re-appointment.

The Board on the recommendation of the Nomination and Remuneration Committeeappointed Mr. Krishna Prasad (Director Identification No. 00130438) as an AlternateDirector to Ms. Marie-Armelle Chupin (Director Identification No. 00066499) Non-ExecutiveDirector of the Company.

Being in employment with the Company and for the purpose of the compliance with theCompanies Act 2013 and Rules framed thereunder appointment and terms of remuneration ofMr. Krishna Prasad as Whole-Time Director designated as Executive Director of the Companyfor a period of five (5) years with effect from May 23 2017 upon his appointment as anAlternate Director to Ms. Marie-Armelle Chupin Non-Executive Director subject to theapproval of the Members at the ensuing AGM of the Company. Mr. Krishna Prasad shall nothold office for a period longer than that permissible to Ms. Marie-Armelle Chupin.

Mr. Krishna Prasad graduated from College of Engineering Trivandrum in 1984 withB.Tech degree in Mechanical Engineering. He completed his Post Graduate Diploma from theIndian Institute of Management Bengaluru in 1990. Mr. Krishna Prasad joined GrindwellNorton Limited in 1990 and has since then served in various positions. He is currentlyholding the position of Vice-President Ceramics & Plastics and Corporate Services.

The resolution seeking approval of the Members for the appointment of Mr. KrishnaPrasad has been incorporated in the Notice convening the AGM of the Company along withbrief details about him. The Company has received a notice under Section 160 of the Actalong with the requisite deposit proposing the appointment of Mr. Krishna Prasad.

None of the Directors or Key Managerial Personnel has any pecuniary relationships ortransactions with the Company other than salaries commission sitting fees andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.


The Company has received declarations from all Independent Directors confirming thatthey meet the criteria of independence as prescribed under Section 149(6) of the CompaniesAct 2013 and Regulation 16 of the Listing Regulations..


The familiarisation programmes are aimed to familiarise the Independent Directors withthe Company nature of industry in which the Company operates and business model of theCompany. The details of the familiarisation programme imparted to Independent Directorsare available on the Company's website at

n/investor-information. The Independent Directors are regularly briefed with respect tothe developments that are taking place in the Company and its operations.


The Board meets at regular intervals to review the Company's businesses and to discussstrategy and plans. A tentative annual calendar of meetings is circulated to the Directorsin advance to enable them to plan their schedule and to ensure effective participation.

During the year five board meetings were held. The maximum interval between themeetings did not exceed the period prescribed under the Companies Act 2013 and theListing Regulations.


During the year in accordance with the Companies Act 2013 and Regulations 18 to 21 ofthe Listing Regulations the Board has constituted or reconstituted its Committees.Currently the Board has the following Committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

• Share Transfer Committee

Details of the Committees their constitution and other details are provided in theCorporate Governance Report.


To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3)(c) of the Companies Act 2013:

i. that in the preparation of the annual financial statements for year ended March312017 the applicable accounting standards have been followed along with properexplanations relating to material departures if any;

ii. that such accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearon March 312017 and of the profit of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv. that the annual financial statements have been prepared on a 'going concernRs.basis;

v. that proper internal financial controls are in place and that such internalfinancial controls are adequate and are operating effectively;

vi. that proper systems to ensure compliance with the provisions of all applicable lawsare in place and that such systems are adequate and are operating effectively.

With reference to the point number (v) the Board believes the Company has soundInternal Financial Controls ("IFC") commensurate with the nature and size of itsbusiness. However business is dynamic and IFC are not static and evolve over time as thebusiness technology and fraud environment changes in response to competition industrypractices legislation regulation and current economic conditions. There will thereforebe gaps in the IFC as business evolves. The Company has a process in place to continuouslyidentify such gaps and implement newer and/or improved controls wherever the effect ofsuch gaps would have a material effect on the Company's operations.


The Nomination and Remuneration Committee has laid down the criteria for DirectorsRs.appointment and remuneration. These are set out in the Nomination and RemunerationPolicy which is annexed as Annexure 3 to this Report.


The Board on recommendation of the Nomination and Remuneration Committee has adopteda framework for performance evaluation of the Board its committees individual directorsand the chairperson through a survey questionnaire. The survey questionnaire broadlycovers various aspects of board functioning composition of Board and its committeesculture execution and performance of specific duties obligation and governance.


All related party transactions entered during the financial year were in the ordinarycourse of business and on an arm's length basis. During the year the Company has notentered into any contract/arrangement/transaction with related parties which would beconsidered material as prescribed under the Companies Act 2013 and Regulation 23 of theListing Regulations.

Prior approval of the Audit Committee is obtained for all related party transactions.The Audit Committee monitors on a quarterly basis the related party transactions enteredvis-a-vis the related party transactions approved by the Audit Committee.

The policy on related party transactions as approved by the Board is available on thewebsite of the Company There are no transactions that arerequired to be reported in Form AOC-2.

The details of the transactions with related parties are provided in the accompanyingfinancial statements.


It is your Company's belief that its primary goal is to serve the needs of itscustomers and in the process of doing so to generate employment livelihood and incomefor all its stakeholders (suppliers vendors service providers employees lendersshareholders etc.) and at the same time to contribute to the revenues of Government.Further it is your Company's belief that by pursuing its primary goal and by ensuringthat its business practices meet the highest standards of corporate governance and ethicsit best fulfills its obligations and responsibility to society. Against the backdrop ofthis belief your Company is committed to implement the agenda set out in its CSR policy.The CSR policy and the initiatives taken during the year in the format prescribed underthe Companies (Corporate Social Responsibility Policy) Rules 2014 are set out inAnnexure 4 to this Report. In accordance with Section 135 of the Companies Act 2013 aCorporate Social Responsibility Committee of the Board having an Independent Chair hasbeen constituted to monitor the CSR policy and programs. The amount spent on eligible CSRactivity for the financial year 2016-17 is around 0.56% of the average net profit of theCompany during the three immediately preceding financial years.


Your Company recognizes that managing risk is an integral part of good managementpractice and an essential element of good corporate governance. It aims to have a commonformalized and systematic approach for managing risk and implementing a risk managementprocess across the Company. The intent of the policy is to ensure the effectivecommunication and management of risk across all risk categories. The Company hasidentified elements of risk which may threaten the existence and financial position ofthe Company which are set out in the Management Discussion and Analysis Report.

The Company's Internal Financial Control systems are commensurate with the nature ofits business financial statements and the size and complexity of its operations. Theseare routinely tested and certified by the Statutory as well as Internal Auditors.Significant audit observations and follow up actions thereon are reported to the AuditCommittee.


Your Company has adopted and disseminated its Whistle Blower Policy to provide a secureenvironment and encourage employees to report unethical unlawful or improper practicesacts or activities and to prohibit any adverse personnel action against those who reportsuch practices acts or activities in good faith.

The Whistle Blower Policy is available on the website of the


a. Statutory Auditors

In accordance with the provision of Section 139 of the Companies Act 2013 read withthe Companies (Audit and Auditors) Rules 2014 M/s. Kalyaniwalla & Mistry LLPChartered Accountants (Firm Registration No 104607W/W100166) completes its term as theStatutory Auditors of the Company at the conclusion of the ensuing Annual General Meeting("AGM") of the Company.

Your Directors on recommendation of the Audit Committee seek approval of the Membersat the ensuing AGM of the Company for appointment of M/s. Price Waterhouse CharteredAccountants LLP (Firm Registration No. 012754N/N500016) for an initial term of five (5)consecutive years. M/s. Price Waterhouse Chartered Accountants LLP have confirmed theireligibility and willingness for appointment as Statutory Auditors of the Company under theprovisions of the Companies Act 2013 and Rules framed thereunder.

Accordingly a resolution proposing appointment of M/s. Price Waterhouse CharteredAccountants LLP (Firm Registration No. 012754N/N500016) as the Statutory Auditors of theCompany for a term of five (5) consecutive years from the conclusion of the 67thAGM till the conclusion of the 72nd AGM of the Company pursuant to Section 139of the Companies Act and Rules framed thereunder on such remuneration as may be mutuallyagreed between Board of Directors of the Company and the Auditors as set out in theresolution included in the Notice convening the AGM of the Company. As per provisions ofSection 139(1) of the Act their appointment for the above tenure is subject toratification by Members at every AGM.

The Board of Directors places on record its appreciation for the services rendered byM/s. Kalyaniwalla & Mistry LLP Chartered Accountants as the Statutory Auditors ofthe Company.

b. Cost Auditor

In accordance with Section 148 of the Companies Act 2013 and Rules framed thereunderthe cost audit records are maintained by the Company in respect of the products which arerequired to be audited. Your Directors on recommendation of the Audit Committeeappointed M/s. Rao Murthy & Associates Cost Accountants to audit the costaccounting records maintained by the Company for the financial year ended March 31 2017.

c. Secretarial Auditor

In accordance with Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Parikh & Associates Company Secretaries to undertake the SecretarialAudit of the Company for the financial year ended March 31 2017. The Secretarial AuditReport for the financial year ended March 31 2017 in Form No. MR-3 is set out in Annexure5 to this Report.


There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Kalyaniwalla & Mistry LLP Statutory Auditors in their Auditors Rs.Report and byM/s. Parikh & Associates Secretarial Auditor in their Secretarial Audit Report.

The Auditors have not reported any incident of fraud to the Audit Committee of theCompany in the year under review


The extract of annual return in Form No. MGT-9 is attached as Annexure 6 to thisReport.


As per Regulation 34 Schedule V of the Listing Regulations the Corporate GovernanceReport with the Auditors Rs.Certificate thereon and the Management Discussion and AnalysisReport are annexed and form part of this Report.


The Listing Regulations mandate inclusion of the Business Responsibility Report("BRR") as part of the Annual Report for the top 500 listed entities based onmarket capitalization. In compliance with the regulation we have annexed the BRR as partof this Report.


There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company's operations in the future.


Your Directors take this opportunity to acknowledge with sincere gratitude thesupport of its esteemed customers the strength it derives from its association withCompagnie de Saint-Gobain and its subsidiaries the continued support and co-operationfrom its employees Bankers and the loyalty of the large family of the Company's DealersSuppliers and valued Shareholders.

For and on behalf of the Board of Directors

Mumbai May 23 2017 Chairman Managing Director

Annexure 1


(A) Conservation of energy:

Your Company is committed to ensure a clean green pollution-free environment as wellas a safe and healthy work place at all plant locations and work sites. All the Plants ofyour Company are certified under the Integrated Management System. These certificationsare recognition of the sustained efforts made by your Company in improving EnvironmentHealth and Safety ("EHS") at all its sites. Your Company has taken variousmeasures to conserve energy and resources.

(B) Technology absorption:

Your Company believes that technology absorption adaptation and innovation is anon-going process. During the year through various visits and interactions with theSaint-Gobain Research & Development ("R&D") centres as well as othermanufacturing locations your Company has kept itself informed on the latest trends intechnology related to the business of the Company. This has helped your Company tocontinuously improve the manufacturing processes improve efficiencies and develop newproducts.

1. Specific areas in which R&D was carried out by the Company:

(a) Abrasives : Bonded (including Thin Wheels) Coated (including Non-woven) Super Abrasives
(b) Ceramics : Silicon Carbide Grains

Refractories and Monolithics

2. Benefits derived as a result of the above R&D:

Development of:

• Light weight Depressed Centre Disc

• Tool room wheel Improvements in:

• Product safety and quality

• EHS at manufacturing site by change of resin systems

3. Future plans of action:

Technology adoption from Saint-Gobain Abrasives and other Saint-Gobain plants inidentified priority areas for development of new and improved products.

Development and utilization of advanced tools facilitated with enhanced grinding systemsolutions.

4. Expenditure on R&D for the year ended March 31 2017:

(a) Capital Nil
(b) Recurring 3.07
(c) Total 3.07
(d) Total R&D expenditure as % of Total turnover 0.25%

(C) Foreign exchange earnings and outgo:

Total earnings in foreign exchange for the financial year ended March 31 2017 wereRs.195.29 Crore and the total outflow was Rs.386.63 Crore. Details are given in notes no29.246 and 48.