Your Directors are pleased to present the 9th Annual Report and AuditedAccounts for the financial year ended March 31 2017.
1. FINANCIAL RESULTS:
| || ||Rs. Lakhs |
|Particulars ||For the Year ended 31.03.2017 ||For the Year ended 31.03.2016 |
|Revenue from Operations (Net) ||113105.67 ||101135.42 |
|Profit before finance cost depreciation & tax ||20191.37 ||17709.33 |
|Less: Finance Cost ||973.69 ||1778.92 |
|Profit before depreciation & tax ||19217.68 ||15930.41 |
|Less: Depreciation/Amortization ||725.04 ||604.15 |
|Profit Before Taxation ||18492.64 ||15326.26 |
|Taxation: || || |
|Current Tax ||6267.46 ||5224.27 |
|Deferred Tax ||117.45 ||70.52 |
|Profit After Taxation ||12107.73 ||10031.47 |
|Balance brought forward from previous year ||8967.92 ||3862.94 |
|Balance available for appropriation ||21075.65 ||13894.41 |
|Appropriations: || || |
|Interim Dividend paid on Equity Shares for the year ||1736.81 ||1487.17 |
|Dividend distribution Tax on Interim Dividend ||353.57 ||302.75 |
|Proposed Final Dividend on Equity Shares for the year ||- ||1982.90 |
|Dividend distribution Tax on Final Dividend ||- ||403.67 |
|Final Dividend on shares issued under employee stock option scheme ||1.47 ||- |
|Dividend distribution Tax on Final Dividend on shares issued under employee stock option scheme ||0.30 ||- |
|Transfer to General Reserve ||900.00 ||750.00 |
|Balance Carried to Balance Sheet ||18083.50 ||8967.92 |
The Company has continued its growth trajectory by outperforming the industry and hasdelivered a Net Revenue growth of 11.8% EBITDA growth of 13.4% PBT growth of 20.7% andPAT growth of 20.7% for the year over the last financial year. Net revenues for the year2016-17 was Rs. 113105.67 lakhs (Previous year Rs. 101135.42 lakhs) Profit before taxfor the year 2016-17 was Rs. 18492.64 lakhs (Previous year Rs. 15326.26 lakhs). EBITDAhas shown healthy growth of 13.4% YOY with EBITDA margins at 16.1% an improvement of 22bps for the year over previous year.
Profit after tax for the year was Rs. 12107.73 lakhs (Previous year Rs. 10031.47lakhs) resulting in an Earnings Per Share (Basic) of Rs. 24.41 (Previous year Rs. 20.24).During the year under review there was no change in the nature of business.
Key Performance highlights are discussed in detail in the Management Discussion andAnalysis forming an integral part of this Report.
During the year the Board of Director of the Company had approved the DividendDistribution Policy in line with Regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The policy is separately provided as AnnexureE forming an integral part of this Report and is also uploaded on the website of theCompany at http:// www.gulfoilindia.com/upload/pdf/dividend-distribution-policy17.pdf .
In line with the Policy the Board has recommended a final dividend of Rs. 5/- perequity share (250% on the Face Value of Rs. 2/- per share) for the year 2016-17. The finaldividend of Rs. 2481.69 lakhs if approved by the Shareholders at the ensuing AnnualGeneral Meeting will be paid out of the profits for the current year to all theShareholders of the Company whose names appear on the Register of Members as on the dateof the Book Closure. The Board at their meeting held on February 3 2017 declared anInterim Dividend of Rs. 3.50 per share i.e. 175% of the Face Value of Rs. 2/- per share.The said Interim Dividend was paid to all eligible shareholders on February 23 2017.
With this the total dividend for the full year 2016-17 shall stand at Rs. 8.50 pershare (425% on Face Value of Rs. 2/- per share).
TRANSFER TO RESERVE:
During the year Board has appropriated Rs. 900 lakhs to General Reserves. (Previousyear Rs. 750 lakhs)
4. SHARE CAPITAL:
During the year there has been an increase in the paid-up equity share capital due toequity shares being allotted to eligible employees under Gulf Oil Lubricants IndiaLimited- Employee Stock Option Scheme- 2015. The paid-up equity share capital of theCompany as on March 31 2017 was Rs. 992.68 lakhs (previous year Rs. 991.45 lakhs). Theauthorized capital of the Company as on March 31 2017 was Rs. 104627228 divided into52313614 equity shares of Rs. 2/- each. There was no change in the authorized capitalof the Company during the year.
5. MANAGEMENT DISCUSSION AND ANALYSIS:
Management discussion and Analysis is provided separately forming an integral part ofthis Report.
6. VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has adopted Whistle Blower and Vigil Mechanism policy for Directors andEmployees of the Company. The Company has established a secured system to enable Directorsand Employees to report their genuine concerns generally impacting / affecting businessof our Company including but not limited to improper or unethical behavior / misconduct /actual or suspected frauds / violation of Company's code of conduct. All protecteddisclosures concerning financial or accounting matters should be addressed in writing tothe Chairperson of the Audit Committee of the Company for investigation.
In respect of all other protected disclosures those concerning the Ombudsman andemployees at the levels of senior Vice President and above should be addressed to theChairperson of the Audit Committee of the Company and those concerning other employeesshould be addressed to the Ombudsman of the Company. The Ombudsman may refer the matter tothe Chairperson of the Audit Committee depending upon the importance of the matter. YourCompany hereby affirms that no Director or employee has been denied access to theChairperson of the Audit Committee. During the year no complaints were received undervigil mechanism.
7. PUBLIC DEPOSITS:
The Company has not accepted any deposits during the year from the Public fallingwithin the ambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
8. RESEARCH & DEVELOPMENT:
Company's Research & Development (R&D) and quality control facility located atSilvassa has comprehensive testing facilities for testing and development of automotiveand industrial lubricants. It is staffed with well qualified & experienced scientistsand technologists for development of product formulations.
Although Company receives global product formulations from Gulf Oil International underthe license agreement the R&D Centre located at Silvassa adopts the global productformulations based on local raw materials and operating conditions meeting the specificneeds of local OEM's and lubricants market in India.
9. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES:
The Company does not have any subsidiary/Joint Venture/ Associates as on March 312017.
10. HUMAN RESOURCES / INDUSTRIAL RELATIONS ESOP SCHEME:
The Company successfully grew its talent acquisition retention and development plansduring the year Cordial industrial relation and low absenteeism contributed to higheroutput levels. The focus on employee development and efforts to enhance competency levelsthrough training programs continued. Detailed information on this section has beenprovided in the "Management Discussion and Analysis which is forming an integralpart of this Report.
EMPLOYEES STOCK OPTION SCHEME:
During the year under review your Company has allotted 61300 equity shares under"Gulf Oil Lubricants India Limited-Employees Stock Option Scheme-2015" toeligible employees of the Company. The total Stock Options outstanding as of March 312017 are 627531. The information as required under Regulation 14 of the SEBI(Share BasedEmployee Benefits) Regulations 2014 are disclosed on the website of the Company atweblink http://www.gulfoilindia.com/upload/pdf/golil-esop. pdf.
11. PREVENTION OF SEXUAL HARASSMENT POLICY:
Your Company has adopted Prevention of Sexual Harassment (POSH) policy. A separateinternal Committee has been constituted under the policy. No complaints were receivedunder POSH during the year ended March 31 2017.
12. REMUNERATION POLICY:
The Board has adopted a policy which lays down a framework in relation to remunerationof Directors Key Managerial Personnel and Senior Management of the Company. The policyalso lays down the criteria for selection and appointment of Board members. The details ofthe policy are provided in the "Report on Corporate Governance" Annexure F tothis Report.
13. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES AND PROGRAMS:
The Company has initiated activities under CSR initiatives in the area of educationvocational training rural development and promoting healthcare in and around its area ofoperations and local area at Silvassa DNH. These projects are in accordance with scheduleVII of the Companies Act 2013 and Company's CSR policy.
A report on CSR activities as required under Companies (Corporate socialresponsibilities Policy) Rules 2014 is set out in Annexure A forming part of thisReport.
The Company instilled and guided by the values of our Group Founder Shri. ParmanandDeepchand Hinduja's belief "My dharma (duty) is to work so that I can give" .The Company actively engaged in various programs under CSR during the year. The details ofthe same are given below:
a) Mobile Medical Unit: Being a multi-year program the Company continued itssupport for mobile medical unit during the current year in the remote villages nearSilvassa DNH. This CSR project provides much needed free medical support to the tribalpopulation residing in the villages near Silvassa. The program is administered throughHinduja Foundation and Hinduja Hospital. During the year more than 8400 villagers weretreated under the project free of cost. The state of the art facilities available to thevillagers free of cost in the mobile van which includes diagnostic facility laboratorytest medicine dispensing.
b) Road Safety Drive: The Company supported road safety campaign to promoteeducation and awareness on road safety amongst bike riders. During the campaign safetyhelmets were distributed to traffic police at various cities in Maharashtra like MumbaiPune Thane Nagpur Nasik Aurangabad Solapur and Amravati. The Company also supported aroad safety rally and awareness programs initiated by Mukul Madhav Foundation at Punejointly with Pune city police and other corporates. The Company distributed more than3000 safety helmets to traffic police in various cities of Maharashtra.
c) Primary Education to Children: For last two years the Company is focusing onone of the critical area of community as educational support to economically challengedchildren through Mukul Madhav Foundation. During the year initiatives were taken todevelop primary education infrastructure for economically challenged children in WagholiPune and village Gholap Ratnagiri.
d) Kushal Mechanic Program: In this year the Company initiated two wheelermechanic vocational training program known as "Kushal Mechanic Program" for twowheeler mechanics who are lacking of formal education and training. Two wheeler mechanicvocational training was provided through MITCON Centre for CSR and Skill Development Puneand the participants were awarded training completion certificate jointly by Mitcon andCompany. During the financial year more than 150 mechanics were benefited with thisprogram. This being a multi-year program which will be further implemented in otherregions in future.
e) Other Programs: Few other programs were undertaken during the year in thearea of Community development (through Make-A-Wish Foundation Woman safety (throughU-Active) and water conservation (through Bhagwat Foundation)
14. DIRECTORS & KEY MANAGERIAL PERSONNEL:
During the year under review in accordance with the provisions of the Companies Act2013 ("Act") and the Articles of Association of the Company Mr. Sanjay G.Hinduja (DIN: 00291692) retires by rotation at the ensuing Annual General Meeting of theCompany and being eligible offers his candidature for re-appointment as a Director.
In accordance with section 149(7) of the Companies Act 2013 each Independent Directorhas given a written declaration to the Company confirming that he/ she meets the criteriaof independence as mentioned under section 149(6) of the Act.
On recommendation and approval of Nomination and Remuneration Committee the Board ofDirectors of the Company at their meeting held on May 14 2017 re-appointed Mr. RaviChawla as Managing Director of the Company for further period of 3 (three) years effectivefrom June 6 2017 and the terms of his re-appointment including the remuneration subjectto approval of the Members of the Company at AGM.
The resolutions seeking approval of the members of the Company for the re-appointmentof Mr. Sanjay G. Hinduja Chairman and re-appointment of Mr. Ravi Chawla ManagingDirector have been incorporated in the Notice of the Annual General Meeting of the Companyalongwith their brief Profile about them.
KEY MANAGERIAL PERSONNEL:
The following persons have been continued as Key Managerial Personnel of the Companypursuant to section 2(51) and section 203 of the Act read with rules framed thereunder:1) Mr. Ravi Chawla Managing Director 2) Mr. Manish Kumar Gangwal Chief Financial Officerand 3) Mr. Vinayak Joshi Company Secretary and Compliance Officer. None of the KeyManagerial Personnel have resigned during the year under review.
15. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 a Board evaluation process was completed througha process of structured questionnaire and taking into consideration various aspects of theBoard's functioning composition culture obligation and governance. The criteria forperformance evaluation have been detailed in Corporate Governance Report Annexure F tothis Report. The Board of Directors expressed their satisfaction with the evaluationprocess.
16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO:
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as required pursuant to section 134(3) of the Companies Act 2013 readwith rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure B and formingan integral part of this Report.
17. BUSINESS RESPONSIBILITY REPORT:
Pursuant to Regulation 34 of SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 the Business Responsibility Report is applicable for the first time tothe company and provided separately in the Annexure- C forming an integral part of thisReport.
18. INFORMATION ON STOCK EXCHANGES:
The Company's equity shares are listed on BSE Limited (Designated Exchange) and TheNational Stock Exchange of India Limited.
19. EXTRACT OF ANNUAL RETURN:
The details of extracts of Annual Return in Form MGT-9 as required under section 92 ofthe Companies Act 2013 are enclosed as Annexure D and forming an integral part of thisReport.
20. CORPORATE GOVERNANCE:
As per SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 aReport on Corporate Governance together with compliance certificate issued by PracticingCompany Secretary is given separately in Annexure F forming an integral part of thisReport.
21. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:
The details of Loan Guarantees and Investments outstanding as on March 31 2017 underSection 186(4) of the Companies Act 2013 are provided in Note 11 and 25 to the FinancialStatements.
22. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYWHICH HAVE OCCURRED BETWEEN MARCH 31 2017 AND THE DATE OF THIS REPORT:
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (March 31 2017) and the date of this Report.
23. RISK MANAGEMENT POLICY:
The Company has implemented an integrated risk management approach through which itreviews and assesses significant risks on regular basis to ensure that a robust system ofrisk controls and mitigation is in place. Senior management periodically reviews this riskmanagement framework to keep updated and addresses emerging challenges. Risk Managementframework followed by the Company is elaborately detailed in the Management Discussion andAnalysis section forming an integral part of this Report.
24. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has well defined and adequate internal control system commensurate withsize scale and complexity of its operations. The internal financials controls areadequate and are operating effectively so as to ensure orderly and efficient conduct ofbusiness operations. During the year Internal Financial Controls (IFC) testing processwas done in order to review adequacy and strength of IFC followed by the company. As perthe assessment there are no major concerns and no reportable material weaknesses in thedesign or operation were observed. The Board has also put in place requisite legalcompliance framework to ensure compliance of all the applicable laws and that such systemswere adequate and operating effectively. The details of Internal control system andadequacy are mentioned in the Management Discussion and Analysis section forming anintegral part of this Report.
The details of number of meetings of the Board held during the Financial year 2016-17are provided in Corporate Governance Report (Annexure F).
26. RELATED PARTY TRANSACTIONS:
All related party transactions were placed before the Audit Committee and the Board fortheir approval. Omnibus approval was obtained on a yearly basis for transactions whichwere of routine and repetitive nature. The transactions entered into pursuant to omnibusapproval were placed before the Audit Committee and Board on quarterly basis. The policyon Related party transactions as approved by the Board of Directors has been uploaded onthe website of the Companywww.gulfoilindia.com/upload/pdf/policy-on-materiality-and-dealings.pdf. Pursuant toSection 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 there were no new material transactions contracts or arrangementsentered with Related Party as on March 31 2017. None of the Directors have any pecuniaryrelationship or transactions vis--vis the Company except sitting fees commission as perCompanies Act 2013. A statement showing Related Party Transactions entered during theyear is given under Note 31 to the Financial Statements.
27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
There were no significant and material orders passed by the Regulators/Courts/Tribunalsthat would impact the going concern status of the Company and its future operations.
28. DIRECTORS RESPONSIBILITY STATEMENT:
To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3)(c) read with Section 134(5) of the Companies Act 2013:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the Board had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and of theprofit and loss of the company for that period;
c) the Board had taken proper and sufficient care 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;
d) the Board had prepared the annual accounts on a going concern basis; and
e) the Board had laid down internal financial controls to be followed by the companyand that such internal financial controls are adequate and were operating effectively and
f) the Board had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
29. AUDITORS INCLUDING COST AUDITORS SECRETARIAL AUDITOR:
At the Annual General Meeting held on June 4 2014 M/s Price Waterhouse CharteredAccountants were appointed as statutory auditors of the Company to hold office till theconclusion of the 11th Annual General Meeting of the Company subject toratification of appointment at every Annual General meeting of the Company. Accordinglythe appointment of M/s. Price Waterhouse Chartered Accountants as statutory auditors ofthe Company is placed for ratification by the shareholders. The Audit Committee and theBoard of Directors have recommended their appointment for the financial year 2017-18. Thenecessary resolution is being placed before the Members for approval. As required underthe provisions of section 139 and 141 of the Companies Act 2013 the Company has obtainedwritten confirmation from M/s Price Waterhouse that their appointment if made would bein conformity with the limits specified in the said section. The Auditor's Report to theshareholders on standalone financials for the year ended March 31 2017 does not containany qualification observation or adverse comments.
As per the requirements of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company has been carrying out audit of cost recordsrelating to Lubricants business.
The Board on recommendation of Audit Committee has appointed M/s Dhananjay V. Joshi& Associates Cost Accountants (Firm Registration No.000030) as Cost Auditors of theCompany to audit the cost records of the company for the financial year 2017-18 for aremuneration of Rs. 275000/- (Rupees Two lakhs seventy five thousands only) plus taxesas applicable and reimbursement of out of pocket expenses . As required under theCompanies Act 2013 a resolution seeking Members approval for the remuneration payable tothe Cost Auditor forms part of the Notice convening the 9th Annual Generalmeeting of the Company.
Pursuant to section 204 of the Companies Act 2013 and rules made thereunder theCompany has appointed M/s BS & Company Company Secretaries LLP (Firm Registration NoAAE-0638.) to carry out secretarial Audit of the Company. The secretarial audit Report isenclosed as Annexure G and forming an integral part of this Report. There are no auditqualifications or reservations or adverse comments for the year under review.
30. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
Pursuant to section 197(12) of the Companies Act 2013 read with Rules 5 (1)5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in the separate annexure forming part of the Board's Report. Having regard tothe provisions of Section 136(1) the Annual Report excluding the aforesaid information isbeing sent to the members of the Company. The said information is available for inspectionat the Registered Office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished without any fee and free of cost.
Your Directors thank the various Government and other statutory bodies for thecontinued help and co-operation extended by them to your Company. The Directors alsogratefully acknowledge all stakeholders of the Company viz. customers members dealersvendors banks and other business partners for the excellent support received from themduring the year. The Directors place on record their sincere appreciation to all employeesof the Company for their unstinted commitment and continued contribution to the Company.
| ||For and on behalf of the Board |
| ||Sanjay G. Hinduja |
| ||Chairman |
| ||(DIN: 00291692) |
|Mumbai || |
|Date: July 24 2017 || |