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Gulshan Polyols Ltd.

BSE: 532457 Sector: Industrials
NSE: GULPOLY ISIN Code: INE255D01024
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OPEN 80.35
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VOLUME 10373
52-Week high 113.95
52-Week low 71.20
P/E 17.68
Mkt Cap.(Rs cr) 374
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 80.35
CLOSE 79.10
VOLUME 10373
52-Week high 113.95
52-Week low 71.20
P/E 17.68
Mkt Cap.(Rs cr) 374
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gulshan Polyols Ltd. (GULPOLY) - Director Report

Company director report

Dear shareholders

Your Directors have pleasure in presenting their 17 Annual Report on the business andoperations of the Company and the accounts for the Financial Year ended 31 March 2017

1. A. THE STATE OF COMPANIES AFFAIRS

( Rs in lakhs)

Year Ended Year Ended
Particulars
31.03.2017 31.03.2016
Gross Turnover 52891.32 46692.68
Less : Excise Duty 3405.79 3274.50
Net Turnover 49485.53 43418.18
Add: Other Operating Income 895.37 697.12
: Other Income 350.16 462.83
Total Revenue 50731.06 44578.13
Expenditure 44322.23 38038.19
Earnings before Interest Tax and Depreciation & Amortization (EBITDA) 6408.83 6539.94
Finance Cost (Interest) 519.08 385.05
Depreciation 2800.15 2373.44
Profit Before Tax (PBT) 3089.59 3781.45
Less: Tax expenses - Current Tax 647.72 804.90
Add - MAT Credit entitlement (633.70) (25.38)
- Deferred Tax 284.58 (47.47)
Net Profit after Tax (PAT) 2791.00 3049.41
AVAILABLE FOR APPROPRIATION
Dividend & Dividend Tax - Interim Dividend 225.87 186.54
- Final dividend 169.40 197.64
Transfer to General Reserves Account 300.00 300.00
Cash Accruals 5591.15 5422.85
Equity Share Capital 469.17 463.04
Earnings per Share Basic (Rs) 5.74 6.37
5.74 6.29
Diluted (Rs)

B. Results of Operations

The Financial Year 2016-17 was a challenging year on multiple fronts and your Companyhas delivered a resilient performance. The performance in FY 2016-17 should be viewed inlight of the several challenges faced.

In the year 2016-17 Net revenue at Rs 494.85 crores increased by 13.97 % primarilydriven by new business of starch powder and HFRS commercial production at Muzaffarnagarplant. During the year the Company faced margin pressure resulting in EBIDTA dropped by200 bps due to input cost mainly raw material prices on higher side in compare to previousyear. Profit Before Tax decreased to Rs 30.90 crores from Rs 37.81 crores due to higherdepreciation and interest.

During the year the business and affairs of the Company have been carried out in itsnormal course and no significant events have taken place which are harmful.

2. TRANSFER TO RESERVES

Your Board recommends to transfer to general reserves of Rs 3.00 crores (previous yearRs 3.00 cores).

Consequently the surplus in the statement of Profit and Loss as at 31 March 2017would stand at Rs 169.91crores (Previous Year Rs 149.94 crores).

3. SHARE CAPITAL

a. Sub-division (Split) of Equity Shares of the Company

The Company sub-divided its equity shares from 1 (One) Equity share of Rs 5/- each into5 (Five) Equity shares of Rs 1/- each on December 28 2016 with an intent to improve theliquidity of the Company's shares in the stock market and also to encourage theparticipation of small investors in the equity shares of the Company.

b. Conversion of warrants into Equity shares

During the year the Company has allotted 122562 equity shares upon conversion ofconvertible warrants to a non-promoter category shareholder namely Antara India EvergreenFund Ltd.

4. DIVIDEND

During the year the Board of Directors has declared and paid an interim dividend of40% on equity shares of face value Rs 5/- each amounting to Rs 2.00 per share. YourDirectors are pleased to recommend a final dividend of 30% on equity shares of face valueRs 1/- each amounting to Rs 0.30 per share for the year ended 31 March 2017 subject tothe approval of the members at this Annual General Meeting. Thus total dividend for theyear amounts to 70% on equity shares (i.e. amounting to Rs 328.42 lakhs).

During the year 2016-17 the Company has transferred unclaimed dividend of Rs207322/- to Investor Education and Protection Fund as per Investor Education andProtection Fund (Awareness and Protection of Investor) Rules 2001

5. NEW DEVELOPEMENTS & RECOGNITIONS

= Gulshan Polyols Ltd. is the first company to manufacture Rice Fructose Syrup in Indiafrom its Rice Grinding Unit in Muzaffarnagar having a grinding capacity of 150 MT of Rice.

= In August 2016 the Company has set up an another unit under Grain processingDivision (GPD) for production of Native Starch with capacity to process 300 tons of cornper day.

= The Company is setting up a grain based distillery for manufacturing potable alcoholin Borgaon industrial area in Chhindwara (M.P.). The construction and erection of plant isin full swing and is expected to be operational in Q2 of the current FY18.

6. PUBLIC DEPOSITS

During the financial year 2016-17 the Company has not accepted or renewed any publicdeposits in terms of Sections 73 and 74 of the Companies Act 2013 and rules framedthereunder

7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the note no. 13 to the Financial Statements.

8. DISCLOSURE REGARDING SUBSIDIARIES JOINT VENTURE OR ASSOCIATE COMPANIES

M/s Gulshan Holdings Pvt. Ltd. is an associate company by holding 40.24% equity sharecapital of the Company. There are no other holding subsidiary and joint venture orassociate company.

9. CREDIT RATINGS

Your Company has adequate liquidity and a strong Balance Sheet. During the year CreditAnalysis & Research Limited (CARE) has maintained the ratings of CARE A+ [Single APlus] for your Company's long- term facilities having tenure of more than one year andCARE A1 + [A one plus] for your Company's short-term facilities having a tenure upto oneyear.

10. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYWHICH HAVE OCCURRED BETWEEN 31 MARCH 2017 AND 27 MAY 2017 (DATE OF THE REPORT)

There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (31 March 2017) and the date of the Report (27May 2017).

11. MATERIAL ORDERS BY GOVERNING AUTHORITIES AND COURTS

There are no significant and/or material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company.

12. ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH RESPECT TO THE FINANCIAL STATEMENT

The Company has implemented and evaluated the Internal Financial Controls which providea reasonable assurance in respect of providing financial and operational informationcomplying with applicable statutes and policies safeguarding of assets prevention anddetection of frauds accuracy and completeness of accounting records. The Internal AuditReports were reviewed periodically by Audit Committee as well as by the Board. Furtherthe Board annually reviews the effectiveness of the Company's internal control system.

The Directors and Management confirm that the Internal Financial Controls (IFC) areadequate with respect to the operations of the Company. A report of Auditors pursuant toSection 143(3) (i) of the Companies Act 2013 certifying the adequacy of InternalFinancial Controls is annexed with the Auditors report.

13. ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO

Information required under section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is given in the Annexure-A to this report.

14. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY

During the year the meeting of CSR Committee was held on 28 May 2016 for discussingcontribution require to be made by Company for ful lling the objectives as per Company'sCSR policy. The contributions in this regard have been made by both ways i.e. directly andthrough registered trust / Society. The Annual report on CSR activities is annexedherewith as Annexure B.

15. DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP)

Change in Directors and KMPs

During the year Mr. K. C. Gupta appointed as Director of the Company in the categoryof Independent Director with effect from 28 May 2016 for a period of two consecutiveyears and thereafter approved by the shareholders in the AGM of the company held on 17September 2016. He will not be liable to retire by rotation.

Retirement by rotation

In terms of Section 152 of the Companies Act 2013 Ms. Aditi Pasari ExecutiveDirector would retire by rotation at the forthcoming AGM. Being eligible she has offeredherself for re-appointment.

Statement on declaration given by Independent Directors

The Board of the Company consist ve independent directors and all the IndependentDirectors have given the declaration that they meet the criteria of independence asprovided in section 149 (6) of the Companies Act 2013.

Performance evaluation

On the advice of Board of Directors the Nomination and Remuneration Committee of theBoard of Directors of the Company formulated the criteria for the evaluation of theperformance of the Board of Directors & its Committees Independent DirectorsNon-Independent Directors and the Chairperson of the Board. Based on that performancevaluation has been undertaken. The Independent Directors of the Company have also conveneda separate meeting for this purpose. All the results and evaluation has been communicated.

Remuneration Policy

Remuneration Policy of the Company aims at recommending and reviewing the remunerationto Managing Director Non-Executive Directors and Key Managerial Personnel of the Companyand is based on evaluation criteria such as industry benchmarks company's annualperformance & its strategy expertise talent and meritocracy including criteria fordetermining quali cation positive attributes independence of a director etc. Thedetailed policy is available on website of the Company i.e. www.gulshanindia.com.

Number of Meetings

The Board of Directors duly met 4 times in the financial year 2016-17 on 28 May 2016 6August 2016 5 November 2016 11 February 2017.

16. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' state that;

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. 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 and loss of the company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

e. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

f. the Directors' have devised proper systems to ensure compliances with the provisionsof all applicable laws and that such systems were adequate and operating effectually.

17. RELATED PARTY TRANSACTION

During the financial year 2016-17 your Company has entered into transactions withrelated parties as defined under Section 2(76) of the Companies Act 2013 read withCompanies (Meetings of Board and its Powers) Rules 2014 all of which were in theordinary course of business and on arm's length basis and in accordance with theprovisions of the Companies Act 2013 read with the Rules issued thereunder and SEBI(Listing Obligations and Disclosure Requirements) 2015. Further there were notransactions with related parties which qualify as material transactions under Regulation23 of SEBI (LODR) 2015.

All transactions with related parties entered by the Company in the normal course ofbusiness were periodically reviewed and approved by the Audit Committee. Form AOC - 2pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is set out as Annexure [C].

18. DEMAT OF SHARES

Necessary arrangements are made for Dematerialization of Shares with NSDL and CDSL.Out of the total 95.99% of the equity shares of the company are already in Demat form.Since the shares of the company are traded on stock exchange in compulsory Demat form theshareholders holding shares in physical form may avail this facility in their flowninterest.

19. INDUSTRIAL RELATIONS

The industrial relations have been cordial at all the plants of the Company. The Boardrecords its appreciation of the commitment and support of employees at all levels.

20. INSURANCE

All the insurable interests of your company including inventories buildings plant& machinery are insured against risk of re and other risks.

21. SAFETY AND ENVIRONMENT

All the manufacturing plants of your company are running in an eco-friendly manner andhave a focus on workplace health and safety.

22. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Board of Directors of the Company has formulated Risk Management Policy which aimsat enhancing Shareholder's value and providing an optimum risk reward trade off. The riskmanagement approach is based on the clear understanding of the variety of risks that theorganization faces disciplined risk monitoring and measurement and continuous riskassessment and mitigation reserves.

23. VIGIL MECHANISM

Pursuant to provisions of Section 177(10) of Companies Act 2013 and Regulation 22 ofthe Listing Regulations the Company has established a Vigil Mechanism for directors andemployees to report the instances of unethical behavior actual or suspected fraud orviolation of the Company's code of conduct or ethics policy. The said policy is explainedin the Corporate Governance Report and also displayed on Company's websitewww.gulshanindia.com under investors/policy documents/Vigil Mechanism Policy link.

24. SEXUAL HARASSMENT POLICY

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the work place (Prevention Prohibition andRedressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The Company has not received anycomplaint under this policy during the year 2016- 2017.

25. PARTICULARS OF EMPLOYEES

The particulars of employee(s) as per Section 197 read with rule 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 employedthroughout the year and were in receipt of remuneration in aggregate of not less than Rs60 lacs per annum is given as under:

Name Designation Remune ration Received Nature of Employment Qualification & Experience Date of Appointment Age Last employ ment % of Equity held Such employee relative of director in the Co.
Dr. C.K. Jain Managing Director ` 1.52 Cr Contractual Phd. in Science & 49 yrs. Experience 20.10.2000 69 Yrs No 10.47% Ms. Arushi Jain
Ms. Aditi Pasari

26. AUDIT OBSERVATIONS

Auditors' observations are suitably explained in notes to the Accounts and areself-explanatory.

27. AUDITORS:

i) Statutory Auditors:

Pankaj K. Goyal & Co. Chartered Accountant (Firm Registration No.002140-C) havebeen appointed as Statutory Auditors of the Company from the conclusion of this AnnualGeneral Meeting held on 9 September 2017 for a period of ve years subject to rati cationby members at every consequent Annual General Meeting. Members are requested to considerthe appointment of Pankaj K. Goyal & Co. and authorize the Board of Directors to xtheir remuneration. Pankaj K. Goyal & Co. Chartered Accountants have submitted acerti cate con rming that their appointment if rati ed will be in accordance withSection 139 read with Section 141 of the Act.

ii) Internal Auditors:

a. Shahid & Associates Chartered Accountants have been appointed as InternalAuditors for the FY 2017-18 for all the Units of the Company except Bharuch Sorbitol Unit.They will perform the duties of internal auditors of the Company and their report will bereviewed by the audit committee from time to time.

b. M/s S. S. Kothari Mehta & Co. appointed as Internal Auditor for audit of BharuchSorbitol Unit for the FY 2017-18.

iii) Cost Auditors:

M/s Rahul Jain & Associates Cost Accountants have been appointed as Cost Auditorsfor auditing the cost accounts of your Company for the year ending 31 March 2018 by theBoard of Directors. Pursuant to the provisions of Section 148 of the Act read with TheCompanies (Audit and Auditors) Rules 2014 Members are requested to consider the ratication of the remuneration payable to M/s Rahul Jain & Associates. The Cost AuditReport for the year 2015-16 has been led under XBRL mode.

iv) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and (The CompaniesAppointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof your Company at its meeting held on 27 May 2017 has appointed Mr. Sanjay ChughPracticing Company Secretary (CP No.:3073 FCS: 3754) as the Secretarial Auditor toconduct an audit of the secretarial records for the financial year 2017-18.

The Secretarial Audit Report for the financial year ended 31 March 2017 is annexedherewith as 'Annexure D'. The Secretarial Audit Report does not contain any quali cationreservation or adverse remark.

28. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as 'Annexure E'.

29. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are set out as separate Annexure F together with the Certicate from the Auditors of the Company regarding compliance with the requirements ofCorporate Governance as stipulated in Regulation 27 of Listing Regulations 2015.

ACKNOWLEDGEMENT

Your Directors express their appreciation of sincere co-operation and assistance ofSate & Central Govt. authorities bankers customers and suppliers as well as all ofthe Company's employees & Shareholders of the Company.

For and on behalf of the Board of Directors
Sd/-
Dr. C.K. Jain
Chairman and Managing Director
Date : 27 May 2017
Place : Delhi

ANNEXURE TO DIRECTORS' REPORT

ANNEXURE-A FORM-A (See Rule-2)

Disclosure of particulars with respect to conservation of energy and Consumption perUnit of Production

Conservation of energy

(I) Energy Conservation measures taken: The Company has realigned the existing powerconsuming sections to remove bottleneck and to ensure the uninterrupted and quality powersupply at the minimum cost.

(ii) Additional investment and proposal if any being implemented for reduction ofenergy consumption: None

(iii) Impact of measures (i) & (ii) above for reduction of energy consumption andconsequent impact on cost of production of goods: This would result in higher yield andreduction in power cost.

(iv) Total energy consumption and energy consumption per unit of production as per Form'A': The details are as under:

A Power Consumption and Fuel Consumption: 31.03.2017 31.03.2016
1 Electricity :
a Purchased:
Units 28430963 26220976
Total Amount (Rs) 207045831 181021045
Average Rate (Rs)/Unit 7.28 6.90
b Own Generation:
i Through Diesel Generator
Units 12890 16294
Cost (Rs) 246174 301202
Cost (Rs)/unit 19.10 18.49
ii Through Steam Turbine/Generator :
Units 22953092 22797876
Cost (Rs) 48636084 50265070
Cost (Rs) /Unit 2.12 2.20
2 Coal /Coke/Pet Coke :(Used in Boiler Microniser & Gas Producer)
Qty. (MT) 60323.985 55049.640
Total Cost (Rs) 403785683 321571678
Average Rate (Rs) 6693.62 5841.49
3. HSD : (Used in Microniser)
Qty. (Ltrs.) 4603 5925
Total Cost (Rs) 246174 301202
Average Rate (Rs) 53.48 50.84
B Consumption Per Unit (MT) of Production
Products
Production (MT)
CALCIUM CARBONATE 101014.59 102826.12
SORBITOL & SWEETNER 87348.69 81510.97
STARCH 15146.00 N.A.
Electricity (Units/Ton)
CALCIUM CARBONATE 225 242
SORBITOL & SWEETNER 294 307
STARCH 248 N.A.
Coal/Coke (MT/Ton)
(On Directly attributable Production)
CALCIUM CARBONATE 0.37 0.33
SORBITOL & SWEETNER 0.47 0.52
STARCH 0.45 N.A.

FORM-B

TECHNOLOGY ABSORPTION ADAPTION & INNOVATION

No technology ties up were entered into. The Company keeps itself updated with latesttechnological innovations by way of constant communication personal discussions andvisits to foreign countries/ plants.

FORM-C

Foreign Exchange Earnings & Outgo: Despite severe competition from low costcountries the Company has made efforts on various fronts for promotion of exports.

(Amount in Rs)

Sr. No. Particulars 2016-17 2015-16
i Earnings by way of Export of Goods calculated on FOB basis 738787928 614931866
ii Payment of interest on loan taken 32839260 23064490
iii Payment of Commission on Export of Goods 8261299 13993339
iv Expenditure on foreign Traveling 4848391 2888975
v Expenditure on Technical Service 16288466 7007440
vi Expenditure on Legal & Professional fee 439379 1173112