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Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

BSE: 500670 Sector: Agri and agri inputs
NSE: GNFC ISIN Code: INE113A01013
BSE 00:00 | 22 Mar 300.95 -3.35






NSE 00:00 | 22 Mar 300.55 -4.55






OPEN 306.05
VOLUME 57191
52-Week high 506.75
52-Week low 237.95
P/E 4.79
Mkt Cap.(Rs cr) 4,677
Buy Price 300.95
Buy Qty 149.00
Sell Price 302.00
Sell Qty 1000.00
OPEN 306.05
CLOSE 304.30
VOLUME 57191
52-Week high 506.75
52-Week low 237.95
P/E 4.79
Mkt Cap.(Rs cr) 4,677
Buy Price 300.95
Buy Qty 149.00
Sell Price 302.00
Sell Qty 1000.00

Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (GNFC) - Director Report

Company director report


The Members

Your Directors have immense pleasure in presenting this 42nd Annual Report on Company'sbusiness and operations together with Audited Financial Statements (Standalone andConsolidated) for the Financial Year ended on 31st March 2018.

The year 2017-18 was the unprecedented year for your Company registering excellentfinancial results in the history of 42 years of its operations. The continued emphasis onhigher productivity energy conservation & efficiency improvement smart marketingstrategies innovation / cost reduction environmental & safety consciousnessdedication of employees at all levels etc. have significantly contributed in achievingcommendable all-round performance of your Company.


The concerted efforts put-in by your Company have resulted in achieving glitteringfinancial and operational performance during the year. The Company established total 186new records on production and marketing fronts.

The financial highlights for the year ended 31st March 2018 are summarized below:

(Rs. in Crores)
Particulars Standalone
2017-18 2016-17
Income from operations 5917 4945
Other Income 141 225
Total Income 6058 5170
Total Expenditure 4526 4292
Profit before Depreciation Finance
Cost Exceptional Item and Tax 1532 878
Depreciation 270 251
Finance Cost 100 204
Exceptional Item (Impairment
Reversal of TDI-II Assets) - 292
Profit Before Tax 1162 715
Tax Expense 372 194
Net Profit for the year 790 521
Re-measurement of Losses on defined employee benefit plans 27 6
Balance brought forward from previous year 635 157
Amount available for Appropriation 1398 672
Appropriations :
Dividend paid 78 31
Tax on Dividend 16 6
Transferred to General Reserve 115 -
Surplus carried to Balance Sheet 1189 635


1. Financial Performance :

Your Directors are delighted to share with you the highest ever financial recordsestablished by your company during the year under review on standalone basis which are asfollows:

• Highest Ever Profit Before Tax of Rs.1162 Crore as against Rs.715 Crore in theprevious year registering an increase of 63%.

• Highest Ever Profit After Tax of Rs.790 Crore as against Rs.521 Crore in theprevious year registering an increase of 51%.

• Highest Ever Turnover of Rs.6058 Crore as against Rs.5170 Crore in theprevious year registering an increase of 17%.

• Highest Ever Exports of Rs.629 Crore as against Rs.361 Crore in the previousyear registering an increase of 74%.

• Highest Ever EBITDA of Rs.1532 Crore as against Rs.1170 Crore in the previousyear registering an increase of 31%.

• Highest Ever EPS of Rs.50.80 as against Rs.33.54 in the previous yearregistering an increase of 51%.

• Recommendation of Highest Ever Dividend of 75% as against 50% paid last year.

• Highest ever pre-payment of Long Term Debt of Rs.534 Crore.

• Highest ever Long Term Debt extinction of Rs.888 Crore. The total debt ofRs.1436 Crore paid off in one single year.

Thus your Company has become Long Term Debt free Company.

During the year under review the exponential growth in revenue and profits aresignificantly led by non-TDI chemicals products. The realisation from Acetic Acid FormicAcid and Ethyl Acetate were the highest in the last 6 years.

The Net Profit for FY 2017-18 on consolidated basis was Rs.794.94 Crore as compared toRs.528.79 Crore in the previous


2. Operational performance :

It is a matter of proud that your Company has once again excelled on production frontduring the year. Most plants were operated at more than 100% capacity utilization. Specialfocus was given on energy conservation and cost reduction in all aspects. Ever highestannual production was achieved in Formic Acid : 22009 MTs. (220.09%) Ethyl Acetate :63126 MTs. (126.25%) Aniline : 41883 MTs. (119.67%) Technical Grade Urea : 103601MTs TDI-II : 42577 MTs (85.15%) .

In addition annual production at more than 100% capacity utilization was also achievedin Acetic Acid : 157067 MTs. (157.07%) Ammonium Nitrophosphate : 216575 MTs.(151.98%) Ammonia : 613010 (137.60%) and TDI-I : 17056 MTs. (121.83%) .

Currently TDI-II Plant Dahej is running smoothly on consistent basis. Your Company ismaking on-going efforts for reliability and improvement in TDI-II Plant operations interms of consistency safety and capacity utilization by implementing various schemes.Actions have been initiated for implementation of various schemes under "ReliabilityPhase-II" with an estimated investment of Rs.170 Crore. This will help in decreasingdowntime and achieving sustainable production resulting into higher contribution in theprofitability of the Company.


1. Industrial Products :

The Chemical Segment has performed extremely well for FY 2017-18 despite competitivescenario of Chemical business in the country and International Market. Almost allIndustrial Products performed well in terms of sales and realization during the year. Manynew milestones have been achieved in sales. E-tendering of Methanol successfully launchedand well accepted in the market. Your Company is the first Company to adopt such a uniqueway of Chemical sales through e-Tendering. Export turn-over has increased to Rs.629 Crorein FY 2017-18 from Rs.361 Crore in FY 2016-17. The company is one of the leading suppliersof TDI in Markets of Middle East and Africa. The company's products have been exported to66 Countries. The outstanding performance of Chemical Segment was mainly attributed tosmart marketing strategy and dynamic pricing of company's products.

2. Fertilizer Business:

The year 2017-18 was challenging for Fertilizer Sector as the over-all rainfallremained normal during the monsoon season and there was high carried forward stock ofFertilizers at the beginning of the year.

Despite these challenges your Company performed well in the fertilizer business duringthe year and achieved total sale of Urea (Manufactured and Traded) at 7.31 Lac MTs. ascompared to 10.37 Lac MTs. in the previous year. Lower sales volume of Urea was due toreduced handling of Imported Urea during the year. The sale of Ammonium Nitro Phosphate(ANP) was highest ever at 2.23 Lac MTs. compared to 2.16 Lac MTs in the previous year. Outof the total sale of fertilizers around 1.09 Lac MTs fertilizers were sold throughCompany's own 68 Narmada Khedut Sahay Kendras (NKSKs) .

During the year trading activities continued in Muriate of Potash (MoP) indigenously sourced Di-Ammonium Phosphate (DAP) Ammonium Sulphate Single Super Phosphate (SSP) and City Compost. Total 10415 MTs. of fertilizers were sold as part of Trading activities.
3. (n) Code Solutions – IT Division:
(n) Code Solutions - IT Division has also contributed in achieving stellar performance of your Company during the year. This division has registered sales turnover of Rs.174 Crore and profit of Rs.39.53 Crore across all its business segments.
(n) Code Solutions has bagged major prestigious order from Vadodara Smart City Development Ltd. Another notable contribution by (n) Code in the Government Sector was its role in conducting reverse auction on its own e-auction for Gujarat State Civil Supplies Corporation (GSCSC) resulting in to a massive savings of Rs.32.58 Crore to GSCSC.
With a view to maintain growth momentum in IT business (n) Code has undertaken several new initiatives in the areas of smart cities education intelligent transportation system integration Geographical Information Systems security and surveillance Digital Mapping and Surveys business intelligence Data Analytics e-Auction etc.

(n) Code Solutions - IT Division of the company was appointed as an Authentication UserAgency (AUA) and e-KYC User Agency (KUA) by Unique Identification Authority of India(UIDAI) for the purpose of providing Aadhaar enabled services. UIDAI had vide its interimorder dated 7th June 2018 imposed financial disincentive of Rs.20532000/- (includingGST of Rs.3132000/-) due to violation of certain provisions of Aadhaar Act 2016 and itsRegulations by (n) Code. Your Company had submitted due explanations in this proceedings.However in order to amicably resolve the issue and close the matter the Company had madefull payment towards financial disincentive to UIDAI. As such there is no material impactof the said payment on the financial position of the Company.

A detailed analysis of Company's operational and financial performance is presentedunder a separate section on "Management Discussion & Analysis" forming partof this report.


Your Directors are delighted to inform that in view of unprecedented performance ofyour Company for FY 2017-18 in its history of 42 years and to meet with the aspirations ofshareholders for higher dividend on their investments your Directors have recommendedever highest dividend of Rs.7.50 per share (75%) on 155418783 equity shares of Rs.10/-each subject to the approval of shareholders at this Annual General Meeting. The dividendpayout would work out to Rs.140.52 Crore including tax on dividend. This amounts to 17.80%of the Net Profit of the Company.


Your Company has registered a Net Profit of Rs.789.52 Crore for FY 2017-18. Afterdeducting therefrom Rs.26.72 Crore being the re-measurement losses on defined employeebenefit plans and adding thereto Rs.635.19 Crore being the balance of Statement of Profit& Loss brought forward from previous year an amount of Rs.1397.99 Crore is availablefor appropriation. Out of this Rs.93.53 Crore (inclusive of Tax on Dividend) isappropriated towards payment of dividend for FY 2016-17 and Rs.115 Crore is transferred toGeneral Reserve. The balance amount of Rs.1189.46 Crore is proposed to be carried toBalance Sheet. The Company proposes to transfer Rs.175 Crore to General Reserve upondeclaration of dividend for FY 2017-18.


The Government of India (GoI) increased subsidy on Phosphates and decreased subsidy onNitrogen and Potash nutrient covered under the policy of Nutrient Based Subsidy for FY2018-19. Net effect of such changes in subsidy on 'Narmada Phos' produced by your Companyhas been positive resulting into annual benefit of around Rs.14 Crore.

After the success of pilot project of GoI for sale of fertilizers under 'Direct BenefitTransfer' (DBT) Scheme in 19 Districts of selected States the said scheme has now beenimplemented across the Country from 1st February 2018 with the objectives of addressingthe challenges such as diversion of Urea for non-agricultural use imbalanced use offertilizers delay in subsidy receipts from Government and protection of some of thelegacy / operation of inefficient plants. The subsidy is now available directly to farmersunder DBT Scheme. GST @ 5% on fertilizers is applicable from 1st July 2017.

Recently GoI has made it compulsory for all Fertilizer Manufacturers to use 45 Kgs.bag of Urea in place of existing 50 Kgs. bag with a view to bring down consumption ofUrea by 10% since farmers mostly assess their requirement of Urea in terms of bags foragriculture purposes. This will not only save country's precious Foreign Exchange out-gobut also reduce de-gradation of soil & environment.


1. Neem Project :

Inspired by Hon'ble Prime Minister's Policy mandate of 100% Neem coating of Urea yourCompany has achieved significant progress in its innovative Neem Project implemented in2015. With effective backward integration of Neem Oil production your Company has createdshared value among rural and urban poor people empowering communities with targeted focuson women empowerment through income generation and improved livelihood. During the lastthree years by collecting over 45000 MTs of Neem seeds income of more than Rs.45 Crorewas generated for 4.5 Lac Women in 53 Districts across Six States of India. Besides morethan 2.5 Lac people were benefitted by indirect employment.

During the year under review around 23000 MTs of Neem seeds were collected from sixStates from which 1724 MTs. of Neem Oil and 14421 MTs. of Neem Cake were produced.

As reported last year facilities for manufacture of Neem Oil based products wereset-up and the Company launched various products such as Neem Shampoo Neem MosquitoRepellent Neem Face-wash Neem Hair Oil Neem Hand-wash etc. New Soap manufacturing Unitwith a capacity of producing 225 MTPA Neem Soaps has been established by Company's CSRWing - NARDES and registered under Khadi Village Industries Commission (KVIC) .

Hon'ble Prime Minister inaugurated Neem Product facility on 8th October 2017 and alsolaid foundation stone for Neem Seed expelling / extraction Unit at Bharuch. Neem basedproducts launched by your Company has received overwhelming response from the consumersacross India. To meet with the growing demand the Company has opened first of its kindNeem Stores and Neem Parlours in various major cities of Gujarat. The Company has opened17 own outlets and 40 Garden Parlours in Ahmedabad Surat Vadodara and Rajkot.

With a view to cater to the market demand of Neem products a large scale Neem Seedexpelling / extraction unit is under implementation to produce around 2900 MTPA Neem Oiland around 22000 MTPA Neem Cake. The Company is also setting-up 10 MTPD Toilet SoapManufacturing Unit at Bharuch.

We are happy to inform that your Company's innovative multi-dimensional socio-economicNeem Project has been lauded in the UNDP impact assessment survey which concluded thatthere has been significant decrease in domestic violence increase in annual income assetcreation and education expenditure. In addition the project has been appreciated byHon'ble Prime Minister and many other Dignitaries at various occasions and has won manyprestigious Awards and Recognitions at both National and International levels the detailsof which are separately given under the heading "Awards and Recognitions" inthis Report.

2. Di-Calcium Phosphate Project :

Hon'ble Prime Minister laid foundation stone for Di-Calcium Phosphate (DCP) project on8th October 2017 at Bharuch. The project execution activities to manufacture 2 Lac MTPADCP at Dahej to be set-up by Ecophos GNFC India Pvt. Ltd. (EGIL) at an estimated cost ofRs.538 Crore are under progress. Financial closure for the project has been completed.There is a slight delay in execution of this project as reported last year and the same isexpected to be completed by end September 2019. The Company is concentrating on speedyimplementation of the said project as downstream integration of TDI-II Plant.

Once the project goes on stream the entire HCI generated as by-product from TDI-IIPlant will be consumed for production of DCP which would help the Company in improvingthe profitability of TDI business.

3. Contribution towards "Digital India" :

As was reported last year your Company was the first Fertilizer Company in India tohave its 100% Cashless Township following the clarion call of Hon'ble Prime Minister for"Digital India". The efforts put-in by your Company for Cashless initiatives invarious segments of its business were well appreciated by Hon'ble Prime Minister and otherDignitaries at various occasions including Government of India Government of Gujarat andother renowned Organizations / Authorities. Last year the Company received manyprestigious Awards at National and International Levels in recognition of Cashless driveundertaken by your Company. This year also the Company has received Awards the detailsof which are given separately under the heading "Awards and Recognitions" inthis Report.


(1) Formic Acid Capacity Enhancement :

Your company is the only producer of Formic Acid (FA) in India. To meet with thedomestic demand of the Country around 15000 MTPA FA is imported mainly from ChinaGermany and Finland. To bridge the gap of demand & supply in India to some extent theCompany is planning to enhance the present capacity of its FA Plant from 22000 MTPA to28800 MTPA through implementation of FA Plant revamp. The proposed capacity enhancementwill save country's precious foreign exchange. Moreover one of the raw materials viz.Carbon Monoxide to produce FA is also available at Company's Dahej site. Hencepossibilities are being explored for setting-up FA Plant at Dahej.

(2) Acetic Acid Capacity Enhancement :

Your company is the only producer of Acetic Acid (AA) in India with installed capacityof 1 Lac MTPA. Currently 80% of domestic demand of AA is met through import. Looking tothe market of AA in India the Company is actively considering Acetic Acid capacityexpansion. The level of capacity of the plant is under technical examination.

(3) Concentrated Nitric Acid (CNA) - IV Plant :

Your Company is operating three CNA Plants. With the increase in captive consumption ofCNA for manufacture of TDI market share of GNFC is reducing. Hence the Company hasinitiated actions for setting up 150 MTPD CNA-IV Plant and is expected to be completed byMid 2020.

(4) Ammonia Plant Revamp :

The Company produces about 1850 MTPD Ammonia from both fuel oil and natural gas routeand further Syngas loop revamp is under implementation to increase the production to1900 MTPD. This revamp is expected to be implemented by end 2018. Ammonia productioncapacity can be further increased from 1900 MTPD to 2050 MTPD by installing Make-up GasConvertor Loop in existing Ammonia Synthesis loop. This will increase Ammonia productionby 150 MTPD (50000 MTPA) and reliability of operations. Actions have been initiated forimplementation of revamp in Ammonia Plant which is expected to be completed by end 2020.

(5) Reliability Improvement Schemes for TDI-II Plant Dahej :

With a view to further increasing the reliability of TDI-II Plant operations andachieving sustainable production resulting into higher contribution in the profitabilityyour company has undertaken implementation of various schemes under 'ReliabilityPhase-II'.

The above mentioned projects / revamp schemes would be implemented with an estimatedinvestment between Rs.1000 ~ Rs.2000 Crore depending upon the scale of operations.


Your Directors are delighted to inform that in recognition of exemplary work done inthe areas of Neem Project and Cashless initiatives the Company has won many prestigiousNational and International Awards from Governments and other renowned Institutions whichare listed below :

• Porter Prize for Enabling Social Progress Mumbai for second consecutive year

• India CSR Innovative Project of the year 2017 Mumbai

• India CSR Award for PSU Leader of the year 2017 Mumbai

• CMO Asia Best CSR Practices Award 2017 Singapore

• Global Giving Award for Best CSR Innovation Practices 2017 Dubai

• CII-ITC Sustainability CSR Award 2017 New Delhi

• Shared Value Inclusive Business List Award New Delhi

• CMO Asia 50 Most Influential Rural Marketing Professional Malaysia

• ET Now CSR Award for Innovation in CSR practices Mumbai

• Dhainik Bhaskar India Pride Award for Excellence in CSR New Delhi

• Business World Digital India Award for implementation of cashless initiativesNew Delhi

• SKOCH BSE Order of Merit Mumbai

• SKOCH Smart Governance SKOCH Order-of-Merit Award

• Times Network Digital India Award for Digital Social Innovation New Delhi

• CII Supply Chain and Logistics Excellence Award Hyderabad

• Star Performer of the year 2017 by SBI Mutual Fund

• India's Best Company of the year Award


Pursuant to Sections 134(3) (c) and 134(5) of the Act the Directors state that–

(i) in the preparation of Annual Accounts for the financial year ended 31st March2018 the applicable Accounting Standards had been followed along with proper explanationrelating to material departures if any therefrom had been furnished;

(ii) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at the end of the financial year and of theprofit of the Company for that period;

(iii) they 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 if any;

(iv) they had prepared Annual Accounts on a going concern basis;

(v) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and

(vi) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


Except for additional equity investment of Rs.12 Crore in the equity of BhavnagarEnergy Co. Ltd. there has been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of financial yearto which the financial statements relate and the date of the Report.


The Company has Wholly Owned Subsidiary Company and Associate Company namely - GujaratNCode Solutions Limited (GNSL) and Gujarat Green Revolution Co. Ltd. (GGRCL) respectively.Statements containing salient features of Financial Statements of GNSL and GGRCL are givenin Form AOC-1 as Annexures to the Consolidated Financial Statements and the same have notbeen repeated here for the sake of brevity.

GNSL has not commenced its business operations during FY 2017-18 and therefore reporton performance and financial position has not been furnished in this Report.

The project execution activities for setting-up of 2 Lac MTPA Di-Calcium PhosphateProject by EcoPhos GNFC India Pvt. Ltd. (EGIL) a Joint Venture Company are underway.Therefore report on operational performance and financial position of EGIL for FY 2017-18has not been furnished in this Report.


Pursuant to Section 129(3) of the Act read with Regulation 33 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Company has preparedConsolidated Financial Statement in respect of Gujarat Ncode Solutions Ltd. (GNSL) awholly owned subsidiary of the Company and Gujarat Green Revolution Co. Ltd. being anAssociate Company for FY 2017-18 and forms part of this Annual Report.

As per Indian Accounting Standards the accounts of EcoPhos GNFC India Pvt. Ltd. (EGIL) a Joint Venture Company are not required to be consolidated.


During the year the Company has neither made any investment in other bodies corporatenor given any Loan or Guarantee or provided any Security in connection with loan to anyother body corporate or person.


The Policy for Related Party Transactions (RPTs) deals with review and approval of RPTsand the same is available on the Company's website at web link The Audit Committee has granted Omnibusapproval for RPTs which are routine and repetitive in nature based on the criteriaapproved by the Board of Directors within the overall framework of the said policy. AllRPTs under omnibus approval are placed periodically before the Audit Committee for itsreview and approval.

In terms of the Policy on Related Party Transactions the Company had not entered intoany contract or arrangement with related parties which could be considered"material" (i.e. transactions exceeding 10% of the annual consolidated turnoveras per the last Audited Financial Statement entered into individually or taken togetherwith previous transactions during the financial year) during FY 2017-18. Hence thedisclosure of RPTs as required under Section 134(3) (h) of the Act in Form AOC-2 is notapplicable to your company. Suitable Related Party disclosure under Ind AS-24 is alsoreported in the Note No.40 to the Standalone Financial Statement.

Requisite details on RPTs have also been furnished in the 'Report on CorporateGovernance' forming part of this Report.


(i) Board Meeting :

Five (5) meetings of the Board were held during the year.

(ii) Committees of the Board :

Currently there are six Committees of the Board as under:

1. Audit Committee;

2. Stakeholders' Relationship Committee;

3. Nomination and Remuneration Committee;

4. Corporate Social Responsibility Committee;

5. Project Committee; and

6. Human Resource Development Committee.

Details of composition of Board and its Committees which are mandatorily required tobe constituted major terms of reference of these Committees meetings held during theyear and attendance of Directors at such meetings are provided in ‘‘Report onCorporate Governance'' forming part of this report.

All the recommendations made by the Audit Committee were accepted by the Board.


The Company has formulated a Nomination Remuneration & Evaluation Policy asrequired under Section 178 of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The details of remuneration paid to Directors / KeyManagerial Personnel / Senior Management and other employees are furnished in the Reporton Corporate Governance forming part of this Report.


The Company has carried out annual performance evaluation of the Board its Committeesand Individual Directors in line with the provisions of the Act and SEBI (LODR)Regulations 2015.


During the year Shri Anil Mukim IAS ceased to be the Director of the Companyeffective 7th March 2018.

Shri Sunil Parekh and Shri Piruz Khambatta who were appointed as Independent Directors(IDs) at the 39th AGM held on 26th September 2015 for a term of three years up to 30thSeptember 2018 their term of office will expire on that date. They are eligible forre-appointment as IDs in terms of Section 149(10) (11) of the Act. Therefore suitableresolutions proposing their reappointment as IDs are included in the Notice of this AGMfor your kind approval.

Government of Gujarat (GoG) has vide its Notification dated 12.07.2018 nominated ShriM.S. Dagur as Government Director on the Board for a period of two years from the date heassumes the charge of Managing Director (MD) and withdrawn the nomination of Dr. RajivKumar Gupta IAS. In accordance with Article 171 of the Articles of Association of theCompany the Board in its meeting held on 9.08.2018 appointed Shri M.S. Dagur as MDw.e.f. 16.07.2018 (i.e. the date of which he assumed the charge) . Dr. Rajiv Kumar GuptaIAS relinquished the charge of MD on 15.07.2018. Accordingly he ceased to be the Directorand MD effective from the said date.

The Members had at their 37th AGM held on 21.09.2013 accorded their consent to theappointment of Dr. Rajiv Kumar Gupta IAS as MD from 2.05.2013 until further orders fromGoG or for five years as per the Companies Act 2013. Accordingly the term of Dr. RajivKumar Gupta IAS as MD had completed on 1.05.2018. In order to formalize the appointmentDr. Rajiv Kumar Gupta IAS as MD for intervening period from 2.05.2018 to 15.07.2018 theBoard had in its meeting held on 9.08.2018 reappointed him as MD. Necessary resolutionsproposing the appointment of Shri M.S. Dagur and re-appointment of Dr. Rajiv Kumar GuptaIAS as MD as required under the Companies Act 2013 are included in the Notice of this AGMfor your kind approval.

Retirement of Director(s) by Rotation:

In terms of Section 152 of the Act Shri V D Nanavaty Director will retire by rotationat this AGM and is proposed to be re- appointed thereat.

Declaration by Independent Directors:

The Company has received necessary declarations from all Independent Directors underSection 149(7) of the Act and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 to the effect that they meet with the criteria of independence as laiddown in the Act and Listing Regulations.

Change in Directorate :

The information relating to change in Directorship during the year is furnished in the'Report on Corporate Governance' forming part of this Report.

Your Directors place on record their deep sense of appreciation for the valuableservices rendered by the outgoing Director.

Key Managerial Personnel :

During the year under review there is no change in the Key Managerial Personnel of theCompany.


Pursuant to the applicable provisions of the Act read with the IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 ('the Rules') all unpaid orunclaimed dividends which were required to be transferred by the Company to the IEPF weretransferred by the Company to IEPF Authority. The Company also transferred 1540351 Nos.of shares held by 27868 Shareholders in respect of which dividend amount remained unpaid/ unclaimed for a consecutive period of seven years or more to IEPF Authority withinstipulated time. The details of unpaid / unclaimed dividend and the shares transferred toIEPF Authority are available on Company's website at web link


A formal Policy against Sexual Harassment of Women at Workplace is in place as requiredunder The Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013. The Company has constituted Internal Complaints Committee to redressthe complaint(s) . No complaint was received during the year.


The Company has in place a Risk Management Policy. Under this Policy various riskspertaining to operations & maintenance of plants financial and other organizationalrisks are assessed evaluated and continuously monitored for taking effective steps forits mitigation. Risk Management Report inter-alia containing major anxiety areas ofrisks and action plan for their mitigation and noteworthy risk management activitiescarried out by the Company is put-up periodically before mettings of the Audit Committeeand Board of Directors for its review.

The Company has adequate internal controls commensurate with the nature of businesssize and complexity of its operations. Details of internal control system and its adequacyare furnished in "Management Discussion & Analysis Report" forming part ofthis Report.


In accordance with Sections 92(3) & 134(3) (a) of the Act an extract of AnnualReturn in Form MGT-9 is enclosed as Annexure - A to this Report.


In accordance with the requirement of Section 135 of the Act read with the Companies(CSR Policy) Rules 2014 the Company has constituted a Corporate Social ResponsibilityCommittee and formulated a CSR Policy. As a responsible corporate the Company has beenundertaking societal activities directly as well as through its CSR arm - NarmadanagarRural Development Society (NARDES) in the areas which are covered in CSR Policy andSchedule-VII to the Act. During FY 2017-18 the company has spent Rs.838 Lac against therequirement of spending Rs.356.35 Lac towards CSR expenditure. Thus the Company has spentaround 4.70% which is more than 2% of average Net Profit of last three Financial Years.

CSR Policy is available on the website of the Company at web link Annual Report on CSR activities asrequired under the Companies (Corporate Social Responsibility Policy) Rules 2014 isenclosed as Annexure - B to this Report.

The Company's exemplary contribution on CSR front has been widely acknowledged andappreciated at various foras as can be seen from the list of Awards listed under 'Awardsand Recognitions'.


The Company has formulated a "Vigil Mechanism-cum-Whistle Blower Policy" forits Directors and Employees to report their genuine concerns details of which have beenfurnished in the "Report on Corporate Governance" forming part of this Report.


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


"Management Discussion & Analysis" on the business and operations of theCompany and the Report on Corporate Governance together with the following are attachedherewith and form part of this Annual Report.

• Declaration regarding compliance of Company's Code of Conduct by Board Membersand Senior Management Personnel.

• Certificate by Practicing Company Secretary on compliance with the conditions ofCorporate Governance by the Company.


The Company has been conducting its business in such a way that it delivers both longterm stakeholders value and benefit society under the approach of "Creating SharedValue". The Company was covered under top 500 listed entities based on marketcapitalization as on 31.03.2017. Therefore as required under Regulation 34 of SEBI (LODR)Regulations 2015 Business Responsibility Report is enclosed as Annexure - C to thisReport.


As required under Section 134(3) (m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 requisite information on conservation of energy technologyabsorption and foreign exchange earnings and outgo is furnished in enclosed Annexure - Dto this Report.


The required information under Section 197(12) of the Act read with Rule 5(1) (2)&(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is furnished in enclosed Annexures - E & F to this Report.


Pursuant to the provisions of Section 139 and other applicable provisions of theCompanies Act 2013 M/s SRBC & Co. LLP Chartered Accountants a Member Firm ofE&Y India were appointed as Statutory Auditors of the Company at the 40th AGM held on30th September 2016 for a term of five consecutive years until the conclusion of 45thAGM to be held in the year 2021 subject to ratification of their appointment at every AGMheld thereafter. However in terms of the Companies Amendment Act 2017 ratification forappointment of Statutory Auditors is now not required to be made at every AGM whenAuditors have been appointed for a term of five years. Hence resolution for ratificationof appointment of Statutory Auditors is not included in the Notice of this AGM.

Notes to Financial Statements (Standalone and Consolidated) forming part of AuditedFinancial Statements for FY 2017-18 are self explanatory and need no further explanation.The Auditors Reports on Audited Standalone and Consolidated Financial Statements does notcontain any modified opinions.


The Board of Directors on the recommendations of Audit Committee appointed M/sDalwadi & Associates Cost Accountant Ahmedabad as the Cost Auditor of the Companyfor a period of three years from FY 2017-18 to 2019-20 at a remuneration of Rs.3.80 Lacper annum for FY 2017-18 and thereafter increase of 10% every year up to FY 2019-20 plusout of pocket expenses and statutory levies.

In accordance with Section 148 of the Act read with Rule 14 of the Companies (Audit& Auditors) Rules 2014 the remuneration of Rs.4.18 Lac per annum payable to CostAuditor for FY 2018-19 is subject to ratification by the Shareholders at the AGM.Therefore a suitable Resolution in this regard is included in Notice of this AGM for yourkind approval.

The Company had e-filed the Cost Audit Report for FY 2016-17 with the Ministry ofCorporate Affairs (Cost Audit Branch) on 1st September 2017. The due date of filing thesaid Report was 30th September 2017.


As required under Section 204 of the Act and the Rules made thereunder the Board ofDirectors has appointed M/s J.J. Gandhi & Co. Practicing Company SecretariesVadodara as Secretarial Auditor for FY 2017-18. The Secretarial Audit Report in Form MR-3in respect of Secretarial Audit work carried out by the Secretarial Auditors for FY2017-18 is enclosed as Annexure - G. In respect of qualifications mentioned in theSecretarial Audit Report the comments are under: (i) In order to have proper compositionof the Board as per Regulation 17(1) of SEBI (LODR) Regulations 2015 during the firstthree quarters of FY 2017-18 the Company made all out efforts for identifying / selectingone more Independent Director having relevant expertise and experience with appropriatebalance of skill and knowledge. However the Board of the company was properly constitutedfrom the fourth quarter.

(ii) The Board Meeting on 29th May 2017 held after a gap of 125 days against maximumpermissible gap of 120 days as per Section 173 of the Companies Act 2013 was due toslight delay in finalization of Annual Accounts for FY 2016-17 on account of adoption ofIndian Accounting Standards (Ind AS) .


As per Regulation 43A of SEBI (LODR) 2016 the Company has formulated DividendDistribution Policy inter-alia setting-out the parameters and circumstances that will betaken into account while determining the distribution of dividend to the shareholders and/ or retaining profits by the Company. This policy is enclosed as Annexure - H and thesame is also available on the Company's website at web link


The Company has complied with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India and approved by the Central Government.


During the year there was no fraud to be reported by Auditors under Section 143(12) ofthe Act.


The Company has not accepted any Fixed Deposit during the year.


The properties and insurable assets and interest of the Company such as buildingsplants & machineries and stocks amongst others are adequately insured. As requiredunder Public Liability Insurance Act 1991 the Company has also taken necessary insurancecover.


Industrial relations during the year under review have remained extremely cordial andharmonious. Your Company has been able to function efficiently because of the culture ofprofessionalism creativity integrity and continuous improvement in all major businessareas as well as efficient utilization of Company's resources for sustainable andprofitable growth.

Your Directors wish to express their deep sense of gratitude for the efficient andloyal services rendered by each and every employee at all levels without whose wholehearted efforts overall splendid performance would have not been possible and also lookforward the bright future of your Company with confidence.


The Board of Directors wish to place on record their deep sense of gratitude for thekind support and guidance received from Government of India and Government of Gujarat.Your Directors also take this opportunity of extending their wholehearted thanks to allour Consumers Dealers Customers Banks Business Associates SEBI NSDL CDSL StockExchanges and other Agencies for their continued support and co-operation and valuedInvestors for strengthening their bond with the Company.

For and on behalf of the Board of Directors
Dr. J.N. Singh
Dated : 9th August 2018 Chairman