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Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

BSE: 500670 Sector: Agri and agri inputs
NSE: GNFC ISIN Code: INE113A01013
BSE 10:17 | 23 Jul 405.00 4.70






NSE 10:04 | 23 Jul 403.50 3.15






OPEN 402.50
VOLUME 24090
52-Week high 548.50
52-Week low 253.60
P/E 7.97
Mkt Cap.(Rs cr) 6,295
Buy Price 405.05
Buy Qty 39.00
Sell Price 405.60
Sell Qty 39.00
OPEN 402.50
CLOSE 400.30
VOLUME 24090
52-Week high 548.50
52-Week low 253.60
P/E 7.97
Mkt Cap.(Rs cr) 6,295
Buy Price 405.05
Buy Qty 39.00
Sell Price 405.60
Sell Qty 39.00

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

Company director report


The Members

Your Directors have great pleasure in presenting this 41st Annual Report on Company'sbusiness and operations together with Audited Financial Statements (Standalone andConsolidated) for the Financial Year ended 31st March 2017. The year 2016-17 was the yearof extraordinary all around performance of your Company. The continued emphasis on higherproductivity energy conservation & efficiency improvement smart marketingstrategies innovation / cost reduction environmental & safety consciousness etc.have substantially contributed in achieving the commendable performance of your Company.


As a result of the concerted efforts put-in by your Company ever highest Profit BeforeTax (PBT) of Rs.715 Crore and Profit After Tax (PAT) of Rs.521 Crore were achievedregistering an appreciable growth for the year ended 31st March 2017.

The financial highlights for the year ended 31st March 2017 are summarized below:

(Rs. in Crores)
Particulars Standalone
2016-17 2015-16
Income from operations 4945 4846
Other Income 225 252
Total Income 5170 5098
Total Expenditure 4292 4283
Profit before Depreciation Finance
Cost Exceptional Item and Tax 878 815
Depreciation 251 251
Finance Cost 204 296
Exceptional Item (Impairment
Reversal of TDI-II Assets) 292 -
Profit Before Tax 715 268
Tax Expense 194 95
Net Profit for the year 521 173
Re-measurement of Losses on
defined employee benefit plans 6 8
Balance brought forward from
previous year 157 42
Amount available for Appropriation 672 207
Appropriations :
Dividend paid 31 -
Tax on Dividend 6 -
Transferred to General Reserve - 50
Surplus carried to Balance Sheet 635 157


The Ministry of Corporate Affairs (MCA) vide its Notification dated 16th February2015 notified the Indian Accounting Standards (Ind AS) applicable to certain classes ofCompanies. Ind AS has replaced the existing Indian Generally Accepted AccountingPrinciples (IGAAP) prescribed under Section 133 of the Companies Act 2013 (here-in-afterreferred to as ‘the Act') read with Rule 7 of the Companies (Accounts) Rules 2014.Ind AS is applicable to the Company with effect from 1st April 2016 with a transitiondate of 1st April 2015 and IGAAP as the previous GAAP. Accordingly the FinancialStatements have been prepared in accordance with Ind AS issued under the Companies (IndianAccounting Standards) Rules 2015.


1. Financial Performance :

Your Directors are happy to inform that during the year under review the company hasestablished ever highest records on standalone basis which are as follows :

• Profit Before Tax of Rs.715 Crore.

• Single quarter PBT of Rs.314 Crore for Fourth Quarter of FY 2016-17.

• Export of Rs.361 Crore to 55 Countries.

• Repayment of term debt of Rs.780 Crore.

• IT Division turnover of Rs.189 Crore and profit of Rs.51 Crore.

• Market capitalization of Rs.5015 Crore.

• Dividend of Rs.5/- per equity share @ 50%.

The Company registered total turnover of Rs.4944.81 Crore for FY 2016-17 as comparedto Rs.4845.85 Crore during previous year registering a marginal increase of 2.04%. Theperformance of Chemical Segment was extraordinarily well registering Segment Profit ofRs.818 Crore despite 140 Nil production days of TDI-II Plant Dahej. The performance ofFertilizer Segment was also good with Segment Profit of Rs.109 Crore before one timeitems / abnormal factors. After accounting of one time items / abnormal factors of Rs.104Crore on account of reversal of subsidy the Company achieved Segment Profit of Rs.5Crore in Fertilizer Segment for the year under review.

During the year the Company exported various Industrial Products and achieved everhighest export turnover of Rs.361 Crore compared to Rs.212 Crore in previous year. Whilethe contribution of TDI in the total export turnover was Rs.304 Crore (the maincontributor) the other Industrial Products contributed Rs.57 Crore. The Net Profit onconsolidated basis was Rs.528.79 Crore as compared to Rs.179.86 Crore in the previousyear.

2. Operational performance :

Your Company has achieved excellent production performance during the year. Mostplants of the Company performed at high capacity utilization level. Ever highest annualproduction was achieved in various plants viz. Ammonia 645347 MTs (144.86%) Urea777555 MTs (122.08%) Formic Acid 21934 MTs (219.34%) Ammonium Nitrophosphate 220311MTs (154.60%) TDI-II 33365 MTs (66.73%). In addition Acetic Acid and Aniline Plantsalso operated at over 100% capacity and achieved production of 158512 MTs (158.51%) and41454 MTs (118.44%) respectively.

The Directors are happy to inform that TDI-II Plant is currently operating at more than100% capacity on a consistent basis. With a view to increase safety reliability and alsoto achieve sustainable operations of the plant the Company has initiated necessaryactions for implementation of various schemes with an estimated investment of Rs.50 Crore.


1. Industrial Products :

The Chemical Segment has performed extremely well for FY 2016-17 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. TheCompany sold in aggregate 12.55 Lac MTs of Industrial Products during 2016-17 as against12.06 Lac MTs in the previous year and achieved total sales turnover of Rs.3061.65 Croreas compared to Rs.2704.14 Crore in the previous year. The outstanding performance ofChemical Segment was mainly attributed to smart marketing strategy and dynamic pricing ofCompany's products.

2. Fertilizer Business:

The year 2016-17 continued to remain challenging for Fertilizer Sector due to weakmonsoon and high carried forward stock of last year in the country. Inspite of this yourCompany performed well in the Fertilizer business. The Company sold total 10.37 Lac MTs ofUrea (Manufactured and Traded) as compared to 8.10 Lac MTs in the previous year. The saleof Ammonium Nitrophosphate (ANP) was marginally lower at 2.16 Lac MTs compared to 2.20 LacMTs in the previous year. Around 1 Lac MTs of Fertilizers were sold through Company'sNarmada Khedut Sahay Kendras (NKSKs) in Gujarat. The Company has decided to expand itsnetwork of NKSKs progressively over a period of time.

The Company continued its trading activities in Muriate of Potash (MOP) indigenouslysourced Di-Ammonium Phosphate (DAP) Single Super Phosphate (SSP) during the year andtotal 8500 MTs Fertilizers were sold as a part of trading activities.

3. (n)Code Solutions – IT Division:

(n)Code Solutions - IT Division has also significantly contributed in achieving thesplendid performance of your Company during the year. This division has registered everhighest sales turnover of Rs.189 Crore compared to Rs.151 Crore in the previous year andcontributed ever highest Profit Before Tax of Rs.51 Crore during the year as compared toRs.38 Crore in previous year registering an increase of 34% across all its businesssegments.

(n)Code Solutions has bagged major prestigious orders from Ahmedabad Janmarg Ltd.Surat Municipal Corporation – BRTS Maharashtra Sales Tax Department Mukhya MantriAmrutam Yojna etc. To achieve sustained growth in IT business (n)Code has undertakenseveral new initiatives in the areas of smart cities intelligent transportation systemintegration Geographical Information Systems security and surveillance Digital Mappingand Surveys business intelligence Data Analytics e-KYC e-sign etc.

Looking to the exponential growth of IT Division of your Company in terms of businessand profitability since last more than three years and future growth opportunities in ITSector and with a view to provide an operational flexibility befitting to its nature ofbusiness which would ultimately pave the way for realizing the full potential of thisdivision and to appropriately reflect its performance your Directors decided to carve outwholly owned subsidiary of GNFC for its IT business rather than functioning as a divisionof the Company. Towards this direction a wholly owned subsidiary of the Company in thename of "Gujarat NCode Solutions Limited" has been incorporated on 28thFebruary 2017 for hiving off IT business to the said Company.

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


The Directors are happy to inform that in view of splendid performance of the Companyfor FY 2016-17 and to ensure that shareholders get sustained and stable return on theirinvestments your Directors have recommended ever highest dividend of Rs.5/- per share(50%) on 155418783 equity shares of Rs.10/- each for FY 2016-17 subject to approval ofshareholders at this Annual General Meeting (AGM). The dividend payout would work out toRs.78 Crore plus dividend tax of Rs.16 Crore and the total outgo works out to around Rs.94Crore. This amounts to 18% of the Net Profit of the Company.


Your Company has earned Net Profit of Rs.521 Crore for FY 2016-17. After deductingtherefrom Rs.9 Crore being the re-measurement losses on defined employee benefit plans andadding thereto Rs.153 Crore being the balance of Statement of Profit & Loss broughtforward from previous year an amount of Rs.665 Crore is available for appropriation. Outof this Rs.37 Crore (inclusive of Tax on Dividend) is appropriated towards payment ofdividend for FY 2015-16. The balance amount of Rs.628 Crore is proposed to be carried toBalance Sheet. The Company proposes to transfer Rs.115 Crore to General Reserve upondeclaration of Dividend for FY 2016-17.


International market of Fertilizer saw a fall in prices during the year. Government ofIndia (GoI) increased subsidy on nitrogen nutrient and decreased subsidy on P&Knutrient covered under Nutrient Based Subsidy Policy for FY 2017-18 resulting intocombined effect of reduction or increase in subsidy on finished fertilizers depending uponthe content of nutrient.

GoI is slowly but steadily pursuing its initiatives to transfer subsidy directly to thefarmers. The pilot project for payment of Fertilizer subsidy as ‘Direct BenefitTransfer' (DBT) is under implementation in 19 Districts across the Country includingNarmada District in Gujarat. GoI is planning to roll out DBT across the country very soon.

Recently GoI has enacted the Central Goods & Service Tax (GST) Act 2017 in theParliament and made effective from 1st July 2017. The applicable GST rate on Fertilizersis 5% which will marginally reduce the cost of Fertilizers across the country except infew states where there was no tax on Fertilizers earlier. This is in the interest ofFarmers and also augurs well for the growth of the company.

Due to Government Policy of 100% Neem Coating of Urea efficiency of Fertilizers hasgone up and it has pesticidal effect too. Therefore the consumption of Urea has beenreduced. This has reduced import of Urea resulting into saving of precious foreignexchange of the country.

As per the directives of GoI to all Fertilizer Companies for opening "ModelFertilizer Retail Shops" your Company has upgraded its 25 Retail Outlets out oftotal 68 Retail Outlets. And as per the directives to all Chemical Fertilizer suppliersfor promoting and marketing City Compost Fertilizers (CCF) your Company has startedmarketing CCF in Gujarat and sold around 7000 MTs during FY 2016-17.


1. Neem Project :

Following the directives of Government of India for 100% Neem coating of Urea yourCompany had undertaken an innovative Socio-Economic Neem Project in 2015 and became thefirst Fertilizer Company in India to implement the Neem Project. During the year about11300 MTs of Neem Seeds were collected through unique network of community basedorganizations providing additional income to about 1.25 lac poor rural women and othermarginalized communities. During the year under review the Company has produced around890 MTs of Neem Oil and 7000 MTs of Neem Cake.

It was reported last year that the Company is planning to set-up its own productionfacility of Neem Oil. Your Directors are happy to inform that the Company has establishedfacility for expelling 5000 MTPA of Neem Seeds to produce high quality Neem Oil atBharuch. As a forward integration and to promote the use of Neem Oil facility formanufacturing Neem Soap and Neem Oil (for domestic and personal care use) and pesticideshave been developed. Additional facilities are also setup to manufacture Neem Oil basedproducts such as Hand-wash Shampoo Face wash and Hair Oil. Actions have also beeninitiated to set-up Neem Seeds extraction unit on a large scale to produce about 2900MTPA Neem Oil and about 22000 MTPA Neem Cake.

This innovative Socio-economic Neem Project – the first of its kind in India haswon several National and International prestigious awards the details of which areseparately provided in this report under the heading "Awards and Accolades".Ministry of Fertilizers has advised other Fertilizer Companies to replicate Neem Project.Hon'ble Prime Minister was kind enough to praise GNFC's initiative in collecting neemseeds and producing neem oil by providing additional income to Lacs of women in hisinterview to CNN IBN in September 2016.

2. Contributing towards "Digital India" Goal :

It is a matter of proud for all of us that your Company became the first FertilizerCompany in India to have its 100% Cashless Township following the clarion call of Hon'blePrime Minister of India for "Digital India". This cashless initiative is wellrecognized at the highest level in Government of India Government of Gujarat and otherStates of the Country. The Company is also facilitating the farmers to buy Fertilizers andother Agri-inputs through cashless mode by installing PoS Machines Mobile App on-lineapplications e-wallets use of debit / credit cards RTGs / NEFT etc. The farmers andretailers are encouraged by offering them various incentives for cashless transactions.GNFC has so far sold 23.17 Lac Bags of Fertilizers to 2.11 Lac farmers amounting toRs.79.48 Crore through cashless transactions.

Hon'ble Prime Minister was kind enough to praise GNFC's initiatives in Cashless sale ofFertilizers during his National address in "Mann-Ki-Baat" on 25th December2016. Under the auspice of NITI Ayog the Apex Planning Body of India chaired by Hon'blePrime Minister of India GNFC's Cashless Township Model has been implemented in 81Integrated Townships across 12 States of India.

The Company's contribution to this innovative framework of cashless initiatives hasbeen well recognized at National and International Level and won several prestigiousawards the details of which are separately provided in this report under the heading"Awards and Accolades".

3. Di-Calcium Phosphate Project :

The project execution activities for setting-up of 2 Lac MTPA Di-calcium Phosphate(DCP) Project at Dahej are under progress by EcoPhos GNFC India Pvt. Ltd. a Joint VentureCompany set-up with EcoPhos s.a. Belgium. The estimated cost of the said project is Rs.538Crore with an equity investment in the ratio of 15:85 by GNFC and EcoPhos s.a. Belgiumrespectively. The Company is concentrating on speedy implementation of project asdownstream integration of TDI-II Plant and the project is expected to be completed byDecember 2018.

With the completion of this project entire HCI generated as by-product from TDI-IIPlant will be consumed for production of DCP which would help in improving theprofitability of TDI business.

4. Solar Power Generation Project :

The Company has entered into a Memorandum of Understanding with a Saudi Arabian Companyfor setting-up about 40 MW Solar Power Generation facilities at Bharuch and Dahej in orderto fulfill the Renewable Purchase Obligations applicable to the Company in terms ofNotification issued by Gujarat Electricity Regulatory Commission. The feasibility studyfor setting-up of this project is being conducted and further course of actions will bedecided based on positive outcome of feasibility study.

5. Coal based Captive Co-generation Power Plant at Dahej:

The Company has set-up 100 MT/hr capacity gas based Boiler at TDI-II Plant Dahej tomeet captive steam requirement while the power is being sourced from DGVCL Grid. There isa large variation in gas prices. With a view to reduce the cost of steam & power forcaptive requirement and to improve its reliability your Company is planning to set up aCoal based Captive Co-generation Power Plant with a capacity to produce 18 MW power and150 MT/hr steam at Dahej.

6. Lime purification Project :

Post successful outcome of pilot plant trials in previous year the Company has enteredin to a Joint Venture Agreement with M/s Santosh Agrochem LLP (SAC) to establish thefacility for purification of by-product Lime generated from ANP Plant to make it moremarketable. This will resolve the environmental issues and at the same time add value tothe product.

The facility of lime purification will be established at Bharuch Complex in two Phaseswith total annual capacity of 100000 MT per annum through a joint venture Company M/s.Calciwell Chemtech Pvt Ltd. (CCPL). The estimated cost of the project is Rs.50 Crore withan equity investment for GNFC and SAC in the ratio of 10:90 respectively. Activitiesrelated to project implementation are under progress.


Your Directors are delighted to inform that the Company has won many National andInternational prestigious Awards from Governments and other renowned Institutions inrecognition of unique work done in the areas of Cashless initiatives and Neem Projectwhich are listed below :

• Skoch Order of Merit Award for Neem Project.

• Skoch Blue Economy Platinum Sustainability Award- 2016.

• Skoch Blue Economy Person of the Year Award to Dr. Rajiv Kumar Gupta IASManaging Director for his exemplary leadership in conceiving designing and managing theNeem Project.

• Golden Peacock Award-2017 in CSR for Neem Project.

• ABP News Award for Excellence in CSR - Women Empowerment.

• Global CSR Award for Women Empowerment.

• Porter prize for Neem Project which is sponsored and supported by Harvardaffiliated Institute for Competitiveness by Michael Porter.

• India CSR Community initiative Award for Women Empowerment.

• Business World Digital India Award for Best implementation of Digital Payments.

• Golden Peacock Product / Service Award – 2017 for Cashless Township.

• Golden Globe Tigers Award for Excellence and Leadership in CSR for e-paymentleadership.

• India CSR Leadership Summit Award for Most Innovative Neem Project of the year.

• Skoch Order of Merit Award for Corporate Excellence for innovation - 100%Cashless drive.


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 March2017 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.


There has been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of financial year of the Company to whichthe financial statements relate and the date of the report.


The Company has an Associate Company namely Gujarat Green Revolution Co. Ltd. (GGRCL).A Statement containing salient features of Financial Statement of GGRCL is given in FormAOC-1 as an Annexure to the Consolidated Financial Statements and the same has not beenrepeated here for the sake of brevity.

During the year a wholly owned subsidiary of the Company in the name of "GujaratNCode Solutions Limited" (GNSL) was incorporated on 28th February 2017.

The first Accounting Year of GNSL is from the date of incorporation i.e. from 28thFebruary 2017 to 31st March 2018. Therefore report on performance and financialposition in respect of GNSL has not been furnished in this Report.

The first Accounting Year of EcoPhos GNFC India Pvt. Ltd. (EGIL) a Joint VentureCompany has ended on 31st March 2017. The project execution activities have recentlycommenced and therefore report on operational performance and financial position of EGILfor FY 2016-17 has 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 Green Revolution Co. Ltd. being anAssociate Company for FY 2016-17 and forms part of this Annual Report.

Gujarat NCode Solutions Ltd. (GNSL) a wholly owned subsidiary of the Company andEcoPhos GNFC India Pvt. Ltd. (EGIL) a Joint Venture Company falls within the category ofsubsidiary. As per Ind AS the accounts of GGRCL and GNSL are only required to beconsolidated. However GNSL being newly formed entity having financial transactions after31st March 2017 only the accounts of GGRCL have been consolidated.


During the year the Company made an additional investment of Rs.24.20 Crore in theequity capital of EcoPhos GNFC India Private Ltd. a Joint Venture Company by subscribing1007300 equity shares of Rs.10/- each for cash and 23201200 equity shares of Rs.10/-each other than cash by executing an Agreement for sub-letting land to EGIL forsetting-up of DCP Project.

The Company has also made an investment of Rs.1 Lac in the equity of Gujarat NCodeSolutions Ltd. a wholly owned subsidiary of the Company by subscribing 10000 equityshares of Rs.10/- each as subscribers to the Memorandum of Association.

The Company has not given any Loan or Guarantee or provided any Security in connectionwith loan to any other body corporate or person during the year.


The Policy for Related Party Transactions (RPTs) is available on the Company's websitewhich deals with review and approval of RPTs. The Audit Committee has granted Omnibusapproval for RPTs which are routine and repetitive in nature based on criteria approvedby the Board of Directors within the overall framework of said policy.

The Company executed an agreement with M/s EcoPhos GNFC India Pvt. Ltd. a jointventure Company for sub-letting of land admeasuring about 130052 sq. mtrs. situated atDahej for consideration of Rs.23.20 Crore for setting-up of Di-Calcium Phosphate Projectinitially for a period of 20 years with a right to further extend the same. The saidtransaction being related party transaction under Section 188(1) of the Act the Companyhas made necessary compliance as required under the Act.

During the year the Company had not entered into any contract or arrangement withrelated parties which could be considered "material" (i.e. transactionexceeding 10% of the annual consolidated turnover as per the last Audited FinancialStatement entered into individually or taken together with previous transaction during thefinancial year) according to the Policy on Related Party Transactions. Hence there is notransaction which is required to be reported in Form AOC-2. Suitable Related Partydisclosure under Ind AS-24 is also reported in the Note No.37 to the Standalone FinancialStatement.

Details on RPTs has also been furnished in the ‘Report on Corporate Governance'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 to Directors / KeyManagerial Personnel / Senior Management and other employees are furnished in the‘‘Report on 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 under review Dr. J.N. Singh IAS was nominated by Govt. of Gujarat asits nominee and appointed Chairman of the Company effective from 31st August 2016. ShriAnil Mukim IAS was appointed Additional Director on the Board effective 30th September2016 who will hold office up to the date of this AGM. Shri Anil Mukim IAS being eligiblefor appointment a suitable resolution proposing his appointment as Rotational Director isincluded in the Notice of this AGM for your kind approval.

Prof. Arvind Sahay and Shri C.S. Mani were appointed as Independent Directors (IDs) atthe 38th AGM held on 26th September 2014 for a term of three years up to 30th September2017. Accordingly 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 re-appointment as IDs are included in the Notice of this AGMfor your kind approval.

Retirement by Rotation:

In terms of Section 152 of the Act Smt. Mamta Verma IAS will retire by rotation atthis AGM and is proposed to be re-appointed at this AGM.

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 other Directorship during the year is furnishedin the ‘Report on Corporate Governance' forming part of this report.

Your Directors place on record their deep sense of appreciation of the valuableservices rendered by the outgoing Directors and take this opportunity to welcome the newDirectors.

Key Managerial Personnel :

During the year under review –

(i) Shri Vikram Mathur ceased to be Chief Financial Officer (CFO) w.e.f. 30thSeptember 2016 and Shri D.V. Parikh was appointed as CFO effective from 1st February2017.

(ii) Shri R.B. Panchal ceased to be Company Secretary and Compliance Officer w.e.f.30th November 2016 and Shri T.J. Lakhmapurkar was appointed as Company Secretary andCompliance Officer w.e.f. 1st December 2016.


Pursuant to the applicable provisions of the Companies Act 2013 and relevant Rulesmade thereunder all unpaid or unclaimed dividends are required to be transferred by theCompany to the Investor Education and Protection Fund (IEPF) established by the CentralGovernment after the completion of seven years. Accordingly the Company has transferredunclaimed / unpaid dividend amount to IEPF.

Further pursuant to the IEPF Authority (Accounting Audit Transfer and Refund)Amendment Rules 2017 ('the Rules') the Company is mandated to transfer all such sharesin respect of which Dividend amount remains unclaimed / unpaid for a consecutive period ofseven years or more to the demat account opened by the IEPF Authority. The details of suchshares 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 Committeeto redress the 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 mitigationsteps. The Audit Committee and Board of Directors periodically review the Risk ManagementReport inter-alia containing major anxiety areas and action plan for their mitigationand noteworthy risk management activities carried out by the Company.

The Company has adequate internal controls commensurate with the nature of its businessand size and complexity of its operations. Details of internal control system are given in"Management Discussion & Analysis Report" forming part of this 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 - I 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 covered in CSR Policy and Schedule -VII tothe Act. Annual Report on CSR activities for FY 2016-17 is enclosed as Annexure - II tothis Report.


The Company has formulated a "Vigil Mechanism-cum-Whistle Blower Policy" forDirectors and employees of the Company to report their genuine concerns details of whichhave been given in the "Report on Corporate Governance" forming part of thisReport.


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.


The "Management Discussion & Analysis" on the business and operations ofthe Company and the Report on Corporate Governance together with the following areattached herewith and form part of this Annual Report.

• Declaration of Code of Conduct.

• Certificate from Practicing Company Secretary with regard to Company'scompliance with the conditions of Corporate Governance.


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 is enclosed as Annexure - III to this Report.


The required information under Section 197(12) of the Act read with Rule5(1)(2)&(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are enclosed as Annexure - IV & V to this Report.


M/s SRBC & Co. LLP Chartered Accountants a Member Firm of E&Y India wereappointed as Statutory Auditors of the Company at the 40th AGM held on 30th September2016 for a term of five consecutive years until the conclusion of 45th AGM to be held inthe year 2021 subject to ratification of their appointment at every AGM held thereafter.A suitable resolution for ratification of their appointment has been included in theNotice of this AGM.

Notes to Financial Statements (Standalone and Consolidated) forming part of AuditedFinancial Statements for FY 2016-17 are self explanatory and need no further explanation.The Auditors' Reports on Audited Financial Statements (Standalone and Consolidated) do notcontain any modified opinions.


The Board of Directors on the recommendations of Audit Committee has 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 payable to Cost Auditor is subject toratification by the Shareholders at the AGM. Therefore a suitable Resolution forratification of remuneration to Cost Auditor for FY 2017-18 is included in Notice of thisAGM for your kind approval.

The Company has e-filed the Cost Audit Report for FY 2015-16 with the Ministry ofCorporate Affairs (Cost Audit Branch) on 20th August 2016. The due date of filing thesaid report was 30th September 2016.


As required under Section 204 of the Act and the Rules thereunder the Board hasappointed Shri V.L. Vyas Practicing Company Secretary as Secretarial Auditor for FY2016-17. The Secretarial Audit Report in Form MR-3 is enclosed as Annexure – VIwhich does not contain any qualification reservation or adverse remark.


As per Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) (SecondAmendment) Regulations

2016 Top 500 listed companies are required to formulate Dividend Distribution Policybased on market capitalization (calculated as on 31st March every year). Your company iscovered under the top 500 listed companies as per the market capitalization as on 31stMarch 2017. Accordingly the Company has formulated a Dividend Distribution Policy inter-aliasetting-out the parameters and circumstances that will be taken into account indetermining the distribution of dividend to the shareholders and / or retaining profits bythe Company. This policy is enclosed as Annexure-VII and the same is also available on theCompany's website at web link


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. No amount on account ofprincipal or interest was outstanding as on the date of Balance Sheet.


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 Directors convey their high sense of appreciation for the significantcontribution made by the employees at all levels in achieving excellent all aroundoperational and financial performance of the Company.


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

Place : Gandhinagar Dr. J.N. Singh
Date : 19th August 2017 Chairman