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Gujarat State Fertilizers & Chemicals Ltd.

BSE: 500690 Sector: Agri and agri inputs
NSE: GSFC ISIN Code: INE026A01025
BSE 00:00 | 25 Sep 59.60 4.25
(7.68%)
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56.55

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60.60

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NSE 00:00 | 25 Sep 59.70 4.30
(7.76%)
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60.90

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OPEN 56.55
PREVIOUS CLOSE 55.35
VOLUME 122887
52-Week high 97.70
52-Week low 29.90
P/E 35.27
Mkt Cap.(Rs cr) 2,375
Buy Price 59.60
Buy Qty 1875.00
Sell Price 59.85
Sell Qty 504.00
OPEN 56.55
CLOSE 55.35
VOLUME 122887
52-Week high 97.70
52-Week low 29.90
P/E 35.27
Mkt Cap.(Rs cr) 2,375
Buy Price 59.60
Buy Qty 1875.00
Sell Price 59.85
Sell Qty 504.00

Gujarat State Fertilizers & Chemicals Ltd. (GSFC) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting their 57th Annual Report onthe business and operations of the Company and the accounts for the Financial Year endedMarch 31 2019.

1. Financial highlights of the Company

(Rs. in Crores)

Particulars Standalone Consolidated
2018-19 2017-18 2018-19 2017-18
1 Gross Sales 8574.54 6309.27 8490.67 6304.57
2 Other Income 104.90 94.67 107.53 98.95
3 Total Revenue 8679.44 6403.94 8598.20 6403.52
4 Less : Operating Expenses 7827.15 5742.67 7742.01 5739.72
5 Operating Profit 852.29 661.26 856.19 663.80
6 Less : Finance Cost 61.26 51.35 61.01 51.35
7 Gross Profit 791.02 609.91 795.18 612.45
8 Less : Depreciation 125.61 119.12 126.25 119.45
9 Exceptional Item 0 0 0 0
10 Profit before Taxes 665.42 490.79 668.92 493.00
11 Share in Profit/(Loss) of Associates 0.00 0.00 0.02 (0.08)
12 Profit before taxes after Associates 665.42 490.79 668.94 492.92
13 Taxation
- Current Tax 123.23 82.08 125.61 85.28
- Deferred Tax (net) 53.11 49.74 54.81 50.69
- Mat Credit recognized (6.89) (15.45) (6.89) (15.45)
- Earlier year tax 2.29 (101.31) 2.29 (101.31)
14 Profit after taxes 493.68 475.73 493.13 473.71
15 Non-controlling Interest 0.00 0.00 0.001 0.06
16 Other comprehensive income arising from
re-measurement of defined benefit plan (8.37) (2.11) (8.35) (2.11)
17 Balance brought forward from last year 432.06 243.96 473.52 287.74
18 Amount available for appropriations 917.37 717.57 958.30 759.39
19 Payment of Dividend
- Dividend 87.66 18.02 87.66 17.85
- DDT Paid 87.66 18.12 87.96 17.90
20 Transfer to General Reserve 380.00 180.00 380.00 180.00
21 Leaving a balance in the Profit & Loss Account 431.69 432.06 472.53 473.52

2. Dividend

Your Directors are happy to recommend a dividend @ 110% i.e. Rs.2.20/- per Equity Share (Face value of Rs. 2/- each) on 398477530 shares (Previous Year- 110% i.e. Rs. 2.20 per share on 398477530 Equity Shares of Rs.2/- each) for thefinancial year ended 31st March 2019. The net outgo on account of Dividend shall be Rs.105.68 Crores including Corporate Dividend Tax. The Dividend shall be paid to thosemembers whose names shall appear on the Register of Members of the Company on the BookClosure Date i.e. on 12/09/2019.

3. Brief description of the Company's working during theyear/ State of Company's affair

Your directors wish to report that your Company has achieved turnoverof Rs. 8574.54 Crores for the year ended March 31 2019 as against Rs. 6309.27 Crores (FY17-18) on standalone basis which is higher by 36% (Rs.2265.27 Crores) when compared tothe previous financial year.

Similarly for the year under review (FY 2018-19) Profit before Tax(PBT) was Rs. 665.42 Crores and Net Profit (Profit after Tax) was Rs. 493.68 Crores asagainst PBT of Rs. 490.79 Crores and PAT of Rs. 475.73 Crores for the previous financialyear.

4. Material changes and commitments

The Company has not made any material changes or commitments whichaffect the financial position of the Company between the end of the financial year of theCompany to which the financial statements relate and the date of signing of this report.

5. Details of significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.

There are no such orders except those which have been appropriatelychallenged before the judiciary and no impact on going concern status and Company'soperation in future of such matters are expected or visualised at the current stage atwhich they are.

6. Details in respect of adequacy of internal financial controlswith reference to the Financial Statements.

Your Company has an internal Control System which commensurate with thesize scale and complexity of its operations. The scope and authority of the InternalAudit function lies with the Audit Committee of Directors. The Audit Committee monitorsand evaluates the efficacy and adequacy of internal control systems accounting proceduresand policies. Based on the report of Internal Auditors significant audit observations andactions taken on such observations are presented to the Audit Committee of the Board.

7. Details of Subsidiary/Joint Ventures/Associate Companies

During the year under review Companies listed below are the SubsidiaryCompany or Associate Companies:

Subsidiary Company - GSFC Agrotech Limited.
Associate Companies - Vadodara Enviro Channel Limited
Gujarat Green Revolution Company Limited
Gujarat Data Electronics Limited
Karnalyte Resources INC
Subsidiary of Subsidiary - Gujarat Arogya Seva Private Limited.

There were no new additions / deletions during the year. A report ofthe performance and financial position of each of the subsidiaries associates and jointventure companies as per the Companies Act 2013 is provided at Annexure - A to theConsolidated Financial Statement and hence not repeated here for the sake of brevity. TheCompany does not have any material subsidiary in terms of Company's Act 2013 readwith SEBI (Listing Obligation & Disclosure Requirement) Regulations.

8. Listing of Shares & Depositories

The Equity Shares of your Company are listed on the BSE Limited (BSE)and National Stock Exchange of India Ltd. (NSE). As approved by the shareholders anapplication for voluntary delisting of Equity Shares from Calcutta Stock ExchangeAssociation Ltd. Kolkatta was made however the approval for delisting is stillawaited. The listing fee for the FY 19-20 has been paid to both the Stock Exchanges.

Your Directors wish to state that the Equity Shares of your Company arecompulsorily traded in dematerialized form w.e.f. 26/06/2000. Presently 97.72% of sharesare held in electronic/ dematerialized form.

9. Report on Corporate Governance And Management Discussion AndAnalysis Report To Shareholders

Your Company has complied with all the mandatory requirements ofCorporate Governance norms as mandated by SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.

A separate report on Corporate Governance together with the Certificateof M/s. Samdani Kabra & Associates Company Secretaries Vadodara forms part of thisAnnual Report. The Management Discussion & Analysis report also forms part of thisAnnual Report.

10. Business Responsibility Reporting

Business Responsibility Report forms part of this Annual Report atannexure "F" as required under Regulation 34(2) (f) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.

11. Fixed Deposits

During the year 2018-19 your Company has not accepted/ renewed anyFixed Deposit. Your Directors wish to report that there are NIL Fixed Deposits aggregatingRs. NIL which have remained unclaimed by Depositors as on 31st March 2019. Lettersreminding them to seek repayment have been sent. Upto and including the date of thisreport NIL deposits amounting to Rs. NIL have been repaid.

During the year the Company has transferred a sum of Rs. 1.25 Lacsbeing the unclaimed deposits and interest amount thereon to the Investors' Educationand Protection Fund (IEPF) as required in terms of Section 125 of the Companies Act 2013.The Company has discontinued accepting new deposits since 15.11.2005 and renewing thedeposits since 31.03.2009.

12. Insurance

All the properties and insurable interests of the Company includingthe buildings plant & machinery and stocks have been adequately insured. Also asrequired under the Public Liability Insurance Act 1991 your Company has taken theappropriate insurance cover.

13. Expansion & Diversification

Projects under development

1000 MTPD Phosphoric Acid and 3000 MTPD Sulphuric Acid Plant atSikka Unit:

As a part of backward integration your Company is contemplating to setup 1000 MTPD Phosphoric Acid and 3000 MTPD Sulphuric Acid Plant on EPC basis at its SikkaUnit. This will reduce the import dependency for sustaining the plant operation oncontinuous basis for production of Phosphatic Fertilizers at Sikka Unit.

For Phosphoric Acid Company has selected the technology supplier forsupply of License & Know-How and Basic Engineering Package. Your Company is in thefinal discussions with Sulphuric Acid Process Licensors for supply of Technology and BasicEngineering Package. Company is expecting to start construction of this project in firstquarter of Financial Year (FY) 2020-21. Company has already received No ObjectionCertificate (NoC) from GPCB for the execution of this Project.

Expansion of Sikka Jetty for better Utilisation :

As present Sikka Jetty and its associated infrastructure facilities areunder unutilized. Your Company is contemplating to expand its jetty for handling solidcargo and for handling of other liquid chemicals by developing necessary infrastructure /storage facilities at jetty and Chemical Shore Terminal (CST).

After expansion and development of jetty / CST Rock Phosphate requiredfor the proposed Phosphoric Acid Plant and other fertilizers like Urea DAP for tradingpurpose will be imported at jetty. Also other liquid chemicals like Sulphuric Acid /Methanol Cyclohexane etc. can be imported and stored for captive use / trading purpose.

Your Company has also undertaken feasibility study for the expansion ofSikka jetty and is now in the process of carrying out Detail Project Report getting theEnvironment Clearance and finalising the joint venture partners for the project.

Methyl Methacrylate (MMA) Plant at Dahej :

Your Company is also contemplating to set up 64800 MTPA MMA plant atDahej and for which it has executed the required agreements with technology supplier M/sMitsui Chemicals Incorporation (MCI) Japan for supply of License Know-How Process DesignPackage and Catalyst. Your Company is expecting the final Process Design Package (PDP)package sometime in August-Sept 2019 and based on that it is expected that bids for EPCpackage shall be finalized by the first quarter of FY 2020-21.

Caprolactam Plant at Vadodara :

Your Company is contemplating to set up 50000 MTPA Caprolactam Plantat Vadodara based on procurement of major raw material Cyclohexanone. It is in discussionswith EPC Contractors for this Project. Your Company is expecting the final commercial bidsby the 3rd Quarter of FY 2019-20. Also your Company is in process of obtainingenvironmental clearance for the project.

14. Information regarding conservation of energy technologyabsorption foreign exchange earnings and outgo and particulars of employees etc.

Information as required under Section 134 (3) (m) of Companies Act2013 read with the Companies (Accounts) Rules 2014 are enclosed in Annexure "E"forming part of this report.

The details relating to Section 197 (12) of the Companies Act 2013read with Rule 5 (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 have been disclosed in point # 5 of Corporate Governance Report.

15. Corporate Social Responsibility (CSR)

The Company has constituted a Corporate Social Responsibility (CSR)Committee in accordance with Section 135 of the Companies Act 2013. As a part of itsinitiatives under "Corporate Social Responsibility" the Company has undertakenprojects in the areas of education livelihood health water and sanitation. The AnnualReport on CSR activities is enclosed as Annexure A. CSR Policy adopted by the Company isplaced on the Company's website athttps://www.gsfclimited.com/social_commitment.asp?mnuid=1&fid=15

16. Directors

A) Changes in Directors and Key Managerial Personnel

Shri Arvind Agrawal IAS has been appointed w.e.f. 04.06.2018 as arotational Director in place of Shri Anil Mukim IAS Director of the Company who was inthe office till 07.03.2018.

Shri Sujit Gulati IAS has been appointed as Managing Director of theCompany w.e.f.13.07.2018 (afternoon) vice Shri A. M. Tiwari IAS. (Managing Director till13.07.2018 (forenoon)). Shri Sujit Gulati IAS was Director of the Company for the periodfrom 25.07.2016 to 13.07.2018.

Shri Raj Gopal IAS ceased to be a Director of the Company w.e.f.01.02.2019. His resignation has been taken on record by the Board of Directors.

Shri Arvind Agrawal shall be liable to retire by rotation at theensuing Annual General Meeting has offered himself for re-appointment.

The appropriate resolution/s and brief resume of Directors underappointment/ re-appointment at 57th Annual General Meeting is annexed to the Noticeconvening the 57th Annual General Meeting and it forms the integral part of this AnnualReport and your Directors recommend the same for your approval.

B) Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (ListingObligation & Disclosure Requirement) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance the Directors individually as wellas the evaluation of its committees. The manner in which the evaluation has been carriedout is explained in the Corporate Governance Report which forms the part of this AnnualReport.

C) Appointment and Remuneration Policy

The Board has on the recommendation of the Nomination and RemunerationCommittee framed a policy for selection and appointment of Directors senior managementand their remuneration. The details of Remuneration Policy and its weblink are containedin the Corporate Governance Report.

D) Meetings

During the year Five Meetings of the Board of Directors and Fivemeetings of the Audit Committee were held. The composition of Board and Committees alongwith details of attendance is contained in Corporate Governance Report.

17. Details of establishment of vigil mechanism for Directors andEmployees

The Company has a Vigil Mechanism Policy in place to deal withinstances if any of the fraud mismanagement misappropriations if any and the same isplaced on the Company's website. The details of the policy as well as its weblink arecontained in the Corporate Governance Report.

18. Particulars of loans guarantees or investments under section 186

Particulars of loans given investments made guarantee given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilized by the recipient are provided in the standalone financialstatement.

Your Directors would further like to inform that in continuation to thereporting made in previous year regarding the investments made by the Company in BhavnagarEnergy Company Limited (BECL) as directed by Government of Gujarat it is further informedthat the Company was holding 59220000 equity shares of Rs. 10/-each aggregatingRs.59.22 Crores in BECL which represents 5.95% of BECL's total equity share capitalas on 31.03.2018.

During the year company has also acquired 12000000 shares of Rs. 10each having value of Rs. 12.00 Crores comprising total holding of 71220000 equityshares having value of Rs. 71.22 Crores.

Government of Gujarat Energy & Petrochemicals Department approvedproposal of merger of BECL into Gujarat State Electricity Corporation Limited (GSECL). Thesaid merger shall be carried out by the State Government under the provisions of GujaratElectricity Industry (Reorganization & Regulation) Act 2003. By virtue of that theGovernment of Gujarat issued a notification dated 27th August 2018 inter-alia determiningthe terms and conditions on which the said merger shall be made effective.

As per the terms the Transferee Company i.e. GSECL shall issue oneequity share to each shareholder of BECL against total number of equity shares of BECLheld by each of such shareholders as on the date of notification of this scheme. Issue ofequity shares by GSECL to the shareholders of BECL shall be the consideration forshareholders of BECL in respect of transfer of the undertaking of BECL and extinguishmentof their rights as shareholder of BECL.

Hence all rights attached thereto by virtue of shareholding at BECLgets extinguished and there shall be diminution of value of shares by effect of thisnotification during the year under report i.e. 2018-19.

19. Particulars of contracts or arrangements with related parties

All related party transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness. There are no materially significant related party transactions made by theCompany with Promoters Directors Key Managerial Personnel and other Designated Personswhich may have a potential conflict with the interest of the Company at large.

All Related party transactions were placed before the Audit Committeeand also the Board of Directors for Approval. Prior omnibus approval of the AuditCommittee is obtained and a statement giving details of transactions if any shall beplaced before the Audit Committee meeting as mandated. The Company has developed amechanism for identification of related party transactions and the Company is also havingthe system of monitoring of such transactions.

The particulars of every contract or arrangements entered into by theCompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso theretohave been disclosed in Annexure "D" to this report.

20. Managerial Remuneration:

Details as required pursuant to Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are contained in CorporateGovernance Report.

21. Risk management policy

The details of such Committee and its terms of reference are set out inthe Corporate Governance Report forming part of the Board's Report.

22. Directors' Responsibility Statement:

Pursuant to Section 134 (3) (c) of the Companies Act 2013 yourDirectors confirm that: a. In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; b. The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period; c. The Directorshad taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d. The Directors had preparedthe annual accounts on a going concern basis; e. The Directors in the case of a listedCompany had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and f. TheDirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

23. Auditors:

(a) Statutory Auditors on recommendation of the Audit Committeethe Board of Directors has recommended for the appointment of M/s. T. R Chadha & Co.LLP Ahmedabad Chartered Accountants (Firm Registration No.006711N/ N500028) as theStatutory Auditors for the second term of three consecutive years i.e. to hold the officefrom the conclusion of 57th Annual General Meeting till the conclusion of 60th AnnualGeneral Meeting of the Company to be held in the year 2022.

(b) Cost Auditors:

In terms of the Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 the Company is required to maintain costaccounting records and get them audited every year.

The Board of Directors of your Company on the recommendations made bythe Audit Committee has approved appointment of M/s Diwanji & Company CostAccountants Vadodara (Firm Registration Number 000339) as the Cost Auditors of yourCompany to conduct the audit of cost records for the Financial Year 2019-20. Theremuneration proposed to be paid to the Cost Auditor is placed for your ratification atthe ensuing 57th Annual General Meeting. The Cost Auditors for the F.Y. 2018-19 was filedwithin stipulated time.

(c) Internal Auditors:

Your Company has appointed M/s Talati & Talati CharteredAccountants Vadodara as Internal Auditors of Baroda & Sikka Unit for Financial Yeari.e. 2019-20. M/s K. N. Mehta & Co. Chartered Accountants Vadodara have beenappointed as Internal Auditors for the Company's Polymers Units.

(d) Secretarial Auditors & Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the Company has appointed M/s Niraj Trivedi Practicing Company Secretary to undertake thesecretarial audit of the Company. The Report of the Secretarial Auditor is enclosed asAnnexure "B".

24. AUDITORS' REPORT

There are no comments/ observations reservations or adverse remarks inthe Auditors Report and Secretarial Audit Report and hence no clarifications need to begiven on their clean report.

25. Extract of the annual return:

Link of annual return as per the Companies Amendment Act 2017 is asbelow; www.gsfclimited.com/compliance

26. Human Resources

Your Directors are happy to acknowledge that the well positioned humanresource of the Company have been key drivers in implementing ideas polices cultural andbehavioral aspects of the organization and ultimately with their outstanding performancehas helped the Company to realize its objectives. Your Directors are happy to place onrecord their appreciation for highly potential consistent and ethical employees for theirremarkable contribution to the Company.

27. Acknowledgements

Your Directors place on record their appreciation for the overwhelmingco-operation and assistance received from the Government of Gujarat Government of IndiaBank of Baroda and other Banks and agencies. Your Directors also wish to express theirgratitude to the investors for their continued support and faith reposed in the Company.

For and on behalf of the Board
Sd/-
Place: Fertilizernagar Dr. J N Singh IAS
Date : 09/08/2019 Chairman

.