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Garware Polyester Ltd.

BSE: 500655 Sector: Industrials
BSE 00:00 | 17 Oct 217.55 -4.45






NSE 05:30 | 01 Jan Garware Polyester Ltd
OPEN 223.00
52-Week high 290.00
52-Week low 185.75
P/E 6.32
Mkt Cap.(Rs cr) 507
Buy Price 217.55
Buy Qty 28.00
Sell Price 224.00
Sell Qty 30.00
OPEN 223.00
CLOSE 222.00
52-Week high 290.00
52-Week low 185.75
P/E 6.32
Mkt Cap.(Rs cr) 507
Buy Price 217.55
Buy Qty 28.00
Sell Price 224.00
Sell Qty 30.00

Garware Polyester Ltd. (GARWARPOLY) - Director Report

Company director report


Your Directors present the 61st Annual Report together with the AuditedStatement of Accounts of the Company for the year ended 31st March 2018.

1. Financial Results (Standalone Basis)

( Rs In Crores)

2017 - 2018 2016 2017
Operating Profit before interest & Depreciation 88.69 78.15
Less : Finance Cost 24.45 32.55
Depreciation 13.41 13.07
37.86 45.62
Profit before tax for the year 50.83 32.53
Provision for Income Tax 17.07 10.65
Profit After Tax 33.76 21.88
Other Comprehensive income for the year Net of Tax 6.87 15.42
Total Comprehensive Income for the year (Net) 40.63 37.30
Opening balance in Retained Earnings 308.51 286.21
Dividend Final - FY 2016-17 2.33 0.00
Tax on Dividend 0.47 0.00
Closing Balance in Retained Earnings 350.48 308.51

2. Dividend

Your Directors recommend 20% dividend (i.e. Rs 2.00/- per equity share) forconsideration at the ensuing Annual General Meeting for the financial year ended 31stMarch 2018 on 23232394 equity shares of Rs 10/- each.

The total sum of the dividend if approved including Corporate Dividend Tax will bepayable Rs 5.59 Crores.

3. Company's performance On Standalone Basis:

Revenue from operations for the financial year 2017-18 was at Rs 837.09 Crores islower by 8.22% over the last year (Rs 912.07 Crores in 2016-17) as post implementation upidle capacities. The of GST revenue growth infrom operations are reported net ofGST from July-2017 and reduction in volume of BOPP films production which was partlyoffset by increased volume in Sun control and BOPET film.

The Earnings before interest tax depreciation and amortization (EBITDA) was Rs 88.69Crores against EBITDA of Rs 78.15 Crores in 2016-17.

The Profit after tax (PAT) for the year wasRs 33.76 Crores against the PAT of Rs 21.88Crores in 2016-17.

The total comprehensive income (net of taxes) for the year was Rs 40.63 Croresagainst Rs 37.30 Crores in 2016-17.

On Consolidated Basis:

Revenue from operations for the financial year 2017-18 was at Rs 847.20 Crores lower by8.53% over the last year (Rs 926.19 Crores in 2016-17) as post implementation of GSTrevenue from operation was reported net of GST from July-2017 and reduction in volume ofBOPP films production which was partly offset by increased volume in Sun control and BOPETPlain film.

The Earnings before interest tax depreciation and amortization (EBITDA) was at Rs88.50 Crores against EBITDA of Rs 80.52 Crores in 2016-17.

The Profit after tax (PAT) for the year was Rs 33.12 Crores against the PAT of Rs 22.44Crores in 2016-17.

The total comprehensive income net of taxes for the year was Rs 39.99 Croresagainst Rs 37.87 Crores in 2016-17.

4. Operations

The Profit before tax was increased by 56% on account of reduction in Finance cost dueto repayment of term loans and switch over to working capital term loan. The increase inEBIDTA by 13.48%in spite of reduction in Revenue was due to change in product mixpenetration in new markets optimization of inventory and optimization of overheads.

5. Future outlook

The BOPET film market is growing at 10% p.a. The market growth will has helped to fillcontinue considering the market growth.

The Industrial Product Division has concentrated its efforts on exports of value addedspecialty films considering the strength of the Organization. The PET shrink label film iswell established in

Indian and International market.

The Solar control film market is growing internationally due to increasing awareness ofadvantages of solar control films that is reduction of energy costs carbon emissionreduction reduction of ultra-violet (UV) rays and infrared (IR) emissivity. The surge inboth automobile sales in export markets and in real estate development globally is alsohelping in the growth of solar control films and we see good potential for growth in thissegment. The new products are introduced which will continue to be the driver for growth.

The Consumer Products division has well established Suncontrol film brands in theInternational Market that is "Sun control' and

‘Global'. The company has been catering to customers across North America SouthAmerica Russia Europe China Far East Middle East and Africa. ‘Global' brandreceived good acceptance in American Market. The market share in matured markets like USAhave grown exponentially. In continuation of the efforts for Exports the Companyrepresentatives are posted in strategic and important markets like Russia Malaysia andUAE to develop and grow the business. The efforts are made in the domestic market with newproducts under Sun control brand for building application. The Company has created strongBrand presence for Building segment window glass application films in India with dominantmarket share.

The Company has lowered down the BOPP operations to focus on value added Nish Products.

6. Research & Development

Your company is a leader in development of new products and new applications for BOPETfilms and Solar Control Window Films.

Your Company's R&D Department is focusing on cost reduction measures by introducingmethods to reduce costs.

Your Company's R&D Centre is accredited by the Department of Scientific andIndustrial Research Ministry of Science and

Technology Government of India for decades. R&D team works hand-in-hand withproduction and Marketing team to introduce and establish new products and to ensuresproper Quality Output

Cost and efficiency.

The Company has introduced many Coated Products Co Extruded Products BOPET-G ShrinkFilms for label applications with low medium and high shrink force. The wide range ofNano based heat rejection films are introduced.

7. Functioning of R & D Department

The R&D Center is well equipped with the Pilot scale plants lab equipment/s andresources and managed by qualified and experienced people. The activities are carried outon continuous basis as an independent important activity.

In recent years your company has developed complete laboratory facility for testingand dispersion of Nano based coatings.

All new polymers and coatings are first produced in these plants and extensively testedin specially developed test facilities before commencing trials on the main plant. All thenew product trials are taken under supervision of very senior R&D personnel and testmarketing is done before producing them in bulk quantities.

Several types of weathering tests are carried out in R&D centers for the productsused for outdoor applications.

8. Information Technology (IT)

• The Company has upgraded its cloud based Emailing system Office365 with MDM(Mobile Device Management) solution for security for mobile email users for communication.

• The Company is in process for evaluating IOT (Internet of Things) Solution forautomatic production data transfer to SAP ERP for faster and better control.

• The company is in process of evaluation and implementation of cloud for SAP ERPand SAP S4 HANA for their business operations.

The Company has upgraded its SAP AIX operating system to a latest IBM AIXversion.

Automatic GST return filling system on GST portal is in process for use fromSAP ERP.

The company implemented automatic barcode scanning for packing and dispatchof goods to customers.

• The company has installed CCTV surveillance systems at all the productionfacilities and security points.

• The company is planning and moving towards digital transformation in variousoperational areas

9. Awards and Recognitions

During this year your Company has been recipient of Two Safety Awards at NationalLevel from Director General Factory Advice Service & Labour Institutes Government ofIndia Ministry of

Labour & Employment and One Safety Award at State Level by

Maharashtra State Chapter of National Safety Council (NSC MC).

The Company has also received the Highest Export Award for the years 2015-16 and2016-17 from the Plastics Export Promotion Council Plexconcil and consistently maintainedthe first position as highest exporter for last more than 25 years.

10. Human Resource Development.

Your Company's Human Resources team successfully ran its talent acquisition retentionand development agenda during the year.

Company's senior management team was strengthened through hiring of leaders in variousdomains. The Company's HR policies and processes are aligned to effectively drive itsbusiness and other emerging opportunities.

The focus on employee development through training modules that were created in-housecontinued. More than 120 training programs were conducted during the year over 85% ofthem through in-house trainers and business leaders. The programs added up to over 9264man-hours / 1158 man-days of training. This has been achieved by continuously investingin learning and development programs by arranging target oriented training programscreating appropriate work environment and maintaining a structured recognition system.

HR has been working to provide an enabling working environment where innovation andperformance thrive. Employees are empowered and we believe that it is they who ultimatelydeliver the results.

11. Manufacturing and Quality Initiatives

The capacity of resin plant has been enhanced to take care of customer demands. Withinnovative approaches in manufacturing techniques and product optimization theproductivity in the manufacturing segment has improved. New equipment's installed forquality system improvement and measurement. The quality culture of your Company ensuresthat the products are benchmarked as best in class by the customers. Our quest forexcellence both in Manufacturing and Quality continues as before. Your Company is regardedas best in class for Quality and Reliability.

In order to keep the plants in excellent running condition the company has upgraded themanufacturing plants with various new equipment to produce quality products.

The Company has established best manufacturing practices and implemented Organizationwide LEAN methodology with the help of an expert BMGI. The Company is also implemented SIXSIGMA and QA initiatives with the help of TQMI which are showing good results andimprovements. The Company is also implementing TPM with the help of CII.

The Company has also taken initiative in machines upgradation with the help of OEMS andimplementing the same where ever required.

12. Consolidated Financial Statement

The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards IND-AS110 issued by the Institute of CharteredAccountants of India and forms a part of this Annual Report.

13. Subsidiary companies

Garware Polyester International Limited UK and Global Pet Films

Inc.- USA continue to be the subsidiaries of your Company. Pursuant to Section 129(3)of the Companies Act 2013 read with Rule 5 of the Companies (Accounts) Rules 2014 thestatement containing salient features of the financial statements of the Company'sSubsidiaries (in Form AOC-1) is attached to the financial statements .

14. Safety Health & Environmental Protection

Being a Responsible Corporate Citizen your Company has regularly undertaken variousinitiatives for the continual improvement in Health Safety and Environment (HSE) at theworks and surrounding areas.

Some of the prominent activities include Safety audits of

Thermic Fluid system and Electrical System by external expertise (M/s JacobsEngineering) Internal Safety survey of Plants Field Safety rounds after monthly Safetyreview meetings EMS review training and Field rounds periodical HSE inspections andtrainings schemes on the efficient usage of energy and the conservation of naturalresources activities for the enhancement of employee participation in HSE emergency mockdrills and the support in emergency management operations at public places.

Your Company is a recipient of various safety laurels from the Regulatory Authoritieson the State level (National Safety Council - India and Industry Energy & LabourDept. the Government of Maharashtra) as stated above during the year. Security systemhas been upgraded like awareness training evacuation drills to meet the new challenges.

15. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that: a) in the preparation of the annualaccounts for the year ended March 31 2018 the applicable accounting standards have beenfollowed and there are no material departures from the same; b) they have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at March 31 2018 and of the profit of the Company for the year ended onthat date; c) they have taken proper and sufficientcare for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d) they have prepared the annual accounts on a ‘going concern' basis;e) they have laid down internal financial controls to be followed by the Company and suchinternal financial controls are adequate and operating effectively and f) they haveadvised proper systems to ensure compliance with provisions of applicable laws and thatsuch systems were adequate and operating effectively.

16. Inter-se Transfer of Equity Shares among Promoter Share Holders:

During the year there was Inter-se transfer among promoter shareholders. S. B. GarwareFamily Trust one of the promoter shareholders has Inter se transferred 1145834 numbersof equity shares among other promoter's shareholders as under: a) 572917 numbers ofequity share to Monika Garware Modi

Benefit Trust and b) 572917 numbers of equity share to Sarita Garware Benefit Trust.

17. Directors and key managerial personnel

In accordance with the provisions of the Act and the Articles of Association of theCompany Mrs. Sarita Garware Ramsay and Ms. Sonia Garware Directors of the Company retireby rotation at the ensuing Annual General Meeting and being eligible have offeredthemselves for re-appointment.

The Board of Directors has accepted the resignation of: (1) Mr. M. S. Adsul Executiveand Non independent Director of the Company w.e.f. 16th October 2017 and (2)Mr. N. P. Chapalgaonkar Non-Executive and Independent Director of the Company w.e.f. 29thMay 2018.

The Board appreciated their valuable advice and guidance to the

Company from time to time during the tenure of their terms of office as director of theCompany.

The Board of Directors has appointed:

(1) Mr. C. J. Pathak as whole time Director of the Company w.e.f. 16th October2017. (2) Mr. B. D. Doshi as a Non-Executive and Non-Independent Director of the Companyw.e.f. 16th October 2017.

(3) Mr. Vivekanand Heroor Kamath as a Non-Executive and Independent Director of theCompany with effect From 08th August 2018 and (4) Mr. T.M. Parikh wasre-appointed as Non-Executive and Independent Director of the Company for second term offive consecutive years w.e.f. 1 st April 2019 to

31st March 2024.

The Company has received declarations from all the Independent

Directors of the Company confirming that they meet the criteria of independence asprescribed both under the Act and under the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 hereinafter referred to as ‘Listing Regulations'.

Key Managerial Personnel

Shri S. B. Garware - Chairman & Managing Director Mrs. Monika

Garware Modi Vice Chairperson & Jt. Managing Director Mrs. Sarita Garware RamsayJt. Managing Director Ms. Sonia Garware Mr. C. J. Pathak Whole Time Director Mr. ManojGupta Chief Financial Officer and Mr. Nimesh S. Shah – Company Secretary are the KeyManagerial Personnel of the Company in accordance with the provisions of Sections 2(51)203 of the Companies Act 2013 read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).

Mr. Sunil Dalmia - Chief Financial Officer (CFO) has resigned from the Company w.e.f.07th September 2017.

Mr. Manoj Gupta was appointed as Chief Financial Officer (CFO) of the

Company w. e. f. 15th January 2018.

18. Number of Meetings of the Board

Six meetings of the Board were held during the year. For details of meetings of theBoard please refer to the corporate governance report which forms part of this report.

19. Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a structured questionnaire was prepared aftertaking into consideration of the various aspects of the Board functioning composition ofthe Board and its Committees culture execution and performance of specific dutiesobligations and governance.

The Board has carried out and completed the performance evaluation of all theIndependent Directors. The performance evaluation of the Chairman and the Non-IndependentDirectors was also carried out by the Independent Directors. The Board of Directorsexpressed their satisfaction with the evaluation process.

20. Policy on Directors' appointment and remuneration and other details

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the Directors' Report.

21. Internal financial control systems and their adequacy

The Company has in place well defined and adequate internal controls commensurate withthe size of the Company and the same were operating effectively throughout the year.

22. Audit Committee

The details pertaining to the composition of Audit Committee are included in theCorporate Governance Report which forms part of this report.

23. Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. Manubhai & Shah LLP Chartered Accountants were appointed as statutory auditorsof the Company from the conclusion of the 57th annual general meeting (AGM) ofthe Company held on September 25 2014 till the conclusion of the 62nd AGM tobe held in the year 2019 subject to ratification of their appointment at ensuing AGM.Members are requested to ratify their appointment in ensuing 61st AGM. Theyhave conveyed their eligibility to act as auditors of the Company subject to theratification of their appointment at the ensuing 61st Annual General Meeting.

Further the Company has received a special notice under Section 115 of the Company'sAct 2013 proposing the name of M/s. Kirtane & Pandit LLP Chartered Accountants asJoint Auditors of the Company for next two years i.e. 2018-19 and 2019-20 subject tomember's approval at the ensuing 61st Annual General Meeting. They haveconveyed their eligibility and willingness to act as joint auditors of the Company for twoyears i.e. from the conclusion of 61st Annual General Meeting till theconclusion of 63rd Annual General Meeting of the Company if appointed at theensuing 61st Annual General Meeting. Board recommends the appointment of JointAuditors.

The Notes on Financial Statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. Auditors' Report does notcontain any qualification reservation adverse remarks or disclaimer.

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act 2013 and the Rulesframed there under M/s. Deloitte Haskins

& Sells LLP Chartered Accountants were appointed as Internal Auditors of theCompany in place of M/s. PricewaterhouseCoopers Private Limited.

Cost Auditor

As per the requirement of central government and pursuant to Section 148 of theCompanies Act 2013 read with The Companies (Cost Records and Audit) Rules 2014 asamended from time to time your company has been carrying out the audit of cost records.The Board of Directors on the recommendations of audit committee has re-appointed M/s.M. R. Pandit & Co. Cost Accountants Aurangabad as cost auditors to audit the costaccounts of the company for financial year 2018-19. As required under the Companies Act2013 a resolution seeking member's approval for ratification of remuneration payable tothe Cost

Auditors forms a part of the notice convening the 61stAnnual GeneralMeeting.

Secretarial Auditor:

The secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

Report of the secretarial auditor is given as an Annexure V which forms part of thisreport.

Your Company has received consent from M/s. Nilesh Shah & Associates CompanySecretaries Mumbai to act as the auditor for conducting audit of the Secretarialrecordsforthefinancialyear ending 31st March 2019.

The Board of Directors of your Company at its meeting held on 08th August2018 has appointed them as the Secretarial Auditor to conduct an audit of the secretarialrecords for the financial year


24. Risk Management

The Board of Directors of the Company has formed a risk management committee to frameimplement and monitor the risk management plan for the Company. The committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. Theaudit committee has additional oversight in the area of financial risks and controls.Major risks identifiedby the businesses and functions are systematically addressed throughmitigating actions on a continuing basis.

The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report.

25. Particulars of Loans Guarantees and Investments

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

26. Transactions with Related Parties

All the transactions entered by the Company during the financial year with relatedparties were in the ordinary course of business and on an arm's length basis. The AuditCommittee had given omnibus approval for the transactions (which are repetitive in nature)and the same were reviewed by the Board.

There were no material significant transactions with related parties during thefinancial year 2017-18 which were in conflict with the interest of the Company. TheDirectors would like to draw attention of the members to Note No. 30 to the financialstatement which sets out related party disclosure.

Pursuant to the provision of Section 134(3)(h) of the Companies Act 2013 Form AOC-2is not applicable to the Company.

27. Corporate Social Responsibility

The CSR expenditure incurred by your Company during the financial year 2017-18 wasRs25.50 Lakhs (around 2% of the average net profits of last three financial years) onCSR activities which does not include the expenses made on the activities carried out bythe Garware Community Center and Garware Bal Bhawan. The CSR initiatives of your Companywere under the thrust areas of health & hygiene education Old age home for disabledpeople and Rehabilitation of Distress/Depressed people.

Your Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2018 is in accordance with Section135 of the Companies Act 2013 and Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed to this report as Annexure [I].

28. Extract of Annual Return

As provided under Section 92(3) of the Act the extract of Annual Return of the Companyis annexed herewith as Annexure [II] in the prescribed Form MGT-9 which forms partof this report.

29. Particulars of Employees and related disclosures

Two Whole-time Directors/Employee employed throughout the year were in receipt ofremuneration of Rs 60.00 Lakhs per annum or more amounting to Rs 4.97 Crore wererelative(s) of Shri S. B. Garware Chairman & Managing Director of the Company. DuringFY 2017-18 the Company had 1012 permanent employees. The information required underSection 197(12) of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and forming part of the Directors'Report for the year ended March 31 2018 is given in a separate Annexure [III] tothe Report.

31. Other Laws

Pursuant to the provisions of sexual harassment of women at work place (PreventionProhibition and Redressal) Act 2013 during the year under review there were no casesfiled.

32. Corporate Governance

Your Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements as set out by the SEBI Board.

Your Company has also implemented several best corporate governance practices asprevalent globally. The report on Corporate Governance as stipulated under the Listingregulations forms an integral part of this Report. from the Practicing The CertificateCompany Secretary confirming compliance as per SEBI (Listing

Obligations and Disclosure Requirements) Regulations 2015 is attached.

33. Vigil Mechanism

The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing regulations includes an Ethics & Compliance Task Forcecomprising senior executives of the Company. Protected disclosures can be made by awhistle blower through an e-mail or dedicated telephone line or a letter to the TaskForce or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistleblower policy is available on the Company's website at the

34. Deposits from Public

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

35. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in Annexure[IV]to this Report.

36. Details on Internal Financial Controls related to Financial Statements

Your Company has in place adequate internal financial controls and system withreference to the financial statements some of which are outlined below.

Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions ofthe Companies Act 1956 to the extent applicable. These are in accordance with generallyaccepted accounting principles in India. Changes in policies if any are approved by theAudit Committee in consultation with the Statutory Auditors.

The accounts of the subsidiary companies are audited and certified by their respectiveStatutory Auditors for consolidation.

Your Company operates in SAP an ERP system and has many of its accounting recordsstored in an electronic form and backed up periodically. The ERP system is configured toensure that all transactions are integrated seamlessly with the underlying books ofaccount. Your Company has automated processes to ensure accurate and timely updation ofvarious master data in the underlying ERP system.

Your Company in preparing its financial statements makes judgments and estimates basedon sound policies and uses external agencies to verify/ validate them as and whenrequired.

37. Indian Accounting Standards (IND AS) - IFRS Converged Standards

Pursuant to the notification issued by the ministry of Corporate

Affairs dated February 16th 2015 relating to the Companies (Indian AccountingStandard) Rules 2015 the Company has prepared accounts complied as per "INDAS" w.e.f. 1st April 2017 with the comparatives for the periods ending

31st March 2017. 38. Industrial Relations

The relations between the Employees and the Management remained cordial during the yearunder review. Your Directors wish to place on record their appreciation of thecontribution made by the Employees at all levels.

39. Acknowledgements

Your Directors wish to place on record their appreciation for the wholeheartedco-operation received by the Company from the various departments of the Central &State Governments Company's Bankers and Financial & Investment Institutions duringthe period under review.

For and on behalf of the Board of Directors
Place: Mumbai S. B. GARWARE
Date: August 08 2018 Chairman & Managing Director