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Garware Polyester Ltd.

BSE: 500655 Sector: Industrials
BSE 00:00 | 20 Jul 148.45 -0.10






NSE 05:30 | 01 Jan Garware Polyester Ltd
OPEN 149.00
52-Week high 265.90
52-Week low 134.30
P/E 10.25
Mkt Cap.(Rs cr) 346
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 149.00
CLOSE 148.55
52-Week high 265.90
52-Week low 134.30
P/E 10.25
Mkt Cap.(Rs cr) 346
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Garware Polyester Ltd. (GARWARPOLY) - Director Report

Company director report



Your Directors present the 60th Annual Report together with the AuditedStatement of Accounts of the Company for the year ended 31st March 2017.

1. Financial Results

2016 - 2017 2015 - 2016
Operating Profit before interest & Depreciation 77.97 85.11
Less : Finance Cost 31.70 42.93
Depreciation 17.37 16.84
49.07 59.77
Profit for the year before Exceptional Item 28.90 25.34
Provision for Income Tax 9.18 7.95
Profit After Tax 19.72 17.39
Add : Balance brought forward from previous year 286.24 268.85
Balance available for Appropriation 305.96 286.24

2. Dividend

Your Directors recommend 10% dividend (i.e. '1.00/- per equity share) for considerationat the ensuing Annual General Meeting for the financial year ended 31st March2017 on 23232394 equity shares of ' 10/- each.

The total sum of the dividend if approved including Corporate Dividend Tax will be '2.80 Crores.

3. Company's Performance On Consolidated Basis:

Revenue from operations for the financial year 2016-17 was at ' 925.25 Croreshigher by 1.78 % over the last year (' 908.99 Crores in 2015-16).

The Earnings before interest tax depreciation and amortization (EBITDA) was at '80.34 Crores against EBITDA of ' 87.13 Crores in 2015-16.

The Profit after tax (PAT) for the year was ' 19.92 Crores against the PAT of '16.50 Crores in 2015-16.

On Standalone Basis:

Revenue from operations for the financial year 2016-17 was at ' 911.13 Croresis higher by 1.95 % over the last year (' 893.69 Crores in 2015-16) due to increase involume of Plain & Sun control Film.

The Earnings before interest tax depreciation and amortization (EBITDA) was ' 77.97Crores against EBITDA of ' 85.11 Crores in 2015-16.

The Profit after tax (PAT) for the year was ' 19.72 Crores against the PAT of ' 17.39Crores in 2015-16.

4. Forfeiture of Shares

During the year Company has forfeited and cancelled 82756 partly paid equity shares of' 10/- each.

5. Operations

The Profit before tax was increase by 14% on account of reduction in Finance cost dueto repayment of term loans However the reduction in EBIDTA by 8.39% in spite of increasein Revenue due to pressure in selling prices of Thin Film & BOPP Film.

Pursuant to the order of the Hon'ble Supreme Court of India to put ban on use of SunControl Film on motor car windows in India since 2012 your Company is making efforts todivert the spare capacity of Consumer Products Division (CPD Division) for exports.

6. Future Outlook

The overcapacity situation persists in the Polyester film Industry in Indian as well asin International Market. The prices are likely to remain under pressure due to oversupplysituation. Your Company has shifted its focus to the Speciality Films and has developednew products for the international market such as digital printable Films Films for solarPV application films for Lidding application coated films for label Medium & Highshrink films for Label and films with high Infrared heat rejection for Automobiles etc.These films will mainly cater to the export markets.

7. Research & Development

Your company is a leader in development of new products and new applications forPolyester Film BOPP Film various coated products based on Polyester and BOPP and SolarControl Window Film. Your Company's R&D Department is focusing on cost reductionmeasures by introducing cost effective alternative raw materials and processes andmanufacturing methods.

Your Company's R&D Centre is accredited by the Department of Scientific andIndustrial Research Ministry of Science and Technology Government of India for manyyears. R&D team works hand-in-hand with production team to introduce and establish newproducts at the plant and to improve the product quality and output efficiencies.

8. Functioning of R & D Department

R&D activities are carried out on continuous basis as an independent importantactivity.

In this center various pilot plants are installed for development of Polymers Filmextrusion and different types of coatings.

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 weatheringtests are carried out in R&D centers for the products used for outdoor applications.

Our laboratories are equipped with state-of-the-art latest testing equipment and manyspecialty test rigs are used as per the end product applications.

9. Information Technology (IT)

a. The Company has upgraded its SAP ERP from EHP4 to EHP7 including AIX operatingsystem and DB2 database.

b. The Company has implemented Office365 cloud platform for business Emailcommunication.

c. The Company has implemented SAP HR Payroll to integrate HR process to the existingSAP ERP system.

d. The Company has enhanced its network security by implementing Fortigate firewalls.

10. Awards and Recognitions

During this year your Company has been recipient of Six Safety Awards at State Levelby Maharashtra State Chapter of National Safety Council (NSC - MC).

Out of these six awards three awards were won by the Company's employees for theircontribution in State Level Safety Slogan Competition.

11. 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.

12. Manufacturing and Quality Initiatives

With innovative approaches in manufacturing techniques and product optimization theproductivity in the manufacturing segment has significantly gone up. The quality cultureof your Company ensures that the products are benchmarked as best in class by thecustomers. Our quest for excellence both in Manufacturing and Quality continues as before.Your Company is regarded as 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 in the process ofimplementing LEAN and SIX SIGMA in some of the operations where it is giving good resultsand improvements.

13. Consolidated Financial Statement

The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Accounting Standards AS-21 AS-23 and AS-27 issued by the Institute of CharteredAccountants of India and forms a part of this Annual Report.

14. Subsidiary Companies

Garware Polyester International Limited -UK and Global Pet Films Inc.- USA continue tobe the subsidiaries of your Company. Pursuant to Section 129(3) of the Companies Act 2013read with Rule 5 of the Companies (Accounts) Rules 2014 the statement containing salientfeatures of the financial statements of the Company's Subsidiaries (in Form AOC-1) isattached to the financial statements.

15. 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 Jacobs Engineering)Internal Safety survey of Plants Field Safety rounds after monthly Safety reviewmeetings EMS review training and Field rounds periodical HSE inspections and trainingsschemes on the efficient usage of energy and the conservation of natural resourcesactivities for the enhancement of employee participation in HSE emergency mock drills andthe 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.

16. 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 annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed and there are no material departuresfrom the same;

b) they have 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 March 31 2017 and of the profit of theCompany for the year ended on that date;

c) they have 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;

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 andsuch internal financial controls are adequate and operating effectively and

f) they have advised proper systems to ensure compliance with provisions of applicablelaws and that such systems were adequate and operating effectively.

17. 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 610000 equityshares among other promoters shareholders as under :

a) 175000 equity shares to B. D. Garware Research Centre

b) 200000 equity shares to Great View Real Estate Private Limited and

c) 235000 equity shares to Garware Industriees Limited.

18. Directors and Key Managerial Personnel

In accordance with the provisions of the Act and the Articles of Association of theCompany Mrs. Monika Garware Modi and Mr. M. S. Adsul Directors of the Company retire byrotation at the ensuing Annual General Meeting and being eligible have offered themselvesfor re-appointment.

The Board of Director has accepted the resignation of Mrs. S.

S. Garware Non-Executive and non-independent Director of the Company with effect from10th August 2017. The Board appreciated her valuable advise and guidance tothe Company from time to time.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand under the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015hereinafter referred to as 'Listing Regulations'.

Key Managerial Personnel

Shri S. B. Garware - Chairman & Managing Director Mrs. Monika Garware Modi - ViceChairperson & Jt. Managing Director Mrs. Sarita Garware Ramsay - Jt. ManagingDirector Mr. M. S. Adsul - Director (Technical) Mr. Sunil Dalmia - Chief FinancialOfficer and Mr. Nimesh S. Shah - Company Secretary are the Key Managerial Personnel ofthe Company in accordance with the provisions of Sections 2(51) 203 of the Companies Act2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 (including any statutory modification(s) or re-enactment(s) for the time being inforce).

Mr. Gokul Naik - Chief Financial Officer (CFO) has resigned from the Company w.e.f. 24thMarch 2017.

Mr. Sunil Dalmia was appointed as Chief Financial Officer (CFO) w. e. f. 25thMay 2017.

19. 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.

20. 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.

21. Policy on Directors' Appointment and Remuneration and Other Details

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

22. 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.

23. Audit Committee

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

24. Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rulesframed thereunder M/s. Manubhai & Shah LLP Chartered Accountants were appointed asstatutory auditors of the Company from the conclusion of the 57th annualgeneral meeting (aGm) of the Company held on September 25 2014 till the conclusion of the62nd AGM to be held in the year 2019 subject to ratification of theirappointment at ensuing AGM. Members are requested to ratify their appointment in ensuing60th AGM. M/s. Manubhai & Shah LLP Chartered Accountants have conveyedtheir eligibility to act as auditors of the Company subject to the ratification of theirappointment as auditors of the Company at the ensuing 60th Annual GeneralMeeting.

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 subject to member's approval at the ensuing 60th Annual GeneralMeeting.

M/s. Kirtane & Pandit - LLP Chartered Accountants have conveyed their eligibilityand willingness to act as joint auditors of the Company if appointed at the ensuing 60thAnnual General Meeting. Board recommends the appointment of Joint Auditors. The Notes onFinancial Statement referred to in the Auditors' Report are self-explanatory and do notcall for any further comments Auditors' Report does not contain any qualificationreservation adverse remark or disclaimer.

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 2017-18. As required under the Companies Act2013 a resolution seeking member's approval for ratification of remuneration payable tothe Cost Auditor forms a part of the notice convening the 60th Annual 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 Secretarial recordsfor the financial year ending 31st March 2018.

The Board of Directors of your Company at its meeting held on 10th August2017 has appointed them as the Secretarial Auditor to conduct an audit of the secretarialrecords for the financial year 2017-18.

25. Risk Management

The Board of the Company has formed a risk management committee to frame implement andmonitor the risk management plan for the Company. The committee is responsible forreviewing the risk management plan and ensuring its effectiveness. The audit committee hasadditional oversight in the area of financial risks and controls. Major risks identifiedby the businesses and functions are systematically addressed through mitigating actions ona continuing basis.

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

26. Particulars of Loans Guarantees and Investments

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

27. 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 2016-17 which were in conflict with the interest of the Company. TheDirectors would like to draw attention of the members to Note No. 33 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.

28. Corporate Social Responsibility

The CSR expenditure incurred by your Company during the financial year 2016-17 was '45.00 Lakhs (around 2.71 % of the average net profits of last three financialyears) on CSR activities which does not include the expenses made on the activitiescarried out by the Garware Community Center and Garware Bal Bhawan. The CSR initiatives ofyour Company were under the thrust areas of health & hygiene education Old age homefor disabled people 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 2017 is in accordance with Section 135 of theCompanies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014 isannexed to this report as Annexure [ I ].

29. Extract of Annual Return

Pursuant to Section 92(3) of the Act the extract of Annual Return of the Company isannexed herewith as Annexure [II] in the prescribed Form MGT-9 which forms part ofthis report.

30. Particulars of Employees and Related Disclosures

Two Whole-time Directors/Employee employed throughout the year were in receipt ofremuneration of ' 60.00 Lakhs per annum or more amounting to ' 4.46 Crore were relative(s)of Shri S. B. Garware Chairman & Managing Director of the Company. During FY 2016-17the Company had 1093 permanent employees.

The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended March 31 2017 is given in a separate Annexure[III] to the 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.

The Certificate on Corporate Governance from the Practicing Company Secretaryconfirming 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 whistle blower policy is available on the Company'swebsite at the

34. Deposits from Public

The Company has not accepted any deposits from public and as

such no amount) on account of principal or interest on deposits from public) wasoutstanding as on the date of the balance 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 data as required to be disclosed under the Act are providedin 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 datedFebruary 16th 2015 relating to the Companies (Indian Accounting Standard)Rules 2015 the Company will adopt "IND AS" with effect from 1stApril 2017 with the comparatives for the periods ending 31st March 2017.

The implementation of IND AS is major change process for which the Company hadestablished a project team and had dedicated considerable resources. The impact of thechange on adoption of IND AS has been assessed and the Company is ready to adopt IND AS.

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 of 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 10 2017 Chairman & Managing Director