FOR THE YEAR ENDED MARCH 31 2020
TO THE MEMBERS
Your Directors present the 63rd Annual Report together with the Audited Statement ofAccounts of the Company for the year ended 31st March 2020.
1. Financial Results
| || ||(Rs. Crores) |
| ||FY 2019 - 20 ||FY 2018 - 19 |
|Operating Profit before interest & Depreciation ||168.13 ||142.02 |
|Less : Finance Cost ||17.71 ||18.65 |
|Depreciation ||20.15 ||13.67 |
| ||37.86 ||32.32 |
|Profit before tax for the year ||130.27 ||109.70 |
|Provision for Income Tax ||43.33 ||35.36 |
|Profit After Tax ||86.94 ||74.34 |
|Other Comprehensive income for the year Net of Tax ||-2.37 ||4.44 |
|Total Comprehensive Income for the year (Net) ||84.57 ||78.78 |
|Opening balance in Retained Earnings ||418.32 ||350.48 |
|Amount available for Appropriation ||504.14 ||423.92 |
|Less Dividend || || |
|(Final for FY 18-19 and Interim for FY 19-20) ||46.46 ||4.65 |
|Less : Tax on Dividend ||6.83 ||0.95 |
|Closing Balance in Retained Earnings ||450.85 ||418.32 |
The Company's manufacturing facilities remained shut from March 23 2020 due tolockdown and operations recommenced in the second week of April 2020 in accordance withthe approval granted by the concerned authorities. This lockdown impacted operations ofthe Company in Q4 of the year under review.
The Company has been taking due care with regard to the safety of employees by adheringto guidelines issued by the Government Authorities.
Your Directors states that the interim dividend declared and paid in the month ofMarch 2020 for the year under review @ 100% (i.e.
Rs. 10.00/- per equity share) shall be considered as final dividend for the financialyear ended 31st March 2020 on 23232394 equity shares of Rs. 10/- each
3. Company's Performance a. On Standalone Basis:
Revenue from operations for the financial year 2019-20 was at Rs. 877.32 Crores lowerby 4.92 % over the last year (Rs. 922.69 Crores in 2018-19) due to 45 days longshutdown of two film line for upgradation and shutdown impact of COVID-19 in the 4thquarter. The earnings before interest tax depreciation and amortization (EBITDA) was Rs.168.13 Crores as against EBITDA of Rs. 142.02
Crores in 2018-19. The Profit after tax (PAT) for the financial year was Rs. 86.94Crores as against the PAT of Rs. 74.34 Crores in 2018-19. The total comprehensive income(net of taxes) for the financial year was Rs. 84.57 Crores as against Rs. 78.78 Crores in2018-19. The Board of Directors of the Company do not proposed to transfer any amount togeneral reserve.
b. On Consolidated Basis:
Revenue from operations for the financial year 2019-20 was at Rs. 924.83 Crores lowerby 2.43 % over the last year of Rs. 947.89 Crores in 2018-19 due to 45 days long shutdownof two film line for upgradation and shutdown impact of COVID 19 in 4th quarter. TheEarnings before interest tax depreciation and amortization (EBITDA) was at Rs. 173.47Crores as against EBITDA of Rs. 153.07 Crores in 2018-19.The Profit after tax (PAT) forthe financial year was Rs. 86.02 Crores as against the PAT of Rs. 81.65 Crores in 2018-19.The total comprehensive income (net of taxes) for the financial year was Rs. 83.65 Croresas against Rs.86.10 Crores in 2018-19.
The Profit before tax increased by 18.75 % on account of better inventory managementbetter working capital management better product mix in expanded market improved plantefficiency reduction in input cost along with Dividend from Subsidiary company. Thesefactors has helped the Company to improve its' performance and bottom line profitabilityin spite of Impact of COVID-19 in last quarter.
5. Future Outlook
The Company has completed the upgradation and modification of the PET filmmanufacturing lines to provide versatility for manufacturing specialty PET films. Theupgradation also ensures reliability and consistent quality of the product. The market forthe specialty films is growing internationally and this upgradation will be useful to meetthe challenges. The Company is concentrating for growth in this segment. The new productsintroduced shall be the drivers for growth.
The Company has successfully launched the Surface Protection Film which is a valueadded product.
6. Research & Development
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.Your company is an aggressive leader in development of new products and new applicationsfor BOPET Films and Solar Control Window Films. The Company has introduced many CoatedProducts Co Extruded Products PETG Shrink Films for label applications with Low Mediumand High Shrink Force. A wide range of high heat rejection films are introduced inInternational Market.
The R&D team works hand-in-hand with production and Marketing team to introduce andestablish new products and to ensure proper Quality Output Cost and efficiency. TheR&D also focus on cost reduction measures by introducing new methods in processes.
Functioning of R&D Center
The R&D Center is well equipped with qualified and experienced
Technical experts and scientists to develop application oriented processes and productdevelopments using the available R&D facility. The R&D center has got theaccreditation of the Department of Scientific and Industrial Research Ministry of Scienceand Technology and Government of India.
7. Information Technology
The company has initiated project for digital transformation by upgrading its Core ERPsystem on to SAP S4HANA.
The digital transformation project taken up covers implementation of supply chainefficiency enhancement and collaboration solutions like implementation of PlanningSolutions Vendor Portal and Customer Portal.
The digitization initiatives include implementation of advance analytics coupled withproductivity enhancement solutions and performance evaluation tools.
The Company has upgraded the solutions for people collaboration within organizationwith Microsoft Teams for all on-line meetings demonstrations and trainings.
The Company has upgraded its Information Technology infrastructure at the central datacenter and DR with latest technology and smart solutions.
The company is planning and evaluating solutions for centralized monitoring andrecording of CCTV surveillance systems for all the production facilities and securitypoints.
The Company is also in process for evaluating Industry 4.0
Solutions for automation of data capturing on manufacturing facilities.
The Company is evaluating IOT Solutions for energy management which includes energymonitoring control and saving.
8. Awards and Recognitions
During this year your Company has been recipient of Safety Award at National Levelfrom Director General Factory Advice Service & Labour Institutes (DG-FASLI)Government of India Ministry of Labour & Employment and Safety Awards at State Levelby Maharashtra State Chapter of National Safety Council (NSC MC).
9. Human Resource Development
Your Company's Human Resources team successfully ran its talent acquisition retentionand development agenda during the year.
The Company's senior management team was strengthened through hiring of leaders invarious domains. The Company's HR policies and processes are aligned to effectively driveits business and other emerging opportunities.
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.
The focus on employee development through training modules that were created in-housecontinued. More than 338 training programs were conducted during the year over 90% ofthem through in-house trainers and business leaders. The programs added up to over 13520man-hours / 1690 man-days of training. This has been achieved by continuously investing inlearning and development programs by arranging target oriented training programs creatingappropriate work environment and maintaining a structured recognition system.
10. Manufacturing and Quality Initiatives
The upgraded plant and Machinery has established its capacity output with appropriatequality and improved reliability. The Company has adopted an integrated approach ofQuality Management systems comprises of TQM TPM Lean and six sigma. The externalprofessionals are also appointed to audit the effectiveness of the systems put in place.The quality culture of your Company ensures that the products are bench marked as best inclass by the customers. The Company has decided to incur capital investment for SurfaceProtection Film manufacturing.
11. Consolidated Financial Statement
The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards IND-AS110 issued under the Companies Act 2013 andforms a part of this Annual Report.
12. Subsidiary Companies
Garware Polyester International Limited UK and Global Pet Films Inc. - USAcontinue to be the subsidiaries of your Company. Pursuant to Section 129(3) of theCompanies 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.
13. 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 includeSafety auditsof Thermic Fluid system and Electrical System by external expertise HAZOP study of theprocessInternal Safety survey of Plants Field Safety round safter monthly Safety reviewmeetings EMS review training and periodical HSE inspections schemes on the efficientusage of energy and the conservation of natural resources activities for the enhancementof employee participation in HSE emergency mock drills and the support in emergencymanagement operations at public places.
The Company has started using LPG for Thermic fluid heaters one location.
The Company also commissioned the Zero discharge effluent facility by installation ofReverse Osmosis plant and using the water for plantation to bring the open area undergreen cover.
The Company is also increasing usage of Biomass briquettes fired boilers.
The Company is a recipient of various safety laurels from the Regulatory Authorities atthe State level.
(National Safety Council- India and Industry Energy & Labor Dept. the Governmentof Maharashtra) as stated above during the year. Security system has been upgraded likeawareness training evacuation drills to meet the new challenges. New fire engines addedin the fleet have enhanced the existing emergency preparedness. Our fire Engines haveplayed a major role in maintaining safety and fighting fires in the local vicinity wherethe manufacturing plants are situated as an mutual aid agreements.
14 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 2020 the applicable Indian Accounting Standardshave been followed and there are no material departures from the same; b) they haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2020 and of the profit of the Company for theyear ended on that date; c) they have taken proper and sufficientcare for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; 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 Companyand such internal financial controls are adequate and operating effectively and f) theyhave advised proper systems to ensure compliance with provisions of applicable laws andthat such systems were adequate and operating effectively.
15 Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. C. J. Pathak (DIN:00601668) and Mr. B. D. Doshi (DIN:02950198) Directors ofthe Company retire by rotation at the ensuing Annual General Meeting and being eligiblehave offered themselves for re-appointment.
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'.
Shri S. B. Garware - Chairman & Managing Director Ms. Monika Garware ViceChairperson & Jt. Managing Director Mrs. Sarita Garware Ramsay Jt. ManagingDirector Mr. C. J. Pathak
Whole-Time Director Mr. Pradeep Mehta - Chief Financial Officer (CFO) and Mr. AwaneeshK Srivastava- Company Secretary & Vice President (Legal) are the Key ManagerialPersonnel of the Company in accordance with the provisions of Sections 2(51) and 203 ofthe Companies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (including any statutory modification(s) or re-enactment(s) for thetime being in force).
Ms. Devanshi Nanavati (DIN: 08770422) was appointed as Additional Director on the Boardof the Company w.e.f. June 25 2020. During the year Mr. Pradeep Mehta was appointed as
Chief Financial Officer of the Company w.e.f November 12 2019 and Mr. Parag B Doshiresigned as Chief Financial officer of the Company w.e.f. November 11 2019. Mr. AwaneeshK Srivastava was appointed as Company Secretary of the Company w.e.f. August 08 2019 andMr. Parag B Doshi resigned as Company Secretary of the Company.
16 Number of Meetings of the Board
Five meetings of the Board were held during the year. For details of meetings of theBoard please refer to the corporate governance report which forms the part of thisreport.
17 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.
18 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.
19 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.
20 Audit Committee
The details pertaining to the composition of Audit Committee are included in theCorporate Governance Report which forms part of this report.
21 Statutory Auditors
M/s. Manubhai & Shah (FRN: 106041W/W100136) Chartered Accountants was re-appointedas Statutory Auditors of the Company until the conclusion of the 67th Annual GeneralMeeting of the Company.
M/s. Kirtane & Pandit LLP (FRN: 105215W/W100057) Chartered Accountants havebeen appointed as joint auditors of the Company until the conclusion of 65th AnnualGeneral Meeting of the Company.
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.
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.
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.M/s. M. R. Pandit & Co. Cost Accountants Aurangabad was appointed as cost auditorsto audit the cost accounts of the company for financial year 2019-20.
M/s. Nilesh Shah & Associates Company Secretaries Mumbai conducted audit of theSecretarial records for the financial year ended 31st March 2020 and the secretarialAudit Report does not contain any qualification reservation adverse remark ordisclaimer.
Report of the secretarial auditor is given as an Annexure [V] which forms partof this report.
22 Risk Management
The Board of Director 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.
23 Particulars of Loans Guarantees and Investments
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
24 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 and approved by the Board.
There were no material significant transactions with related parties during thefinancial year 2019-20 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.
25 Corporate Social Responsibility
The CSR expenditure incurred by your Company during the financial year 2019-20 was115.00 Lakhs (around 2 % of the average net profits of last three financial years) on CSRactivities which does not include the expenses made on the activities carried out by theGarware Community Center and Garware Bal Bhawan. The CSR initiatives of your Company wereunder the thrust areas of health & hygiene education old age home for disabledpeople and Rehabilitation of Distressed / Depressed people.
Your Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2020 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].
The Policy on Corporate Social Responsibility is available on the Company's website at"www.garwarepoly.com
26 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.
27 Particulars of Employees and Related Disclosures
Two Whole-time Directors / Employee employed throughout the year were in receipt ofremuneration of Rs. 1.02 Crores per annum or more amounting to Rs. 6.83 Crore wererelative(s) of Shri S. B. Garware Chairman & Managing Director of the Company. DuringFY 2019-20 the Company had 968 permanent employees. The information required under Section197(12) of the Companies Act 2013 read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 and forming part of the Directors' Report for the yearended March 31 2020 is given in a separate Annexure [III] to the Report.
28 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 and there were NIL Complain received. The Company has constituted the InternalComplaint Committee under Sexual Harassment of Women at Work Place (PreventionProhibition and Redressal) Act 2013.
29 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 Practicing The Certificate CompanySecretary confirming compliance as per SEBI (Listing
Obligations and Disclosure Requirements) Regulations 2015 is attached.
30 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 www.garwarepoly.com.
31 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
32 Conservation of Energy Technology Absorption and Foreign Exchange Earningsand Outgo
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.
33 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 IndianAccounting Standards prescribed in the Companies (Accounting Standards) Rules 2006 thatcontinue to apply under Section 133 and other applicable provisions if any of theCompanies Act 2013 read with Companies (Indian Accounting Standards) Rule 2015 asamended. These are in accordance with generally accepted accounting principles in India.Changes in policies if any are approved by the Audit Committee in consultation with theStatutory 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 updating 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.
34 Business Responsibility Report
As per Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 Business Responsibility Report is attached and is a part of this AnnualReport as set out in Annexure VI of this report.
35 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.
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 |
| ||S. B. GARWARE |
|Place: Mumbai ||Chairman & Managing Director |
|Date: June 25 2020 ||DIN: 00943822 |