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GHCL Ltd.

BSE: 500171 Sector: Industrials
NSE: GHCL ISIN Code: INE539A01019
BSE 13:13 | 16 Nov 219.00 -3.35
(-1.51%)
OPEN

221.70

HIGH

223.00

LOW

219.00

NSE 13:04 | 16 Nov 219.45 -2.85
(-1.28%)
OPEN

223.90

HIGH

223.90

LOW

218.50

OPEN 221.70
PREVIOUS CLOSE 222.35
VOLUME 4018
52-Week high 357.50
52-Week low 189.50
P/E 7.32
Mkt Cap.(Rs cr) 2,147
Buy Price 219.05
Buy Qty 19.00
Sell Price 219.60
Sell Qty 113.00
OPEN 221.70
CLOSE 222.35
VOLUME 4018
52-Week high 357.50
52-Week low 189.50
P/E 7.32
Mkt Cap.(Rs cr) 2,147
Buy Price 219.05
Buy Qty 19.00
Sell Price 219.60
Sell Qty 113.00

GHCL Ltd. (GHCL) - Director Report

Company director report

To The Members of GHCL Limited

We are pleased to present the 35th Annual Report together with the auditedfinancial statements of the company for the financial year ended March 312018.

OPERATIONAL RESULTS

The summary of the financial performance of the Company for the financial year endedMarch 31 2018 compared to the previous year ended March 312017 is given below:

(Rs in Crores)

Standalone

Particulars Year ended March 31 2018 Year ended March 31 2017
Net Sales /Income 2992.27 2980.17
Gross profit before interest and depreciation 649.17 724.39
Finance Cost 124.16 133.77
Profit before depreciation and amortisation - (Cash Profit) 525.00 590.62
Depreciation and Amortisation 109.53 85.69
PBT before exceptional items 415.48 504.93
Exceptional items - 3.04
Profit before Tax (PBT) 415.48 501.93
Provision for Tax - Current 106.76 113.61
Tax adjustment for earlier years -89.81 -40.18
Provision for Tax - Deferred 34.02 41.73
Profit after Tax 364.51 386.77
Other comprehensive income (OCI) 3.48 1.39
Total Comprehensive income for the period 367.99 388.16
Balance brought forward from last year 1142.63 817.87
Appropriations
Reserve created on account of buy back during the year 2.61 0.55
FVTOCI Reserve -1.40 -2.65
Interim Dividend - 15.01
Final Dividend 34.20 35.01
Tax on Dividend 6.96 10.18
Balance carried to Balance Sheet 1407.04 1142.63

PERFORMANCE HIGHLIGHTS AND STATE OF COMPANY'S AFFAIRS

SODA ASH

As per latest estimates of IHS Chemical (Market Advisory Service) the total GlobalDemand in 2017 was approximately 59 Million Tons against an estimated capacity ofapproximately 68 million MT. Soda Ash demand remains strong in most global regions otherthan winter supply issues and China's restriction problems which cause temporary pocketsof tightness. There has been an influx of new supply of natural soda ash from Turkeywhich is cost-competitive and hence more sustainable than synthetic production; in factduring 2017 Turkey has added

4 streams totaling 2.0 million MT which has caused significant disruption on the supplyside. As a result of this cheaper supply more costly synthetic supply from high-costproducers particularly in Europe has come under increasing pressure.

Soda Ash demand in Europe has improved over the last year and is expected to remainstable for some time. However the supply side is disturbed due to new supplies fromTurkey have started having an effect. Delayed commissioning of Kazan's 5th lineand high demand/low supplies from China into Asia and East Europe has been helpingmaintain some balance.

In spite of increasing economic problems that are affecting the financial viability ofsome operations China continues to be the largest Soda Ash player in the world having acapacity of 31 million tpa which is 46% of the global capacity. Even after variousrestrictions and disturbances overall Chinese soda ash output continues ahead of the 2million MT month mark. Currently another round of environmental inspections is carryingon in various provinces causing some disruptions and lower rate of operations. As per IHSChemical report China's operating rates were around 88% in 2017 reporting a production of27 million tpa and domestic consumption of 25 million tpa with 1.5 million tpa beingexported. Our assumption of domestic growth in China is around 4 to 5% due to downstreamimprovement especially flat glass.

US producers continue to enjoy the highly competitive production costs. Around 58% ofUS Soda Ash production is sold to export markets and shipment volumes have been increasingyear by year. US capacity is 13 million tpa and they produced around 12 million tpa ofsoda ash and their annual production represents 91% operating rate. The US production isstated to have grown by 1% in 2017 where as domestic demand for soda ash also saw a growthof 1% versus 2016. The total domestic consumption was estimated at around 5 million tpaand they exported around 7 million tpa recording 3% growth. US exports are supported bygood demand from South America South East Asia (especially due to lower Chinese exports)Australia and parts of Europe. However in future US will face competition from Turkey intheir traditional markets of South East Asia & Asia Pacific owing to the naturalfreight advantage that Turkey enjoys over US. In fact US may vacate some of these marketsin favour of Turkey in this year.

Globally there is no major mismatch expected between Demand and Supply in soda ashindustry except for temporary disturbance caused due to Turkey's additional volumes.

As regards Domestic Soda Ash market is concerned after couple of years the demand haswitnessed a growth of 11% in FY 2017-18 as against last year. Indian soda ash marketsremain strong with excellent growth in most of the downstream sectors. Our market estimateindicates that the momentum in the downstream demand growth will remain. The coming fiscalshould see stable demand for soda ash with the main drivers being a strong detergent andfloat glass sector followed by a reasonably silicate and chemical sectors.

Total Soda Ash installed capacity in India is 3.5 million tons with an estimatedproduction of about 3 million tons in last financial year (2017-18). The total size of theIndian soda ash market is about 3.75 million tons and almost all the major industryplayers are located in the state of Gujarat due to the closeness and ready availability ofthe main raw materials namely limestone and salt.

At present your Soda Ash plant has a capacity of 9.75 lacs tpa. During the financialyear 2017-18 your company has produced 9.37 lacs tons soda ash. This year the Company hasalso achieved highest domestic sales i.e. 8.47 lacs tons and total sales of Soda Ash is8.69 lacs tons including exports.

Our ongoing 1.25 Lacs MT Brownfield expansion is likely to get completed by Q4 FY19.Going forward we are looking at another Brownfield expansion of 1.25 lacs metric ton to becompleted over a period of 2 year. Your company is also aggressively working on Greenfieldexpansion of 5 lacs MTPA which is likely to be completed in 4-5 years.

BI-CARBONATE (BICARB)

During the year the Company achieved production of BiCarbonate 35342 tons against27677 tons in the previous year. During the year the Company achieved sales ofBi-Carbonate 34888 tons against 27638 tons in the previous year. Your company has doubledthe capacity to 60000 MTPA which has been completed in January 2018. The full benefit ofthe expansion will be achieved in the coming year.

R & D INITIATIVES IN SODA ASH

Your company had initiated R&D activities for last five years to achieve followingobjectives (a) Introduce latest and economical technologies in the plant; (b) Provideinnovative solutions to recurring problems and save natural resources; (c) To improvecarbon foot print of company and contribute in national saving and environmentimprovements; (d) Energy conservation projects and (e) To improve soda ash production andplant productivity.

The R&D department operates with focused mandate (a) to Identify latest technologysuperior design of equipment improving process efficiency leading to reduced raw materialconsumption and reduced utility consumption resulting in better life of equipment andreduced cost of manufacture (b) to identify the possibility of producing value addedproducts from wastes of soda ash manufacturing; (c) to identify suitable expert agencieswho can find permanent solution to recurrent process problems; (d) to study possibility ofcatering to specific requirements of customers like soda ash briquettes (e) to suggestpractices and procedures which can focus on reducing the energy consumption & reducingraw material consumption thus reducing carbon foot print .

We carry out above activities with the help of research department of premier chemicalengineering institutes reputed consultants & in house capabilities. During the yearyour company has carried out following activities:

1) Alternate binder supplier.

We had only one briquette plant binder supplier capable of supplying binder suitablefor our plant. We worked closely with various vendors and modified their process tomanufacture binder confirming to our quality requirements. Now we have three alternatesuppliers thereby strengthening our supplier base as well as better quality product.

2) Reduction of binder consumption.

Plant trials with higher viscosity of Pre-gel starch binder in coke briquetting planthave been taken up by working in co-ordination with few suppliers. Initial plant trialshave indicated reduction of binder consumption by 1-1.2 %. Further trials are going on.

3) Value added product from our wastes.

In co-ordination with a leading Engineering College of South India we have developedproduct equivalent topaver blocks from our wastes viz. fly ash limestone fines &waste plastics. The blocks are water resistant having properties almost similar andstrength equal to concrete. These blocks can be used for constructing path way canallinings floorings etc.

4) In close co-ordination with an International agency exhaustive work has beencarried out for improving the efficiency of carbonation towers. Expert guidelines issuedby them are in implementation stage.

5) De-bottlenecking of certain carbonation towers has been successfully achievedresulting in increase in tower capacity by 50%.

6) Lump formation in Refined Sodium Bicarbonate bags:

After exhaustive studies and experimentation in association with an internationalagency through R & D efforts we have developed solution for preventing soft lumpformation in our refined sodium bicarbonate bags. We made changes in manufacturing stageof purge liquor during Refined Sodium Bicarbonate Manufacture resulting in saving of 5MTPD of internal soda consumption.

7) We have adopted belt filter technology and installed same in our expansion phase forreducing steam consumption in Calciners. Further high speed filter with technology fromGermany is being commissioned. This shall also reduce the steam consumption in Calciners.

We stand committed in our endeavor to remain focused on our R&D initiatives in linewith our Mission and Vision thus creating value for our stakeholders.

TEXTILES

The domestic textile industry in India is projected to reach US$ 250 billion by 2019 asper recent IBEF (India Brand Equity Foundation) report from US$ 150 billion in July 2017.Rising per capita income favorable demographics and a shift in preference to brandedproducts are likely to boost demand. Textile and apparel exports from India is expected toincrease to US$ 82 billion by 2021 from US$ 37 billion in 2017. The Indian TextileIndustry contributes to around 10% of industry output in value terms 2% of India's GDPand to 15% of the country's export earnings. With a production of over 6000 million kgsIndia was the largest producer of cotton in the world in 2016-17. India is also the 2ndlargest producer of man-made fibre and filament globally with a production of over 2million kgs in 2016-17. India is the second largest supply country with a share of 11%after China with a share of 39%. Over 25% of the US imports in this industry originatefrom India.

Rising government focus and favourable policies is leading to growth in the industry.100% FDI under the automatic route is allowed in the sector and US$ 140 billion worth offoreign exchange investments are expected. Under the Union Budget 2018-19 Government ofIndia allocated around US$ 1.1 billion for the textile industry. Huge investments arebeing made by the government under the Scheme for Integrated Textile Parks (SITP) to thetune of US$ 185 million and the Technology Upgradation Fund Scheme (TUFS) to the tune ofUS$ 216 million to encourage more private equity and to train workforce.

Your company has integrated textile manufacturing facilities centring around Spinningon one hand with 1.76 Lakh spindles and 3320 rotors and Home Textiles (Weaving Processingand Cut & Sew of Bed Textiles) on the other. Our state-of-the art

Home Textiles facility in Vapi Gujarat comprises of 190 Air Jet looms 45 millionmeter of wide width processing capacity 12 million meter of weaving capacity and 30million meter of cut & sew. The Home Textiles division has recently increased weavingcapacity by 18% and processing capacity by 25%. GHCL has also stepped up its focus on thedomestic market and is working with major organized retail stores and brands in India.

The operating performance of the textiles business faced various industry levelchallenges like oversupply situation in USA resulting in the drop in the prices as well asmargin impact of GST and demonetisation reduction in duty drawback etc. However theCompany has strengthened its marketing product development and operating teams and hasaltered its focus to work around sustainability and innovation - two areas that areclearly competitive advantage drivers and are likely to see a huge improvement in theproliferation of business across geographies with better margins in times to come. Asinformed above our Home Textile business is well integrated with our spinning business.Our Spinning units situated in Tamil Nadu are considered to be one of the most efficientand modern yarn manufacturing facilities in India. Our spinning units manufacture multiplevarieties of yarn ranging from 100% cotton to blended yarns. This part of the business hasperformed well during the FY2017-18 and we expect that with the new cotton crop andbuoyant yarn demand the coming year should be even better.

The Revenue of Textiles division is at Rs. 1046 Crores during the financial year2017-18 against Rs. 1229 Crores in 2016-17.

Our belief is that with our strong marketing and product development teams in place andlaunch of new innovative concepts such as REKOOP and FABFIT we shall be able to create adifferentiation through sustainability and innovation. We anticipate that with theacceptance of these two concepts this business will not only grow top line and but alsoimprove the profitability.

DIVIDEND

Your Directors are pleased to inform that your Company has a consistent track-record ofdividend payment for last 24 years. The Board of Directors in its meeting held on May 192016 had approved a Dividend policy of the Company. As per said policy dividend pay-out(including tax if any) will be 15 to 20 % of net profit of the Company.

Pursuant to the Dividend Policy your Directors are pleased to recommend a dividend ofRs. 5.00 per Equity Share of Rs. 10 each (i.e. 50% on the paid-up capital) for thefinancial year ended March 31 2018. Total dividend payout for the financial year 2017-18shall be Rs. 58.60 crores comprising of dividend amounting to Rs. 48.70 crores anddividend tax of Rs. 9.90 crores. This dividend pay-out amounts to 16.29% of net profit ofthe Company for the financial year 2017-18 and the same is in line with the approveddividend policy of the Company.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as on March 312018 is Rs.974232860/- comprising of 97423286 equity shares of Rs. 10/- each.

Details of changes in the paid-up share capital (after Buyback of equity share capitaland Allotment of equity shares against ESOP) are as under:

Particulars No. of Equity shares of Rs. 10/- each
1. No. of Equity Shares as on March 31 2016 (Pre - Buyback) 100019286
2. Less: Shares Bought back (during February 15 2017 to August 14 2017) 3156000
3. No. of Equity Shares (Post - Buyback) (i.e. 1-2) 96863286
4. Equity Shares allotted against conversion of ESOP (on October 24 2017) Note: Final Listing & Trading approval was given by BSE & NSE effective from November 10 & November 14 2017 respectively). 560000
5. No. of Equity Shares after allotment i.e. present shares (3+4) 97423286

BUYBACK OF SHARES

The Board of Directors of GHCL Limited in their meeting held on January 31 2017 hadgiven their approval for Buy Back of the Company's fully paid-up equity shares of Rs. 10/-each from the Open Market through Stock Exchange route at a Maximum Buyback price of Rs.315/- per Equity Share excluding transaction costs for an aggregate amount of Rs. 80Crores. The information in this regards had already been given in last annual report.

Your Directors are pleased to inform that in line with the said approval sincestarting of buyback process the Company had bought back 3156000 equity shares andextinguished the same. Out of which 573438 equity shares were bought back and 546550equity shares were extinguished in Financial Year 2016-17 and balance 2582562 equityshares are bought back and 2609450 equity shares are extinguished during financial year2017-18. Consequently after said extinguishment of equity shares the issued & paid-upcapital of the Company stands reduced to Rs. 968632860/- consisting of 96863286equity shares (i.e. 100019286 equity shares minus 3156000 equity shares) as onSeptember 30 2017.

Your Directors are pleased to further inform that the price at which the equity shareswere bought back was dependent on the price quoted on the stock exchanges. The highest andlowest price at which equity shares were bought back was Rs. 277.00 and Rs. 233.50 perequity share respectively. The average price (excluding brokerage and other charges) atwhich the equity shares have been bought back is Rs. 252.04 per equity share and the totalamount deployed in the Buyback is Rs. 79.54 crores which represents 99.43% of the MaximumBuyback Offer Size (excluding transaction cost).

EMPLOYEES STOCK OPTION SCHEME

Your company has Employees Stock Option Scheme for its permanent employees as per thescheme approved by shareholders in their Annual General Meeting held on July 23 2015. TheCompany had obtained in-principle approvals from the Stock Exchanges for issue of 50 lakhequity shares through Employees Stock Option Scheme. During the year the Nomination andRemuneration Committee in its meeting held on October 24 2017 had granted 2.30 Lacs StockOptions to its 14 employees at an exercise price of Rs. 170 each. Subsequent to the yearend the Nomination and Remuneration Committee in its meeting held on April 25 2018 hadgranted 21.30 Lacs

GHCL

Stock Options to its 58 employees (including three KMPs) at an exercise price of Rs.150 each. Employees may exercise their options after vesting period subject to complianceof other terms and conditions of the Scheme approved by the shareholders.

Further the Committee in its meeting held on October 24 2017 made allotment of 5.60lakhs Equity Shares of Rs. 10 each to forty employees (including three KMPs) of theCompany against conversion of Stock Options pursuant to GHCL ESOS 2015 - Series -1.Consequent to above allotment of 5.60 lakh Equity Shares the Issued & Paid-up Capitalof the Company stands increased to Rs. 974232860/- consisting of 97423286 equityshares of Rs. 10/- each from Rs. 968632860/- consisting of 96863286 equity shares ofRs. 10/- each.

The details of the Employee Stock Options plan form part of the Notes to accounts ofthe financial statements in this Annual Report and is also annexed herewith as Annexure-Iand forming part of this Report.

FINANCE

I. Soda Ash Expansion Loan

After successful completion of Soda Ash Expansion Phase - I your Company has startedPhase - II with a Project Cost of Rs. 300 crores. Your company successfully tied up TermLoan for Rs. 225 Crores for a period of 10 years including moratorium period of 2 years atinterest rate of 8.75% p.a. and availed disbursement of Term Loan of Rs. 80 crores duringthe current year.

II. Capex Program

Your company has also undertaken several Capex program in Home Textile and YarnDivisions at the project cost of Rs. 88 Crores and your company has successfully tied upterm loans for Rs. 58 crores for a period of 10 years including moratorium period of 2years at an average interest rate of 8.5% p.a. Your company has availed term loan of Rs.26 crores during the current year for the said capex program.

IN. Conversion of Rupee Term Loan into Foreign Currency Loan

During the year your company successfully converted some of high cost Rupee term loanscarrying interest rate at 10% p.a. into Foreign Currency Loan at an average rate of 3.80%.

IV. Short Term Loan

During the year 2017-18 short term requirements were met through Cash Credit / ShortTerm Loan / Working Capital Demand Loan / Export Packing Credit / Pre-shipment in ForeignCurrency / Buyers Credit whereby your company could manage to borrow at Weighted AverageInterest rate at 6.32%.

V. Also your company could borrow Long Term Loans which includes Rupee Term Loans andForeign Currency Loans at an average rate of 8.49%

Thus your company could manage to borrow Long Term Loans and Short Term Loans at anaverage rate of 7.61%.

Due to efficient cash flow management and timely repayment of interest and principal tovarious banks CARE (Credit Analysis & Research Ltd) has upgraded rating from CARE A-to CARE A for long term facilities and from CARE A2+ to CARE A1 for short term facilitiesof the Company.

During the financial year your Company has transferred to investors' education andprotection fund account (IEPF) a sum of Rs. 32.48 lacs towards unclaimeddividend/unclaimed deposits along with interest thereon.

DEPOSITS

Your Company has not accepted deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014.

AWARDS AND RECOGNITION

Your Directors are pleased to inform that during the financial year 2017-18 yourCompany has received various awards and recognition. The major ones among them are asfollows:

(i) Special Commendation for Golden Peacock Award for Excellence in CorporateGovernance for the year 2017.

(ii) Golden Peacock Award for Corporate Social Responsibility - 2017 for the year 2017.

(iii) GHCL Limited has been declared as the Winner of ‘Golden Peacock NationalQuality Award' for the year 2018.

(iv) GHCL Limited achieved 16th rank in Great Place to Work survey amongIndia's Great Place to Work manufacturing sector.

(v) The President of Association Other ways Management & Consultancy Francecertify that GHCL Limited has been selected to receive the Green Era Award forSustainability.

SUBSIDIARIES

Grace Home Fashion LLC a subsidiary of the Company in USA engaged in Home Textilesegment is catering to some of the popular Home-Textile Retailers like Bed Bath BeyondWood and Steinmart. In addition Grace Home Fashion is also doing online Home-TextileBusiness in USA through JC Penny and Kohls. com. As reported in the previous year RosebysInteriors India Limited (RIIL) an Indian subsidiary is under liquidation with effect from15th July 2014.

Pursuant to requirement of Section 136 of the Companies Act 2013 which has exemptedcompanies from attaching the financial statements of the subsidiary companies along withthe Annual Report of the Company. The Company will make available the annual financialstatements of the subsidiary company and the related detailed information to any membersof the company on receipt of a written request from them at the Registered Office of theCompany. The annual financial statements of the subsidiary company will also be kept openfor inspection at the Registered Office of the Company on any working day during businesshours. The Consolidated Financial Statements presented by the Company include financialresults of its subsidiary companies associates etc. Details regarding subsidiaries havebeen provided in note no. 45 (refer page no. 171 of Annual Report) and also in thestatement u/s 129(3) of the Companies Act 2013 (refer page no. 120). The statements arealso available on the website of the Company

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to the requirement of Regulation 33 & Regulation 34 of the SEBI (ListingObligations & Disclosure Requirements) Regulations 201 5 (hereinafter referred as

Listing Regulations) read with other applicable provisions and prepared in accordancewith applicable IND AS for financial year ended March 312018.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the Listing Regulations read with other applicableprovisions the detailed review of the operations performance and future outlook of theCompany and its business is given in the Management's Discussion and Analysis Report whichforms part of this Annual Report. The report on Management's Discussion and Analysis isannexed with the Report.

CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the Listing Regulations read with Schedule V to the saidRegulations a compliance report on Corporate Governance has been annexed as part of theAnnual Report along with Auditor's certificate for the compliance.

SECRETARIAL AUDIT REPORT

In line with the requirement of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 read withother applicable provisions if any; the Board of Directors of the Company had appointedMr. S Chandrasekaran representing Chandrasekaran & Associates Practicing CompanySecretaries New Delhi to conduct Secretarial Audit of the Company for the financial year2017-18. The Secretarial Audit Report for the financial year ended March 312018 isannexed with the Board's report and formed as part of the Annual Report. This report isselfexplanatory and does not call for any further comments.

LISTING OF THE EQUITY SHARES

The equity shares of your Company are listed at BSE Limited Mumbai (BSE) and NationalStock Exchange of India Limited Mumbai (NSE). The annual listing fees for the year2017-18 have been paid to all these Stock Exchanges.

DIRECTORS

Mr. Sanjay Dalmia and Mr. Anurag Dalmia directors retire by rotation and beingeligible offer themselves for re-appointment. The Board of Directors in their meetingheld on January 31 2018 had re-appointed Mr. Raman Chopra as a Whole-time Directordesignated as CFO & Executive Director (Finance) of the Company for a period of fiveyears with effect from April 1 2018 subject to the approval of the shareholders. TheBoard recommends their appointments at the ensuing Annual General Meeting.

Your directors would like to confirm that all Independent Directors of the Company havegiven their declarations that they meet the criteria of independence as laid down underSection 149(6) of the Companies Act 2013 and Regulation 16 (1) (b) of the ListingRegulations.

During the year Mr. Sanjiv Tyagi one of the Independent Director of the Company hasceased from the directorship of the Company with effect from October 24 2017 as per theprovisions of Section 167(1) read with Sections 164 (2) of the Companies Act 2013 onaccount of his disqualification in other companies. The Board of Directors placed onrecord their gratitude and appreciation for the immense contribution made by the outgoingdirector during his tenure as director of the Company.

MEETING OF THE BOARD

During the financial year ended March 31 2018 the Board of Directors meets regularlyto review strategic operational and financial matters and has a formal schedule ofmatters reserved for its decision.

During the financial year ended March 31 2018 four Board Meetings were held on May20 2017 July 29 2017 October 24 2017 and January 31 2018. More details about theBoard Meetings are mentioned in the Corporate Governance Report.

BOARD EVALUATION

In line with the provisions of the Companies Act 2013 and SEBI Guidance Note on Boardevaluation issued on January 5 2017 read with relevant provisions of the SEBI ListingRegulations 2015 the Board has carried out an annual evaluation of its own performanceand that of its Committees and individual Directors through the separate meeting ofindependent directors and the Board as a whole.

The performance of the independent directors was evaluated by the entire Board exceptthe person being evaluation in their meeting held on January 31 2018. The performance ofthe Committees was evaluated by the Board seeking inputs from the Committee Members.

A separate meeting of Independent Directors was held on January 312018 to review theperformance of Non-Independent Directors' performance of the Board and Committee as awhole and performance of the Chairman of the Company taking into account the views ofExecutive Directors and the Non-Executive Directors.

The performance evaluation of the Board and its constituents was conducted on the basisof functions responsibilities competencies strategy tone at the top riskidentification and its control diversity and nature of business. A structuredquestionnaire was circulated to the members of the Board covering various aspects of theBoard's functioning Board culture execution and performance of specific dutiesprofessional obligations and governance. The questionnaire was designed to judge knowledgeof directors their independence while taking business decisions; their participation informulation of business plans; their constructive engagement with colleagues andunderstanding the risk profile of the company etc. In addition to the above the chairmanof the Board and / or committee is evaluated on the basis of their leadershipcoordination and steering skills.

Thereafter the Nomination and Remuneration Committee used to review the performance ofindividual Directors on the basis of their contribution as a member of the board orcommittee. The quantum of profit based commission payable to directors is decided by theNomination and Remuneration Committee on the basis of overall performance of individualdirectors.

REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.

EXTRACTS OF ANNUAL RETURN

The extract of annual return as on the financial year ended March 31 2018 in Form MGT- 9 is annexed herewith as Annexure-II and forming part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has been one of the foremost proponents of inclusive growth and sinceinception has been continuing to undertake projects for overall development and welfareof the society. GHCL's commitment to the development of weaker sections of society iscontinuing since more than two decades. GHCL through its "GHCL Foundation Trust"has upgraded its CSR activities to cover a larger section of the society and included toprovide support to the downtrodden needy and marginalized citizens and also to createsocial infrastructure for their sustenance.

As part of its initiatives under Corporate Social Responsibility (CSR) the Company hasundertaken projects in the areas of Sanitation Vocational training institute EducationAgro Based Livelihood Health cancer early detection camps Rain Water Harvesting WomanEmpowerment Animal Husbandry etc. These projects are covered under Schedule VII of theCompanies Act 2013. Pursuant to the provisions of Section 135 of the Companies Act 2013and Rules thereto a Corporate Social Responsibility (CSR) Committee of the Board has beenconstituted to monitor CSR related activities comprising of Mr. Mahesh Kumar Kheria asthe Chairman of the Committee Mr. Neelabh Dalmia and Mr. R S Jalan as members of theCommittee. Subsequent to the year end the Board of Directors in its meeting held on April25 2018 has reconstituted CSR Committee comprising of Mrs. Vijaylaxmi Joshi as theChairperson of the Committee and Mr. Mahesh Kumar Kheria Mr. Neelabh Dalmia Mr. R SJalan and Mr. Raman Chopra as members of the Committee. The Annual Report of CSRactivities are annexed herewith as Annexure-III and forming part of this Report

BUSINESS RESPONSIBILITY REPORTING

As per Regulation 34 (2) (f) of the Listing Regulations listed companies shall submitas part of their Annual Reports Business Responsibility Report describing theinitiatives taken by them from an environmental social and governance perspective in theprescribed format. At present this provision is applicable to top 500 listed companiesbased on market capitalisation as on March 31 2018. As on March 31 2017 GHCL Limitedwas on 456th position under NSE list and on 462nd position under BSE list. Hence thisclause was first time applicable to GHCL Limited in the last year. But based on marketcapitalisation as on March 31 2018 GHCL Limited is not part of the list of top 500listed companies of NSE & BSE. However your company will continue to publish BusinessResponsibility Report (BRR) for the purpose of establishing and strengthening the normsof Corporate Governance and setting the highest principle envisaged by SEBI under BRRreporting. The Business Responsibility Report of the Company for the financial year endedon March 312018 is annexed herewith as Annexure-IV and forming part of this Report.

COMPOSITION OF AUDIT COMMITTEE

Audit Committee of the Board has been constituted as per Section 177 of the CompaniesAct 2013 and rule 6 of the Companies (Meetings of Board and its Powers) Rules 2014 andread with Regulation 18 of the Listing Regulations. Presently the Audit Committeeconsists of four Independent directors having expertise in financial and accounting areascomprising of Dr. B C Jain Mrs. Vijaylaxmi Joshi Mr. G C Srivastava and Mr. K. C. Jani.Details regarding Audit Committee and other Committees are also stated in the CorporateGovernance Report.

COMPOSITION OF STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee has been constituted as per section 178 (5) ofthe Companies Act 2013 read with Regulation 20 of the Listing Regulations. TheStakeholders Relationship Committee shall consider and resolve the grievances of thesecurity holders of the company including complaints related to transfer of sharesnon-receipt of annual report and non-receipt of dividend etc. The StakeholdersRelationship committee consists of Executive and NonExecutive directors comprising of Mr.Mahesh Kumar Kheria Mr. Neelabh Dalmia Mr. R S Jalan and Mr. Raman Chopra.

COMPOSITION OF NOMINATION AND REMUNERATION COMMITTEE

Nomination and Remuneration Committee of the Board has been constituted as per Section178 of the Companies Act 2013 and rule 6 of the Companies (Meetings of Board and itsPowers) Rules 2014 and read with Regulation 19 of the Listing Regulations. The Nominationand Remuneration Committee shall determine qualifications positive attributes andindependence of a director and recommend to the Board a policy relating to theremuneration of the directors Key Managerial Personnel and other employees. TheNomination and Remuneration Committee consists of three Non-Executive directors comprisingof Mr. K C Jani Mr. Sanjay Dalmia and Dr. B C Jain.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As a conscious and vigilant organization GHCL Limited believes in the conduct of theaffairs of its constituents in a fair and transparent manner by adopting the higheststandards of professionalism honesty integrity and ethical behaviour. In its endeavourto provide its employee a secure and fearless working environment GHCL Limited hasestablished the "Whistle Blower Policy". The Board of Directors in its meetingheld on May 28 2014 had approved the Whistle Blower Policy which is effective fromOctober 1 2014 & the same has been duly amended effective from December 1 2015. Mr.Mahesh Kumar Kheria Independent Director of the Company is Ombudsperson.

The purpose of the policy is to create a fearless environment for the directors andemployees to report any instance of unethical behaviour actual or suspected fraud orviolation of GHCL's code of conduct or Ethics Policy to the Ombudsperson. Detailsregarding Whistle Blower Policy are also stated in the Corporate Governance Report. TheWhistle Blower Policy is posted on the website of the Company. There are no complaintsreported during the year under Vigil mechanism.

RELATED PARTY TRANSACTIONS

There are no material related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. All related party transactions thatwere entered into during the financial year were on an arm's length basis and were in theordinary course of business. A statement giving details of all related party transactionsis placed before the Audit Committee and the Board of Directors on a quarterly basis. Thestatement is supported by a Certificate from the CFO. All Related Party Transactions areplaced before the Audit Committee and also before the Board.

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. None of the Directors has any material pecuniary relationships ortransactions vis-a-vis the Company.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

RISK MANAGEMENT POLICY

Pursuant to the requirement of Regulation 21 of the Listing Regulations the Companyhad voluntarily constituted a Risk Management Committee. The details of Committee andother details are also set out in the Corporate Governance Report forming part of theBoard's Report. The policy on Risk Management as approved by the Board is uploaded on theCompany's website.

CONSERVATION OF ENERGY TECHNOLOGYABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 are given in Annexure-III forming partof this Report.

MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company are given in Annexure-IV forming part of this Report.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013

Your Company is committed in creating and maintaining a secure work environment whereits employees agents vendors and partners can work and pursue business together in anatmosphere free of harassment exploitation and intimidation. To empower women and protectwomen against sexual harassment a policy for prevention of sexual harassment had beenrolled out and Internal Complaints Committee as per legal guidelines had been set up atall major locations of the Company. This policy allows employees to report sexualharassment at the workplace. The Internal Committee is empowered to look into allcomplaints of sexual harassment and facilitate free and fair inquiry process with cleartime lines. There are no complaints reported during the year regarding sexual harassment.

STATUTORY AUDITORS

Your directors would like to inform that in the 33rd AGM held on July 192016 M/s S. R. Batliboi & Co. LLP Chartered Accountants (Firm Reg. No. 30100CE /E300005) was appointed as statutory auditors of the Company for a period of five yearsi.e. from the conclusion 33rd AGM till the conclusion of 38th AGMsubject to ratification by members at every AGM. Ratification of appointment of M/s S. R.Batliboi & Co. LLP is being sought from the members of the Company at the ensuing AGM.The Board recommends their ratification.

AUDITOR'S REPORT

There is no qualification reservation adverse remark or disclaimer made by theStatutory Auditors and/or Secretarial Auditors of the Company in their report for thefinancial year ended March 31 2018. Hence they do not call for any further explanationor comment U/s 134 (3) (f) of the Companies Act 2013.

COST AUDITORS

The Board has appointed M/s R J Goel & Company Cost Accountants New Delhi as CostAuditors of the Company for all its divisions (i.e. Soda Ash Yarn and Home Textile) forthe financial year 2018-19.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them and also based on the representations received from theOperating Management your directors make the following statement in terms of Section 134(3) (c) of the Companies Act 2013 that:

a. in the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;

b. such accounting policies as mentioned in the Notes to the Financial Statements havebeen selected and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 312018 and of the profit and loss of the Company for the financialyear ended March 312018;

c. the proper and sufficient care has been taken by them for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d. the annual accounts for the financial year ended March 31 2018 have been preparedby them on a going concern basis;

e. proper Internal financial controls have been followed by the company and that suchinternal financial controls are adequate and were operating effectively; and

f. proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

ACKNOWLEDGMENT

The Directors express their gratitude to Financial Institutions Banks and variousother agencies for the co-operation extended to the Company. The Directors also take thisopportunity to thank the shareholders customers suppliers lenders distributors andother stakeholders for the confidence reposed by them in the Company. The employees of theCompany contributed significantly in achieving the results. The Directors take thisopportunity of thanking them and hope that they will maintain their commitment toexcellence in the years to come.

For and on behalf of the Board of Directors For GHCL Limited

SANJAY DALMIA
Chairman
Date : April 25 2018
Place : New Delhi