To the Members
Your Directors have pleasure in presenting the Annual Report along with the AuditedAccounts for the Financial Year ended March 31 2017.
Review of Operations
Your Company's performance during the year as compared with that during the previousyear is summarized below:
| ||(Rs. Crore) ||(Rs. Crore) |
| ||Year Ended March 31 ||Year Ended March 31 |
|Particulars ||2017 ||2016 |
|Revenue from Operations ||1602.17 ||1393.86 |
|Other Income/Exceptional Items ||46.88 ||159.68 |
|Total Income ||1649.05 ||1553.54 |
|Total Expenditure other than Finance Costs and ||1534.11 ||1300.67 |
|Depreciation and Amortisation || || |
|Profit before Finance Costs Depreciation and ||114.94 ||252.87 |
|Amortisation and Tax || || |
|Depreciation and Amortisation Expense ||52.43 ||44.37 |
|Profit before Finance Costs and Tax ||62.51 ||208.50 |
|Finance Costs (net) ||207.86 ||200.24 |
|Profit before Tax ||(145.35) ||8.26 |
|Provision for Current Tax ||- ||9.96 |
|Provision for Deferred Tax ||(0.11) ||(35.91) |
|Net Profit ||(145.24) ||34.21 |
|Surplus brought forward ||690.64 ||788.22 |
|Profit after Tax available for appr opriation ||545.40 ||822.43 |
|Appropriation || || |
|Your Directors recommend appropriation as under: || || |
|Final Dividend including DDT ||- ||70.78 |
|Dividend excess provided in earlier years ||- ||(0.01) |
|Interim dividend declared and paid ||- ||58.80 |
|DDT on interim dividend distributed ||- ||11.97 |
|Dividend Distribution Tax (DDT) credit ||- ||(9.75) |
|from subsidiaries || || |
|Transfer to General Reserve ||- ||- |
|Surplus Carried Forward ||545.40 ||690.64 |
|Total Appropriation ||545.40 ||822.43 |
The Board of Directors of your Company recommended a dividend of Rs. 1.75 per equityshare of Rs. 1/- each aggregating Rs. 58.82 Crore as final dividend for the year endedMarch 31 2017.
The Dividend policy of the Company is uploaded on the Company's website.http://www.godrejindustries.com/listing-compliance.aspx
INDUSTRY STRUCTURE AND DEVELOPMENT
The global economy produced a lackluster run in 2016 with global output growth estimateat about 3.1%. This stable average growth rate masks divergent developments in differentcountry groups. There has been a stronger-than-expected pickup in growth in advancedeconomies due mostly to a reduced drag from inventories and some recovery inmanufacturing output. In contrast it is matched by an unexpected slowdown in someemerging market economies mostly reflecting idiosyncratic factors. Forward-lookingindicators such as purchasing managers' indices have remained strong in the fourth quarterin most areas.
Going forward the IMF expects the world economy to grow at a slightly faster rate of3.4% in 2017 and 3.6% in 2018. Growth in advanced economies is projected to be around 1.9%in 2017 and 2.0% in 2018. On the other hand the growth in emerging economies is projectedto increase from 4.1% in 2016 to 4.5% and 4.8% in 2017 and 2018 respectively.
India experienced a slightly sluggish financial year with advance GDP estimates peggingthe growth at 7.1% compared to 7.6% last year (constant price comparison).
On the domestic front the year was marked by two major domestic policy developmentsthe passage of the Constitutional amendment paving the way for implementing the Goods andServices Tax (GST) and the action to demonetize the two highest denomination notes. TheGST will create a common Indian market improve tax compliance and governance and boostinvestment and growth. Demonetization has had short-term costs but holds the potential forlong-term benefits. Follow-up actions to minimize the costs and maximize the benefitsinclude: fast demand-driven remonetization; further tax reforms including bringing landand real estate into the GST reducing tax rates and stamp duties; and acting to allayanxieties about over-zealous tax administration. Other major reforms included enactment ofthe Insolvency and Bankruptcy Code; amendment to the RBI Act for inflation targeting;enactment of the Aadhar bill for disbursement of financial subsidies and benefits;significant reforms in FDI policy; the job creating package for textile sector; andseveral other measures. These actions would allow growth to return to trend in FY2017-18.
FY2016-17 was a predominantly good year for Indian Agriculture after two successivedroughts with the first advance estimates pegging the growth rate to be 4.1%. This was onthe back of a normal monsoon implementation of credit and other financial schemesirrigation fund with NABARD and better support through higher MSP. During the South WestMonsoon of 2016 the country as a whole received rainfall which was 97% of its long periodaverage. However wide regional and crop-wise variations continued to be seen in coverageof irrigated area. As per the Advance Estimates production of kharif food-grains duringFY2016-17 increased by 8.8% as against FY2015-16. During FY2016-17 area sown under allkharif crops taken together was 3.5% higher compared to FY2015-16 while area coverageunder rabi crops was 5.9% higher than that of last year. The area coverage under wheat ason 13th January 2017 is 7.1% higher than that in the corresponding week of last year.
Going forward we expect farm focused interventions in the budget like expansion ofcrop insurance (Fasal Bima Yojana) expansion of National Agricultural Markets (e-NAM) andadded support to animal husbandry and dairy will provide adequate support for growth inthis sector.
Volatility in commodity prices continued to affect the oleo-chemicals industrythroughout the year. The global over-capacity in fatty alcohols with low growth rates inadvanced economies has resulted in subdued demand of fatty alcohols. With re-monetizationand early implementation of GST we expect good growth in the Indian market going forward.
Residential real estate sector in India continued to witness a stagnant growth inFY2016-17. The marginal increase in absorption during first two quarters was more thanoffset by demonetization in the subsequent two quarters. We are however optimistic aboutthe future prospects of the Industry on account of economic and fiscal policy measuresbeing implemented by the government. A sustained GDP growth momentum reduction ininterest rates and subsidies in affordable housing segment are expected to strengthen thevolume demand going forward. On the other hand structural policy reforms in form of realestate regulatory laws are expected to bring more customers to market by facilitating atransparent and controlled regulatory environment. This is expected to eventually boostdemand thereby easing the supply pressure in the market. Office space absorption levelshave increased last year compared to FY2015-16 and the trend is expected to continue inFY2017-18 on the back of improved business conditions and GDP growth.
There is a separate section on Management Discussion and Analysis appended as AnnexureA to this Report which includes the following:
Discussion on financial performance with respect to operational performance
Segment wise performance
Human Resources and Industrial Relations
Opportunities and Threats
Internal Control Systems and their adequacy
Risks and Concerns
Subsidiary and Associate Companies
Your Company has interests in several industries including animal feeds poultry dairyand agro-products oil palm plantation property development personal and home care etc.through its subsidiary and associate companies.
Godrej Agrovet Limited (GAVL)
Godrej Agrovet Limited a subsidiary of your Company is a diversified agri businesscompany with interests in animal feed crop protection dairy and oil palm business alongwith Joint Venture with the ACI Group in Bangladesh for the feed business and Tyson Inc.USA for the poultry and processed food business.
FY2016-17 was a welcome departure from the previous two years for Indian agriculture. Anormal monsoon after two back-to-back poor monsoons provided much needed boost to the agrisector. GAVL was also positively impacted by these conditions as evident in its financialperformance. GAVL integrated Astec LifeSciences Limited (Astec) and Creamline DairyProducts Limited (Creamline) with FY2016- 17 financials reflecting the full yearperformance of these two companies.
In FY2016-17 GAVL recorded consolidated revenue of Rs. 4985 crore against Rs. 3819crore a growth of 31% over FY2015-16 consolidated revenue. The reported Profit Before Taxfor the year was up by 12% to Rs. 375 crore in FY2016-17 against Rs. 335 crore inFY2015-16. The financial numbers are as per IND AS.
The Animal feed business had a flat year with revenues growing at 3% due to headwinds faced in certain feed categories. While Cattle feed Layer feed and Fish feedrecorded robust growth the business had flat sales in Shrimp Feed and volumes declined inBroiler feed. Integration as an operating business model had gained ground in Broilerbusiness in the last five years. The prevalence has increased to an extent that majorityof the broiler market share has been captured by Integrators. GAVL is working on multiplesolution themes to improve its Broiler feed play in coming years. Good monsoons had led toincrease in Kharif and Rabi crops. Keeping the critical raw materials prices muted in thesecond half of FY2016- 17 aided the profitability of the business in FY2016-17.
Crop Protection Business:
Good south west monsoons during the year and booking of full year revenue of Astechelped clock the Crop protection business a growth of 54% in sales in FY2016-17. Thebusiness reported sales of Rs. 765 Crore in FY2016-17. The business started sales ofAstec's product portfolio in FY2016-17 and has seen its market share improve across theAzole product fungicide portfolio.
Both Crude Palm Oil and Palm Kernel Oil prices in FY2016-17 were robust which resultedin significant improvement in the performance of this business over the last year.Operating performance of the business remained strong. The business recorded Sales of Rs.507 Crore in FY2016-17 growth of over 25% over FY2015-16. A project to convert the OilPalm Biomass into value added product was also commissioned in FY2016-17.
Astec LifeSciences Limited & Its Subsidiaries:
FY2016-17 was GAVL's first full year of operations at Astec. Astec recorded TotalIncome of Rs. 316 Crore in FY2016-17 a growth of 24% over FY2015-16. Astec saw growth inboth Enterprise & Bulk sales and Contract Manufacturing. Astec successfullyimplemented SAP in FY2016-17 and streamlined all the business processes around it toensure smoother business operations in future.
Creamline Dairy Products Limited & Its Subsidiary:
FY2016-17 was a robust milk year with Creamline recording Total Income of Rs. 1019Crore a growth of 9% over FY2015-16. Creamline's focus on Value added products hasstarted yielding results with the sales of the products portfolio increasing by 24% inFY2016-17 over FY2015-16.
Review of Operations / State of Affairs of Joint Ventures (JVs):
ACI Godrej Agrovet Private Limited Bangladesh:
The joint venture in Bangladesh recorded a strong volume growth of 16% in FY2016-17over FY2015-16. The growth was recorded across all the categories of feed in Bangladesh.The business continues to consolidate and grow its market share in the categories of Feed.
Godrej Tyson Foods Limited:
The processed poultry business sales remained flat in FY2016-17 compared to sales inFY2015-16. The focus of the business will continue to remain investing and building the RealGood Chicken' and Yummiez' brands for future growth.
Godrej Properties Limited (GPL)
Financial Highlights: For the full financial year GPL's Total Income decreased by24% and stood at Rs. 1733 crore. However EBITDA increased by 42% to Rs. 401 croreand net profit increased by 30% to Rs. 207 crore. An important contributor to thestrong profit growth has been our flagship project The Trees' which attained revenuerecognition much ahead of schedule.
Sales Highlights: From a sales perspective despite a weak year on the whole due toregulatory approval delays resulting in a low number of new residential project launchesthe projects which we were able to launch received an encouraging response. GPL registeredbooking volume of 3.1 million sq. ft. and booking value of Rs. 2020 crore in a weak realestate market. Below are the highlights:
Godrej Golf Links Noida:
First GPL project in Noida
Sold over 6 lakh sq. ft. of villas with a booking value in excess of Rs. 300crore in a single day
Sold more than 1 million sq. ft. with a booking value of Rs. 563 crore despiteweak market conditions
Serves as a reflection of GPL's brand strength sales capability and ability tosuccessfully attract customers across the country's leading real estate markets.
Godrej Greens Pune:
Witnessed an overwhelming customer response despite being launched immediatelyafter the government's demonetization announcement
Sold 420088 sq. ft. with a booking value of Rs. 187 crore in FY2016-17.
Continued success in business development: FY2016-17 has been a strong year forbusiness development. GPL added 7 new projects with a saleable area of 18 million sq. ft.The government's announcement of demonetization in addition to implementation of RERA haschanged the structural dynamics of the real estate sector. The sector is likely to see ashift towards organized developers as non-serious players with low repute will find itdifficult to comply with the increased scrutiny from regulators and home buyers. This willpave way for consolidation in the sector as landowners seek to partner with reputabledevelopers through the joint development model and cash starved developers monetize theirland banks by selling it to developers with strong balance sheets with access toinstitutional funding. We remain well placed to capitalize on these opportunities in thebusiness development space. GPL's strong brand and solid governance framework provides uswith a strong advantage in increasing the depth of our presence across the country'sleading real estate markets while maintaining a capital light development strategy.
Strong focus on execution: GPL has delivered 4.6 million square feet in FY2016-17which includes 3.3 million square feet of residential and 1.3 million square feet ofcommercial space across four cities. We have now delivered over 15 million sq. ft. of realestate in the last 4 years which demonstrates that our operational delivery is keepingpace with our sales acceleration over the past few years.
Global recognition for sustainability initiatives: GPL was ranked 2nd in Asia &5th globally by GRESB (Global Real Estate Sustainability Benchmark) - An industry-drivenorganization which assesses Environmental Social and Governance (ESG) performance of realestate assets globally. GRESB is committed to rigorous and independent evaluation of thesustainability performance of real assets across the globe. GRESB data is used by morethan 200 institutional investors listed property companies and fund managers and isbacked by all leading international real estate associations and industry bodies. Itprovides investors the tools to benchmark their investments against each other based onproperty type country and regional peer groups. GRESB is widely recognized as the globalstandard for portfolio-level ESG reporting and benchmarking in the real asset sector. Inaddition Godrej One our headquarters received a LEED Platinum Rating under theCommercial Interiors segment from the US Green Building Council (USGBC). This is one ofthe first such certifications in the country.
Expanding international presence: GPL opened its second internationalrepresentative office in Singapore. Singapore is an important market opportunity for GPLand our presence will help us to address the needs of the large Indian diaspora located inSingapore and neighboring geographies.
Outlook: The real estate sector is in the midst of a transition. A cyclicaldownturn combined with demonetization and the implementation of the Real Estate RegulationAct has created short-term uncertainty in the sector. However these same factors will leadto consolidation and improved governance in the sector which in turn will drive improvedconsumer confidence. The combination of this improved consumer confidence with farimproved affordability that is the result of rising incomes stagnant prices and reducedinterest rates will propel the sector in a very positive direction over the next severalyears. The government has put in place many policy reforms to encourage real estatedevelopment especially in the affordable housing space which have the potential to leadto sustained improvements in the sector. We expect 2017 to be a transition year but theyears ahead are likely to be very exciting ones for the sector. Our brand nationalpresence demonstrated track record and capabilities put us in a strong position todisproportionately benefit from any improvement in the environment and will allow us toremain on a high growth trajectory in the years ahead.
Natures Basket Limited (NBL)
NaturesBasketLimitedcontinuestogrowitsrevenueatdoubledigitstherebyachievedTotalIncomeofRs. 310 Crore an increase of 15% over the previous year of Rs. 269 Crore.
The Company during the year worked on defining the long-term strategy for thebusiness. As part of the strategy the management decided to exit out of theunderperforming market of Delhi and Hyderabad. Post the exit the Company has 26 operatingstores across 3 cities of Mumbai Pune and Bangalore. As part of the strategy NBL hasalso realigned the portfolio allowing to position NBL as the "Daily FoodDelight" stores on the base of providing the "Freshest and Finest" food toour customers. This helps improve frequency and loyalty of our customers. Overall revenuefrom loyal customers contribute nearly 80% of overall revenue.
The focus is to excel and be a leading Omni Channel player by focusing strongly onInstore as well on line business channels in Daily Food Delight space. Currently NBL'sonline sales stands at 7% of its overall sales. NBL continues to improve its website andApp experience through regular updates and improvements.
During the year NBL has set up a Supply Chain Function to improve overall availabilityand inventory management and use of technology for improving in store processes.
The brand continues to win awards in forums like Food & Grocery forum FranchiseIndia Retail Award for Omni Chanel performance TRRAIN awards for Customer service etc.
Godrej Consumer Products Limited (GCPL)
Godrej Consumer Products Limited an associate of your Company has continued to growahead of the overall FMCG sector as well as the home and personal care categories that itparticipates in despite a challenging macro environment.
On a consolidated basis GCPL reported a Total Income of Rs. 9684 crore during theFY2016-17 compared to Rs. 8837 crore for FY2015-16. The net profit grew by 58% at Rs. 1304crore as compared to Rs. 828 crore during the FY2015-16.
GCPL is a leading emerging markets company. As part of the 120-year young Godrej GroupGCPL is fortunate to have a proud legacy built on the strong values of trust integrityand respect for others. At the same time it is growing fast and has exciting ambitiousaspirations.
Today the Godrej Group enjoys the patronage of 1.1 billion consumers globally acrossdifferent businesses. In line with its 3 by 3 approach to international expansion GCPL isbuilding a presence in 3 emerging markets (Asia Africa Latin America) across 3categories (home care personal wash hair care). It ranks among the largest householdinsecticide and hair care players in emerging markets. In household insecticides it isthe leader in India the second largest player in Indonesia and expanding its footprint inAfrica. It is the leader in serving the hair care needs of women of African descent thenumber one player in hair colour in India and Sub-Saharan Africa and among the leadingplayers in Latin America. It also ranks number two in soaps in India and is the numberone player in air fresheners and wet tissues in Indonesia.
However it is very important that besides its strong financial performance andinnovative much-loved products GCPL remains a good company. About 23% of the holdingcompany of the Godrej Group is held in a trust that invests in the environment health andeducation. We are also bringing together our passion and purpose to make a differencethrough our 'Good & Green' approach to create a more inclusive and greener India.
At the heart of all of this is a talented team. GCPL takes much pride in fostering aninspiring workplace with an agile and high performance culture. It is also deeplycommitted to recognising and valuing diversity across our teams.
It was ranked the number 1 FMCG Company to work for in the Great Place to Work Best Workplaces in India 2016' list; its thirteenth consecutive year on the list.It was also ranked number 12 on the Great Place to Work Best Workplaces inAsia 2017' list and ranked among the top 19 Aon Hewitt Best Employers in India -2017' survey.
Godrej International Limited (GINL) is incorporated in the Isle of Man is a whollyowned subsidiary of the company. GINL trades worldwide in vegetable oils mainly palm andsoya.
Godrej International Trading & Investments Pte. Ltd. is registered and located inSingapore and also trades in palm and soya oil as well as in by-products.
Both companies enjoy a well -deserved reputation in the market and enjoyed their bestyear ever. Our international companies are often quoted in the media and are well-knownfor their in-house research with regard to S&Ds and Price Outlook.
Godrej International Limited Labuan is incorporated in the financial centre of Labuan.This company has remained dormant and is not actively trading as yet.
Ensemble Holdings & Finance Limited (EHFL) a wholly owned subsidiary of yourCompany is a Non-Banking Finance Company. The total income of EHFL for FY2016-17 was Rs.12.36 Crore as against that of Rs. 3.10 Crore last year. The Net Profit before Tax of EHFLduring the financial year ended March 31 2017 was Rs. 11.11 Crore as against that of Rs.3.01 Crore last year.
Pursuant to Regulation 16(1)(c) of the SEBI (Listing Obligations and disclosurerequirements) Regulations 2015 (Listing Regulations) your Company has formulated apolicy for determining its material subsidiaries'. The said policy has been uploadedon the Company's website http://www.godrejindustries.com/Resources/pdf/compliances/material_subsidiaries.pdf
The loan funds at the end of the year stand at Rs. 2862 crore as compared to Rs. 2658crore for the previous year. The net debt equity ratio is 1.76 as compared to 1.51 lastyear. Your Company continues to hold the topmost rating of [ICRA] A1+ from ICRA for itscommercial paper program (` 1000 crore) (previous year Rs. 1000 crore). ICRA hasreaffirmed an [ICRA] A1+ rating for its short term debt instruments/other bankingfacilities (` 800 crore) (previous year Rs. 800 crore). This rating of ICRA representshighest-credit quality carrying lowest-credit risk. ICRA also reaffirmed [ICRA] AA ratingwith stable outlook for long-term debt working capital and other banking facilities (`1015 crore) (previous year Rs. 1015 crore) and a rating of [ICRA]AA with stable outlookfor Non-Convertible Debenture program. These ratings represents high-credit qualitycarrying low-credit risk. ICRA has also assigned a rating of MAA+ with stable outlook forour Public Deposit scheme. The Public Deposit scheme under the Companies Act 1956 hasbeen discontinued. Instruments with this rating are considered to have the high-creditquality and low credit risk.
The chemicals division of your Company has manufacturing units at Ambernath ValiaWadala and Dombivli.
The Ambernath factory is ISO-9001:2008 ISO 14001:2004 ISO 18001:2007 ISO 27001: 2005certified. Over the last year the factory also got certified for FSSC 22000 and ISO 22716for Food safety and GMP respectively. The factory has also achieved considerable energysavings over the year.
The Valia factory is ISO-9001:2008 ISO 14001:2004 ISO 18001:2007 ISO 27001: 2005certified. The Factory has also got certification from FDA FSSAI and Kosher. We aremember of RSPO (Roundtable on Sustainable Palm Oil). The Valia factory haS successfullygot GMP +B2 certification for Palmitic Acid used as Animal Feed during this year. Companyhas invested in plants for making specialty products.
Vegoils Division (Wadala) manufactures & sells Edible Oils under "Godrej"Brand. The total turnover of Division for FY2016-17 increased to Rs. 111 Crore against Rs.61 crore from the previous year. In FY2016-17 the division introduced two new Edible Oils"Godrej Refined Rice Bran Oil" and "Godrej Sesame Oil" for our evergrowing health conscious consumers. The division is in the process of modernisation of itspacking facility which will be completed early next year.
The Dombivali unit has flexibility of producing multiple value added products mainlyfatty esters and amide used in personal and home care products.
Research and Development (R&D)
ln the year under consideration our R&D activities have resulted in the innovativeprocess improvements for existing range of products and also launch of several newproducts. Majority of these new products are high value derivatives of fatty acids andfatty alcohols with specialty applications in home personal care products animal feedsand agri products.
Besides our efforts to manufacture and improve the premium quality fatty acids andfatty alcohols using alternate raw materials the endeavor to develop new processesthrough innovations and advanced technologies will be an ongoing activity. We will alsocontinue to focus our attention on high value fractionated fatty acids and fatty alcoholsfor the polymer oilfield lubricant and paper industries. Parallel to all the above oleochemicals projects R&D continues its efforts in developing improved and customizedspecialty surfactants & biosurfactants through in house and external consultationroutes.
Human Resource Development and Industrial Relations
During the year under review industrial relations at all plant locations remainedharmonious.
Your Company emphasizes on the safety of people working in its premises. Structuredsafety meetings were held and safety programmes were organized for them throughout theyear.
The total number of persons employed in your Company as on March 31 2017 were 1164.
Business Responsibility Report
SEBI vide its circular SEBI/LAD-NRO/GN/2015-16/27 dated December 22 2015 had mandatedinclusion of Business Responsibility Reports (BRR) as part of the Annual Reports for top500 listed entities based on market capitalization as on March 31 of every financialyear.
A detailed report on your Company's sustainability initiatives is published in theBusiness Responsibility Report as Annexure B' and forms a part of this report. TheBRR describes the initiatives taken by the Company from an environment social andgovernance perspective.
Your Company has implemented Digital Signature to send digitally signed invoices tocustomers & enabled SMS alerts for dispatches which are integrated with SAP thushelping in better customer experience.
Implemented Odex Application at all our weighbridges which sends data online to DGFTsite which is a statutory requirement as per the SOLAS guidelines from D.G.Shipping theVGM Weight related information has to be transmitted electronically from theApproved/Registered Weighbridges.
Business Intelligence is implemented to get Financial Reports from SAP helping inautomation of processes.
Employee Stock Grant Scheme 2011 (ESGS) and Employee Stock Option Plan (ESOP)
On May 25 2016 the Nomination and Compensation Committee approved a total of 160395stock grants equivalent to 160395 equity shares of the Company to eligible employees interms of the ESGS 2011 Scheme. The exercise price is Rs. 1/- per equity share. As on March31 2017 and in terms of the ESGS Scheme 2011 a total of 148319 grants were vested and150941 were exercised and allotted. (Includes 2622 options which were vested in theprevious financial year and exercised and allotted in the current financial year.)
Disclosure in compliance with Section 62 of the Companies Act 2013 rule 12 ofcompanies (share capital and debentures) rules 2014 SEBI (Share based employee benefits)regulations 2014 and The SEBI (Employee Stock Options Scheme and Employee Stock PurchaseScheme) Guidelines 1999 is given in Annexure C attached and forms a part of this report.
Your Company is currently not accepting public deposits. The management of the Companyis thankful to all the investors for their continued trust in the Company. During the yearended March 31 2017 deposits aggregating Rs. 22.86 crore have been repaid on maturity.The Company has no overdue deposits other than unclaimed deposits.
Your Company's equity shares are available for dematerialization through NationalSecurities Depository Limited and Central Depository Services (India) Limited. As of March31 2017 99.81% of the equity shares of your Company were held in demat form.
In accordance with the Articles of Association of the Company the following directorsretire by rotation at the ensuing Annual General Meeting and being eligible offerthemselves for reappointment;
| Ms. T. A. Dubash ||(DIN 00026028) |
| Mr. A. B. Godrej ||(DIN 00065964) |
Your Company had appointed following Non-Executive (Independent) Directors pursuant toRegulation 17 of the Listing Regulations and they are not liable to retire by rotation asper Companies Act 2013 (the Act);
| Mr. S. A. Ahmadullah ||(DIN 00037137) |
| Mr. A. B. Choudhury ||(DIN 00557547) |
| Mr. K. K. Dastur ||(DIN 00050199) |
| Mr. K. M. Elavia ||(DIN 00003940) |
| Mr. A. D. Cooper ||(DIN 00026134) |
| Mr. K. N. Petigara ||(DIN 00066162) |
Your Company has received declarations from all the Independent Directors of theCompany confirming that they meet with the criteria of independence as prescribed undersub-section (7) of Section 149 of the Companies Act 2013
Your Company has conducted a formal Board Effectiveness Review as part of its effortsto evaluate identify improvements and thus enhance the effectiveness of the Board itsCommittees and Individual Directors. This was in line with the requirements mentioned inthe Act.
The HR team of the Company worked directly with the Chairman and the Nomination andCompensation Committee of the Board to design and execute this process which was adoptedby the Board. Each Board Member completed a confidential online questionnaire providingvital feedback on how the Board currently operates and how it might improve itseffectiveness.
The survey comprised four sections and compiled feedback and suggestions on:
Board Processes (including Board composition strategic orientation and teamdynamics);
Individual Board Members; and
The following reports were created as part of the evaluation:
Board Feedback Report;
Individual Board Member Feedback Report; and
Chairman's Feedback Report
The overall Board Feedback Report was facilitated by Mr. A. B. Godrej Chairman. TheIndividual Committees and Board Members' feedback was shared with the Chairman. Followinghis evaluation a Chairman's Feedback Report was also compiled.
On the recommendation of the Nomination & Compensation Committee the Board hadframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The details of the Board Appointment Policy are stated below:
Board Appointment Policy - Godrej Industries Limited (the "Company")
The Company is committed to equality of opportunity in all aspects of its business anddoes not discriminate on the grounds of nationality race colour religion castegender gender identity or expression sexual orientation disability age or maritalstatus.
The Company recognises merit and continuously seeks to enhance the effectiveness of itsBoard. The Company believes that for effective corporate governance it is important thatthe Board has the appropriate balance of skills experience and diversity of perspectives.
Board appointments will be made on merit basis and candidates will be consideredagainst objective criteria with due regard for the benefits of diversity on the Board. TheBoard believes that such merit-based appointments will best enable the Company to serveits stakeholders.
The Board will review this Policy on a regular basis to ensure its effectiveness.
Pursuant to Regulation 25(7) of the Listing Regulations the Company has familiarizedthe Directors on Goods & Service Tax and a presentation was made to the Directors onNew/Emerging products of the Company. The details of Directors familiarization program isuploaded on the Company's website. http://www.godrejindustries.com/listing-compliance.aspx
Key Managerial Personnel
Mr. N. B. Godrej (DIN: 00066195) has been reappointed as a Managing Director of theCompany for a period of three years from April 1 2017 to March 31 2020.
Pursuant to section 139 of the Companies Act 2013 the Board of the Company hassubject to the approval of the shareholders approved appointment of M/s. BSR & Co.LLP Chartered Accountants (Firm Regn. No. 101248W/W-100022) as Auditors of the Company tohold office for the period commencing from the conclusion of the 29th Annual GeneralMeeting (AGM) on August 11 2017 until the conclusion of the 34th AGM in the year 2022(subject to ratification of their appointment at every AGM) on a remuneration that willbe approved by the Board.
You are requested to approve the appointment of Auditors and to authorise the Board tofix their remuneration. The auditors M/s. BSR & Co. LLP Chartered Accountants areeligible for appointment. A certificate from the Auditors has been received to the effectthat their appointment if made would be within the prescribed limits. The Auditor'sReport for the FY2016-17 does not contain any qualification reservation adverse remarkor disclaimer.
Pursuant to the provisions of Section 148 and other applicable provisions if any ofthe Companies Act 2013 M/s. R. Nanabhoy & Co. Cost Accountants have been appointedas Cost Auditors of the Company for the FY2017-18. They are required to submit the reportto the Central Government within 180 days from the end of the accounting year.
The Board has appointed M/s. A. N. Ramani & Co. Practicing Company Secretaries toconduct Secretarial Audit for the FY2016-17. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed herewith marked as Annexure G' tothis Report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark.
The Audit Committee constituted pursuant to the provisions of the Act and the ListingRegulations has reviewed the accounts for the year ended March 31 2017. The members ofthe Audit Committee are Mr. K. K. Dastur Mr. S. A. Ahmadullah Mr. K. N. Petigara and Mr.A. B. Choudhury all Independent Directors.
Policy to Prevent Sexual Harassment at Work Place
Your Company is committed to creating and maintaining an atmosphere in which employeescan work together without fear of sexual harassment exploitation or intimidation. Asrequired under the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 your Company has constituted an Internal ComplaintsCommittee. No complaints were received by the committee during the year under review.Since the number of complaints filed during the year was NIL the Committee prepared a NILcomplaints report. This is in compliance with section 22 of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013.
Directors' Responsibility Statement
The Board has laid down Internal Financial Controls within the meaning of theexplanation to section 134 (5) (e) ("IFC") of the Act. The Board believes theCompany has sound IFC commensurate with the nature and size of its business. Business ishowever dynamic. The Board is seized of the fact that IFC are not static and are in fact afluid set of tools which evolve over time as the business technology and possibly evenfraud environment changes in response to competition industry practices legislationregulation and current economic conditions. There might therefore be gaps in the IFC asBusiness evolves. The Company has a process in place to continuously identify such gapsand implement newer and/or improved controls wherever the effect of such gaps might have amaterial effect on the Company's operations.
Pursuant to the provisions contained in Section 134 of the Act the Directors of yourCompany confirm:
a) that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures if any;
b) that such accounting policies have been selected and applied consistently and suchjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the profit or loss of the Company for that period;
c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company for preventing and detecting fraud and other irregularities;
d) that the annual accounts have been prepared on a going concern basis.
e) that the proper policies and procedures have been adopted for ensuring the orderlyand efficient conduct of its business including adherence to code of conduct andpolicies the safeguarding of assets the prevention and detection of frauds and errorsthe accuracy and completeness of the accounting records and the timely preparation ofreliable financial information and that such policies and procedures are adequate and wereoperating effectively.
f) that proper systems are in place to ensure compliance of all laws applicable to theCompany and that such systems are adequate and operating effectively.
As required by the existing Regulation 34(3) of the Listing Regulation a detailedreport on Corporate Governance is included in the Annual Report. The Auditors havecertified the Company's compliance of the requirements of Corporate Governance in terms ofRegulation 34(3) of the Listing Regulation and the same is annexed to the Report onCorporate Governance.
Disclosures and Information under the Companies Act 2013
Pursuant to section 134 and any other applicable sections of the Act followingdisclosures and information is furnished to the shareholders:
(a) Conservation of Energy Technology absorption and Foreign Exchange Earnings andOutgo
Annexure D' to this Report gives information in respect of Conservation ofEnergy Technology absorption and Foreign Exchange Earnings and Outgo required underSection 134(3)(m) of the Act and forms a part of the Boards' Report
(b) Extract of Annual return
The extract of the annual return as provided under sub section (3) of Section 92 of theAct is given in Form No. MGT 9 as Annexure E' attached and forms a part of thisreport.
(c) Board meetings
The Board of Directors of your Company met 4 (four) times during the year under review.The details of Board meetings and the attendance of the Directors are provided in theCorporate Governance Report.
(d) Loans Guarantees & Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the Financial Statements.
(e) Related Party Transactions
All related party transactions entered into by your Company during the financial yearwere on an arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with relatedparties. Prior omnibus approval of the Audit Committee was obtained for those transactionswhich were of routine nature. Accordingly the disclosure of Related Party Transactions asrequired under Section 134(3) (h) of the Act in Form AOC-2 is not applicable. Attention ofmembers is also drawn to the disclosure of transactions with related parties set out inNote No. 41 of Standalone Financial Statements forming part of the Annual Report. None ofthe Directors has any pecuniary relationships or transactions vis--vis the Company.
The policy on Related Party Transactions is uploaded on the Company's websitehttp://www.godrejindustries.com/Resources/pdf/compliances/Policy-on-Related-Party-Transaction.pdf.
(f) Particulars of Employees:
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 has been appended as Annexure F' to thisReport. The information required pursuant to Section 197 of the Act read with Rule 5(2)& (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of your Company is available for inspection by the members atregistered office of the Company during business hours on working days up to the date ofthe ensuing Annual General Meeting. If any member is interested in obtaining a copythereof such member may write to the Company Secretary whereupon a copy would be sent.
(g) Risk Management
Your Company had formed a Risk Management Committee consisting of the Managing Directorand the Whole time Directors. The Committee identifies evaluates business risks andopportunities. This Committee has formulated and implemented a policy on risk managementto ensure that the company's reporting system is reliable and that the company complieswith relevant laws and regulations. The Board of Directors of your Company are of theopinion that at present there are no elements of risks which may threaten the existenceof the Company.
Your Company has a vigil mechanism named Whistle Blower Policy to deal with instance offraud and mismanagement if any. The details of the Whistle Blower Policy are explained inthe Corporate Governance Report and also posted on the website of the Company.
(h) Nomination & Remuneration Policy for Senior Management
The details relating to ratio of the remuneration of each director to the medianremuneration of the employees of the Company for the FY2016-17 is given in AnnexureF' attached and forms part of this Report.
The policy of your Company on director's appointment and remuneration of the directorskey managerial personnel and other employees including criteria for determiningqualifications positive attributes independence of a director is stated below:
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year to which the financialstatement relates and the date of the report.
There are no qualifications reservations or adverse remarks in the Auditors Report andthe Secretarial Audit Report for the FY2016-17.
(j) Share Capital
During the year under review your company allotted 150941 equity shares of Rs. 1 eachupon exercise of stock option under Company's Employee Stock Grants Scheme and 38 bonusequity shares on ESGS in compliance with the scheme of amalgamation of Wadala CommoditesLimited with Godrej Industries Limited. Consequently the paid up share capital of yourCompany has increased from Rs. 335988807/- divided into 335988807 equity shares ofRs. 1 each to Rs. 336139786/- divided into 336139786 equity shares of Rs. 1 each.
(k) Significant Court Order received - None
The consolidated financial statements of the Company forms a part of this AnnualReport. Accordingly this Annual Report of your Company does not contain the financialstatements of its subsidiaries. The Audited Annual Accounts and related information of theCompany's subsidiaries will be made available upon request. These documents will also beavailable for inspection during business hours at the Company's registered office inMumbai India. The subsidiary companies' documents will also be available for inspectionat the respective registered offices of the subsidiary companies during business hours.
Your Directors thank the Union Government the Governments of Maharashtra and Gujaratas also all the Government agencies banks financial institutions shareholderscustomers employees fixed deposit holders vendors and other business associates whothrough their continued support and co-operation have helped as partners in yourCompany's progress.
For and on behalf of the Board of Directors
|A. B. Godrej || |
|Chairman ||Mumbai May 22 2017. |