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Grindwell Norton Ltd.

BSE: 506076 Sector: Engineering
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OPEN 514.95
52-Week high 589.85
52-Week low 384.00
P/E 35.06
Mkt Cap.(Rs cr) 5,624
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 514.95
CLOSE 511.00
52-Week high 589.85
52-Week low 384.00
P/E 35.06
Mkt Cap.(Rs cr) 5,624
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Grindwell Norton Ltd. (GRINDWELL) - Director Report

Company director report

Dear Members

Your Directors present the 68th Annual Report of the Company along with theaudited financial statements for the year ended March 312018.


(Rs crores)



2017-18 2016-17 2017-18 2016-17
Sale of Products (Gross) 1329.92 1259.43 1355.48 1286.16
Service & Other Operating Income 127.28 110.38 125.25 108.49
Less: Excise Duty (22.81) (100.44) (22.81) (100.44)
Revenue from Operations 1434.39 1269.37 1457.92 1294.21
Operating Profit 223.16 173.85 229.00 181.72
Interest 1.05 1.10 1.53 2.00
Profit before Tax 222.11 172.75 227.47 179.72
Provision for Tax 74.95 56.74 76.58 58.83
Profit for the year 147.16 116.01 150.89 120.89
Other Comprehensive Income (0.14) 10.46 (0.14) 10.51
Total Comprehensive Income for the year 147.02 126.47 150.75 131.40
Less: Share of Minority Interest - - (1.14) (1.49)
Total Comprehensive Income attributable to owners 147.02 126.47 149.61 129.91

The Company proposes to transfer an amount of Rs 7.36 crores to General Reserve. Anamount of Rs 139.66 crores is proposed to be retained in the Statement of Profit and Loss.


Your Directors are pleased to recommend for approval of the Members a dividend of Rs5/- per equity share of face value of Rs 5/- (Rupees five only) each for the financialyear ended March 312018. The dividend on equity shares if approved by the Members wouldinvolve a cash outflow of'66.74 crores including dividend tax as against the cashoutflow of' 53.31 crores in the previous year.


The uncertainty caused by the implementation of the Goods and Services Tax("GST") adversely impacted growth in the first half of the fiscal year. The newIndex for Industrial Production ("IIP") which was released in April 2017 wherethe base year was 2011-12 and the basket of goods has been changed to make it morerepresentative witnessed low growth between April and October (average of ~2.5%). Sincethen however growth has been strong. The significant increase from November onwards ispartly on account of a low base partly on account of re-stocking of the channelinventories post-GST and partly on account of a partial revival led by the auto sector.While growth increased inflation and the exchange rate remained relatively stable. On theother hand investment in the economy remained at a record low level. Reflecting thisyour Company's revenue from operations and operating profit increased by 12.6% and 25.9%respectively overthe previous year.

• Abrasives

After witnessing barely any growth in the first half the Abrasives business bouncedback in the second half and delivered double-digit growth. This was partly on account ofhigher level of industrial activity and partly on account of re-stocking of the channelinventories post-GST. Meanwhile the business continued to focus on new products and newmarkets. Overall in 2017-18 sales of the Abrasives business grew by 8.1%. Most of thisgrowth was on account of volumes which led to an increase of 10.5% in operating profitswhile the operating margin remained at the same level.

• Ceramics & Plastics

After facing severe headwinds for a few year (excess global supply and low prices) theworst seems to be over for the Silicon Carbide business which witnessed growth in salesand operating profits albeit on a low base. The Tirupati plant benefited from improvedavailability of power in the first half of the year. The High Performance Refractoriesbusiness witnessed strong growth in domestic sales and even stronger growth in exports.Overall the business delivered higher sales and profits. The Performance Plastic businesshad an excellent year with sales and profits growing significantly. The ADFORS businesswas stable. Overall in 2017-18 sales and operating profit of the Ceramics & Plasticsbusinesses grew by 21% and 67% respectively over the previous year.

• Others

The "Others" segment includes INDEC (the captive IT Development Centre thatprovides services to the Saint-Gobain Group globally) the Projects division and a Tradingdivision (that primarily trades in roofing and siding products of CetainTeed CorporationUSA an affiliate of your Company). All these activities witnessed an increase in revenuesand profits in 2017-18.


The Company has one subsidiary in Bhutan Saint-Gobain Ceramic Materials Bhutan PrivateLimited. In terms of sub-regulation (1) (c) of Regulation 16 of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("Listing Regulations") it is not a material subsidiary.

The operations of your Company's subsidiary in Bhutan were stable. In accordance withSection 129 (3) of the Companies Act 2013 ("Act") and Rule 5 of the Companies(Accounts) Rules 2014 and relevantAccounting Standards ("AS") the Company hasprepared consolidated financial statements of the Company and its subsidiary Companywhich forms part of the Annual Report. A statement in Form AOC-1 containing salientfeatures of the financial statements of the subsidiary Company is also included in theAnnual Report. In accordance with the provisions of Section 136(1) of the Act the AnnualReport of the Company containing therein the standalone and consolidated financialstatements and audited financial statements of the subsidiary has been placed on thewebsite of the Company Shareholders interested in obtaining a copy of the audited financial statements of thesubsidiary may write to the Company Secretary at the Company's Registered Office.


While the long term outlook for the Indian economy remains very positive the shortterm outlook is somewhat uncertain. The last few months have witnessed higher growth butit is far from clear that this higher growth rate will be sustained. Investment demandremains low. Bank balance sheets remain stressed. Global oil prices have risen. The Goodsand Services Tax remains a work-in-process. Having said that there are several positives:there are signs that capacity utilization is increasing and the investment cycle willrevive inflation is expected to remain low and the Rupee is expected to depreciategradually exports have resumed growth. In the balance there is a greater likelihood ofhigher industrial growth in the new fiscal. Your Company's management will continue tofocus on new productsnew markets and exports to sustain growth even as it implementsplans to improve productivity across its businesses. More important your Company'sbusinesses are facing severe pressures on account of rising input costs (mainly rawmaterials and energy) and as such increasing prices in 2018-19 will be an overarchingpriority.


There have been no material changes or commitments affecting the financial position ofthe Company which have occurred between the end ofthe financial year and the date oftheReport.


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


Employee relations were cordial and productive at all sites of your Company. At the endof the financial year there were 1820 employees. During the year a new productivityenhancing wage agreement was concluded with the workers' union at Mora. Your Directorsplace on record their appreciation for the contribution made by all employees in theprogress of your Company.

The Company follows the best practices in hiring and on-boarding of employees. TheCompany adopts a fair and transparent performance evaluation process. In order to improveorganizational efficiency and employee engagement various change initiatives wereundertaken during the year. To ensure this and also to improve skill levels employeesparticipate in various training programmes and complete mandatory e-learning courses. Oneimportant initiative launched during the year was the adoption of Saint-Gobain Attitudes.

Your Company is committed to create and sustain a positive workplace environment freefrom discrimination and harassment of any nature. The Company believes that all employeeshave a right to be treated with respect and dignity and has zero tolerance towardsviolations of its Code of Conduct in general and its sexual harassment policy inparticular. During the year the Company received one complaint of sexual harassment andthe same has been resolved by taking appropriate action.


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Act and read with Rule 8 ofthe Companies (Accounts) Rules 2014 is set out in the Annexure 1 to this Report.

Your Company is committed to ensure a clean and green pollution-free environment aswell as a safe and healthy work place at all plant locations and work sites. Your Companystrictly abides by the Saint-Gobain Group's Environment Health and Safety Charter and thepolicies and procedures framed under it. All the plants of your Company are certifiedunder ISO 9001 ISO 14001 and OHSAS 18001. These certifications and various awards arerecognition of the efforts made and results achieved by your Company in improving theEnvironment Health and Safety at all its work sites.


Disclosures pertaining to remuneration and other details as required under Section 197of the Act read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure 2(A) to this Report.

The Statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required under Section 197(12) of the Act read with Rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in a Annexure 2(B) forming part of this Report. Further the Annual Report isbeing sent to the Members excluding the aforesaid Annexure 2(B). In terms of Section 136of the Act the said Annexure is open for inspection at the Registered Office of theCompany. Any Member interested in obtaining copy of the same may write to the CompanySecretary. The full Annual Report including the aforementioned information is available onthe website of the Company


The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.


In terms of the provisions of the Act Mr. Pradip Shah Mr. Keki M. Elavia and Mr.Shivanand Salgaocar have been appointed as Independent Directors at the Annual GeneralMeeting ("AGM") held on July 23 2014 for a term of five (5) consecutive yearscommencing from July 23 2014. They have submitted a declaration that each of them meetthe criteria of independence as provided in Section 149 (6) of the Act and Regulation16(1) (b) of the Listing Regulations. There has been no change in circumstances affectingtheir status as an Independent Director during the year.

Due to other professional commitments Mr. Jean-Pierre Floris resigned as a member ofthe Board with effect from December 7 2017. The Directors place on record theirappreciation for the valuable contribution made by him during his long tenure as aDirector of your Company.

In accordance with the Act and the Articles of Association of the Company Ms.Marie-Armelle Chupin Director retires by rotation and being eligible has offeredherself for re-appointment. The Board recommends the re-appointment of Ms. Marie-ArmelleChupin. Her brief profile and her experience is disclosed in the Notice convening the AGM.

Pursuant to Section 203 of the Act the Key Managerial Personnel of the Company are:Mr. Anand Mahajan Managing Director Mr. Krishna Prasad Executive Alternate Director toMs. Marie-Armelle Chupin w.e.f. May 23 2017 Mr. Deepak Chindarkar Chief FinancialOfficer and Mr. K. Visweswaran Company Secretary. During the year there has been nochange in the Key Managerial Personnel.

None of the Directors or Key Managerial Personnel has any pecuniary relationships ortransactions with the Company other than salaries commission sitting fees andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.


The purpose of the programme is aimed to familiarise the Independent Directors with theCompany the nature of the industry in which the Company operates and the business model ofthe Company. The details of the familiarisation programme imparted to the IndependentDirectors are available on the Company's website The Independent Directors are regularlybriefed with respect to the developments that are taking place in the Company and itsoperations.


The Board meets at regular intervals to review the Company's businesses and to discussstrategy and plans. A tentative annual calendar of meetings is circulated to the Directorsin advance to enable them to plan their schedule and to ensure effective participation.

During the year five board meetings were held and one meeting of Independent Directorswas also held. The maximum interval between the board meetings did not exceed the periodprescribed under the Act and the Listing Regulations.


During the year in accordance with the Act and Regulation 18 to 21 of the ListingRegulations the Board has constituted or reconstituted its Committees. Currently theBoard has the following Committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

• Share Transfer Committee

Details of the Committees their constitution meetings and other details are providedin the Corporate Governance Report.


To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134 of the Act:

i. that in the preparation of the annual financial statements for the year ended onMarch 31 2018 the applicable accounting standards have been followed along with properexplanations relating to material departures if any;

ii. that such accounting policies have been selected and applied consistently andjudgments 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 yearon March 31 2018 and of the profit of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv. that the annual financial statements have been prepared on a ‘going concern'basis;

v. that proper internal financial controls are in place and that such internalfinancial controls are adequate and are operating effectively;

vi. that proper systems to ensure compliance with the provisions of all applicable lawsare in place and that such systems are adequate and are operating effectively.

With reference to the point number (v) the Board believes the Company has soundInternal Financial Controls ("IFC") commensurate with the nature and size of itsbusiness. However business is dynamic and the IFC are not static and evolve over time asthe business technology and fraud environment changes in response to competitionindustry practices legislation regulation and current economic conditions. There willtherefore be gaps in the IFC as business evolves. The Company has a process in place tocontinuously identify such gaps and implement newer and/or improved controls wherever theeffect of such gaps would have a material effect on the Company's operations.


Your Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by The Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.


The Nomination and Remuneration Committee has laid down the criteria for Directors'appointment and remuneration. These are set out in the Nomination and Remuneration Policywhich is annexed as Annexure 3 to this Report.


The Board on the recommendation of the Nomination and Remuneration Committee hasadopted a framework for performance evaluation of the Board its committees individualdirectors and the chairperson through a survey questionnaire. The survey questionnairebroadly covers various aspects of board functioning composition of Board and itscommittees culture execution and performance of specific duties obligation andgovernance. The performance of the Board its committees individual directors andchairperson were reviewed by the Board and Nomination and Remuneration Committee. Theindependent directors evaluated the performance of non-independent directors chairpersonand Board as a whole.


All related party transactions entered during the financial year were in the ordinarycourse of business and on an arm's length basis. During the year the Company has notentered into any contract/arrangement/transaction with related parties which would beconsidered material as prescribed under the Act and Regulation 23 of the ListingRegulations.

Prior approval of the Audit Committee is obtained for all related party transactions.The Audit Committee monitors on a quarterly basis the related party transactions enteredvis-a-vis the related party transactions approved by the Audit Committee.

The policy on related party transactions as approved by the Board is available on thewebsite of the Company There are no transactions that arerequired to be reported in Form AOC-2.

The details of the transactions with related parties are provided in the accompanyingfinancial statements.


It is your Company's belief that its primary goal is to serve the needs of itscustomers and in the process of doing so to generate employment livelihood and incomefor all its stakeholders (suppliers vendors service providers employees lendersshareholders etc.) and at the same time to contribute to the revenues of the Government.Further it is your Company's belief that by pursuing its primary goal and by ensuringthat its business practices meet the highest standards of corporate governance and ethicsit best fulfills its obligations and responsibility to the society. Against the backdropof this belief your Company is committed to implement the agenda set out in its CSRpolicy. The CSR policy and initiatives taken during the year in the format prescribedunder the Companies (Corporate Social Responsibility Policy) Rules 2014 are set out inAnnexure 4 to this Report. In accordance with Section 135 of the Act a Corporate SocialResponsibility Committee of the Board having an Independent Chair has been constitutedto monitor the CSR policy and programs. The amount spent on eligible CSR activity for thefinancial year 2017-18 was around 0.64% ofthe average profit of the Company during thethree immediately preceding financial years.


Dividend Distribution Policy of the Company as required under the Listing Regulationswas adopted to set out the parameters and the circumstances that will be taken intoaccount by the Board in determining the distribution of dividend to its shareholders. Thepolicy is annexed as Annexure 5 to this Report and is also available on the Company'swebsite at


Your Company recognises that managing risk is an integral part of the good managementpractice and an essential element of good corporate governance. It aims to have a commonformalised and systematic approach for managing risk and implementing a risk managementprocess across the Company. The intent of the policy is to ensure the effectivecommunication and management of risk across all risk categories. The Company hasidentified elements of risk which may threaten the existence and financial position ofthe Company which are set out in the Management Discussion and Analysis Report.

The Company's Internal Financial Control systems are commensurate with the nature ofits business financial statements and the size and complexity of its operations. Theseare routinely tested and certified by the Statutory as well as Internal Auditors.Significant audit observations and follow up actions thereon are reported to the AuditCommittee.


Your Company has adopted and disseminated its Whistle Blower Policy to provide a secureenvironment and encourage employees to report unethical unlawful or improper practicesacts or activities and to prohibit any adverse personnel action against those who reportsuch practices acts or activities in good faith.

The Whistle Blower Policy is available on the website of the


a. Statutory Auditors

M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016)were appointed as Statutory Auditors of your Company at the 67th AGM of theCompany held on July 26 2017 till the conclusion of the 72nd AGM of theCompany to be held in the year 2022. As per provisions of the Section 139 of the Act theappointment of Auditors is required to be ratified by the Members at every AGM.

In accordance with the Companies Amendment Act 2017 enforced on May 7 2018 by theMinistry of Corporate Affairs the appointment of Statutory Auditors is not required to beratified at every AGM.

b. Cost Auditor

In accordance with Section 148 of the Act and Rules framed thereunder the cost auditrecords are maintained by the Company in respect of the products which are required to beaudited. Your Directors on recommendation of the Audit Committee appointed M/s. RaoMurthy & Associates Cost Accountants (Firm Registration No. 000065) to conduct theaudit of the cost records maintained by the Company for the financial year ending March31 2019. M/s. Rao Murthy & Associates Cost Accountants have under Section 139(1)of the Act and the Rules framed thereunder furnished a certificate of their eligibilityand consent for appointment.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditoras recommended by the Audit Committee and approved by the Board has to be ratified by theMembers of the Company. Accordingly an appropriate resolution forms part of the Noticeconvening the AGM. The Board seeks your support in approving the proposed remuneration ofRs 200000/- (Rupees two lakhs only) plus taxes and out of pocket expenses at actualspayable to the Cost Auditor for the financial year ending March 31 2019.

M/s. Rao Murthy & Associates Cost Accountants have vast experience in the fieldof cost audit and have conducted the audit of the cost records of the Company for the pastseveral years.

c. Secretarial Auditor

In accordance with Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. Parikh& Associates Company Secretaries to undertake the Secretarial Audit of the Companyfor the financial year ended March 31 2018. The Secretarial Audit Report for thefinancial year ended March 312018 in Form No. MR-3 is set out in Annexure 6 of thisReport.

The Board has also appointed M/s. Parikh & Associates Company Secretaries asSecretarial Auditor to conduct Secretarial Audit ofthe Company for the financial year2018-19.


There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Price Waterhouse Chartered Accountants LLP Statutory Auditors in their Auditors'Report and by M/s. Parikh & Associates Secretarial Auditor in their SecretarialAudit Report.

The Auditors have not reported any incident of fraud to the Audit Committee of theCompany in the year under review.


The extract of annual return in Form No. MGT-9 is attached as Annexure 7 to thisReport. The extract of annual return is also available on the Company's


As per Regulation 34 Schedule V of the Listing Regulations the Corporate GovernanceReport with the Practising Company Secretaries' Certificate thereon and the ManagementDiscussion and Analysis Report are annexed and forms part of this Report.


In compliance with Regulations 34 of the Listing Regulations a Business ResponsibilityReport is annexed as part of this Report.


There has been no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company's operations in the future.


Your Directors take this opportunity to acknowledge with sincere gratitude thesupport of its esteemed customers the strength it derives from its association withCompagnie de Saint-Gobain and its subsidiaries the continued support and co-operationfrom its employees Bankers and the loyalty of the large family of the Company's DealersSuppliers and valued Shareholders.

For and on behalf of the Board of Directors
Mumbai May 30 2018 Chairman Managing Director