To the Members,
The Directors have pleasure in presenting the Annual Report along with the Audited Accounts for the Financial Year ended March 31, 2017.
Review of Operations
Your Company’s performance during the year as compared with that during the previous year is summarized below:
(Rs, Crore) (Rs, Crore)
Year Ended March 31 Year Ended March 31
Revenue from Operations
Other Income/Exceptional Items
Total Expenditure other than Finance Costs and Depreciation and Amortization
Profit before Finance Costs, Depreciation and Amortization and Tax
Depreciation and Amortization Expense
Profit before Finance Costs and Tax
Finance Costs (net)
Profit before Tax
Provision for Current Tax
Provision for Deferred Tax
Surplus brought forward
Profit after Tax available for appropriation
Your Directors recommend appropriation as under:
Final Dividend including DDT
Dividend excess provided in earlier years
Interim dividend declared and paid
DDT on interim dividend distributed
Dividend Distribution Tax (DDT) credit from subsidiaries
Transfer to General Reserve
Surplus Carried Forward
The Board of Directors of your Company recommended a dividend of Rs, 1.75 per equity share of Rs, 1/each, aggregating Rs, 58.82 Crore as final dividend for the year ended March 31, 2017.
The Dividend policy of the Company is uploaded on the Company''''s website. http://www.godreiindustries.com/listing-compliance.aspx
INDUSTRY STRUCTURE AND DEVELOPMENT
The global economy produced a lackluster run in 2016 with global output growth estimate at about 3.1%. This stable average growth rate, masks divergent developments in different country groups. There has been a stronger-than-expected pickup in growth in advanced economies, due mostly to a reduced drag from inventories and some recovery in manufacturing output. In contrast, it is matched by an unexpected slowdown in some emerging market economies, mostly reflecting idiosyncratic factors. Forward-looking indicators such as purchasing managers’ indices have remained strong in the fourth quarter in most areas.
Going forward, the IMF expects the world economy to grow at a slightly faster rate of 3.4% 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 projected to 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 pegging the 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 developments, the passage of the Constitutional amendment, paving the way for implementing the Goods and Services Tax (GST), and the action to demonetize the two highest denomination notes. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth. Demonetization has had short-term costs but holds the potential for long-term benefits. Follow-up actions to minimize the costs and maximize the benefits include: fast, demand-driven, demonetization; further tax reforms, including bringing land and real estate into the GST, reducing tax rates and stamp duties; and acting to allay anxieties about over-zealous tax administration. Other major reforms included enactment of the 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; and several 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 successive droughts, with the first advance estimates pegging the growth rate to be 4.1%. This was on the back of a normal monsoon, implementation of credit and other financial schemes, irrigation fund with NABARD and better support through higher MSP. During the South West Monsoon of 2016 the country as a whole received rainfall which was 97% of its long period average. However, wide regional and crop-wise variations continued to be seen in coverage of irrigated area. As per the Advance Estimates, production of kharif food-grains during FY2016-17 increased by 8.8% as against FY2015-16. During FY2016-17, area sown under all kharif crops taken together was 3.5% higher compared to FY2015-16 while area coverage under rabi crops was 5.9% higher than that of last year. The area coverage under wheat as on 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 of crop insurance (Fasal Bima Yojana), expansion of National Agricultural Markets (e-NAM) and added support to animal husbandry and dairy will provide adequate support for growth in this sector.
Volatility in commodity prices continued to affect the oleo-chemicals industry throughout the year. The global over-capacity in fatty alcohols with low growth rates in advanced economies has resulted in subdued demand of fatty alcohols. With re-monetization and 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 in FY2016-17. The marginal increase in absorption during first two quarters was more than offset by demonetization in the subsequent two quarters. We are, however, optimistic about the future prospects of the Industry on account of economic and fiscal policy measures being implemented by the government. A sustained GDP growth momentum, reduction in interest rates and subsidies in affordable housing segment are expected to strengthen the volume demand going forward. On the other hand, structural policy reforms in form of real estate regulatory laws are expected to bring more customers to market by facilitating a transparent and controlled regulatory environment. This is expected to eventually boost demand thereby easing the supply pressure in the market. Office space absorption levels have increased last year compared to FY2015-16 and the trend is expected to continue in FY2017-18 on the back of improved business conditions and GDP growth.
There is a separate section on Management Discussion and Analysis appended as Annexure A 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, dairy and 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 business company^^ interests in animal feed, crop protection, dairy and oil palm business along with Joint Venture with the^^^^H 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. A normal monsoon after two back-to-back poor monsoons provided much needed boost to the agri sector.
GAVL was also positively impacted by these conditions as evident in its financial performance. GAVL integrated Astec Life Sciences Limited (Astec) and Cream line Dairy Products Limited (Cream line), with FY2016-17 financials, reflecting the full year performance of these two companies.
In FY2016-17, GAVL recorded consolidated revenue of Rs, 4,985 crore against Rs, 3,819 crore, a growth of 31% over FY2015-16 consolidated revenue. The reported Profit Before Tax for the year was up by 12% to Rs, 375 crore in FY2016-17 against Rs, 335 crore in FY2015-16. The financial numbers are as per IND AS.
The Animal feed business had a flat year, with revenues growing at 3%, due to head winds faced in certain feed categories. While Cattle feed, Layer feed and Fish feed recorded robust growth, the business had flat sales in Shrimp Feed and volumes declined in Broiler feed. Integration as an operating business model had gained ground in Broiler business in the last five years. The prevalence has increased to an extent that majority of the broiler market share has been captured by Integrators. GAVL is working on multiple solution themes to improve its Broiler feed play in coming years. Good monsoons had led to increase in Kharif and Rabi crops. Keeping the critical raw materials prices muted in the second 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 Astec helped clock the Crop protection business, a growth of 54% in sales in FY2016-17. The business reported sales of Rs, 765 Crore in FY2016-17. The business started sales of Astec''''s product portfolio in FY2016-17 and has seen its market share improve across the Azole product fungicide portfolio.
Both Crude Palm Oil and Palm Kernel Oil prices in FY2016-17 were robust which resulted in 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 Oil Palm Biomass into value added product was also commissioned in FY2016-17.
Astec Life Sciences Limited & Its Subsidiaries:
FY2016-17 was GAVL''''s first full year of operations at Astec. Astec recorded Total Income of Rs, 316 Crore in FY2016-17, a growth of 24% over FY2015-16. Astec saw growth in both Enterprise & Bulk sales and Contract Manufacturing. Astec successfully implemented SAP in FY2016-17 and streamlined all the business processes around it to ensure smoother business operations in future.
Cream line Dairy Products Limited & Its Subsidiary:
FY2016-17 was a robust milk year, with Cream line recording Total Income of Rs, 1,019 Crore, a growth of 9% over FY2015-16. Cream line’s focus on Value added products has started yielding results with the sales of the products portfolio increasing by 24% in FY2016-17 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 FY2016-17 over 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 in FY2015-16. The focus of the business will continue to remain investing and building the ‘Real Good Chicken'''' and ‘Yummiez'''' brands for future growth.
Financial Highlights: For the full financial year, GPL’s Total Income decreased by 24% and stood at Rs, 1,733 crore. However, EBITDA increased by 42% to Rs, 401 crore and net profit increased by 30% to Rs, 207 crore. An important contributor to the strong profit growth has been our flagship project ‘The Trees’ which attained revenue recognition much ahead of schedule.
Sales Highlights: From a sales perspective, despite a weak year on the whole due to regulatory approval delays resulting in a low number of new residential project launches, the projects which we were able to launch received an encouraging response. GPL registered booking volume of 3.1 million sq. ft. and booking value of Rs, 2,020 crore in a weak real estate 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, 300 crore in a single day
- Sold more than 1 million sq. ft. with a booking value of Rs, 563 crore despite weak market conditions
- Serves as a reflection of GPL’s brand strength, sales capability and ability to successfully attract customers across the country’s leading real estate markets.
Godrej Greens, Pune:
- Witnessed an overwhelming customer response despite being launched immediately after the government’s demonetization announcement
- Sold 420,088 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 for business 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 has changed the structural dynamics of the real estate sector. The sector is likely to see a shift towards organized developers as non-serious players with low repute will find it difficult to comply with the increased scrutiny from regulators and home buyers. This will pave way for consolidation in the sector as landowners seek to partner with reputable developers through the joint development model, and cash starved developers monetize their land banks by selling it to developers with strong balance sheets with access to institutional funding. We remain well placed to capitalize on these opportunities in the business development space. GPL’s strong brand and solid governance framework provides us with a strong advantage in increasing the depth of our presence across the country''''s leading real estate markets while maintaining a capital light development strategy.
Strong focus on execution: GPL has delivered 4.6 million square feet in FY2016-17, which includes 3.3 million square feet of residential and 1.3 million square feet of commercial space across four cities. We have now delivered over 15 million sq. ft. of real estate in the last 4 years, which demonstrates that our operational delivery is keeping pace 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-driven organization which assesses Environmental, Social and Governance (ESG) performance of real estate assets globally. GRESB is committed to rigorous and independent evaluation of the sustainability performance of real assets across the globe. GRESB data is used by more than 200 institutional investors, listed property companies and fund managers and is backed by all leading international real estate associations and industry bodies. It provides investors the tools to benchmark their investments against each other based on property type, country and regional peer groups. GRESB is widely recognized as the global standard for portfolio-level ESG reporting and benchmarking in the real asset sector. In addition, Godrej One, our headquarters received a LEED Platinum Rating under the Commercial Interiors segment from the US Green Building Council (USGBC). This is one of the first such certifications in the country.
Expanding international presence: GPL opened its second international representative office in Singapore. Singapore is an important market opportunity for GPL and our presence will help us to address the needs of the large Indian diaspora located in Singapore and neighboring geographies.
Outlook: The real estate sector is in the midst of a transition. A cyclical downturn combined with demonetization and the implementation of the Real Estate Regulation Act has created short-term uncertainty in the sector. However these same factors will lead to consolidation and improved governance in the sector, which in turn will drive improved consumer confidence. The combination of this improved consumer confidence with far improved affordability that is the result of rising incomes, stagnant prices, and reduced interest rates will propel the sector in a very positive direction over the next several years. The government has put in place many policy reforms to encourage real estate development, especially in the affordable housing space which have the potential to lead to sustained improvements in the sector. We expect 2017 to be a transition year but the years ahead are likely to be very exciting ones for the sector. Our brand, national presence, demonstrated track record, and capabilities put us in a strong position to disproportionately benefit from any improvement in the environment and will allow us to remain on a high growth trajectory in the years ahead.
Natures Basket Limited continues to grow its revenue at double digits thereby achieved Total Income of Rs, 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 the business. As part of the strategy the management decided to exit out of the underperforming market of Delhi and Hyderabad. Post the exit, the Company has 26 operating stores across 3 cities of Mumbai, Pune and Bangalore. As part of the strategy, NBL has also realigned the portfolio allowing to position NBL as the “Daily Food Delight” stores on the base of providing the “Freshest and Finest” food to our customers. This helps improve frequency and loyalty of our customers. Overall revenue from loyal customers contribute nearly 80% of overall revenue.
The focus is to excel and be a leading Omni Channel player by focusing strongly on Instore as well on line business channels in Daily Food Delight space. Currently, NBL''''s online sales stands at 7% of its overall sales. NBL continues to improve its website and App experience through regular updates and improvements.
During the year, NBL has set up a Supply Chain Function to improve overall availability and inventory management, and use of technology for improving in store processes.
The brand continues to win awards in forums like Food & Grocery forum, Franchise India Retail Award for Omni Chanel performance, TRRAIN awards for Customer service etc.
Godrej Consumer Products Limited, an associate of your Company, has continued to grow ahead of the overall FMCG sector, as well as the home and personal care categories that it participates in, despite a challenging macro environment.
On a consolidated basis, GCPL reported a Total Income of Rs, 9,684 crore during the FY2016-17 compared to Rs, 8837 crore for FY2015-16. The net profit grew by 58% at Rs, 1304 crore 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 Group, GCPL is fortunate to have a proud legacy built on the strong values of trust, integrity and respect for others. At the same time, it is growing fast and has exciting, ambitious aspirations.
Today, the Godrej Group enjoys the patronage of 1.1 billion consumers globally, across different businesses. In line with its 3 by 3 approach to international expansion, GCPL is building a presence in 3 emerging markets (Asia, Africa, Latin America) across 3 categories (home care, personal wash, hair care). It ranks among the largest household insecticide and hair care players in emerging markets. In household insecticides, it is the leader in India, the second largest player in Indonesia and expanding its footprint in Africa. It is the leader in serving the hair care needs of women of African descent, the number one player in hair colour in India and Sub-Saharan Africa, and among the leading players in Latin America. It also ranks number two in soaps in India, and is the number one player in air fresheners and wet tissues in Indonesia.
However, it is very important that besides its strong financial performance and innovative, muchloved products, GCPL remains a good company. About 23% of the holding company of the Godrej Group is held in a trust that invests in the environment, health and education. We are also bringing together our passion and purpose to make a difference through 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 an inspiring workplace, with an agile and high performance culture. It is also deeply committed to recognizing 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 in Asia 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 wholly owned subsidiary of the company. GINL trades worldwide in vegetable oils mainly palm and soya.
Godrej International Trading & Investments Pte. Ltd. is registered and located in Singapore 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 best year ever. Our international companies are often quoted in the media and are well-known for 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 your Company, 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 EHFL during 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 disclosure requirements) Regulations, 2015 (Listing Regulations), your Company has formulated a policy for determining its ‘material subsidiaries’. The said policy has been uploaded on 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, 2,862 crore as compared to Rs, 2,658 crore for the previous year. The net debt equity ratio is 1.76 as compared to 1.51 last year. Your Company continues to hold the topmost rating of [ICRA] A1 from ICRA for its commercial paper program (Rs, 1000 crore) (previous year Rs, 1000 crore). ICRA has reaffirmed an [ICRA] A1 rating for its short term debt instruments/other banking facilities (Rs, 800 crore) (previous year Rs, 800 crore). This rating of ICRA represents highest-credit quality carrying lowest-credit risk. ICRA also reaffirmed [ICRA] AA rating with stable outlook for long-term debt, working capital and other banking facilities (Rs, 1015 crore) (previous year Rs, 1015 crore) and a rating of [ICRA]AA with stable outlook for Non Convertible Debenture program. These ratings represents high-credit quality carrying low-credit risk. ICRA has also assigned a rating of MAA with stable outlook for our Public Deposit scheme. The Public Deposit scheme under the Companies Act, 1956 has been discontinued. Instruments with this rating are considered to have the high-credit quality and low credit risk.
The chemicals division of your Company has manufacturing units at Abernathy, Valia, Wadala and Dombivli.
The Ambernath factory is IS0-9001:2008, ISO 14001:2004, ISO 18001:2007, ISO 27001: 2005 certified. Over the last year the factory also got certified for FSSC 22000 and ISO 22716 for Food safety and GMP respectively. The factory has also achieved considerable energy savings over the year.
The Valia factory is ISO-9001:2008, ISO 14001:2004, ISO 18001:2007, ISO 27001: 2005 certified. The Factory has also got certification from FDA, FSSAI and Kosher. We are member of RSPO (Roundtable on Sustainable Palm Oil). The Valia factory haS successfully got GMP B2 certification for Palmitic Acid used as Animal Feed during this year. Company has 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 ever growing health conscious consumers. The division is in the process of modernization of its packing facility which will be completed early next year.
The Dombivali unit has flexibility of producing multiple value added products, mainly fatty 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 innovative process improvements for existing range of products and also launch of several new products. Majority of these new products are high value derivatives of fatty acids and fatty alcohols, with specialty applications in home, personal care products, animal feeds and agri products.
Besides our efforts to manufacture and improve the premium quality fatty acids and fatty alcohols using alternate raw materials, the endeavor to develop new processes through innovations and advanced technologies will be an ongoing activity. We will also continue to focus our attention on high value fractionated fatty acids and fatty alcohols for the polymer, oilfield, lubricant and paper industries. Parallel to all the above oleo chemicals projects, R&D continues its efforts in developing improved and customized specialty surfactants & biosurfactants through in house and external consultation routes.
Human Resource Development and Industrial Relations
During the year under review, industrial relations at all plant locations remained harmonious.
Your Company emphasizes on the safety of people working in its premises. Structured safety meetings were held and safety programmes were organized for them throughout the year.
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 mandated inclusion of Business Responsibility Reports (BRR) as part of the Annual Reports for top 500 listed entities based on market capitalization as on March, 31 of every financial year.
A detailed report on your Company’s sustainability initiatives is published in the Business Responsibility Report, as ‘Annexure B’ and forms a part of this report. The BRR describes the initiatives taken by the Company from an environment, social and governance perspective.
Your Company has implemented Digital Signature to send digitally signed invoices to customers & enabled SMS alerts for dispatches which are integrated with SAP thus helping in better customer experience.
Implemented Odex Application at all our weighbridges which sends data online to DGFT site which is a statutory requirement as per the SOLAS guidelines from D.G.Shipping, the VGM Weight related information has to be transmitted electronically from the Approved/Registered Weighbridges.
Business Intelligence is implemented to get Financial Reports from SAP helping in automation 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 1,60,395 stock grants equivalent to 1,60,395 equity shares of the Company to eligible employees in terms of the ESGS 2011 Scheme. The exercise price is Rs, 1/- per equity share. As on March 31, 2017 and in terms of the ESGS Scheme, 2011, a total of 1,48,319 grants were vested and 1,50,941 were exercised and allotted. (Includes 2,622 options which were vested in the previous financial year and, exercised and allotted in the current financial year.)
Disclosure in compliance with Section 62 of the Companies Act, 2013, rule 12 of companies (share capital and debentures) rules, 2014, SEBI (Share based employee benefits) regulations, 2014 and The SEBI (Employee Stock Options Scheme and Employee Stock Purchase Scheme) 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 Company is thankful to all the investors for their continued trust in the Company. During the year ended 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 National Securities Depository Limited and Central Depository Services (India) Limited. As of March 31, 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 directors retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for reappointment;
- Ms. T. A. Dubash (DIN 00026028)
- Mr. A. B. Godrej (DIN 00065964)
Your Company had appointed following Non-Executive (Independent) Directors pursuant to Regulation 17 of the Listing Regulations and they are not liable to retire by rotation as per 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 the Company confirming that they meet with the criteria of independence as prescribed under sub-section (7) of Section 149 of the Companies Act, 2013
Your Company has conducted a formal Board Effectiveness Review as part of its efforts to evaluate, identify improvements and thus enhance the effectiveness of the Board, its Committees, and Individual Directors. This was in line with the requirements mentioned in the Act.
The HR team of the Company worked directly with the Chairman and the Nomination and Compensation Committee of the Board, to design and execute this process which was adopted by the Board. Each Board Member completed a confidential online questionnaire, providing vital feedback on how the Board currently operates and how it might improve its effectiveness.
The survey comprised four sections and compiled feedback and suggestions on:
- Board Processes (including Board composition, strategic orientation and team dynamics);
- Individual Committees;
- Individual Board Members; and
- the Chairman
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. The Individual Committees and Board Members’ feedback was shared with the Chairman. Following his evaluation, a Chairman''''s Feedback Report was also compiled.
On the recommendation of the Nomination & Compensation Committee, the Board had framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of the Board Appointment Policy are stated below:
Pursuant to Regulation 25(7) of the Listing Regulations, the Company has familiarized the Directors on Goods & Service Tax and a presentation was made to the Directors on New/Emerging products of the Company. The details of Directors familiarization program is uploaded 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 the Company, 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 has subject 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 to hold office for the period commencing from the conclusion of the 29th Annual General Meeting (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 will be approved by the Board.
You are requested to approve the appointment of Auditors and to authorize the Board to fix their remuneration. The auditors M/s. BSR & Co., LLP, Chartered Accountants, are eligible for appointment. A certificate from the Auditors has been received to the effect that their appointment, if made, would be within the prescribed limits. The Auditor’s Report for the FY2016-17 does not contain any qualification, reservation, adverse remark or disclaimer.
Pursuant to the provisions of Section 148 and other applicable provisions, if any, of the Companies Act, 2013, M/s. R. Nanabhoy & Co., Cost Accountants have been appointed as Cost Auditors of the Company for the FY2017-18. They are required to submit the report to 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, to conduct Secretarial Audit for the FY2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed herewith marked as Annexure ‘G’ to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Audit Committee, constituted pursuant to the provisions of the Act and the Listing Regulations, has reviewed the accounts for the year ended March 31, 2017. The members of the 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 employees can work together without fear of sexual harassment, exploitation or intimidation. As required under the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has constituted an Internal Complaints Committee. 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 NIL complaints report. This is in compliance with section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Directors’ Responsibility Statement
The Board has laid down Internal Financial Controls within the meaning of the explanation to section 134 (5) (e) (“IFC”) of the Act. The Board believes the Company has sound IFC commensurate with the nature and size of its business. Business is however dynamic. The Board is seized of the fact that IFC are not static and are in fact a fluid set of tools which evolve over time as the business, technology and possibly even fraud environment changes in response to competition, industry practices, legislation, regulation and current economic conditions. There might therefore be gaps in the IFC as Business evolves. The Company has a process in place to continuously identify such gaps and implement newer and/or improved controls wherever the effect of such gaps might have a material effect on the Company’s operations.
Pursuant to the provisions contained in Section 134 of the Act, the Directors of your Company confirm:
a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies have been selected and applied consistently, and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;
c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 orderly and efficient conduct of its business, including adherence to code of conduct and policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information and that such policies and procedures are adequate and were operating effectively.
f) that proper systems are in place to ensure compliance of all laws applicable to the Company and that such systems are adequate and operating effectively.
As required by the existing Regulation 34(3) of the Listing Regulation, a detailed report on Corporate Governance is included in the Annual Report. The Auditors have certified the Company’s compliance of the requirements of Corporate Governance in terms of Regulation 34(3) of the Listing Regulation and the same is annexed to the Report on Corporate Governance.
Disclosures and Information under the Companies Act, 2013
Pursuant to section 134 and any other applicable sections of the Act, following disclosures and information is furnished to the shareholders:
(a) Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo
‘Annexure D’ to this Report gives information in respect of Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo, required under Section 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 the Act is given in Form No. MGT 9 as ‘Annexure E’, attached and forms a part of this report.
(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 the Corporate Governance Report.
(d) Loans, Guarantees & Investments
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 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 year were on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with related parties. Prior omnibus approval of the Audit Committee was obtained for those transactions which were of routine nature. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Act in Form AOC-2 is not applicable. Attention of members is also drawn to the disclosure of transactions with related parties set out in Note No. 41 of Standalone Financial Statements, forming part of the Annual Report. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
The policy on Related Party Transactions is uploaded on the Company’s website http://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 required under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure ‘F’ to this Report. 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) Rules, 2014 in respect of employees of your Company is available for inspection by the members at registered office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, 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 Director and the Whole time Directors. The Committee identifies, evaluates business risks and opportunities. This Committee has formulated and implemented a policy on risk management to ensure that the company’s reporting system is reliable and that the company complies with relevant laws and regulations. The Board of Directors of your Company are of the opinion that, at present, there are no elements of risks which may threaten the existence of the Company.
Your Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the 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 median remuneration of the employees of the Company for the FY2016-17 is given in ‘Annexure F’ attached and forms part of this Report.
The policy of your Company on director’s appointment and remuneration of the directors, key managerial personnel and other employees including criteria for determining qualifications, positive attributes, independence of a director, is stated below:
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statement relates and the date of the report.
There are no qualifications, reservations or adverse remarks in the Auditors Report and the Secretarial Audit Report for the FY2016-17.
(j) Share Capital
During the year under review your company allotted 1,50,941 equity shares of '''' 1 each upon exercise of stock option under Company’s Employee Stock Grants Scheme and 38 bonus equity shares on ESGS in compliance with the scheme of amalgamation of Wadala Commodites Limited with Godrej Industries Limited. Consequently, the paid up share capital of your Company has increased from Rs, 33,59,88,807/- divided into 33,59,88,807 equity shares of Rs, 1 each to Rs, 33,61,39,786/- divided into 33,61,39,786 equity shares of Rs, 1 each.
(k) Significant Court Order received - None Additional Information
The consolidated financial statements of the Company forms a part of this Annual Report. Accordingly, this Annual Report of your Company does not contain the financial statements of its subsidiaries. The Audited Annual Accounts and related information of the Company’s subsidiaries will be made available upon request. These documents will also be available for inspection during business hours at the Company’s registered office in Mumbai, India. The subsidiary companies’ documents will also be available for inspection at the respective registered offices of the subsidiary companies during business hours.
Your Directors thank the Union Government, the Governments of Maharashtra and Gujarat as also all the Government agencies, banks, financial institutions, shareholders, customers, employees, fixed deposit holders, vendors and other business associates, who, through their continued support and co-operation, have helped as partners in your Company’s progress.
For and on behalf of the Board of Directors
A. B. Godrej
Mumbai, May 22, 2017.