GULF OIL LUBRICANT Directors Report

BOARD''''S REPORT


The Directors are pleased to present the 9th Annual Report and Audited Accounts for the financial year ended March 31, 2017.


1. FINANCIAL RESULTS:


Rs, Lakhs
















































































































Particulars



For the Year ended 31.03.2017



For the Year ended 31.03.2016



Revenue from Operations (Net)



113,105.67



101,135.42



Profit before finance cost, depreciation & tax



20,191.37



17,709.33



Less: Finance Cost



973.69



1,778.92



Profit before depreciation & tax



19,217.68



15,930.41



Less: Depreciation/Amortization



725.04



604.15



Profit Before Taxation



18,492.64



15,326.26



Taxation:



Current Tax



6,267.46



5,224.27



Deferred Tax



117.45



70.52



Profit After Taxation



12,107.73



10,031.47



Balance brought forward from previous year



8,967.92



3,862.94



Balance available for appropriation



21,075.65



13,894.41



Appropriations:



Interim Dividend paid on Equity Shares for the year



1,736.81



1,487.17



Dividend distribution Tax on Interim Dividend



353.57



302.75



Proposed Final Dividend on Equity Shares for the year



----



1,982.90



Dividend distribution Tax on Final Dividend



----



403.67



Final Dividend on shares issued under employee stock option scheme



1.47



Dividend distribution Tax on Final Dividend on shares issued under employee stock option scheme



0.30



Transfer to General Reserve



900.00



750.00



Balance Carried to Balance Sheet



18,083.50



8,967.92



PERFORMANCE HIGHLIGHTS:


The Company has continued its growth trajectory by outperforming the industry and has delivered a Net Revenue growth of 11.8%, EBITDA growth of 13.4%, PBT growth of 20.7% and PAT growth of 20.7% for the year over the last financial year.


Net revenues for the year 2016-17 was Rs, 113,105.67 lakhs (Previous year Rs, 101,135.42 lakhs), Profit before tax for the year 2016-17 was Rs, 18,492.64 lakhs (Previous year Rs, 15,326.26 lakhs). EBITDA has shown healthy growth of 13.4% YOY with EBITDA margins at 161% an improvement of 22 bps for the year over previous year.


Profit after tax for the year was Rs, 12,107.73 lakhs (Previous year Rs, 10,031.47 lakhs) resulting in an Earnings Per Share (Basic) of Rs, 24.41 (Previous year Rs, 20.24). During the year under review, there was no change in the nature of business.


Key Performance highlights are discussed in detail in the Management Discussion and Analysis forming an integral part of this Report.


2. DIVIDEND:


During the year, the Board of Director of the Company had approved the Dividend Distribution Policy in line with Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The policy is separately provided as Annexure E forming an integral part of this Report and is also uploaded on the website of the Company at http:// www.gulfoilindia.com/upload/pdf/dividend-distribution-policy17.pdf .


In line with the Policy, the Board has recommended a final dividend of Rs, 5/- per equity share (250% on the Face Value of Rs, 2/- per share) for the year 2016-17. The final dividend of Rs, 2,481.69 lakhs, if approved by the Shareholders at the ensuing Annual General Meeting, will be paid out of the profits for the current year to all the Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure. The Board at their meeting held on February 3, 2017, declared an Interim Dividend of Rs, 3.50 per share i.e. 175% of the Face Value of Rs, 2/- per share. The said Interim Dividend was paid to all eligible shareholders on February 23, 2017.


With this, the total dividend for the full year 2016-17 shall stand at Rs, 8.50 per share (425% on Face Value of Rs, 2/- per share).


3. TRANSFER TO RESERVE:


During the year, Board has appropriated Rs, 900 lakhs to General Reserves. (Previous year Rs, 750 lakhs)


4. SHARE CAPITAL:


During the year there has been an increase in the paid-up equity share capital due to equity shares being allotted to eligible employees under Gulf Oil Lubricants India Limited-Employee Stock Option Scheme- 2015. The paid-up equity share capital of the Company as on March 31, 2017 was Rs, 992.68 lakhs (previous year Rs, 991.45 lakhs). The authorized capital of the Company as on March 31, 2017 was Rs, 10,46,27,228 divided into 5,23,13,614 equity shares of Rs, 2/- each. There was no change in the authorized capital of the Company during the year.


5. MANAGEMENT DISCUSSION AND ANALYSIS:


Management discussion and Analysis is provided separately, forming an integral part of this Report.


6. VIGIL MECHANISM / WHISTLE BLOWER POLICY:


The Company has adopted Whistle Blower and Vigil Mechanism policy for Directors and Employees of the Company. The Company has established a secured system to enable Directors and Employees to report their genuine concerns, generally impacting / affecting business of our Company, including but not limited to improper or unethical behavior / misconduct / actual or suspected frauds / violation of Company''''s code of conduct. All protected disclosures concerning financial or accounting matters should be addressed, in writing, to the Chairperson of the Audit Committee of the Company for investigation.


In respect of all other protected disclosures, those concerning the Ombudsman and employees at the levels of senior Vice President and above should be addressed to the Chairperson of the Audit Committee of the Company and those concerning other employees should be addressed to the Ombudsman of the Company. The Ombudsman may refer the matter to the Chairperson of the Audit Committee depending upon the importance of the matter. Your Company hereby affirms that no Director or employee has been denied access to the Chairperson of the Audit Committee. During the year no complaints were received under vigil mechanism.


7. PUBLIC DEPOSITS:


The Company has not accepted any deposits during the year from the Public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.


8. RESEARCH & DEVELOPMENT:


Company''''s Research & Development (R&D) and quality control facility located at Silvassa has comprehensive testing facilities for testing and development of automotive and industrial lubricants. It is staffed with well qualified & experienced scientists and technologists for development of product formulations.


Although Company receives global product formulations from Gulf Oil International under the license agreement, the R&D Centre located at Silvassa adopts the global product formulations based on local raw materials and operating conditions meeting the specific needs of local OEM''''s and lubricants market in India.


9. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES:


The Company does not have any subsidiary/Joint Venture/ Associates as on March 31, 2017.


10. HUMAN RESOURCES / INDUSTRIAL RELATIONS, ESOP SCHEME:


The Company successfully grew its talent acquisition, retention and development plans during the year, Cordial industrial relation and low absenteeism contributed to higher output levels. The focus on employee development and efforts to enhance competency levels through training programs continued. Detailed information on this section has been provided in the "Management Discussion and Analysis, which is forming an integral part of this Report.


EMPLOYEES STOCK OPTION SCHEME:


During the year under review, your Company has allotted 61,300 equity shares under "Gulf Oil Lubricants India Limited-Employees Stock Option Scheme-2015" to eligible employees of the Company. The total Stock Options outstanding as of March 31, 2017 are 6,27,531. The information as required under Regulation 14 of the SEBI(Share Based Employee Benefits) Regulations, 2014 are disclosed on the website of the Company at we blink http://www.gulfoilindia.com/upload/pdf/golil-esop. pdf.


11. PREVENTION OF SEXUAL HARASSMENT POLICY:


Your Company has adopted Prevention of Sexual Harassment (POSH) policy. A separate internal Committee has been constituted under the policy. No complaints were received under POSH during the year ended March 31, 2017.


12. REMUNERATION POLICY:


The Board has adopted a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy also lays down the criteria for selection and appointment of Board members. The details of the policy are provided in the "Report on Corporate Governance" Annexure F to this Report.


13. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES AND PROGRAMS:


The Company has initiated activities under CSR initiatives in the area of education, vocational training, rural development and promoting healthcare in and around its area of operations and local area at Silvassa, DNH. These projects are in accordance with schedule VII of the Companies Act, 2013 and Company''''s CSR policy.


A report on CSR activities as required under Companies (Corporate social responsibilities Policy) Rules, 2014 is set out in Annexure A, forming part of this Report.


The Company instilled and guided by the values of our Group Founder, Shri. Parmanand Deepchand Hinduja''''s belief, "My dharma (duty) is to work, so that I can give", . The Company actively engaged in various programs under CSR during the year. The details of the same are given below:


a) Mobile Medical Unit: Being a multi-year program, the Company continued its support for mobile medical unit during the current year in the remote villages near Silvassa, DNH. This CSR project provides much needed free medical support to the tribal population residing in the villages near Silvassa. The program is administered through Hinduja Foundation and Hinduja Hospital. During the year, more than 8,400 villagers were treated under the project free of cost. The state of the art facilities available to the villagers free of cost, in the mobile van which includes diagnostic facility, laboratory test, medicine dispensing.


b) Road Safety Drive: The Company supported road safety campaign to promote education and awareness on road safety amongst bike riders. During the campaign, safety helmets were distributed to traffic police at various cities in Maharashtra like Mumbai, Pune, Thane, Nagpur, Nasik, Aurangabad, Solapur and Amravati. The Company also supported a road safety rally and awareness programs initiated by Mukul Madhav Foundation at Pune jointly with Pune city police and other corporate. The Company distributed more than 3,000 safety helmets to traffic police in various cities of Maharashtra.


c) Primary Education to Children: For last two years, the Company is focusing on one of the critical area of community as educational support to economically challenged children through Mukul Madhav Foundation. During the year, initiatives were taken to develop primary education infrastructure for economically challenged children in Wagholi, Pune and village Gholap, Ratnagiri.


d) Kushal Mechanic Program: In this year, the Company initiated two wheeler mechanic vocational training program known as "Kushal Mechanic Program" for two wheeler mechanics who are lacking of formal education and training. Two wheeler mechanic vocational training was provided through MITCON Centre for CSR and Skill Development, Pune and the participants were awarded training completion certificate jointly by Mitcon and Company. During the financial year more than 150 mechanics were benefited with this program. This being a multi-year program, which will be further implemented in other regions in future.


e) Other Programs: Few other programs were undertaken during the year in the area of Community development (through Make-A-Wish Foundation, Woman safety (through U-Active) and water conservation (through Bhagwat Foundation)


14. DIRECTORS & KEY MANAGERIAL PERSONNEL:


During the year under review, in accordance with the provisions of the Companies Act, 2013 ("Act") and the Articles of Association of the Company, Mr. Sanjay G. Hinduja (DIN: 00291692) retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers his candidature for re-appointment as a Director.


In accordance with section 149(7) of the Companies Act, 2013, each Independent Director has given a written declaration to the Company confirming that he/ she meets the criteria of independence as mentioned under section 149(6) of the Act.


On recommendation and approval of Nomination and Remuneration Committee, the Board of Directors of the Company at their meeting held on May 14, 2017, re-appointed Mr. Ravi Chawla as Managing Director of the Company for further period of 3 (three) years effective from June 6, 2017 and the terms of his re-appointment including the remuneration, subject to approval of the Members of the Company at AGM.


The resolutions seeking approval of the members of the Company for the re-appointment of Mr. Sanjay G. Hinduja, Chairman and re-appointment of Mr. Ravi Chawla, Managing Director have been incorporated in the Notice of the Annual General Meeting of the Company along with their brief Profile about them.


KEY MANAGERIAL PERSONNEL:


The following persons have been continued as Key Managerial Personnel of the Company pursuant to section 2(51) and section 203 of the Act, read with rules framed there under: 1) Mr. Ravi Chawla, Managing Director 2) Mr. Manish Kumar Gangwal, Chief Financial Officer and 3) Mr. Vinayak Joshi, Company Secretary and Compliance Officer. None of the Key Managerial Personnel have resigned during the year under review.


15. BOARD EVALUATION:


Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 a Board evaluation process was completed through a process of structured questionnaire and taking into consideration various aspects of the Board''''s functioning, composition, culture, obligation and governance. The criteria for performance evaluation have been detailed in Corporate Governance Report, Annexure F to this Report. The Board of Directors expressed their satisfaction with the evaluation process.


16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:


The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required pursuant to section 134(3) of the Companies Act, 2013 read with rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure B and forming an integral part of this Report.


17. BUSINESS RESPONSIBILITY REPORT:


Pursuant to Regulation 34 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is applicable for the first time to the company and provided separately in the Annexure- C forming an integral part of this Report.


18. INFORMATION ON STOCK EXCHANGES:


The Company''''s equity shares are listed on BSE Limited (Designated Exchange) and The National Stock Exchange of India Limited.


19. EXTRACT OF ANNUAL RETURN:


The details of extracts of Annual Return in Form MGT-9, as required under section 92 of the Companies Act, 2013 are enclosed as Annexure D and forming an integral part of this Report.


20. CORPORATE GOVERNANCE:


As per SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, a Report on Corporate Governance together with compliance certificate issued by Practicing Company Secretary is given separately in Annexure F forming an integral part of this Report.


21. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:


The details of Loan, Guarantees and Investments outstanding as on March 31, 2017 under Section 186(4) of the Companies Act, 2013 are provided in Note 11 and 25 to the Financial Statements.


22. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31, 2017 AND THE DATE OF THIS REPORT:


There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2017) and the date of this Report.


23. RISK MANAGEMENT POLICY:


The Company has implemented an integrated risk management approach through which it reviews and assesses significant risks on regular basis to ensure that a robust system of risk controls and mitigation is in place. Senior management periodically reviews this risk management framework to keep updated and addresses emerging challenges. Risk Management framework followed by the Company is elaborately detailed in the Management Discussion and Analysis section, forming an integral part of this Report.


24. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:


The Company has well defined and adequate internal control system, commensurate with size, scale and complexity of its operations. The internal financials controls are adequate and are operating effectively so as to ensure orderly and efficient conduct of business operations. During the year, Internal Financial Controls (IFC) testing process was done in order to review adequacy and strength of IFC followed by the company. As per the assessment, there are no major concerns and no reportable material weaknesses in the design or operation were observed. The Board has also put in place requisite legal compliance framework to ensure compliance of all the applicable laws and that such systems were adequate and operating effectively. The details of Internal control system and adequacy are mentioned in the Management Discussion and Analysis section, forming an integral part of this Report.


25. MEETINGS:


The details of number of meetings of the Board held during the Financial year 2016-17 are provided in Corporate Governance Report (Annexure F).


26. RELATED PARTY TRANSACTIONS:


All related party transactions were placed before the Audit Committee and the Board for their approval. Omnibus approval was obtained on a yearly basis for transactions which were of routine and repetitive nature. The transactions entered into pursuant to omnibus approval were placed before the Audit Committee and Board on quarterly basis. The policy on Related party transactions as approved by the Board of Directors has been uploaded on the website of the Company, www.gulfoilindia.com/upload/pdf/policy-on-materiality-and-dealings.pdf. Pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 there were no new material transactions, contracts or arrangements entered with Related Party as on March 31, 2017. None of the Directors have any pecuniary relationship or transactions vis-a-vis the Company except sitting fees, commission as per Companies Act, 2013. A statement showing Related Party Transactions entered during the year is given under Note 31 to the Financial Statements.


27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:


There were no significant and material orders passed by the Regulators/Courts/Tribunals that would impact the going concern status of the Company and its future operations.


28. DIRECTORS RESPONSIBILITY STATEMENT:


To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013:


a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;


b) the Board had selected such accounting policies and applied them consistently and made judgments and estimates 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 and loss of the company for that period;


c) the Board had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;


d) the Board had prepared the annual accounts on a going concern basis; and


e) the Board had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and


f) the Board had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


29. AUDITORS INCLUDING COST AUDITORS, SECRETARIAL AUDITOR:


At the Annual General Meeting held on June 4, 2014, M/s Price Waterhouse, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the 11th Annual General Meeting of the Company subject to ratification of appointment at every Annual General meeting of the Company. Accordingly, the appointment of M/s. Price Waterhouse, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. The Audit Committee and the Board of Directors have recommended their appointment for the financial year


2017-18. The necessary resolution is being placed before the Members for approval. As required under the provisions of section 139 and 141 of the Companies Act, 2013, the Company has obtained written confirmation from M/s Price Waterhouse, that their appointment, if made, would be in conformity with the limits specified in the said section. The Auditor''''s Report to the shareholders on standalone financials for the year ended March 31, 2017 does not contain any qualification, observation or adverse comments.


Cost Auditors:


As per the requirements of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Lubricants business.


The Board, on recommendation of Audit Committee, has appointed M/s Dhananjay V. Joshi & Associates, Cost Accountants (Firm Registration No.000030), as Cost Auditors of the Company to audit the cost records of the company for the financial year 2017-18 for a remuneration of '''' 2,75,000/-(Rupees Two lakhs seventy five thousands only) plus taxes as applicable and reimbursement of out of pocket expenses . As required, under the Companies Act, 2013, a resolution seeking Members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the 9th Annual General meeting of the Company.


Secretarial Auditor:


Pursuant to section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/s BS & Company, Company Secretaries LLP (Firm Registration No AAE-0638.) to carry out secretarial Audit of the Company. The secretarial audit Report is enclosed as Annexure G and forming an integral part of this Report. There are no audit qualifications or reservations or adverse comments for the year under review.


30. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:


Pursuant to section 197(12) of the Companies Act, 2013 read with Rules 5 (1),5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the separate annexure forming part of the Board''''s Report. Having regard to the provisions of Section 136(1), the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.


31. ACKNOWLEDGEMENT:


Your Directors thank the various Government and other statutory bodies for the continued help and co-operation extended by them to your Company. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.


For and on behalf of the Board


Sanjay G. Hinduja Chairman (DIN: 00291692)


Mumbai


Date: July 24, 2017

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