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Your Directors present this 42nd Annual Report of the Company on the business and operations of the Company together with Audited Balance Sheet and Statement of Profit & Loss for the Financial Year ended 31st March, 2015 and the report of the Auditors thereon
RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS
The highlights of the Company's performance are as under:
> The Company has achieved highest ever sales (including E xcise D uty) of Rs.2157.17 Crores during the year 2014–15 as against Rs.2087.50 Crores in the Previous Year
Total production of all the products has increased by 1.54% to 14,47,788 MT during the year 2014–15 as against 14,25,853 MT in previous year.
> Other Operating Income increased by Rs.3.10 Crores to Rs.16.31 Crores during the year 2014–15 as against Rs.13.21 Crores in previous year.
> Other Income increased by Rs.18.69 Crores to Rs.48.95 Crores during the year 2014–15 as against Rs.30.26 Crores in previous year.
> Gross Profit has decreased by 20.03% from Rs.403.73 Crores in previous year to Rs.322.87 Crores in the year 2014–15.
> Profit before Tax has decreased by 12.60% from Rs.246.55 Crores in previous year to Rs.215.48 Crores in the year 2014–15.
> Profit after Tax has increased by 23.15% from Rs.185.02 Crores in previous year to Rs.227.86 Crores in the year 2014–15 due to MAT status and deferred tax reversals.
The Financial Year 2014–15 was a challenging year for Chlore–alkali sector. The price of Caustic Soda remained under pressure due to huge imports during most of the part of the Financial Year 2014–15. However, the Company was able to sustain the cut–throat competition due to its nationwide distribution network, operational excellence, higher efficiency and well executed business strategy. During the year 2014–15, the Company has achieved highest ever productions in Caustic Soda, Chloromethanes and Hydrogen Peroxide at Vadodara Complex and highest ever productions in Hydrogen Peroxide, Poly Aluminium Chloride and Anhydrous Aluminium Chloride at Dahej Complex.
Your Directors are glad to recommend Dividend @ Rs.4.50 per share (i.e. 45%) on 7,34,36,928 Equity Shares of Rs.10/– each fully paid up for the year ended 31st March, 2015.
ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in the Annexure – 1 to this report.
SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES
The Company does not have subsidiary, joint venture or associate com pany and hence, requirements for giving information under Rule 8 of the Companies (Accounts) Rules, 2014 are not applicable.
On 23rd June, 2015, the Company has signed Joint Venture–cum–Shareholders' Agreement with National Aluminium Company Ltd. (NALCO), a Government of India Enterprise to take up 800 TPD Caustic Soda Project and 80–90 MW Coal based Power Plant at Dahej, Gujarat. The formation of JV Company is under process.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
During the year, the Company has constituted Internal Risk Management Committee comprising of senior executives of the Company who are heading respective departments viz. Finance, Manufacturing, Marketing, Purchase, Project, HR, Secretarial and Legal functions. The Executive Director (Finance) & CFO is the Chairman of the Internal Risk Management Committee. The Internal Risk Management
Committee report to the Managing Director and the risks identified by the said Committee along with proposed mitigation actions are discussed periodically with the Managing Director. Out of the various risks identified by the Internal Risk Management Committee, the Audit Committee has identified certain critical risks, which are reviewed by Audit Committee and by the Board of Directors on quarterly basis. A Report on the steps taken to mitigate those critical risks is also submitted to the Audit Committee and the Board of Directors.
VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has formulated a Vigil Mechanism–cum–Whistle Blower Policy ("Policy") as per the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Policy is applicable to all Directors and Employees of the Company.
As per the Policy, protected disclosures can be made by whistle blower to the Chairman of the Audit Committee.
During the Financial Year 201 4–15, no unethical and im proper practice or any other wrongful conduct in the Com pany by any person was reported under the said Policy.
The Vigil Mechanism –cum –Whistle Blower Policy may be accessed on the Company's website at the link : <http://>www.gacl.com/public_html/new/policy/ VIGIL_MECHANISM_CUM_WHISTLE_BLOWER_POLICY.pdf
CORPORATE SOCIAL RESPONSIBILITY
As per the provisions of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted Corporate Social Responsibility (CSR) Committee and formulated CSR Policy. The composition of CSR Committee is given in the Corporate Governance Report.
The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR P olicy) identifying the activities to be carried out by the Company and the said CSR Policy has been approved by the Board of Directors at their Meeting held on 23.07.2014.
The Board of Directors at their Meeting held on 26.05.2015 have approved som e m odifications in the CSR Policy including to undertake CSR activities through GACL Education Society (GE S). GES is a registered Society under the Societies Registration Act, 1860 and was formed with an objective for promotion and development of education in various fields and branches of Engineering, Management Technology, Information & Communication etc. and carry out such other projects having similar objects. Various projects are planned to be undertaken through GES during the year 2015–16 which include GACL UdayShala
Project; Project "UDAAN"; Projects for special children at Vadodara, Bharuch, Chhotaudepur; promoting vocational education and entrepreneurship among youth students from poor families; creating generic medical stores at Bharuch, Vadodara and other places; setting up a chain of maternity wards in few Districts on the lines of Life Spring Hospitals Model to reduce the MMR and IMR in these areas etc. To implement the said projects, GES has recruited Project Officers, Volunteers, Teaching Volunteers and Field Workers.
The revised CSR Policy m ay be accessed on the Company's website at the link: http://www. gacl. compublic_html/new/pdf/CSR_POLICY.pdf
During the year, the Company has spent an amount of Rs.4.47 Crore towards the CSR activities, against the statutory amount of Rs.5.20 Crore which is slightly lesser (by Rs.73 lakhs) than 2% of the average Net Profits of the Company for last three years. Thus, amount of Rs.73 lakhs towards CSR activities could not be spent during the year as per the provisions of the Com panies Act, 2013. The Company has transferred this amount of Rs.73 lakhs to GACL Education Society. This amount shall be utilized in current year for CSR activities identified by the Company as per CSR Policy.
The Annual Report on CSR activities for the Financial Year 2014–15 is annexed herewith as Annexure – 2.
A. Appointment / Reappointment / Cessation of Directors & Key Managerial Personnel
D uring the year, D r. Varesh Sinha, IAS (Retd. ), Chairm an, D r. Hasm ukh Adhia, IAS and Shri D. J. Pandian, IAS, Directors have resigned from the Board of Directors of the Company effective from 02.12.2014, 13.11.2014 and 30.08.2014, respectively.
Shri Atanu Chakraborty, IAS has resigned as the Managing Director effective from 28.08.2014 and in his place, Shri A M Tiwari, IAS was appointed as Managing Director of the Company with effect from 29.08.2014.
Shri G C Murm u, IAS, Director has resigned from the Board of Directors of the Company effective from 01.05.2015.
Shri D J Pandian, IAS, Chief Secretary to Government of Gujarat was appointed as Government Nominee Non–Rotational Director and Chairm an of the B oard of Directors of the Company effective from 08.04.2015. Further, Shri D J P andian, IAS (Retd.) has sent his resignation as Chairman of the Company vide letter dated 30th May, 2015 effective from 3rd July, 2015 (i.e. date of receipt by the Company) due to his superannuation from the services as Chief Secretary.
The Board placed on record its deep appreciation of the valuable services rendered to the Company by D r. Varesh Sinha, IAS (Retd.) as Chairman, Shri D J Pandian, IAS (Retd.) as Director and Chairman, Shri Atanu Chakraborty, IAS as M anaging D irector,
Dr. Hasmukh Adhia, IAS and Shri G C Murmu, IAS as Directors of the Company.
During the year, Dr. Rajiv I Modi and Ms. Pallavi S Shroff (Woman Director) have been appointed by the Board as Independent Directors of the Company for a term of five years effective from 01.10.2014. The Independent Directors have submitted the declarations under Section 149(6) of the Companies Act, 2013 to the effect that they qualify to be appointed as Independent Directors of the Company.
Dr. J N Singh, IAS has been appointed as a Director by the Board of Directors of the Company effective from 05.02.2015 to fill casual vacancy caused due to resignation of Dr. Hasmukh Adhia, IAS.
Shri G R Aloria, IAS, Chief Secretary to Government of Gujarat is appointed as Governm ent Nom inee Non–Rotational D irector and Chairman of the B oard of Directors of the Company w.e.f. 28th July, 2015 as per the provisions of Articles of Association of the Company.
Dr. Sukh Dev has expressed his unwillingness to be reappointed as an Independent Director due to old age. Therefore, his term as an Independent Director would continue till the date of this 42nd AGM (i.e. 18.09.2015).
As per Section 149 of the Companies Act, 2013, Shri J N Godbole, Dr. Rajiv I Modi and Ms. Pallavi S Shroff, Directors are eligible for appointment / reappointment as Independent Directors. Your Directors recommend the appointments of Dr. Rajiv I Modi and Ms. Pallavi S Shroff and reappointment of Shri J N Godbole as Independent Directors for a period of 5 years. Further, declarations under Section 149(6) of the Companies Act, 2013 have been received from all the Directors to the effect that they qualify to be appointed as Independent Directors of the Company.
Thus, as on the date of this Report, there are seven Directors on the Board of Directors of the Company. The Chairman, Managing Director, four Independent Directors are Non–Rotational Directors and one Non Independent Director viz. Dr. J N Singh, IAS is Rotational Director appointed in the casual vacancy in place of D r. Hasmukh Adhia, IAS. The appointment of Dr. J N Singh, IAS will be regularized by the Shareholders at this Annual General Meeting. Except Dr. Sukh Dev, Independent Director, the four Directors viz. : Managing D irector and three Independent Directors will be appointed / reappointed at this Annual General Meeting. Thus, the appointment/reappointment of five Directors are being placed before the Shareholders at this Annual G eneral M eeting and D r. Sukh Dev will not be reappointed as mentioned above. Therefore, no Director will retire by rotation at this Annual General Meeting.
P ursuant to the provisions of Section 203 of the Companies Act, 2013, effective from 14.05.2014, Dr. H. B. Patel was appointed as Chief Financial Officer of the Company and Mr. Sanjay S Bhatt was appointed as Company Secretary of the Company.
B. Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
C. Nomination and Remuneration Policy
The B oard has on the recommendation of the Nomination–cum–Remuneration Committee formulated a Nomination & Remuneration–cum–Board Diversity Policy for selection, appointment of Directors and Senior Management and their remuneration. Information about the Policy is provided in the Corporate Governance Report.
During the year, 7(seven) Board Meetings and 4 (four) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 201 3 and the Listing Agreement. Further, the com position of Audit Com m ittee is given in the Corporate Governance Report.
A. Internal Auditors
M/s. Chandulal M. Shah & Co., Chartered Accountants, Ahm edabad were appointed as Internal Auditors for conducting Internal Audit of the Company for the period
from 1st July, 2014 to 30th June, 2015.
The Board of Directors of the Company at its Meeting held on 26th May, 2015, appointed M/s. Talati & Talati, Chartered Accountants, Vadodara as Internal Auditors for conducting Internal Audit of the Company for the period from 1st July, 2015 to 30th June, 2016.
The Internal Auditors independently evaluate the internal controls, adherence to and com pliance with the procedures, guidelines and statutory requirements. The Audit Committee of Directors periodically reviews the reports of the Internal Auditors and the corrective actions, if any, are taken by the Management.
B. Statutory Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara (Firm Registration No.:117364W) were appointed as Statutory Auditors of the Company for a period of five years in the 41st Annual General Meeting held on 22nd August, 201 4. M/s. Deloitte Haskins &
Sells, Chartered Accountants, Vadodara have confirmed their eligibility under Section 141 of the Companies Act,
2013 and rules framed there–under for their appointment as Statutory Auditors of the Company from this Annual General Meeting up to the conclusion of next Annual General Meeting.
The Board of Directors of the Company at their Meeting held on 26th May, 2015 have approved the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants for the Financial Year 2015–16. Accordingly, a Resolution for ratification of appointment of the Statutory Auditors for the Financial Year 2015–16 is placed at Item No. 3 of the Notice.
Your Directors recom m end the said Resolution for ratification for your approval.
The Auditors Report to the shareholders for the year under review does not contain any qualification.
C. Cost Auditors
The Board of Directors of the Company at its Meeting held on 14th May, 2014 had appointed M/s. R.K. Patel & Co., Cost Accountants, Vadodara as Cost Auditors for the Financial Year 2014–15 to conduct the Cost Audit of the cost accounts and records maintained by the Com pany, at the rem uneration of Rs.4,95,000/– plus service tax as applicable. As required under the Section 148 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Shareholders at their 41st Annual General Meeting held on 22nd August, 2014 had ratified the remuneration payable to the Cost Auditors for the Financial Year 2014–15.
The Board of Directors of the Company at its Meeting held on 26th May, 2015, appointed M/s. R K Patel & Co., Cost Accountants, Vadodara as Cost Auditors for conducting the Cost Audit of the Accounts and records maintained by the Company for the Financial Year 2015–16.
Your Directors recommend the remuneration of the Cost Auditors appointed by the Board of Directors for the Financial Year 2015–16 for your ratification / approval as per the provisions of the Companies Act, 2013.
D. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company The Report of the Secretarial Audit is annexed herewith as Annexure – 3. The Report does not contain any qualification
The Company has been following the principles and practices of good Corporate Governance and has ensured compliance of the requirements stipulated under Clause 49 of the Listing Agreement with Stock Exchanges.
A detailed report on Corporate Governance along with Certificate issued by Com pany Secretary in Practice in term s of Clause 49 of the Listing Agreement is attached herewith.
PARTICULARS OF EMPLOYEES
The inform ation required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of em ployees of the Company, are provided in the Annexure – 4. Further, there was no employee holding 2% or more of the Equity Shares of the Company during the Financial Year 2014–15.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review, the Company has not entered into any arrangement or contract or transactions with related parties except the remuneration paid to the Key Managerial Personnel.
The P olicy on Related Party Transactions and Material Related Party Transactions as approved by the Board of Directors m ay be accessed on the Company's website at the link : http: //www. gacl. com/public_html/new/policy/ related_party_tran_policy–1.pdf
The Audit Committee of Directors at its Meeting held on 26th May, 2015 has accorded om nibus approval to execute transactions with related parties up to the value of Rs.1 Crore.
Your Directors draw attention of the Members to Note No. 36 to the Financial Statement which sets out Related Party disclosures.
LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Note No.4, 7, 9, 12, 15 and 32(i)(e) of the Notes to the Financial Statements.
The Company has taken adequate insurance for all its properties. The Com pany has also taken necessary insurance cover as required under the P ublic Liability Insurance Act, 1991.
LISTING AGREEMENT COMPLIANCE
Your Company's Equity Shares are listed on Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE) and their listing fees for the Financial Year 201516 have been paid and the conditions of Listing Agreements have been complied with.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure – 5.
Your Directors state that no disclosure or reporting is required in respect of the following items since there were no transactions in these matters and/or they are not applicable to the Company during the year under review :
1. Business Responsibility Reporting is not applicable as the Company does not fall under list of top 100 listed companies.
2. Details relating to deposits covered under Chapter V of the Act.
3. Issue of equity shares with differential rights as to dividend, voting or otherwise.
4. Issue of shares (including sweat equity shares) to employees of the Company under ESOS.
5. There is no subsidiary company of our Company and therefore, the Managing Director is not in receipt of any commission from any subsidiary.
6. No significant or material orders were passed by the Regulators / Courts or Tribunals which would impact the going concern status of the Company and its future operations.
You Directors further state that your Company has constituted Sexual Harassment Committee and during the year under review, no case was pending pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors state that :
i) in the preparation of the annual accounts for the Financial Year ended 31st March, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
ii) the Directors 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 31st March, 2015 and of the profit of the Company for the year ended on that date;
iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) the Directors have prepared the annual accounts on a going concern basis;
v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on Management Discussion and Analysis forms part of the Board's Report and it deals with inter–alia the Business, Operations & Financial Performance, Research & D evelopm ent, E xpansion & Diversification, Risk Management, Marketing Strategy, Safety & Environment, Corporate Social Responsibility, H um an Resources Development etc.
The Board expresses its gratitude and appreciation to the Government of India, Government of Gujarat, Financial Institutions, Insurance Companies, Banks, other business associates, Promoters, Shareholders and employees of the Company for their continued support. The Directors also gratefully acknowledged 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 commitments and continued contribution to the Company.
For and on behalf of the Board
(A.M. Tiwari) Managing Director
(Dr. J.N. Singh) Director
Date : 6th August, 2015