DIRECTORS' REPORT To The Members, 1. Your Directors have pleasure in presenting their 53rd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015. 2. Dividend Your Directors are happy to recommend a dividend @ 110%, i.e. Rs. 2.20/- per Equity Share (Face value of Rs. 2/- each) on 39, 84,77,530 shares (Previous Year - 100%, i.e. Rs. 2 per share on 39,84,77,530 Equity Shares of Rs.2/- each) for the Financial Year ended 31st March, 2015. The net outgo on account of Dividend shall be Rs. 105.51 Crores including Corporate Dividend Tax. The Dividend shall be paid to those members, whose names shall appear on the Register of Members of the Company on the Book Closure Date i.e. on 02/09/2015. 3. Brief description of the Company's working during the year/State of Company's affair Your directors wish to report that your Company has achieved the turnover of Rs.5325 Crores for the year ended March 31, 2015 as against Rs. 5412 Crores (FY 13-14) down by 87 Crores (2%) when compared to the previous Financial Year. Similarly, for the FY 2014-15, Profit before Tax (PBT) was Rs.573.91 Crores and Net Profit (Profit after Tax) was Rs.400.51 Crores as against PBT of Rs.495.41 Crores and PAT of Rs.342.17 Crores for the previous Financial Year. 4. Material changes and commitments The Company has not made any material changes or commitments which affect the financial position of the company between the end of the Financial Year of the company to which the financial statements relate and the date of signing of this report. 5. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future There are no such orders except those which have been appropriately challenged before the judiciary and no impact on going concern status and company's operation in future of such matters are expected or visualised at the current stage at which they are. 6. Details in respect of adequacy of internal financial controls with reference to the Financial Statements The Company has an internal Control System, commensurate with the size, scale and complexity of its operation. The Scope and authority of the internal audit functions lies with the Audit Committee. The Audit Committee monitors and evaluates the efficacy and adequacy of internal control systems, accounting procedures and policies. Based on the report of internal auditors, significant audit observations and actions taken on such observations are presented to the audit committee of the Board. 7. Details of Subsidiary/Joint Ventures/Associate Companies During the year under review, companies listed below are Company's Subsidiary Company or Associate Company. Subsidiary Company - GSFC Agrotech Limited. Associate Companies - Vadodara Enviro Channel Limited Gujarat Green Revolution Company Limited There were no new additions/ deletions during the year. A report of the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as annexure A to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company does not have any material subsidiary in terms of Company's Act, 2013 read with Listing Agreement. 8. Listing of Shares & Depositories The Equity Shares of your Company are listed on the BSE Limited (BSE) and National Stock Exchange of India Ltd. (NSE). As approved by the shareholders, an application for voluntary delisting of Equity Shares from Calcutta Stock Exchange Association Ltd., Kolkatta, was made, however, the approval for delisting is still awaited. The listing fees for the FY 15-16 has been paid to both the stock exchanges Your Directors wish to state that the Equity Shares of your Company are compulsorily traded in dematerialized form w.e.f. 26/ 06/2000. Presently, 96.78% of shares are held in electronic/dematerialized form. 9. Report on Corporate Governance And Management Discussion And Analysis Report To Shareholders Your Company has complied with all the mandatory requirements of Corporate Governance norms as mandated by Clause 49 of the Listing Agreement with Stock Exchanges. A separate report on Corporate Governance together with the Certificate of M/s. S. Samdani & Associates, Company Secretaries, Vadodara forms part of this Annual Report. The Management Discussion & Analysis report also forms part of this Annual Report. 10. Fixed Deposits During the year 2014-15, your Company has not accepted/ renewed any Fixed Deposit. Your Directors wish to report that there are 49 Fixed Deposits aggregating Rs. 5.36 Lacs which have remained unclaimed by Depositors, as on 31st March, 2015. Letters reminding them to seek repayment have been sent. Upto and including the date of this report, 10 deposits amounting to Rs. 1.23 Lacs have been repaid. During the year, the Company has transferred a sum of Rs. 20.98 Lacs being the unclaimed deposits and interest amount thereon to the Investors' Education and Protection Fund (IEPF) as required in terms of Section 125 of the Companies Act, 2013. The Company has discontinued accepting new deposits since 15.11.2005, and renewing the deposits since 31.03.2009. 11. Insurance All the properties and insurable interests of the Company, including the buildings, plant & machinery and stocks have been adequately insured. Also, as required under the Public Liability Insurance Act, 1991, your Company has taken the appropriate insurance cover. 12. Projects under Clean Development Mechanism (CDM) The Directors are happy to inform that Wind Mill Projects of 10 MW, 12 MW, 18 MW & 33 MW are already registered under CDM and for 50.4 MW Wind Mill Project registration process is being finalised for availing Carbon Credit. Company has also taken up the steps for getting the revenue against Carbon Credit for the registered projects. 13. Expansion & Diversification Your company had been conscious of the development of Green technology and has translated this into reality by setting up total 152.8 MW Wind Mill Power Projects in the Saurashtra & Kutch Region. These windmills are performing satisfactorily and are helpful in partly meeting Company's captive power requirement. The surplus power so generated is being sold to the State Grid as per contractual arrangements. Your Directors also wish to inform that for additional 15,000 MTPA Nylon-6 capacity (Engineering Plastic) at Vadodara unit, the technology tie-up has been made with M/s. Lurgi, Germany and M/s.Tata Consulting Engineers Ltd. are hired for Detail Engineering work. The project execution is in advance stage and the project is likely to go in to main stream during the second quarter of F.Y. 2015-16. Your Directors also wish to inform that for 20,000 MTPA Water Soluble Fertilizer (WSF) Project at Vadodara unit, for which the tie-up for project execution has been made with M/s.Hindustan Dorr-Oliver. The project execution is under execution and is likely to go into production during the second quarter of F.Y. 2015-16. Your Directors are also happy to inform that the Company in its pursuit of capacity addition, is setting up 4th train (D Train) with about 5 Lakh MTPA of DAP/NPK Fertilizers at Sikka Unit, Dist. Jamnagar and for this the process license is from M/s Espendisa, Spain. The technological tie-up and project implementation has been made through M/s. Hindustan Dorr-Oliver. The total plant production capacity with this capacity addition shall now be to the tune of 1.4 MTPY. The total cost of the DAP/ NPK Plant with Associated Additional Facilities is approximately Rs. 900 Crores. The new plant is expected to be put in operation by third quarter of FY 2016-17. This project will have the benefit of reduction of DAP imports and would enable your Company to produce different grades of NPK fertilizers. Your Company is also setting up of Associated Additional Facilities related to DAP/NPK plant at Sikka Unit (SU) near Jamnagar and for this M/s. TKIS (UIPL) has been hired to provide engineering services for. EIA approval for the project has been received in October 2014 and work is in progress. The project is slated to be commissioned during the 2nd quarter of F.Y. 2016-17. Your Directors are happy to inform that for setting up of 40000 MTPA Melamine Project at Vadodara unit, the technology tie up already done and contract is signed for supply of know-how, basic engineering and proprietary equipment with M/s. Casale, Switzerland on 5th February 2015. Project is slated to be implemented on fast track basis and is planned to be operational in 2nd quarter of 2017-18. Your Directors are pleased to inform that the Company has ambitious plans for setting up large capacity Fertilizers & Petrochemicals Complex at Dahej for which Land acquisition is done and plot development is under progress. Technology selection for various projects like - Caprolactam, Methyl Methacrylate, Ammonia, Urea, etc. is under progress. Your Directors are also happy to inform that technology selection for setting up of 30000 MTPA High Speed Nylon-6 Chips is under way and will be finalised after review of feasibility by third quarter of 2015-16. This project is proposed to be set up at Company's Kosamba Unit near Surat, Gujarat. Yours Directors would also like to inform that the proposal of setting up Ammonia- Urea Fertilizer Complex in Iran as a consortium partner with RCF & GNFC as per the Government of India guidelines is being explored. Your Directors would also like to inform that your company being environment conscious and promote environment friendly technologies and accordingly various options for construction products from Gypsum are being explored. 14. Information regarding conservation of energy, technology absorption, foreign exchange earnings and outgo and particulars of employees etc. Information as required under Section 134 (3) (m) of Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are enclosed in Annexure "E" forming part of this report. The Company does not have any employee falling within the purview of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and hence such Particulars of Employees are not included. 15. Corporate Social Responsibility (CSR) The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. As a part of its initiatives under "Corporate Social Responsibility", the Company has undertaken projects in the areas of education, livelihood, health, water and sanitation. The Annual Report on CSR activities is annexed as Annexure "A". CSR Policy adopted by the company placed on the company's website www.gsfclimited.com. . 16. Directors A) Changes in Directors and Key Managerial Personnel Chairman & Managing Director - Executive Director During the year, Dr. S. K. Nanda, IAS has been nominated as Chairman and Managing Director of the Company w.e.f. 01.11.2014 in place of Dr. Varesh Sinha, IAS, Chairman (till 31.10.2014) and Shri Atanu Chakraborty, IAS, Managing Director of the Company (till 31.10.2014). Accordingly, resolution relating to his appointment and terms & conditions relating to his appointment are included in the notice convening the 53rd Annual General Meeting and is recommended for your approval. Independent Director and Non-executive Directors The independent directors of the Company viz. Shri D C Anjaria, Prof. Vasant P Gandhi, Shri Vijai Kapoor and Shri Ajay Shah, were approved for a term of one year at the 52nd Annual General Meeting of the Company. The resolutions proposing their re-appointment for another term of five consecutive years and your Directors recommend their appointment for your approval. Smt. Geeta Goradia (Woman Director) was appointed as an additional director of the Company. In the opinion of the Board, Smt. Geeta Goradia fulfills the criteria prescribed in the Companies Act, 2013 and rules made there under for her appointment as a Woman Independent Director of the Company and she is independent of the management in all ways. Accordingly, a resolution relating to her appointment as a woman independent director for a term of five years is included in the notice convening the 53rd Annual General Meeting and is recommended for your approval. Shri Raj Kumar, IAS has been appointed w.e.f. 08.08.2014 as a rotational director of the Company in place of Shri P N Roy Chowdhury, Director (till 08.08.2014). Consequent upon his transfer to Govt. of India, he has tendered his resignation and ceased to be the Director of the Company. Shri L Chuaungo, IAS has been appointed w.e.f. 23.04.2015 as a rotational director in place of Shri D J Pandian, IAS, Director of the Company (till 30.08.2014). Dr. J N Singh, IAS has been appointed w.e.f. 25.11.2014 as rotational director of the Company in place of Dr. Hasmukh Adhia, IAS, Director of the Company (till 05.11.2014). The brief resume of Directors including declaration of Independent Director etc with regard to appointment/ re-appointment at 53rd Annual General Meeting is annexed to the Notice convening the 53rd Annual General Meeting, which forms the integral part of this Annual Report. Dr. J N Singh, IAS, director of the Company, shall be liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. B) Declaration by an Independent Director(s) and re- appointment, if any All Independent directors have given declarations that they meet the criteria of independency as laid down under section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. An independent director shall hold office for a term up to five consecutive years on the Board of a Company, but shall be eligible for reappointment for next five years on passing of a special resolution by the Company and disclosure of such appointment in the Board's report. Accordingly special resolutions are recommended for your approval in the notice convening the 53rd Annual General Meeting. C) 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 its committees. The manner in which the evaluation has been carried explained in the Corporate Governance Report which forms the part of this Annual Report. D) Appointment and Remuneration Policy The Board has on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of directors, senior management and their remuneration. The details of Remuneration Policy and its weblink are contained in the Corporate Governance Report. E) Meetings During the year, Seven Meetings of the Board of Directors and Five meetings of the Audit Committee were held. The composition of Board and Committees along with details of attendance is contained in Corporate Governance Report. 17. Details of establishment of vigil mechanism for directors and employees The Company has a Vigil Mechanism Policy in place to deal with instances, if any, of the fraud, mismanagement, misappropriations, if any and the same is placed on the Company's website. The details of the policy as well as its weblink are contained in the Corporate Governance Report. 18. Particulars of loans, guarantees or investments under section 186 Particulars of loans given, investments made, guarantee given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement. (Please refer to note 12,13,14 to the standalone financial statement). 19. Particulars of contracts or arrangements with related parties All related party transactions that were entered into during the Financial Year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the company with promoters, directors, key managerial personnel and other designated persons which may have a potential conflict with the interest of the Company at large. All Related party transactions were placed before the Audit Committee and also the Board of Directors for Approval. Prior omnibus approval of the Audit Committee is obtained and a statement giving details of transactions, if any, shall be placed before the Audit Committee meeting as mandated. The Company has developed a mechanism for identification of related party transactions and the company is also having the system of monitoring of such transactions. The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto have been disclosed in Annexure "D" to this report. 20. Managerial Remuneration Details as required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are contained in Corporate Governance Report. 21. Risk management policy Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted Risk Management Committee. The details of such Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. 22. Directors' Responsibility Statement Pursuant to Section 134 (3) (c) of the Companies Act, 2013, your Directors confirm that: 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 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 fai r view of the state of affai rs of the company at the end of the Financial Year and of the profit and loss of the company for that period; c. The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. The directors had prepared the annual accounts on a going concern basis; e. The directors, in the case of a listed company, 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 directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 23. Auditors (a) Statutory Auditors: M/s Deloitte Haskins & Sells, Chartered Accountants, Vadodara were appointed as Statutory Auditors of the Company for a term of three consecutive years i.e. from 2014-15 to 2016-17. The Company has received a letter from M/s Deloitte Haskins & Sells, Chartered Accountants, Vadodara (Firm Registration No. 117364W) to the effect that their reappointment, if made, would be in accordance with the conditions prescribed under section 139 (2) of the Companies Act, 2013 and they are not disqualified for such reappointment within the meaning of Section 141 of the said Act. Your Directors recommend the ratification of Resolution for re-appointment and fixation of remuneration to the Statutory Auditors for the F.Y. 2015-16. (b) Cost Auditors: Your directors have appointed M/s A G Dalwadi & Company, Cost Accountants, Ahmedabad (Firm Registration Number 100071), whose appointment and remuneration has been recommended by the Audit Committee and approved by the Board, for conducting and carrying out the cost audit for the Financial year 2015-16. The Cost Audit Report for Financial Year ended 31st March, 2014 was timely filed with Central Government (Ministry of Corporate Affairs) on 19.09.2014 (due date 27.09.2014). Pursuant to Section 148 (3) of Companies Act, 2013, remuneration of cost auditors shall require ratification of shareholders and accordingly, the appropriate resolution has been included in notice convening the 53rd Annual General Meeting. (c) Internal Auditors: Your Company has appointed M/s K. C. Mehta & Co., Chartered Accountants, Vadodara, as Internal Auditors for carrying out the Internal Audit of Baroda Unit & Sikka Unit for F.Y. 2014-15. M/s K. N. Mehta & Co., Chartered Accountants, Vadodara and M/s Parikh Mehta & Associates, Chartered Accountants, Vadodara have been appointed as Internal Auditors for the Company's Fibre and Polymers Units respectively. (d) Secretarial Auditors & Secretarial Audit Report: Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Niraj Trivedi, Practicing Company Secretary to undertake the secretarial audit of the Company. The Report of the Secretarial Auditor is enclosed as annexure "B". 24. Auditors' Report There are no comments/ observations from the Auditors and hence no clarifications need to be given on their clean report. 25. Extract of the annual return The extract of the annual return in Form No. MGT - 9 is annexed herewith as Annexure "C". 26.Human Resources Your Directors are happy to acknowledge that with the competent, motivated and cost conscious personnel, the Company made significant strides in its operations. The employees have been able to meet the challenges from time to time to improve upon the performance of its plants through efficiency, productivity and economy. Your Directors are happy to place on record their appreciation for the sincere efforts and contributions made by the employees of the Company. 27. Acknowledgements Your Directors place on record their appreciation for the overwhelming co-operation and assistance received from the Government of Gujarat, Government of India, Bank of Baroda and other Banks and agencies. Your Directors also wish to express their gratitude to the investors for their continued support and faith reposed in the Company. For and on behalf of the Board Sd/- Dr. S K Nanda, IAS Chairman & Managing Director Place : Fertilizernagar Date : 15.06.2015 |