REPORT OF THE DIRECTORS TO THE MEMBERS: The Directors have pleasure in presenting the Fifty Second Annual Report and the Audited Financial Statement of the Company for the year ended March 31, 2015. 2. FINANCIAL REVIEW: Sales & Other Operating income for the year of Rs. 2,240.09 million grew by 12% over the previous year due to healthy opening order backlog and export sales. Sales of glass line products increased by 16% and sales of non-glassline products increased by 4% compared to the previous year. Order receipts during the year improved by 8% over previous year. Profit before tax for the year of Rs. 261.04 million was 20% above Rs. 216.67 million in the previous year and Profit after tax increased by 20% to Rs. 172.03 million from Rs. 142.86 million in the previous year. Earnings per share increased by 20% to Rs. 11.77 per share as compared to Rs. 9.77 of the previous year. On Consolidated basis Sales & Other Operating income for the year of Rs. 3,076.28 million grew by 10% over the previous year. Profit before tax for the year of Rs. 281.85 million was 4% above Rs. 270.85 million in the previous year. However, profit after tax decreased marginally by 1% to Rs. 188.67 million from Rs. 190.62 million in the previous year. Performance of the Company's Swiss subsidiary, Mavag AG remained steady during the year. Sales for the year of Rs. 851.92 million was 3% below Rs. 875.88 million in the previous year due to appreciation of INR against Swiss Franc. Profit after tax for the year decreased by 67% to Rs. 16.21 million, as compared to Rs. 48.75 million in the previous year due to foreign exchange fluctuation loss and some one time expenditure. 3. DIVIDEND: During the year under review, the Board of Directors approved payment of three interim dividends of Rs. 0.70 per share each aggregating to Rs. 2.10 per share. The total amount distributed as interim dividends on the paid-up share capital for the year amounted to Rs. 30.70 million (excluding dividend tax of Rs. 5.83 million). Based on the performance of the Company for the year and in view of the track record of the Company, the Board of Directors is pleased to recommend the payment of a final dividend of Rs. 0.90 per equity shares amounting to Rs. 13.16 million (excluding dividend tax of Rs. 2.67 million), subject to approval of the Shareholders in the Annual General Meeting. The aggregate amount of interim dividends paid during the year and the final dividend recommended for the year shall be Rs. 3.00 per share i.e. aggregating to Rs. 43.86 million (excluding dividend tax of Rs. 8.50 million). 4. RESERVES: The Board has recommended transfer of Rs. 17.20 million (being 10% of net profit) to the General Reserve out of the amount available for appropriation and an amount of Rs. 891.96 million of Profit & Loss Account for this year is proposed to be carried forward to the Balance Sheet. 5. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES: Karamsad Holdings Limited, Karamsad Investments Limited, GMM Mavag AG and Mavag AG are wholly owned subsidiaries of the Company. The performance and financial position of Karamsad Holdings Limited, Karamsad Investments Limited, GMM Mavag AG and Mavag AG for the year ended March 31, 2015 is annexed herewith as 'Annexure A' and forms part of this Report. The policy for determining 'material' subsidiaries adopted by the Board is available on Company's website www.gmmpfaudler.com. 7. CORPORATE SOCIAL RESPONSIBILITY POLICY: The Company has actively supported various initiatives in the areas of health, education and environment over the years. In accordance with the Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee during the year. The CSR policy as recommended by the Company and adopted by the Board of Directors is available on the Company's website at www.gmmpfaudler.com. The CSR Committee decided to continue with the existing programmes and keep it focus on health and education and environment in the years ahead. The Annual Report on Corporate Social Responsibility activities carried out during the financial year 2014-15 is annexed herewith as 'Annexure B' and forms a part of this Report. 8. RELATED PARTY TRANSACTIONS: Policy on dealing with Related Party Transactions, as approved by the Board, is available on the Company's website at www.gmmpfaudler.com As per the said policy, all Related Party Transactions are pre-approved by the Audit Committee and the Board, if necessary. The said transactions are also reviewed by the Audit Committee and Board on a quarterly basis. Details of Related Party Transactions: All contracts/ arrangements/ transaction entered into by the Company during the financial year 2014-15 with Related Parties were in the ordinary course of business and on arm's length basis. Also, there was no contract/ arrangement/ transaction with any of the Related Parties which could be considered material in accordance with the Companies Act, 2013, Rules framed there under and Clause 49 of the Listing Agreement. Details of Related Party Transactions entered into by the Company during the financial year 2014-15 are provided in Note 42 to the Financial Statements. 9. RISK MANAGEMENT POLICY: The Board of Directors of the Company has framed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management policy & plan and ensuring its effectiveness to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The said risk management policy is available on the Company's website www.gmmpfaudler.com. 10. OPEN OFFER BY PFAUDLER US, INC: During the year under review, the shareholding of Pfaudler Inc. (Foreign Promoters) held by Robbins & Myers Holdings, LLC ("Seller") (which in turn was owned and controlled by National Oilwell Varco, Inc) were sold to Pfaudler US, Inc ("Acquirer"). This acquisition was a part of a global level transaction between the Acquirer and Pfaudler Inc. In terms of the Takeover Regulations, Pfaudler Inc is a 'person acting in concert' with the Acquirer. Accordingly, an Open Offer was made by Pfaudler US, Inc and Persons Acting in Concert ("PAC") - Pfaudler Holdings S.a.r.l. ("PAC 1") and Pfaudler, Inc. ("PAC 2"), to acquire 36,54,375 equity shares of the The Open Offer commenced on April 9, 2015 and closed on April 23, 2015. Under the said Offer, Pfaudler Inc., have acquired 2,742 (Two thousand seven hundred and forty two) shares, being 0.02% of the total issued share capital of the Company. With this acquisition of 2,742 shares, the Post Offer shareholding of the Acquirer and PAC has increased to 7,375,217 shares and the shareholding of the Acquirer and the PAC has increased by 0.02% to 75.02%. In terms of Regulation 7(4) of Securities and Exchange Board of India (SEBI), Substantial Acquisition of Shares and Takeovers Regulations 2011 read with Securities Contracts (Regulation) Rules, 1957, the time-limit to bring down the Promoters' holding by 0.02% (or 2,742 shares), from 75.02% to 75% is one year from the date of closure of the open offer i.e. upto April 22, 2016. Pfaudler Inc., US the Foreign Promoters have agreed to dilute 2,742 (0.02%) shares to comply with the 25% minimum public holding within the stipulated time period. 11. DIRECTORS AND kEY MANAGERIAL PERSONNEL: As per the provisions of Sections 149 and 152 of the Companies Act, 2013, the Board of Directors at its meeting held on February 12, 2015 appointed as Mr. P. Krishnamurthy and Dr. S. Sivaram Independent Directors on the Board w.e.f. February 12, 2015 for a period of five years subject to the approval of the shareholders of the Company in the ensuing general meeting. Dr. Amrita Patel was appointed as Non-Executive Additional (Independent) Director on the Board w.e.f. December 11, 2014, subject to the approval of the shareholders of the Company in the ensuing general meeting in accordance with the provisions of the Section 149 and 152 of the Companies Act, 2013. The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Mr. Ashok Patel has resigned as Managing Director w.e.f. May 31, 2015 and continues as a Non Executive Director of the Company. Mr. Tarak Patel has been appointed as Managing Director of the Company for a period of five years w.e.f. June 1, 2015, subject to the approval of the shareholders of the Company in the ensuing general meeting in accordance with the provisions of Section 196 and other applicable provisions of the Companies Act, 2013. The Board places on record its sincere appreciation and gratitude for the leadership and direction provided by Mr. Ashok Patel during his tenure of 40 years as a Director of the Company including 28 years as Managing Director of the Company. The Board will continue to count on Mr. Patel's guidance and support as a Non Executive Director of the Company. The Board places on record its sincere appreciation for the advice and guidance extended by Mr. Michael C. Reed, Mr. Sudipta Sengupta, Mr. Darius Shroff, Mr. Ashok Pillai and Ms. Soha Shirke during their tenure as Directors of the Company. The present composition of the Board is in compliance with the provisions of Section 149 of the Companies Act, 2013. 12. DIRECTOR'S RESPONSIBILITY STATEMENT: In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2015, the Board of Directors hereby confirms 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. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2015 and of the profit/loss of the Company for that year; c. proper and sufficient care was taken 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 annual accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; 13. MEETINGS OF THE BOARD: Six (6) Meetings were held during the financial year ended March 31, 2015. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report attached and forms a part of this Report. 14. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS: The Company proactively keeps its Directors informed of the activities of the Company its management and operations and provides an overall industry perspective as well as issues being faced by the industry. The Policy on Familiarization Programme adopted by the Board is available on the Company's website www.gmmpfaudler.com. The details of various familiarization programmes will be uploaded as and when the programmes are conducted. The Audit Committee comprises of Mr. P. Krishnamurthy, Dr. S. Sivaram, Dr. Amrita Patel (Independent Directors) and Mr. Thomas Kehl (Non Executive Director). The Role of the Committee is provided in the Corporate Governance Report annexed to this Report. All the recommendations made by the Audit Committee during the year were accepted by the Board. 16. NOMINATION, REMUNERATION AND EVALUATION POLICY: The Board of Directors has formulated a Policy which set standards for the nomination, remuneration and evaluation of the Directors and Key Managerial Personnel and aims to achieve a balance of merit, experience and skills amongst its Directors and Key Managerial Personnel. 17. BOARD EVALUATION: Pursuant to the provisions of the Companies Act, 2013, and Clause 49 of the Listing Agreements, the Board has carried out the annual performance evaluation of the Directors individually as well as evaluation of the working of the Board and of the Committees of the Board, by way of individual and collective feedback from Directors. The Evaluation Criteria applied are: (a) For Independent Directors: • Knowledge and Skills • Professional conduct • Duties, Role and functions (b) For Executive Directors • Performance as Team Leader/ Member. • Evaluating Business Opportunity and analysisof Risk Reward Scenarios • Key set Goals / KRA and achievements • Professional Conduct, Integrity • Sharing of Information with the Board The Directors expressed their satisfaction with the evaluation process. 18. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES: The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Whistle Blower Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc. The employees of the Company have the right / option to report their concern / grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. No instance under the Whistle Blower Policy was reported during the financial year 2014-15. 19. CORPORATE GOVERNANCE: The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the BSE Limited, together with a Certificate from the Company's Auditors is attached hereto and forms a part of this Report. 20. DEPOSITS: The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable. The particulars of loans advanced and investments made under Section 186 of the Companies Act, 2013 are given at Note no. 18 and 12 & 14 respectively in the Notes to the Financial Statements. No corporate guarantees were given during the financial year. 22. AUDITORS: a) Statutory Auditors Deloitte has been appointed as the group auditors of Pfaudler Group. In order to bring uniformity in audit, it is proposed to appoint M/s. Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors of the Company. The Board of Directors at their meeting held on July 30, 2015 have approved the appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors, subject to approval of shareholders at the ensuing General Meeting. Consequent thereto, M/s. Kalyaniwalla & Mistry, Chartered Accountants the current statutory auditors have agreed that they will not offer themselves for reappointment at the ensuing Annual General meeting. The consent letter alongwith the certificate as required under Section 139 & 141 of the Companies Act, 2013 has been received from M/s. Deloitte Haskins & Sells, Chartered Accountants to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company. The Board recommends the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants as the Statutory Auditors of the Company. Necessary resolution for reappointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members. b) Auditors Report The observations made by the Statutory Auditors in their report for the financial year ended March 31, 2015 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. c) Cost Auditors Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications / Circulars issued by the Ministry of Corporate Affairs from time to time, as per the recommendation of the Audit Committee, the Board of Directors at their meeting held on May 19, 2015, has appointed M/s. Dalwadi & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16. d) Internal Auditors During the year under review, M/s. Deloitte Haskins & Sells, Chartered Accountants have resigned as Internal Auditors of the Company in view of their appointment as Auditors of Pfaudler Group. As per the recommendation of the Audit Committee, the Board of Directors at their meeting held on May 19, 2015, has appointed M/s. PAM & Associates, Chartered Accountants as Internal Auditors. e) Secretarial Audit Provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Board of Directors has appointed M/s. Rathi and Associates, Practicing Company Secretaries for conducting Secretarial Audit Report of the Company for the financial year 2014-15. Secretarial Audit Report is annexed herewith as 'Annexure D' and forms part to this report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. 23. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013: Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report. 24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in 'Annexure E' which forms part of this Report. 25. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014: The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year under review is annexed as 'Annexure F.' EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended March 31, 2015 made under the provisions of Section 92(3) of the Act is annexed as 'Annexure G' which forms part of this Report. 27. GENERAL: i) The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished. ii) The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished. iii) The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished. iv) During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished. ACKNOWLEDGEMENT: The Board of Directors of the Company would like to acknowledge to all its stakeholders and is grateful for the support received from shareholders, bankers, customers, suppliers and business partners. The Directors recognize and appreciate the sincere and dedicated efforts and contribution of all the employees that ensured steady performance in a challenging business environment. For and on behalf of the Board of Directors P. Krishnamurthy Chairman Tarak Patel Managing Director Place : Mumbai, date : July 30, 2015 Registered Office: Vithal Udyognagar Anand - Sojitra Road, Karamsad - 388 325, Gujarat. |