DIRECTORS' REPORT TO THE MEMBERS OF GRAVITA INDIA LMITED We are delighted to present on behalf of Board of Directors of the Company, the 24th Annual Report of the Company along with Audited Financial Statements for the year ended 31st March, 2016. 1. Performance at a Glance During F.Y. 2015-16 the International Commodity Market has seen downward trend which was largely due to slow down in Chinese Market. Although there was a slight recovery in US market with respect to Lead commodity. The International Lead prices have seen levels of below $ 1600 and average of $ 1768 during the period. The levels are around 14% down as compared to last fiscal year. Financial Year 2015-16 proved to be full of global economic uncertainties and disturbances in many parts of the world. The industry was also affected by currency fluctuations, sluggish demand, consumer down trend and continued to be fraught with challenges. The market expects the similar situation during F.Y. 201617 with China maintaining about 50% share of global Lead consumption. Infrastructure spending and strong automotive sales globally are likely to boost the demand of Lead in F.Y. 2016-17. Infrastructure and automobile industries are the main demand drivers for Lead in India. We have been consistently increasing our production capabilities to make Gravita self-sufficient. Government's focus on 'Make in India', infrastructure development and 'Smart Cities' is expected to provide further impetus to the Indian metal market in F.Y. 2016-17. Despite of all odds and unfavorable market conditions, the Company performed rationally well and the highlights of the performance are as under: Consolidated Results: • Consolidated Total Revenue stood at Rs. 431.20 crores • Operating Profit before Interest, Depreciation and Tax stood at Rs. 16.03 crores in financial year 2015-16 as compared to Rs. 18.83 crores in previous year. • Net Profit after Tax and Minority Interest during the year stood at Rs. 4.37 crores. • Earnings Per Share of the Company stood at Rs. 0.64 per share having face value of Rs. 2 each. • Cash Profit during the year stood at Rs. 14.78 crores. Standalone Results: • Total Revenue stood at Rs. 353.84 crores as compared to Rs. 333.98 crores in the previous year. • Operating Profit before Interest, Depreciation and Tax stood at Rs. 8.86 crores in financial year 2015-16 as compared to Rs. 5.85 crores in previous year. • Net Profit after Tax during the year is reported at Rs. 3.27 crores as compared to last year's PAT of Rs. 5.11 crores. • Earnings Per Share of the Company stood at Rs. 0.48 per share having face value of Rs. 2 each. • Cash Profit during the year stood at Rs. 7.75 crores. 2. Dividend The Board of Directors of your Company has recommended payment of final dividend @ 10 % (Rs. 0.20 per equity share) amounting to Rs. 1.37 crores. The dividend will be paid to members whose names appear in the Register of Members as at the close of business hours of 31st July 2016 and in respect of shares held in dematerialized form it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date. Futher, Company has not transferred any amount to General Reserve. 3. Performance of Subsidiaries Companies and Firms a. Gravita Infotech Limited (formerly known as Gravita Exim Limited), India: Gravita Infotech Limited is a wholly-owned subsidiary of the Company. Since inception this subsidiary was engaged in the business of providing comprehensive turnkey solution for cost effective Battery Recycling Process & plant with environment friendly technology but from F.Y. 201314 the company has ventured in the business of IT Segment for providing facilities related to IT Software and IT Solutions, Web Designing etc. Total revenue of the Company for current financial year stood at Rs. 3.25 crores resulting in Net Loss of Rs. 0.49 crores. b. Gravita Ghana Limited, Ghana: Gravita Ghana Limited is a wholly-owned subsidiary of the Company. The subsidiary is engaged in recycling of Lead Acid Battery Scrap for producing Re-melted Lead Ingots, PP Chips etc. During the year under review this plant produced 3048 MT of Re-melted Lead Ingots and delivered revenue of Rs. 36.36 crores coupled with Net Loss of Rs. 0.62 crores. c. Gravita Senegal SAU, Senegal: Gravita Senegal SAU is a step down subsidiary of Gravita India Limited. The subsidiary is engaged in recycling of Lead Acid Battery Scrap for producing Re-melted Lead Ingots, PP Chips etc. During the year under review this plant produced 1857 MT of Re-melted Lead Ingots and achieved a Turnover of Rs. 25.00 crores coupled with Net Profit of Rs. 0.46 crores. d. Gravita Mozambique LDA, Mozambique: Gravita Mozambique LDA is a step down subsidiary of Gravita India Limited and is engaged in the business of Manufacture of Re-melted Lead & PP Chips. During the year under review this subsidiary has produced 2494 MT of Re-melted Lead Ingots and achieved a Turnover of Rs. 34.77 crores against Rs. 29.68 crores in last year and reported a Net Profit of Rs. 3.58 crores during the year. e. Gravita Global Pte. Ltd, Singapore: Gravita Global Pte. Ltd is a wholly owned subsidiary of the Company and is based at Singapore which is engaged in the trading business. During the year under review the Company has been able to achieve a Turnover of Rs. 0.64 crores resulting in a Net Loss of Rs. 0.08 crores. During the year under review this company acquired 3.62% stake of Gravita Mozambique LDA, Mozambique from Gravita Infotech Limited. f. Gravita Netherlands B.V., Netherlands: Gravita Netherlands B.V. is a step down subsidiary of Gravita India Limited. It is investment subsidiary of the Company and during the year under review this subsidiary achieved Income of Rs. 5.51 crores out of which Rs. 4.72 crores is derived from dividend income from other business entities/subsidiaries of Gravita Netherlands B.V. During the year under review this company acquired 96.38% stake of Gravita Mozambique LDA, Mozambique from Gravita India Limited. g. Navam Lanka Ltd, Srilanka: Navam Lanka Limited is a step down subsidiary of Gravita India Limited operating in Sri Lanka for more than a decade. It is the largest producer of Lead Ingots and PP Chips in Sri Lanka. This subsidiary is engaged in recycling of Lead Acid Battery Scrap, PP Chips/Granules & Refining & Alloying of Lead Ingots to produce 99.97% Pure Lead and Specific Alloys. During the year under review this subsidiary produced 2548 MT of Re-melted Lead Ingots and Refined Lead Ingots and achieved a Total Turnover of Rs. 35.12 crores coupled with Net Profit after Tax of Rs. 2.32 crores. h. M/s Gravita Metals, India: Gravita India Limited along with its wholly owned subsidiary Gravita Infotech Limited (formerly known as Gravita Exim Limited) holds 100% share in this partnership firm. This firm is engaged in manufacturing of Pure Lead and all kind of Lead Alloys like Antimonial Lead Alloy, Calcium, Selenium, Copper, Tin, Arsenic Lead Alloy etc. During the year under review the operations of Gravita Metals remained at very low level due to some excise duty issues. The topline of the firm stood at Rs. 1.89 crores with a Net Loss of Rs. 0.16 crores. i. M/s Gravita Metal Inc, India: Gravita India Limited along with its wholly owned subsidiary Gravita Infotech Limited (formerly known as Gravita Exim Limited) holds 100% share in this partnership firm. This firm is engaged in Manufacturing of Pure Lead and all kind of Specific Lead Alloys. During the year under review the unit produced 3577 MT of Re-melted Lead Ingots and achieved a Turnover of Rs. 49.83 crores coupled with Net Profit of Rs. 6.92 crores. This firm enjoys fiscal benefits of J&K region. j. Gravita Nicaragua S.A., Nicaragua: Gravita Nicaragua S.A. is a step down subsidiary of the Company. This subsidiary is engaged in recycling of PET waste and having installed capacity of 3600 MTPA. During the year under review subsidiary achieved Turnover of Rs. 7.72 crores coupled with Net Loss of Rs. 0.80 crores. k. Gravita Infotech: Gravita India Limited together with its subsidiary holds 100% share in this firm. This firm is engaged in business of Information Technology. During the year under review the Total Income of firm stood at Rs. 0.17 crores with a Net Loss of Rs. 0.09 crores. l. Other Subsidiaries The Company has some other Subsidiaries/ Step Subsidiaries/LLP which are under process of implementation of projects/commercial production. The details of the same are given below: • Noble Buildestate Private Limited • Gravita Jamaica Limited • Gravita Ventures Limited, Tanzania • Gravita USA Inc. • Recycling Infotech LLP 4. Sale/Disinvestment/Winding up/ Striking off During the year under review the Company has made an application for de-registration of its step down subsidiary Gravita Trinidad & Tobago Ltd, T&T due to lack of operational ease in T&T. In addition the company has sold its entire stake of 96.32% held in Gravita Mozambique LDA to its step down subsidiary Gravita Netherlands B.V. Further the company has also closed one of its stepdown subsidiary viz. Gravita Mauritania SARL which was incorporated during the year under review due to non-availability of export license. 5. Disclosures under Companies Act, 2013 a. Extract of Annual Return: The detail forming part of extract of annual return is enclosed as Annexure-1. b. Material Subsidiaries: In accordance with SEBI (Listing Obligations and Disclosure Requirements), 2015, the Company has formulated a policy for determining material subsidiaries. The policy has been uploaded on the website of the Company at <http://> www.gravitaindia.com/wp-content/uploads/pdf/ material-subsidiaries-policy.pdf. c. Number of Board Meetings: During the year under review the Board of Directors of the company met 9 (nine) times. The details of the Board Meetings and the attendance of the Directors are provided in Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. d. Committees of the Board: Details of all the Committees including Audit Committee of Board of Directors along with their terms of reference, composition and meetings held during the year, is provided in the Corporate Governance Report, and forms integral part of this report. e. Directors' Responsibility Statement: Pursuant to Section 134 of the Companies Act, 2013, the Directors hereby confirm that: • In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures, if any; • They have selected such Accounting Policies and applied them consistently and made judgment 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, 2016 and of the profit and loss of the company for that period; • To the best of their knowledge and information, they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; • They have prepared the Annual Accounts on a Going Concern basis; • They 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 • There is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. f. Independent Directors: The Company has received declarations from all Independent Directors of the Company confirming that they meet with the criteria of independence, as prescribed under Section 149 of the Companies Act, 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Independent Directors have also confirmed that they have complied with the Company's Code of Conduct. g. Vigil Mechanism: The Company is having an established and effective mechanism called the Vigil Mechanism. The mechanism under the Whistle Blower Policy of the company has been appropriately communicated within the organization. The purpose of this Policy is to provide a framework to promote responsible whistle blowing by employees. It protects employees wishing to raise a concern about serious irregularities, unethical behavior, actual or suspected fraud within the Company. h. Familiarisation Programme for Independent Directors: The Company conducts an introductory familiarisation programme when a new Independent Director joins the Board of the Company. New Independent Directors are provided with copy of latest Annual Report, the Company's Code of Conduct, the Company's Code of Conduct for Prevention of Insider Trading, to let them have an insight of the Company's present status and their regulatory requirements. The induction comprises a detailed overview of the business verticals of the Company and meetings with business heads / senior leadership team and with the Managing Director of the Company. During the year under review Mrs. Chanchal Chadha Phadnis, who joined Board on 24th March, 2015 as Independent Director was given introductory familarisation programme by providing basic documents of the company, overview of company's business, meetings with functional heads and plant visit. The policy on familiarisation programmes for Independent Directors is posted on the website of the Company and can be accessed through the following link <http://www>. gravitaindia.com/wp-content/uploads/pdf/ <http://gravitaindia.com/wp-content/uploads/pdf/> familarization-programme.pdf. i. Remuneration Policy: The Company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More detail on the same is given in the Corporate Governance Report which forms part of Annual Report 2015-16. j. Board Evaluation: Pursuant to the provisions of the Companies Act , 2013 and Regulation 17 (10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 , the Independent Directors 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 performance of the Board is evaluated by each individual Director as well as collectively by the Board on the Annual Basis towards the end of the Financial Year. The Board performance is evaluated on the basis of number of Board and Committee meetings attended by individual Director, participation of Director in the affairs of the company, duties performed by each Director, targets achieved by company during the year. The Board further discusses the areas where the performance is not up to the desired level. k. Internal Financial Controls: 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 were observed. l. Related Party Transactions: 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. However, material transactions entered into with Related Parties in the ordinary course of business and on arm's length basis are disclosed in the form AOC-2 as Annexure-2 in terms of provisions of Rule 8 (2) of the Companies (Accounts) Rules, 2014 which forms part of this report. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee and Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all Related Party Transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board is available on the Company's website. m. Corporate Social Responsibility (CSR): The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The details about Committee composition and terms of reference of Committee are given in Corporate Governance Report and forms integral part of this report. A CSR Report on activities undertaken by the company and amount spent on them is attached as Annexure-3 n. Risk Management: The Company has developed a very comprehensive risk management policy under which all key risks and mitigation plans are compiled into a Risk Matrix. The same is reviewed quarterly by senior management and periodically also by the Board of Directors. The Risk Matrix contains the Company's assessment of impact and probability of each significant risk and mitigation steps taken or planned. For a detailed risk management policy please refer the website link <http://www.gravitaindia.com/wp->content/uploads/pdf/risk-management-policy. pdf. o. Material Changes and Commitments Affecting Financial Position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report: No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. 6. Corporate Governance Corporate Governance is a continuous process at Gravita India Limited. It is about commitment to values and ethical business conduct. Systems, policies and frameworks are regularly upgraded to effectively meet the challenges of rapid growth in a dynamic external business environment. Being a Listed Corporate entity, our Company is committed to sound corporate practices based on openness, fairness, professionalism and accountability paving the way in building confidence among all its stakeholders for achieving sustainable long term growth and profitabilité A detailed Corporate Governance Report and a certificate from M/s P. Pincha & Associates, Practicing Company Secretaries, Jaipur regarding compliance with conditions of Corporate Governance as required under SEBI (LODR) Regulations, 2015 are attached and forms an integral part of this report. Further, a certificate of CEO/CFO, inter alia, confirming the correctness of the Financial Statements, compliance with Company's Code of Conduct, adequacy of the Internal Control measures and reporting of matters to the Audit Committee is also attached and forms integral part of this report. Statutory Auditor At the Annual General Meeting of the Company held on 02nd August 2014, M/s Deloitte Haskins & Sells, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 27th Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, based on recommendation of Audit Committee and Board of Directors, the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. Further, there are no qualifications or adverse remarks in the Auditors' Report which require any clarification/ explanation. The Notes on financial statements are self-explanatory, and needs no further explanation. 8. Cost Auditor The Audit Committee and Board of Directors of the Company has appointed M/s K.G. Goyal & Associates, Cost Accountants having firm registration no. 000024 as Cost Auditors for conducting the audit of Cost Records maintained by the company for the Financial Year 201617. The Cost Audit Report for the F.Y. 2014-15 was filed with Registrar of Companies (Central Government) on 28th September, 2015 while the due date for filing of Cost Audit Report for F.Y. 2014 -15 was 30th September, 2015. There are no qualifications or adverse remarks in the Cost Audit Report which require any clarification/explanation. 9. Particulars of Loans given, Investments made, Guarantees given and Securities provided [Reference Section 134 and 186(4)] Particulars of loans given, investments made, guarantees 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 herein below: 10. Secretarial Auditor and Secretarial Audit Report The Board has appointed M/s P Pincha & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit of the Company under the provisions of Section 204 of the Companies Act, 2013. The report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed with this report as Annexure-4. 11. Insider Trading Prevention Code Pursuant to the SEBI Insider Trading Code, the company has formulated a comprehensive policy for prohibition of Insider Trading in Equity Shares of Gravita India Limited to preserve the confidentiality and to prevent misuse of unpublished price sensitive information. The Company Secretary has been designated as the Compliance Officer. It has also been posted on the website of the Company www.gravitaindia.com 12. Energy Conservation A detailed statement on Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, forms part of this Report as Annexure-5, 13. Particulars of Employees and related disclosures In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided hereunder. Further, the disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure-6. 14. Appointment/Resignation of KMP's • Mr. Naveen Prakash Sharma: During the year under review Mr. Naveen Prakash Sharma has been appointed as Chief Executive Officer (CEO) of the company w.e.f. 10th August, 2015 pursuant to Section 203 of Companies Act 2013 read with SEBI (LODR), Regulations, 2015. Mr. Sharma is associated with the Company since 2006. Considering the qualification and nature of duties being carried out by Mr. Sharma, the Nomination & Remuneration Committee of the Board proposed the appointment of Mr. Naveen Prakash Sharma as CEO of the Company which was subsequently ratified by Board of Directors in their meeting held on 10th August 2015. • Mr. Rajeev Surana: During the year under review Mr. Rajeev Surana, Whole-time Director of the company resigned from the post of directorship w.e.f 14th March, 2016 due to his pre-occupancy. Further, Dr. Mahavir Prasad Agarwal, Whole time Director shall be liable for retiring by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment and none of the Director is disqualified under Section 164 of the Companies Act, 2013 and rules made thereunder, for the reporting period. 15. Consolidated Financial Statements and Cash Flow Statement The Consolidated Financial Statements of the Company are prepared as required in terms of Accounting Standards (AS-21) issued by Institute of Chartered Accountants of India and forms part of the Annual Report. 16. Subsidiaries and Associates The Company has prepared Consolidated Financial Statements in accordance with Section 129 (3) of the Companies Act, 2013 which form part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1 is annexed to this report as Annexure -7. In accordance with Section 136 of the Companies Act, 2013, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company are available on our website www.gravitaindia.com 17. Disclosures Regarding ESOPs The members of the company at its Annual General Meeting held on 27th July, 2011 had approved issue of 3405000 Stock Options of Rs. 2/- each (681000 Stock Options of Rs. 10/- each) to eligible employees of the company. The Compensation Committee of the Board of Directors of the Company administers and monitors the Employees' Stock Option Scheme of the Company in accordance with the prescribed SEBI Guidelines. The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The certificate would be placed at the Annual General Meeting for inspection by members. 18. Listing of Equity Shares The Equity Shares of the Company are listed on the Bombay Stock Exchange Ltd (BSE Ltd) and National Stock Exchange (NSE) of India Ltd. and the listing fees for the Financial Year 2016-17 has been duly paid. 19. Management Discussion and Analysis Report Management Discussion and Analysis Report for the year under review as stipulated under SEBI (LODR), Regulations, 2015 is presented in a separate section forming part of this Annual Report. 20. Fixed Deposit The Company has not accepted any Fixed Deposits from public, shareholders or employees during the year under report. 21. Share Capital The Company has made allotment of 1,13,521 Equity Shares of Rs. 2/- each to the employees of the Company and its subsidiaries upon exercise of an equal number of stock options granted to them pursuant to the Stock Option Scheme of the Company. In view of the above allotment, the outstanding shares of the Company during the year has increased from 6,82,54,578 Equity Shares of Rs. 2/- each to 6,83,68,099 Equity Shares of Rs. 2/- each. 22. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" and the Rules there under. Company has formed an "Internal Complaints Committee" for prevention and redressal of sexual harassment at workplace. The Committee is having requisite members and is chaired by a senior woman member of the organization. Further, the Company has not received any complaint of sexual harassment during the financial year 2015-16. 23. Miscellaneous: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: • Details relating to deposits covered under Chapter V of the Act. • Issue of Equity Shares with differential rights as to dividend, voting or otherwise. • Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP's referred to in this report. • Neither the Managing Director nor the Whole-time Director of the Company receive any remuneration or commission from any of its subsidiaries. • No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 24. Acknowledgement The Directors take this opportunity to express their deep sense of gratitude to the Banks, Government Authorities, Customers, Suppliers, BSE, NSE, CDSL, NSDL, Bankers, Business Associates, Shareholders, Auditors, Financial Institutions and other individuals / bodies for their continued co-operation and support. Directors would also like to place on record their sincere appreciation for the commitment, dedication and hard work put in by every employee of the Gravita family for the Company's success and achievements. For and on behalf of the Board Sd/- (Dr. Mahavir Prasad Agarwal) Whole-time Director DIN:00188179 Sd/- (Rajat Agrawal) Managing Director DIN:00855284 Date: 17th June, 2016 Place: Jaipur |