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Directors Report of GOCL Corporation Ltd.

Mar 31, 2022

Your Directors have pleasure in presenting their Sixty First Annual Report and Audited Accounts for the year ended March 31,2022. There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which these financial statements relate and the date of this Report.

1. FINANCIAL RESULTS

(H in Lakhs)

Particulars

Consolidated

Standalone

2021-22

2020-21

2021-22

2020-21

Profit after providing for Depreciation and before extraordinary items and taxation

6293.68

9044.46

5831.44

5570.40

Exceptional Items

12761.04

-

-

-

Profit Before Taxation

19054.72

9044.46

5831.44

5570.40

Taxation:

Current Tax - Current Year

1314.05

1410.34

957.00

1010.00

Deferred (including MAT)

131.05

(236.27)

104.09

(343.96)

Profit After Taxation

17609.62

7870.39

4770.35

4904.36

Appropriations:

Dividend

(1982.90)

2974.35

(1982.90)

2974.35

Transfer to General Reserve

-

-

-

-

Balance carried to Balance Sheet

15626.72

4896.04

2787.45

1930.01

EPS (of H 2/- each)

35.52

15.88

9.62

9.89

During the year under review, the Company has not transferred any amount to reserves.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India forms part of this Annual Report. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by their respective Board of Directors.

There is no change in the nature of business of the Company or the Subsidiaries.

Rule 8(5)/(xi) and (xii) are not applicable as there were no proceedings against your Company under the Insolvency and Bankruptcy Code, 2016. There was no one time settlement of financial dues etc.

2. DIVIDEND

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has approved and adopted a Dividend Distribution Policy. The policy

details various considerations, the Company’s dividend track record, usage of retained earnings for corporate actions, etc. based on which the Board may recommend or declare Dividend. The Dividend Distribution policy is available on the Company’s website at https://goclcorp.com/reports/Policy-DividendDistribution2021.pdf. The said Policy lays down various factors which are considered by the Board while recommending dividend for the year.

The Board had declared on August 12, 2021 an Interim Dividend of H 2.00 per equity share of face value of H 2.00 each @ 100%, the Record Date for which was 23rd August 2021 and the same was accordingly paid to the Shareholders, out of the profits of the Company.

The Board has further recommended a final dividend of H 3.00 per equity share (150%) for the financial year 2021-22. This aggregates the total dividend for the financial year 2021-22 to 250%.

Your Company is in compliance with its Dividend Distribution Policy as approved by the Board.

3. CREDIT RATING

Infomerics Valuation and Rating Private Limited (IVR) has assigned a long term rating of IVR A on and short term rating of IVR A1 for the Company.

4. OPERATIONS AND STATE OF AFFAIRS

Standalone:

The net Income of the Company was H 185 crores (previous year of H 162 crores). The profit before tax was H 58.31 crores (H 55.70 crores). The profit after provision for current tax of H 9.57 crores and deferred tax including MAT Credit of H 1.04 crores was H 47.70 crores (H 49.04 crores) resulting in an EPS of H 9.62 for the year (H 9.89).

5. DIVISIONAL PERFORMANCE

5.1 Business Operations

Consolidated:

On a consolidated basis, the net Income of the Company was H 623 crores (H 557 crores). Profit after tax increased to H 176.10 crores (H 78.70 crores). As a result, EPS increased by 124 % to H 35.52 per share.

The wholly owned subsidiary, IDL Explosives Limited achieved a total Income of H 400 crores (H 344 crores). Profit Before Tax was H 1.22 crores (H 6.45 crores). Profit After Tax was H 0.84 Cr (H 4.61 crores).

5.2 Energetics

Energetics business achieved a turnover of H119.49 crores during the year under review. This is the highest turnover in the last 10 years. The improved performance has been contributed by both the domestic and export sales. The Division continues its focus on value added products of electronic detonators.

5.3 Bulk and Cartridge Explosives

Explosives and Cartridges business achieved a business turnover of H382 crores for the year which was 16 % more than the previous year. High ammonium nitrate prices and non- availability affected performance in Q3. However, the subsidiary has tied up with ammonium nitrate suppliers for continuous supplies and availability at reasonable price. Robust demand from PSUs and private players will ensure better performance in FY23.

5.4 Electronics Group

The Electronics Group posted positive results with strong order book for FY 23 and acquired more than 20 new customers in automotive and defense space. Being the niche player in electronics manufacturing space, the group is expanding the facility with latest 3D solder paste inspection machines to benchmark the quality; working with defense OEM design houses for collaboration to offer various RF products to defense labs and focusing on export orders for

turnkey services for the clients globally. Electronics Group has successfully incorporated Quality management systems with IMS and is currently working on AS9100D (defense) and TS16949 for automotive certifications.

5.5 Special Products Group

The Special Products Group (SPG), which serves the Defence and Space sectors, consolidated its business over the years. By successful absorption of transfer of technology (TOT) from Defence Research & Development Organization (DRDO) for Canopy Severance Systems (CSS), the Company has executed orders and awaits further orders. The SPG has obtained repeat orders for Pyro Devices and added new customers. Other product development works are in progress.

5.6 Metal Cladding Division (MCD):

Performance of the Division was H331 lakhs. MCD output was lower during the year due to the prolonged monsoon and higher material prices. However based on orders on hand, the Division’s performance is expected to be better during the subsequent year.

5.7 Exports

Even in the face of Covid 19 pandemic, the Company achieved export sales of H 44.32 crores against H 37.89 crores in the previous year with growth of 17% on annual basis.

The Company has developed new customers in the Asia-Pacific region and obtained repeat orders from East Africa, Middle East and South America utilizing our better portfolio of products and experience with shipping logistics. The Company has a healthy order book for the current financial year and expects better business in FY 23.

The Company is focused on increasing exports by developing new customers and higher volumes with existing customers. The Company will maintain its thrust in exports by adding products in existing markets and foraying into new markets.

5.8 Property Development

Bengaluru

''Ecopolis’, the Company’s mixed-use commercial project, is a joint development project with Hinduja Realty Ventures Limited. The project is located in the growth corridor of North Bengaluru. The 38.15 acres Techpark comprises of SEZ and commercial office space, is being constructed in phases.

Phase 1, of over 14.54 lac sft comprising of office building ''e3’ and Multi Level Car Parking space (MLCP) with a leasable area of over 7.64 lac sft. ''e3’ is a LEED Gold certified building, which is operational with IT/ITES clients working in the building. This building has 3 levels of basement to accommodate clients’ car parking requirements with ground floor and 10 upper floors. The MLCP consisting of 11 levels is designed as an infrastructure bank, which accommodates DG sets on the ground level, hybrid HVAC chillers on the terrace level and additional car parks in the remainder levels which will cater for three buildings in the campus.

The second wave of Covid-19 pandemic continued to cloud the outlook for commercial real estate sector. New lease agreements could not be finalized although, the Developer was in discussions with many MNCs and Indian IT companies for lease of SEZ office space in the completed buildings in Ecopolis’ project at Bengaluru.

Hyderabad

The Company had in the year 2012 entered into a Joint Development Agreement (JDA) in respect of the land situated at Kukatpally, Hyderabad with Hinduja Estates Private Limited (HEPL). With a view of an early monetization of the property, the Company has entered into an Agreement dated August 27, 2021 with Squarespace Infra City Private Limited for sale of 44.25 acres land at Kukatpally, Hyderabad subject to requisite approvals, for a consideration of H451.79 crores. The requisite approvals have since been received. The Company is also receiving the consideration as per the agreed schedule.

6. PROMOTER OF THE COMPANY

Hinduja Capital Limited (HCL) Mauritius, earlier known as Hinduja Power Limited, Mauritius continued to reinforce their

confidence in the long term prospects of your Company with their shareholding in the Company at 73.83%.

7. PUBLIC DEPOSITS

The Company had during the earlier financial year repaid / prepaid all the public deposits and there were no outstanding public deposits at the beginning of the year under review. The Company has not accepted any public deposits during the year. Thus, there are no unpaid, unclaimed or outstanding public deposits or outstanding interest as at March 31, 2022. The Board of Directors of the Company may consider accepting fresh public deposits at the appropriate time, as per the regulatory changes under the Companies Act, 2013.

8. TAXATION

Odisha Sales Tax

The Sales Tax cases pertain to branch transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger in 2011) situated in the State of Odisha to Coal India Limited subsidiaries in other States during the period 1975-76 to 1983-84.

Writ Petitions for assessment years 1976-77 to 1983-84 were filed in March, 2013 in the Odisha High Court against the order of the Commissioner of Commercial Taxes. The High Court of Odisha has granted stay on the tax re-computation order and the order of Commissioner of Commercial Taxes. The Writ Petitions are pending.

In respect of other assessment years 1998-99, 2002-03, 200405 & 2005-06 the petitions are pending before the Odisha Sales Tax Tribunal and Odisha High Court.

Due to Covid-19 situation, the matter did not progress during the year. The Company is expecting a scheme for onetime-settlement of commercial taxes, to be issued by the Government of Odisha.

9. SUBSIDIARIES:

The Company has at present three subsidiaries, out of which two are material subsidiaries.

From the two material subsidiaries, one is in India, namely IDL Explosives Limited. The other material subsidiary is in the UK and is an SPV, incorporated originally for the purpose of overseas acquisition of Houghton which has since combined with Quaker Chemical Corp. The Company has during the year under review (w.e.f. September 1,2021) acquired APDL Estates Limited, which is engaged in property development. The annual performance of the subsidiaries is as under:

IDL Explosives Limited reported net a profit of H 84.26 lakhs (H 460.56 lakhs).

HGHL Holdings Limited, UK reported a profit of H 15339.75 lakhs (H 5858.69 lakhs).

APDL Estates Limited, incurred a loss of H 81.62 lakhs

In accordance with section 136 of the Companies Act, 2013, the audited Financial Statements including Consolidated Financial Statements and related information of the Company and audited accounts of the each of its subsidiaries are available on our website www.goclcorp.com. These documents will also be available for inspection till the date of AGM during working hours at our Registered Office. A statement containing salient features of the financial statement of the above subsidiaries are disclosed in Form-AOC 1 as Annexure-A’ to this Report.

A Scheme of Arrangement has been proposed for amalgamation of APDL Estates Limited with the Company.

Overseas subsidiary

The Company through its UK based subsidiary HGHL Holdings Limited (HGHL) was holding a strategic beneficial interest of 10% in Houghton International Inc., USA, which had combined with Quaker Chemical Corporation. HGHL has fully divested this investment. The initial investment of GOCL in HGHL was only GBP 1,00,000. Thus the Company and its overseas subsidiary HGHL have substantially benefitted out of the said investment.

After fully repaying the LOC/SBLC Facility of USD 300 million availed in the year 2012 in connection with the acquisition of Houghton International Inc., HGHL has availed of a Stand By Letter of Credit (SBLC) USD 200 million to pursue an opportunity in the United Kingdom in a hospitality project. This SBLC facility availed by HGHL is collaterally secured by the factory land parcel of the Company at Hyderabad and also guaranteed by Gulf Oil International Limited (GOIL) along with a Cash Deficit Undertaking to the lender. The Company continues to receive 100 bps commission per annum for providing security for the SBLC.

10. HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Company continues to accord paramount importance to health and safety of its employees and workforce. Necessary class room and on-job training has been provided to employees on Safety, Quality and Standard Operating Procedures (SOP) aspects. The Company continued its welfare measures to its employees and workforce by way of transport, canteen, uniform, personal protective equipment (PPE), etc.

During second wave of COVID 19, awareness and precautionary measures were taken in the company to prevent the employees from getting effected by the Covid 19 Virus.

Safety

The Company is mainly focused on 5 Core Values as follows: 1) Ethics & Integrity; 2) Safety; 3) Innovation & Creativity; 4) Quality and 5) Customer Focus. Safety being one of the core values, builds the foundation for the best safety culture. The Occupational Health & Safety Management System lies in the culture of the organization, and the organization believes that safety is the key factor for overall health and performance

of the organization. Basis of safety is achieved through inherent design, safe distances, remote operations, process interlocks, safety procedures, preventive maintenance, good housekeeping and training.

The organization is in continuous improvement of its processes through automation technologies, introduction of new machineries and introduction of remote operations with PLC controls which reduces the human intervention in critical operations thereby creating safe work place. Behaviour based safety is achieved through employee consultation and participation, continuous refresher trainings and enforcement of strict safety rules and procedures. Despite the global pandemic situation, the organization emerged with its team work and handled the situation with a challenge to maintain the occupational health & safety throughout the factory. Programs have been conducted for all the employees to create awareness on the pandemic and special emphasis has been made on personal hygiene and cleanliness. Many precautions have been taken to fight the COVID-19 by maintaining social distances, hand sanitization, contact less work culture, disinfection of equipment, tools and provision of required PPE etc.

The Hyderabad factory of the Company has been awarded the prestigious "Golden Peacock Occupational Health & Safety Award 2021” from the Institute of Directors, International Golden Peacock Organization on 8th December 2021 on the eve of 22nd World Congress on Environment Management & Climate Change 2021 under Explosives Engineering Sector. GOCL Team has achieved this award for appreciable achievement of Occupational Health & Safety by attaining 2.9 Million Accident Free man hours in Hyderabad Factory.

Safety is being given an utmost importance in the day to day activities and taking necessary steps to create a safe work place for employees and safe products. The organization is in compliance with Integrated Management System. Integrated Management System was strengthened by successful upgradation of ISO 45001:2018 Occupational Health & Safety Management System from old BS OHSAS 18001:2007 Standard. ISO 14001:2015 Environment Management System and ISO 9001:2015 Quality Management Systems in the organization, which further enhances the credibility of the organization in the international market.

We have a strong focus on Research & Development with self-contained in terms of tooling, design, instrumentation, production and testing. We have developed new products with incorporation of latest electronic systems for enhanced safety in the work place and security of the products. Statutory and regulatory approvals for these new products are in pipeline and upon receiving the same will set a benchmark in explosives industry. We are in compliance with the PESO online system for Explosive Tracking and Tracing (SETT) and every explosive transaction is being carried out with enhanced transparency in explosive manufacturing, transportation and storage.

Safety training programs are being carried out on regular basis on safe operating procedures and safe handling of hazardous materials. Emergency evacuation mock drills are regularly

carried out to assess the onsite emergency preparedness as per the protocols and mitigation and rescue exercises. Regular EHS inspections, internal and external safety audits are being carried out to identify all kinds of hazards in the work place and suitable action plan is being implemented to create a safe work place in the organization. Safety Tools like HAZOP HIRARC, EAI, JSA and Leading and Lagging Indicators are in use to address all kinds of safety issues.

Safety and Security review by the top management is being carried out on monthly basis and by the Board level Safety Review Committee on quarterly basis, to increase the effectiveness of the safety culture within the organization. Central Safety Committee has been constituted and regular meetings are being carried out on quarterly basis to bring out the safety issues from the shop floor. Opening remarks, followup actions from the previous meetings, safety performance, opportunities for improvement and recommendations are reviewed and recorded. Strengthening of CCTV surveillance monitoring in vulnerable process areas, safety walk through audits by the cross functional teams, have helped to strengthen the overall safety processes in the Hyderabad Works.

Occupational Health and Preventive Health Check-ups

Occupational Health of employees is given the utmost importance and suitable ergonomic work places are designed with proper illumination and fresh air ventilation. The work zone air monitoring is carried out on regular basis to assess the environment in the workplaces and complying with the work place exposure norms by statutory authorities. Specialized medical tests for occupational health hazards are carried out perodically for all the employees. Health and hygiene medical tests are carried out for all canteen employees to ensure hygienic food in the canteen.

As a part of preventive healthcare, the Hyderabad Factory regularly organizes free medical check-ups for all the employees and workers in association with reputed multi-specialty corporate hospitals in cardiology, orthopaedics, diabetics, gynaecology, dental and eye check-ups etc. All the employees are monitored for non-communicable diseases related to the lifestyle. The health monitoring activity is continued to create awareness among the employees to maintain a healthy life style and good health. The Occupational Health Centre is equipped with new upgraded equipment to take good care of the employee health.

Security

Strengthening of the security of the operations and the facilities is taken up on regular basis by adopting technology and improvisation such as installation of more and more CC cameras for monitoring unauthorised movements, illegal activities and encroachments. All security documents, records and registers are updated for strengthening the security and SOPs are updated as per IB recommendations. Training programmes have been conducted in the area of fire fighting and handling of fire extinguishers by safety personnel and fire crew.

Recognising the quality and the efficacy of the Company’s systems and the procedures in the area of safety and security,

the Government deputes their security personnel to undergo training with the Company. One day training program was conducted to 60 personnel of the Telangana State Intelligence Security Wing (ISW). National Security Guard Operations & Training Directors, Octopus Team and Local Police have successfully completed reconnaissance at our plant.

Employment Practices & Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company believes in fair employment practices and is committed to provide an environment that ensures that every employee is treated with dignity and respect and is provided equitable treatment. The Company has a large proportion of women in the workforce and has adopted a Policy in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. No complaint was received in this regard, during the year.

11. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 of the Companies Act, 2013:

(a) that in the preparation of the annual accounts/financial statements for the financial year ended 31st March 2022, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) that the accounting policies as mentioned in the financial statements were selected and applied consistently and reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d) that the annual accounts were prepared on a going concern basis;

(e) that proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; and

(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

In compliance with Section 135 of the Companies Act, 2013 and other applicable provisions, the Company has constituted Corporate Social Responsibility Committee. The Committee presently consists of Mr. Ajay Hinduja, Non-Executive Director and Chairman of the Board as Chairman of the Committee, Mr. Sudhanshu K Tripathi, Non-Executive Director and Mr. Aditya Sapru, Independent Director, as the other Members of the Committee. The Committee met once during the year. The CSR Policy of the Company is displayed on the website of the Company.

The Company had incurred CSR expenditure of H 50 lakhs during the financial year 2020-21 which was in excess of its obligation. The excess amount has been set off in the subsequent financial year(s). The Annual Report on CSR activities is annexed herewith as ''Annexure- B’.

13. AUDITORS

Statutory / Financial Audit

BSR & Associates LLP the current Auditors of the Company were appointed at the 56th Annual General Meeting of the Company held in 2017 for a period of five years. Accordingly, BSR & Associates LLP would complete their term and tenure as envisaged in Section 139 of the Companies Act 2013 at the conclusion of the ensuing AGM of the Company.

Based on the recommendation of the Audit Committee, the Board of Directors proposes for appointment of Haribhakti & Co. LLP Chartered Accountants, (Firm Registration No. 103523W / W100048) the Statutory Auditor of the Company. The Company has received a certificate under Section 141(3) of the Companies Act, 2013 read with Rule 10 of the Companies (Audit and Auditors) Rules, 2014 from Haribhakti & Co. LLP Chartered Accountants, confirming their eligibility to be appointed as the Auditors of the Company and that they are free from any disqualifications and that they do not violate the limits as specified under the Companies Act, 2013. The necessary Resolution for appointment of Haribhakti & Co. LLP, Chartered Accountants, as the Statutory Auditors to hold office from the conclusion of the 61st Annual General Meeting till the conclusion of the 66th Annual General Meeting has been included in the Notice of the ensuing 61st Annual General Meeting of the Company and the Resolution is recommended for your approval.

Cost Records and Cost Audit

In terms of Section 148 of the Companies Act 2013 and the Companies (Cost Records & Audit) Rules, 2014, the Company, being manufacturer of Detonators, Detonating Fuse, Explosives, etc. maintains proper cost records as specified by the Central Government and is also required to appoint a cost auditor. Accordingly, the Board of Directors has appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad as the Cost Auditors of the Company for the financial year 2021-22.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed BS & Company Company Secretaries LLP, Company Secretaries, Hyderabad to undertake the Secretarial Audit of the Company for the financial year 2021-22. The Secretarial Audit Report is annexed herewith as ''Annexure C1’.

Secretarial Audit of Material Unlisted Indian Subsidiary

Secretarial Audit of IDL Explosives Limited, the material unlisted Indian subsidiary of the Company was also undertaken by BS & Company Company Secretaries LLP, Company Secretaries, Hyderabad for the financial year 202122 and their Report is annexed ''Annexure C2’ to this Report in terms of Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2021-22 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/ Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by BS & Company Company Secretaries LLP, Company Secretaries, Hyderabad has been submitted to the Stock Exchanges within the specified time and same is annexed here with as ''Annexure C3’.

Compliance with Secretarial Standards

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India.

Internal Auditor

In terms of Section 138 of the Companies Act 2013, The Board of Directors of the Company has appointed Ernst & Young LLP as Internal Auditors to conduct Internal Audit of the Company for FY 23. The Company also has an in-house internal audit department.

There was no qualification, reservation or adverse remark disclaimer in the auditors report, cost audit report or the secretarial audit report.

Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors, the Cost Auditors, Internal Auditors and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Directors or Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.

14. INTERNAL FINANCIAL CONTROLS

In order to ensure orderly and efficient conduct of the business, safeguard the assets, ensure the accuracy and completeness

of the accounting records and timely preparation of reliable financial information and financial statements, the Company has put in place adequate Internal Financial Controls in the form of various policies and procedures. Adequacy and effectiveness of the Internal Financial Controls of the Company are validated on annual basis by an external audit firm who provide assurance to the Board and the statutory Auditors.

15. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In terms of the requirements of the Companies Act, 2013 and Regulation 22 of Listing Regulations, the Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism are displayed on the website of the Company. The Audit Committee reviews the functioning of the vigil / whistle blower mechanism from time to time. There were no allegations / disclosures / concerns received during the year under review in terms of the vigil mechanism established by the Company.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of other loans, guarantees, securities and investments made by the Company, are in the notes to the financial statements forming part of the Annual Report.

There were no loans or advances in the nature of loans to firms/companies in which directors are interested, either by the Company or its subsidiaries.

17. INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, your Company transferred unclaimed dividend amount of H 2,445,438.00 (pertaining to dividend for FY 2013-14) to the Investor Education and Protection Fund in compliance with the applicable provisions of the Companies Act, 2013. Your Company also transferred during the year 20,532 shares to the IEPF Authority, in respect of which dividend had remained unclaimed for a consecutive period of 7 years. The Company Secretary is the Nodal Officer under the IEPF Rules.

18. DIRECTORS and KMPs

During the year there were some changes in composition of the Board of Directors and Key Managerial Personnel (KMPs) of the Company.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company Mr. Sudhanshu Kumar Tripathi retires by rotation at the 61st Annual General Meeting of the Company and is eligible for re-appointment. The Board recommends his re-appointment.

During the year under review, on the recommendation of the Nomination and Remuneration Committee, the Board had appointed Mr. Pankaj Kumar (DIN: 08460825) as Chief Executive Officer and Whole Time Director of the Company

with effect from 30th August, 2021 which was approved by the Shareholders at the previous Annual General Meeting of the Company.

The Board of Directors of the Company ("the Board”) at its meeting held on May 27, 2022, has appointed Mr. Pankaj Kumar as Managing Director & CEO for a period of 5 years with effect from August 30, 2022 or until the conclusion of the Annual General Meeting of the Company to be held in the calendar year 2027, whichever is later, subject to approval of the shareholders.

Mr. Subhas Pramanik (DIN: 00020414) has retired as Managing Director of the Company at the end of his tenure on September 28, 2021. Mr. Pramanik has also resigned from the Board of Directors, effective from close of September 28, 2021. The Board wishes to place on record its appreciation for the contribution made by Mr. Pramanik for the growth and diversification of the business of the Company.

The number and details of the meetings of the Board and other Committees are furnished in the Corporate Governance Report.

There were no pecuniary relationships or transactions with any Directors other than payment of sitting fees and Directors’ Commission. There were no stock options issued to any Directors.

The Independent Directors have furnished declarations of independence under Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (LODR) Regulations, 2015. They have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

Further, the Board after taking these declarations/disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors are persons of integrity and possess the relevant expertise and experience to qualify as Independent Directors of the Company and are Independent of the Management.

All the Directors of the Company including the Independent Directors have affirmed Codes of Conduct as applicable.

Registration of Independent Directors in Independent Directors Databank

All the Independent Directors of the Company have been registered and are members of Independent Directors Databank maintained by Indian Institute of Corporate Affairs.

Disclosure of Expertise / Skills / Competencies of the Board of Directors

The list of core skills / expertise / competencies identified by the Board of Directors of the Company as required in the context of its business (es) and sector(s) for it to function effectively and those actually available with the Board, form part of the Corporate Governance Report.

Directors’ Appointment and Remuneration Policy

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company and formulates the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and the Listing Regulations. The Board has in an earlier year, on the recommendations of the Nomination and Remuneration Committee, framed a policy for remuneration of the Directors and Key Managerial Personnel. The objective of the Company’s remuneration policy is to attract, motivate and retain qualified and expert individuals that the company needs in order to achieve its strategic and operational objectives, whilst acknowledging the societal context around remuneration and recognizing the interests of Company’s stakeholders.

The Non-Executive Directors (NED) are remunerated by way of Sitting Fee for each meeting attended by them and an annual commission on the profits of the Company. Commission to respective non-executive directors is determined on the basis of an objective criteria discussed and agreed upon by the Committee Members unanimously. NEDs are reimbursed any out of pocket expenses incurred by them in connection with the attendance of the Company’s Meetings.

Directors and Officers Liability Insurance (‘D&O’)

As per the requirements of Regulation 25(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has taken Directors and Officers Liability Insurance (''D and O insurance’) for all its Directors and members of the Senior Management.

Particulars of Employees and Remuneration

The information required under Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as ''Annexure D’. The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report.

None of the employees listed in the said Annexure is related to any Director of the Company.

19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as ''Annexure E’.

20. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them are up to date.

21. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report (''BRR’) of the Company for the year ended March 31, 2022 forms part of this Annual Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as ''Annexure F’.

22. CORPORATE GOVERNANCE

A separate report on Corporate Governance along with the Auditors’ Certificate on its compliance with the corporate governance requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations”) is attached as ''Annexure G’ to this Report.

23. RELATED PARTY TRANSACTIONS

No material related party transactions / arrangements were entered into during the financial year. Related party transactions approved in earlier years and continued during the year, were on an arm’s length basis and were in the ordinary course of business. During the year under review, there were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All related party transactions / arrangements, mostly with the wholly owned subsidiaries, are on arm’s length basis and are in the ordinary course of business. The Audit Committee/ Board reviews all the related party transactions on annual basis. The policy on Related Party Transactions as approved by the Board is displayed on the Company’s website.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Details of the transactions with Related Parties are provided in the accompanying financial statements.

24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant or material order(s) passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

25. ANNUAL RETURN

Pursuant to the provisions of Section 92 (3) of the Companies Act, 2013, the Annual Return in Form MGT-7 is available at the weblink: https://goclcorp.com/reports/Misc-AReturn2022.pdf

26. DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999

The Company’s acquisition of APDL Estates Limited amounts to downstream investment under the Foreign Exchange Management Act, 1999. The Company adheres to the Foreign Exchange Management Act, 1999 and the Regulations thereunder with respect to downstream investments made in its subsidiaries. Certificate from the Auditors in this regard is being obtained.

27. RISK MANAGEMENT

Details of development and implementation of risk management policy for the Company including identification of elements of risks form part of the Management Discussion and Analysis and Corporate Governance Report.

28. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the

Management Discussion and Analysis, which forms part of this Report as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

ACKNOWLEDGEMENTS

Your Directors would like to express and place on record their appreciation for the continued co-operation and support received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also place on record their deep appreciation to the employees for their continued dedication, commitment, hard work and significant contributions to the Company in very competitive market conditions. The Directors also thank the Company’s investors, business associates, for their continued co-operation and support.

for and on behalf of the Board of Directors

Place: Switzerland Ajay P Hinduja

Date: May 27, 2022 Chairman


Mar 31, 2018

REPORT OF THE BOARD OF DIRECTORS TO SHAREHOLDERS

To the Members

of GOCL Corporation Limited

Your Directors have pleasure in presenting their Fifty Seventh Annual Report and Audited Accounts for the year ended March 31, 2018. There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which these financial statements relate and the date of this Report.

1. FINANCIAL RESULTS;

Consolidated

Standalone

2017-18 Rs, Lakhs

2016-17 Rs, Lakhs

2017-18 Rs, Lakhs

2016-17 Rs, Lakhs

Profit after providing for Depreciation and before exceptional items and taxation

4374.18

4026.68

2454.52

2064.23

Exceptional Items

402.23

714.85

407.65

714.85

Profit Before Taxation

4776.41

4741.53

2862.17

2779.08

Taxation:

Current Tax - Current Year Deferred

1332.32

101.38

1231.89

244.12

477.89

162.64

385.00

285.55

Profit After Taxation

3342.71

3265.52

2221.64

2108.53

Other Comprehensive Income

27863.90

15936.06

27.58

(16.54)

Total Comprehensive Income for the year

31206.61

19201.58

2249.22

2091.99

Appropriations:

Interim Dividend Proposed Dividend

793.16

793.16

793.16

793.16

Transfer to General Reserve

-

-

-

-

Balance carried to Balance Sheet

30413.45

18408.42

1456.06

1298.83

EPS (of Rs,. 2/- each)

6.74

6.59

4.48

4.25

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India form part of this Annual Report. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by their respective Board of Directors. There is no change in the nature of bussiness of the Company or the subsidiaries.

2. DIVIDEND

The Board had on March 23, 2018 declared an interim dividend of Rs, 1.60 per equity share of face value of Rs, 2 each @ 80% (final dividend of 80% for previous year), the Record Date for which was April 6, 2018 and the same was accordingly paid to the Shareholders on April 12, 2018 out of the profits of the Company for the current year. The Board has decided to treat the Interim Dividend as the Final Dividend and hence not recommended any additional dividend for the year. The Interim Dividend, excluding dividend distribution tax, aggregated to Rs, 793.16 crores (previous year Rs, 793.16 crores).

3. CREDIT RATING

Infomerics Valuation and Rating Private Limited (IVR) has assigned long term rating of IVR A- with Stable Outlook and short term rating of IVR A2 for the Company; and ICRA has assigned [ICRA] BBB and short term rating of [ICRA] A3 , respectively for its wholly owned subsidiary IDL Explosives Ltd. In view of the improvement in operations, funds flow and decrease in debt, the ratings have improved for both the Company and its subsidiary IDLEL.

4. OPERATIONS Standalone:

The net revenue of the Company was Rs, 121 crores (previous year Rs, 130 crores). The profit before exceptional items and taxation was Rs, 24.55 crores (Rs, 20.64 crores). The profit before tax was Rs, 28.62 crores (Rs, 27.79 crores). The profit after provision for current tax of Rs, 4.78 crores and deferred tax of Rs, 1.63 crores was Rs, 22.22 crores (Rs, 21.09 crores) resulting in an EPS of Rs, 4.48 for the year (Rs, 4.25).

The turnover and profits were affected due to the Mining & Infrastructure Division having reduced operations in line with the non-operation of mines in the metal sector.

Consolidated:

On a consolidated basis, the net revenue of the Company was Rs, 551 crores (Rs, 577 crores). Profit After Tax was marginally higher at Rs, 33.43 crores (Rs, 32.66 crores) and EPS of Rs, 6.74 (Rs, 6.59).

The wholly owned subsidiary, IDL Explosives Limited (IDLEL) achieved a net revenue of Rs 416 crores (Rs, 422 crores). Profit Before Tax was Rs, 21.53 crores (Rs, 20.57 crores). Profit After Tax was Rs 13.88 crores (Rs,12.93 crores).

The drop in turnover and profit was due to drop in market prices of explosives and accessories by over 8% and 25% respectively and transition to GST affecting sales activity by a fortnight.

5. DIVISIONAL PERFORMANCE

5.1 Business Operations

5.2 Energetics

The net revenue of the Division was marginally lower at Rs, 90.75 crores as against Rs, 92.72 crores in the previous year, in spite of tough market conditions. Detonator sales were mainly affected due to shift in retail sector demand from plain detonators and electric detonators to non-electric detonators and cords.

The shift in demand pattern also affected the prices of our product mix by nearly 25% on an average. However, the challenge was met by increasing volumes across all emerging demand segments. Non-electric detonators were increased by around 56% whilst cartridge explosives by nearly 15%. Electronic detonators and pentolite boosters volumes were doubled.

Special Products Group was able to make higher supplies after qualifying for various pyro devices for the missile programmes of Bharat Dynamics Limited and DRDL. The sales income of the Group increased by 81% over the previous year.

Export volumes contributed to the overall turnover and contribution, and added new customers located in new regions.

R&D activities were increased to cover new product and process development to cater to specific market requirements and improve product attributes. Expenditure of Rs, 1.73 crores was incurred during the year.

5.3 Mining and Infrastructure

The operations of the Division continued to be curtailed due to clients not receiving mining approval from respective State Governments under the MMRDA Act. In the latter part of the year, some mines started reopening at a slow pace.

The Division did a limited turnover of Rs, 1.39 crores as against Rs, 6.57 crores of previous year. In view of the paucity of business, further equipment which were idle or had become inefficient were disposed off during the year.

5.4 Bulk and Cartridge Explosives

Bulk and Cartridge explosives are manufactured by IDL Explosives Ltd., a wholly owned subsidiary. Several initiatives taken during the year have resulted in benefits in this year itself. The Ammonium Nitrate storage capacities at locations were increased from 2500 MT to 7000 MT helping higher throughputs at all plants. The Rourkela plant achieved capacity utilisation of 102% whilst the average capacity utilisation of the Bulk plants was around 80%. Two new bulk plants with capacities of 10000 T in West Bengal and 6000 T in Chhattisgarh were added which achieved capacity utilisation of 78% and 61% respectively during the year.

At Rourkela, the increase in throughput was also helped by the continuous processing plant coming into operation for packaged explosives. This has been a major in-house project which has not only reduced manufacturing costs but also improved the consistency of the products related to the batch processes operated earlier. The bulk explosives volumes increased to 99,000 tonnes was supported by new bulk delivery pump truck being introduced and several older vehicles having been replaced.

5.5 Exports

Export activities increased during the year but due to paucity of vessels at Chennai several shipments could not be made by the end of the year. However, exports recorded for the year was at Rs, 35.28 crores ( Rs, 37.45 crores ).

5.6 Property Development Bengaluru :

Construction of Block 3 (2 Basements Ground 10 upper Floors) and MLCP (multi-level car park) in the “Ecopolis” project is completed and Occupation Certificate received. It has potential of approx. over 7.6 lakh sqft of leasable area and 2500 car parks. Block 3 is a certified LEED Gold rated building and is ready for fit-outs with occupancy certificate.

Block 2 is in the final stages of completion, and would be ready for clients fit-out works by Q3 of 2018. Block 2 (2 Basements Ground 10 upper Floors), has potential of approx. over 7.3 lakh sqft of leasable area and pre-certified LEED Gold rated building.

Plans for development of the balance land is under finalization considering some serious interest from large organizations for built to suit requirements in the SEZ block.

The first block in the Ecopolis project at Bengaluru, i.e., Block 3 and the Multi-Level Car Parking (MLCP) have been ready for some time. The first Lease Agreement for 10 years (extendable to another 5 years ) has been signed with one of the major leading multi-national insurance/financial companies, for one full floor ( 73,465 sft ) in Block 3. The revenue stream will start after the fit out period from Q3 of the current year.

Our Developer, Hinduja Realty Ventures Limited, for “Ecopolis” has been awarded the prestigious CIDC ( Construction Industry Development Council) Vishwakarma Awards 2018 in the category of “Best Construction Projects” for engagement of new / innovative techniques, deployment of Green Technologies, Health, Safety & Environment measures adopted, engagement of quality manpower, engineering, management, skilled construction worker etc.

Hyderabad

The city’s strong office leasing activity in the recent past has had positive impact on the residential market. This coupled with robust infrastructural development, supportive government policies and competitive pricing has positioned Telangana''s capital Hyderabad as one of the most affordable residential markets for buyers.

The 100 acre integrated mixed use township is located in Kukatpally which is easily accessible to all the hotspots of the city. This township comprises of IT/ITeS office space, Retail segment, Educational Institution, Hotel, Hospital and Residential apartments.

The master plan has been redesigned and a detailed design for Phase 1 of the development is currently being developed. In the meantime, approval from the Airport Authorities has been received.

6. OVERSEAS HOLDING

The Company through its UK based subsidiary HGHL Holdings Limited, UK (HGHL) holds 10% stake in Houghton International Inc., USA a subsidiary of the Hinduja Group''s Gulf Oil International. Further, repayments of the loan instalments are being regularly made. The outstanding as on March 31, 2018 was USD 88.20 million.

Houghton International has, in the month of April 2017 entered into a definitive agreement to merge with Quaker Chemical (NYSE: KWR) to create a global leader in the space of process fluids, chemical specialties, and technical expertise to the global primary metals and metal working industries. The Hinduja conglomerate will be the largest shareholder in the combined public company. On completion of the merger, your Company will be entitled to approx. 2% in the combined entity.

Quaker Chemical is reported to have already received regulatory approvals from two of the countries in which it operates. Depending on the receipt of the remaining regulatory approvals including from the USA and Europe, as well as other customary terms and conditions set forth in the share purchase agreement, closing of the Combination is expected to occur in the next few months.

Your Company continues to receive commission towards providing security of its property for the loan availed by its wholly owned subsidiary in the UK for the aforesaid acquisition.

7. PROMOTER OF THE COMPANY

Hinduja Power Limited, Mauritius (HPL) continued to reinforce their confidence in the long term prospects of your Company by increasing their shareholding to 74.93%.

8. PUBLIC DEPOSITS

The Company has during the earlier financial year repaid / prepaid all the public deposits and there were no outstanding public deposits at the beginning of the year under review. The Company has not accepted any public deposits during the year. The Board of Directors of the Company may consider accepting fresh public deposits at the appropriate time, as per the regulatory changes under the Companies Act 2013.

9. TAXATION

Goods & Services Tax ( GST )

The GST implementation w.e.f. July 1, 2017 was a game changer triggering a major change in the method of doing business especially for interstate transactions. The Company was, therefore, able to resolve several distribution issues involving interstate supplies to its major customers.

Your Company along with its subsidiaries have been able to implement satisfactorily at all plants and sales locations the GST system with numerous amendments and the E-way Bill system for smooth operations using the SAP backbone.

Odisha Sales Tax

The Sales Tax cases pertain to branch transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger) situated in the State of Odisha to Coal India Limited subsidiaries in other States.

Writ Petitions for assessment years 1976-77 to 1983-84 were filed in March, 2013 in the Odisha High Court against the order of the Commissioner of Commercial Taxes. The High Court of Odisha has granted stay on the tax re-computation order and the order of Commissioner of Commercial Taxes. The Writ Petitions are pending.

I n respect of other assessment years 1998-99, 2002-03, 2004-05 and 2005-06 the petitions are pending before the Odisha Sales Tax Tribunal and Odisha High Court.

10. SUBSIDIARIES:

The Company has four subsidiaries, of which, only one is a material one, namely IDL Explosives Limited. The UK subsidiary is an SPV incorporated for the purpose of overseas acquisition of Houghton. The remaining two subsidiaries do not, at present, undertake any significant business activity. The annual performance of the subsidiaries is as under:

- HGHL Holdings Limited, UK reported a net profit of '' 565.99 lakhs ('' 248.72 lakhs).

- IDL Explosives Limited reported a net profit of '' 1388.05 lakhs ('' 1293.43 lakhs).

- IDL Buildware Limited reported a net profit of '' 5.25 lakhs ('' 13.82 lakhs ).

- Gulf Carosserie India Limited incurred a loss of '' 0.30 lakhs ( Loss '' 0.58 lakhs).

In accordance with section 136 of the Companies Act, 2013, the Audited Financial Statements including Consolidated Financial Statements and related information of the Company and Audited accounts of the each of its subsidiaries are available on our website www.goclcorp.com. These documents will also be available for inspection till the date of AGM during working hours at our Registered Office. A statement containing salient features of the financial statement of the above subsidiaries are disclosed in Form AOC - 1 as ‘Annexure-A'' to this Report.

A Scheme of Arrangement has been proposed during the year for amalgamation of two of the wholly owned subsidiaries, namely, IDL Buildware Limited and Gulf Carosserie India Limited. Pursuant to the directions of the Hon''ble National Company Law Tribunal (NCLT), Hyderabad Bench, the Scheme of Arrangement has been approved with requisite majority of the Shareholders and the Creditors. The Scheme is presently under the consideration of the Hon''ble NCLT.

11. HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Human Resources Department and Industrial Relations Department at the factories continued to maintain high levels of commitment and motivation amongst the employees resulting in higher productivity and value addition at all locations.

The Company continued to lay a strong emphasis on Safety and in this regard programs on Hazard Identification and Risk Assessment (HIRA) and Job Safety Analysis (JSA) were conducted along with training programs at Hyderabad and Rourkela on the New IMS Standards for ISO 9001, 14001 and 18001. Intensive Training Programs on GST was provided to key personnel for effective implementation of GST in the Company within the timeframe announced by the State Governments.

Recognition of employees for outstanding monthly performance and achievement of efficiency with compliance to Safety Standards was continued.

Safety

New Initiatives for Safety improvement include up gradation to the new IMS 2015 standards and recertification of ISO 9001:2015; ISO 14001:2015 & BS OHSAS 18001:2007. During the year, systems in the magazines to reduce the manual handling of explosive boxes and daily safety walkthrough inspections with cross functional teams and reporting through daily EHS inspection reports were maintained. Refresher training programs for all the employees; specialized medical tests for workmen for enhancing occupational health &safety. Third party safety audit was conducted to strengthen the manufacturing systems. .

National Safety Month programs conducted for further building up the of safety awareness of the employees. Inter Plant like Safety Slogans, Quiz, Essay writings, drawings and Paper presentations were organized to spread the safety awareness messages.

Preventive Health Check-ups

Specialized medical check-ups on occupational health was conducted for all the employees who are involved in hazardous process operations to identify occupational health issues, if any.

Security

Security measures have been enhanced at all factories of the Company and its subsidiary IDLEL. Additional security gates and speed breakers were constructed on both sides of all access gates to control speedy movement of vehicles. Records of all visitors to the plant in terms of the requirement of the Ministry of Home Affairs are being maintained. Walkie talkie sets were deployed for faster communication within the factory premises and monthly security training was organized for the security.

Employment Practices

The Company believes in fair employment practices and is committed to provide an environment that ensures that every employee is treated with dignity and respect and is provided equitable treatment. The Company has a large proportion of women in the workforce and has adopted a Policy in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. No complaint was received in this regard, during the year.

12. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 of the Companies Act 2013:

(a) that in the preparation of the annual accounts/financial statements for the financial year ended March 31, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) that the accounting policies as mentioned in the financial statements were selected and applied consistently and reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d) that the annual accounts were prepared on a going concern basis;

(e) that proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; and

(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

13. AUDITORS

Statutory / Financial Audit

M/s BSR & Associates LLP, Chartered Accountants, (ICAI Firm Registration Number: 116231W/ W-100024) were appointed as Auditors of the Company for a period of five years from conclusion of the 56th Annual General Meeting subject to ratification by the members at every AGM. However, the Companies (Amendment) Act, 2017 has done away with the requirement of annual ratification of appointment of Auditors. Hence, ratification of auditors appointment is not being proposed at the ensuing AGM. Accordingly, as approved at the 56th AGM, the term of M/s BSR & Associates LLP, will be upto the conclusion of 61st AGM of the Company.

Cost Audit

The Ministry of Corporate Affairs had, vide its Order dated December 31, 2014 directed audit of cost records of the companies covered under the Companies (Cost Records & Audit) Amendment Rules, 2014. The said Order is applicable to the Company, being manufacturer of Detonators, Detonating Fuse, Explosives, etc. Accordingly, the Board of Directors has appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad as the Cost Auditors of the Company for the financial year 2017-18.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s BS & Company Company Secretaries LLP, Company Secretaries, Hyderabad to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Report of the Secretarial Audit Report is annexed herewith as ‘Annexure D''.

There was no qualification, reservation or adverse remark or disclaimer in the auditor’s report, cost audit report or the secretarial audit report. The Auditors have not reported any frauds.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

The CSR Committee recommended CSR expenditure of '' 38.02 lakhs for the year 2017-18. Accordingly, two projects in the Education and Rural Development were identified and work orders released. The Annual Report on CSR activities is annexed herewith as ‘Annexure E''.

In the first project, as part of the Sustainable Rural Development program, we have undertaken an Innovative Digital Education Initiative. We have provided interactive smart boards and projectors for imparting teaching in an audio-visual form, in 5 zillaparishad and residential schools in Palghar District of Maharashtra. The course content for the particular class and selected subjects (PCM and Social Sciences) will be delivered in audio-visual form.

I n the second project, a major renovation was carried out in a 72 year old School in Tandur, Telangana. The project involved major renovations in the school premises including repair of walls and roofing. Thereafter, a school library and a Science Laboratory were created. Computer Room with audio visual facilities has been set up to teach and train students for getting them ready for the digital world. Since, the work involved was dependent on several contractors and suppliers the work completed in the first two months of the current year.

15. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In terms of the requirements of the Companies Act 2013 and Regulation 22 of Listing Regulations, the Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism are displayed on the website of the Company. The Audit Committee reviews the functioning of the vigil / whistle blower mechanism from time to time. There were no allegations / disclosures / concerns received during the year under review in terms of the vigil mechanism established by the Company.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of loans, guarantees, securities and investments made by the Company, most of which are to its wholly owned subsidiaries, are in the notes to the financial statements forming part of this report.

The Company has during the year invested an amount of '' 19,05,75,000 for subscribing to '' 18,15,000 equity shares of IDL Explosives Limited (IDLEL), at a premium of '' 95 per equity share. IDLEL has subsequently redeemed 1,89,000 preference shares held by the Company, at a premium of '' 900 per share of face value of '' 100 each. An amount of '' 40,010 was further invested for acquiring 20,005 equity shares of Gulf Carosserie India Limited, making it a wholly owned subsidiary.

17. INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, your Company transferred unclaimed dividend amount (pertaining to dividend for 2009-10) and unclaimed refund amount (application amounts for rights issue of 2010) to the Investor Education and Protection Fund in compliance with the applicable provisions of the Companies Act 2013. Your Company also transferred an aggregate of 2,45,579 shares to the IEPF Authority, in respect of which dividend had remained unclaimed for a consecutive period of 7 years.

18. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

During the year there was no change in composition of Board of Directors and KMPs of the Company.

In accordance with the provisions of the Companies Act 2013 and the Articles of Association of the Company Mr. Ajay P. Hinduja retires by rotation at the 57th Annual General Meeting of the Company and is eligible for reappointment. Mr. Ramkrishan P Hinduja and Mr. Ajay P Hinduja are related to each other. The Board recommends his re-appointment.

The number and details of the meetings of the Board and other Committees are furnished in the Corporate Governance Report.

The Independent Directors have furnished declaration of independence under Section 149 of the Companies Act 2013 and Regulation 25 of SEBI (LODR) Regulations, 2015.

Detailed report on the evaluation of the Board, its Committees and the individual directors forms part of the Corporate Governance Report.

Directors'' Appointment and Remuneration Policy

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company and formulates the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and the Listing Regulations. The Board has in an earlier year, on the recommendations of the Nomination &Remuneration Committee framed a policy for remuneration of the Directors and Key Managerial Personnel. The objective of the Company''s remuneration policy is to attract, motivate and retain qualified and expert individuals that the company needs in order to achieve its strategic and operational objectives, whilst acknowledging the societal context around remuneration and recognizing the interests of Company''s stakeholders.

The Non-Executive Directors (NED) are remunerated by way of Sitting Fee for each meeting attended by them and an annual commission on the profits of the Company. Commission to respective non-executive directors is determined on the basis of an objective criteria discussed and agreed upon by the Committee Members unanimously. NEDs are reimbursed any out of pocket expenses incurred by them in connection with the attendance of the Company''s Meetings.

Particulars of Employees and Remuneration

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

19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as ‘Annexure C''.

20. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them up-to-date.

21. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company’s compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

22. RELATED PARTY TRANSACTIONS

All related party transactions / arrangements that were entered into during the financial year were at an arm’s length basis and were in the ordinary course of business. During the year under review, there were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All related party transactions / arrangements, mostly with the wholly owned subsidiaries, are at arm''s length basis and are in the ordinary course of business. The Audit Committee/Board reviews all the related party transactions on annual basis. The policy on Related Party Transactions as approved by the Board is displayed on the Company''s website.

None of the Directors has any pecuniary relationships or

transactions vis-a-vis the Company. Details of the transactions with Related Parties are provided in the accompanying financial statements.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Pursuant to a complaint filed before the Competition Commission of India (CCI) by Coal India Limited, CCI had vide their Order dated April 16, 2012 held that the Company had, along with a few other explosive manufacturers, were alleged to have contravened the provisions of Section 3 of the Competition Act 2002. The CCI had on that basis imposed a penalty on the Company of Rs, 29.84 crores. The Company had filed an Appeal before the Competition Appellate Tribunal (COMPAT) and the COMPAT had vide its Order dated April 18, 2013, reduced to Rs, 2.89 crores; and a further Civil Appeal in the Supreme Court of India and the matter is subjudice. Based on expert legal advice, the Company believes that it has a good case and expects a favourable decision in the matter.

24. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as ‘Annexure F''.

25. RISK MANAGEMENT

Details of development and implementation of risk management policy for the Company including identification therein of elements of risks form part of the Management Discussion and Analysis and the Corporate Governance Report.

ACKNOWLEDGEMENTS

Your Directors would like to express and place on record their sincere appreciation for the continued co-operation and support received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also place on record their deep appreciation for their continued dedication, commitment, hard work and significant contributions to the Company in very competitive market conditions which prevailed in the year under review. The Directors also thank the Company''s investors, business associates, for their continued co-operation and support.

for and on behalf of the Board of Directors

Place : Mumbai Ajay P. Hinduja

Date : August 10, 2018 Chairman


Mar 31, 2017

The Directors have pleasure in presenting their Fifty Sixth Annual Report and Audited Accounts for the year ended 31st March, 2017.

1. FINANCIAL RESULTS

Consolidated

Standalone

2016-17

2015-16

2016-17

2015-16

Rs. Lakhs

Rs. Lakhs

Rs. Lakhs

Rs. Lakhs

Profit after providing for Depreciation and before extraordinary items and taxation

4025.35

3498.36

1801.57

2211.24

Exceptional Items

714.85

368.36

714.85

368.36

Profit Before Taxation Tax Expenses:

4740.20

3866.72

2516.42

2579.60

Current Tax - Current Year

1231.89

863.81

385.00

642.00

Deferred

212.79

378.15

200.00

177.00

MAT Credit

4.50

(68.86)

-

-

Profit After Taxation

3291.02

2693.62

1931.42

1760.60

Balance brought forward from previous year

12715.09

11056.65

20579.63

19846.50

Balance available for appropriation Appropriations:

16006.11

13750.27

22511.05

21607.10

Proposed Dividend

-

743.59

-

743.59

Tax on dividend

127.01

111.59

-

103.88

Transfer to General Reserve

-

180.00

-

180.00

Balance carried to Balance Sheet

15879.10

12715.09

22511.05

20579.63

EPS (of Rs.2/- each)

6.64

5.43

3.90

3.55

Consolidated Financial Statements

The Consolidated Financial Statements of the Company is prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of this Annual Report. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by their respective Board of Directors.

2. DIVIDEND

The Board at its meeting held on 29th May, 2017 has recommended the payment of Dividend of Rs.1.60 per share (Rs. 1.50) equivalent to 80% (75%) on the Paid-up Capital of the Company. The dividend of Rs.8.28 crores (Rs. 8.48 crores), including dividend distribution tax, if approved by the Shareholders at the Fifty Sixth Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure.

3. OPERATIONS

The total turnover of the Company was Rs.105.44 crores (previous year Rs.108.21 crores). The profit before exceptional items and taxation was Rs.18.02 crores (Rs. 22.12 crores). The profit before tax was Rs.25.16 crores (Rs.25.80 crores). The profit after provision for current tax of Rs. 3.85 crores and deferred tax of Rs.2.00 crores was Rs.19.31 crores (Rs.17.60 crores) resulting in an EPS of Rs.3.90 for the year (Rs.3.55 ).

On a consolidated basis, the turnover of the Company was Rs.554.20 crores (Rs. 537.41 crores). Profit after tax was Rs.32.91 crores (Rs. 26.94 crores) and EPS of Rs.6.64 (Rs. 5.43).

4. CREDIT RATING

ICRA has reaffirmed the long term rating of [ICRA] BBB and short term rating of [ICRA] A3 for the Company and [ICRA] BBB-and short term rating of [ICRA] A3 for its wholly owned subsidiary IDL Explosives Ltd.

5.2 Energetics

The gross turnover of the Division increased by over 30% to Rs.97 crores as against Rs.74 crores in the previous year. This was achieved through increase in volumes of 14% in Detonators and 49% in Detonating Fuse in the Domestic Market and increase in Detonator Volume by 37% and Detonating fuse by 46% in the Export Market.

Production of Detonators went up by over 14% to 71 million as against 62 million in the previous year. Detonating fuse production rose by 33% to 16 million meters as against 12 million metres in the previous year driven by increase in Export volumes.

Several projects for up gradation and modification of process, and equipment for enhancing productivity and safety, was completed during the year. These actions helped to reduce production cost and improve efficiencies. The R&D activities helped in completing the pilot plant for manufacture of HMX required for captive consumption.

In the Special Products Group, which serves the Defense and Space sectors, demand for Pryo Cartridges for Akash Missiles, Squibs and Igniters besides Explosive Trains and Booster Pellets also for missiles were successfully met. A major DRDO project for missile was also completed as per requirement.

5.3 Mining and Infrastructure

The operations of the Division were curtailed due to clients not receiving mining approval from the State Government as their cases under the MMRDA Act were pending decision by the Supreme Court.

The Division did a limited turnover of Rs.6.57 crores as against Rs.20.16 crores of previous year. In view of the paucity of business, all old equipment which were idle or had become inefficient were disposed off during the year. The focus of the Division continued to be in Eastern India for ferrous metal mines in the Barbil region.

Construction activities, however, continued.

5.4 Exports

Export sales increased by over 50% reaching Rs.24.75 crores as against Rs.16.43 crores of previous year. This was achieved with successful implementation of the strategy to expand into new markets in South America and re-couping business in Europe. Better margins resulted from improvement in product design, increased volumes of value-added products and effective logistics planning.

5.5 Realty

Bengaluru:

The construction work in the “Ecopolis” project, at Bengaluru has proceeded well during the year. Out of the proposed 77.31 lakh sq. ft. for development, 14.54 sq.ft. in the SEZ designated area has been developed and ready for fitouts by client. The completed area comprises of Block 3 and MLCP (for parking requirement of Block 3, 2 & 1). Block 3 and Multi Level Car Park (MLCP) are certified LEED Gold rated buildings.

During the year construction of Block 2 comprising of 10.06 lakh sq. ft. is nearing completion. Super structure is completed. The fagade work is underway along with Low side HVAC work, electrical works and PHE works. Block 2 will be ready for fit-outs in Q1 2018. Block 2 is a pre-certified LEED Gold rated building.

The Developer Company is closely working with consultants and local brokers. They have received clients’ sale / lease and ‘Build to Suit’ requirements from reputed organizations and are working towards a positive conclusion.

Hyderabad:

Based on market assessment and owing to its proximity to the IT hub in Hyderabad, the project will be an Integrated Mixed-use Township comprising of residential apartments, IT / ITeS office space, retail, healthcare, educational facilities, leisure and hospitality facilities. Integrated new Master Plan for full 100-acre development has been reworked to suit present market condition. Detailed design for Phase 1 of the development is currently being finalized for obtaining statutory approvals.

6. OVERSEAS HOLDING

As reported earlier the Company through its UK based subsidiary HGHL Holdings Limited, UK (HGHL) holds 10% stake in Houghton International Inc., USA a subsidiary of the Hinduja Group’s Gulf Oil International. The Company has been released of all its obligations to the lenders by the new investor who had provided guarantee to the Company for servicing and repayment of balance of the then outstanding loan of USD180 million, as per the repayment schedule of the Lender, but continues to receive commission towards providing of security of its properties for the said loan.

Houghton International, has in the month of April 2017 entered into a definitive agreement to combine with Quaker Chemical (NYSE: KWR) to create a global leader in the space of process fluids, chemical specialties, and technical expertise to the global primary metals and metal working industries. The Hinduja conglomerate will be the largest shareholder in the combined public company. The Company will be entitled to approx. 2% in the combined entity.

7. PROMOTER OF THE COMPANY

Hinduja Power Limited, Mauritius (HPL) continued to reinforce their confidence in the long term prospects of the Company by increasing their shareholding to 69.94%.

8. INTERNAL CONTROL SYSTEMS

The Company has laid down policies, guidelines, processes and structure which support its robust Internal and Financial Control Systems that commensurate with the size, scale and complexity of its operations, designed to ensure reliability of financial reporting, timely feedback on achievement of goals, compliance with policies, procedures, applicable laws and regulations, safeguarding of assets and economical and efficient use of resources. Internal and Financial control system assists the Board and Management to fulfill all business objectives. The Company’s SAP-ERP system, Risk Management processes along with its certification in ISO 9001(QMS), ISO 14001(EMS) & ISO 18001 (OHSAS) ensures that quality and control processes in place are operating effectively.

The Company has an Internal Audit Department which provides the Audit Committee and the Board of Directors an independent, objective and reasonable assurance of the adequacy, efficiency and effectiveness of the Organization’s risk management, internal, financial and operational controls and corporate governance processes. Internal Audit reviews are conducted on an on-going basis, based on a comprehensive risk-based audit plan approved by the Audit Committee at the beginning of the year. The Internal Audit Department reviews and evaluates the efficacy and adequacy of internal and financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. The function also assesses opportunities for improvement in business processes, systems and controls and provides recommendations designed to add value to the organization in consultation with the Senior Management.

Significant observations, corrective actions and good practices suggested by Statutory and Internal Auditors are reviewed by the Management and the Audit Committee for appropriate implementation for monitoring and strengthening controls on various business processes. During the year, the Audit Committee met six times to review key findings and recommendations of the internal auditors including status of implementation through Action Taken Reports.

9. PUBLIC DEPOSITS

The Company has during the earlier financial year repaid / prepaid all the public deposits and there were no outstanding public deposits at the beginning of the year under review. The Company has not accepted any public deposits during the year. The Board of Directors of the Company may consider accepting fresh public deposits at the appropriate time, as per the regulatory changes under the Companies Act, 2013.

10. TAXATION

Odisha Sales Tax

The Sales Tax cases pertain to branch transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger) situated in the State of Odisha to other States.

Writ Petitions for assessment years 1976-77 to 1983-84 were filed in March, 2013 in the Orissa High Court against the order of the Commissioner of Commercial Taxes dismissing the Revision Petitions. The High Court has granted stay on the tax recomputation order and the order of Commissioner of Commercial Taxes. The Writ Petitions are pending.

In respect of other assessment years 1998-99, 2002-03, 2004-05 & 2005-06 the petitions are pending before the Odisha Sales Tax Tribunal and Orissa High Court.

11. SUBSIDIARIES

The Company has four subsidiaries, of which, only one is a material one, namely IDL Explosives Limited. The UK subsidiary is a SPV incorporated for the purpose of overseas acquisition of Houghton. The remaining two subsidiaries do not, at present, undertake any significant business activity. The annual performance of the subsidiaries are as under:

- HGHL Holdings Limited, UK reported a profit of Rs.248.72 lakhs (Rs. 288.10 lakhs).

- IDL Explosives Limited reported a profit of Rs.1561.26 lakhs (Rs. 661.79 lakhs).

- IDL Buildware Limited reported a profit of Rs.22.48 lakhs (Rs.2.15 lakhs).

- Gulf Carosserie India Limited incurred a loss of Rs.-0.58 lakhs (Rs. 5.16 lakhs).

In accordance with section 136 of the Companies Act, 2013, The Audited Financial Statements including Consolidated Financial Statements and related information of the Company and Audited accounts of the each of its subsidiaries are available on our website www.goclcorp.com. These documents are also available for inspection till the date of AGM during working hours at our Registered Office. A statement containing salient features of the financial statement of above subsidiaries are disclosed in Form-AOC 1 as ‘Annexure-A’ to the Board’s Report.

12. HUMAN RESOURCES / INDUSTRIAL RELATIONS

Human Resources and Industrial Relations Departments ensured high morale amongst the employees in the Company and its subsidiary IDL Explosives Limited ( IDLEL ) which resulted in increased production volumes and revenues. A healthy and positive working relationship was maintained through continuing programs on behavioral competencies for the Management staff.

As a continuing trend, strong emphasis was laid on reducing product rejections and process wastages through training programs in statistical quality control and material flow cost accounting system in the Company and its major subsidiary IDLEL. Training programs in Safety, Internal Audit on Integrated Management Systems for ISO 9001, 14001 and 18001 have been successfully conducted for employees in the Company.

Strategic HR initiatives to ensure seamless understanding of Company goals have been put in place through implementation of Balanced Score Card objectives across all levels of Management / Supervisory cadre.

Staff Welfare

Employee motivation by felicitation of employees on monthly basis for outstanding performance is being continued in GOCL as well as in IDLEL to inculcate a culture of innovation and achievement beyond annual goals.

Safety

Safety awareness has been enhanced by way of training on hazard identification, risk assessment and continuous training to the newly inducted employees and regular training to the employees on SOPs, mock drills on emergency preparedness and mitigation exercises; in addition to internal and external safety audits, central safety committee with equal number of worker staff and management staff to bring out the safety issues from the shop floor and to review and discuss on the safety related issues, monthly safety reviews by top management, CCTV surveillance monitoring in vulnerable process areas, Safety walk through audits by the cross functional teams, have helped to strengthen the overall safety processes in the Hyderabad Works.

All new projects and developmental activities are being assessed and appropriate management of change of approvals, Hazard Identification and Risk Assessments as well as Hazop studies are undertaken by the Safety Department and its major subsidiary IDLEL.

National Safety Day on 4th March was celebrated and month long programs conducted for various kinds of safety awareness to the employees like Safety Slogans, Quiz, Essay writings, drawings and Paper presentations etc,. Safety Bulletin, Housekeeping Handbook in English and Telugu languages and Company standing orders Handbook in Telugu language were released.

ISO system in the organization was upgraded to a new level by implementing the new standards of ISO i.e., ISO 9001:2015, ISO 14001:2015 and BS OHSAS 18001:2007, thereby integrating management systems covering quality, occupational health, safety and environmental standards as per the latest updates.

Preventive Health Check-ups

In order to ensure healthy atmosphere in the Company and to create necessary awareness among the employees on the health aspects, the Hyderabad Factory organized number of free medical camps and preventive medical check ups with the association of reputed multi -specialty and super specialty hospitals. Specialized medical check-ups on health and hygiene has been conducted for all the canteen workers and Specialized medical check-ups on occupational health were conducted for all the employees who are involved in the operations to identify any occupational health effects on the workers.

The camps have been focused on the areas of diabetic, pulmonology, pathology, orthopedics, cardiology and gynecology and free medical checkups conducted on dental, eye, RBS, ECG etc., during the financial year at our occupational health center and given necessary preventive guidance.

Occupational Health Centre has been equipped further with specialized emergency medicines and specialized equipments like Defibrillators, Burnaid - Sterile gel impregnated dressing (First aid Emergency burn dressing kit), etc.

Security

Security measures have been increased to safeguard the Company’s personnel, properties, equipment. Speed breakers were constructed on both sides of all access gates to check speedy movement of vehicles. Improvised CC cameras have been installed at the gates for clear view of the incoming/outgoing vehicles and their occupants. Additional security measures include mandatory frisking, bio-metric attendance system for all employees and photo records of people entering the premises. Additional vehicles have been provided for better patrolling in the Factory area by the security personnel. Better illumination has been provided at all magazines, tower posts and periphery of the factory area.

Employment Practices

The Company believes in fair employment practices and is committed to provide an environment that ensures that every employee is treated with dignity and respect and is provided equitable treatment. The Company has a large proportion of women in the workforce and has adopted a Policy in line with the provisions of the Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Redressal ) Act, 2013 and the Rules there under. No complaint was received in this regard, during the year.

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of loans, guarantees, securities and investments made by the Company, most of which are to its wholly owned subsidiaries, are in the notes to the financial statements forming part of this report.

14. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

India has emerged as the fastest growing major economy in the world. India’s gross domestic product (GDP) growth is expected to be around 7.4 per cent for fiscal 2017-18. Energy prices and inflation level continue to be at a moderate level. The proposed GST which will come into force shortly, is expected to bring rationalization of taxes and supply chains and will benefit all stakeholders. Economic growth will drive energy demand, especially coal. The Union Government has increased focus on the infrastructure sector which will enhance the consumption of cement, steel, aluminum, copper and other metals.

The “Make in India” policy of the Government of India in the Defence sector would be a game changer and is expected to bring several activities of the Company into higher revenue levels.

14.1 Energetics

The growth of GDP will drive the demand for Power, Steel, Cement and major Minerals like Coal, Iron Ore, Manganese Ore, Dolomite, Limestone, Bauxite and Copper which in turn sustains the demand for Explosives & Accessories.

In addition to the increase in demand from the Mining and Minerals sector, there will be significant increase in demand from infrastructure, transport, housing and irrigation segments. The Central and State Governments have affirmed their strong commitment towards these sectors of economy. The growth in demand in these areas over the medium and long term augurs well for the Company to deliver enhanced value to stakeholders.

The Energetics Division and its 100% subsidiary IDLEL have undertaken more projects for the upgradation and modification of processes and equipment for enhancing quality, productivity, along with safety and efficiency to deliver superior value through improved and new products and services.

For the Special Products Group the outlook is exciting with the Government of India rolling its strategic “Make in India”, initiative. The group has received key technology transfers (TOTs) from DRDO and other strategic partners, to exploit the emerging opportunities.

The Company will continue its expansion plans for exports into new territories in Africa and South East Asia.

14.2 Mining and Infrastructure

Mining business in the metal sector, especially in Eastern India where we have been focusing is awaiting Supreme Court orders under the MMRDA Act. As such, very limited activity is currently being continued in mines meant for captive consumption. The commercial mining activities will be taking more time as several clarifications are still awaited by the Supreme Court based on which State Governments would be required to issue orders for restart of the leases. As a result, we do not expect an immediate restart of the Division’s mining activities. However, the infrastructure work is being continued on a limited scale and is expected to yield revenues as in the past.

14.3 Realty

Bangalore

The Real Estate (Regulation and Development) Act 2016, which has recently come into force, is expected to create a uniform regulatory environment and bring transparency to the sector, thereby giving a boost to investments into the sector which had turned sluggish.

The first quarter of calendar year 2017 saw India’s gross office take-up of space amounting to 9.3 million sft. Bengaluru maintained its top position in comparison to 9 cities with 37% share of total absorption area. Bengaluru also retained its top position by attracting occupier interest of 3.5 million sft, which is 33% of total office leasing volume. Majority of the office take-up was concentrated on Outer Ring road, which accounted for 59%, followed by SBD, CBD, Whitefield, Bannerghatta road and other micro-markets accounting for 13%, 8%, 7%, 5% and 8% respectively.

The “Ecopolis” project, located in North Bengaluru near the Airport is expected to show growth in demand with the improving infrastructure in the Hebbal area. Already the “Ecopolis” project is drawing the attention of large international clients. We expect 2017 - 18 to be a watershed year for the project.

Hyderabad

Hyderabad market offers the lowest office rentals across major markets in South India, thereby attracting many large corporates who are planning expansion in the region. The city’s real estate development has seen a major uptick due to strong political stability; coupled with its status as a prominent IT hub, availability of large talent pool, supportive government policies and improved infrastructure.

Hyderabad commercial market clocked in 0.51 million sft of total office leasing volume in Q1 2017. Out of this, IT/ITeS segment contributed to 61% of the total share followed by healthcare (20%), business centers (15%) and others (4%).

Multi-national technology companies have signed large office spaces in the last few months. The city saw the second-largest office space absorption last year after Bengaluru. Considering these emerging demand for office space, the revised plan for Hyderabad development have been made for approval.

15. RISKS & CONCERNS AND RISK MANAGEMENT

Pursuant to the Companies Act 2013 and the SEBI Regulations, the Board has authorized the Audit Committee to review the risk management systems of the Company from time to time. There is a Risk Management Committee functioning at the senior executive level that facilitates identification and evaluation of business risks related to the Company and its major subsidiary IDLEL from time to time. The Audit Committee / Board reviews the risk management framework/ systems of the Company and renders advice for minimizing adverse impact, if any.

Apart from the usual risks and concerns that affect any commercial, manufacturing organization, the key business risks and concern areas identified by the Company and its mitigation plans are as under:

15.1 Environmental Risks

Regular safety audits are carried out by internal safety audit teams and at regular intervals by external teams. General Safety Directions (GSDs) are strictly enforced in all plants within the factories to ensure minimization of risk. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods to the explosives and accessories factories from undue risk. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories. In addition, the Hyderabad Factory has implemented the Integrated Management System incorporating ISO 14001 and OHSAS 18001.

15.2 Operational Issues

Licensing

The Energetics Division operates a licensed factory in a highly regulated environment. Amendments / revisions in licenses are required for change in production capacities and processes, for launch of new products etc. Any significant delay in such approvals beyond normal time taken by the regulatory authorities may impact the growth prospects of the Company. The Division, therefore, ensures that approvals are applied for well in advance to avoid delay in launch dates / export of products and active follow up is maintained to get approvals in time.

Imported Raw Materials

Many of the inputs of the Company and its major subsidiary are imported, availability of which is affected by global market situations. Also, prices of such items are volatile. Timely availability of raw materials is critical for continuous plant operations. The Company addresses this by entering into long-term relationship with global raw material suppliers, with suitable price adjustment clauses to ensure regular flow of supplies.

15.3 Market Dynamics:

The Company and its major subsidiary operate in highly competitive markets where competition from all India players as well as regional players is high. The Energetics Division which manufactures explosive accessories and Mining & Infrastructure Division operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. Therefore, there is a risk of cost increases not being possible to be passed on to ultimate consumers. Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand and consequent deceleration in manufacturing industry.

Concentration of Customers

The Mining & Infrastructure Division which undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts. Both the Energetics and Mining & Infrastructure Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 to L3 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

15.4 Financial Risks: Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. The Company has designed a debt mix policy that also considers natural hedge available to it from its export earnings to mitigate currency fluctuation risks. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interest risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact landed cost of imported materials.

Credit Risk

The Company and its major subsidiary sometimes sell their products by extending credit to customers, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and exposure is another area of risk.

Liquidity Risk

The Company and its major subsidiary operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely and regular collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and closely monitored by Corporate Finance.

With the introduction of GST during 2017 - 18, the liquidity risks may increase till the GST implementation stabilizes across the Country.

15.5 Legal and Statutory Issues:

Contractual Liability

All major contracts are reviewed / vetted by the in-house Legal Department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

Litigation Issues:

The Company is exposed to the risk of litigation of prolonged nature. Apart from the Tax Matters referred to in the Financial Statements, Litigations having a major impact on the Company include those with Udasin Mutt pertaining to leased lands of Hyderabad Works, Competition Commission of India, which are being pursued by the Company with the appropriate Court/ Tribunal.

15.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business software operated from the Corporate Office and the business Divisions. Viral attacks, failure of system networks and consequential loss of business is attempted to be minimized by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software. An IT policy is in place which also addresses IT risk mitigation measures.

15.7 Risks in the Realty Business

Market demand and price is a factor of macroeconomic conditions in the Country and varies from city to city as well. The Company’s strategy is to entrust development to specialist developer companies who take responsibility for insulating your Company against rise in construction cost. On the other hand, timely completion of projects is a risk which is not fully mitigated and is therefore becomes a matter of close follow up by your Company. The construction industry attracts many local body, state and central regulations. Responsibility for compliance with regulations is owned jointly by your Company and the developer.

16. DIRECTORS AND KMPs

During the year there was no change in composition of Board of Directors and KMPs of the Company.

In accordance with the provisions of the Companies Act 2013 and the Articles of Association of the Company Mr. Ramkrishan P. Hinduja retires by rotation at the 56th Annual General Meeting of the Company and is eligible for reappointment. The Board recommended his re-appointment.

The number and details of the meetings of the Board and other Committees are furnished in the Corporate Governance Report.

The Independent Directors have furnished declaration of independence under Section 149 of the Companies Act 2013 and Regulation 25 of SEBI (LODR) Regulations, 2015.

Familiarization Programme for Independent Directors

No new Independent Directors have joined during the year. However, the Independent Directors are familiarized with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. through various programmes on a continuing basis. The familiarisation programme along with terms and conditions of appointment of Independent Directors is disclosed on the Company’s website.

Separate Meeting of Independent Directors

A separate meeting of Independent Directors of the Company, without the attendance of Non-Independent Directors and members of management, was held on 9th February, 2017, as required under Schedule IV to the Companies Act, 2013 (Code for Independent Directors) and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. At the Meeting, the Independent Directors:

- Reviewed the performance of Non-Independent Directors and the Board as a whole;

- Reviewed the performance of the Chairman of the Company, taking into account the views of Executive Director and Non-Executive Directors; and

- Assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Independent Directors had appreciated the overall performance of the Non-executive directors including the Chairman and the Managing Director. They also concluded that the Board as a collective body, is performing satisfactorily and is an active and participating Board. The Independent Directors also concluded that the flow of information between the Company’s Management and the Board in terms of quality, quantity and timeliness is satisfactory. The Independent Directors commended the depth and quality of discussions at the Board and the Committee Meetings.

All the Independent Directors attended/participated in the Meeting of Independent Directors and Mr. K.N.Venkatasubramanian was the Lead Independent Director of that Meeting.

Board & Directors’ Evaluation

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) the Board, its Committees and the Directors have carried out annual evaluation based on the evaluation parameters formulated by the Nomination and Remuneration Committee and the Board based on SEBI Guidance Note on Board Evaluation. The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Director being evaluated. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the flow of information between the Company’s Management and the Board in terms of quality, quantity and timeliness. The Directors expressed their satisfaction with the evaluation process.

Directors’ Appointment and Remuneration Policy

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company and formulates the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and the Listing Regulations. The Board has in an earlier year, on the recommendations of the Nomination & Remuneration Committee framed a policy for remuneration of the Directors and Key Managerial Personnel. The objective of the Company’s remuneration policy is to attract, motivate and retain qualified and expert individuals that the Company needs in order to achieve its strategic and operational objectives, whilst acknowledging the societal context around remuneration and recognizing the interests of Company’s stakeholders.

The Non-Executive Directors (NED) are remunerated by way of Sitting Fee for each meeting attended by them and an annual commission on the profits of the Company. Commission to respective non-executive directors is determined on the basis of an objective criteria discussed and agreed upon by the Committee Members unanimously. NEDs are reimbursed any out of pocket expenses incurred by them in connection with the attendance of the Company’s Meetings.

Particulars of Employees and Remuneration

The information required under Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as ‘Annexure B’. The information required under Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report.

None of the employees listed in the said Annexure is related to any Director of the Company.

17. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as ‘Annexure C’.

18. INFORMATION ON STOCK EXCHANGES

The equity shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited and the listing fees have been paid to them upto date.

19. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this Report. The Statutory Auditors of the Company have examined the Company’s compliance and have certified the same as required under the SEBI Guidelines/ Regulations. Such a certificate is reproduced in this Annual Report.

20. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 of the Companies Act, 2013:

(a) that in the preparation of the annual accounts/financial statements for the financial year ended 31st March, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) that the accounting policies as mentioned in the financial statements were selected and applied consistently and reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d) that the annual accounts were prepared on a going concern basis;

(e) that proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; and

(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

21. AUDITORS

Statutory / Financial Audit

M/s Deloitte Haskins and Sells, Chartered Accountants retire at the ensuing Annual General Meeting and are not eligible for re-appointment in view of the provisions for mandatory rotation of auditors. The Audit Committee and the Board of Directors at their respective meetings held on 28th and 29th May, 2017 have recommended the appointment of M/s. B S R & Associates LLP, Chartered Accountants, (ICAI Firm Registration Number: 116231W/ W-100024) as Auditors of the Company for a period of five years from conclusion of the ensuing Annual General Meeting subject to ratification by the members at every AGM in compliance with section 139 of the Companies Act, 2013 on receipt of confirmation that their appointment will be within the limits prescribed under Section 141 of the Companies Act, 2013.

Cost Audit

The Ministry of Corporate Affairs had, vide its Order dated 31st December, 2014 directed audit of cost records of the companies covered under the Companies (Cost Records & Audit) Amendment Rules, 2014. The said Order is applicable to the Company, being manufacturer of Detonators, Detonating Fuse, Explosives, etc. Accordingly, the Board of Directors has appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad as the Cost Auditors of the Company for the financial year 2016-17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s BS & Company Company Secretaries LLP, Company Secretaries, Hyderabad to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report is annexed herewith as ‘Annexure D’.

There was no qualification, reservation or adverse remark or disclaimer in the Auditors Report or the Secretarial Audit Report.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

In compliance with Section 135 of the Companies Act, 2015 and other applicable provisions, the Company has constituted Corporate Social Responsibility Committee consisting of Mr. Ashok Kini, Chairman of the Committee (Independent Director), Mr. Ajay P. Hinduja (Non-Executive Director and Chairman of the Company) and Mr. K.N.Venkatasubramanian (Independent Director) as the other Members of the Committee. The Committee met once during the year and reviewed the policy on Corporate Social Responsibility stating therein the objectives, implementation and other issues pertaining to the achievement of the CSR objectives of the Company.

The erstwhile Lubricants Division which was demerged from the Company, was the major profit generating Division. The remaining businesses of the Company did not have eligible profit on aggregate basis during the last one out of the three financial years. Gulf Oil Lubricants India Limited (GOLIL) to whom the Lubricants Division was transferred, had undertaken to incur the CSR expenditure, treating the profits of the erstwhile Lubricants Division as that of GOLIL for CSR purposes. Accordingly, the CSR Committee recommended CSR expenditure of '' 23 lakhs and the same was spent for CSR purposes.

The CSR Policy of the Company is displayed on the website of the Company. The Annual Report on CSR activities is annexed herewith as ‘Annexure-E’.

23. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In terms of the requirements of the Companies Act 2013 and Regulation 22 of Listing Regulations, the Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism are displayed on the website of the Company. The Audit Committee reviews the functioning of the vigil / whistle blower mechanism from time to time. There were no allegations / disclosures / concerns received during the year under review in terms of the vigil mechanism established by the Company.

24. RELATED PARTY TRANSACTIONS

All related party transactions / arrangements that were entered into during the financial year were at an arm’s length basis and were in the ordinary course of business. During the year under review, there were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All related party transactions / arrangements are placed before the Audit Committee for approval, supported by a statement/ declaration from the management as to the adherence of arm’s length basis and being in the ordinary course of business. The policy on Related Party Transactions as approved by the Board is displayed on the Company’s website.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Details of the transactions with Related Parties are provided in the accompanying financial statements.

25. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Pursuant to a complaint filed before the Competition Commission of India (CCI) by Coal India Limited, CCI had vide their Order dated 16th April, 2012 held that the Company had, along with a few other explosive manufacturers, contravened the provisions of Section 3 of the Competition Act, 2002. The CCI had on that basis imposed a penalty on the Company of Rs.29.84 crores. The Company had filed an appeal before the Competition Appellate Tribunal (COMPAT) and the COMPAT had vide its Order dated 18th April, 2013, reduced to Rs.2.89 crores; and a further Civil Appeal in the Supreme Court of India and the matter is subjudice. Based on expert legal advice, the Company believes that it has a good case and expects a favourable decision in the matter.

26. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as ‘Annexure F’.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the continued co-operation and support received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. The directors take this opportunity to thank the investors for their support and cooperation. Your Directors also place on record their deep appreciation for the dedicated hard work and contribution of all employees of the Company, which has enabled the business growth of the Company in the extremely competitive and challenging market conditions which prevailed in the year under review.

For and on behalf of the Board of Directors

Place : Mumbai Ajay P. Hinduja

Date : May 29, 2017 Chairman


Mar 31, 2015

The Directors have pleasure in presenting their Fifty Fourth Annual Report and Audited Accounts for the year ended 31st March 2015.

1. FINANCIAL RESULTS :

2014-15 2013-14 (Rs. Lakhs) (Rs.Lakhs)

Profit after providing for Depreciation of Rs.145.66 lakhs ( Rs.1443.08 lakhs ) and before extraordinary items and taxation 3161.85 8748.14

Exceptional Items 1025.31 (865.52)

Profit Before Taxation 4187.16 7882.62

Taxation:

Current Tax 874.00 2790.00

Deferred 245.00 (741.00)

Profit After Taxation 3068.16 5833.62

Balance brought forward from previous year 18425.02 16091.26

Balance available for appropriation 21493.18 21924.88 Adjustment on account of additional depreciation (Refer Note 3 of Financial Statements) Appropriations:

Interim Dividend paid - 2478.62

Proposed Dividend 991.45 -

Tax on dividend 198.24 421.24

Transfer to General Reserve 310.00 600.00

Balance carried to Balance Sheet 19846.50 18425.02

EPS (in Rs.) 6.19 5.88

Since the Company has demerged its erstwhile Lubricants Division effective from 1 st April 2014 and transferred the same to Gulf Oil Lubricants India Ltd., the financials for 2014 - 15, exclude the Lubricants business and hence not comparable with the fina ncials of the Company for the previous financial year.

2. DIVIDEND

The Directors are pleased to recommend the payment of Dividend of Rs. 2.00 per share (Rs. 2.50 per share, including Special Dividend of Rs. 0.30 equivalent to 15% on the occasion of Demerger of Lubricants Division) on the Paid Up Capital of the Company. The dividend of Rs. 11.90 crores (Rs. 24.79 crores), if approved by the Shareholders at the Fifty Fourth Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure.

3. OPERATIONS

The total turnover of the Company was Rs. 116.10 crores ( previous year Rs. 1100.22 crores ). The profit before exceptional items and taxation was Rs. 31.62 crores (Rs. 87.48 crores). The profit before tax was Rs. 41.87 crores ( Rs. 78.83 crores ). The profit after provision for current tax of Rs. 8.74 crores and deferred tax of Rs. 2.45 crores was Rs. 30.68 crores ( Rs. 58.34 crores ) resulting in an EPS of Rs. 6.19 for the year ( Rs. 5.88 ).

4. DIVISIONAL PERFORMANCE MininlS

4.2 Detonators and Accessories (Energetics)

Domestic markets for explosives and detonators / accessories recorded a negative growth in 2014 – 15 mainly on account of slowdown in production in the metal sector, uncertainty in private coal mining and consequent over supply and price decline in the trade market.

However, the gross turnover of the Division was at Rs. 79.99 crores as against Rs. 69.77 crores in the previous year. The Division has manufactured 53.75 million Detonators (92.42 million), 19.05 million meters of Detonating Cord (4.05 million meters), Explosives 811.50 tonnes (272.50 tonnes) and e-det 84,025 Nos (27,200 Nos) during the year 2014-15.

The production for the domestic market and sales of non-electric detonators was high along with underground products. But surface detonators and trade detonators were affected due to market conditions. Export production however, was increased for surface dets, detonating fuse and non-electrics as the demand was good.

Overall the demand from the trade segment remained sluggish but larger mining projects'' requirements were steady and fully met. Production of Special Products for Defence and Space applications increased and several new products were developed during the year. All these new products found acceptance from the defence laboratories and companies. Production of these items will be increased during the current year.

The Division increased its focus on more value added products such as Raydets, E-dets and Cord Relays.

The Company markets its Detonators and Accessories through IDL Explosives Limited, a wholly owned subsidiary. This arrangement has been necessitated on account of market conditions, as customers prefer to place combined orders for industrial explosives and accessories.

4.3 Mining and Infrastructure

Mining and Infrastructure suffered in the last 4 years due to various issues with the Government / regulatory bodies and our operation was scaled down drastically. Commencement of mining projects is expected to take more time and is largely dependent on Government policy announcements. However, events in 2014- 15 have indicated that this sector being the life-line for the growth of the country, is going to be revived. During the year mining activity in parts of the country picked up with renewed business confidence and growing industrial activity.

In this background, the Division had taken up a few infrastructure projects along with a mining contract for reputed industrial house and achieved a turnover of Rs. 19.10 crores with a profit of Rs. 5.79 crores for the year.

The large equipment bank of excavators, heavy duty earth moving tippers, dozers, etc. which impaired during the last year in view of the bleak mining scenario, have now been sorted. The older equipment has been disposed and all the operating equipment are currently being put into use for various mining projects. Our current focus is in the mining areas in eastern India with large corporate where the Division had operations earlier.

4.4 Other Business Groups

The 4 Wind Mills ( 1 MW ) located at Ramagiri in Andhra Pradesh generated 33,100 units ( 1,44,307 units ). The Hyderabad facto ry received the benefit of the generation through the TRANSCO grid.

4.6 Exports

Export Sales of Explosive Accessories which declined to Rs. 9 crores in the previous year bounced back to Rs. 24.70 crores in the current year with the re-commissioning of the Detonating Cord production facility at Hyderabad. The Division is exploring higher volumes and new markets / opportunities to offset the high incidence of freight and handling costs on account of statutory compliances.

4.7 Property Development

Bangalore:

In the "Ecopolis" project, located at Yelahanka, Bangalore, out of the total built-up area of about 77.31 lacs sq. ft., the construction by the Developer Company ( "HRVL" ) has been completed to the extent of 14.54 lacs sq. ft. This comprises of one Main Building ( Block 3 ) plus a Multi-Level Car Park space.

All MEP services such as lifts, internal and external electrical & plumbing and HVAC services have been installed and completed . The main trunk road within the site from Bellary Road till Block 3 is completed. The external façade works are under completion.

Approvals for the start of construction of Block 2 are in place. Contract for the civil work has been finalized and excavation for start of the second block comprising of 10 lacs sq. ft. approx. is also completed.

The Company has undertaken civil construction works to the extent of Rs. 9 crores in this project. During Q1 of 2015-16, the Company will be undertaking further civil works of Rs. 4 crores approx.

Hyderabad:

The Master Plan for the project has been drawn up by the Developer Company, Hinduja Estates Private Ltd. ( "HEPL" ) through reputed Architects. The development will be an Integrated Residential Commercial Township which will comprise of residential apartments, IT / commercial office spaces, Health care and educational areas. The development will also have areas for the hospitality industry.

The Company has surrendered approximately 9 acres of land for development of new and widening of existing road to improve the infrastructure in the vicinity of the Hyderabad factory. For the areas surrendered Transferable Development Rights ( TDR ) and Impact fee concessions would be made available to the Company.

In the quarter ended December 2014, the Company sold its share of Transferable Development Rights ( TDR ) to the Developer Company at a value of Rs. 922 lakhs.

In the quarter ended March 2015, the Company earned further revenue of Rs. 350 lakhs, being the initial amount payable by the Developer Company towards remission of impact fees payable for approval of high rises.

5. OVERSEAS ACQUISITION

In December 2012, the Company had acquired 100% stake in Houghton International Inc, in USA through its 100% subsidiary HGHL Ltd in the UK, which was reduced to 10% as a result of infusion of fresh capital by Gulf Oil International into the Houghton intermediary holding entity, as a measure of de-risking and de-leveraging. Simultaneously, the Company has been released of all its obligations to the lenders. The new investor has taken over the obligations for repayment of the $ 180 mn loan obligation. Thus the Company retains 10% stake in Houghton through a subsidiary. The Company will realize the investment at an appropriate time so as to fetch optimum value to the Company. Further, the Company continues to receive commission towards providing of security of its properties for the said loan.

6. RESTRUCTURING OF THE COMPANY

The Company has demerged the Lubricants Undertaking into a separate company, namely Gulf Oil Lubricants India Limited (GOLIL ) with effect from 1st April 2014. The shares of GOLIL which were allotted to the Shareholders of the company are also listed on BSE Limited and the National Stock Exchange of India Limited, with effect from 31st July 2014. As part of the aforesaid Scheme, the share capital of the Company was reduced by half. The Demerger proved to be a substantial value enhancer to the Shareholders as expected.

7. PROMOTER OF THE COMPANY

As part of internal restructuring by the promoter group entities, Hinduja Power Limited, Mauritius ( HPL ) became the Holding Company and Promoter of the Company, by acquiring the entire shareholding from Gulf Oil International (Mauritius) Inc. by way of inter-se transfer on 17th March 2015. HPL has subsequently acquired further 4.99% of the equity share capital of the Company, increasing their shareholding to 64.94%.

8. INTERNAL CONTROL SYSTEMS

Your Company has in place a robust Internal and Financial control systems which assists the Board and Management to fulfill business objectives, safeguards the shareholders''interest, financial transactions and company''s assets. The primary objective of our internal control framework is to ensure that internal controls are established, properly documented, maintained and adhered to in each functional department for ensuring orderly and efficient conduct of business which includes proper use and protection of the Company''s resources, accuracy in financial reporting, compliance with the statutes, timely feedback on achievement of operational and strategic goals. The Company''s internal control system, supported by SAP ERP implemented a few years ago, is driven by well defined policies and procedures across its business divisions. In addition the Company is ISO 9001(QMS), ISO 14001(EMS) and ISO 18001 (OHSAS) compliant which provides added comfort to our business partners and regulatory bodies.

The Company has an Internal Audit function which provides the Audit Committee and the Board of Directors an independent, objective and assurance of the adequacy, efficiency and effectiveness of the Organization''s risk management, internal and financial control and corporate governance processes. The Audit Committee/Board approved annual audit plan prepared in consultation with business heads and inputs obtained from the Company''s statutory auditors ensures coverage of significant areas of operations with a risk based approach in order to conduct the audit in an efficient and timely manner. Process reviews for critical functions at all locations are performed in accordance with the audit plan. The function also assesses opportunities for improvement in business processes, systems and controls; provides recommendations to the Senior Management.

The Audit Committee of the Board of Directors regularly meets to review the significant audit findings, action taken thereon, adequacy of internal and financial controls and implementation of various comprehensive policies. During the year, the Audit Committee met six times to review the reports submitted by the Internal Audit Department. The Audit Committee also regularly meets the Company''s Statutory Auditors to ascertain their views on the business, adequacy of the internal control systems in the Company and their observations on the financial reports.

9. PUBLIC DEPOSITS

The Company has during the previous financial year repaid / prepaid all the public deposits and there are no outstanding public deposits at the beginning of the year under review. The Company has not accepted any public deposits during the year under review. The Board of Directors of the Company will consider accepting fresh public deposits at the appropriate time, in view of the regulatory changes under the Companies Act 2013.

10. TAXATION

Odisha Sales Tax

The matter pertaining to the transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger) situated in the State of Odisha to other States.

Tax Revision Petition in respect of assessment years viz 1976-77 to 1983-84 filed before the Commissioner of Commercial Taxes at Cuttack had been dismissed in February 2012. Against the said dismissal fresh Writ Petitions were filed in March, 2013 in th e Odisha High Court.

In respect of assessment year 1998-99 application for rectification of apparent errors in its order was filed before the Odisha Sales Tax Tribunal in January 2014. The appeal filed before the Central Sales Tax Appellate Tribunal was withdrawn.

As regards the assessment years 2002-03, 2004-05 and 2005-06, the 2nd appeal filed before the Odisha Sales Tax Tribunal and application for stay filed before the Commissioner of CommercialTaxes. Against the order of Commissioner of Commercial Taxes in stay application, Writ Petition was filed in the Odisha High Court for the same assessment years. The Company filed Review Petition in the High Court of Odisha against its order in the Writ Petition.

11. RESEARCH & DEVELOPMENT

The in-house R&D developed and implemented a shift in the process technology of Delay Detonator Elements manufacture from Alloy Lead to Soft Lead metal thus simplifying the process with a more compact layout while achieving better quality and safety. Significant work was also done in manufacture of PETN to modify the crystallization/granulation that eliminates reprocessing of batches and enables better utilization in different products. R&D work on the Electronic Detonator system was carried out to double the capability of the system to handle single blasts of over 300 holes as against the earlier limitation of 150 holes making the system suitable for larger mines.

In the special products category, a host of critical components and chemicals were developed for Missile applications in the Defence sector. These included squibs, ignitors, fuseheads and pre-charge assemblies for various types of missiles.

12. SUBSIDIARIES:

The Company has four subsidiaries. Of which, only one is a material one, namely IDL Explosives Limited. The UK subsidiary is an SPV incorporated for the purpose of overseas acquisition. The remaining two subsidiaries do not, at present, undertake any business activity. The annual performance of the subsidiaries is as under:

- HGHL Holdings Limited, UK reported a profit of Rs. 486.45 lakhs (Rs. 412.68 lakhs).

- IDL Explosives Limited reported a profit of Rs. 722 lakhs (Rs. 431.13 lakhs).

- IDL Buildware Limited reported a profit of Rs. 553.51 lakhs ( Rs. 5.19 lakhs).

- Gulf Carosserie India Limited inucrreded a loss of Rs. 0.19 lakhs ( profit of Rs. 2.38 lakhs).

Gulf Oil Lubricants India Limited (formerly known as Hinduja Infrastructure Limited), ceased to be subsidiary of the Company during the year under review, consequent to the demerger of the Lubricants Division and transfer of the same to the said Company .

A statement containing salient features of the financial statement of the Company''s Subsidiaries (in Form-AOC-1) is attached as Annexure-A .

13. HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Energetics Division at Hyderabad has continued to maintain cordial industrial relations, with low absenteeism while maintaining output levels. Programmes were conducted to improve the competency levels of workmen.

As part of strategic plans and enhancing capability building for our employees in the Energetics Division, based on the perform ance Management System and training need identification, extensive training program on Statistical Quality control has been introduc ed at Hyderabad Works for core group comprising Production, Maintenance, Quality control, Materials and Safety Departments to improve Operational Efficiency without compromise on Quality and Safety standards. Regular Training programs have been conducted on Safety for Executive Staff and workmen to re-emphasize importance of Safety Systems.

As a measure to improve focus and ensure alignment of Organization goals, Strategic HR interventions are being implemented in the Energetics Division.

Staff Welfare

The Energetics Division has also demonstrated its commitment to recognizing employee performance by conducting employee of the Month awards to recognize exceptional performances by employees and inculcating a commitment to perform beyond the regular roles and responsibilities.

Safety

Various programmes have been conducted during the year covering Safety Awareness, Alteration Authority, Job Safety Analysis (JSA), Hazard Identification, Risk Assessment, Risk Control (HIRARC). In addition, Internal / External Safety Audits; Safety Committee Meetings on regular basis; Job Study Analysis; HIRA / HAAZOP studies, SQC ; First Aid Training; Fire & Safety aspects and Emergency Rescue methods, have helped to strengthen the overall safety and disaster management processes in the Hyderabad Factory.

Preventive Health Check-ups

As part of preventive healthcare, the Hyderabad Factory organized series of free medical check-ups, consisting of Diabetes, Cardiology, Orthopedic and General Medical Check up, to all the employees.

Security

As part of enhanced security of the Hyderabad Factory and other assets of the Hyderabad Works, compound walls have been reinforced, height raised and fencing of barbed wire & concertina coils provided. Other measures include CC TV monitoring at Ke y areas especially magazines relaying of patrolling route, erection of watch towers and construction of additional Security Check posts, installation of tower flood lights for better night illumination, installation of guard monitoring systems for effective patrolling checks. Communication systems from magazines watch towers through land lines have been streamlined. As such over the years considerable additions and precautions have been added to strengthen the Security of the Factory.

Employment Practices

The Company believes in fair employment practices and is committed to provide an environment that ensures that every employee is treated with dignity and respect and afforded equitable treatment. The Company has a large proportion of women on the workforce and has adopted a Policy in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has not received complaints in this regard, during the year.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has during the year under review acquired an additional 60,00,000 Equity Shares at par Face Value of Rs. 10 in its subsidiary, IDL Explosives Ltd., aggregating to Rs. 6.00 crores. The Company has further made an investment of Rs. 38,67,800 in the equity shares @ Rs. 100 per share at par, of Gulf Ashley Motor Limited, by way of Rights. The Company has provided guarantee/ security during the year to Gulf Oil Lubricants India Limited of an amount of Rs. 345.50 crores pursuant to the Scheme of Arrangement.

The Company subsequently divested the shares of Gulf Ashley Motor Limited due to synergy issues.

15. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

The growth of the industrial sector in India is dependent on the large extent on mining. Mining constitutes 10 – 11% of the total industrial sector. The Government plans to increase GDP by 7 – 8%, and, therefore development and growth of basic industries such as iron and steel, cement, aluminum, copper, etc. have to be nurtured. Mining activities supporting these basic industries will therefore be in the Government focus, if GDP target of 7.5% annual growth is to be achieved. In fact, during 2014 – 15 the new Union Government''s first year in office mining activities showed a marginal growth of 1.4% as against 0.6% negative in 2013 – 14.

15.1 Detonators and Accessories

The demand for explosives and accessories registered a contraction in volumes in 2014 – 15. With the growth of the economy in general & mining in particular demand pattern is expected to grow steadily in all coal and metal sectors. It is expected to grow around 50% over the next 4 /5 years. The products of the Division will, therefore, grow year on year. However, there is expected to be a change in product-mix as high volume trade items have changed to higher end initiating systems such as non electrics, electronic detonators due to the change in storage and licensing requirements for Ammonium Nitrate.

The Division has also recorded healthy growth in export where the demand has increased especially in Africa, Middle East and East European countries. In the meantime, with intense follow up from the industry the Government of India has permitted export of explosives material from Chennai port in addition to Mumbai. This will help to improve the flexibility of availing vessels and reduce handling as well as freight cost. This will increase the competitiveness of exports.

The improvement in production process and quality systems in the Hyderabad plant has helped to improve the demand for the products besides making them competitive. As a result, in the recent tenders from Coal India Limited, the major consumer of explosives and initiating devices in the country, the Company has won large orders compared to the previous years.

The Company is poised to grow steadily over the next few years on the basis of favourable decisions from tender driven PSUs such as Coal India, Singareni Collieries, NMDC, etc. and large non-PSU organizations, supported by growth in export business. Special products for Defence and Space agencies along with sophisticated products such as the electronic detonator range would add to the business volumes of this Division.

15.2 Mining and Infrastructure

The Division which has had rich exposure in providing support services to the mining industry with services such as mine planni ng, execution of mine plans, overburden removal, extraction of ore, crushing and grading of ore, etc. should be able to grow and recover its former activities levels. The Government has already fast tracked various mining related regulatory issues, a few actions are already visible but will take time to yield visible results. The Government has recently allotted / re-allotted coal blocks which were earlier cancelled by the Supreme Court. Most of these mines are expected to commence operations shortly giving ample opportunities for the Division. We expect the mine scenario in the country to grow at a healthy pace after nearly four years of downtrend.

The Division is already tendering / quoting for projects over the last few months and should be able to finalise some of the projects during the year.

In preparation for infrastructure work, which is also in the Government focus, the Division has started taking elevated road, bitumen roads and other building projects in order to qualify for larger projects.

15.3 Realty

In Bangalore, with the completion of the first building and multi-level car park of 15.54 lakhs sq.ft., the 2nd Building of another 10 lakhs sq.ft. has been started. The elevated approach road to the 2 buildings is also in place. Marketing of the space in the first building will be completed in the coming year.

Major initiatives for the economic development of the State announced by the new Telangana State Government such as industry specific clusters for IT, foundry, solar energy, cinema city, AIIMS, etc. is expected to increase the demand for realty space in Hyderabad. Planning work relating to the project is being modified anticipating the emerging demand pattern and approvals are being sought on sector-wise basis.

Based on an assessment and feedback on current market needs, detailing for Phase 1 of 11 lakh sft, which will mainly be a residential development alongwith neighbourhood shopping, is being readied for statutory approvals.

16. RISKS & CONCERNS AND RISK MANAGEMENT

Pursuant to the Companies Act 2013 and Clause 49 of the Listing Agreement, the Board has authorized the Audit Committee to review the risk management plan of the Company from time to time. The executive Management identifies, evaluates business risks from time to time and furnishes the same to the Audit Committee along with risk mitigation plan. The Audit Committee reviews and renders advice for minimizing adverse impact, if any.

The key business risks identified by the Company and its mitigation plans are as under:

16.1 Environmental Risks

Regular safety audits are carried out by internal safety audit teams and at regular intervals by external teams. General Safety Directions (GSDs) are strictly enforced in all factories and plants within the factories to ensure minimisation of risk. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods to the explosives and accessories factories from undue risk. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories. In addition, the Hyderabad Factory has implemented the Integrated Management System incorporating ISO 14001 and OHSAS 18001.

16.2 Operational Risk

Licensing

The Energetics Division operates in a highly regulated and licensed industry environment and amendment / revision in licenses a re required based on expiry of the licenses and change in production capacity and process. Amended / revised licenses for increase in license capacity for any of the explosives products may get delayed temporarily or for long periods thereby limiting our ability to cater to any increase in demand for these products from our customers. Non-availability of licenses / approvals for expansion of new products could affect our future growth and expansion plans. The Division, therefore, ensures that approvals are applied for well in advance to avoid launch dates / export of products and active follow up is maintained to get approvals in time.

Location Risks

Manufacturing facilities of our major subsidiary, are spread across six States. The optimum locations for packed explosives unit is determined by the customer location and the source of raw material. The advantage of the location of bulk explosives units is optimized to be close to the customer location. With changes in sources of raw material our location may not continue to be optimal in comparison with the competition. Moreover, if there is a consolidation in the industry, and the size of each manufacturing units go up, we may be disadvantaged by being sub-optimal.

Raw Materials

Many of the inputs of the Company and its major subsidiary are imported, availability of which is affected by global market situations. Also, prices of such items are volatile. Timely availability of raw materials is critical for continuous plant o perations. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

With crude oil prices showing an uptrend after an unexpected fall during the last six months or so, the raw material prices and input costs are expected to increase. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

16.3 Market Risks:

Markets

The Company and its major subsidiary operate in highly competitive markets where competition from all India players as well as regional players is high. The Energetics Division which manufactures explosive accessories and the Mining and Infrastructure Division operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. Therefore, there is a risk of cost increases not possible to be passed on to ultimate consumers. Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand and consequent deceleration in manufacturing industry

Concentration of Customers

The Mining and Infrastructure Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts. Both the Energetics and Mining & Infrastructure Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 to L3 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

16.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests'' risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact base oil and ammonium nitrate rates.

Credit Risk

The Company and its major subsidiary sometimes sell its products by extending credit to customers, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and exposure is another area of risk.

Liquidity Risk

The Company and its major subsidiary operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely and regular collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and closely monitored by Corporate Finance.

16.5 Legal and Statutory Risks:

Contractual Liability

All major contracts are reviewed / vetted by the in-house Legal department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

Litigation Risks:

The Company is exposed to the risk of litigation of prolonged nature. Apart from the Tax Matters referred to in the Financial Statements, Litigations having a major impact on the Company include those with Udasin Mutt pertaining to leased lands of Hyderabad Works, Competition Commission of India, which are being pursued by the Company with the appropriate Court/ Tribunal.

16.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business software operated from the Corporate Office and the business Divisions. Failure of system networks and consequential loss of business is attempted to be minimised by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software.

16.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer system s could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

While the Company undertakes regular review of remuneration structures, threat of poaching by competitors, especially, new entrants in the industry of key persons is possible. Such actions could lead to temporary drop in efficiency and performance in the specific areas.

17. DIRECTORS

During the year, Mr.Sanjay G Hinduja ceased to be Director of the Company. However, the Board has appointed him as the Chairman Emeritus of the Company in recognition of his valuable contributions made over the last more than twelve years and to be able to avail of his advice from time to time. Ms.Vinoo S Hinduja (Alternate: Mr.K.C.Samdani), Mr.Ramesh V Rao and Mr. Prakash Shah have resigned as Directors of the Company. The Board wishes to place on record its appreciation for the valuable guidance received from them from time to time.

Mr.Ajay P. Hinduja had been appointed as Director of the Company in the casual vacancy caused by the resignation of Mr.Ramesh V Rao. He is proposed to be appointed as Director liable to retire by rotation.

Mr. Ajay P. Hinduja holds a Degree in Economics from the University of Geneva, with specialisation in Finance. He has had varied experience in the International Banking arena, including as ''Director'' and ''Member'' of the Management Committee of Amas Bank (Switzerland) Ltd. {presently named "Hinduja Bank (Switzerland) Ltd."} since 1996.

In accordance with the provisions of the Companies Act 2013 and the Articles of Association of the Company Mr.Ramkrishan P. Hinduja retires by rotation at the 54th Annual General Meeting of the Company and is eligible for reappointment.

The number and details of the meetings of the Board and other Committees are furnished in the Corporate Governance Report.

The Independent Directors have furnished declaration of independence under Section 149 of the Companies Act 2013.

Familiarization Programme for Independent Directors

The Company familiarizes its Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. through various programmes on a continuing basis. The Familiarisation programme for Independent Directors is disclosed on the Company''s website.

Separate Meeting of Independent Directors

A separate meeting of Independent Directors of the Company, without the attendance of Non-Independent Directors and members of management, was held on 24th March, 2015, as required under Schedule IV to the Companies Act, 2013 (Code for Independent Directors) and Clause 49 of the Listing Agreement. At the Meeting, the Independent Directors:

- Reviewed the performance of Non-Independent Directors and the Board as a whole;

- Reviewed the performance of the Chairman of the Company, taking into account the views of Executive Director and Non- Executive Directors; and

- Assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All the Independent Directors attended the Meeting of Independent Directors.

Board & Directors'' Evaluation

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the Listing Agreement, the Board, its Committees and the Directors have carried out annual evaluation / annual performance evaluation, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was carried out by the entire Board. The criteria for performance evaluation are as follows: Role & Accountability

- Understanding the nature and role of Independent Directors'' position.

- Understanding of risks associated with the business.

- Application of knowledge for rendering advice to management for resolution of business issues.

- Offer constructive challenge to management strategies and proposals.

- Active engagement with the management and attentiveness to progress of decisions taken. Objectivity

- Non-partisan appraisal of issues.

- Own recommendations given professionally without tending to majority or popular views. Leadership & Initiative

- Heading Board Sub-committees.

- Driving any function or identified initiative based on domain knowledge and experience. Personal Attributes

- Commitment to role & fiduciary responsibilities as a Board member.

- Attendance and active participation.

- Proactive, strategic and lateral thinking.

Directors'' Appointment and Remuneration Policy

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company and formulates the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and Clause 49 of the Listing Agreement. The Board has, on the recommendations of the Nomination & Remuneration Committee framed a policy for remuneration of the Directors and Key Managerial Personnel. The objective of the Company''s remuneration policy is to attract, motivate and retain qualified and expert individuals that the company needs in order to achieve its strategic and operational objectives, whilst acknowledging the societal context around remuneration and recognizing the interests of Company''s stakeholders.

The Non-Executive Directors (NED) are remunerated by way of Sitting Fee for each meeting attended by them and an annual commission on the profits of the Company. Commission to respective non-executive directors is determined on the basis of an objective criteria discussed and agreed upon by the Committee Members unanimously. NEDs are reimbursed any out of pocket expenses incurred by them in connection with the attendance of the Company''s Meetings.

PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure B. The information required under Rule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. None of the employees listed in the said Annexure is related to any Director of the Company.

18. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure C.

19. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited and the Listing Fee s have been paid to them uptodate.

20. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company''s compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

21. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 of the Companies Act 2013:

(a) that in the preparation of the annual accounts/financial statements for the financial year ended 31st March 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) that the accounting policies as mentioned in the financial statements were selected and applied consistently and reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d) that the annual accounts were prepared on a going concern basis;

(e) that proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; and

(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

22. AUDITORS

Statutory / Financial Audit

M/s Deloitte Haskins and Sells, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 14 1 of the Companies Act, 2013.

Cost Audit

The Ministry of Corporate Affairs had, vide its Order dated 31st December, 2014 directed audit of cost records of companies covered under the Companies (Cost Records & Audit) Amendment Rules, 2014. The said Order is applicable to the Company, being manufacturer of Detonators, Detonating Fuse, Explosives, etc. Accordingly, the Company has appointed M/s Dhananjay V Joshi and Associates, Cost Accountants, Pune for audit of the Cost Records for the financial year 2014-15. The Cost Auditor is required to forward his report to the Central Government by 27th September 2015. The Board of Directors has appointed M/s. Narsimha Murthy & Co, Cost Accountants, Hyderabad as the Cost Auditors of the Company for the financial year 2015-16.

Secretarial Audit

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 Messrs BS & Company, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure D .

There was no qualification, reservation or adverse remark or disclaimer in the auditors report or the secretarial audit report.

23. CORPORATE SOCIAL RESPONSIBILITY (CSR )

In compliance with Section 135 of the Companies Act 2013 and other applicable provisions, the Company has constituted Corporate Social Responsibility Committee consisting of Mr.Prakash Shah, Chairman of the Committee (Independent Director), Mr.Ajay Hinduja (Non Executive Director and Chairman of the Company) and Mr.K.N.Venkatasubramanian (Independent Director) as the Members of the Committee. The Committee met once during the year and laid down the policy on Corporate Social Responsibility stating therein the objectives, implementation and other issues pertaining to the achievement of the CSR objectives of the Company.

The erstwhile Lubricants Division which was demerged from the Company, was the major profit generating Division. The remaining businesses of the Company does not have eligible profit on aggregate basis during the last three financial years. Gulf Oil Lubricants India Limited (GOLIL) to whom the Lubricants Division was transferred, has undertaken to incur the CSR expenditure, treating the profits of the erstwhile Lubricants Division as that of GOLIL for CSR purposes. In view of these circumstances, and based on legal advice, the CSR Committee concurred that the Company would not incur mandatory CSR expenditure. The Company, however, makes reasonable contributions to CSR purposes. Towards this objective, an ambulance was donated by the Company to Lions Club Eye Hospital, Balanagar, Hyderabad.

The CSR Policy of the Company is displayed on the website of the Company. The Annual Report on CSR activities is annexed herewith as Annexure-E .

24. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In terms of the requirements of the Companies Act 2013 and Clause 49 of the Listing Agreement, the Company has a vigil mechanism to deal with instance of fraud and mismanagement. The details of the vigil mechanism are displayed on the website of the Company. The Audit Committee reviews the functioning of the vigil / whistle blower mechanism from time to time.

25. RELATED PARTY TRANSACTIONS

All related party transactions / arrangements that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All related party transactions / arrangements were placed before the Audit Committee for prior approval, supported by a statement from the Management as to the adherence of arm''s length basis and being in the ordinary course of business. The policy on Related Party Transactions as approved by the Board is displayed on the Company''s website. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company. Details of the material transactions are provided in Form AOC-2 which forms part of this Report.

26. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

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

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. Pursuant to a complaint filed before the Competition Commission of India (CCI) by Coal India Limited, CCI had vide their Order dated 16th April 2012 held that the Company had, along with a few other explosive manufacturers, contravened the provisions of Section 3 of the Competition Act 2002. The CCI had on that basis imposed a penalty on the Compan y of Rs. 28.94 crores. The Company has filed an Appeal before the Competition Appellate Tribunal (COMPAT) and the COMPAT had vide its Order dated 18th April 2013, reduced the penalty to Rs. 2.89 crores; and a further Civil Appeal in the Supreme Court of India and the matter is subjudice. Based on expert legal advice, the Company believes that it has a good case and expects a favourable decision in the matter.

28. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure F.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of all employees of the Company.



For and on behalf of the Board of Directors

Place : Mumbai Ajay P. Hinduja

Date : August 7, 2015 Chairman


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their Fifty Third Annual Report and Audited Accounts for the year ended 31st March, 2014.

1. FINANCIAL RESULTS:

2013-14 2012-13 Rs Lakhs Rs Lakhs Profit after providing for Depreciation of 8748.14 6890.84 Rs 1443.08 lakhs (Rs 1448.13 lakhs) and before extraordinary items and taxation

Exceptional Items: (865.52) 430.88

Profit Before Taxation 7882.62 7321.72

Taxation:

Current Tax -Current Year 2790.00 2149.33

- Previous Year - 8.67

Deferred (741.00) 69.10

MAT Credit - (204.00)

Profit After Taxation 5833.62 5298.62

Balance brought forward from previous year 16091.26 13894.52

Balance available for appropriation 21924.88 19193.14

Appropriations:

Interim Dividend paid 2478.62 -

Proposed Dividend - 2181.19

Tax on Dividend 421.24 370.69

Transfer to General Reserve 600.00 550.00

Balance carried to Balance Sheet 18425.02 16091.26

EPS (Rs) 5.88 5.34

2. DIVIDEND

During the year the Board had decided to pay an Interim Dividend of – 2.50 per share, equivalent to 125% (consisting of – 2.20 per share Interim Dividend equivalent to 110% Special Interim Dividend of – 0.30 equivalent to 15% in view of the Demerger in progress), for the year 2013-14 (previous year – 2.20 per share). The Record Date for the purpose of determining the shareholders eligibility for the Interim Dividend was 14th April, 2014. The said Interim Dividend was paid from 22nd April 2014. The Board has decided to treat the interim dividend as final dividend and hence not recommended any additional dividend for the year. Interim Dividend aggregated to – 24.79 crores (Previous Year Dividend aggregated to – 21.81 crores).

3. OPERATIONS

The total turnover of the Company was – 1098.39 crores (previous year – 1081.95 crores). The profit before exceptional items and taxation was – 87.48 crores (– 68.9 crores). The profit before tax was – 78.83 crores (– 73.22 crores ). The profit after provision for current tax of – 27.90 crores and deferred tax write back of – 7.41 crores was – 58.34 crores (– 52.99 crores) resulting in an EPS of – 5.88 for the year (– 5.34).

4.2 Lubricants

The Lubricant industry has been adversely impacted by slower GDP, Industrial, Infrastructure and Automotive Industry growths.

Automotive Industry growth in volume terms has been negative in the commercial vehicle space which saw a 20% drop in domestic sales, Passenger vehicle sales also witnessed a negative drop of 6.8%. 2 wheeler ( with scooters showing good growth) came in positively at 7.3% growth. Tractors grew well at 15.75%. Overall the industry grew by 3.5% (sans Tractors). This has impacted Lubricants volumes for most players in the industry not only for OEM fills but also in the Bazaar market as vehicle movement came down considerably with complete slowdown in Infra and mining activities and overall industrial production.

Amid such a challenging environment, your Company''s Lubricants Division has been able to maintain volumes and grow its revenues for the year by around 5% and with many industry players recording negative growth rates, the Division has been able to gain further market share. The Division still hasaCAGR Revenue Growth rate of around 15% over last 6 years.

Another key impact for the industry during the year was extremely volatile Exchange Rate and depreciation of Rupee by around 13%. Since a major portion of demand of base oils and additives for the industry is catered from imports, it resulted in continuous increase in input costs. While Rupee started stabilizing from around February'' 14, it impacted the profitability of all import dependant companies and the Lubricants Division also had to face this challenge. However, the Division''s operating profits were maintained by timely passing on the burden of increase in input costs. The overall profitability was marginally lower due to forex losses.

Segment-wise Prognosis

The Lubricants Division currently operates in the Automotive, Industrial and Marine segments in India with some exports to markets like Bangladesh, Indonesia and Nepal. Within the Automotive segment the Division has been successfully increasing it''s presence on sub segments like New Generation Diesel Engine Oils for Commercial Vehicles, Motorcycle Oils and also expanding it''s focus in the passenger car and tractor lubricant areas.

Lower goods movement on account of the overall subdued economy and closure in mining, slowdown in infrastructure resulted in large number of vehicles remaining idle in the commercial vehicles (trucks, tippers, etc) - especially in Southern States like Tamil Nadu, Karnataka and Andhra Pradesh and construction equipment. Overall demand for lubricants for commercial vehicles was negative (estimated drop is 8-10%) in 2013-14and this impacted oursales directly.

Overall the OEM and bazaar segment volumes have contracted in single digit. However, the lubricants division has managed to minimise the impact of these macro factors to retain its volumes and market share with positive growth in the motorcycle and B2B segments in 2013-14.

New Business Development in terms of increased sales and addition of new customers in the Government sector, Infrastructure, Mining and Fleet segment, Marine, OEMs and Direct Industries resulted in retaining overall market shares.

The Division has continued its strategies to invest in building the Gulf Oil brand, strengthening our end customer value propositions, distribution and people competencies.

Brand Building in 2013-14

Media Campaigns featuring our brand ambassador and Indian Cricket Captain - MS Dhoni were continued, backed by retail visibility initiatives. Innovative distribution and below-the-line activities were implemented to increase consumer acceptance, reach and influencer engagement. Innovative consumer/retail promotions like the tie-up with the well known Dhoom 3 franchise (which became India''s biggest grossing film), enabled the Division to increase brand visibility and market share in the motorcycle segment. To strengthen the ''long drain,endurance'' leadership position and build the brand in the B2B segment, the Division associated as the main title sponsors for CNN-IBN''s - LeaderTalk -a unique talk show which juxtaposed Leading Corporate and Sports Leaders with Rajdeep Sardesai for a chat to share their thoughts and mantras on Leadership.

4.3 Detonators and Accessories (Energetics)

The gross turnover of the Division was at – 69.77 crores as against – 78.25 crores in the previous year. The decreased turnover was on account of subdued demand from the mining and infra sectors. Shut down of the Detonating Fuse (DF) Plant due to accident in the month of April''13 also affected the turnover of theDivision. The DF Plant has since commenced in the month of Februay''14 after the reconstruction. The Division has manufactured 92.42 million Detonators ( 96.89 million) and 4.05 million meters (17.584 million meters) of Detonating Cord during the year 2013-14. But value added products like Raydets and LDD for Domestic Market increased by 12.8% and 87% respectively. There was a significant growth of 175% over F13 in the Division''s sale of electronic detonators to large mining companies.

The Company markets its Detonators and Accessories through IDL Explosives Limited, a wholly owned subsidiary. This arrangement has been necessitated on account of market conditions, as the customers prefer to place a combined order for industrial explosives and accessories.

Considering that the Division is engaged mainly in manufacturing of pyrotechnic devices as well as special products for the defence, space and various R&D applications, it has been renamed as ''Energetics Division'' effective from 1st April 2014.

4.4 Mining and Infrastructure (IDLconsult)

Operations of the Mining and Infrastructure Division have been scaled down due to major projects being under temporary suspension for want of various Government / regulatory clearances in the non-coal sectors. Disposal / impairment of equipment at sites have been done during the year. Commencement of mining projects is expected to take more time and is largely dependent on Government policy announcements. As a result, the Division ended the year with a revenue of – 4.92 crores as against – 28 crores for the previous year.

4.5 Realty

Bangalore:

Major work of the first block of the –1800 crores project ''Ecopolis'' at Yelahanka, Bengaluru, consisting of a 30 acre IT / ITES SEZ park and a 10 acre Hotel / Hospitality / Retail areas being developed in association with Hinduja Realty Ventures Limited, is completed. The first block consists of a building (G 10 3 basements) of 10.46 lakh sft and a multi level car park of 74,000 sft is under construction in the SEZ sector. The project has been getting good response from potential customers. The external façade, MEP services and related infrastructure are expected to be completed by September 2014 and the revenue streams are expected to commence from Q3 of 2014-15. Work on the subsequent blocks of the project is being planned keeping the current demand pattern and other relevant factors.

Hyderabad:

For the Hyderabad property, where the Company has entered into a Development Agreement with Hinduja Estates Private Limited, the 100 feet road passing through the Company''s property has been completed after considerable delay. Uncertainty about the restructuring of the State of Andhra Pradesh during major part of the year under review, resulted in delay in planning the project.

In the meantime, with the announcement of bifurcation of the State of Andhra Pradesh the political environment is stabilising and the new State Government is expected to take major initiatives for the economic development of the State. Many high rise buildings have come up abutting the Company premises and along the Moosapet-Hitech City Road, which intersects the 100-feet IDL Road. Traffic on these roads has increased substantially, increasing the visibility and accessability of the Company''s properties.

4.6 Other Business Groups

Received the benefit of the generation through the APTRANSCO grid.

4.7 Exports

Export Sales of Explosive Accessories were–9crores duringthe current year asagainst–21 croresinprevious year. The shortfall was mainly on account of non availability of DetonatingCord from the Hyderabad factory and closure of all Exports through NAD, KaranjaJetty,for3monthsonaccountoflabourproblems.However,budgetedbottom- linewas achievedthroughhighervalue-added products evenwith the lower turnover.

Economic down-turn continued in Europe, Middle-East,S.E.Asia and Africa.However,thereare encouragingsigns of recoveryforthe upcoming year and our Detonating Cord plant is back in operation. Also, all our products continue to have the CE Certification for exports toEurope.This wouldenable the Companytomakefurther inroads inthe year ahead.

5. OVERSEAS ACQUISITION

In December 2012,the Company had acquired 100% stake in Houghton International Inc,in USA through its 100% subsidiary HGHL Ltd in theUK.

As a measure of de-riskingandde-leveraging,the Board had approved 90% dilution in the step down subsidiary through which Hought on International Inc.,USAs take was acquired. The dilution was by way of infusionof fresh capital by Gulf Oil International,CaymanIslands. As a result, the Company has since been released of all its obligations to the lenders.The new investor has agreed to take over the obligationsforrepaymentofthe$180mn obligation toSBI.TheCompanyhoweverretains10%stakeinHoughton throughasubsidiary, which isexpected tofetch good value totheCompany inthe future.Further,theCompany continues toreceivecommissiontowards providing ofsecurityofits properties for thesaid loan.

6. RESTRUCTURINGOFTHECOMPANY

During the year, the Company had announced demerger of the Lubricants Undertaking into a separate company. Accordingly, a Scheme of Arrangement between the Company and GulfOil Lubricants IndiaLimited(GOLIL),earlier known as Hinduja Infrastructure Limited, was sanctionedby the Hon''ble High Court of AndhraPradesh videits Order dated16th April2014,providingfortransfer ofthe Lubricants Undertakingofthe CompanytoGOLIL andcapital reorganizationofboth thecompanies. Appointed Datefor the Scheme was 1st April 2014. In terms of the Scheme of Arrangement, 1 equity share of GOLIL has been allotted to the shareholders of the Company, forevery 2 equityshares heldin the Company and as part ofthecapitalreduction/reorganization,facevalueof theequity shares hasbeenreduced from– 2 to –1and every2 shares of the Company have beenconsolidatedintoone equity share of –2face value.The sharesofGulfOil LubricantsIndiaLimited havealsobelistedonthestockexchanges, namely BSELimitedandtheNational

Stock Exchange of India Limited,with effect from 31st July2014.

The Demergeris expected to unlock and maximize valueto the shareholders through focused operations of GOLIL on the domestic lubricantsmarket.

7. PROMOTER BECOMES HOLDING COMPANY

GulfOil International(Mauritius)Inc.(GOIMI), the Promoter of the Company,has acquired4.99% additional equityshare capitalof the Company,enhancingtheir shareholding in the Company to 54.95%. With this,the Company became subsidiary of GOIMI from April 2014.The Promotershave subsequently,acquired an other 5% shareholding,enhancing their shareholding in the Company to59.95%.

8. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

Internal Control System:

Our system of internalcontrol assistsin ensuring that the Boardand management are able to fulfill the business objectives. An effective internal control framework contributes to safeguarding the shareholders'' investment and company''s assets. The objective of our internal controlframeworkis toensure thatinternalcontrolsare established,properly documented,maintainedandadheredtoineach functional department for ensuringefficient use and protection of the Company''s resources, accuracy in financial reporting and compliance withthestatutes.TheCompany''sinternal control system, wellsupportedbySAPERPimplemented afew yearsago,isdrivenbywell definedpoliciesandprocedures acrossitsmultifariousbusinessactivities.YourCompanyisISO9001(QMS), ISO 14001(EMS)&ISO 18001 (OHSAS)compliant whichprovides added comfortto our business partners and regulatory bodies.

Risk Managment :

The Company has an Internal Audit Function which provides the Audit Committee and the BoardofDirectorsanindependent, objective andreasonable assuranceof theadequacy,efficiencyandeffectiveness of theOrganization''s riskmanagement,internal control and corporate governance processes.TheAudit Committee/Board approvedannual auditplan preparedin consultation withbusiness heads andinputsobtainedfrom the Company''s statutory audit or sensures coverage of significant areas of operations with arisk based

approach in order to conduct the audit in an efficient and timely manner. Process reviews for critical functions at all locations are performed in accordance with the audit plan. The function also assesses opportunities for improvement in business processes, systems and controls; provides recommendations, designed to add value to the organization in consultation with the Senior Management.

The Audit Committee of the Board of Directors regularly meets to reviewthesignificantauditfindings, action taken thereon, adequacy of internal controls and also the implementation of various comprehensive policies forcompliance and governance. During theyear, theAudit Committee metsix times to reviewthe reports submitted by the Internal Audit Department. TheAudit Committee also regularly meets the Company''s Statutory Auditors to ascertain their views on the business, adequacy of the internal control systems in the Company and their observations on the financial reports.

9. PUBLIC DEPOSITS

The Company hasduring theyear repaid/prepaidall the public deposits and therearenooutstanding public depositsattheendof the year under review. The Board of Directorsof the Company will consider accepting fresh public depositsatthe appropriate time, in view of the regulatory changes underthe Companies Act 2013.

10. TAXATION

Orissa Sales Tax

The matter pertains to transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger) situated in the State of Odisha to other States.

Tax Revision Petition in respect of assessmentyears viz 1976-77 to 1983-84 filed before the Commissionerof Commercial Taxes at Bhubaneswar had been dismissed in February 2012. Against the said dismissal fresh Writ Petitions were filed in March, 2013 in the Orissa High Court. In respect of the assessmentyear 1998-99, fresh appeal has been filed in the Orissa Sales TaxAppellate Tribunal. As regards the assessmentyears 2002-03,2004-05 and 2005-06. Review Petition was filed in the High Court of Orissa and also appeal filed in the Orissa SalesTaxAppellateTribunal.

11. RESEARCH & DEVELOPMENT

During theyear under review, improvements have been made to in-house developed electronic detonators and manufactured very extensively and successfully evaluated in the field. Based on the feed-back received from the field, new features in the electronic instruments were introduced thatare used in conjunction with these detonators as well improved theirhardwareformaking them more userfriendly. Imported Electronic Detonators have also been evaluated extensively. Electronic delay modules have been developed with precise delay times and supplied them for Defense and Space Applications where these have been successfully utilized in their intended applications.

Pyrotechnic Ignitors have been developed and delivered to users. Booster Pellet supplied and flight trials completed successfully. Different Fuse Heads were made as perthe user requirements. Improvements are made in the precision of delay-timingsof shock- tube delay detonators.

The R&D Centreof Lubricants Division located at Silvassadeveloped various products/formulations tocaterto the emerging market requirements.

High performance commercial vehicleand farm tractorengineoilswere developed and validated in respectiveapplications. Customised superior performance gear oils and rear axle oils were developed for specific OEM requirements evaluated and commercialised. Motorcycle oils catering to specific to certain customer/vehicle segments were developed. Niche/ Differentiated products for industrial segmentwere developed including high quality waterbased metal workingfluid and customised rust preventive. Alternate formulations forvarious products developed in linewith the recent technological developments/ market requirements is expectedto provide enhanced product performance/customersatisfaction and contribute to cost effectiveness and supply chain efficiency/flexibility.

12. SUBSIDIARIES:

The Company has during theyearunderreviewdivested the three overseassubsidiaries, namely, Gulf Oil Yantai Co. Ltd., PTGulf Oil Lubricants Indonesiaand Gulf Oil Bangladesh Limited effective from the close of 31 stDecember2013, as those investments were not generating any major returns even after7 to 10years; the Company needing cash inflow to meet various commitments; the Company''s declared intent of concentrating and strengthening its core competencies to have greater focus on Indian operations and to create more value forthe Lubricants business by way of Demergerof the Lubricants business into a separate company.

The annual performance of the subsidiaries is as under:

Rs HGHL Holdings Limited, UK reported a profit of –412.68 lakhs (–179.16 lakhs).

Rs IDL Explosives Limited reported a profit of –431.13 lakhs (loss of –244.56 lakhs).

Rs IDL Buildware Limited reported a profit of–5.19 lakhs (profit of– 16.70 lakhs).

Rs Gulf Carosserie India Limited reported a profit of –2.38 lakhs (loss of –0.49 lakhs).

Rs Gulf Oil Lubricants India Limited (formerlyknown asHinduja Infrastructure Limited) reported a loss of –0.57 lakhs (profit of – 0.13 lakhs).

Rs Gulf Oil Bangladesh Limited reported a loss of –119.63 lakhs (loss of– 149.41 lakhs).

Rs PT. Gulf Oil Lubricants Indonesiareportedaprofitof–40 lakhs (– 160.46 lakhs).

Rs GulfOil(Yantai)Co.Ltd.reportedaprofitof –375.65 lakhs(lossof –476.97 lakhs)

13. HUMAN RESOURCES/INDUSTRIALRELATIONS:

The Energetics Division at Hyderabad has continued to maintain cordial industrial relations, with low absenteeism while maintaining high output levels. Programmes were conducted to improve the competency levels. Periodical medical checkups have been conducted by tying up with corporate hospitals. The workmen are also provided medical insurance. The Division has entered into a3yearwage settlement with the workmen amicably.

As part of strategic plans and enhancing capability buildingforouremployees in the Lubricants Division, the training need identification and delivery processes were strengthened during theyear. Extensive programs covering the following 4 areas- Product andTechnical knowledge, 5 S/Kaizen initiatives at our Plant and Effective Communication Skills were undertaken. The capability building initiatives also focused on developing Internal Trainers through"Trainer Boot Camps" as well as an extended arm for"DSRs" (Distributor''s Sales Representatives) at Distributor''s end to enhance frontline effectiveness. Specific post programme initiatives are planned so as to sustain the capability building initiatives.

Staff Welfare

The Lubricants Division has also demonstrated its commitment by introducing another milestone in the long service award policy (20 years completion award).

Safety

To enforce a system of rewards for scrupulous practice of safety procedures by workers, existing annual awards system changed to monthly system of awards in the Energetics Division. Safety projects such as translation and dissemination of all Safe Operating Procedures (SOPs) in local language continued during theyear and the sameare being reviewed/read out on monthly basis at each department forbetterunderstanding and to enhance safety awareness among employees. Internal Audits are being done on regular basis to identify unsafe condition/acts and theaction plan forfollowupwasin place to minimize the risk. Awareness/training programmes on the Explosives Rules, 2008 have been conducted by external experts/senior resource persons. 5 ''S'' Workplace Management Systems implemented afterconducting awareness/training programs among the employees. 5"S" Audits beingconducted by cross functionalteams.

ISO 9001:2008recertification and ISO14001:2004 and OHSAS 18001:2007 surveillance External Audit successfully completed in April 2013.

Pulsejet bag filters system has been installed for3M.T coal boilerstackto minimize stack emission. Fortreatment of domestic effluents, a sewage treatment plant of the capacity of 30,000 liters/day has been installed. Free medical camps have been conducted forthe benefit of the workmen at the Energetics Division.

Measures to enhancesafety at the Silvassa plant were taken in terms of-100% use of personal protection equipments, safety related processes, stringent electrical safety inspections, safety briefings/training in all shifts forcontractworkmen. Strengthening hazardous waste management systems was also undertaken.

Security

As part of enhanced security of Explosives Magazine and otherassets of the Hydearbad Works, compound walls have been reinforced and height raised. As such over theyears considerable additions and precautions have been added up the Security wherewithal of the Magazines which include installation of PTZcameras, linking of watch towers through land line communication, repairand relaying of patrolling route along the inside magazine perimeter, compound wall construction and overhang barbed wire fencing, erection of watch towers using local resources, curbingsoil/boulderdumping in the Company''s land.

Quality Systems - ISI/TS Certification

The Lubricants Division achieved the coveted certification of ourquality management system in line with the requirements of ISO/TS 16949:2001 for Silvassa Plant and Corporate office-a global standard forautomotivesuppliers

14.OUT LOOK FOR THE CURRENT YEAR,OPPORTUNITIES AND THREATS

14.1 Lubricants

expected to pose challenges in terms of volume growths. The positive areas where demand conditions should pick-up will be light commercial vehicles,tractorsand motorcycles(scooters).The Division has plans to grow ahead ofthemarket in these segmentsand

also establish new OEM tie-ups. The strategic levers of segment wise focus, distribution reach increase initiatives and brand building will be utilised to retain and grow market shares in the core segments. Competition levels will continue to be high.

The Lubricants Division has already acquired land for its second plant in Southern India and is expected to commence construction during the year. The new plant, once operational, will add to the Division''s strategic presence in South India. The Lubricants Division has been demerged into a separate listed company – Gulf Oil Lubricants India Limited from the Financial Year 2014-15 and will continue to focus on strengthening its position in domestic lubricant market. The new Company has been listed on the BSE Limited and the National Stock Exchange of India Limited with effect from 31st July, 2014.

14.2 Detonators and Accessories (Energetics)

The outlook for F 15 is one of the cautious optimism. Though the demand for conventional detonators is likely to remain depressed, it will get compensated to some extent by increase in demand for value-added products – particularly Electronic Detonators. The economic growth of the Country is long overdue for a turnaround that should bring commensurate growth in demand from the coal, metals and construction sectors. The Division is prepared to take aggressive advantage of this up-swing.

14.3 Mining and Infrastructure (IDLconsult)

The mining scenario in the country is changing after nearly 3 years after the downturn started. The growth of the economy is also dependent on the mining activity in the country and the manufacturing indices are to a great extent dependent on to the mining activity in major industries such as iron and steel, cement, aluminium and copper. All these basic industries are expected to grow in the coming year. The new Government which will be taking over the reins from May 2014 is expected to address all these issues.

The Division is therefore expecting inflow of orders, resumption of pending contract which were held up due to regulatory clearances being suspended in several mines in the Orissa / Jharkhand sector where orders were in hand in 2012.

15. RISKS AND CONCERNS

15.1 Environmental Risks

Safety audits are carried out by internal safety audit teams at regular intervals in addition audits by external teams. General Safety Directions (GSDs) are strictly enforced in all factories and plants within the factories to ensure minimisation of risk. Safety trainings on different aspects are conducted to further develop the safe working culture. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighborhoods. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories. In addition, the Hyderabad Factory has implemented the Integrated Management System incorporating ISO 14001 and OHSAS 18001 whilst the Silvassa Factory is certified under ISO 14001 incorporating the Environment Management System.

The Lubricants plant at Silvassa has also obtained certification in ISO/TS 16929-2009 which helped in monitoring and improving quality in process and products. The standard is in sync with the ISO 9001-2008 standard, which is being maintained across the organization.

15.2 Operational Risk

Licensing

The Energetics Division operates in a highly regulated and licensed industry. Amended / revised licenses for increase in license capacity for any of the explosives products may get delayed temporarily or for long periods thereby limiting our ability to cater to any increase in demand for these products from our customers. Non availability of licenses / approvals for expansion of new products could affect our future growth and expansion plans. The Division, therefore, ensures that approvals are applied for well in advance to avoid launch dates / export of products.

Location

Manufacturing facilities, for our major Subsidiary, are spread across six states. The optimum locations for packed explosives unit is determined by the customer location and the source of raw material. The advantage of the location of bulk explosives units is optimized to be close to the customer location. With changes in sources of raw material our location may not continue to be optimal in comparison with the competition. Moreover, if there is a consolidation in the industry, and the size of each manufacturing units go up, we may be disadvantaged bybeing sub-optimal.

Further since the lubricants are manufactured at one location and distributed throughout India, the cost of transportation and storage are higher in comparison to some of our competitors operations. As a mitigation measure the Company is working towards setting up a second plant in the south India.

Raw Materials

Many of the inputs of the three major Divisions are imported, availability of which is affected by global market situations. Also, prices of such items are volatile. Timely availability of raw materials is critical for continuous plant operations. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

As the World economy is facing a rising commodity price cycle currently, with Crude Oil prices also firming up, the raw material prices and input costs are expected to increase. Base oils are showing a rapidly increasing trend and this is expected to impact margins/profitability. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

The IDLConsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availabilityor delayof environmental clearance by clients in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and commitments is carried out before undertaking mining service contracts.

15.3 Market Risks:

Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India players as well as regional players is high. Of which, two major divisions, namely Explosive accessories and IDLConsult Divisions operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. In the Lubes Division, increased competition from existing players and entry level pricing by new entrants leading to price undercutting could affect revenues. Therefore, there is a risk of cost increases, especially of petro product inputs, if not possible to be passed on to ultimate consumers.

Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand in the automobile industry and consequent deceleration in manufacturing industry. This is likely to have an adverse impact on the lube industry. In order to minimise such adverse impact, the Lubes Division has taken various product and marketing initiatives.

Concentration of Customers

Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

15.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests'' risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact base oil and ammonium nitrate rates.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and Exposure (with the trade channels) is another area of risk.

Liquidity Risk

Liquidity conditions in the money market and the commercial interest rates may impact the capability of distribution channel of the Lubes Division to support growth in business. Steps are being taken up for tie–up with financing partners to support distributors.

All the three major Divisions operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and Corporate Finance.

15.5 Legal and Statutory Risks: Contractual Liability

engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company. Concerted efforts by company for recovery of overdue receivables through legal proceedings have been fruitful.

Litigation Risks:

The Company is exposed to the risk of litigation of prolonged nature. Apart from the Tax Matters referred to in the Financial Statements, Litigations having a major impact on the Company include those with Udasin Mutt pertaining to leased lands of Hyderabad Works, Competition Commission of India, which are being pursued by the Company with the appropriate Court/ Tribunal.

15.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business software operated from the Corporate Office and the business Divisions. Failure of system networks and consequential loss of business is attempted to be minimised by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software. Your company is operating on SAP ERP system closely monitored internally and also serviced by external professional agencies, which helped in minimizing downtime.

15.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

While the Company undertakes regular review of remuneration structures, threat of poaching by competitors, especially, new entrants in the industry of key persons is possible. Such actions could lead to temporary drop in efficiency and performance in the specific areas.

16. DIRECTORS

During the year, Mr.H.C.Asher has resigned as Director and Member of the Audit Committee. The Board wishes to place on record its appreciation for the valuable guidance received from him from time to time.

Mr.Ramesh V Rao has resigned in the month of August 2014, as Director and Member of the Stakeholders Relationship Committee and Chairman of Safety Review Committee. The Board wishes to place on record its appreciation for the valuable guidance received from him from time to time.

Mr.Ajay P. Hinduja has been appointed as Director of the Company in the casual vacancy caused by the resignation of Mr.Ramesh V Rao, who will retire by rotation at the AGM of the Company to be held in the year 2016. Mr. Ajay P. Hinduja holds a Degree in Economics from the University of Geneva, with specialisation in Finance. He has had varied experience in the International Banking arena, including as ''Director'' and ''Member'' of the Management Committee of Amas Bank (Switzerland) Ltd. {presently named "Hinduja Bank (Switzerland) Ltd.}since 1996.

In accordance with the provisions of the Companies Act 1956 and the Articles of Association of the Company, Mr.Sanjay G . Hinduja, Mr.Ramkrishan P. Hinduja and Ms. Kanchan Chitale retire by rotation at the 53rd Annual General Meeting of the Company and are eligible for reappointment. However, Mr.Sanjay G. Hinduja has not offered for re-appoinment.

In terms of the Companies Act, 2013 the Independent Directors – Ms.Kanchan Chitale, Mr.M.S.Ramachandran, Mr.Ashok Kini, Mr.K.N.Venkatasubramanian and Mr.Prakash Shah are proposed to be appointed for a term of 5 years, not liable for retirement by rotation.

Mr.S Pramanik, Managing Director was reappointed effective 8th July, 2014 for a period of 3 years, after completion of his earlier term of appointment.

17. STATUTORY INFORMATION

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees ) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisions of Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company.

18. INFORMATION ON STOCKEXCHANGES

Fees have been paid to them uptodate.

19. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The StatutoryAuditors of the Company have examined the Company''s compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

20. DIRECTORS''RESPONSIBILITY STATEMENT

The Directors, on the basis of informative documents made available to them, 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. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

21. SUBSIDIARY COMPANIES

In the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries, which are available for inspection at the Registered Office of the Company, will be provided the same on receipt of a written request from them. The Board has given consent for not attaching balance sheets and other financial statements of the subsidiary companies, by passing a resolution to this effect. However, specified information of each of the subsidiary company has been provided in this annual report.

22. AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 139 of the Companies Act, 2013, read with the applicable Rules.

Cost Audit

The Ministry of Corporate Affairs, Cost Audit Branch had, vide its Order dated 2nd May, 2011 directed audit of cost records of companies covered under the Cost Accounting Records (Petroleum Industry) Rules, 2002. The said Order is applicable to the Company, being manufacturer of Lubricating Oils and other products. Accordingly, the Company has appointed M/s Dhananjay V Joshi and Associates, Cost Accountants, Pune for audit of the Cost Records for the financial year 2013-14.

The Cost Auditor is required to forward his report to the Central Government by 27th September 2014.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of all employees of the Company.

For and on behalf of the Board of Directors

Place:Mumbai S.G.HINDUJA Date : August 11, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting their Fifty Second Annual Report and Audited Accounts for the year ended 31st March 2013.

1. FINANCIAL RESULTS:

2012-13 2011-12 Rupees Rupees Lakhs Lakhs

Profit after providing for Depreciation of Rs. 1448.13 lakhs (Rs. 1441.61 lakhs) and before extraordinary items and taxation 6890.84 4939.06

Exceptional Income: 430.88 2092.17

Profit Before Taxation 7321.72 7031.23

Taxation:

Current - Current Year 2149.33 1585.00

- Previous Year 8.67 Nil

Deferred 69.10 (95.00)

MAT Credit (204.00) (670.00)

Profit After Taxation 5298.62 6211.23

Balance brought forward from previous year 13894.52 10868.32

Balance available for appropriation 19193.14 17079.55

Appropriations:

Proposed Dividend 2181.19 2181.19

Provision for tax on proposed dividend 370.69 353.84

Transfer to General Reserve 550.00 650.00

Balance carried to Balance Sheet 16091.26 13894.52

EPS 5.34 6.26

2. DIVIDEND

The Directors recommend the payment of Dividend of Rs. 2.20 per share (Rs.2.20 per share) on the Paid Up Capital of the Company. The dividend of Rs. 21.81 crores (Rs. 21.81 crores), if approved by the Shareholders at the Fifty Second Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure.

3. OPERATIONS

The total turnover of the Company Rs. 1081.95 crores (previous year - Rs. 1009.30 crores). The profit before exceptional items and taxation was Rs.68.91 crores (Rs. 49.39 crores). The profit before tax was Rs.73.22 crores (Rs.70.31 crores). The profit after provision for current tax of Rs. 21.58 crores and write back of deferred tax of Rs. 0.69 crores and adjustment of MAT credit of Rs.2.04 crores, was Rs. 52.99 crores (Rs. 62.11 crores) resulting in an EPS of Rs. 5.34 for the year (Rs.6.26).

The business operations were satisfactory in the background of the Indian economy in which industrial performance in the financial year was one of the worst in the past 20 years.

Industrial output has grown at only 1.2%. All activities in mining, manufacturing, electricity outputs across sectors have either contracted or halved compared to the previous fiscal. Capital goods and consumer goods have been growing at a worryingly low pace through FY 13. In fact, capital goods contracted to 6.3% in FY 13, more than in FY 12. With consumption collapsing over the last couple of quarters, manufacturing has been severely hit along with mining and electricity.

Mining production index dipped to -2.5% as against -1.9% in the previous year and electricity generation dropped from 8.2% in the previous year to 4.0% in the current year. Vehicle sales along with the consumer durables saw around 4.5% contraction in output. Overall, slowdown in economic activities during 2012-13 along with consumer demand constrained manufacturing growth. Higher interest rates also moderated the industrial activity.

4. DIVISIONAL PERFORMANCE

4.1 Business Operations

4.2 Lubricants

Twin achievements by crossing the coveted Rs. 1000 crores Gross Revenue & Rs. 100 crores segment profit mark.........

The Lubricants Division for the first time crossed Rs. 1000 crores by achieving Rs. 1051 crores Gross Revenue during the Financial Year 2012-13, a growth of 12% over 2011-12. At the same time, the Lubricants Division has also delivered segment profits of Rs. 106 crores, a growth of 13% over previous year. With this, the Division is continuing its journey of consistent growth even in the backdrop of the challenging economic scenario during 2012-13.

Outperforming Industry and Competition.......

Overall the Lubricant Industry witnessed marginally negative to flat volume growth in 2012-13. The bazaar market segment growth also slowed down considerably in line with our forecast of 2-3% vs 5-6% growth last year. The

Automobile Industry is passing through a very lean phase with Commercial Vehicles segment posting a negative growth of 2%, Passenger Vehicles and Two Wheelers sales grew at much slower pace than earlier years at 2.2% and 2.9% respectively. The overall growth of the automobile industry was modest at 2.6%. Accordingly, demand conditions in the lube industry mainly the OEM and related sales remained quite subdued for Automotive Lubricants. With industrial growth also severely affected due to delayed policy decisions mainly in mining and infrastructure segments, all through the year, the demand for industrial lubricants in particular was also lower.

In spite of these constraints, in the Lubricants industry, your Division has been able to register positive growth in volumes and revenues, which is well ahead of most of the top industry players. This higher growth is resulting in increased market share for the Division across segments.

The industry witnessed major volatility in input costs throughout the year with significant upward bias in Base Oil prices in first quarter, sharp drop in Q2 and sideways movements thereafter. In addition, fluctuations in the exchange rates of the Rupee against US Dollar continued during the year resulting in significant uncertainty in input costs putting pressures on margins. The Division''s procurement strategies, market growth and pricing initiatives resulted in the Division attaining better margins coupled with volume and revenue growth, which is reflected in the improved financial results of the Division.

Brand and Distribution initiatives......

The Division continued its Brand building initiatives and launched a campaign with its Brand Ambassador, Mr. Mahendra Singh Dhoni and introduced special edition packs to communicate and highlight the longer drain interval "value proposition". Innovative below the line initiatives like Gulf Cricket League targeted at our consumers, trade and influencers in major trucking centres around the country were successfully executed. Focussed consumers and retailers loyalty programs like - King of the Road 3 and Winners Circle targeted at Passenger Car Motor Oil (PCMO) retail outlets were successfully launched and executed. Specialised distribution initiatives like ''Non-Stop Express'' were launched to increase our distribution width & depth. Pilots to tap the rural market were also intitiated by the division to enhance the rural penetration levels in terms of distribution.

Fortifying ourposition as Pioneers ofLongerDrain, Higherperformance Lubricants in India....

The division continued to increase its customer base for our Co-Branded ranges of Gulf Super Fleet LE Max (40,000 kms long drain interval engine oils), Gulf Super Fleet LE Duramax(80,000 kms long drain interval engine oils) for Ashok Leyland commercial vehicles. Gulf Super Fleet Turbo range of products was launched to meet the requirements of latest generation of commercial vehicles like TATA Motors, Eicher, etc. The product range has received very positive response from consumers, trade & influencers.

Gulfin Motorsports.....

Gulf Speed Bolt 2012

Gulf Speed Bolt is an initiative to showcase global motorsport events for the Indian audience by leveraging on Gulf''s international associations. In its 2012 edition, Gulf debuted the Aston Martin GTE, one of the most powerful cars in its class, at the Buddh International Circuit in Greater Noida on 19-November 2012. The car, with a top speed of 300 km/h and capable of reaching 100 km/h in just 3 seconds, set the track on fire as it covered the 5.14 km track in just under a minute. Putting the pedal to the metal was Mr. Stefan Mucke, an experienced endurance motorsport specialist. In fact, this very driver-car combo had scored a podium finish at the 24 Hours of Le Mans in June this year.

Gulf Dirt Track National Championship & Monsoon Scooter Rally:

Gulf sponsored Dirt Track National Championship carries Gulf''s international motorsports legacy in India. Last year four rounds of races were held - one each in Mangalore, Aurangabad and Jodhpur. The 4th and the final round was held successfully in Nasik. Also, for more than a decade now Gulf has been sponsoring the one of its kind rally for scooters - Gulf Monsoon Scooter Rally. The rally took place in the month of July 2012.

Gulf Foster A Child Car Drive:

As a part of Gulf''s CSR initiative Gulf Foster A Child Car Drive was held in the month of January'' 2013. This event is born out of desire to bring smile on the face of under privileged children. The car drive saw more than 50 cars participating. The participating cars are usually driven & navigated by a husband and wife team along with their children and one or more under -privileged children. The under privileged child becomes the one day foster child for the parents driving and navigating the car. The final aim of the drive is to reach the destination within the shortest possible time (and with as much fun along the way !).

4.3 Detonators and Accessories (Explosives)

The gross turnover of the Division was at Rs.83 crores as against Rs.95 crores in the previous year. The decreased turnover was on account of reduced export shipments and power shortages faced by the converters in Hyderabad and low demand from the mining and infra sectors. The Division has manufactured 96.692 million Detonators (109.434 million) and 17.584 million meters (24.239 million meters) of Detonating Cord during the year. Growth in production of Electronic detonators was significant.

The Company markets its Detonators and Accessories through IDL Explosives Limited, a wholly owned subsidiary. This arrangement has been necessitated on account of market conditions, as certain customers preferred to place combined orders for industrial explosives and accessories.

4.4 Mining and Infrastructure (IDLconsult)

Concerns over the Mining activities across the country continued. 2012-13 was even worse than the previous year for the Mining Industry in India and for the IDLconsult Division. Mine owners are still struggling to clear their various regulatory and governmental issues. Iron ore mining in Orissa was one of the major contributors to the Division in the previous year, but the clients continue to remain badly affected by the statutory restrictions imposed by the State & Central Governments on account of forest, environmental and land issues. As a result, the Division ended the year with a revenue of Rs. 28 crores as againstRs. 51 crores for the previous year.

4.5 Other Business Groups

The 4 Wind Mills (1 MW) located at Ramagiri in Andhra Pradesh generated 2,38,100 units (2,61,000 units). The Hyderabad factory received the benefit of the generation through the APTransco grid.

4.6 Exports

Export Sales of Explosive Accessories were Rs. 21 crores during the current year as against Rs. 18 crores in previous year.

Economic depression worsened in Europe and the Middle-East and spread to S.E. Asia (except Indonesia & Thailand) and also to Africa. Political uncertainty not only delayed several major projects in Sri Lanka and Nepal but also lead to stopping of on-going projects.

In Europe the EU authority issued new guidelines on packing and marking of products that require significant changes in our plant processes.

The down-turn in world trade hit the shipping industry resulting in reduced availability of ships and increase in freight on explosives cargoes due to reduced spread on general cargo. Margins were maintained by judicious price increases, rationalizing the volume/value ratio by redesign of packing, clubbing different ports in the same voyage and by focusing on securing orders with more profitable product-mix.

Export turnover of lubricant products was marginally higher at Rs.10 crores during 2012-13 against Rs. 9 crores in 2011-12. The Division is exporting its products mainly to Asian markets and highly competitive Middle East markets.

4.7 Property Development Bangalore:

Work on the Rs.1800 crores project at Yelahanka, Bengaluru, consisting of a 30 acre IT / ITES SEZ park and a 10 acre Hotel / Hospitality / Retail areas being developed in association with Hinduja Realty Ventures Limited, is processing. Foundation work on the first building in SEZ sector is under construction. Bulk materials such as aggregates, cement, steel, etc. have been procured after receiving tax and duty exemption. Erection and testing of the batching plant was completed.

Our project is situated on the expressway from Bangalore City to the Airport. Infrastructure works such as signal-free 6 lane expressways from Hebbal and Yelahanka to Bengaluru Airport, are expected to be completed by mid 2014, providing excellent and fast access to our project site. This will give a boost to the real estate developments in North Bengaluru, the emerging growth corridor.

Hyderabad:

For the Hyderabad property, where the Company has entered into a Development Agreement with Hinduja Estates Private Limited, work by GHMC on the 100 feet road passing through the Company''s property, is about 70% complete. In the meantime, investments in developments outside the Company premises, abutting the new 100-feet road, are increasing rapidly. As a result of this infrastructure initiative of the Government of Andhra Pradesh and as per reports from leading property consultants, Kukatpally will witness higher demand in the near future. However, uncertainty over the restructuring of the State is delaying the finalization of plans.

5. OVERSEAS ACQUISITION

The Company through its subsidiary in the United Kingdom has acquired 100% stake in Houghton International Inc. for USD 1.045 billion, after satisfactory conclusion of regulatory approvals in the USA, for maximization of shareholder value including by divesting the stake at a future date. The acquisition through the step-down subsidiary ensured that the financials of GOCL did not get affected. A major portion of the debt will be serviced through Houghton International Inc.''s cash flows.

The acquisition has put some pressure due to the high leveraged position on account of foreign currency loan being taken by the Company.

The Company is seized of the matters and is exploring several restructuring operations to derisk the high leveraged position.

6. RESTRUCTURING OF THE COMPANY

In view of the diverse nature of the Company''s businesses, the Company is actively considering restructuring of the various businesses of the Company including demerger of the Lubricants business into a separate listed company.

7. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

Internal Control System:

The Company''s internal control system is driven by well defined policies and procedures across its diverse business activities. The objective of the internal control system is to ensure efficient use and protection of the Company''s resources, accuracy in financial reporting and compliance with the statues. The Company has an Internal Audit Function which provides the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy, efficiency and effectiveness of the Organization''s risk management, internal control and corporate governance processes. The SAP system implemented a few years ago in your Company serves well in integrating the functioning of various departments and provides enhanced system controls.

The audit function, in consultation with the Senior Management, assesses opportunities for improvement in business processes, systems and controls and also provides recommendations designed to add value to the organization. After review by the Audit Committee, follow up of corrective actions are monitored for implementation.

The Internal Audit function during the course of monitoring the effectiveness of the internal controls also reviews and reports to the management and the Audit Committee on compliance with internal controls and statutory norms related to the industry in which the businesses operate as well the efficiency and effectiveness of operations and the key process risks. The Audit Committee ofthe Board of Directors regularly meets to review the significant audit findings, action taken thereon, adequacy of internal controls, and also the implementation of various comprehensive policies for compliance and governance.

The annual audit plan prepared by the Internal Audit Department in consultation with the statutory auditors and duly approved by the Audit Committee does consider the scope of coverage of the company''s activities including subsidiaries based on the risk profile of the business. Process reviews for critical functions are performed by the function in an efficient and timely manner for ensuring effective coverage as per the annual audit plan.

During the year, the Audit Committee met seven times to review the reports submitted by the Internal Audit Department. The Audit Committee regularly meets the Company''s Statutory Auditors to ascertain their views on the business, adequacy of the internal control systems in the Company and their observations on the financial reports.

8. FIXED DEPOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2013 amounted to Rs. 114.13 lakhs (Rs.346.44 lakhs). Out of the above, 16 deposits amounting to Rs.71.35 lakhs (Rs.236.33 lakhs), which had matured, remained unclaimed. Of these, 14 deposits amounting to Rs.65.35 lakhs had matured only on 31st March 2013, most of which have been renewed / repaid to the depositors in the month of April/May 2013.

9. TAXATION

Orissa Sales Tax

The matter pertains to transfer of finished goods from Rourkela factory (since transferred to IDL Explosives Limited as part of the Demerger w.e.f. 1st October 2010) situated in the State of Orissa to other States, in respect of 10 assessment years viz 1976-77 to 1983-84, 1989-90 & 1990-91. Tax Revision Petitions were filed before the Commissioner of Commercial Taxes at Bhubaneswar. Against the dismissal of the Tax Revision Petition by the Commissioner of Commercial Taxes in February 2012, Writ Petitions were filed in the High Court of Orissa in March, 2012. Fresh Writ Petitions were filed in March, 2013 along with additional documents and the Writ Petitions filed earlier were withdrawn. For the assessment year 1998-99, appeal has been filed in the March, 2013 in the Central Sales Tax Appellate Tribunal, Delhi against the order of the Sales Tax Appellate Tribunal at Cuttack and order passed in October, 2012. However, for the assessment years 2002-03, 2004-05 and 2005-06 Review Petition was filed in the High Court of Orissa against the order dated 05.03.2013 of the High Court in the stay petitions.

10. RESEARCH & DEVELOPMENT

During the year under review, improvements have been made to in-house developed electronic detonators and their large-scale field evaluation is being done. Electronic support instruments that are used in conjunction with these detonators have been also improved by including more diagnostics features and making them more user friendly. Field trials of imported Electronic Detonators are also carried out and are being continued. Electronic modules have also been designed and customised with precise delay times for specific defense and space applications.

New products have been developed for Boostering and Metal forming applications for commercial manufacture, for special applications. High Energetic materials for defense applications have been developed for DRDO applications.

Lubricants Division''s R&D Centre at Silvassa developed formulations for high performance engine oils, driveline fluids and motor cycle oils to meet current and future market requirements.

High performance diesel engine oils and driveline fluids were validated across different makes of commercial vehicles. Different motorcycle oils were also developed to meet the requirements of the mass market segment and requirements of the specific makes of motorcycles. In the Industrial portfolio, metal working fluids were developed for special applications. Various alternate formulations were developed which helped in improving product performance and customer satisfaction, cost reduction and besides providing improved operational flexibility.

11. SUBSIDIARIES

HGHL Holdings Limited, UK, incorporated during the year for the purpose of overseas acquisition, reported a profit ofRs.179.16 lakhs. PT. Gulf Oil Lubricants Indonesia reported a profit ofRs. 160.46 lakhs (Rs. 122.94 lakhs).

IDL Buildware Limited reported a profit of Rs.16.70 lakhs (Rs. 14.27 lakhs).

Hinduja Infrastructure Limited reported a profit ofRs.0.13 lakhs (Rs. 0.11 lakhs).

Gulf Oil (Yantai) Co. Ltd. reported a loss of Rs. 476.97 lakhs (profit ofRs. 225.59 lakhs).

IDL Explosives Limited reported a loss of Rs. 244.56 lakhs (Rs.1270.44 lakhs).

Gulf Oil Bangladesh Limited reported a loss of Rs. 149.41 lakhs (profit ofRs. 100.29 lakhs).

Gulf Carosserie India Limited reported a loss of Rs.0.49 lakhs (Rs. 0.13 lakhs).

12. HUMAN RESOURCES / INDUSTRIAL RELATIONS:

Talent Acquisition has been the key activity throughout the yearwith specific focus on strengthening the Channel Sales, B2B, Infrastructure, Mining and Fleet verticals with the objective of "Right Skill at Right Place at Right Time" in the Lubes Division. Competency Development has been the key strategic focus for the year. Training programs on ISO / TS 16949, FMEA, problem solving techniques, relationship building for middle management, and safety were held in the Division.

The HR function in the explosives and mining Divisions were revamped and all the process and procedures were reviewed. Training programmes on general management, quality, safety and health management and also Focus on periodical medical checkups were emphasised. In addition, other internal and external functional training programs were imparted during the year.

The Divisions have continued to maintain cordial industrial relations, with low absenteeism. Programmes were conducted to improve the competency levels. Periodical medical checkups have been conducted by tying up with corporate hospitals.

Safety

The Explosives Division completed translation of all Safe Operating Procedures (SOPs) in local language i.e. Telugu and the same are being reviewed / read out on monthly basis at each department for better understanding and to enhance safety awareness among employees at the Hyderabad factory. Audits are being done on regular basis to identify probable unsafe condition / acts to minimize risks. Awareness training programmes on recent amendments to the Explosives Rules, 2008 have been conducted by internal trainers in June 2012 and March 2013. IMS 14001 and OHSAS 18001 External Audit were successfully completed in the month of April 2012.

Pulse jet bag filters system has been installed for 3 M.T. coal boiler stack to minimize stack emissions in October 2012. For treatment of domestic effluents as per Pollution Control Board requirements at 30 KL per day is in progress.

Security

Security of Explosives Magazine and other assets tops the list of priorities at Hyderabad Works. Over the years considerable additions and surveillance equipment have been added to strengthen the Security of the factory and of the Magazines. Additional security measures taken during the year include - installation of PTZ (Pan Tilt and Zoom) Cameras, linking of watch towers through land line communication, repair and relaying of patrolling route along the inside magazine perimeter, compound wall construction and overhang barbed wire fencing, erection of watch towers at strategic locations on the factory land.

13. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

The positive surge in the industrial activity in March 2013 as against a major slowdown in the economy observed over the last 2 years indicates a possible improvement in the Indian economy in 2013-14.

The Government has taken steps to boost economic growth from Q-3 of the last year such as reduction in energy subsidies, withholding tax on interest earned by foreign investors and FDI in aviation and retail. It is expected that the GDP would grow at approximately 5 - 6% with stimulus from the Reserve Bank of India in moderating interest rates further and increasing liquidity in the banking system. However, the growing current account deficit which has been a worrying factor last year may continue to impact dramatically in the current year and, therefore, pressures in the economy are likely to continue with marginal improvements.

13.1 Lubricants

The automotive industry growth is pegged at 6-8 % (as per SIAM). Volume growth in the lubricant industry is expected to be subdued at similar levels as in the last year at flat to very marginal growth. In the bazaar market the growth is estimated at an overall 2-3 %. Increasing input costs and adverse exchange rates are likely to put pressure on margins.

The Division will focus on maintaining its volume growths at double the rate of the industry and further increase its presence in the B2B / OEM segments. Additional opportunities to extend the distribution base and network in the automotive and industrial markets are also being tapped to increase market shares. New Synthetic lubricant products and mineral based ''long life'' products are planned to be launched in 2013-14.

Competition is expected to increase to make up for lost volumes with higher discounts and promotions, putting pressure on margins and market share.

The Division will continue and further strengthen its strategies and executions to counter these possible threats and tap the emerging opportunities.

13.2 Detonators and Accessories

The outlook for F 2014 is marginally optimistic with signs of economic recovery and revival of infrastructure/mining activity in Africa, S. E. Asia, Oman, Qatar, Nepal & Sri Lanka.

In India, the mining sector which is dominated by coal mining accounts for 80% demand for industrial explosives and the balance 20% is for infrastructure projects like roads, hydro engineering, irrigation etc. Operations of various coal and iron ore mining projects have been affected over the past 3 years on account of regulatory and other approval / reviews and issues relating to rehabilitation of the mine-displaced people. These have adversely affected the demand for the products and growth of the Division.

In F 2014 mining activities which have grown negatively in the last 2 years is expected to perk up and show some positive growth in the coal and iron ore sectors. The Division is geared to increase business in keeping with the expected higher demand.

13.3 Mining and Infrastructure (IDLconsult)

Contract Mining business may suffer again in the coming year and our turnover may be similar to the last year. However, we will be reducing on costs by reviewing all the operations of the Division.

We are hopeful that the Government of India will act positively for the clearances of 200 coal blocks and once these blocks are cleared, a flood-gate of opportunities will open up for contract mining. Our hope lies on two facts, first, India is self-sufficient in non-coking coal reserves and second, India will reduce import of coal to conserve foreign exchange.

14. RISKS AND CONCERNS

14.1 Environmental Risks

Regular safety audits and mock drills are carried out by internal safety audit teams and at regular intervals by external teams. Standard Operating Procedures (SOPs) are strictly enforced in all plants within the factories to ensure minimisation of risk. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods from undue risk. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories. In addition, the Hyderabad Factory has implemented the Integrated Management System incorporating ISO 14001 and OHSAS 18001 whilst the Silvassa Factory is certified under ISO 14001 incorporating the Environment Management System.

14.2 Operational Risk Licensing

The Explosives Division operates in a highly regulated and licensed environment and amendment / revision in licenses are required based on expiry of the licenses and change in production capacity and process. Amended / revised licenses for increase in license capacity for any of the explosives products may get delayed temporarily or for long periods thereby limiting our ability to cater to any increase in demand for these products from our customers. Non availability of licenses / approvals for exports and expansion of new products could affect our future growth and expansion plans. The Division, therefore, ensures that approvals are taken up well in advance to avoid launch dates / export of products.

Location Risks

Since the lubricants are manufactured at one location and distributed throughout India, the cost of transportation and storage are higher in comparison to some of our competitors'' operations. An analysis of business growth areas have indicated the requirement of a second plant in South India. This is under active consideration.

Raw Materials

Many of the inputs of the two major Divisions are imported. Availability of which is affected by global market situations. Also, prices of such items are volatile and subject to forex fluctuation. Timely availability of raw materials is critical for continuous plant operations. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies as well as hedging to minimise forex risks.

As the World economy is facing a rising commodity price cycle currently, with Crude Oil prices also firming up, the raw material prices and input costs are expected to increase. Base oils are showing a rapidly increasing trend and this is expected to impact margins/profitability. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

14.3 Market Risks: Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India players as well as regional players is high. Of which, two major divisions, namely Explosives and IDLconsult Divisions operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. In the Lubes Division, increased competition from existing players and entry level pricing by new entrants leading to price undercutting could affect revenues. Therefore, there is a risk of cost increases, especially of petro product inputs, if not possible to be passed on to ultimate consumers.

Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand in the automobile industry and consequent deceleration in manufacturing industry. This is likely to have an adverse impact on the lube industry. In order to minimise such adverse impact, the Lubes Division is taking various product and marketing initiatives.

Concentration of Customers

The IDLconsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts. Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

14.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests'' risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact base oil and ammonium nitrate rates.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and Exposure (with the trade channels) is another area of risk.

Liquidity Risk

Liquidity conditions in the money market and the commercial interest rates may impact the capability of distribution channel of the Lubes Division to support growth in business. Steps are being taken up for tie-up with financing partners to support distributors.

All the three major Divisions operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and Corporate Finance.

14.5 Legal and Statutory Risks:

Contractual Liability

All major contracts are reviewed / vetted by the in-house Legal department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

Litigation Risks:

The Company is exposed to the risk of litigation of prolonged nature. Apart from the Tax Matters referred to in the Financial Statements, Litigations having a major impact on the Company include those with Udasin Mutt pertaining to leased lands of Hyderabad Works, Competition Commission of India and Orissa Sales Tax cases as old as 25 years which are being pursued by the Company with the appropriate Court/Tribunal.

14.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business software operated from the Corporate Office and the business Divisions. Failure of system networks and consequential loss of business is attempted to be minimised by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software.

14.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

While the Company undertakes regular review of remuneration structures, threat of poaching by competitors, especially, new entrants in the industry of key persons is possible. Such actions could lead to temporary drop in efficiency and performance in the specific areas.

15. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.M.S.Ramachandran, Ms.Vinoo S Hinduja and Mr.V.Ramesh Rao retire by rotation at the 52nd Annual General Meeting of the Company and are eligible for reappointment.

Profile of members of the Board of Directors being appointed I reappointed :

M.S.Ramachandran

Mr. M.S.Ramachandran is a Bachelor in Mechanical Engineering. He has vast knowledge and experience of Oil and Gas industry. He was Chairman of Indian Oil Corporation Limited, Chennai Petroleum Corporation Limited, IBP Co. Ltd., Bongaigaon Refineries & Petrochemicals Ltd., Indian Oil Tanking Ltd., Indian Oil Petronas and Director, ONGC Ltd., Petronet LNG Ltd. He has received several awards including Chemtech Pharma Bio Hall of Fame Award in 2005 and National Institute of Industrial Engineers Lakshya Business Visionary Award in 2004.

Vinoo S Hinduja

Ms. Vinoo S Hinduja is a degreeholder in Business Administration from UK and a Diploma holder in Health Policy Management from USA. She has completed her internship and training in Finance and Banking at the Credit Suisse Bank, Geneva and Chase Manhattan Bank, London and in Hospital Administration and Management from Cromwell Hospital, London. She is also a memberofthe National Health and Education Society, Hinduja National Hospital in Mumbai.

V Ramesh Rao

Mr.V.Ramesh Rao is a postgraduate in Mechanical Engineering with specialization in Industrial Tribology from IIT, Madras and is a President''s Gold Medalist. He has been working in the lubricants industry since 1984 in various companies such as Lubrizol India Limited, Gulf Lubricants Systems and in Gulf Oil International companies in China, Korea, Taiwan and Philippines. He is a member of the Gulf Oil Core Technical Team and assisted Gulf Oil''s international operations and handles the operations in the Asia Pacific Region.

Names of companies in which the Directors, seeking appointed/reappointed at the ensuing AGM, hold positions of directorship and the membership/chairmanship of committees of the Board, are as per the Annexure to the Report on Corporate Governance.

16. STATUTORY INFORMATION

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisions of Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company.

17. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them uptodate.

18. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company''s compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

19. DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors, on the basis of informative documents made available to them, 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. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

20. SUBSIDIARY COMPANIES

In the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries, which are available for inspection at the Registered Office of the Company, will be provided the same on receipt of a written request from them. The Board has given consent for not attaching balance sheets and other financial statements of the subsidiary companies, by passing a resolution to this effect. However, specified information of each of the subsidiary company has been provided in this annual report.

21. AUDITORS

M/s Deloitte Haskins and Sells and M/s Shah and Co., Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Cost Audit

The Ministry of Corporate Affairs, Cost Audit Branch had, vide its Order dated 2nd May, 2011 directed audit of cost records of companies covered under the Cost Accounting Records (Petroleum Industry) Rules, 2002. The said Order is applicable to the Company, being manufacturer of Lubricating Oils. Accordingly, the Company has appointed M/s Dhananjay V Joshi & Associates, Cost Accountants, Pune for audit of the Cost Records ofthe Lubricants Division for the financial year 2012-13.

The Cost Auditor is required to forward his report to the Central Government by 27th September 2013.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of all employees of the Company and the members for their continued support.

For and on behalf of the Board of Directors Place : Mumbai S. G. HINDUJA

Date : May 25, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their Fifty First Annual Report and Audited Accounts for the year ended 31st March 2012.

1. FINANCIAL RESULTS: (Rs. in lakhs)

2011-12 2010-11

Profit after providing for Depreciation of Rs.1441.61 lakhs (Rs. 1605.22 lakhs) and before extraordinary items 4939.06 4690.29 and taxation

Exceptional Income: 2092.17 2011.74

Profit Before Taxation 7031.23 6702.03

Taxation:

Current 1585.00 866.00

Deferred (95.00) 417.00

MAT Credit (670.00) -

Profit After Taxation 6211.23 5419.03

Balance brought forward from previous year 10868.32 8303.87

Balance available for appropriation 17079.55 13722.90

Appropriations:

Proposed Dividend 2181.19 1982.90

Provision for tax on proposed dividend 353.84 321.68

Transfer to General Reserve 650.00 550.00

Balance carried to Balance Sheet 13894.52 10868.32

EPS 6.26 6.11



2. DIVIDEND

The Directors recommend the payment of Dividend of Rs. 2.20 per share (Rs. 2.00 per share) on the Paid Up Capital of the Company. The dividend of Rs.21.81 crores (Rs.19.83 crores), if approved by the Shareholders at the Fifty First Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure.

3. OPERATIONS

The total turnover of the Company was Rs. 1075.76 crores (previous year - Rs.1001.02 crores). The profit before exceptional items and taxation was Rs. 49.39 crores (Rs. 46.90 crores ). The profit before tax was Rs. 70.31 crores (Rs. 67.02 crores). The profit after provision for current tax of Rs. 15.85 crores and write back of deferred tax of Rs. 0.95 crores and adjustment of MAT credit of Rs. 6.70 crores, was Rs. 62.11 crores (Rs. 54.19 crores) resulting in an EPS of Rs. 6.26 for the year (Rs. 6.11).

4. DIVISIONAL PERFORMANCE

4.1 Business Operations

4.2 Lubricants

Continuing the Growth Journey

The Lubricants Division continued its growth journey by delivering significantly higher revenues and profits during the Financial Year 2011-12. The gross turnover of the Division was at Rs. 931 crores as against Rs. 679 crores, an increase of 37% over previous year and segment profits increased by 28%.

Outperforming Industry and Competitor growth rates

The Lubricant Industry estimated annual growth in overall volumes was 2-3% and the bazaar market segment growth slowed down to 5-6 %. The Automobile Industry witnessed positive growth throughout the year but at a slower pace with Commercial Vehicles segment posting a growth of 18%, mainly due to the increase in sales of Light Commercial Vehicles. Passenger Cars and Two Wheelers sales grew at 2 % and 14% respectively. The overall growth of the automobile industry was moderate at 12%. Accordingly, demand conditions in the lube industry remained positive for Automotive Lubricants. With industrial growth slowing down all through the year, the demand for industrial lubricants in particular was lower.

Rising Input costs Increased Volumes Increased Profits

The Lubes Division has achieved significant growth in volumes which was well ahead of the industry and achieved faster growth resulting in increased market share in spite of the situation wherein prices of major raw materials were volatile throughout the year with an upward bias coupled with increase in prices of additives, packaging, etc. Fluctuations in the exchange rates and weakening of the Rupee against US Dollar to unprecedented levels led to significant uncertainty in input costs and the margins were under pressure throughout the year. The Division's focused strategies and execution resulted in the Division attaining one of the highest volume and revenue growth in the industry which directly contributed to the improved financial results of the Division.

On ground activations and Brand Building

The volume growths were higher in the focus segments namely New Generation Diesel Engine Oils and Motorcycle Engine Oils. Continued on-the-ground below-the-line initiatives and distribution increase across segments resulted in increased retail shares and product usage. Sales from co-branded ranges with Ashok Leyland and Mahindra also contributed to the growth.

Brand Building efforts like campaigns with the Champions of IPL - the Chennai Super Kings and also other multi-media campaigns featuring our newly appointed Brand Ambassador - Indian cricket captain and India's leading Youth Icon - Mahendra Singh Dhoni, were instrumental in driving brand awareness, communicating the brand value of 'longer drain' and strengthening the brand equity. The Division also achieved success in the Fleet, Construction and Mining segments by increasing its customer base.

Motor Sports revving up excitement levels

The Division continued its association with motor sports with many regular and new events. The annual Gulf Dirt Track Championship was staged in Nashik, Jodhpur and Bhopal. The unique Gulf Foster A Child Car Drive - A Corporate Social Responsibility activity and Gulf Monsoon Scooter Rally were organized in Mumbai.

To promote 'young talent' in motor racing, two Gulf sponsored cars participated and won the MRF Formula 1600 Championship 2011 and also featured in the Support Race at the Indian F1 track at the Buddh International Circuit in Noida before the main F1 race Gulf's Top Fuel Bike driven by 5 times European Drag Bike Champion - Ian King (sponsored by Gulf Oil International) which is one of the fastest bikes in the world, was flown in to Mumbai to demonstrate its awesome speed and endurance powers to bike enthusiasts and media.

OEM tie-ups with Global Majors

The technical and business development teams secured and announced tie-ups with Leyland Nissan, Leyland Deere, MANForce for co-branded products and also secured approval for its products from Mahindra Navistar to consolidate it's position as one of the foremost lubricant companies in the diesel engine space.

4.3 Detonators and Accessories (Explosives)

The gross turnover of the Division was at Rs.94 crores as against Rs. 194 crores in the previous year which includes the turnover of the demerged undertaking from 1st April 2010 to 30th September 2010.

The Company markets its Detonators and Accessories through IDL Explosives Limited, a wholly owned subsidiary. This arrangement has been necessitated on account of market conditions, as the customers prefer to place a combined order for industrial explosives and accessories. The industrial explosives business was transferred to IDL

Explosives Limited during the last year, as part of Scheme of Arrangement. The Explosives Division of the Company now consists of the manufacturing plant and other facilities of the Hyderabad Works only.

The Division has manufactured 109.434 million Detonators (103.293 million) and 24.239 million meters (22.903 million meters) of Detonating Cord during the year 2011-12, registering a growth of 6% over the previous year. Growth in the production of Detonating Cords was in high value added products.

4.4 Mining and Infrastructure (IDLconsult)

The Year 2011-12 was no better for the Mining Industry over the previous year and the performance of Mining and Infrastructure Division (IDL Consult) is held back by various Governmental issues faced by mine owners. The mining contracts in the Iron ore block of Orissa which was contributing to the business of the Division in the previous years were affected due to the statutory restrictions from the State and Central Government on account of lease areas allowed for mining and environmental exigencies. As a result, the Division ended the year with the revenue of Rs. 51 crores as against Rs. 126 crores in the previous year.

However the Division has taken up one Irrigation Project in Andhra Pradesh to build canals for the Pranahita Chevella Project.Division's contract is in the first package of this prestigious Project in AP.

Uranium ore mining project for Uranium Corporation of India under the Department of Atomic Energy suffered due to issues amongst the management of UCIL and the land losers for few months. The Project picked up in the later part of the year.

The Division had undertaken an ambitious project for implementing and integrating Management system covering Quality, Safety, Occupation health and environment. This Division is the only Mining Service Provider in India with all certification under ISO 9001, ISO 14001 and BS OHSAS 18001.

4.5 Other Business Groups

The 4 Wind Mills ( 1 MW ) located at Ramagiri in Andhra Pradesh generated 2,61,000 units (2,01,600 units). The Hyderabad factory received the benefit of the generation through the APTRANSCO grid.

4.6 Exports

Sales of Explosive accessories was Rs. 28 crores during F 12 as against Rs. 31 crores in previous year. This was despite continuing economic slow down in both Europe and Middle East and more stringent shipping procedures and increased competition. Margins were maintained by optimizing product mix, clubbing shipments and better cost management.

Exports of the Lubricants Division were at 658 KL during 2011-12 as compared to 1487 KL in 2010-11. Export turnover of lubricant products was lower at Rs. 9.14 crores during 2011-12 against Rs. 13.34 crores in 2010-11. The Division is exporting its products mainly to ASEAN markets and highly competitive Middle East markets.

4.7 Property Development Bangalore:

During the year, the Bangalore project of the Company was notified by the Ministry of Commerce and Industry, Government of India as Special Economic Zone (SEZ) comprising of an area of 12.14 hectares (30.35 acres). The remaining area of 9.32 acres is being developed as non-SEZ property. Auspicious Bhoomi Puja for the project was performed in the month of April 2012. Designed by renowned Architects - RSP Design Consultants, the project will consist of a total of 8.00 million sq ft out of which revenue area is 3.82 million sq ft of IT SEZ and 1.23 million sq ft of non-SEZ space encompassing a Hotel, Serviced Apartments, Commercial Offices and a Retail Mall.

It is being developed at a total cost of Rs 1800 crores on a Joint Development basis with Hinduja Realty Ventures Ltd who are responsible for all Architectural Scheme design, project funding, permissions, approvals, construction and development, marketing / leasing and eventual maintenance of the entire complex.

There will be no additional cost to be incurred by the Company on the development. In return for making available the land for the project, the Company is entitled to 30% of the entire developed area totalling 2.4 million sq ft out of which revenue area will be 1.5 million sq ft. Revenues are planned in a phased manner from the last quarter of the FY 2013-14.

The Co-Developers are involving reputed contractors and consultants for adherence to quality and timely completion of the project in a phased manner in about 5 A years.

Hyderabad:

Work on the 100 ft. road through the property of the Company being laid by Greater Hyderabad Municipal Corporation (GHMC) has been progressing well. The Company had handed over 8 acres and 11 guntas of land for the road, in lieu of which the Company is entitled to waiver of impact fee in respect of the proposed development of the property.

The Company is in advanced stage of entering into of agreement for developing the property with Hinduja Realty Ventures Limited, sharing ratio based on the recommendations of reputed property consultants is being considered.

5. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT Internal Control System:

The Company has an Internal Audit Department with an objective to provide to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the Organisation's risk management, control and governance processes. The function also assesses opportunities for improvement in business processes, systems and controls; provides recommendations, designed to add value to the organization in consultation with the Senior Management. After review by the Audit Committee, follow through on the implementation of corrective actions are monitored.

The Audit function in its process of monitoring the effectiveness of the internal controls also reviews and reports to the management and the Audit Committee about the compliance with internal controls and the efficiency and effectiveness of operations and the key process risks. The Audit Committee of the Board of Directors regularly review the significant audit findings, adequacy of internal controls, action taken reports as well as implementation of various comprehensive policies for compliance and governance.

The Internal Audit Department in consultation with the Statutory Auditors and the Audit Committee develop and document annual audit plans and coverage on significant areas of operations with a risk based approach. Based on the annual audit plan, the Internal Audit Department carries out process reviews for critical functions at all locations in an efficient and timely manner.

During the year, the Audit Committee met six times to review the reports submitted by the Internal Audit Department. The Audit Committee regularly meets the Company's Statutory Auditors to ascertain their views on the adequacy of business and control systems in the Company and their observations on financial reports.

6. FIXED DEPOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2012 amounted to Rs. 346.44 lakhs (Rs. 557.43 lakhs). Out of the above, 49 deposits amounting to Rs. 236.33 lakhs (Rs. 172.76 lakhs), which had matured, remained unclaimed. Of these, 45 deposits amounting to Rs. 224.95 lakhs had matured only on 31st March 2012, most of which have been renewed / repaid to the depositors in the month of April/May 2012.

7. TAXATION Orissa Sales Tax

The matter pertains to transfer of finished goods from the Rourkela factory situated in the State of Orissa to other States, in respect of 10 assessment years viz., 1976-77 to 1983-84, 1989-90 and 1990-91. Subsequent to the dismissal of the Review Petition in the Orissa High Court, the Company had filed a Special Leave Petition in the Supreme Court and in terms of the liberty granted by the Supreme Court, the Company had filed Tax Revision Petition and a Stay Petition against demand notices, before the Commissioner of Commercial Taxes at Bhubaneswar. The Stay Petition was dismissed and the Company has filed a Writ Petition before the Orissa High Court. The Tax Revision Petition was dismissed in February 2012 and the Company filed Writ Petition in the Orissa High Court in March, 2012 against the order of the Commissioner of Commercial Taxes.

8. RESEARCH & DEVELOPMENT

During the year under review, the R & D of the Explosives Division has obtained relevant statutory permissions for trial manufacture and field-evaluation of improved indigenous version and imported version of detonators. Field trials of indigenously developed improved version Electronic Detonators are successfully completed. Initial field trials of programmable electronic detonators using imported electronic systems were also completed. More field trials are planned at various customer locations during the current year.

Initial designs are being tested in the lab for high security initiating systems/detonators which can be initiated only by authorized persons at authorized locations. Regulatory approvals have been received for manufacture of new products developed by the inhouse R & D for Boostering and Metal Forming applications. High energetic materials for defense applications have been developed for premier Defense establishments of the Government of India and pyrotehnic igniters for Space applications.

9. SUBSIDIARIES

Gulf Oil Bangladesh Limited reported a profit of Rs.100.29 lakhs ( Rs. 67.45 lakhs ). PT. Gulf Oil Lubricants Indonesia reported a profit of Rs.122.94 lakhs ( Rs. 48.14 lakhs ) Gulf Oil (Yantai) Co. Ltd. reported a profit of Rs. 225.59 lakhs ( Rs. 261.43 lakhs )

Hinduja Infrastructure Limited reported a profit of Rs.0.11 lakhs ( Rs. 0.02 lakhs ).

IDL Buildware Limited reported a profit of Rs. 14.27 lakhs (loss of Rs. 144.47 lakhs ) after closure of the factory at Vizag.

Gulf Carosserie India Limited reported a loss of Rs. 0.13 lakhs ( Rs. 0.20 lakhs ).

IDL Explosives Limited reported a loss of Rs. 1270.44 lakhs ( profit of Rs.27.69 lakhs).

10. HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Explosives Division has maintained cordial industrial relations, with low absenteeism. The Division conducted various training programmes on quality, safety and health management and also programmes to improve the competency levels. Focus on periodical medical checkups was emphasised. Specialised programmes were conducted and discussion sessions were arranged on "Stress Management" to create a healthy work atmosphere which would lead to reduction in absenteeism and thereby better levels of productivity. Also, programmes were started for upgrading skill levels of the employees in their respective areas of work to overcome challenges in more competitive market conditions.

The Lubes Division's focus has been on the developing competencies by conducting training programmes in the areas of 'Creating a Selling Edge', Understanding of Business Processes using SAP technology and enhancing ISO awareness levels across the Division's employees . For the Division's Core Sales Team, programs to learn and practice Conceptual Thinking models based on Dr. Edward de Bono's techniques, were imparted through "Six Thinkings Hats" workshops. Also modules of Persuasive Selling Skills and Merchandising programs were conducted for the sales teams across regions. In addition, other internal and external functional training programs were imparted during the year.

Safety

The Explosives Division has implemented safety projects during the year such as IMS Surveillance Audit by reputed auditors, installation of new Dissolver and replacement of flooring with new chequered plates at PETN Crystallization plant, safety awareness programmes and fire-fighting training sessions covered for all categories of employees including contract workmen working in process plants.

Security

With a view to beef up enhanced security around the explosives magazines, CC cameras are being installed, height of the boundary walls surrounding the magazines increased to 10 feet secured by blade edged coils. Watch towers with illumination facility have been erected in the magazines areas. Entry of people and authorised vehicles into the factory are being subjected to stricter monitoring by way of entry passes and such other measures.

11. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

11.1 Lubricants

Volume growth in the lubricant industry is expected to be subdued at similar levels as in the last year at 5 % in the bazaar market and 2-3 % overall. The automotive industry growth is pegged at 10-11 % (as per SIAM). Increasing input costs and adverse exchange rates are likely to put pressure on margins.

The Division will focus on maintaining its volume growth at double the rate of the industry and increase its presence in the B2B / OEM segments. Additional opportunities to extend the distribution base and network in the automotive and industrial markets are also being tapped to increase market shares. New Synthetic lubricant products and mineral based 'long life' products will be launched in 2012-13.

Competition is expected to increase as they have been loosing volumes with more price discounts and promotions, putting pressure on margins and market share.

The Division will continue and further strengthen its strategies and executions to counter these possible threats and tap the opportunities.

11.2 Detonators and Accessories

In India, the mining sector accounts for 80% demand for industrial explosives which in turn is dominated by coal mining and the balance 20% is for other minerals and infrastructure projects like roads, hydro engineering, irrigation etc. Operations of various coal and iron ore mining projects have been affected in recent times on account of regulatory and other approvals and issues relating to rehabilitation of the mine-displaced people, thus affecting the demand for the products of the Division. However, with both Central and State Governments, focusing their policies towards resolving these issues, the mining sector is expected to improve in the coming months.

11.3 Mining and Infrastructure (IDLconsult)

Mining contract business in the country may continue to suffer also in the current year and our results may be similar to the last year in the Mining sector. The major reasons being the temporary closure of many iron ore and manganese ore mines of our major clients due to various statutory and environmental issues under review by the Central and State governments and entry level pricing by new entrants with an eye on future growth of these sectors. However, the Governments are expected to act positively in view of the importance of mining in the growth of the economy.

In the coal sector, the Government of India has started acting at an accelerated pace to clear about 200 coal-blocks in the country, which provides ample scope for mining contract business since India is currently importing about 100 million of coal annually while having large coal reserves. In short there are strong indications that the Governments will be clearing the decks soon to increase mining activities in the country.

Increased Government attention to the infrastructure sector and its financing is also expected to give a fillip to activities such as irrigation and tunneling in which the Division is engaged.

12. RISKS AND CONCERNS

12.1 Environmental Risks

Regular safety audits are carried out by internal safety audit teams and at regular intervals by external teams. General Safety Directions (GSDs) are strictly enforced in all factories and plants within the factories to ensure minimisation of risk. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods to the explosives and accessories factories from undue risk. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories. In addition, the Hyderabad Factory has implemented the Integrated Management System incorporating ISO 14001 and OHSAS 18001 whilst the Silvassa Factory is certified under ISO 14001 incorporating the Environment Management System.

12.2 Operational Risk Licensing

The Explosives Division operates in a highly regulated and licensed industry and amendment / revision in licenses are required based on expiry of the licenses and change in production capacity and process. Amended / revised licenses for increase in license capacity for any of the explosives products may get delayed temporarily or for long periods thereby limiting our ability to cater to any increase in demand for these products from our customers. Non availability of licenses / approvals for expansion of new products could affect our future growth and expansion plans. The Division, therefore, ensures that approvals are applied for well in advance to avoid launch dates / export of products.

Location Risks

Manufacturing facilities, for our Industrial Explosives Division, are spread across six states. The optimum locations for packed explosives unit is determined by the customer location and the source of raw material. The advantage of the location of bulk explosives units is optimized to be close to the customer location. With changes in sources of raw material our location may not continue to be optimal in comparison with the competition. Moreover, if there is a consolidation in the industry, and the size of each manufacturing units go up, we may be disadvantaged by being sub-optimal.

Further since the lubricants are manufactured at one location and distributed throughout India, the cost of transportation and storage are higher in comparison to some of our competitors operations.

Raw Materials

Many of the inputs of the three major Divisions are imported, availability of which is affected by global market situations. Also, prices of such items are volatile. Timely availability of raw materials is critical for continuous plant operations. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

As the world economy is facing a rising commodity price cycle currently, with Crude Oil prices also firming up, the raw material prices and input costs are expected to increase. Base oils are showing a rapidly increasing trend and this is expected to impact margins/profitability. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

12.3 Market Risks: Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India players as well as regional players is high. Of which, two major divisions, namely Explosive Accessories and IDLconsult Divisions operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. In the Lubes Division, increased competition from existing players and entry level pricing by new entrants leading to price undercutting could affect revenues. Therefore, there is a risk of cost increases, especially of petro product inputs, if not possible to be passed on to ultimate consumers.

Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand in the automobile industry and consequent deceleration in manufacturing industry. This is likely to have an adverse impact on the lube industry. In order to minimise such adverse impact, the Lubes Division is taking various product and marketing initiatives.

Concentration of Customers

The IDLconsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts. Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

12.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests' risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact base oil and ammonium nitrate rates.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and Exposure (with the trade channels) is another area of risk.

Liquidity Risk

Liquidity conditions in the money market and the commercial interest rates may impact the capability of distribution channel of the Lubes Division to support growth in business. Steps are being taken up for tie-up with financing partners to support distributors.

All the three major Divisions operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and Corporate Finance.

12.5 Legal and Statutory Risks:

Contractual Liability

All major contracts are reviewed / vetted by the in-house Legal department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

Litigation Risks:

The Company is exposed to the risk of litigation of prolonged nature. Apart from the Tax Matters referred to in the Financial Statements. Litigations having a major impact on the Company include those with Udasin Mutt pertaining to leased lands of Hyderabad Works, Competition Commission of India, which are being pursued by the Company with the appropriate Court/ Tribunal.

12.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business software operated from the Corporate Office and the business Divisions. Failure of system networks and consequential loss of business is attempted to be minimised by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software.

12.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

While the Company undertakes regular review of remuneration structures, threat of poaching by competitors, especially, new entrants in the industry of key persons is possible. Such actions could lead to temporary drop in efficiency and performance in the specific areas.

13. DIRECTORS

In accordance with the provisions of the Companies Act 1956 and the Articles of Association of the Company, Mr.K.N.Venkatasubramanian, Mr.H.C.Asher, Mr.Prakash Shah and Mr.Ashok Kini retire by rotation at the 51st Annual General Meeting of the Company and are eligible for reappointment.

Profile of members of the Board of Directors being appointed / reappointed :

K.N.Venkatasubramanian

K.N. Venkatasubramanian is a Chemical Engineer and M.Tech from IIT-Khargpur. He was Executive Director - Marketing and later Director (Operations) in Indian Petrochemicals Corporation Limited (IPCL) and also a Director on the Board of State Trading Corporation of India and also served as Chairman of Cashew Corporation of India. He was the Chairman of the Sub-Committee on "Petrochemicals" constituted by the Department of Chemicals and Petrochemicals for formulating the perspective plan of petrochemicals during the 8th and 9th Plans periods. He was Chairman and Managing Director of Engineers India Limited and Chairman of Indian Oil Corporation from where he retired.

H.C.Asher

Hemraj Chaturbhuj Asher is a Senior Solicitor and Senior Partner of M/s. Crawford Bayley & Co., a leading firm of Solicitors and Advocates in Mumbai. He specializes in broad spectrum of Corporate Laws.

Prakash Shah

Mr.Prakash Shah was a Member of the Indian Foreign Service for over 35 years. In his distinguished career, Mr.Prakash Shah has served as India's ambassodor to Japan and Venezuela, India's High Commissioner to Malaysia and Brunei and India's Permanent Representative to the United Nations Offices in Geneva and New York. He had also served as Under Secretary General, the UNO and Secretary General's Special Envoy for Iraq.

Ashok Kini

Mr. Ashok Kini graduated from Mysore University in 1965 majoring in Science and obtained a Master's degree in English Literature from Madras Christian College, Chennai before joining State Bank of India ( SBI ) as Probationary Officer in 1967 and reached the position of Managing Director (National Banking) of SBI. During his career, Mr. Ashok Kini was responsible for the Bank's IT plans, from concept and RFP to execution and vendor management, domestic distribution, retail business, consumer banking, marketing/brand management, etc.

Names of companies in which the Directors, being appointed/reappointed at the ensuing AGM, hold positions of directorship and the membership/chairmanship of committees of the Board, are as per the Annexure to the Report on Corporate Governance.

14. STATUTORY INFORMATION

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo under Section 217(1)

(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisions of Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company.

15. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them uptodate.

16. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company's compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

17. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors, on the basis of informative documents made available to them, 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. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

18. SUBSIDIARY COMPANIES

In the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries, which are available for inspection at the Registered Office of the Company, will be provided the same on receipt of a written request from them. The Board has given consent for not attaching balance sheets and other financial statements of the subsidiary companies, by passing a resolution to this effect. However, specified information of each of the subsidiary company has been provided in this annual report.

19. AUDITORS

M/s Deloitte Haskins and Sells and M/s Shah and Co., Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Cost Audit

The Ministry of Corporate Affairs, Cost Audit Branch had, vide its Order dated 2nd May, 2011 directed audit of cost records of companies covered under the Cost Accounting Records (Petroleum Industry) Rules, 2002. The said Order is applicable to the Company, being manufacturer of Lubricating Oils. Accordingly, the Company has appointed M/s Dhananjay V Joshi & Associates, Cost Accountants, Pune for audit of the Cost Records of the Lubricants Division for the financial year 2011-12.

The Cost Auditor is required to forward his report to the Central Government by 30th September 2012.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of all employees of the Company.

For and on behalf of the Board of Directors

Place : Mumbai S. G. Hinduja

Date : May 30, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting their Fiftieth Annual Report and Audited Accounts for the year ended 31st March 2011.

1. FINANCIAL RESULTS:

2010-11 2009-10

Rupees Lakhs Rupees Lakhs

Profit after providing for Depreciation of Rs.1605.22 lakhs (Rs. 1700.79 lakhs) and before extraordinary items and taxation 4690.29 3845.62

Exceptional Income 2011.74 1584.61

Profit Before Taxation 6702.03 5430.23

Taxation:

Current 866.00 541.00

Deferred 417.00 382.00

Profit After Taxation 5419.03 4507.23

Balance brought forward from previous year 8303.87 5857.40

Balance available for appropriation 13722.90 10364.63

Appropriations:

Proposed Dividend 1982.90 1338.46

Provision for tax on proposed dividend 321.68 222.30

Transfer to General Reserve 550.00 500.00

Balance carried to Balance Sheet 10868.32 8303.87

EPS 6.11 6.06

2. DIVIDEND

The Directors recommend the payment of Dividend of Rs.2.00 per share (Rs.1.80 per share) on the paid up capital of the Company. The dividend of Rs.19.83 crores (Rs.13.38 crores), if approved by the Shareholders at the Fiftieth Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on date of Book Closure.

3. OPERATIONS

The total turnover of the Company Rs.1001.02 crores (previous year - Rs.1065.66 crores). The profit before exceptional items and taxation was Rs.46.90 crores (Rs.38.46 crores). The profit before tax was Rs.67.02 crores (Rs.54.30 crores). The profit after provision for current tax of Rs. 8.66 crores and deferred tax of Rs.4.17 crores, was Rs.54.19 crores (Rs. 45.07 crores) resulting in an EPS of Rs.6.11 for the year (Rs.6.06).

4. SCHEME OF ARRANGEMENT

During the year it was decided to go through a Scheme of Arrangement (the Scheme) involving demerger of the Explosives Undertaking of the Company and merger of the same with IDL Explosives Limited (IDL), a 100% subsidiary of your Company. Under the Scheme, all facilities excluding the detonator manufacture facilities at Hyderabad in the Explosives Division will be a part of IDL from the effective date The Scheme was sanctioned by the Hon'ble High Court of Andhra Pradesh vide its Order dated March 15, 2011. The Scheme has become effective on 24th May 2011 on filing of the certified copy of the Order of the Hon'ble High Court with the Registrar of Companies, Andhra Pradesh, Hyderabad.

Under the Scheme, the Explosives Undertaking gets transferred, at book value, to IDL together with all the property, rights, powers, liabilities and duties with effect from 1st October 2010, excepting the pending legal proceedings. Your Company will receive as consideration 2,49,000 10% preference shares of face value Rs.100 each at a premium of Rs.900 per share from IDL. These preference shares will be automatically redeemed at a premium of Rs.900 per share in one or more tranches before 12 months from the date of allotment or within 45 days of fresh capital infusion in IDL, whichever is earlier.

With the coming into effect of the Scheme, the assets and liabilities including Deferred Ta x asset / liabilities in the books of accounts of your Company stood reduced to that extent. The effect given to these actions are reflected in the audited financial statements for the year 2010-11.

5. DIVISIONAL PERFORMANCE

Lubricants

The Lubricants Division has significantly improved performance during the Financial Year 2010-11, both in terms of value/volume growth as well as profitability. The gross turnover of the Division was at Rs. 679 crores as against Rs. 563 crores, an increase of 21% over previous year and segment margins nearly doubled. Prices of major raw materials like base oils started firming up in the 2nd half of the year and coupled with increase in prices of additives, packaging etc forced the Division to take price increases as a margin management strategy in line with other industry players.

The Lubricant Industry growth in overall volumes was at 3-4%. The positive aspect was that the bazaar market continued to grow at 7-8 % and the acceptance of 'long-drain' lubricants was significantly higher. The Automobile Industry witnessed positive growth throughout the year with Commercial Vehicles segment posting a growth of 27%. Passenger Car and Two Wheeler segments also growing at a fast pace of 29% and 26% respectively. The overall growth of the automobile industry was substantial at over 25% growth. Accordingly, demand conditions in the lube industry also remained buoyant for Automotive Lubricants. With industrial growth also positive all through the year, the Lubes Division has grown in volumes well ahead of the industry and achieved faster growth resulting in increased market share.

The objective of the Lubricants Division for achieving higher volume growth compared to the industry over the last couple of years was successfully continued also during the year. The key strategies, with a focus on a segment wise approach backed by channel expansion, promotions for trade, influencers and end-users, coupled with brand building initiatives, were successfully executed across core segments of New Generation Diesel Engine Oils, Motorcycle Oils (4T) and Passenger Car Motor Oils. The major highlight of the operations during the year has been substantial growth in the highly competitive 4T segment which has strengthened the position of the Division's brands in this fast growing market segment.

In spite of increased competition, the Division continued to protect and also grow its market share in the important New Generation Diesel Engine Oils segment to retain the overall No. 2 position across India, in the key bazaar segment.

In the motorcycle segment, the Division launched the Gulf Bikestops – a branded workshop concept and covered more than 125 locations across India.

The Division continued its technological up-gradation of product portfolio in commercial vehicles and launched an Advanced Engine Oil, Gulf Super Fleet Dura Max, with high extended life of 80,000 Kms for the next generation "U" trucks launched by Ashok Leyland.

By closely working with the OEM (vehicle manufacturers) a completely new range of products like Axle Oils, Transmission Oils and Greases were developed and launched with the USP of "extended service period". The Division has grown its business with key OEMs like Ashok Leyland and also forged tie-ups with leading OEM's like Mahindra (Automotive Division) by launching a co-branded range of lubricants with them in third quarter of the current year, contributing further to the Division's growth, which has also contributed to the overall growth.

In the Industrial segment, the direct customer base of fleets, industries and construction companies has been expanded and the Division has added leading 'Build, Operate & Transfer' ( BOT ) customers to its fold. The Division also increased sales and market share by breaking into new medium sized industries and OEMs.

A new business segment of "Adblue" with a tie up with Greenchem (Netherlands) for meeting the requirement of Euro IV vehicles with SCR, after treatment device.

Brand Building

As part of increasing brand visibility and brand building, the Division invested in launching mass media campaigns on television and outdoor. In addition, the Division continued its signage and wall painting programs and the Gulf Cup covering the Dirt Track Championship for Motorbikes. The event is being held annually across India.

An innovative consumer scheme – Gulf King of the Road – was launched to energise Trade and attract consumers and drive tertiary sales. The scheme was promoted through TV advertisements in Hindi, Telugu and Tamil channels for an all India reach and supported by High visibility programs in the market through a Dealer Display scheme in key cities and towns. Rewards were also provided to key influencers – the garage mechanics. The Division continued its ground level initiatives in terms of retailer, mechanic loyalty programs as well as consumer promotions in key products.

5.3 Industrial Explosives

The Explosives Division, after the Scheme of Arrangement is implemented from 1st October, 2010, will consist of Blast Initiation Systems business which manufactures the full range of packaged bulk explosive products and blasting accessories, including cast boosters for the mining, civil infrastructure and oil exploration segments. Detonators include Plain, Electric, Non-electric & Electronic varieties and Detonating Cords of various grammages.

While the business from the national market accounted for 82 % of sales turnover, the rest came from exports in the international market. The business in the national market dropped by 2%, the business in international market grew by 2%.

The Division achieved an overall turnover of Rs. 194 crores during F-11, against previous year's turnover of Rs. 308 crores. The Division's turnover was affected to the extent of Rs. 11 crores, due to suspension of operations at Hyderabad for 45 days in September / October 2010 by the Petroleum & Explosives Safety Organization (PESO) due to alleged non- compliances of rules under the recently released Explosive Rules 2008. The suspension was withdraw after submission of our replies security audit by PESO.

Bulk Explosives business contributed to approximately 56% of turnover. This business achieved negative growth by 10% over previous year, due to lower demand arising out of stringent implementation of new PESO rules and consequent withdrawal of permission for outsourcing products of other manufacturers having spare capacity.

While all operations of the Explosives Division were previously covered under Quality Management System, the Division carried out diligent exercises for implementing the Integrated Management System (IMS) where Environmental Management System (ISO 14001-2004) and Occupational Health & Safety Management System (BS OHSAS 18001- 2007) are integrated with the organization's systems and processes into one framework. TUV Rheinland audited and re- certified the "Quality Management System (QMS) against ISO 9001:2008 Standard during August 2010. The Adequacy and Stage I Audits for EMS & OHSAS were carried out during the year and the final certification audit was completed in April 2011.

Performance of User Industry

The Explosives Division products are consumed largely by Mining and Infrastructure industries. Amongst mining industries, the coal mining industry consumes more than 60 % of products. The production performance of Coal India Limited (CIL), a coal major is below par to the extent of 5% in F-11. Other mining industries like iron ore, lime stone mines (related to steel and cement) also did not fare well compared to previous year; and their production was less than the previous year. The mining industry on an overall basis, did not fare as expected due to stringent implementation of environmental laws in the year 2010-11. In fact, as per official GDP details issued by the Central Statistical Organisation, the revised estimates for 2010-11 indicate that Mining and Quarrying activity grew by only 5.9% in F-11 as against 9.9% F-10.

5.4 Mining and Infrastructure (IDLconsult)

The performance of Mining and Infrastructure Division (IDL Consult) during the year was lukewarm. The mining contracts in the Iron ore block of Orissa which was contributing to the business of the Division over the last four years was affected due to the statutory restrictions from the State and Central Governments on account of lease areas allowed for mining and environmental exigencies. As a result, the Division ended the year with the revenue of Rs.126 crores as against Rs.194 crores in the previous year. No new projects were undertaken during the year, but another large coal mining project at Nigahi under Northern Coalfields Limited, Singrauli was completed ahead of schedule. The activities of the Division were therefore reduced considerably during the year.

Uranium ore mining project for Uranium Corporation of India under the Department of Atomic Energy was fully operational with the installation of all equipments required for the project. The Uranium mine started from February 2010 but has been slowed down due to local issues. We expect this work to continue in full swing in the current year.

The Division had undertaken an ambitious project for implementing an Integrated Management System covering Quality, Safety, Occupation Health and Environment. The efforts of the Division in achieving ISO 14001 and OHSAS 18001 were completed.

The Division has now received certification under ISO 9001 (Quality Management System) from TUV Sud and the ISO 14001 and BS OHSAS 18001 from BSI.

5.5 Other Business Groups

The 4 Wind Mills ( 1 MW ) located at Ramagiri in Andhra Pradesh generated 2,01,600 units (4,00,900 units). The Hyderabad factory received the benefit of the generation through the APTRANSCO grid.

5.6 Exports

Sales of explosives and blasting accessories dipped to Rs.315 million during F-11 as against Rs.458 million in the previous year. This was due to general economic slowdown in both Europe and Middle East; piracy on the high seas around the 'Horn of Africa'; shutdown of the Hyderabad Plant for 45 days; affected product availability; and strict imposition of maximum shipment of 500 MT gross weight by the Naval Armament Depot contributed to the negative growth.

Business focus was re-aligned to protect margins through price increase, optimizing product mix, improving aesthetics, maintaining world-class quality levels. Re-design and rationalization of packing of export products with an objective of optimizing unit weight – volume helped reduce shipping costs.

Actions initiated for penetrating the African and South American markets and first time shipments successfully executed. Special Products Group also exported for the first time.

CE marking was extended to the entire range of Explosives, Detonators and Detonating Cord products. Our Company is the only manufacturer in India to have such extensive coverage.

The exports of the Lubricants Division were at 1487 KL as compared to 3547 KL in 2009-10. Exports turnover of Lubricant products was Rs. 13.34 crores against Rs. 22.26 crores in 2009-10. The Division is exporting its products mainly to Africa, Bangladesh and highly competitive Middle-East markets and exploring other regions such as South East Asia for further growth in exports.

5.7 Property Development

During the year the layout design of the IT / ITES Park at Bangalore was modified to take into account further widening of the Highway and creation of the elevated metro rail along the highway. The land to be acquired by the Government for the purpose was finalised and the final layout confirmed. Construction activities are to start shortly.

At Hyderabad, town planning work on the property under development is being tuned to the final alignment of the 100 ft. road through the property as per the Hyderabad Master Plan being implemented by Greater Hyderabad Municipal Corporation ( GHMC ) and Hyderabad Metro Development Authority (HMDA). As a result of the widening of the road, the Company will be required to surrender land through the centre and along the periphery of the property under development. Road work by GHMC is currently under way at the Company's premises in Kukatpally.

7. FIXED DEPOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2011 amounted to Rs.384.67 lakhs (Rs.510.69 lakhs). At the end of 31st March 2011, 44 deposits amounting to Rs.172.76 lakhs (Rs.7.71 lakhs), which had matured, remained unclaimed. Of these, 40 deposits amounting to Rs.166.52 lakhs had matured only on 31st March 2011, most of which have been renewed/repaid to the depositors in the month of April'11.

8. TAXATION Orissa Sales Tax

The matter pertains to transfer of finished goods from the Rourkela factory situated in the State of Orissa to other States, in respect of 10 assessment years viz., 1976-77 to 1983-84, 1989-90 & 1990-91. Subsequent to the dismissal of the Review Petition in the Orissa High Court, the Company had filed a Special Leave Petition in the Supreme Court and in terms of the liberty granted by the Supreme Court, the Company had filed Tax Revision Petition and a Staty Petition against demand notices, before the Commissioner of Commercial Taxes, Orissa. The Stay Petition was dismissed and the Company has filed a Writ Petition before the Orissa High Court. The Tax Revision Petition is pending before the Orissa State Commercial Taxes Authorities.

9. RESEARCH AND DEVELOPMENT

The R&D Laboratory at Hyderabad contributed significantly to the Company's business during the year. The projects carried out and achievements include:

a) Development of implementation of new techniques and processes for the manufacture of emulsions with improved quality and shelf life and other products.

b) Development of high energetic materials for defence applications.

c) Development of new products for boostering applications and over-seas markets.

d) Production and Evaluation of indigenous 'Fully Field Programmable' Electronic Detonators.

Benefits were derived as a result of work carried out by R&D on cost optimization and improvements in the quality of products. Work will continue for developing new explosive systems for underground coal mines and other mining applications, new versions of e-DET electronic Detonator and processing techniques for improved quality, safety and shelf life.

The R&D Centre of the Lubricants Division at Silvassa developed formulations for high performance engine oils, gear and transmission oils, and motor cycle oil to meet current and future market requirements. High performance diesel engine oils were validated in commercial vehicles with different after treatment technologies meeting the latest BS IV emission norms. The Industrial portfolio was expanded by developing synthetic gear oil for wind turbine, metal working fluids and rust preventives. R&D activities also continued in developing alternate formulations to improve the flexibility in overall operations or to reduce / manage costs.

A major achievement for the year for your Company was to be first Oil Company to launch extended drain oils for engine, transmission and Axle for Ashok Leyland U trucks. The Division also established long drain capability for CNG vehicles through trial.

10. SUBSIDIARIES

Gulf Oil Bangladesh Limited reported a profit of Rs. 67.45 lakhs (Rs.97.51 lakhs).

PT. Gulf Oil Lubricants Indonesia reported a profit of Rs. 48.14 lakhs (Rs. 55.52 lakhs).

Gulf Oil (Yantai) Co. Ltd. reported a profit of Rs. 261.43 lakhs ( Rs.84.58 lakhs).

Hinduja Infrastructure Limited reported a profit of Rs. 0.02 lakhs ( Rs.0.07 lakhs).

IDL Buildware Limited incurred a loss of Rs. 144.47 lakhs (Rs.180.74 lakhs) after closure of the factory at Vizag.

Gulf Carosserie Limited reported a loss of Rs. 0.20 lakhs (Rs.0.24 lakhs).

IDL Explosives Limited, which was incorporated during the year, reported a profit of Rs.27.69 lakhs, on implementation of the Scheme of Arrangement.

17. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them uptodate.

18. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company's compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

19. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors, on the basis of informative documents made available to them, 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. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

20. SUBSIDIARY COMPANIES

In the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries, which are available for inspection at the Registered Office of the Company, will be provided the same on receipt of a written request from them. In terms of MCA Circular dated 8th February, 2011, the Board has given consent for not attaching balance sheets and other financial statements of the subsidiary companies, by passing a resolution to this effect. However, specified information of each of the subsidiary company has been provided in this annual report.

21. AUDITORS

M/s Deloitte Haskins & Sells and M/s Shah and Co., Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGEMENTS

While celebrating 50 years of your Company's activities, your Directors place on record their sincere appreciation for the dedication and commitment of the employees and their contribution to the significant growth of your Company. Your Directors would also like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and shareholders during the year under review. We look forward to their continued support in the years ahead.

For and on behalf of the Board of Directors

Place : Mumbai S. G. HINDUJA

Date : May 25, 2011 Chairman


Mar 31, 2010

The Directors have pleasure in presenting their Forty Ninth Annual Report and Audited Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS

2009-10 2008-09

Rupees Lakhs Rupees Lakhs

Profit after providing for Depreciation of Rs.1700.79 lakhs

(Rs. 1537.24 lakhs) and before extraordinary items and taxation

3845.62 3875.41

Exceptional Income 1584.61 -

Profit Before Taxation 5430.23 3875.41

Taxation:

Current 541.00 509.00

Deferred 382.00 387.01

FBT - 116.02

MAT Credit - (41.00)

Profit After Taxation 4507.23 2904.38

Balance brought forward from previous year 5857.40 4801.95

Balance available for appropriation 10364.63 7706.33 Appropriations:

Proposed Dividend 1338.46 1264.10

Provision for tax on proposed dividend 222.30 214.83

Transfer to General Reserve 500.00 370.00

Balance carried to Balance Sheet 8303.87 5857.40

EPS 6.06 3.91

2. DIVIDEND

The Directors recommend the payment of Dividend of Rs. 1.80 per share (Rs.1.70 per share) on the paid up capital of the Company. The dividend of Rs. 13.38 crores (Rs.12.64 crores), if approved by the Shareholders at the Forty- Ninth Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on date of Book Closure.

3. OPERATIONS

The total turnover of the Company increased to Rs.1065.66 crores (Rs.995.89 crores). The profit before extraordinary items and taxation was Rs.38.46 crores (Rs.38.75 crores). The profit before tax and exceptional income was Rs.54.30 crores (Rs.38.75 crores). The profit after provision for tax of Rs. 5.41 crores and deferred tax of Rs.3.82 crores, was Rs.45.07 crores (Rs. 29.04 crores) resulting in an EPS of Rs.6.06 for the year (Rs.3.91).

3.2 Industrial Explosives

The Explosives Division has three main business groups namely :

- Industrial (Commercial) Explosives and Blast Initiation Systems Group manufactures and markets the full range of packaged & bulk explosive products and blasting accessories including cast boosters for the mining, civil infrastructure and oil exploration sectors.

- Metal Cladding Group manufactures explosively bonded metals used in a number of industries such as ship building, electrical and chemicals. It has also developed deep surface hardening processes utilised by the mining equipment and railway sectors.

- Special Products Group manufactures high energy materials, specialised products for defence, space and other specialized applications.

All operations of commercial explosives, blasting accessories and metal cladding are covered under ISO 9001-2000 quality systems. The Division has embarked on an ambitious plan to bring its activities under the Integrated Management System (IMS) comprising of ISO 9001-2008 Quality Management System, ISO 14001-2004 Environmental Management System and ISO 18001-2007 Occupation Health & Safety Management System over two years.

The Division achieved an overall turnover of Rs. 308 crores as against last years turnover of Rs. 277 crores, representing a growth of 11%. Export turnover increased by 13% this year. Availability of Ammonium Nitrate, a major ingredient in explosives, continued to be critical, warranting import to supplement purchases from domestic sources.

Coal Production in India continued on a growth trajectory of around 9% per annum. The Division has achieved the growth of 15% with CIL business during the financial year and to ensure this growth rate the Division secured confirmed order from Coal India Limited valued at approximately Rs. 150 crores to be executed over the next year. Focus was also given to consolidate the Division’s position in the non-coal sector. This resulted in the increase of value added products turnover by 14%.

The Division has added a packaged emulsion explosives manufacturing facility to meet the growing requirement of this kind of product at Rourkela. The small diameter general purpose emulsion explosive has found good acceptance in the civil infrastructure, tunnelling and trade sectors. The product is being used for blasting in tunnels in the North and North-Eastern sectors of India and Bhutan. It has made a mark in the Southern Sector in the civil infrastructure segment.

The Division’s indigenously designed electronic detonator e-DET has been the choice of many surface coal mines for carrying out cautious blasts to reduce ground vibrations. Taking a technical step, a ‘Fully Field Programmable’ electronic detonator was designed by the R&D laboratory of the Division to meet customer specific requirements.

A new P5 Permitted category explosive product developed for a Coal S&T project mooted by the Explosives & Explosion Laboratory of Central Institute of Mining & Fuel Research (CIMFR), a CSIR laboratory based in Dhanbad, has been commercialized during the year after successful trials in mines of Singareni Collieries Company Ltd, Monnet Ispat & Energy Ltd. and Coal India Limited.

Metal Cladding Group

Technology using explosives has been adopted for metallurgical bonding of dissimilar metals, like Nickel & Nickel alloys, various grades of HASTELLOY, Copper & Copper alloys, Titanium, Stainless steel, Niobium, Aluminum on carbon steel / alloy steel and other ductile metals. The economic slowdown that led to postponement / reduced capital investments during F 2010 adversely affected this business segment. The Metal Cladding Group posted a turnover of Rs. 585.72 lakhs (Rs. 1014.53 lakhs).

Special Products Group (SPG)

SPG was created to cater to the use of pyrotechnic and high energy materials for special applications mainly in the Space and Defense sectors. Development and production of new products within time-bound and cost effective parameters were carried out under strict confidentially and under controlled environment. The Group executed orders of Rs. 136 lakhs (Rs. 290 lakhs).

3.3 Mining and Infrastructure (IDLconsult)

The Division ended the year with a turnover of Rs. 194 crores as against Rs. 211 crores in F 09. The reduction in business for the year was mainly on account of the completion of one large contract at Dudhichua Project of Coal India Limited in the middle of F10. The 36 months’ contract at Dudhichua was completed in 32 months. The project handled 30 million cubic meters of rock as per the contract successfully. The other large ongoing contract in F10 was at Nigahi Project under Coal India. 11 million cubic meters of rock has been handled during the year.

Mining services were successfully continued in the cluster of iron ore mines in the Barbil, Orissa region and two iron ore mines in Karnataka (NMDC). Manganese Mining is being carried out in the Koira sector of Orissa. The Division started operating its first Uranium Ore Mining in Jharkhand under Uranium Corporation of India Limited from February 2010. However, strict check on implementation of environmental rules and licensing affected the operations in the iron ore mining areas in Orissa for a major part of the year.

Further progress was made in the large infrastructure Project under Aditya Birla Group for their Alumina Plant in Rayagada, Orissa, during the year.

The Division is equipped to handle large complex projects. The 3D Laser Scanning Survey equipment for mine planning and control along with VSAT network across the sites, online MIS and SAP linkages have helped improve operational efficiency and scheduling.

3.4 Lubricants

The overall performance of the Lubricants Division has been positive for the financial year 2009-10 in terms of volume growth and profitability. The turnover of the Division was Rs. 563 crores, 11% over previous year.

The automobile industry started off on a sedate note in the beginning of the year, which saw decline or slow growth in sales of heavy commercial vehicles in the first 2 quarters. The commercial vehicles market witnessed strong growth from Q3 onwards and was back on track from October 2009. Other vehicles (cars, 2-wheelers, tractors) grew well across the year and overall the automobile industry grew by over 25 %. Accordingly, demand conditions in the lube industry picked up from Q3 across automotive and industrial segments.

The Lubricants Division had aimed to achieve higher volume growth than the industry and grew faster than competition. The key strategies, with a focus on segment wise approach backed by brand building initiatives, were successfully executed across core segments of New Generation Diesel Engine Oils, Motorcycle Oils (4T) and Passenger Car Motor Oils.

As part of brand building, in addition to signage and wall painting programs and the Gulf Cup covering the Dirt Track Championship for Motorbikes, which are held annually across India, another key initiative was the sponsorship of the Kings XI Punjab Cricket franchise for the Indian Premier League (IPL - 3). The association helped to build brand awareness/recall amongst the cricket loving as well as youth audiences across India. The various related ‘activation programs’ have enabled the Division to increase market share in the North, especially in Punjab and the Hindi speaking belt.

Innovative media campaigns on TV, airports and outdoor launched in December 2009 have further helped to increase the brand visibility and communicate the product benefits amongst retail and user industry target groups. The Division continued its ground level initiatives in terms of retailer, mechanic loyalty programs as well as consumer promotions in key product semi knocked-down units (SKUs).

The Division also increased sales and market share by breaking into new fleet operators and construction customers, medium sized industries and OEMs. New products and promotions aimed at the 3-wheeler commercial segments, tractors and other commercial vehicles recorded increased sales volumes. The Division’s market share in the PCMO segment grew by 1 % with the launch of Gulf Max range of engine oils in the second half of the year.

The Division increased market share also in the bazaar market by aggressively growing volumes in North and West regions. Overall the growth in this important segment as per AC Nielsen Retail Audit Report has been one of the highest in the industry. The focus on secondary and tertiary sales with below-the-line initiatives in key geographies helped to achieve faster growth for the Gulf brand in India in 2009-10.

Prices of major raw materials like base oils started firming up from May 2009 onwards although at a slower pace after hitting lows in Quarter IV of 2008-09. However, the increasing trend firmed up in Q4. Costs of additives increased sharply due to global supply constraints for chemicals and pricing policy of additive majors.

In spite of increased competition, the Division continued to protect and grow its market share in the important segment of New Generation Diesel Engine Oils to retain the overall No. 2 position across India, in the bazaar market, a key segment.

Gulf Filters product line recorded excellent growth as the products gained better customer acceptance thanks to the increased distribution network.

3.5 Other Business Groups

The 4 Wind Mills (1 MW) located at Ramagiri in Andhra Pradesh generated 4,00,900 units (2,54,414 units). The Hyderabad factory received the benefit of the generation through the APTRANSCO grid.

3.6 Exports

Explosives Division achieved a turnover of Rs. 46 crores from exports during the financial year. The Company was also awarded the prestigious CAPEXIL Award for excellence in exports. The Company has an edge in the overseas market through its compre gious CE Marking accorded for products manufactured at Hyderabad and Rourkela Works has established the Company’s quality assurance and manufacturing practices.

During the year, the exports of the Lubricants Division increased to 3547 KL from 1593 KL in 2008-09, an increase of 122% over previous year. Exports turnover of Lubricant products was Rs. 22.26 crores against Rs.6.48 crores in 2008-09. The Division is exporting its products mainly to Africa and highly competitive Middle-East markets and exploring other regions such as South East Asia for further growth in exports.

3.7 Property Development

Development work at the Bangalore property progressed at a slow pace during the year as the advantages of setting up of SEZ for IT and ITES was found difficult in view of the economic scenario. The Company had earlier obtained approval for setting up of the SEZ at 30 acres out of 40 acres proposed to be developed. The work related to development of land, clearing of old structures and setting up of a large site office has been completed. The development of 5.05 milion sq.ft. will also cover hotel, retail outlets, commercial malls and service apartments. Construction work is likely to be commenced during the current year.

With regard to the Hyderabad property, GHMC has advised the Company that it proposes to lay a 100 ft. connector road to decongest NH9 (Hyderabad – Mumbai) Highway. In addition, the GHMC also wants to widen the existing road on the west side of the property to link Hi-tech City and Balanagar. For the development of the property, the Company is in discussion with GHMC for finalizing the alignment of the 2 roads and also the compensation for such acquisition. The Architects have made draft lay-outs which will be finalised on receipt of final clearance from GHMC.

4. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

Internal Control System:

The Company has a well defined control environment and the internal control system provides reasonable assurance to the Company with regard to accomplishment of its business objectives through policies, procedures and guidelines.

As part of Company’s governance process, the Internal Audit Department provides facilitative and advisory role, on a continuous basis in developing and revising the policies and procedures for all significant processes such as procurement, inventory management, sales and distribution, finance and accounting, HR, IT etc; in order to support business and operational needs.

The Internal Audit Department in consultation with senior executives develops and documents annual audit plan and coverage for significant areas of operations in order to conduct the audit in an efficient and timely manner. The Company, through its Internal Audit Department, carries out process reviews for critical functions at all locations in accordance with annual audit plan. The observations arising out of audits are periodically reviewed and compliance is ensured by the process owners. The internal audit reports with relevant process owner clarifications are submitted to Audit Committee for their review and suggestions. The implementation status of Action Taken Reports (ATR) is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.

The Internal Audit Department provides facilitative and supportive role on a regular basis in implementing the risk management process and policies in the Company with emphasis to manage risks under changing business and operating conditions.

Further, risks identified during the course of internal audits at any process level are properly addressed and reported to the management and steps are taken by the process owners for rectification / mitigation as the case may be.

5. FIXED DEPOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2010 amounted to Rs.510.69 lakhs (Rs.140.83 lakhs). At the end of 31st March 2010, 10 deposits amounting to Rs.7.70 lakhs (Rs.38.21 lakhs), which had matured, remained unclaimed.

6. TAXATION

Orissa Sales Tax

The Writ Petitions filed in the Orissa High Court, impleading the other State Governments, Coal India Limited and its subsidiary Companies for grant of stay against the demand notices of the Orissa Sales Tax Authorities relating to 1976-77 to 1989-90 & 1990-91, were dismissed. The Review Petition against the aforesaid Order was also dismissed. The Company is taking necessary steps in consultation with legal counsels.

7. RESEARCH and DEVELOPMENT

A new plant for production of cartridged emulsion explosive was commissioned at Rourkela to service the tunneling sector, especially in North / North East sectors of the country. Trials of field programmable e – DET were successful. A new explosive for underground coal mining applications has been commercialized. New products for explosive deep hardening and boostering application have been developed and undergone successful trials.

Significant savings were achieved by cost optimization in bulk emulsion explosives. Several new products were developed for defence and metal cladding markets.

The Research and Development Centre of the Lubricants Division at Silvassa developed formulations for high performance Passenger Car Motor Oils, Gear and Transmission Oils, and Motor Cycle Oil to meet current and future market requirements. High performance diesel engine oils were validated in commercial vehicles with different after treatment technologies meeting the latest BS IV emission norms. To strengthen the existing product portfolio of the fast growing Construction and Mining segment, tailor made hydraulic and transmission fluids were developed. The Industrial portfolio was also expanded by developing metal working fluids and rust preventives. R&D activities also continued in developing alternate formulations to improve the flexibility in overall operations or to reduce costs.

Major achievements for the year include development of high performance Passenger Car Diesel Engine Oil, Gulf MAX TD 15W-40 meeting API CI-4/SL specifications and various hydraulic and transmission fluids for Construction and Mining Segment, upgradation of Ashok Leyland-Gulf Oil co-branded Gear Oil, Gulf Gear XP Max 90 for extended drain interval and validation of high performance diesel engine oils in BS IV vehicles.

8. SUBSIDIARIES

Gulf Oil Bangladesh Limited reported a profit of Rs. 97.51 lakhs (Rs.155.84 lakhs).

PT. Gulf Oil Lubricants Indonesia reported a profit of Rs. 55.52 lakhs (45.26 lakhs).

Gulf Oil (Yantai) Co. Ltd. reported a profit of Rs. 84.58 lakhs (Rs.151.96 lakhs).

Hinduja Infrastructure Limited reported a profit of Rs. 0.07 lakhs (loss of Rs.0.54 lakhs).

IDL Buildware Limited incurred a loss of Rs. 180.74 lakhs (loss of Rs.136.10 lakhs) on closure of the factory at Vizag.

Gulf Carosserie India Limited reported a loss of Rs. 0.24 lakhs ( profit of Rs.0.61 lakhs ).

During the year under review, the Company has fully disinvested the shareholding in IDL Speciality Chemicals Limited which was a 100% subsidiary of the Company, after transfer of the API and formulations businesses to two pharma companies.

9. HUMAN RESOURCES / INDUSTRIAL RELATIONS

Divisional HR Departments focused on conducting internal programmes for management personnel as well as workmen. The training programmes were related to areas of advanced product knowledge, creating a selling edge, leadership / competency development, safety and understanding of business process using SAP.

The HR focus has been to facilitate and start a number of key initiatives that provide enabling environment to enrich employee experience and enhance performance. To this end, during the year, improvement in the performance management process through sharper KRA / goal setting with long term goals and key strategies have been achieved for monitoring of performance.

During the year, 71 workmen availed VRS from Explosives Division at Hyderabad. However, the production levels were maintained by operations streamlining and manpower deployment, process improvement and outsourcing of certain activities.

A Wage Settlement was signed for regular workmen of Hyderabad Explosives Division, for a period of 3 years 4 months effective 1.1.2009. Major improvement in productivity is expected with the implementation of this Settlement.

During the year under review the employer-employee relations were cordial at all locations.

Safety

Accident-free man hours achieved by Hyderabad Works was 1.18 m (Previous Year : 1.33 m), Rourkela 1.55 m (Previous Year 1.23 m), Bulk Explosives locations 0.20 m (Previous Year 0.11 m).

In Hyderabad factory, Safety, HAZID AND HAZOP training was imparted to around 50 officers by DNV Energy (an associate of Norsk Veritas) for safe operations in the factories in the Explosives Division. Also several measures were undertaken by the Hyderabad factory to improve safety in operations through introduction of interlocking systems, trip relay system in automatic coil cutting machines and measures to reduce press fires.

A campaign was initiated to upgrade safety in Bulk Emulsion manufacture and delivery by introducing further safety measures in pump operations. In this connection, audit of bulk manufacturing facilities at Singrauli and Rourkela was carried out by an expert from UK and his observations actioned.

11. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

The global economy which witnessed very high degree of uncertainty and volatility during 2008-09 recovered to a great extent in 2009-10. However, vestiges of some of the issues which led to the fiscal meltdown is still seen in many parts of Europe.

Although, our exports during the year declined, domestic markets have been steady if not buoyant in many sectors. The six infrastructure sectors – crude, petroleum refinery products, coal, electricity, cement and finished steel – that constitute 26.68 per cent in IIP, recorded a growth of 5.3 per cent in the period April-February 2009-10, as against 2.9 per cent in the same period last year.

Overall the economy is expected to grow at 8 – 8.5% over the current year (2010 – 11).

In the automotive sector, the growth was 26.4% in sales riding on the Government’s stimulus packages. Sales in the domestic market were driven mainly by the car and 2-wheeler segment that posted 25.1% and 26% increases respectively. Ernst and Young forecast for the passenger car market in India is 12% CAGR over the next 5 years from the present figure of 1.89 m units to reach 3.75 m units by 2014.

The overall trend of mineral production indicates a growth of 7.9% for the year. The value of mineral production (excluding atomic minerals) during 2009-10 is estimated at Rs.1.28 lakh crores, an increase of 4.6% over the previous year. The total production comprised of fuel minerals 02.2%. Metallic minerals 21.6% and other minerals 16.2%.

Minerals play a very important role in the growth of Indian economy. India produces more than 80 minerals, which include fuels, metallic ores, non-metallic minerals, atomic minerals and other minor minerals. Mining and Quarry industry has a share of 1.9% of GDP and contributed significantly in driving the economic and social growth in India. India at its current place in the development path, requires coal for energy; metal ores, limestone and other minor minerals for infrastructure. The growth is reflected in the Index for Industrial production data for Mining industry. The year 2009-10 show a 8% growth over the previous year. As against a 4% CAGR over the last 16 years, we expect the growth rate to be in the range of 8-10% over the next few years.

In this background, the outlook of the activities of our Divisions is expected to be as follows:

11.1 Explosives

India is estimated to have around 2700 mines (570 : Coal, Metallic Minerals : 640, Non-metallic : 1500) with 90% of them concentrated in 11 states. The Company’s 50 years of long relationship, close geographical proximity with its multiple manufacturing locations and through active application support gives the Division a unique position as the “Supplier of Choice” with its customers.

The Division has envisaged a good growth in the coming year based on the ambitious targets set by Planning Commission. The huge requirement of coal, iron ore, limestone ( for cement and steel sectors ) and other strategic minerals, coupled with increased thrust in infrastructure sector will result in increased demand for explosives and blasting accessories as blasting with explosives continues to be the most economic method for excavating coal, minerals and overburden rock encountered in mining industry.

A Strategic review of the Explosives business with inputs from an external consultant was carried out. This study covered the size and composition of the market and identified the high growth and high value areas of focus for growth of the business.

During the year 2010-11, the Explosives Division will focus on the fast growing Bulk explosives, specialized packaged explosives for niche segments, technologically advanced accessories to provide high value to our customers. The new products developed during 2009-10 will address the needs of increased productivity and safety besides customised blasting solutions to signifi cantly reduce ground vibrations in the tunneling segment for hydro electric projects and underground coal mines. These have already enhanced our technological leadership and we have started to commercialize these products.

The Special Products Group of Explosives Division designs and manufactures initiators and pyrotechnic devices for specialized applications in Defense, Space and other industries. A number of new niche products which have been recently developed are expected to be commercially manufactured after appropriate approvals and qualifications.

11.2 Mining and Infrastructure (IDLconsult)

The Mining and Infrastructure Division (IDL Consult) engaged in contract mining and mining related infrastructure projects has segmented the market space and identified several strategic initiatives.

A number of large mining opportunities are expected in the coal sector, with the private sector opening up the captive coal blocks as well as new PSU owned coal blocks coming for exploitation. The Division’s experience in handling large mines and the related qualifications positions it favourably for undertaking these projects.

The current stress levels in the Iron ore mining segment is expected to ease in the first half of the year leading to opening up of new mines which have been long delayed. The Division’s offer of cost effective end to end mining solution covering mining and mineral processing is expected to get new customers from new mines in the metal segment.

The new mines which will open in the near future will require infrastructure such as roads, bridges, rail lines, buildings etc. The Division’s position as a One Stop Solution provider will give it a unique position in providing mining related infrastructure.

The Division has Rs. 322 crores of orders booked as at the end of F 10 to be executed in the next two to four years period comprising of coal mining, iron, manganese and uranium ore mining and mine related construction business.

With rising demand for coal, especially for thermal power generation, the Division foresees good opportunities in the coal sector for mining contracts with the coal majors like Singareni Collieries and Coal India who are planning more offloading of their operations. Many coal mines in the private and joint venture sectors are also to start in the next two to three years. All these developments of new mines are expected to increase the demand for contract mining and the Division is working closely with the mine owners / lessees for undertaking these large projects in the coal sector. The Division looks forward to becoming a major Mine Developer cum Operator (MDO).

Allocation of a large outlay for infrastructure development by the Government of India has directed the Divisions attention to the opportunity in projects relating to the Road sector and other infrastructure Projects. The Divisions expertise gained over the last eight years would be a major strength in increasing the business in these areas. The Division has already started a mining related infrastructure contract with the Aditya Birla Group for their new Alumina Project in Orissa.

11.3 Lubricants

With the growth trends in the automobile sector and steady demand for lubricants in the domestic market, the Division is looking at achieving double digit growth in volumes and consequent increase in market shares in the core segments. With increasing use of long drain lubricants, major volume growth prospects in the Lubes industry is likely to be limited. It is estimated that the overall volume growth for lubricants will be 2-3% in 2010-11. The Divisions strategy is aimed at growing faster than industry and competition, to gain market share.

As mentioned above, the growth in longer drain interval products is expected to be higher and in line with the growing preference for products with superior benefits, the Division is planning to launch a number of products that deliver ‘longer life’ to strengthen its position in this area.

These introductions will be backed by increased investments in the brand and further upgrading of its bottom line. It is expected that competition levels will increase but opportunities to take market share will also be available. The Division plans to leverage its strengths and build on the recent successes in the core segments to increase market share with continuation of segment wise approach. .

The Division will also focus on prospecting more Automobile OEMs (Original Equipment Manufacturers) for factory and service-fill related opportunities.

As the industrial and infrastructure sectors are expected to witness growth, opportunities in the B2B segment with industries, fleet/construction companies and marine will also be a focus area for the Division in 2010-11. The industrial segment is expected to grow well. The Division is planning to increase it’s presence with additional manpower and products to cater to this demand. The Lubricants Division will continue to strengthen its position with Ashok Leyland network and customers, with innovative programs and differentiated product offerings, which add value to the customers.

Base oil and additive prices and other costs are expected to increase given the current trend in base commodity prices, which may necessitate price increases during the year.

12. RISKS AND CONCERNS

12.1 Environmental Risks

Regular safety audits are carried out by internal safety audit teams and at regular intervals by external teams. General Safety Directions (GSDs) are strictly enforced in all factories and plants within the factories to ensure minimisation of risk. During the year, a special safety audit has been carried out by a consultant specialising in Explosives at the Rourkela factory and some bulk explosives manufacturing units. All recommendations have been implemented and confirmed by the Consultants. In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods to the explosives and accessories factories from undue risk. Operations are carried out to comply with emission, waste water and waste disposal norms of the local authorities of the respective factories.

12.2 Operational Risk

Licensing

The Explosives Division operates in a highly regulated and licensed industry and amendment / revision in licenses are required based on expiry of the licenses and change in production capacity and process. Amended / revised licenses for increase in license capacity for any of the explosives products may get delayed temporarily or for long periods thereby limiting our ability to cater to any increase in demand for these products from our customers. Non availability of licenses / approvals for expansion of new products could affect our future growth and expansion plans. The Division, therefore, ensures that approvals are applied for well in advance to avoid launch dates / export of products.

Location Risks

Manufacturing facilities, for our Industrial Explosives Division, are spread across six states. The optimum locations for packed explosives unit is determined by the customer location and the source of raw material. The advantage of the location of bulk explosives units is optimized to be close to the customer location. With changes in sources of raw material our location may not continue to be optimal in comparison with the competition. Moreover, if there is a consolidation in the industry, and the size of each manufacturing units go up, we may be disadvantaged by being sub-optimal.

Further since the lubricants are manufactured at one location and distributed throughout India, the cost of transportation and storage are higher in comparison to some of our competitors operations.

Raw Materials

Many of the inputs of the three major Divisions are imported, availability of which is affected by global market situations. Also, prices of such items are volatile. Increases in Base Oils due to increases in crude oil rates. Timely availability of raw materials is critical for continuous plant operations. The Company seeks to mitigate the risk by entering into long-term relationship with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

12.3 Market Risks:

Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India players as well as regional players is high. Of which, two major divisions, namely Industrial Explosives and IDLconsult Divisions operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. In the Lubes Division, increased competition and entry level pricing by new entrants leading to price undercutting could affect revenues substantially. Therefore, there is a risk of cost increases, especially of petro product inputs, not possible to be passed on to ultimate consumers. The Company is in direct contact with the industry associations to ensure that there is a suitable consensus on pricing policies by the majority of the producers.

Any reversal in growth trend in the economy in general and weak monsoons in particular, could affect demand in the automobile industry and consequent deceleration in manufacturing industry. This is likely to have an adverse impact on the lube industry. In order to minimise such adverse impact, the Lubes Division is taking various product and marketing initiatives.

Since the Q4 of the previous year, the base oil prices have again seen significant increases on account of high international rates. Given this trend of increasing base oils cost, if the cost increases cannot be passed on fully or recovered from the consumer, we may see an erosion of margins across the industry. Increased competition levels from the market leader to retain volumes and new entrants may lead to aggressive pricing and discounts.

Concentration of Customers

The IDLconsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts. Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tenders might result in loss of business opportunities for extended periods for the relevant tender(s).

12.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at Corporate Office under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests’ risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Adverse movement of Rupee from current levels may further impact base oil and ammonium nitrate rates.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delays and defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers. Credit availability and Exposure (with the trade channels) is another area of risk.

Liquidity Risk

Liquidity conditions in the money market and the commercial interest rates may impact the capability of distribution channel of the Lubes Division to support growth in business. Steps are being taken up for tie–up with financing partners to support distributors.

All the three major Divisions operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and Corporate Finance.

12.5 Legal and Statutory Risks:

Contractual Liability

All major contracts are reviewed / vetted by the in-house Legal Department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis. In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

12.6 IT Risks

The Company is dependent on intra-office and inter-office networks, as well as several business softwares operated from the Corporate Office and the business Divisions. Failure of system networks and consequential loss of business is attempted to be minimised by critical systems being operated on secured servers with regular maintenance, regular back up and off-site storage of data, selection of suitable firewall and virus protection systems / software.

12.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

While the Company undertakes regular review of remuneration structures, threat of poaching by competitors, especially, new entrants in the industry of key persons is possible. Such actions could lead to temporary drop in efficiency and performance in the specific areas.

13. DIRECTORS

During the year, Mr. P. N. Ghatalia, Chiarman of the Audit Committee passed away on August 13, 2009. Your Board of Directors wishes to place on record its appreciation for the contributions made by late Mr. P. N. Ghatalia during his over 8 years tenure as Director and Chairman of the Audit Committee of the Board of the Company.

The Board has during the year, appointed Ms. Kanchan Chitale w.e.f. 5th October, 2009, in the casual vacancy caused by the sad demise of Mr. P. N. Ghatalia. Ms. Kanchan Chitale has also been appointed as the Chairperson of the Audit Committee. Ms. Chitale is a Fellow Member of the Institute of Chartered Accountants of India ( ICAI ). She has experience of 20 years in internal and management audits of corporate enterprises and specialized / concurrent audits and other assignments of commercial banks and financial institutions. She has been a governing body member of IIM-Ahmedabad Alumni Association ( 1990-95 ), Ex-Vice President of Association of Women Industrialists of Maharashtra ( 1992-93 ) and is a member of Bombay Chartered Accountants Society and Institute of Internal Auditors.

Mr. Ashok Kini, Mr. Vinod K. Dasari, Ms. Vinoo S. Hinduja and Mr. V. Ramesh Rao in accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, retire by rotation at the 49th Annual General Meeting of the Company and are eligible for reappointment.

Profile of members of the Board of Directors being appointed / reappointed :

Ashok Kini

Mr. Ashok Kini graduated from Mysore University in 1965 majoring in Science and obtained a Master’s degree in English Literature from Madras Christian College, Chennai before joining State Bank of India ( SBI ) as Probationary Officer in 1967 and reached the position of Managing Director (National Banking) of SBI. During his career, Mr. Ashok Kini was responsible for the Bank’s IT plans, from concept and RFP to execution and vendor management, domestic distribution, retail business, consumer banking, marketing/brand management, etc.

Vinod K Dasari

Mr. Vinod K Dasari is Wholetime Director of Ashok Leyland Ltd., heading manufacturing, domestic marketing, strategic sourcing and corporate quality engineering divisions. Mr. Vinod K. Dasari commenced his career with General Electric Company, USA in 1986 and worked for companies such as Timken USA, Timken India, Cummins India Limited and is credited with bringing about signifi cant changes in these organizations and leading them into profitability after a period of sustained losses.

Vinoo S Hinduja

Vinoo S Hinduja is a degreeholder in Business Administration from UK and a Diploma holder in Health Policy Management from USA. She has completed her internship and training in Finance and Banking at the Credit Suissee Bank, Geneva and Chase Manhattan Bank, London and in Hospital Administration and Management from Cromwell Hospital, London. She is also a member of the National Health and Education Society, Hinduja National Hospital in Mumbai.

V. Ramesh Rao

Mr.V.Ramesh Rao is a postgraduate in Mechanical Engineering with specialization in Industrial Tribology from IIT, Madras and is a President’s Gold Medalist. He has been working in the lubricants industry since 1984 in various companies such as Lubrizol India Limited, Gulf Lubricants Systems and in Gulf Oil International companies in China, Korea, Taiwan and Philippines. He is a member of the Gulf Oil Core Technical Team and assisted Gulf Oil’s international operations and handles the operations in the Asia Pacific Region.

Names of companies in which the Directors, proposed to be appointed / reappointed at the ensuing AGM, hold positions of directorship and the membership/chairmanship of committees of the Board, are as per the Annexure to the Report on Corporate Governance.

14. STATUTORY INFORMATION

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees ) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisions of Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company.

15. INFORMATION ON STOCK EXCHANGES

The Equity shares of the Company are listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees have been paid to them uptodate.

16. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Companys compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this Annual Report.

17. DIRECTORS RESPONSIBILITY STATEMENT

The Directors, on the basis of information and documents made available to them, 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. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

18. SUBSIDIARY COMPANIES

The Report and Accounts of the Subsidiary Companies are annexed to this Report along with the statement pursuant to Section 212 of the Companies Act, 1956. However, in the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries will be provided the same on receipt of a written request from them.

19. AUDITORS

M/s Deloitte Haskins and Sells and M/s Shah and Co., Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government of India and various State Government authorities and agencies, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of all employees of the Company.

For and on behalf of the Board of Directors

S. G. HINDUJA

Chairman

Place : Mumbai

Date : 14th May 2010

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