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.
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 Companyâs 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 Companyâs 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.
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
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).
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).
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.
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.
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.
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.
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 Divisionâs performance is expected to be better during the subsequent year.
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.
''Ecopolisâ, the Companyâs 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 ''e3â and Multi Level Car Parking space (MLCP) with a leasable area of over 7.64 lac sft. ''e3â 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 clientsâ 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 Ecopolisâ project at Bengaluru.
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.
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%.
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.
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.
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-Aâ to this Report.
A Scheme of Arrangement has been proposed for amalgamation of APDL Estates Limited with the Company.
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.
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 2021â 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 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.
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 Companyâs 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. DIRECTORSâ 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- Bâ.
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.
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.
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 C1â.
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 C2â to this Report in terms of Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
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 C3â.
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.
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.
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 Boardâ) 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 Directorsâ 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.
All the Independent Directors of the Company have been registered and are members of Independent Directors Databank maintained by Indian Institute of Corporate Affairs.
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.
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 Companyâs 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 Companyâs 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 Companyâs Meetings.
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 insuranceâ) for all its Directors and members of the Senior Management.
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 Dâ. 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 Eâ.
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 (''BRRâ) 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 Fâ.
A separate report on Corporate Governance along with the Auditorsâ 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 Regulationsâ) is attached as ''Annexure Gâ 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 armâs 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 armâs 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 Companyâs 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.
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 Companyâs 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.
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.
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 Companyâs investors, business associates, for their continued co-operation and support.
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 âEcopolisâ 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 âEcopolisâ has been awarded the prestigious CIDC ( Construction Industry Development Council) Vishwakarma Awards 2018 in the category of âBest Construction Projectsâ 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 cityâs 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 âAnnexure-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 âAnnexure D''.
There was no qualification, reservation or adverse remark or disclaimer in the auditorâs 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 âAnnexure 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 âAnnexure 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 âAnnexure 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 Companyâs 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 armâs 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 âAnnexure 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 âEcopolisâ 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 clientsâ sale / lease and âBuild to Suitâ 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 Groupâs 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 Companyâs 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 Organizationâs 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 âAnnexure-Aâ to the Boardâs 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 Companyâs 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. Indiaâs 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 âMake in Indiaâ 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 âMake in Indiaâ, 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 Divisionâs 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 Indiaâs 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 âEcopolisâ 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 âEcopolisâ 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 cityâs 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 Companyâs 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 Companyâs 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 Companyâs 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 & Directorsâ 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 Companyâs Management and the Board in terms of quality, quantity and timeliness. The Directors expressed their satisfaction with the evaluation process.
Directorsâ 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 Companyâs 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 Companyâs 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 Companyâs 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 âAnnexure Bâ. 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 âAnnexure Câ.
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 Companyâs compliance and have certified the same as required under the SEBI Guidelines/ Regulations. Such a certificate is reproduced in this Annual Report.
20. DIRECTORSâ 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 âAnnexure Dâ.
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 âAnnexure-Eâ.
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 armâs 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 armâs 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 Companyâs 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 âAnnexure Fâ.
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 Â 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 Â 11% of the total industrial
sector. The Government plans to increase GDP by 7 Â 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 Â 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 Â 14.
15.1 Detonators and Accessories
The demand for explosives and accessories registered a contraction in
volumes in 2014 Â 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-Ã -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 Â
2.50 per share, equivalent to 125% (consisting of  2.20 per share
Interim Dividend equivalent to 110% Special Interim Dividend of Â
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 Â
1081.95 crores). The profit before exceptional items and taxation was Â
87.48 crores ( 68.9 crores). The profit before tax was  78.83 crores
(Â 73.22 crores ). The profit after provision for current tax of Â
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 (Â
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 Â
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 Â1800 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 wereÂ9crores duringthe current year
asagainstÂ21 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 Â1and every2 shares of the
Company have beenconsolidatedintoone equity share of Â2face 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 Â412.68 lakhs
(Â179.16 lakhs).
Rs IDL Explosives Limited reported a profit of Â431.13 lakhs (loss of
Â244.56 lakhs).
Rs IDL Buildware Limited reported a profit ofÂ5.19 lakhs (profit ofÂ
16.70 lakhs).
Rs Gulf Carosserie India Limited reported a profit of Â2.38 lakhs (loss
of Â0.49 lakhs).
Rs Gulf Oil Lubricants India Limited (formerlyknown asHinduja
Infrastructure Limited) reported a loss of Â0.57 lakhs (profit of Â
0.13 lakhs).
Rs Gulf Oil Bangladesh Limited reported a loss of Â119.63 lakhs (loss
of 149.41 lakhs).
Rs PT. Gulf Oil Lubricants IndonesiareportedaprofitofÂ40 lakhs (Â
160.46 lakhs).
Rs GulfOil(Yantai)Co.Ltd.reportedaprofitof Â375.65 lakhs(lossof Â476.97
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
tieÂup 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 Â
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 à 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 à Gulf King of the Road à 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 à 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 à 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 DivisionÃs 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 DivisionÃs 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 ÃFully
Field Programmableà 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
monthsà 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 Ãactivation
programsà 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 DivisionÃs 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 CompanyÃs 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 à 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 CompanyÃs 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 à 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 à crude, petroleum refinery products, coal, electricity, cement
and finished steel à 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 Ã 8.5% over the current
year (2010 Ã 11).
In the automotive sector, the growth was 26.4% in sales riding on the
GovernmentÃs 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 CompanyÃs 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 ÃSupplier of Choiceà 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 DivisionÃs
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 DivisionÃs 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
DivisionÃs 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 Ãlonger lifeà 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 itÃs 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. Interestsà 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
tieÃup 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 MasterÃs 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 BankÃs 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
PresidentÃs 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 OilÃs 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