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Directors Report of Grindwell Norton Ltd.

Mar 31, 2016

The Directors present the 66th Annual Report of the Company along with the audited financial statements for the year ended 31st March 2016.

SO ALIVE @75

For seventy five years your Company has been a part of India''s industrial development. This journey began in 1941 in the humble surroundings of the fishing village of Mora (across Mumbai''s harbour). Over the years, your Company has been through several ''ups''and a few ''downs'', has gained strength with each passing year and has witnessed sustained growth and success. This incredible journey was made possible by countless people and organisations who have been associated with Grindwell Norton Limited ("GNO") over the years, including its loyal customers, dealers, suppliers, service providers and, above all, its employees. GNO and its employees are energetic, innovative and spirited and this is reflected in your Company''s theme for its 75th Anniversary: SO ALIVE @ 75. The Board believes that, with your continued support, your Company will sustain its growth and success and drive forward towards its centenary and beyond.

FINANCIAL HIGHLIGHTS

(Rs.in crores)

Standalone Consolidated

2015-16 2014-15 2015-16 2014-15

Sale of Products (Gross) 1182.61 1144.06 1206.58 1168.58

Service & Other Operating Income 61.80 50.58 62.09 51.04

Less: Excise Duty (85.96) (84.25) (85.96) (84.25)

Revenue from Operations 1158.45 1110.39 1182.71 1135.37

Operating profit 153.31 149.78 160.93 156.70

Interest 0.64 0.55 2.37 2.91

Profit before Tax 152.67 149.23 158.56 153.79

Provision for Tax 51.15 48.21 52.80 49.60

Profit for the year 101.52 101.02 105.76 104.19

Less: Share of Minority Interest - - (1.15) (0.98)

Profit for the year after Minority Interest - - 104.61 103.21

Surplus brought forwards 150.00 120.00 148.81 116.62

251.52 221.02 253.42 219.83

Appropriations:

Interim/Final Dividend 35.98 35.98 35.98 35.98

Tax on Interim / Final Dividend 7.33 7.33 7.33 7.33

Transfer to General Reserves 8.21 27.71 8.21 27.71

Surplus Carried to Balance sheet 200.00 150.00 201.90 148.81

251.52 221.02 253.42 219.83

The Company proposes to transfer an amount ofRs.8.21 crores to the General Reserve. An amount of Rs.200 crores is proposed to be retained in the Statement of profit and Loss.

DIVIDEND

The Board of Directors confirmed an interim dividend ofRs.6.50 per equity share (previous yearRs.6.50 per equity share), declared on 16th March 2016, as the final dividend for the financial year 2015-16.The dividend outgo, including dividend distribution of tax, was Rs.43.31 crores (previous yearRs.43.31crores).

BONUS ISSUE

On the occasion of the Company''s 75th Anniversary, the Board of Directors, at its meeting held on 30th May 2016, have recommended the issue of Bonus Shares in proportion of one fully paid equity share ofRs.5/-(Rupees Five only) each for one fully paid equity share ofRs.5/- (Rupees Five only) each.

OPERATIONS

For the ffth consecutive year, growth of the Index of Industrial Production ("IIP") was under 3%. In fact between 2010-11 and 2015-16, the IIP has increased from 165.5 to 181.6 (a compounded growth rate of barely 2%). Within the IIP, the compounded growth rate of the manufacturing sector has been less than 2% over 5 years (from 175.7 to 190.4), while the index for the mining sector is still below its level in 2010-11 (from 131.0 to 129.4). Your Company''s overall sales growth over the last five years has similarly been low relative to earlier years. Decline in inflation over the last two years (thanks mainly to low global oil prices) and a relatively stable Rupee continued to provide respite for the industrial economy. Against this backdrop, during the year under review, your Company''s sales and operating profit registered a modest increase of 3% and 2% respectively. The workers''union of the Bengaluru plant went on strike for a period of 20 days in November 2015 due to an impasse in the wage negotiations. The management had taken all steps to meet customer requirements during the strike period and there was no major impact on the financial performance of your Company due to the strike.

- Abrasives

The low growth of the manufacturing and mining sectors affected domestic volumes. Exports, however, witnessed strong growth. The business continued to focus on new products and new markets. With volume growth being low and with only a small improvement in price realization, higher manpower costs (partly one-time) and expenses caused a decline in operating margin.

- Ceramics & Plastics

The Silicon Carbide business had a very disappointing year. While domestic demand continued to be stable, but weak, exports saw a significant decline. Production at your Company''s Tirupati Plant was affected due to disruption in power supply from Andhra Pradesh Gas Power Corporation Limited (on account of reduced availability of gas). Low-priced competition from Vietnam and China intensified. Consequently, production, sales and prices witnessed a sharp fall and caused operating profit and margin to decline. The High Performance Refractories business also had a dififcult year with domestic demand and order flow being weak and exports being fat. An adverse product mix led to a decline in margins and profits. The Performance Plastics business had an excellent year with strong growth in sales and profits largely due to growth of the auto and life sciences market segments.

SUBSIDIARY COMPANY

The Company has one subsidiary in Bhutan, Saint-Gobain Ceramic Materials Bhutan Private Limited. It is not a material subsidiary in terms of sub-regulation (1)(c) of Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

The operations of your Company''s subsidiary in Bhutan were stable. Despite the increase in power cost by 10% in Bhutan, the cost of electricity is still much lower than the cost at Tirupati.

In accordance with Section 129(3) of the Companies Act, 2013 ("Act") and Rule 5 of the Companies (Accounts) Rules, 2014 and relevant Accounting Standards ("AS"), the Company has prepared consolidated financial statements of the Company and its subsidiary company, which forms part of the Annual Report. A statement in Form AOC-I containing salient features of the financial statements of the subsidiary company is also included in the Annual Report. In accordance with provisions of Section 136(1) of the Act, the Annual Report of the Company, containing therein the standalone and consolidated financial statements and audited financial statement of the subsidiary has been placed on the website of the Company, www.grindwellnorton.com. Shareholders interested in obtaining a copy of the audited financial statements of the subsidiary may write to the Company Secretary at the Company''s Registered Office.

FUTURE PROSPECTS

While the long term outlook of the economy is positive, the short term outlook is uncertain. Investment demand remains low. The order inflow, across businesses, is still muted and there is no pull from the channel. With inflation expected to remain low and the Rupee expected to depreciate gradually, there are hopes of a mild recovery. Under the circumstances, your Company''s management will continue to focus on growing exports, improving price realization and containing the rise in manpower costs and expenses even as it continues to invest in new products and new markets to sustain growth. As and when growth accelerates, your Company will benefit from the investments made in capacities and capabilities in recent years.

MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF FINANCIAL YEAR

There have been no material changes or commitments, affecting the financial position of the Company, which have occurred between end of the financial year and the date of the Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes forming part of the financial statements.

HUMAN RESOURCES

Employee relations were cordial at all sites of your Company, with one exception. The workers''union at your Company''s plant at Bengaluru went on strike in November 2015 due to an impasse in the wage negotiations. The workers unconditionally resumed normal operations after 20 days and, subsequently, a new productivity-enhancing wage agreement was concluded. Earlier in the year, a new wage agreement was also concluded with the workers''union at Tirupati. At the end of the financial year, there were 1793 employees. Your Directors place on record their appreciation for the contribution made by all employees in the progress of your Company.

The Company follows best practices in hiring and on-boarding of employees. The Company adopts a fair and transparent performance evaluation process. In order to improve organizational efficiency and employee engagement, various process change initiatives were undertaken during the year. Your Company believes in conducting its business in a highly transparent and ethical way. To ensure this and also to improve skill levels, employees participate in various training programmes and complete mandatory e-learning courses.

Your Company is committed to creating and maintaining a healthy working environment that enables employees to work without fear of prejudice, gender bias and sexual harassment. The Company believes that all employees have a right to be treated with respect and dignity and has zero tolerance towards violations of its Code of Conduct, in general, and its sexual harassment policy in particular. During the year, no complaint under the sexual harassment policy has been received by the Compliance Committee.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND ENVIRONMENT

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 set out in Annexure 1 to this Report.

Your Company is committed to ensure a clean and green, pollution-free environment as well as a safe and healthy work place at all plant locations and work sites. Your Company strictly abides by the Saint-Gobain Group''s Environment, Health and Safety Charter and the policies and procedures framed under it. All the plants of your Company are certified under ISO-14001 and OHSAS-18001. These certification and various awards are recognition of the efforts made and results achieved by your Company in improving Environment, Health and Safety at all its work sites.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of the Annual Report.

Having regard to the provisions of the first proviso to Section 136(1) of the said Act, 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 on request. The full Annual Report including the aforesaid information is available on the website of the Company, www.grindwellnorton.com.

PUBLIC DEPOSITS

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of the provisions of the Companies Act, 2013, Mr. Pradip Shah, Mr. Keki M. Elavia and Mr. Shivanand Salgaocar have been appointed as Independent Directors at the Annual General Meeting held on 23rd July 2014 for a term of five consecutive years commencing from 23rd July 2014.

Consequent to their transfers to new positions within the Saint-Gobain Group, Mr. Guillaume Texier and Mr. Benoit d''Iribarne (Alternate Director to Ms. Marie-Armelle Chupin), resigned with effect from 2nd February 2016. The Directors place on record their appreciation of the valuable contribution made by them during their tenure as Directors.

In accordance with the Companies Act, 2013 and the Articles of Association of the Company, Mr. Patrick Millot, Director, retires by rotation and being eligible, has offered himself for re-appointment.

Mr. Anand Mahajan was first appointed as the Managing Director of the Company on 1st April 1991. The Members had approved the last re-appointment of Mr. Anand Mahajan as the Managing Director of the Company for a period of five years from 1st April 2011 to 31st March 2016.

The Board, on the recommendations of the Nomination and Remuneration Committee, re-appointed Mr. Anand Mahajan as the Managing Director of the Company for a further period of five years with effect from 1st April 2016, subject to the approval of the Members.

On 2nd February 2016, Mr. Laurent Guillot, President, High Performance Materials Sector, was appointed as an Additional Director of your Company. Mr. Laurent Guillot is a graduate of Ecole Polytechnique and Ecole Nationale des Ponts et Chaussees, with a post-graduate degree in Macroeconomics from Universite Paris I. After serving the Government for a few years, Mr. Guillot joined Compagnie de Saint-Gobain in 2002 as Vice-President, Corporate Planning. Between 2004 and 2007, he held various positions within the High Performance Materials Sector of Saint-Gobain, In 2007, he was appointed General Delegate for Brazil, Argentina and Chile. He was the Saint-Gobain Group''s Chief Financial Officer from 2009 to the end of 2015. In January 2016, Mr. Guillot was appointed as the President of High Performance Sector of Saint-Gobain.

The resolutions seeking approval of the Members for the appointment of Mr. Anand Mahajan and Mr. Laurent Guillot have been incorporated in the notice of the forthcoming Annual General Meeting of the Company along with brief details about them. The Company has received a notice under Section 160 of the Act along with the requisite deposit proposing the appointment of Mr. Laurent Guillot.

None of the Directors or Key Managerial Personnel has any pecuniary relationships or transactions with the Company, other than salaries, commission and sitting fees.

DECLARATION GIVEN BY INDEPENDENT DIRECTORS

The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The familiarisation programmes are aimed to familiarise the Independent Directors with the Company, nature of industry in which the Company operates and business model of the Company. The details of the familiarisation programme imparted to Independent Directors are available on the Company''s website at http://grindwellnorton.co.in/Familiarisation_Programme.htm. The Independent Directors are regularly briefed with respect to the developments that are taking place in the Company and its operations.

NUMBER OF MEETINGS OF THE BOARD

The Board meets at regular intervals to review the Company''s businesses and to discuss strategy and plans. A tentative annual calendar of meetings is circulated to the Directors in advance to enable them to plan their schedule and to ensure effective participation.

During the year, six board meetings were held. The maximum interval between the meetings did not exceed the period prescribed under the Companies Act, 2013 and the Listing Regulations.

COMMITTEES OF THE BOARD

During the year, in accordance with the Companies Act, 2013 and Regulations 18 to 21 of the Listing Regulations, the Board has constituted or reconstituted its Committees. Currently, the Board has the following Committees:

Audit Committee

Nomination and Remuneration Committee

Stakeholders Relationship Committee

Corporate Social Responsibility Committee

Risk Management Committee

Share Transfer Committee

Details of the Committees, their constitution and other details are provided in the Corporate Governance Report.

DIRECTORS''RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

i. that in the preparation of the annual financial statements for year ended 31st March 2016, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

ii. that such accounting policies have been selected and applied consistently and judgments and estimates have been made, 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 on 31st March 2016, and of the profit of the Company for the year ended on that date;

iii. that proper and sufficient care has 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;

iv that the annual financial statements have been prepared on a ''going concern''basis;

v. that proper internal financial controls are in place and that such internal financial controls are adequate and are operating effectively;

vi. that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and are operating effectively.

With reference to the point number (v), the Board believes the Company has sound Internal Financial Controls ("IFC") commensurate with the nature and size of its business. However business is dynamic and IFC are not static, and evolve overtime as the business, technology and fraud environment changes in response to competition, industry practices, legislation, regulation and current economic conditions. There will therefore be gaps in the IFC as business evolves. The Company has a process in place to continuously identify such gaps and implement newer and/or improved controls wherever the effect of such gaps would have a material effect on the Company''s operations.

DIRECTORS''APPOINTMENT AND REMUNERATION

The Nomination and Remuneration Committee has laid down the criteria for Directors''appointment and remuneration. These are set out in the Nomination and Remuneration Policy which is annexed as Annexure 3 to this Report.

ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD

The Board, on recommendation of the Nomination and Remuneration Committee, has adopted a framework for performance evaluation of the Board, its Committees, individual directors and the chairperson through a survey questionnaire. The survey questionnaire broadly covers various aspects of board functioning, composition of Board and its committees, culture, execution and performance of specific duties, obligation and governance.

RELATED PARTY TRANSACTIONS

All related party transactions entered during the financial year were in the ordinary course of business and on an arm''s length basis. During the year, the Company has not entered into any contract/arrangement/transaction with related parties which would be considered material as prescribed under the Companies Act, 2013 and Regulation 23 of the Listing Regulations.

The related party transactions are approved by the Audit Committee through an omnibus resolution. The Audit Committee monitors, on a quarterly basis, the related party transactions entered vis-à-vis the related party transactions approved by the omnibus resolution.

The policy on related party transactions, as approved by the Board, is available on the website of the Company, www.grindwellnorton.com. There are no transactions that are required to be reported in Form AOC-2.

The details of the transactions with related parties are provided in the accompanying financial statements.

CORPORATE SOCIAL RESPONSIBILITY

It is your Company''s belief that its primary goal is to serve the needs of its customers and, in the process of doing so, to generate employment, livelihood and income for all its stakeholders (suppliers, vendors, service providers, employees, lenders, shareholders etc.) and, at the same time, to contribute to the revenues of Government. Further, it is your Company''s belief that by pursuing its primary goal and by ensuring that its business practices meet the highest standards of corporate governance and ethics, it best fulfills its obligations and responsibility to society. Against the backdrop of this belief, your Company is committed to implementing the agenda set out in its CSR policy. The CSR policy and the initiatives taken during the year, in the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in Annexure 4 to this Report. In accordance with Section 135 of the Companies Act, 2013, a Corporate Social Responsibility ("CSR") Committee of the Board, having an Independent Chair, has been constituted to monitor the CSR policy and programs. The amount spent on eligible CSR activity for the financial year 2015-16 is around 0.52% of the average net profit of the Company during the three immediately preceding financial years.

RISK MANAGEMENT POLICY AND INTERNAL FINANCIAL CONTROLS

Your Company recognizes that managing risk is an integral part of good management practice and an essential element of good corporate governance. It aims to have a common, formalized and systematic approach for managing risk and implementing a risk management process across the Company. The intent of the policy is to ensure the effective communication and management of risk across all risk categories. The Company has identified elements of risk, which may threaten the existence and financial position of the Company, which are set out in Management Discussion and Analysis Report.

The Company''s Internal Financial Control systems are commensurate with the nature of its business, financial statements and the size and complexity of its operations. These are routinely tested and certified by the Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

WHISTLE BLOWER POLICY AND VIGIL MECHANISM

Your Company has adopted and disseminated its Whistle Blower Policy to provide a secure environment and encourage employees to report unethical, unlawful or improper practices, acts or activities and to prohibit any adverse personnel action against those who report such practices, acts or activities, in good faith.

The Whistle Blower Policy is available on the website of the Company, www.grindwellnorton.com.

AUDITORS

a. Statutory Auditors

M/s. Kalyaniwalla & Mistry, Chartered Accountants, (Registration No 104607W), Statutory Auditors of your Company, who hold office till the conclusion of 66th Annual General Meeting, are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and Rules framed thereunder, for re-appointment as Statutory Auditors of the Company.

Your Directors on recommendation of the Audit Committee, seek approval of the Shareholders, for appointment of M/s. Kalyaniwalla & Mistry, Chartered Accountants, as the Statutory Auditors of the Company, from the conclusion of the forthcoming Annual General Meeting till the conclusion of the next Annual General Meeting of the Company, on such remuneration as may be mutually agreed between Board of Directors of the Company and the Auditors, as set out in the resolution included in the Notice convening the Annual General Meeting of the Company.

b. Cost Auditor

In accordance with Section 148 of the Companies Act, 2013 and Rules framed thereunder, the cost audit records are maintained by the Company in respect of the products which are required to be audited. Your Directors, on recommendation of the Audit Committee, appointed M/s. Rao, Murthy & Associates, Cost Accountants, to audit the cost accounting records maintained by the Company for the financial year ended 31st March 2016.

c. Secretarial Auditor

In accordance with Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Parikh & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year ended 31st March 2016. The Secretarial Audit Report for the financial year ended 31st March 2016 in Form No. MR-3 is set out in Annexure 5 to this Report.

COMMENTS ON AUDITORS''REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Kalyaniwalla & Mistry, Statutory Auditors, in their Auditors''Report and by M/s. Parikh & Associates, Secretarial Auditor, in their Secretarial Audit Report.

The Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form No. MGT-9 is attached as Annexure 6 to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT AND CORPORATE GOVERNANCE REPORT

As per Regulation 34, Schedule V of the Listing Regulations, the Corporate Governance Report with the Auditors''Certifcate thereon and the Management Discussion and Analysis Report are annexed and forms part of this Report.

ACKNOWLEDGMENTS

Your Directors take this opportunity to acknowledge with sincere gratitude the support of its esteemed customers, the strength it derives from its association with Compagnie de Saint-Gobain and its subsidiaries, the continued support and co-operation from its Bankers and the loyalty of the large family of the Company''s Dealers, Suppliers and valued Shareholders.

For and on behalf of the Board of Directors

PRADIP SHAH ANAND MAHAJAN

Chairman Managing Director

Mumbai, 30th May 2016


Mar 31, 2013

The Members, Grindwell Norton Ltd.

The Directors present the 63rd Annual Report of the Company along with the Audited Balance Sheet as at 31st March, 2013 and the Statement of Proft and Loss for the year ended 31st March, 2013.

Financial Highlights

(Rs. Crores)

2012-13 2011-12

Sale of Products (Gross) 990.68 951.32 Service & Other Operating

Income 31.32 22.26

Less: Excise Duty (76.90) (66.98)

Revenue from Operations 945.09 906.60

Operating Proft 136.64 149.35

Interest 0.59 0.37

Proft before Tax 136.05 148.98

Provision for Tax 38.38 45.35

Proft after Tax 97.67 103.63

Surplus brought forward 80.00 60.00 177.67 163.63

Appropriations:

Proposed Dividend 35.98 35.98

Tax on Proposed Dividend 6.12 5.84

Transfer to General

Reserve 35.57 41.81

Surplus Carried to Balance

Sheet 100.00 80.00

177.67 163.63

Responsibility Statement

Your Directors confrm that :

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) Appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the proft of the Company for that year;

(iii) Proper and suffcient care has been taken for the maintenance of 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;

(iv) The annual accounts have been prepared on a going concern basis.

Operations

The growth of the industrial sector, in general, and within that, manufacturing, in particular, witnessed a steep decline. This was the second consecutive year of low growth. Consequently, during the year under review, your Company''s sales increased by only 4%. Domestic sales were fat (volumes contracted by about 3%) while exports grew by about 75% (largely due to one large equipment order executed by your Company''s Project Engineering Division). Overall, the growth in sales was the lowest since 2001. Meanwhile, margins came under increasing pressure due to the rise in cost of inputs (energy and raw materials), the further depreciation of the Rupee and general infationary conditions. While the management succeeded in increasing prices, in weak and highly competitive markets, the increase was not suffcient to maintain margins, even after considering the improvements in productivity, effciencies and yields and cost control. Consequently, your Company''s operating proft declined by 8.5%, the frst drop since 2008.

Dividend

In the light of your Company''s profts and its strong fnancial position, your Directors are pleased to recommend a dividend of Rs. 6.50 per equity share for the fnancial year ended 31st March, 2013. The cash outgo on account of the dividend (including dividend distribution tax) will be Rs. 42.10 crores (Previous year Rs. 41.82 crores).

Abrasives

Due to contraction in volume of many end–user industries (led by auto), domestic sales were fat in value terms even as volumes declined. With considerable efforts, the domestic volume drop was partly compensated by some growth in exports. Despite being successful in increasing prices, improving operating performance and containing expenses, operating proft and margin was much lower than the previous year. The two capacity expansion projects initiated last year were delayed. The new Non-woven Abrasives plant in Bangalore was partially commissioned in the second half while, given the market situation, the Bonded Abrasives expansion project at Nagpur was slowed down and is now likely to be commissioned in the current year.

Ceramics & Plastics

Domestic and export demand for Silicon Carbide was weak during the year under review. Margins were affected mainly on account of higher power cost (there was a steep increase in grid power tariff in Andhra Pradesh) and slightly lower price realization. The execution of major project orders during the year under review, helped the High Performance Refractories (HPR) business to register good growth in sales compared to previous year. The new HPR plant in Halol (Gujarat) was commissioned in September 2012 and stabilization of the process and ramp up of production from that unit is in progress. The Performance Plastics business also witnessed good growth during the year.

Subsidiary in Bhutan

Operations of your Company''s subsidiary in Bhutan stabilized and achieved almost 100% capacity utilization. The processing plant project started last year was commissioned in January 2013. During the year, your company has made a further equity investment of Rs. 35 million in its subsidiary. This capital infusion was utilised for the processing plant. In terms of general exemption provided under Section 212 (8) of the Companies Act, 1956, granted by Ministry of Corporate Affairs vide its circular no 02/2011 dated 8th February, 2011 and in compliance with the conditions enlisted therein, copies of the Balance Sheet, Statement of Proft & Loss, Report of Board of Directors and Auditors of the subsidiary have not been attached to the Balance Sheet of the Company. However these documents will be made available upon request by any member of the Company. As directed by said circular, the fnancial data of the subsidiary has been furnished under "Financial Information of Subsidiary Company" which forms part of Annual Report. The annual accounts of the Company including that of the subsidiary will be kept for inspection by any member. Further, pursuant to Accounting Standard (AS) – 21, consolidated fnancial statements presented by the Company include fnancial information of the subsidiary company.

Investment in Saint-Gobain Research India Limited

During the year, Saint-Gobain Research India Ltd (SGRI) was incorporated. SGRI will invest in setting up a transversal Research & Development Centre for the Saint-Gobain Group in Chennai. Two of the Group''s R&D entities and three of its entities in India have contributed to SGRI''s equity. SGRI will support the Saint-Gobain businesses in India (including all the businesses of your Company). During the year under review, your Company invested Rs. 2.34 crores in the equity capital of SGRI.

Amalgamation of Group Companies

At a meeting held on 19th April, 2013, the Board of Directors of your Company, based on the recommendation of the Audit Committee, has approved the merger of SEPR Refractories India Ltd (SEPR), Saint-Gobain Crystals and Detectors India Ltd (SGCD) and Saint-Gobain Sekurit India Ltd (SGSIL) with your Company. The appointed date for the Scheme of Amalgamation was fxed as 1st April, 2013. The Board, after due consideration, approved the share exchange ratio as determined by the independent valuer, M/s. S.R. Batliboi & Co. LLP. The fairness opinion on the valuation was provided by ICICI Securities Ltd, a category - I merchant banker.

The share swap ratio for the proposed scheme has been determined as under :

(i) 1 (one) Equity Share of the face value of Rs. 5/- (Rs. Five) each fully paid-up of the Company for every 17 (Seventeen) Equity Shares of the face value of Rs. 10 (Rs. Ten), each fully paid-up of SGSIL

(ii) 100 (one hundred) Equity Shares of the face value of Rs. 5/- (Rs. Five) each fully paid-up of the Company for every 50 (Fifty) Equity Shares of the face value of Rs. 10/- (Rs. Ten) each, fully paid-up of SGCD

(iii) 100 (one hundred) Equity Shares of the face value of Rs. 5/- (Rs. Five) each fully paid-up of the Company for every 38 (Thirty eight) Equity Shares of the face value of Rs. 10/- (Rs. Ten) each, fully paid-up of SEPR

The amalgamation is subject to all necessary approvals from statutory / regulatory authorities in the respective jurisdictions and subject to the sanction / confrmation by the concerned High Court and / or any other appropriate authority as may be necessary.

Future Prospects

There are no signs of industrial growth recovering in the short term. It is possible that a mild recovery may commence in the later part of 2013-14, but this is far from certain. Under the circumstances, your Company''s management will focus on increasing price realization, improving operating performance (implementation of the World Class Manufacturing programme remains a priority) and containing costs and working capital even as it continues to invest in new products and new markets in order to sustain growth.

Employee Relations

During the course of the year, new wage agreements were signed with unions at your Company''s plants at Tirupati and Nagpur. Employee Relations were generally cordial at all units of the Company. At the year-end there were 1596 employees. Your Directors place on record their appreciation for the contribution made by all employees in the progress of your Company.

Environment, Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company is committed to ensure a clean and green, pollution-free environment as well as a safe and healthy work place at all plant locations and work sites. All the plants of your company (except the new HPR plant in Gujarat) are certifed under ISO 14001:2004 as well as OHSAS 18001:1999. These certifcations are in recognition of the sustained efforts of your Company in improving Environment, Health and Safety at all its sites.

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo as required in the prescribed format is annexed (Annexure A) and forms part of this Report.

Fixed Deposit

At present your Company does not accept any fxed deposits.

Particulars of Employees

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent excluding the statement containing the particulars to be provided under Section 217 (2A) of the Act. Any member interested in obtaining such particulars may write to the Company at its registered offce.

Management Discussion & Analysis Report and Report on Corporate Governance

The Management Discussion & Analysis Report and Report on Corporate Governance along with a Certifcate dated 4th May, 2013, of the Auditors of your Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges is annexed (Annexure C) and forms part of this Report.

Directors

In accordance with the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. Patrick Millot and Mr. M. M. Narang, retire by rotation and being eligible, offer themselves for re-appointment as Directors of the Company.

Mr. Keki M. Elavia was appointed as an additional Director with effect from 26th July, 2012. Mr. Elavia holds offce up to the date of forthcoming 63rd Annual General Meeting of the Company. As required under Section 257 of the Companies Act, 1956, the Company has received notice in writing from a Member proposing the candidature of Mr. Elavia as a Director of the Company.

Auditors

M/s. Kalyaniwalla & Mistry, Chartered Accountants (Registration No 104607W), Auditors of your Company, retire on the conclusion of 63rd Annual General Meeting. You are requested to appoint Auditors for the current fnancial year and to fx their remuneration. The retiring Auditors, M/s. Kalyaniwalla & Mistry, Chartered Accountants are eligible for re-appointment.

Cost Auditors

The Board of Directors in pursuance to the Order issued by the Central Government under Section 233B of the Companies Act, 1956, have appointed M/s. Rao, Murthy & Associates, Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for few of its businesses.

Acknowledgments

Your Directors take this opportunity to acknowledge with sincere gratitude the support of its esteemed customers, the strength it derives from its association with Compagnie de Saint-Gobain and a number of its subsidiaries, the continued support and co-operation from its Bankers and the loyalty of the large family of the Company''s Dealers, Suppliers and valued Shareholders.

On behalf of the Board of Directors,

P. SHAH A. Y. MAHAJAN

CHAIRMAN MANAGING DIRECTOR

Mumbai; 4th May, 2013


Mar 31, 2012

To The Members of Grindwell Norton Ltd

The Directors present the 62nd Annual Report of the Company along with the Audited Balance Sheet as at 31st March, 2012 and the Statement of Profit and Loss for the year ended 31st March, 2012.

Financial Highlights

(Rs Crores)

2011-12 2010-11

Sale of Products (Gross) 951.32 837.63 Service & other Operating

Income . 22.26 15.98

Less: Excise Duty (66.98) (56.88) Revenue from operations 906.60 796.73

Operating Profit 149.35 125.97

Interest 0.37 0.28

Profit before Tax 148.98 125.69

Provision for Tax 45.35 40.06

Profit after Tax 103.63 85.63

Surplus Brought forward 60.00 50.00

163.63 135.63

Appropriations:

Proposed Dividend 35.98 33.22

Tax on Proposed Dividend 5.84 5.39 Transfer to General

Reserve 41.81 37.02 Surplus Carried to Balance

Sheet 80.00 60.00

163.63 135.63

Responsibility Statement Your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of the affairs of the Company as at 31st March, 2012 and of the profit of the Company for that year;

(iii) proper and sufficient caste has been taken it the maintenance of 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;

(iv) the annual accounts have been prepared on a going concern basis.

Operations

During the year under review, your Company's sales recorded a growth of about 13%. The pace of industrial growth slowed down markedly as the year unfolded and in the second half of the year your Company's businesses saw little or no volume growth in domestic sales. Exports were also flat. Meanwhile, margins in all businesses came under pressure mainly because of the increase in energy prices, the depreciating Rupee and the general inflationary conditions. To counter this, an important management priority was to increase prices in all businesses. This coupled with increases in productivity and improvements in operating efficiencies and yields meant that the operating margins were maintained in most of your Company's businesses.

Dividend

Your Company's net profit increased by 20% and crossed the Rs 100 crores milestone. In the light of this and, considering your Company's strong financial position, your Directors recommend a dividend of Rs 6.50 per equity share for the financial year ended 31st March, 2012. The cash outgo on account of the dividend (including tax on dividend) will be Rs 41.82 crores (Previous year Rs 38.61 crores).

Abrasives

After two years of very strong growth, the Abrasives business grew at a more moderate pace of 12% during the year under review. Domestic and export demand remained subdued for much of the year and with important end-user industries slowing down as the year progressed, volumes were flat in the second half. But for higher sales of new products and in new markets and higher prices (increased from time to time to offset the steep increases in costs), sales growth would have been much lower. Despite being successful in increasing prices and improving operating performance, margins declined and restricted the growth of operating profit to 10%. Two large projects (expansion of Bonded Abrasives capacity at Nagpur and a new Non-woven Abrasives plant in Bangalore) were initiated and made considerable progress during the year. The plants are expected to be commissioned in the first half of 2012-13.

Ceramics & Plastics

Local demand for Silicon Carbide was similar to the previous year whereas the European market was buoyant for much of 2011. Your Company's sales volume remained flat and the increase in sales was entirely due to higher prices (which offset much of the steep increase in costs of coke and electricity). A softening of demand in certain market segments caused a slowdown in the growth of the High Performance Refractoriness business and the Performance Plastics business. The construction of a new plant for High Performance Refractory's near Vadodara in Gujarat made considerable progress during the year. The plant is expected to be commissioned in the first half of 2012-13. During the year, a project for the manufacture of mine grids (part of the ADFORS' Technical Fabrics business of Saint-Gobain) was initiated and completed. This small plant, which was commissioned in the last quarter, is located in Bangalore.

Subsidiary in Bhutan

Operations of your Company's subsidiary in Bhutan improved and the plant achieved capacity utilization of about 83%. In its second year of operations, the Company made a small operating profit. During the year, a project to set up a processing plant was initiated and made good progress. The plant is expected to be commissioned in the first half of 2012-13. In terms of the general exemption provided under Section 212(8) of the Companies Act, 1956, granted by the Ministry of Corporate Affairs vide its circular no. 02/2011 dated 8th February, 2011 and in compliance with the conditions enlisted therein, copies of the Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and Auditors of the subsidiary have not been attached to the Balance Sheet of the Company. However, these documents will be made available upon request by any member of the Company. As directed by the said circular, the financial data of the subsidiary has been furnished under 'Financial Information of Subsidiary Company' which forms part of the Annual Report. The Annual accounts of the Company including that of the subsidiary will be kept for inspection by any member. Further, pursuant to Accounting Standards (AS)-21, consolidated financial statements presented by the Company include financial information of the subsidiary company.

Future Prospects

Industrial growth has been weak and volatile and has trended downwards for several quarters and despite the RBI's recent decision to reduce reference rates by 0.5%, there are no signs that growth will recover in the near term. Meanwhile, high inflation and the depreciating Rupee remain a concern. The outlook for 2012-13 is uncertain. Your Company's financial strength will enable it to continue to implement its capital investment (new capacities and capabilities) programmes and prepare for the resumption of growth. In the meanwhile, your Company's management will focus on improving price realisation and operating performance (implementation of the World Class Manufacturing programme) and containing costs and working capital. At the same time, investments will continue to be made in developing new products and new markets in order to sustain growth.

Employee Relations

During the course of the year, new productivity-enhancing wage agreements were signed with Unions at your Company's plants at Mora and Bangalore. Employee Relations were generally cordial at all units of the Company. As at the year-end, there were 1619 employees. Your Directors place on record their appreciation for the contribution made by all the employees in the progress of your Company.

Environment, Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company is committed to ensure a clean and green, pollution free environment as well as healthier and safer work place at all plant locations and work sites. All the Plants of your Company are certified under ISO 14001:2004 as well as OHSAS 18001:1999. These certifications are in recognition of the sustained efforts of your Company in improving Environment, Health and Safety at all its sites.

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo as required in the prescribed format is annexed (Annexure A) and forms part of this report.

Fixed Deposit

At present your Company does not accept any fixed deposits. Particulars of Employees

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b) (iv) of the Act, the Report and Accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may write to the Company at its registered office.

Management Discussion & Analysis Report and Report on Corporate Governance

The Management Discussion & Analysis Report and Report on Corporate Governance along with a Certificate dated 23rd May, 2012, of the Auditors of your Company; regarding the compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is annexed (Annexure C) and forms part of this Report.

Directors

Consequent to his assuming new responsibilities in the Saint-Gobain group, Mr. J. T. Crowe resigned as Director of the Company with effect from 24th October 2011. Your Directors place on record their deep appreciation for the valuable services rendered by him during his tenure as director.

Mr. G. Texier, President of the ceramic materials business of Saint-Gobain Group, was appointed as an Additional Director, from 24th October, 2011. He holds office upto the date of the ensuing Annual General Meeting of the Company. As required under Section 257 of the Companies Act, 1956, the Company has received notice in writing from a Member proposing the candidature of Mr. Texier as Director of the Company.

In accordance with the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. A. C. Chakrabortti, Mr. S. Salgaocar and Mr. P. Shah, Directors, retire by rotation. While Mr. Salgaocar and Mr. Shah, being eligible, offer themselves for reappointment as Directors of your Company, Mr. Chakrabortti, after serving as a Director of your Company for more than 29 years, has informed the Directors of his decision to step down from the Board and not to seek re-election.

Your Directors wish to record their immense gratitude to Mr. Chakrabortti and their deep appreciation of the important role played by him (as a Director, as Vice-Chairman and as Chairman of the Board) and the significant contribution made by him to the development and growth of your Company over several years. .

Auditors

M/s. Kalyaniwalla & Mistry, Chartered Accountants, (Registration No. 104607W), Auditors of your Company, retire on the conclusion of 62nd Annual General Meeting. You are requested to appoint Auditors for the current financial year and to fix their remuneration. The retiring Auditors, M/s. Kalyaniwalla & Mistry, Chartered Accountants are eligible for re-appointment.

Acknowledgments

Your Directors take this opportunity to acknowledge with sincere gratitude the support of its esteemed customers, the strength it derives from its association with Companies de Saint-Gobain and a number of its subsidiaries (in particular, Saint-Gobain Abrasives Inc.), the continued support and co-operation from its Bankers and the loyalty of the large family of the Company's Dealers, Suppliers and valued Shareholders.

On behalf of the Board of Directors,

A. C. CHAKRABORTTI A. Y. MAHAJAN

CHAIRMAN MANAGING DIRECTOR

Mumbai; 23rd May, 2012

 
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