Ganesha Ecosphere Ltd Directors Report.
The Members of Ganesha Ecosphere Ltd.
Your Directors have pleasure in presenting the Thirtieth Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31st March, 2019.
The summarised financial results of the Company for the year ended 31st March, 2019 as compared to the preceding year are as under:
( H in crores)
|Year ended||Year ended|
|March 31, 2019||March 31, 2018|
|Profit before Finance Costs, Depreciation and Amortization Expense||133.56||89.14|
|Less: Finance Costs||10.49||14.57|
|Less: Depreciation & Amortization Expense||25.80||20.48|
|Profit before Tax||97.27||54.09|
|Profit after Tax||61.95||35.23|
|Add: Other Comprehensive Income||(0.18)||0.18|
|Total Comprehensive Income||61.77||35.41|
|Balance in retained earnings at the beginning of the year||190.37||157.72|
|Profit after Tax available for appropriation||252.14||193.13|
|Dividend Distribution Tax||(0.67)||(0.47)|
|Transfer to General Reserve||-||-|
|Balance in retained earnings at the end of the year||248.20||190.37|
FINANCIAL AND OPERATIONAL PERFORMANCE
The financial statements for the financial year ended March 31, 2019, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs.
The year under review, had been a landmark in the history of the Company, as it crossed Turnover of H1000 crore. The performance has been exceptional as revenue and profits mounted new heights. The Company recorded a substantial growth of 34.76%, in revenue from operations of H1020.49 crore, during the year under review,
as compared to H757.26 crore in the previous year. Earnings before Depreciation, Interest and Taxation (EBITDA) stood at H133.56 crore in financial year 2018-19 against H89.14 crore in financial year 2017-18, thereby recording a growth of 49.83%. During the year under review, the Company has achieved Net Profits of H61.95 crore as against H35.23 crore in previous year, registering a splendid growth of 75.84%. This improvement in performance of the Company has been mainly on account of increase in sales volume due to addition in production capacity (commenced in last quarter of FY18) and cost consciousness.
The performance of the Company during the current year continues to be encouraging and barring unforeseen circumstances, your Directors expect your Company to achieve better results during the year.
As at the end of the financial year, your Company has been assigned the following ratings from ICRA and CARE: i. A; Stable (Single A; Outlook Stable) for Long Term Bank Facilities (Term Loan and Fund Based) signifying adequate degree of safety regarding timely servicing of financial obligations. Such facilities carry low credit risk. ii. A1 (A One) for Short Term Bank Facilities (Non-Fund based) signifying very strong degree of safety regarding timely payment of financial obligations. Such facilities carry lowest credit risk.
Your Directors are pleased to recommend for approval of the members, a dividend of H2/- per share (i.e. @ 20%) on Equity Shares of H10/- each of the Company, involving cash outflow of H5.26 crore (inclusive of Dividend Distribution Tax of H0.90 crore) for the financial year 2018-19.
Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, final dividend for the financial year 2010-11 amounting to H8.65 lakh being unclaimed for more than 7 years from the date it was lying in the unpaid dividend account, had been transferred by the Company to the Investor Education and Protection Fund (IEPF) of the Central Government.
During the year under review, your Company has issued and allotted 26,52,520 Equity Shares of face value of H10/- each at a price of H377/- per share (including premium of H367/- per share) aggregating to approx. H100 crore to eligible Qualified Institutional Buyers in accordance with Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.
The proceeds of the aforesaid issue have been fully utilized in accordance with the objects stated in the offer document.
With the aforesaid allotment of Equity Shares, the total Paid-up Equity Share Capital of the Company stood increased from H19.18 crore to H21.83 crore.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is provided in a separate section forming part of the Annual Report.
SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES
The Company has no Subsidiary, Associate and Joint Venture Companies during the year, as such; the requirement of furnishing information relating to performance and financial position of the Subsidiary, Associate and Joint Venture Companies is not applicable.
At the 29th Annual General Meeting held on 15th September, 2018, the following Whole Time Directors of the Company were re-appointed by the Company:
|Shri Vishnu Dutt Khandelwal (DIN: 00383507)||Executive Vice Chairman||5 years (w.e.f. 19th June, 2018)|
|Shri Rajesh Sharma (DIN: 02228607)||Executive Director||5 years (w.e.f. 19th June, 2018)|
|Shri Gopal Singh Shekhavat (DIN: 06591844)||Director (Administration)||5 years (w.e.f. 1st June, 2018)|
During the year under review, Shri Shyam Sunder Sharmma (DIN: 00530921), Chairman of the Company, due to his advancing age and perceived need to elevate the next generation, had expressed his unwillingness to be re-appointed as Managing Director after expiry of his term of office on 17th September, 2018. He is continuing as a Non-Executive Chairman of the Company thereafter.
Consequently, the Board of Directors had elevated Shri Sharad Sharma (DIN: 00383178), Joint Managing Director, to the post of Managing Director and Chief Executive Officer of the Company, w.e.f. 18th September, 2018 till the expiry of his term on 31st January, 2019 and on recommendation of Nomination and Remuneration
Committee, re-appointed him as such for a further period of 5 years w.e.f. 1st February, 2019, subject to the approval of members.
The Board of Directors of the Company, at their meeting held on 1st August, 2019, on the recommendation of Nomination and Remuneration Committee and subject to the approval of members, have designated and appointed Shri Rajesh Sharma (DIN: 02228607), Whole Time Director, as Joint Managing Director of the Company with effect from 1st August, 2019 till the end of current term of his appointment i.e. 18th June, 2023.
In terms of the requirements of the Companies Act, 2013, the Independent Directors of the Company were appointed for a period of five years at the 25th Annual General Meeting held on 29th September, 2014. Such term of appointment of the Independent Directors shall come to an end at the ensuing Annual General Meeting. In view of the same, the Board of Directors have on the basis of the recommendation of the Nomination and Remuneration Committee proposed to re-appoint Shri Abhilash Lal, Shri Anoop Gupta, Shri Pradeep Kumar Goenka, Shri Surendra Kumar Kabra and Shri Vishwa Nath Chandak as the Independent Directors of the Company for a second term. A resolution proposing re-appointment of Independent Directors of the Company for the second term pursuant to Section 149(6) of the Companies Act, 2013 forms part of the Notice of Annual General Meeting.
Shri Narayanan Subramaniam, Independent Director of the Company, did not offer his candidature for re-appointment by shareholders in the ensuing Annual General Meeting. Consequently, he will cease from the position of the Independent Director on the conclusion of ensuing Annual General Meeting. The Board places on record its deep sense of gratitude and appreciation for Shri Subramaniams immense contribution and strategic guidance provided during his tenure as an Independent Director of the Company.
All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.
Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Shri Shyam Sunder Sharmma (DIN: 00530921), Director of the Company retires from the Board by rotation, at the ensuing Annual General Meeting of the Company and being eligible he has offered himself for reappointment.
Appropriate Resolution(s) seeking your approval for appointment/ re-appointment of the directors are placed in the Notice of ensuing Annual General Meeting.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company had received the declarations u/s 149(7) of the Companies Act, 2013 from all Independent Directors that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 (1) (b) of the Listing Regulations.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee of the Company comprises of six Directors, out of which five Directors are independent. The composition and other details are provided in the Corporate Governance Report of the Company. During the year, all the recommendations made by the Audit Committee were accepted by the Board.
KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel of the Company:
|S. No. Name of the person||Designation|
|1. Shri Sharad Sharma||Managing Director & CEO|
|2. Shri Gopal Agarwal||Chief Financial Officer|
|3. Shri Bharat Kumar Sajnani||Company Secretary &|
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of the financial year ended 31st March, 2019, confirm that: -a) in preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; b) they have selected such accounting policies and applied them consistently and made judgements 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 of the Company for that year; c) they have taken proper and sufficient care 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) they have prepared Annual Accounts on a Going Concern basis. e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively. f ) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company has in place adequate internal financial controls commensurate with the size of the Company and the nature of its business, with reference to financial statements. The Audit Committee of the Board of Directors regularly reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the financial year 2018-19 are given under the Corporate Governance Report.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year under review, the Company has duly complied with the applicable provisions of the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2), issued by the Institute of Company Secretaries of India.
The extract of the Annual Return in Form MGT-9 as required under Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is included in this Report as "Annexure A" and forms an integral part of this Report.
As required under Section 134(3)(a) of the Companies Act, 2013, the copy of Annual Return is also placed in the Companys website and can be accessed at http://ganeshaecosphere.com/wp-content/ uploads/2019/08/Annual-Return-FY-2017-18.pdf
The Equity Shares of the Company are presently listed at BSE Limited and National Stock Exchange of India Limited and the listing fee, for the year 2019-20, for both the Stock Exchanges is paid.
AUDITORS AND AUDITORS REPORT a. Statutory Auditors
M/s. Narendra Singhania & Co., Chartered Accountants, New Delhi were appointed as Statutory Auditors of the Company at the 28th Annual General Meeting of the Company held on 25th September, 2017, who shall hold office till the conclusion of the 33rd Annual General Meeting in accordance with the provisions of the Companies Act, 2013.
Their appointment was subject to ratification by the members at every Annual General Meeting to be held thereafter during their tenure of office. However, pursuant to the amendments made to Section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn. Therefore, the resolution for dispensing with the requirement for ratification of appointment of Statutory Auditors is being placed in the notice of the ensuing Annual General Meeting. The Auditors have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.
The Auditors Report for the financial year 2018-19 does not contain any qualification, reservation or adverse remark. b. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Board has appointed M/s. S.K. Gupta
& Co., Company Secretaries, as Secretarial Auditor, to undertake Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended 31st March, 2019 is annexed herewith as "Annexure B" to this report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. c. Cost Auditors
Pursuant to the Rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148 (1) of the Companies Act, 2013 in respect of its products and accordingly such accounts and records are made and maintained.
M/s. R. M. Bansal & Co., Cost Accountants (Firm Regn. No.:00022) and M/s. Rakesh Misra & Co., Cost Accountants (Firm Regn. No.: 00249), have been appointed as Cost Auditors of the Company to conduct the audit of the Cost Accounts of the Company in respect of its products Yarn and Recycled Polyester Staple Fibre respectively, for the financial year 2019-20.
As required under the Companies Act, 2013, the resolutions seeking Members ratification for the remuneration payable to Cost Auditors forms part of the Notice convening the Annual General Meeting. d. Internal Auditors
Pursuant to the provisions of Section 138 read with Rule 13 of the Companies (Accounts) Rules, 2014, your Company engaged the services of M/s. Ashok & Ajai, Chartered Accountants, Kanpur, to conduct the Internal Audit of the functions and activities of the Company for the Financial Year 2018-19. The Internal Audit Report is placed before the Audit Committee of the Company at regular intervals.
REPORTING OF FRAUDS
There was no instance of fraud during the year under reivew, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Act and Rules framed thereunder.
RELATED PARTY TRANSACTIONS
The Companys Policy on Related Party Transactions is disclosed on the website of the Company at the link http://ganeshaecosphere. com/wp-content/uploads/2016/05/related-party-transaction.pdf
During the financial year under review, all transactions entered into with Related Parties were in the ordinary course of business and on an arms length basis and they were placed before the Audit Committee as also to the Board for approval. Omnibus approval from the Audit Committee was obtained on annual basis for transactions of repetitive nature. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Companys Related Party Transactions Policy. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable. The related party transactions are disclosed under Note No. 33 of the Notes to the Financial Statements for the year ended 31st March, 2019.
PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS BY THE COMPANY
Your Company has not given any loans and guarantees or provided securities attracting provisions of Section 186 of the Companies Act, 2013. However, the details of investments made are provided in the Note No. 8.1 of the Notes to the Financial Statements for the year ended 31st March, 2019.
WHISTLE BLOWER POLICY
Pursuant to Section 177 of the Companies Act, 2013 and the Listing Regulations, the Company has adopted Whistle Blower Policy for vigil mechanism for Directors and employees to report to the management about the unethical behavior, fraud or violation of Companys code of conduct. The details of the policy are explained in the Corporate Governance Report.
The Policy has been posted on the website of the Company and may be accessed at the link http://ganeshaecosphere.com/wp-content/ uploads/2016/05/whistle-blower-policy.pdf
NOMINATION AND REMUNERATION POLICY
Our current Nomination and Remuneration Policy is to have an appropriate mix of Executive and Non-Executive Directors including the independent directors to maintain the diversity and independence of the Board.
The broad parameters covered under the Policy are Attributes, Qualifications and Remuneration of Executive and Non-Executive Directors including Independent Directors, KMP and Senior Management Personnel. It also covered performance evaluation criteria of the Board, its Committees and individual directors. The Nomination, Remuneration and Board Diversity Policy of the Company is available on the website of the Company at the link http://ganeshaecosphere.com/wp-content/uploads/2016/08/ Policy-on-Nomination-Remuneration-And-Board-Diversity.pdf.
There has been no change in the policy during the year under review. We affirm that the remuneration paid to the Directors is as per the terms laid out in the Policy.
The Board of Directors at its meeting held on 9th February, 2019, has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act & Listing Regulations. Performance Evaluation of Independent Directors was done by the entire board, excluding the director being evaluated. The Evaluation Process was conducted through a structured questionnaire prepared after taking into consideration the various aspects laid down under the "Nomination, Remuneration and Board Diversity Policy" of the Company. The Board of Directors expressed satisfaction with the evaluation process.
In a separate meeting of Independent Directors held on 9th February, 2019, performance of non-independent directors, the Chairman of the Company and the Board as a whole was evaluated, taking into account the views of Executive Directors and Non-Executive Directors.
Risk management is an ongoing process and embedded in the operating framework of your Company. Your Company believes that managing risks helps in maximizing returns. The Board members are regularly informed about the potential risks, their assessment and minimization procedures. The Board frames a plan for elimination
/ minimization of the risk and further lays out the steps for implementing and monitoring of the risk management plan. There are no risks which in the opinion of the Board are of the nature that can threaten the existence of the Company. However, the risks inter-se those are generally dealt in regular course of business and have to be taken care of, are fluctuations in foreign exchange rates and prices of raw material as well as finished products.
The Risk Management Policy has been uploaded on the Companys website and may be accessed at the link www.ganeshaecosphere. com/wp-content/uploads/2016/05/risk-management-policy.pdf
CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to focus on inclusive growth and improving lives by contributing towards communities around which it operates. The Company works primarily through its CSR Trust i.e. "Ganesh Memorial Trust", towards supporting projects in the area of promoting education among differently abled, eradicating hunger and promoting healthcare including preventive healthcare. These projects are in accordance with Schedule VII to the Companies Act, 2013 and the Companys CSR Policy.
The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as "Annexure C". The CSR Policy has been uploaded on the Companys website and may be accessed at the link http://ganeshaecosphere.com/wp-content/uploads/2016/05/corporate-social-responsibility-policy.pdf
During the year under review, the Company has neither accepted nor renewed any deposit from public in terms of the provisions of Sections 73 and 76 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.
In terms of Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014, the Company, during the year, has accepted an amount of H1.80 crore as unsecured loans from the Directors and the balance outstanding as on 31st March, 2019 was H4.47 crore.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year 2018-19 and the date of this Report. Further, there was no change in the nature of business of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure D".
PARTICULARS OF EMPLOYEES
The Disclosure required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure E" and forms an integral part of this Report. The information showing names and other particulars of employees as per Rule 5(2) and 5(3) of the aforesaid Rules forms part of this report. However, as per first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company and others entitled thereto. The said information is available for inspection by members at the registered office of the Company during business hours on all working days upto the date of ensuing Annual General Meeting. Any member interested in obtaining a copy thereof, may also write to the Company Secretary.
As required under Schedule V to the Listing Regulations, a separate section on Corporate Governance together with Certificate from M/s. S. K. Gupta & Co., Practicing Company Secretaries, confirming compliance of the conditions of Corporate Governance, forms an integral part of this Report.
POLICY ON SEXUAL HARASSMENT
Prevention and control of sexual harassment at workplace constitutes an important part of corporate culture while aligning with best practices and improving management processes. The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace with a mechanism of lodging complaints and has constituted an Internal Complaints Committee in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. No complaints were reported to the Board for sexual harassment of women at work place during the financial year 2018-19.
Your Directors take this opportunity to place on record appreciation for the co-operation and support extended by various departments of the Central and the State Government(s), Bankers and Business associates.
Your Directors also wish to place on record appreciation to the employees at all levels, whose hard work, co-operation and support helped us face all challenges and deliver results. We are also grateful to all the Shareholders, customers, dealers, agents, suppliers and bankers of the Company for reposing continued trust, support and confidence in the management of the Company.
|For and on behalf of the Board|
|Place: Kanpur||Shyam Sunder Sharmma|
|Date: 1st August, 2019||