Godrej Consumer Products Ltd Directors Report.

Dear Members,

Your Directors, with great pleasure, present the Annual and Integrated Report for the year ended March 31, 2019.

1. RESULTS OF OUR OPERATIONS

Fiscal year 2018-19 was a mixed bag. While the India business continued to deliver strong profits and increased profit margins to industry leading levels, it was a challenging year for top-line growth. Our soaps, hair colour and air freshener categories performed relatively well. However, our largest category, household insecticides, was significantly impacted by a surge in illegal and unsafe mosquito incense sticks and an unfavourable season. We are taking numerous corrective actions to recover our performance over the next year.

This has been an active year on innovations, with multiple new products launched across categories. Godrej protekt Mr. Magic hand wash is the first ever powder-to-liquid hand wash, designed to be more environmentally sustainable, while also democratising the low penetration hand wash category. We extended our Cinthol portfolio to foray into the growing male grooming category, with a range of multi-benefit products for the face, body, hair and beard. Through Godrej Nupur Natural Henna Based Hair Colour, we are extending our strong henna play to the herbal-based powder hair colour segment. In Goodknight, we introduced Power Chip, an electric solution infused with unique gel technology, a higher efficacy liquid vapouriser and 100 per cent natural mosquito repellent incense sticks.

On a consolidated basis, we reported a comparable sales growth of 7 per cent (excluding the UK business which was divested during the year) and a comparable PAT growth of 40 per cent (excluding the UK business).

An overview on the performance of the Companys subsidiaries in various geographies is given separately in the Boards Report.

The Shareholders may also refer to the Management Discussion & Analysis Section which gives more details on the functioning of the Company.

The financial performance of your Company for the fiscal year under review is summarised as follows:

(द Crore)
Financials Abridged Profit and Loss Statement Consolidated Standalone
March 31, 2019 March 31, 2018 March 31, 2019 March 31, 2018
Total Revenue From Operations 10,314.34 9,936.99 5,679.31 5,354.74
Other Income 108.76 107.55 94.45 73.89
Total Income 10,423.10 10,044.54 5,773.76 5,428.63
Total Expenses including Depreciation and Finance Costs 8,590.96 8,186.30 4,300.68 4,139.62
Profit/(Loss) Before Exceptional Items, Share of Profit of Equity 1,832.14 1,858.24 1,473.08 1,289.01
Accounted Investees, and Tax
Exceptional Items 252.56 179.56 - -
Share of Profit of Equity Accounted Investees 0.63 1.08 - -
(Net of Income Tax)
Profit/(Loss) Before Tax 2,085.33 2,038.88 1,473.08 1,289.01
Tax Expense/(Income) (256.2) 404.70 (281.90) 289.14
Profit/(Loss) After Tax 2,341.53 1,634.18 1,754.98 999.87
Other Comprehensive Income 138.51 36.95 (0.17) (1.97)
Total Comprehensive Income for the Period attributable to 2,480.04 1,671.13 1,754.81 997.90
Owners

2. APPROPRIATION

Your Directors recommend appropriation as under:

Fiscal Year Fiscal Year
Appropriation 2018-19 2017-18
(द Crore) (द Crore)
Surplus at the Beginning of the Year 2,982.46 2,722.50
Less: Remeasurements of Defined Benefit Plans 0.17 1.97
Add: Net Profit for the Year 1,754.98 999.87
Available for Appropriation 4,737.27 3,720.40
Less: Interim Dividends 1,226.52 613.12
Less: Tax on Distributed Profits 252.11 124.82
Surplus Carried Forward 3,258.64 2,982.46

3. CHANGE IN CAPITAL STRUCTURE

During the year, the Company has increased its authorised share capital from द 70 crore to द 104 crore. The shareholders vide their resolution dated September 5, 2018, had approved the issue of Bonus shares in the ratio of 1:2, that is, one bonus equity share of 1 each for every two fully paid-up equity shares held. Accordingly, the Company has issued and allotted 34,07,22,032 equity shares after which the post issue paid up capital of the Company increased from द 68.13 crore to द 102.22 crore.

4. DIVIDEND

A. Dividend Declared

During the fiscal year 2018-19, the following interim dividends were declared on shares of face value of 1 each.

Declared at the Board Meeting Dated Dividend Rate Per Share on Shares of Face Value of 1 Each Record Date
May 8, 2018 7.00* May 16, 2018
July 30, 2018 2.00* August 7, 2018
November 2, 2018 4.00 November 14, 2018
January 29, 2019 2.00 February 6, 2019

*Note: The dividend declared on May 8, 2018 and July 30, 2018 are on the pre-bonus paid-up capital, and all the subsequent dividends are on the post-bonus paid-up capital. Subsequent to the close of fiscal year 2018-19, the Board has declared an interim dividend of 2 per equity share. The record date for the same is May 13, 2019. This dividend will be accounted in fiscal year 2019-20.

B. Dividend Distribution Policy

The Board of Directors adopted the Dividend Distribution Policy pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Regulations), which requires the top 500 listed companies (by market capitalisation) to formulate the same. The Companys Dividend Distribution Policy may also be accessed through the following link[1].

5. BOARD OF DIRECTORS

A. Number of Meetings and Appointment of Directors

Four Board meetings were held during the year. The details of the meetings and the attendance record of the Directors are in the Corporate Governance section of the Annual Report.

B. Appointment/Reappointment/ Retirement of Directors

Mr. Sumeet Narang was appointed as an Additional Independent Director at the Board meeting held on January 29, 2019, with effect from April 1, 2019. Sumeet has experience of making investments in businesses in emerging categories in India and working closely with management teams in scaling business. Sumeets appointment will enable GCPL to leverage his significant expertise and perspective to guide GPCLs growth strategy.

Mr. Bharat Doshis tenure of 5 years is ending on September 25, 2019, and he has expressed his desire to not offer himself for reappointment for another term. The Board of Directors places on record its sincere appreciation of the contribution made by Mr. Doshi during his tenure on the Board.

[1] http://www.godrejcp.com/Resources/uploads/codes-and-policies/dividend_distribution_policy.pdf

The first term of 5 years of Mr. Narendra Ambwani is ending on July 27, 2019. The first term of 5 years of Mr. Aman Mehta, Dr. Omkar Goswami and Ms. Ireena Vittal is ending on September 25, 2019. Based on their successful performance evaluations, the Nomination and Remuneration Committee has recommended their reappointment for a second term as follows:

Mr. Narendra Ambwani - Term from July 28, 2019 to November 14, 2023

Mr. Aman Mehta - Term from September 26, 2019 to August 31, 2021

Ms. Ireena Vittal and Dr. Omkar Goswami - Term of 5 years from September 26, 2019 to September 25, 2024

The special resolutions for the above reappointments are included in the notice of the Annual General Meeting (AGM).

In the forthcoming AGM, Mr. Nadir Godrej and Mr. Jamshyd Godrej will retire by rotation and being eligible will be considered for re-appointment.

C. Audit Committee of the Board of Directors

Your Company has an Audit Committee in compliance with Section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations. The Committee consists entirely of the Independent Directors Mr. Bharat Doshi, Mr. Narendra Ambwani, Dr. Omkar Goswami, Mr. Aman Mehta, Ms. Ireena Vittal, Ms. Ndidi Nwuneli and Ms. Pippa Armerding as members. Mr. Sumeet Narang has also been appointed as a member of the Audit Committee with effect from April 1, 2019, consequent to his appointment on the Board as an Independent Director. Mr Bharat Doshi has stepped down as the Chairman of the Committee from April 1, 2019 and Mr Aman Mehta has been appointed as the Chairman of the Committee with effect from the same date.

D. Declaration from Independent Directors

All the Independent Directors have given their declaration confirming that they meet the criteria of independence as prescribed under the provisions of the Companies Act, 2013 and the Listing Regulations, and the same has been noted by the Board of Directors.

E. Familiarisation Programmes

Several familiarisation programmes for the Independent Directors were conducted during the year, covering topics like Annual Operating Plan for fiscal year 2018-19, update on key amendment to the SEBI Listing Regulations and actionables for the Company arising out of the amendments and in-depth presentation on household insecticides business by the business head. Additionally, at all the Board meetings, detailed presentations covering business performance and financial updates were made. The number of hours of the familiarisation programmes conducted may be accessed through the following link[2].

F. Board Diversity Policy

The Company has in place a Board Diversity Policy, which is attached as Annexure ‘A. The criteria for determining qualification, positive attributes and independence of Directors are as per the Board Diversity Policy, Listing Regulations and the Companies Act, 2013.

G. Remuneration Policy

The Companys Remuneration Policy for Directors, key managerial personnel (KMP) and other employees is attached as Annexure ‘B. The Companys total rewards framework aims at holistically using elements such as fixed and variable compensation, long-term incentives, benefits and perquisites, and non-compensation elements (career development, work-life balance and recognition). The Non-Executive Directors receive sitting fees and commission in accordance with the provisions of the Companies Act, 2013.

H. Remuneration to Directors

The remuneration of Directors is in accordance with the remuneration policy formulated in accordance with various rules and regulations for the time being in force. The disclosure on the details of remuneration to Directors and other employees pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given under Annexure ‘C. The information required under Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not being sent along with this report. However, this annexure is available on the Company website. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for

[2] http://www.godrejcp.com/Resources/uploads/compliance_other_updates/FamiliarisationProgrammeIndependentDirectors_11042019.pdf inspection at the Registered Office of the Company during working hours, up to the date of the AGM. Mr. Adi Godrej, Chairman Emeritus; Ms. Nisaba Godrej, Executive Chairperson; and Mr. Vivek Gambhir, Managing Director and CEO, receive remuneration from your Company.

I. Performance Evaluation of the Board of Directors, its Individual Members and its Committees

We conducted a formal Board effectiveness review, as part of our efforts to evaluate the performance of our Board and identify areas that need improvement in order to enhance the effectiveness of the Board, its Committees, and Individual Directors. This was in line with the requirements of the Companies Act, 2013 and the Listing Regulations. The Corporate HR team of Godrej Industries Limited and Associate Companies worked directly with the Chairperson and the Nomination and Remuneration Committee of the Board to design and execute this process. It was later adopted by the Board.

Each Board Member completed a con_dential online questionnaire, sharing vital feedback on how the Board currently operates and how its effectiveness could be improved. This survey included four sections on the basis of which feedback and suggestions were compiled:

• Board processes

• Individual Committees

• Individual Board Members

• Chairperson

The criteria for Board processes included Board composition, strategic orientation and team dynamics. Evaluation of each of the Board Committees covered whether they have well-defined objectives and the correct composition, and whether they achieved their objectives. The criteria for Individual Board Members included skills, experience, level of preparedness, attendance, extent of contribution to Board debates and discussion, and how each Director leveraged their expertise and networks to meaningfully contribute to the Company. The criteria for the Chairpersons evaluation included leadership style and conduct of Board meetings. The performance evaluation criteria for Independent Directors included a check on their ful_lment of the independence criteria and their independence from the management.

The following reports were created as part of the evaluation:

• Board Feedback Report

• Individual Board Member Feedback Report

• Chairpersons Feedback Report

The overall Board Feedback was facilitated by Mr. Bharat Doshi with the Independent Directors. The Directors were not only vocal regarding the Board functioning effectively but also identi_ed areas that showed scope for improvement. Feedback from the Committees and Individual Board Members was shared with the Chairperson. Following her evaluation, a Chairpersons Feedback Report was compiled.

J. Directors Responsibility Statement

Pursuant to the provisions contained in Section 134(5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management, and after due inquiry, confirm the following:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed, and no material departures have been made from the same

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 fiscal year and of the profit of the Company for that period

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 the annual accounts on a going concern basis

e) They have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and operating effectively

f) They have devised a proper system to ensure compliance with the provisions of all applicable laws, and this system is adequate and operating effectively

6. Transfer to IEPF

In accordance with the applicable provisions of Companies Act, 2013 read with Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘IEPF Rules), all unclaimed dividends are required to be transferred by the Company to the IEPF, after completion of 7 years. Further, according to IEPF Rules, the shares on which dividend has not been claimed by the shareholders for seven consecutive years or more shall be transferred to the demat account of the IEPF authority. Accordingly, 86,83,307 of unpaid/ unclaimed dividends and 9,22,131 shares (including 8,35,029 bonus shares declared in September 2018) were transferred during the financial year 2018-19 to the Investor Education and Protection Fund.

The Company has appointed a Nodal Officer under the provisions of IEPF Regulations, the details of which are available on the website of the Company, which can be accessed through the following link[3].

The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on July 30, 2018 (date of last AGM) on the Companys website, which can be accessed through the following link[4] and of the Ministry of Corporate Affairs website at www.iepf.gov.in.

7. Finance

A. Loans, Guarantees and Investments

The details of loans, guarantees and investments as required by the provisions of Section 186 of the Companies Act, 2013, and the rules made thereunder are set out in the Notes to the Standalone Financial Statements of the Company.

B. Related Party Transactions

In compliance with the Listing Regulations, the Company has a policy for transactions with Related Parties (RPT Policy). During the year, the Company has revised its Policy on dealing with Materiality of Related Party Transactions, in accordance with the amendments to the applicable provisions of the Listing Regulations. The RPT Policy is available on the Company website, which can be accessed through the following link[5].

Apart from the Related Party Transactions in the ordinary course of business and on arms length basis, the details of which are given in the notes to financial statements, no other related party transactions require disclosure in the Boards Report, for compliance with Section 134(3)(h) of the Companies Act, 2013. Therefore, 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.

8. Subsidiaries, Associates and Joint Venture

During the year, the following company became a subsidiary of your Company:

• Godrej CP Malaysia BHD

During the year, the following companies have ceased to be the subsidiaries of your Company:

• Argencos SA on account of its merger with Laboratoria Cuenca

• Godrej Consumer Products UK Ltd. on account of divestment of stake in that Company

During the year, the following company has ceased to be the Joint Venture of your Company:

• Godrej Easy IP Holding Ltd.

A. Report on the Performance of Subsidiaries and Associates

The business details of the key subsidiaries are provided in the Management Discussion & Analysis section of this Annual Report. While the Review of Operations section mentions the details regarding the performance of your Companys India business, we provide brief details on the performance of other clusters below:

Indonesia

Our Indonesia business posted a strong turnaround in fiscal year 2019, growing by 11 per cent in constant currency terms, recovering from the 6 per cent top-line decline in the previous fiscal. Our growth was led by HIT, with strong share revival backed by at-scale media investments, break-the-clutter communication and strategic trade spends. This fiscal was also a milestone year for us in terms of innovation, with the highest ever new product launches in a year. We had four strong launches this year, all aimed at category development and with strong product differentiation. In household insecticides, we launched Long Lasting Paper (LLP) under the expert platform that we launched in the previous fiscal. LLP is a superior overnight solution, longer lasting as well as more effective than coil; it targets upgrading coil users and gained a share of the coil market, a segment we earlier did not compete in. We also forayed into other pests, by launching HIT Roach Aerosol, as part of our strategy to address market whitespaces. In air care, we launched the parfumist platform, a range of premium air fragrancing solutions. Under this platform, we launched a new Matic during the festive Lebaran season, aimed at driving upgrades in-home, and Twist, a car dashboard solution, aiming to drive car air freshener penetration. HIT Expert Aerosol, launched in the previous fiscal, continued to do well and build strong equity for the overall HIT Aerosol portfolio. We backed all our new products with strong media and trade investments. We also focused on cost savings through direct cost and fixed overhead optimisations to enable strong investments in brand and channel building. Our margins expanded this fiscal, with bottom line growing well ahead of top line. We continue to focus sharply on category development with breakthrough innovation, strong brand building and driving balanced growth across our portfolio.

Africa, Middle East and USA

Fiscal year 2019 was a challenging year for our Africa, Middle East and US business cluster. The overall business grew by 5 per cent in constant currency terms. On top line, while most countries performed moderately well, we faced slowdown in South Africa due to macro-economic challenges. We faced favourable currency movement due to which the Rupee translation was better at 12 per cent. We faced bottom-line challenges due to inventory aging issues given the nature of fashion in the dry hair market. Despite a challenging year, we focused on strengthening the fundamentals for future. We turned around the Kenya business, driven by an enhanced operating model. Brand building through the Darling re-launched drove strong top-line growth in Nigeria. The US business, Strength of Nature, grew strongly despite soft macro factors, driven by our entry into the naturals space. We also established strong beach heads in Tanzania and Zambia. Going forward, our focus would be to strengthen margins, strategically drive ‘Fast Fashion to avoid inventory issues and drive faster ramp-up of wet hair.

Latin America

Our Argentina business was mired in unprecedented macroeconomic challenges this year, with the highest ever currency devaluation in recent years driven by hyper-inflation and the economy shrinking. The business performed well on top line, with 34 per cent growth in constant currency terms, driven by our gaining volume share while also increasing prices well ahead of inflation. However, due to the currency devaluation, this did not translate in Rupee terms. We also faced bottom-line pressures this year, with working capital requirements increasing.

Our Chile business too faced strong macro headwinds with heightened competitive intensity and the category in some of our key-channels de-growing. As a result, our top-line declined by 13 per cent in constant currency terms with muted performance on bottom line as well, driven by increased trade spends to counter competition and working capital requirements.

Looking ahead, we will focus disproportionately on margin improvement and working capital management to turn our Latin America businesses around.

United Kingdom

We divested our UK business in Q2, this fiscal, in line with our overall GCPL-wide strategy of focusing on our core categories—home insecticides, personal care, hair care and air care.

B. Policy on Material Subsidiaries

In compliance with the Listing Regulations, the Board has adopted a policy for determining material subsidiaries. This policy is available on the Company website, which can be accessed through the following link[6].

C. Financial Performance

A statement containing the salient features of financial statements of subsidiaries/joint venture companies of the Company in the prescribed Form AOC-1 forms a part of consolidated financial statements (CFSs) in compliance with Section 129 (3) and other applicable provisions, if any, of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014.

The said form also highlights the financial performance of each of the subsidiaries and joint venture companies included in the CFS of the Company pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.

9. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has complied with the provisions relating to the constitution of the Internal Committee in compliance with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to consider and resolve all sexual harassment complaints reported by women. During the year, in-person and e-learning workshops were conducted to create awareness regarding sexual harassment among employees. There was one complaint during the calendar year 2018, and hence, the Committee filed one complaint report with the concerned authorities, in compliance with Section 22 of the aforementioned act.

10. TALENT MANAGEMENT AND SUCCESSION PLANNING

Your Company has the talent management process in place with an objective of developing a robust talent pipeline for the organisation which includes the senior leadership team. As part of the talent process, we identify critical positions and assess the succession coverage for them annually. During this process, we also review the supply of talent, identify high potential employees and plan talent actions to meet the organisations talent objectives. We continue to deploy leadership development initiatives to build succession for key roles.

11.ANNUAL RETURN

In compliance with the provisions Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as per Section 92(3) of the Act is available on the Company website, which can be accessed through the following link[7].

12.RISK MANAGEMENT

The Company has a well-defined process in place to ensure appropriate identification and mitigation of risks. The Risk Management Committee of the Company has been entrusted by the Board with the responsibility of identification and mitigation plans for the ‘Risks that Matter.

Elements of risks to the Company are listed in the Management

Discussion and Analysis Section of the Annual and Integrated Report.

13.VIGIL MECHANISM

Your Company has adopted a Whistle Blower Policy as a part of its vigil mechanism. The purpose of the policy is to enable any person (employees, customers or vendors) to raise concerns regarding unacceptable improper practices and/or any unethical practices in the organisation without the knowledge of the management. All employees shall be protected from any adverse action for reporting any unacceptable or improper practice and/or any unethical practice, fraud or violation of any law, rule or regulation. This policy is also applicable to the Directors of the Company.

Mr. V Swaminathan, Head-Corporate Audit and Assurance, has been appointed as the ‘Whistle Blowing Officer, and his contact details have been mentioned in the policy. Furthermore, employees are also free to communicate their complaints directly to the Chairman/ Member of the Audit Committee, as stated in the policy. The policy is available on the internal employee portal as well as the Companys website and can be accessed through the following link[8]. The Audit Committee reviews reports made under this policy and implements corrective actions, wherever necessary.

14.ANNEXURES

A. Disclosure on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Annexure ‘D of this Report provides information on the conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134

(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, which forms a part of the Boards Report.

B. Corporate Social Responsibility

Your Company has a well-documented Corporate Social Responsibility (CSR) Policy, and the same is available on the website of the Company under the following link[9]. The CSR Report along with details of CSR projects are provided in Annexure ‘E to this Report.

C. Employee Stock Option Scheme

The Company has a stock option scheme named as ‘Employee Stock Grant Scheme, 2011. The number and the resulting value of stock grants to be given to eligible employees is decided by the Nomination and Remuneration Committee, which is based on the closing market price on the date of the grants. The grants vest in one or more tranches as per the decision of the Nomination and Remuneration Committee with a minimum vesting period of 1 year from the grant date. Upon vesting, the eligible employee can exercise the grants and acquire equivalent shares of face value 1. The difference between the market price at the time of grant and the market price on the date of exercise is the gross gain/loss to the employee. The details of the grants allotted under Godrej Consumer Products Limited Employee Stock Grant Scheme, 2011, as also the disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, and Section 62 1(b) read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are set out in Annexure ‘F. Your Company has not given loan to any person under any scheme for or in connection with the subscription or purchase of shares in the Company or the holding Company. Hence, there are no disclosures on voting rights not directly exercised by the employees with respect to the shares to which the scheme relates.

15.LISTING

The shares of your Company are listed at the BSE Limited and the National Stock Exchange of India Limited. The applicable annual listing fees have been paid to the Stock Exchanges before the due dates. Your Company is also listed on the Futures & Options Segment of the National Stock Exchange of India.

16.BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34 of the Listing Regulations, the Business Responsibility Report highlighting the initiatives taken by the Company in the areas of environment, social, economic and governance is available on the website of the Company, which can be accessed through the following link[10].

17.AUDITORS AND AUDITORS REPORT

A. Statutory Auditors

In accordance with Section 139 of the Companies Act, 2013 and the Rules made thereunder, M/s. B S R and Co., LLP, Chartered Accountants (Firm Regn. No. 101248W/W-100022) has been appointed as the statutory auditor to hold office from the conclusion of the 17th AGM on July 31, 2017 until the conclusion of the 22nd AGM in the year 2022, at a remuneration as may be approved by the Board.

B. Cost Auditors

The Company is maintaining requisite cost records for the applicable products of the Company. Pursuant to directions from the Department of Company Affairs, M/s. P. M. Nanabhoy and Co., Cost Accountants, were appointed as cost auditors for the applicable products of the Company for the fiscal year 2018-19. They are required to submit the report to the Central Government within 180 days from the end of the accounting year.

C. Secretarial Auditors

The Board had appointed M/s. A. N. Ramani and Co., Company Secretaries, Practising Company Secretary, to conduct a secretarial audit for the fiscal year 2018-19. The Secretarial Audit Report for the fiscal year ended March 31, 2019 is attached herewith as Annexure ‘G. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

18.CORPORATE GOVERNANCE

Your Company continues to enjoy a Corporate Governance Rating of CGR2+ (pronounced CGR 2 plus) and a Stakeholder Value Creation and Governance Rating of SVG1 (pronounced SVG one). The ‘+ sign indicates a relatively high standing within the category indicated by the rating. The aforementioned ratings are on a scale of 1 to 6, where 1 is the highest rating. The two ratings indicate whether a company is being run on the principles of corporate governance and whether the practices followed by the company lead to value creation for all its shareholders. The CGR2 rating is on a scale of CGR1 to CGR6, where CGR1 denotes the highest rating. The CGR2+ rating implies that according to ICRAs current opinion, the rated company has adopted and follows such practices, conventions and codes that would provide its financial stakeholders a high level of assurance of the quality of corporate governance.

The SVG1 rating is on a scale of SVG1 to SVG6, where SVG1 denotes the highest rating. The SVG1 rating implies that according to ICRAs current opinion, the company belongs to the highest category of the composite parameters of stakeholder value creation and management as well as corporate governance practices.

Pursuant to the Listing Regulations, the Report on Corporate Governance is included in the Annual and Integrated Report. The Practicing Company Secretarys Certificate certifying the Companys compliance with the requirements of corporate governance, in terms of the Listing Regulations, is attached as Annexure ‘H.

19.MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis as stipulated under the Listing Regulations is presented in a separate section forming a part of this Annual and Integrated Report.

20. CONFIRMATIONS

• Your Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

• There have been no material changes and commitments affecting the financial position of the Company which have occurred between the March 31, 2019 and the date of this Boards Report (i.e. May 3, 2019).

• There have been no instances of frauds reported by the auditors under Section 143(12) of the Companies Act, 2013 and the Rules framed thereunder, either to the Company or to the Central Government.

• During the Financial Year 2018-19, there were no significant and material orders passed by the regulators or Courts or Tribunals which can adversely impact the going concern status of the Company and its operations in future.

21.APPRECIATION

Your Directors wish to extend their sincere thanks to the employees of the Company, central and state governments as well as the government agencies, banks, customers, shareholders, vendors and other related organisations that have helped in your Companys progress, as partners, through their continued support and co-operation.

For and on behalf of the Board of Directors Nisaba Godrej Executive Chairperson

Mumbai, May 03, 2019

ANNEXURE ‘A

BOARD DIVERSITY POLICY

The Company is committed to equality of opportunity in all aspects of its business and does not discriminate on the grounds of nationality, race, colour, religion, caste, gender, gender identity or expression, sexual orientation, disability, age or marital status. The Company recognises merit and continuously seeks to enhance the effectiveness of its Board. The Company believes that for effective corporate governance, the Board should have the appropriate balance of skills, experience and diversity of perspectives. Board appointments will be made on a merit basis, and candidates will be considered on the basis of objective criteria, with due regard for the benefits of diversity on the Board. The Board believes that such merit-based appointments will best enable the Company to serve its stakeholders. The Board will regularly review this policy to ensure its effectiveness.

ANNEXURE ‘B

GCPL TOTAL REWARDS POLICY

GCPLs Total Rewards Framework aims at holistically using elements such as fixed and variable compensation, long-term incentives, benefits and perquisites and non-compensation elements (career development, work-life balance and recognition).

Highlights

The rewards framework offers employees the _exibility to customise different elements based on need. The framework is also integrated with GCPLs performance and talent management processes and is designed to ensure sharply differentiated rewards for our best performers.

The total compensation for a given position is influenced by the following three factors: position, performance and potential. As a broad principle, for high performers and potential employees, GCPL strives to deliver total compensation at the 90th percentile of the market.

Total Cash Compensation

The employees total cash compensation has the following three components:

1. ‘Fixed Compensation comprising the basic salary and retirement benefits such as the provident fund and gratuity

2. ‘Flexible Compensation comprising a fixed predetermined component of the employees compensation. Employees can allocate this amount to different components, as per their grade eligibility, defined at the start of each fiscal year

3. ‘Variable Compensation (Performance-Linked Variable Remuneration) comprising employee rewards for delivering superior business results and individual performance. It is designed to provide a significant upside earning potential without a cap for overachieving business results. It has a ‘Collective component, linked to the achievement of specified business results, measured by ‘Economic Value Added or other related metrics, relative to the target set for a given fiscal year, and an ‘Individual component, based on employees performance, as measured by the performance management process.

Long-Term Incentives (Employee Stock Grant Scheme)

This scheme aims at driving a culture of ownership and focus on long-term results. It is applicable to Godrej Leadership Forum members. Under this scheme, performance-based stock grants are awarded. The value of the stock grant is proposed by the management and approved by the Nomination and Remuneration Committee.