Guj. Terce Labs. Director Discussions


To,

The Members of

GUJARAT TERCE LABORATORIES LIMITED

The Board of Directors have pleasure in presenting their 38th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended March 31, 2023.

1. FINANCIAL HIGHLIGHTS

The Companys financial performance for the year ended on March 31, 2023 is summarized below:

( In Lakhs)

Particulars

Current Year Previous Year
2022-23 2021-22
Revenue from operation 4678.25 4013.37
Profit before Interest and Depreciation (180.78) 142.34
Less: Interest 72.14 40.09
Profit Before Depreciation (252.92) 102.25
Less: Depreciation 36.45 27.59

Profit Before Tax

(289.39) 74.66
Less/Add: Tax Expenses
Current Tax -
Deferred Tax (122.23) (12.57)

Total Tax Expenses

(122.23) (12.57)

Profit for the year

(167.16) 87.23

2. STATE OF COMPANYS AFFAIRS

The gross sales and other incomes for the financial year under review was 4713.70 lakhs as against 4043.97.00 lakhs in the previous year, recording a growth of 16.56 %.

The loss before tax was Rs. 289.39 lakhs for the financial year under review as against profit before tax of Rs. 74.66 lakhs for the previous financial year registering decline of 487.61%.

The loss after tax for the financial year under review was Rs. 167.16 lakhs as against profit after tax of Rs. 87.23 lakhs for the previous financial year, registering decline of 291.63 %.

3. CAPITAL EXPENDITURE:

As on March 31, 2023 the gross fixed assets (tangible and intangible) stood at 833.39 lakhs (previous year 827.84 lakhs) and the net fixed assets (tangible and intangible), at 398.79 Lakhs (previous year 429.29 lakhs). Capital Expenditure during the year amounted to 6.31 lakhs (previous year 211.41 Lakhs).

4. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There have been no material changes and commitments aecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

5. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES

No company has become or ceased to be Subsidiary Company, Joint Venture Company or Associate Company during the year.

6. CHANGE IN THE NATURE OF BUSINESS

During the Financial Year 2022-2023 Company has not commenced any new business nor discontinued or sold or disposed o any of its existing businesses or hived o any segment or division.

7. SHARE CAPITAL

The issued, subscribed and paid-up Equity Share Capital of the Company as on March 31, 2023, was 7,42,03,000 comprising of 74,20,300 Equity Shares of 10.00 each. The Company has not issued any Equity Shares during FY 2022-2023. There was no change in Share Capital during the year under review.

8. MEETINGS OF THE BOARD OF DIRECTORS

During the Financial year Seven Board Meetings were held. For details of meetings of the Board of Directors with regard to the dates and attendance of each of the Directors thereat, please refer to the Corporate Governance Report, which is a part of this Report.

9. CORPORATE GOVERNANCE

As provided under Regulation 15(2) of the SEBI (LODR) Regulations, 2015, the compliance with Corporate Governance as specified in Regulation 17,17A, 18, 19, 20, 21,22, 23, 24, 24A, 25, 26, 27 and 46(2)(b) to (i) & Para C, D & E of Schedule V are not applicable to the Company as paid up share capital doesnt exceed 10 Crore and net worth not exceeding 25 crore.

The Company has decided to maintain and adhere to the Corporate Governance requirements set out by SEBI voluntarily. The Report on Corporate Governance along with requisite Certificate from GKV & Associates, Practicing Company Secretary, Ahmedabad is annexed to this Report.

10. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A report on Management Discussion and Analysis, as required in terms of Regulation 34(2) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, forms part of this report and it deals with the Business Operations and Financial Performance, Research & Development Expansion

& Diversification, Risk Management, Marketing Strategy, Safety & Environment, Human Resource Development, significant changes in key financial ratios etc. in Annexure-A

11. DIVIDEND

In view of the losses incurred from the financial year 2022-23 and also recognizing the need to conserve cash to address working capital needs, the Board of Directors of the Company did not recommend any dividend for the year under review.

12. DEPOSITS

The Company does not have ‘Deposits as contemplated under Chapter V of the Companies Act, 2013. Further, the Company has not invited or accepted any such deposit during the financial year ended on March 31, 2023.

13. A STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY FOR THE COMPANY INCLUDING IDENTIFICATION THEREIN OF ELEMENTS OF RISK, IF ANY, WHICH IN THE OPINION OF THE BOARD MAY THREATEN THE EXISTENCE OF THE COMPANY

Risk management is embedded in your companys operating framework. Your company believes that managing risk helps in maximizing returns. The companys approach to addressing business risk is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee. Some of the risks that the company is exposed to are:

Commodity Price Risks

The Company is exposed to the risk of price fluctuation of raw material as well as finished goods. The company proactively manages these risks through forward booking, Inventory management and proactive vendor development practices. The Companys reputation for quality, product dierentiation and service, coupled with existence of powerful brand image with robust marketing network mitigation the impact of price risk on finished goods.

Regulatory Risks

The company is exposed to risks attached to various statutes and regulations including the Companies Act. The company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

Human Resources Risks

Retaining the existing talent pool and attracting new talent are major risks. The company has initialed various measures including rolling out strategic talent management system, training and integration of learning and development activities.

Strategic Risks

Emerging businesses, capital expenditure for capacity expansion, etc., are normal strategic risk faced by the company. However, the company has well-defined processes and procedures for obtaining approvals for investments in new business and capacity expansion etc.

14. DIRECTOR RETIRING BY ROTATION

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Natwarbhai Prajapati (DIN: 00031187) will retire by rotation at the ensuing Annual General Meeting and is eligible for reappointment. Pursuant to Regulation 17 of SEBI (LODR) Regulations, 2015, details of Directors retiring by rotation are provided under explanatory statement of the Notice of the 38th Annual General Meeting.

15. RE-APPOINTMENT OF DIRECTORS

The Board of directors, on the recommendations of the Nomination and Remuneration Committee (NRC) have re-appointed Mr. Surendra kumar Sharma (DIN: 06430129) as an Independent Director of the Company w. e. f. August 10, 2023 to August 09, 2028 for the second term for five consecutive years, subject to the resolution to be passed by the Shareholders at the 38th Annual General Meeting.

Further, the Board on the recommendation of the Nomination & Remuneration Committee have decided to continue the tenure of Mr. Amritbhai Prajapati, Whole-Time Director of the Company even after his attainment of age of seventy years for the term of five consecutive years w.e.f May 24, 2024, to May 23, 2028 subject to the approval of the members of the Company at the ensuing Annual General Meeting.

All Independent Directors (IDs) 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details terms of appointment of IDs are disclosed on the companys website with following link http:// gujaratterce.in/Codes-and-Policies

16. CHANGE IN KEY MANAGERIAL PERSONNEL

Ms. Ashka Solanki resigned from the position of Company Secretary & Compliance Ocer of the w.e.f September 06, 2022 and Mrs. Rupal Sukhadiya was appointed as the Company Secretary & Compliance Ocer of the Company w.e.f March 06, 2023.

17. NOMINATION AND REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, senior Management and their Remuneration including criteria for determining qualifications, positive attributes, Independence of a director. The details of the Nomination and Remuneration Policy are covered in the Corporate Governance Report. The said policy has also been uploaded on the Companys website at http://gujaratterce. in/Codes-and-Policies

18. ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Individual Directors pursuant to the requirements of the Companies Act, 2013 and rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and schedule prescribed thereunder.

The performance of the Board was evaluated by the Board after seeking input from all the Directors on the basis of criteria such as the board composition and structure, eectiveness of board processes, information and functioning, etc. The performance of the respective Committees was evaluated by the Board after seeking input from the Committee members on the basis of criteria such as the composition of Committees, eectiveness of Committee meetings, etc. The above criteria are as per the Performance Evaluation Policy of the Company approved by the Board of Directors upon the recommendation of the Nomination and Remuneration Committee. As required under Regulation 25 of the Listing Regulations, a separate meeting of the Independent Directors of the Company was also held on March 30, 2023, to evaluate the performance of the Chairman, Non- Independent Directors and the Board as a whole and also to assess the quality, quantity and timeliness of flow of information between the management of the Company and the Board.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual Directors to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated, on the basis of following evaluation criteria:

Relevant Knowledge, Expertise and Experience.

Devotion of time and attention to the Companys long term strategic issues.

Addressing the most relevant issues for the Company.

Discussing and endorsing the Companys strategy

Professional Conduct, Ethics and Integrity.

Understanding of Duties, Roles and Function as Independent Director.

Your directors have expressed their satisfaction with the evaluation process.

19. AUDITORS Statutory Auditors

At the 35th Annual General Meeting of the Company held on August 21, 2020, the Members approved appointment of M.A. Shah & Co., Chartered Accountants, (Firm Registration No.: 112630W) as Statutory Auditors of the Company to hold oce for a period of five (5) years from the conclusion of that Annual General Meeting till the conclusion of the 40th Annual General Meeting.

Internal Auditors

On recommendation of Audit Committee, the Board of Director has appointed M/s D V Shah & Associates, Chartered Accountants, Ahmedabad as Internal Auditor of the Company in terms of Section 138 of the Companies Act, 2013 and rules made thereunder, from Financial Year 2023-24 to 2025-26.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit for the year ended March 31, 2023, was carried out by the Secretarial Auditors, GKV & Associates, Company Secretaries, Ahmedabad.

The Report of the Secretarial Audit is annexed herewith marked asAnnexure -Bto this Report. The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

GKV & Associates has been appointed as the Secretarial Auditor of the Company for the Financial Year 2023-24.

20. EXPLANATION OR COMMENTS ON DISQUALIFICATIONS, RESERVATIONS, ADVERSE REMARKS OR DISCLAIMERS IN THE AUDITORS REPORTS

The observations made in the Auditors Report of M.A. Shah & Co., Chartered Accountants for the year ended March 31, 2023, read together with relevant notes thereon, are self-explanatory and hence do not call for any comments. There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report.

21. REPORTING OF FRAUD BY AUDITORS:

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

22. COMMITTEES OF THE BOARD

In compliance with the requirement of applicable laws and as part of best governance practices, the Company has following Committees of the Board as on March 31, 2023: i. Audit Committee ii. Stakeholders Relationship Committee iii. Nomination and Remuneration Committee The details with respect to the aforesaid Committees forms part of the Corporate Governance Report.

23. AUDIT COMMITTEE

A duly constituted Audit Committee consists of majority of Independent Directors with Mr. Surendrakumar Sharma, Independent Director, as the Chairman of the Committee. The other members of the Audit Committee are Mr. Viplav Khamar and Smt. Chhayaben Shah, Independent Directors. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members of the Audit Committee are set out in the Report on Corporate Governance, which forms part of this Report.

During the year under review, all the recommendations of the Audit Committee were accepted by the Board.

24. LOANS & ADVANCES

There were loans, guarantees or investments made by the Company under section 186 of the Companies Act, 2013 given in note 4 to the financial statements.

25. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 (3) (c) of the Companies Act, 2013, the

Board of Directors hereby confirms that, i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures. ii. It has in the selection of the accounting policies, consulted the Statutory Auditors and has applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of aairs of the company as of March 31, 2023 and of the profit or loss of the company for that period. iii. It has taken proper and sucient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, to the best of its knowledge and ability. iv. It has prepared the annual accounts on a going concern basis. v. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating eciently. vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating eectively.

26. ANNUAL RETURN

Pursuant to section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on March 31, 2023 is available on the Companys website at https://www.gujaratterce. in/annual-returns/ under Investor tab.

27. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed herewith as Annexure-C to this report.

Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report.

28. INSURANCE

All the insurable interests of the Company including inventories, buildings, plant and machinery are adequately insured against the risk of fire and other risks.

29. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were in the ordinary course of the business of the Company and were on an arms length basis. There were no materially significant related party transactions entered with Promoters, Directors, Key Managerial Personnel, or other persons which may have a potential conflict with the interest of the Company. The transactions entered, pursuant to the omnibus approval so granted, are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval. The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company http://gujaratterce.in/Codes-and-Policies. Since all related party transactions entered into were in the ordinary course of business and were on an arms length basis, form AOC-2 is not applicable to the Company.

30. FAMILIARISATION PROGRAMME OF INDEPENDENT DIRECTORS

The Objective of a familiarization program is to ensure that the Independent Directors are updated on the business environment and overall operations of the Company. This enables the Independent Directors to make better informed decisions in the interest of the Company and its stakeholders.

In Compliance with the requirements of SEBI Regulations, the Company has put in place a familiarization program for the Independent Directors to familiarize them with their roles, rights and responsibility as Directors, the working of the Company, nature of industry in which the Company operates, business model etc.

A familiarization program was conducted for Independent Directors on areas such as the core functions and operations of the Company, overview of the industry, financials and the performance of the Company by site visits to plant location.

31. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to provisions of Section 177 (9) of the Act, read with Regulation 22(1) of the SEBI Listing Regulations, your Company has adopted a Whistle Blower Policy, to provide a formal vigil mechanism to the Directors and employees to report their concerns about unethical behavior, including actual or suspected leak of unpublished price sensitive information, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail the mechanism and also provides for direct access to the Chairman of the Audit Committee in certain cases. It is armed that no personnel of the Company has been denied access to the Audit Committee.

The Whistle Blower Policy is available on the Companys website at http://gujaratterce.in/ assets/upload/CodesandPolicies/Whistle BlowerPolicyGTLL.pdf

32. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS

During the year under review, the Company is in compliance with 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 as approved by the Central Government.

33. GENERAL DISCLOSURES

Your directors state that no disclosure or reporting is required in respect of the following matters as there is no transaction on these items during the year under review: (i) Issue of equity shares with dierential rights as to dividend, voting or otherwise.

(ii) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees Stock Options Schemes referred to in this Report. (iii) The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

(iv) There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

V) During the financial year under review, no such agreement was entered into by the shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel, employees of the Company or of its holding, subsidiary or associate company, among themselves or with the Company or with a third party, solely or jointly, whose purpose and eect is to, impact the management or control of the Company or impose any restriction or created any liability of the Company.

34. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

35. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company remains committed to ensuring an eective Internal Control environment that, inter alia, provides assurance on orderly and ecient conduct of operations, security of assets, prevention and detection of frauds / errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has an independent Internal Audit function with well-established Risk Management processes both at the business and corporate levels and provide assurance on the adequacy and eectiveness of Internal Controls, compliance with operating systems, internal policies and regulatory requirements.

The Audit Committee regularly reviews the major findings of the Internal Audits and corrective measures taken thereon to ensure the ecacy of the Internal Control process. These reviews are done with respect to dierent locations and functions to help take eective steps for ensuring compliance.

The system of Internal Control is structured to verify that financial and other documents are accurate in compiling financial reports and other data, and in maintaining transparency for individuals. Statutory Auditors Report on Internal Financial Controls as required under Clause (i) of Sub-section 3 of Section 143 of the Act, is annexed with the Independent Auditors Report.

36 ANY SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS

Pursuant to the requirement of Section 134(3)(q) of the Act, read with Rule 8 (5)(vii) of the Companies (Accounts) Rules, 2014, it is confirmed that during FY 2022-23 there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Companys operations in future.

38. A STATEMENT UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a Prevention of sexual harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: a. number of complaints filed during the financial year : Nil b. number of complaints disposed of during the financial year :Nil c. number of complaints pending as on end of the financial year :Nil

39. DISCLOSURE REGARDING MAINTENANCE OF COST RECORDS

Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time was applicable to your company hence, your Company has maintained adequate cost records.

40. HUMAN RESOURCE

Your Company recognizes its employees as most valuable resource and ensures strategic alignment of Human Resource Initiatives and practices to business priorities and objectives. Its constant endeavor is to invest in Human Talent and Talent Management Processes to improve capabilities and potentials of human capital of the organization to cope with challenging business environment, varying needs of the customers and bring about customers delight by focusing on the Customers needs. Attracting, developing and retaining the right talent and keeping them motivated will continue to be a key strategic initiative and the organization continues to be focused on building up the capabilities of its people to cater to the business needs. Given growth plans of the Company, an important strategic focus is to continue to not only nurture its human capital, but also proactively focus on preparing all employees for the challenges of the future.

The Company strives to provide a healthy, conducive and competitive work environment to enable the employees excel and create new benchmarks of quality, productivity, eciency and customer delight. The Company always believes in maintaining mutually beneficial, healthy and smooth industrial relations with the employees and the Unions which is an essential foundation for the success of any organisation. The proactive initiatives combined with fair Wage Settlements at Manufacturing Plants have ensured healthier and more transparent Industrial Relations based on foundation of mutual trust and co-operation.

41. OTHER DISCLOSURES:

During the year under review:

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Company and or its operations in future;

No proceedings are made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of onetime settlement with any Bank or Financial Institution;

42. ACKNOWLEDGEMENT

Your directors express their gratitude to customers, vendors, dealers, investors, business associates and bankers for their continued support during the year. We place on record our appreciation of the commitment and contribution made by the employees at all levels.

Our resilience to meet challenges was made possible by their hard work, solidarity, cooperation and support. We thank the Government of India, the State Governments and statutory authorities and other government agencies for their support and look forward to their continued support in the future.

By Order of the Board of Directors

For, Gujarat Terce Laboratories Ltd

Sd/-
Natwarbhai Prajapati
Place: Ahmedabad Chairman
Date: 13.05.2023 DIN: 00031187