Gulshan Polyols Ltd Directors Report.

Dear shareholders,

Your Directors have pleasure in presenting their 18th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2018

  1. A. THE STATE OF COMPANIES AFFAIRS

(Rs. in Lakhs)

Particulars Year Ended 31.03.2018 Year Ended 31.03.2017
REVENUE
Revenue from Operations 62403.80 52681.57
Other Income 183.49 412.57
TOTAL REVENUE (I) 62587.29 53094.14
EXPENSES (II) 55503.98 46635.26
Earnings before Interest, Tax , and Depreciation 8i Amortization (EBITDA) (I -II) 7083.31 6458.88
Less: Finance Cost (Interest) 1080.72 617.78
Depreciation 3648.48 2808.13
PROFIT BEFORE TAX (PBT) (III) 2354.11 3032.97
Less - Current Tax 508.33 14.01
Add - MAT Credit entitlement (508.33) -
- Deferred Tax 529.91 284.58
PROFIT AFTER TAX (PAT) (IV) 1824.20 2734.38
OTHER COMPREHENSIVE INCOME (V)
Item that will not be reclassified to Profit and Loss: - 18.42
(a) Fair Value changes of Equity Instruments
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (IV) + (V) 1824.20 2752.81
Dividend 8i Dividend Tax - Interim Dividend 225.87 225.87
Cash Accruals 5472.68 5560.94
Equity Share Capital 469.17 469.17
Earnings per Share - Basic ( Rs. ) 3.89 5.83
- Diluted ( Rs. ) 3.89 5.83

B. RESULTS OF OPERATIONS

The Financial Year 2017-18 was a challenging year on multiple fronts, and your Company has delivered a resilient performance. The performance in FY 2017-18 should be viewed in light of the several challenges faced.

During the financial year ended 31st March 2018, Revenue from operations increased to Rs. 624.04 crores from Rs. 526.82 crores in the previous year. The figures are not comparable as the revenue for the year is net of GST. Registered growth is 25% on net revenue basis. EBIDTA of Rs. 70.83 crores for the year against Rs. 64.59 crores in the previous year, a growth of 10% despite a negative EBIDTA of Rs. 3.93 crores from Distillery. Profit after tax (PAT) of Rs. 18.24 crores in FY2017-18 against Rs. 27.53 crores in the previous year. PAT is lower due to higher finance cost of Rs. 4.63 crores and higher depreciation of Rs. 8.40 crores.

During the year the business and affairs of the Company have been carried out in its normal course and no significant events have taken place, which are harmful.

2. TRANSFER TO RESERVES

Your Board recommends to transfer to general reserves of Rs. 3.00 crores (previous year Rs. 3.00 crores). Consequently, the surplus in the statement of Profit and Loss as at 31st March, 2018 would stand at Rs. 183.22 crores (Previous Year Rs. 171.93 crores).

3. DIVIDEND

During the year, the Board of Directors had declared and paid an interim dividend of 40%, on equity shares of face value Rs. 1/- each amounting to Rs. 0.40 per share. Your Directors are pleased to recommend a final dividend of 30% on equity shares of face value Rs. 1/- each amounting to Rs. 0.30 per share for the year ended 31st March, 2018, subject to the approval of the members at this Annual General Meeting. Thus, total dividend for the year amounts to 70% on equity shares (i.e. Rs. 0.70 per share on face value of Rs. 1/- each)

During the year 2017-18, the Company has transferred unclaimed dividend of Rs. 2,21,497.50/- to Investor Education and Protection Fund, as per Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001

4. NEW DEVELOPEMENTS & RECOGNITIONS

• The Company has entered into an agreement to set up 24000 MTPA Onsite PCC/WGCC with a Silver ton Paper Mill in Western U.P.

• Company achieved a 222% volume growth in its Maize Starch sales in FY2017-18.

• Company achieved a 208% volume growth in its FIFRS production in FY2017-18.

• The Company has successfully commenced the commercial production of ENA and Rectified Spirit in Borgaon industrial area in Chhindwara (M.P.) during the month of December 2017.

5. PUBLIC DEPOSITS

During the financial year 2017-18, the Company has not accepted or renewed any public deposits in terms of Sections 73 and 74 of the Companies Act, 2013 and rules framed thereunder

6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no. 6 to the Financial Statements.

7. DISCLOSURE REGARDING SUBSIDIARIES, JOINT VENTURE OR ASSOCIATE COMPANIES

M/s Gulshan Holdings Pvt. Ltd. is an associate company by holding 40.24% equity share capital of the Company. There are no other holding, subsidiary, and joint venture or associate company.

8. CREDIT RATINGS

Your Company has adequate liquidity and a strong Balance Sheet. During the year, Credit Analysis 8i Research Limited (CARE) has maintained the ratings of CARE A+ [Single A Plus] for your Companys long-term facilities having tenure of more than one year and CARE A1 + [A one plus] for your Companys short-term facilities having a tenure upto one year.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31st MARCH, 2018 AND 22nd MAY, 2018 (DATE OF THE REPORT)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (31st March, 2018) and the date of the Report (22nd May, 2018).

10. MATERIAL ORDERS BY GOVERNING AUTHORITIES AND COURTS

There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company.

11. ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH RESPECT TO THE FINANCIAL STATEMENT

The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Internal Audit Reports were reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Companys internal control system.

The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.

12. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure-A to this report.

13. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY

During the year, the meeting of CSR Committee was held on 27th May, 2017 for discussing contribution require to be made by Company for fulfilling the objectives as per Companys CSR policy. The contributions in this regard have been made by both ways i.e. directly and corpus to the registered trust / Society. The Annual report on CSR activities is annexed herewith as Annexure B.

14. DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP)

Change in Directors and KMPs

During the year under review, there is no change in Directors and KMPs

Retirement by rotation

In terms of Section 152 of the Companies Act, 2013, Mr. Ashwani Kumar Vats,, Executive Director would retire by rotation at the forthcoming AGM. Being eligible, he has offered himself for re-appointment.

Statement on declaration given by Independent Directors

The Board of the Company consist five independent directors and all the Independent Directors have given the declaration that they meet the criteria of independence as provided in section 149 (6) of the Companies Act 2013.

Performance evaluation

On the advice of Board of Directors, the Nomination and Remuneration Committee of the Board of Directors of the Company formulated the criteria for the evaluation of the performance of the Board of Directors & its Committees, Independent Directors, Non-Independent Directors and the Chairperson of the Board. Based on that performance valuation has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated.

Remuneration Policy

Remuneration Policy of the Company aims at recommending and reviewing the remuneration to Managing Director, Non-Executive Directors and Key Managerial Personnel of the Company and is based on evaluation criteria such as industry benchmarks, companys annual performance & its strategy, expertise, talent and meritocracy including criteria for determining qualification, positive attributes, independence of a director etc. The detailed policy is available on website of the Company i.e. www.gulshanindia.com .

Number of Meetings

The Board of Directors duly met 4 times in the financial year 2017-18 on 27th May 2017, 11th August 2017, 13th November, 2017, 29th January, 2018.

15. DIRECTORS RESPONSIBILITY STATEMENT

The Directors state that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c. the directors had taken proper and sufficient 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;

d. the directors had prepared the annual accounts on a going concern basis; and

e. 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 effectively.

f. the Directors have devised proper systems to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectually.

16. RELATED PARTY TRANSACTION

During the financial year 2017-18, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, all of which were in the ordinary course of business and on arms length basis and in accordance with the provisions of the Companies Act, 2013, read with the Rules issued thereunder and SEBI (Listing Obligations and Disclosure Requirements), 2015. Further, there were no transactions with related parties which qualify as material transactions under Regulation 23 of SEBI (LODR), 2015.

All transactions with related parties entered by the Company in the normal course of business were periodically reviewed and approved by the Audit Committee. The Form AOC - 2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure [C],

17. DEMAT OF SHARES

Necessary arrangements are made for Dematerialization of Shares, with NSDL and CDSL. Out of the total, 97.23% of the equity shares of the company are already in Demat form. Since the shares of the company are traded on stock exchange in compulsory Demat form, the shareholders holding shares in physical form may avail this facility in their own interest.

18. INDUSTRIAL RELATIONS

The industrial relations have been cordial at all the plants of the Company. The Board records its appreciation of the commitment and support of employees at all levels.

19. INSURANCE

All the insurable interests of your company, including inventories, buildings, plant 8i machinery are insured against risk of fire and other risks.

20. SAFETY AND ENVIRONMENT

All the manufacturing plants of your company are running in an eco-friendly manner and have a focus on workplace health and safety.

21. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Board of Directors of the Company has formulated Risk Management Policy which aims at enhancing Shareholders value and providing an optimum risk reward trade off. The risk management approach is based on the clear understanding of the variety of risks that the organization faces, disciplined risk monitoring and measurement and continuous risk assessment and mitigation reserves.

22. VIGIL MECHANISM

Pursuant to provisions of Section 177(10) of Companies Act, 2013, and Regulation 22 of the Listing Regulations, the Company has established a Vigil Mechanism for directors and employees to report the instances of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy. The said policy is explained in the Corporate Governance Report and also displayed on Companys website www.gulshanindia . com under investors/policy documents/Vigil Mechanism Policy link.

23. SEXUAL HARASSMENT POLICY

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaint under this policy during the year 2017- 2018.

24. PARTICULARS OF EMPLOYEES

The particulars of employee(s), as per Section 197 read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, employed throughout the year and were in receipt of remuneration in aggregate of not less than Rs. 60 lakhs per annum is given as under:

Name Designation Remuneration received Nature of Employment Qualification & Experience Date of appointment Age Last employment % of equity held Such employee relative of director in the Co.
Dr. C. K. Jain Managing Director Rs. 1.66 cr Contractual Phd. in Science & 50 yrs. Exp. 20.10.2000 70yrs No 10.33% Ms. Arushi jain
Ms. Aditi Pasari

25. AUDIT OBSERVATIONS

Auditors observations are suitably explained in notes to the Accounts and are self-explanatory.

26. AUDITORS:

i) Statutory Auditors:

Rajeev Singal & Co., Chartered Accountant (Firm Registration No. 008692C), have been appointed as Statutory Auditors of the Company at the Annual General Meeting held on 9th September, 2017 for a period of five years subject to ratification by members at every consequent Annual General Meeting. Members are requested to consider the ratification of the appointment of Rajeev Singal 8i Co., Chartered Accountant and authorize the Board of Directors to fix their remuneration.

Rajeev Singal 8i Co., Chartered Accountants have submitted a certificate, confirming that their appointment, if ratified, will be in accordance with Section 139 read with Section 141 of the Act.

ii) Internal Auditors:

a. Shahid 8i Associates, Chartered Accountants have been appointed as Internal Auditors for the FY 2018- 19 for all the Units of the Company except Bharuch Sorbitol Unit. They will perform the duties of internal auditors of the Company and their report will be reviewed by the audit committee from time to time.

b. S. S. Kothari Mehta 8i Co. appointed as Internal Auditor for audit of Bharuch Sorbitol Unit for the FY 2018-19.

iii) Cost Auditors:

Rahul Jain 8i Associates, Cost Accountants have been appointed as Cost Auditors for auditing the cost accounts of your Company for the year ending 31st March, 2019 by the Board of Directors. Pursuant to the provisions of Section 148 of the Act read with The Companies (Audit and Auditors) Rules, 2014, Members are requested to consider the ratification of the remuneration payable to Rahul Jain 8i Associates. The Cost Audit Report for the year 2016-17 has been filed under XBRL mode.

iv) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and (The Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of your Company at its meeting held on 22nd May, 2018 has appointed Mr. Sanjay Chugh, Practicing Company Secretary (CP No. :3073, FCS: 3754) as the Secretarial Auditor to conduct an audit of the secretarial records, for the financial year 2018-19.

The Secretarial Audit Report for the financial year ended 31st March, 2018 is annexed herewith as Annexure D. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

27. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure E.

28. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Corporate Governance and Management Discussion 8i Analysis Report, which form an integral part of this Report, are set out as separate Annexure F, together with the Certificate from the Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Regulation 27 of Listing Regulations, 2015.

ACKNOWLEDGEMENT

Your Directors express their appreciation of sincere co-operation and assistance of Sate 8i Central Govt, authorities, bankers, customers and suppliers as well as all of the Companys employees 8i Shareholders of the Company.

For and on behalf of the Board of Directors
Date : 22nd May, 2018 Dr. C.K. Jain
Place : Delhi Chairman and Managing Director

ANNEXURE TO DIRECTORS REPORT

ANNEXURE-A

FORM-A (See Rule-2)

Disclosure of particulars with respect to conservation of energy and Consumption per Unit of Production

Conservation of energy

(i) Energy Conservation measures taken: The Company has realigned the existing power consuming sections to remove bottleneck and to ensure the uninterrupted and quality power supply at the minimum cost.

(ii) Additional investment and proposal, if any, being implemented for reduction of energy consumption: None

(iii) Impact of measures (i) 8i (ii) above for reduction of energy consumption and consequent impact on cost of production of goods: This would result in higher yield and reduction in power cost.

(iv) Total energy consumption and energy consumption per unit of production as per Form A: The details are as under:

A Power Consumption and Fuel Consumption: 31.03.2018 31.03.2017
1 Electricity :
a Purchased:
Units 39123193 28430963
Total Amount ( Rs. ) 291642501 207045831
Average Rate ( Rs. )/Unit 7.45 7.28
b Own Generation :
i Through Diesel Generator :
Units 0 12890
Cost ( Rs. ) 0 246174
Cost ( Rs. )/Unit 0 19.10
ii Through Steam Turbine/Generator :
Units 29750106.5 20430382
Cost ( Rs. ) 89226561 43363620
Cost ( Rs. )/Unit 3.00 2.12
2 Coal /Coke : (Used in Boiler ,Microniser & Gas Producer)
Qty. (MT) 60885.938 60323.985
Total Cost ( Rs. ) 455626720 403785683
Average Rate ( Rs. ) 7483.28 6693.62
3 Agriculture Waste : (Used in Boiler ,Microniser & Gas Producer)
Qty. (MT) 15917.000 0
Total Cost ( Rs. ) 73799324 0
Average Rate ( Rs. ) 4636.51 0
4 HSD : (Used in Microniser)
Qty. (Ltrs) 0 4603
Total Cost ( Rs. ) 0 246174
Average Rate ( Rs. ) 0 53.48
B Consumption Per Unit (MT) of Production
1 Products - Production
Calcium Carbonate (in MT) 97539.936 101014.040
Sorbitol & Sweetner (in MT) 87617.860 87348.690
Starch (in MT) 46449.000 15146.000
Liquor -ENA/IMFL 1674901.000 0.000
2 Electricity (Units/Ton)
Calcium Carbonate (in MT) 194 225
Sorbitol & Sweetner (in MT) 353 294
Starch (in MT) 378 248
Liquor -ENA/IMFL (Units/Ltr.) 1.19 0
3 Coal/Coke (MT/Ton) : (On Directly attributable Production)
Calcium Carbonate (in MT) 0.15 0.37
Sorbitol & Sweetner (in MT) 0.43 0.47
Starch (in MT) 0.23 0.45
Liquor -ENA/IMFL (Units/Ltr.) 0.003 0
4 Agriculture Waste (Mt/Ton) : (On Directly attributable Production)
Calcium Carbonate (in MT) 0.10 0
Sorbitol & Sweetner (in MT) 0.21 0
Starch (in MT) 0.16 0

FORM-B

TECHNOLOGY ABSORPTION, ADAPTION & INNOVATION

No technology ties up were entered into. The Company keeps itself updated with latest technological innovations by way of constant communication, personal discussions and visits to foreign countries/ plants.

FORM-C

Foreign Exchange Earnings & Outgo: Despite severe competition from low cost countries, the Company has made efforts on various fronts for promotion of exports.

(Amount in Rs. )

PARTICULARS 2017-18 2016-17
(i) Earnings by way of Export of Goods calculated on FOB basis 738531267 738787928
(ii) Payment of interest on loan taken 19579393 32839260
(iii) Payment of Commission on Export of Goods 9152435 8261299
(iv) Expenditure on foreign Traveling 2777267 4848391
(V) Expenditure on Technical Service 1972940 16288466
(Vi) Expenditure on Legal 8i Professional fee 1063998 439379