Morganite Crucible (India) Ltd Management Discussions.


The Members,

Your Directors are pleased to present the 32 Annual Report, together with the Audited Financial Statements of the

Company for the financial year ended March 31, 2017.


Standalone Consolidated
2017 2016 2017 2016
Revenue from Operations, net of excise 8,584.35 8,738.66 10,768.55 10,840.52
Other Operating Revenue 338.51 128.65 368.58 145.16
Other income 182.24 247.92 245.49 279.92
Total income
9,105.10 9,115.23 11,382.62 11,265.60
Operating Expenses 6,702.84 6,851.25 8,315.20 8,598.26
Profit before finance cost, depreciation and amortisation 2,402.26 2,263.98 3,067.42 2,667.34
Finance Cost - - -
Depreciation and amortisation
362.42 710.65 493.89 830.72
Profit before tax 2,039.84 1,553.33 2,573.53 1,836.62
Provision for tax
723.28 565.70 956.67 796.78
Share of minority interest -
164.56 41.08
Profit after tax 1,316.56 987.63 1,452.31 998.76
Proposed equity dividend
224.00 112.00 224.00 112.00
Corporate dividend tax
45.60 22.80 45.60 22.80
Total Outflow
269.60 134.60 269.60 134.60


Your Directors are pleased to recommend a final dividend of 8/- per equity share, amounting to 269.60 lakh (including dividend distribution tax) for the financial year 2016-17 for approval of the members in the ensuing 32 Annual General

Meeting of the Company.


Revenue & Profits – Standalone :

The Company has achieved net revenue of 8,584.35 lakh as compared to 8,738.66 lakh in the previous year. The export sales were 5,603.19 lakh as compared to 5,946.69 lakh in the previous year. The gross profit before tax grew by 3 per cent to 2,039.83 lakh as compared to 1,553.33 lakh in the previous year. The operating expenses decreased by 2 per cent to 6,702.84 lakh as compared to 6,851.25 lakh in last year.

Revenue & Profits – Consolidated :

During the year under review, the Company has achieved net turnover of 10,768.55 lakh as compared to 10,840.52 lakh in the previous year. The gross profit before tax grew by 40 per cent to 2,573.53 lakh as compared to 1,836.62 lakh. The operating expenses decreased by 4% to 8,315.20 lakh as compared to 8,598.26 lakh in last year.


The Indian economy grew by 7.1 per cent in FY 2016-17, making India the fastest growing major economy in the world as per the report of Central Statistics Organisation (CSO) and International Monetary Fund (IMF). The currency crunch that followed the demonetization of high-value notes was widely believed to have impacted consumption and driven down economic growth in Oct-Dec quarter.

Global GDP growth is projected around 3.5 per cent boosted by fiscal initiatives in the major economies. The forecast is broadly unchanged since last year, however consumption, investment, trade and productivity remain subdued. Geopolitical pressures and weak capital investment are weighing on medium-term prospects across many emerging markets and developing economies. Fiscal stimulus in major economies may boost global growth above expectations in the short term, but the likelihood of such policy remains uncertain. The risks to growth forecasts remain tilted to the downside from heightened policy uncertainty in major economies.

With a global supply chain, your company, achieved 80 % of its business (on a consolidated basis) in the crucible market and the remaining in the foundry accessories business; mainly in non-ferrous and ferrous foundries. In line with macroeconomic trends, your company saw double digit growth in the Indian subcontinent, with sales outside of the region dropping steadily as economic worries overtook our export markets.


In 2017-18, we expect to see strong demand for our products and services in the Indian subcontinent and the Middle East, with flat or declining demand in the markets of Europe, Rest of Asia, North America and South Africa.

In the Indian sales region, our consistent focus on product portfolio management, end customer connections, application engineering and sales effectiveness, coupled with the positive sentiment in the Indian economy will assure us of sales growth in the coming year.

Your company will continue to focus on non-traditional growth opportunities outside the core business in the Indian and

export markets.


Your Company always strives to provide the highest quality product to their customer ensuring consistency in performance, safety, delivering more value and innovation by continuous focus on research and development. The Company encourages employees and customers to provide regular feedback and active participation by various means to develop quality of product and continuous improvement. This commitment is rooted in our corporate values and is essential to our continued growth and success.

Your Company continued to remain ISO 9001 certified for Quality Management System Standards certified from LUCIDEON Management System for continuously demonstrating the focus on product quality and services, to meet statutory and regulatory norms and to increase customer satisfaction throughout its operations.


During the year, the Company has not accepted any public deposits under the provisions of the Companies Act, 2013.


During the year under review, the Company has not provided any loans, given guarantees and made investments covered

under Section 186 of the Companies Act, 2013.


In compliance with the provisions of Section 188 of Companies Act, 2013 and Regulation 23 of Securities Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements), (LODR) Regulations, 2015, the Audit Committee had given omnibus approval for related party transactions which were of repetitive in nature and entered with associates companies for sale, purchase of goods and services for a period of one year. In every Audit Committee meeting during the year, the schedule of related party transactions for each quarter end were placed before the Committee to ensure transactions were within limit of the approval.

The related party transactions entered during the year were in ordinary course of the business and on arms length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered into during the year by your Company. 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. Further, the Company has not given any loans and advances in the nature of loans to subsidiary company or to associate company or to firms/companies in which directors are interested hence disclosure as per Regulation 34(3) of SEBI LODR, Regulations, 2015 is not applicable.

As per Regulation 46 of SEBI LODR Regulations, 2015, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions is available on Companys website at



During the year under review, there have been no other material changes happened and commitments given which affectsthe financial position of the Company between the end of the financial year and the date of the report.


Your Company has one subsidiary company i.e. Diamond Crucible Company Limited having its manufacturing facility at Mehsana, Gujarat. As per provisions of Section 129 (3) of the Companies Act, 2013, a statement containing salient financial highlights of the subsidiary company for the year ended March 31, 2017 is annexed as part of this Annual Report in Form AOC 1 as Annexure 1. However, the Company has published the audited consolidated financial statements for the financial year March 31, 2017 and also forms part of this Annual Report. The Annual Accounts of the subsidiary company and related detailed information shall be made available to members of the Company seeking such information and shall be kept open for inspection at the Registered Office of the Company during office hours.


In accordance with provisions of Companies Act, 2013 and the Article of Associations of the Company, Ms Pauline Tan, Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered herself for re-appointment.

The evaluation of Board including independent directors was carried out based on parameters of attendance in every Board and Committee meeting, participation in discussions and independent judgement. The Board carried out annual performance evaluation of the Board Committees and Individual Directors, internally. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees.

The members in the Annual General Meeting held on August 10, 2016, have unanimously approved appointment of

Mr Mukund Bhogale as Independent Director of the Company for a period of five years, not liable to retire by rotation.

During the year under review, the independent directors has submitted certificate of independence under Section 149 (6) (d) of the Companies Act, 2013. The policy on familiarisation program for Independent Directors including details of Nomination Remuneration committee and their roles and responsibility are provided in the Corporate Governance Report. The evaluation of Board including independent directors was carried out based on parameters of attendance in every Board and Committee meeting, participation in discussions and independent judgement.

The Board of Directors and Senior Management Personnel has confirmed compliance to the Code of Conduct of the Company and submitted the required annual compliance declaration to the Company Secretary. The Managing Director Certificate on affirmation to the Code of Conduct is attached as Annexure 5.

The details of such familiarization program for Independent Directors are posted on the website of the Company and can

be accessed at -


The Board met five times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.


The company has setup the policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178 (3) and Section 197 (12) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment And Remuneration of Managerial Personnel) Rules, 2014. The ratio of remuneration of Managing Director and Key Managerial Personnel (KMP) to the medians employee remuneration as per above provisions is annexed as Annexure 2 to the Boards report.


During the year under review, no employee was in receipt of remuneration of 102 lakh or more, or employed for part of the year and in receipt of 8.50 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.


As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (Act) and Rules made thereunder, your Company has constituted a policy on Prevention of Sexual Harassment at Workplace in December, 2012 with periodic amendments. During the year, the Company has not received any complaint with allegations of sexual harassment.


The Risk Management Committee was constituted as per provisions of Companies Act, 2013 and Regulation 21 of SEBI LODR having composition of executive and independent directors. The Morgan Group considers that risk management and internal control are fundamental to achieving the Group aim of creating long-term sustainable shareholder value. Your company is also committed to identify, quantify and mitigate business risks by periodic review of potential risks, inherent impact and its mitigation plan in compliance with policy and statement of Morgan Advanced Materials Plc (the Group) on Risk Management.

During the year, the committee in its meeting held on November 10, 2016 has reviewed risk relating to competition, operations, people management and development, product quality, technological obsolescence, quality of contract, external risks of previous year and further development in current year and actions taken for mitigating such risks.


The Company has formulated Corporate Social Responsibility Policy indicating the activities to be undertaken by the

Company as recommended by the Corporate Social Responsibility Committee and approved by the Board of Directors.

The Corporate Social Responsibility policy formulated by the Company is available on the website of the Company at -

The CSR activities as undertaken by the Company are attached as Annexure - 3 and form part of this annual report.


The Board of Directors has constituted Nomination and Remuneration Committee with a view to determine qualification, positive attributes and independence of a director and recommend to the board and to formulate a criteria for evaluation and performance for board members. The committee comprises of independent and non-executive directors of Board which details are given in Corporate Governance Report.

During the year, the Nomination and Remuneration Committee met once on November 10, 2017 for considering in revision in remuneration payable to Mr Aniruddha Karve for the period from October 1, 2016 to March 31, 2017 and for the financial year 2017-18 subject to approval of members.


The Morgan Group is committed for protecting the health and safety of employees and others affected by its operations. It also seeks to minimise the environmental impacts of its activities and maximise the positive effects of its products and services. The Groups environment, Health and Safety (EHS) programmes deliver real business benefits whilst ensuring its obligations to stakeholders are met.

There was no loss time accidents occurred since August-2014 in the organisation however during the year there were 7 first aid injuries occurred and immediate action has been taken on the observations on unsafe actions and unsafe conditions. Further, regular monitoring of air, water and soil pollution was being carried out throughout the year from external agencies.

During the year, the Company has made improvements in certain identified areas which summary as below –

Operational, Health and Safety Improvements :

- To manage heat stress during summer time, man-coolers were provided at shop floor

- Dust collector provided at finishing area

- Safely completed new Clay Graphite extension

- Fire alarm and smoke detection system provided in factory premises

- Procured Self Containing Breathing Apparatus in view of confined space safety

- Consent to Operate renewed for a period of five years

- LPG leak detection system provided at LPG yard

- Completed process hazard analysis wrt LPG usage in kilns, dryers and ovens

- Quantitative Risk Assessment (QRA) completed for LPG yard storage

Well-being :

- Regular internal training/programs for developing awareness on health, safety and environment of employees and contractual labour

- Annual medical check-ups was completed and suggestions has been given for monitoring health of employees and contractual labour

- ThinkSAFE+ training has been given to relevant employees

- Briefed a five-step pre-task process to ensure potential hazards are identified and controlled before work commences.

- To prevent accidents awareness program conducted on Slip, Trip and Falls

- Launched Safety Hero and Safety Champion award scheme for staff and workers

- Conducted program on Bright, Clean and ThinkSAFE

- Portal developed for capturing accident, near miss and visual safety leadership data


During the Financial year 2016-17, your Company has continued its effort to liquidate the accumulated balances lying in CENVAT credit account as per provision of Excise laws. This has been a significant achievement in reducing accumulated balances in CENVAT Credit Account and bringing the cash in circulation for working capital of the company.

The Company has applied for Advance Pricing Agreement (APA) before the CBDT & Govt. of India for International Inter company related party transactions with Associated Enterprises (AE) during March, 2016. The APA is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to avoid the potential transfer pricing disputes in a co-operative manner. Once APA agreement is completed, your company will have certainty with respect to tax outcome of international transactions, by agreeing in advance the arms length pricing, or pricing methodology to be applied. Under APA specific rollback provisions enable to attain certainty in transfer prices of international transactions for up to 9 years (including 4 years rollback provisions) in total. Besides this the APA has a persuasive value on all open transfer pricing litigations of past years. During the year we have received initial questionnaire from the APA authority and have submitted our replies. We are awaiting for communication from APA authority for site visit etc.

During the year our Income Tax assessment for the FY 2011-12, FY2012-13 and FY2013-14 has been completed. For FY 2011-12 and FY2012-13 the Transfer Pricing Authority raised objection w.r.t. management cross charges and your company has filed appeal before ITAT & CIT (Appeal) respectively.

On Indirect Tax front the Central Excise & Service tax department has issued three SCN (Show Cause Notices) in light of their findings after Excise departmental Audit. Your Company is not in agreement of Departmental findings and have submitted replies for SCN before the appropriate authority.

During the year the Company has completed VAT assessment for the FY 2012-13 and received order from the Authority with refund of VAT.

Your Company has started preparation for seamless transition from existing tax regime to GST regime. We are working towards updating SAP ERP system and updating of various master data in system in line with GST requirement.


The Responsible Business Programme (RBP) is the Group ethics and compliance programme comprise of policies, training, risk assessment, monitoring and assurance. The training content covers human rights, anti-bribery and ethics, anti-trust and contract risk management and is refreshed on an annual basis.

Raising awareness of and educating employees on Group compliance policies and the applicable laws and regulations is a fundamental part of the RBP. During the year, your Company has given Updates on RBP 2016 to all sales and marketing managers and relevant employees on the topic of Competition Laws, Ethics Policy and Contract Risk Management.

Your Company has continued vigilance on Export Compliance Policy where Company sells the product to regulated countries. Whenever the Company receives any customer enquiry from the regulated countries, the same is screened from the compliance software for any restriction on the concerned party for exporting of goods in the said country. Further, in order to capture more vigilance on third parties, distributors and sales agent, the details of the relevant parties has been recorded in the Third Party compliance software called TRACEsort and accordingly the due diligence reports are generated. The third parties falling under certain risk categories are subject to due diligence in the year 2017.


Your Company is consistently striving to raise the bar of excellence in people, policies, practices, systems and organisation. We believe that Morgan employees are critical to its success and the workforce comprises people with highly unique skills and abilities.

During the year, your company has organised nearly 76 functional and leadership training programs for nurturing existing peoples talent and motivating them to attain organisation goals. The employee turnover was around 10.21 as at end of March 31, 2017 as compared to 12.36 in the previous year.

As per initiatives of Morgans Global Graduate Training Programme, your Company has recruited three graduate trainees in quality and operation excellence functions. This training programme will build current and future capability, and will give access to international assignments and opportunities.

Further, as a commitment towards customer focus and diversification of business, during the year various training program has been given to sales and marketing personnel such as Corporate Etiquettes & Professional Presence, Customer Orientation etc.


Statutory Auditors

Pursuant to provisions of Section 139, 140, 141 & 142 of the Companies Act, 2013, M/s B S R & Co LLP, (Registration No.


101248W/W-100022) was appointed as Statutory Auditor of the Company for a period of 5 years from 30 Annual General


Meeting until the conclusion of 35 Annual General Meeting of the Company subject to ratification in every Annual nd

General Meeting. M/s B S R & Co LLP has expressed their unwillingness to be re-appointed on 32 Annual General


Therefore, the Company proposes to appoint M/s. B S R & Associates LLP, Chartered Accountants, Pune (Firm Registration No. 116231W/ W-100024) as statutory auditor of the Company from 32 Annual General Meeting until the conclusion of the 35 Annual General Meeting subject ratification by members in every annual general meeting.

The report is given by the Auditors on the financial statements of the Company forms part of this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their report.

Secretarial Auditor :

M/s KMP & Associates, (ACS 32369 / COP 11947) Practicing Company Secretaries, was appointed to conduct the Secretarial Audit of the Company for the financial year 2016-17, as required under Section 204 of the Companies Act, 2013 and rules thereunder. The Secretarial Audit Report for financial year 2016-17 forms part of the Annual Report as Annexure 4. The Board has continued appointment of M/s KMP & Associates, Practicing Company Secretaries, as Secretarial Auditor of the Company for the financial year 2017-18.

There has been no qualification, reservation, adverse remark or disclaimer given by Secretarial Auditor in their report. The report of Statutory Auditors on the financial statements and report of Secretarial Auditors are made part of this Annual Report.


Pursuant to Section 177(4)(vii) of the Companies Act, 2013, ("Act") the Audit Committee needs to evaluate internal financial control system of the Company and make further reporting to the Board. Further, pursuant Section 143(3) (i) of the Companies Act, 2013 the Statutory Auditor of the Company is required to make representation in their Auditor Report that the Company has adequate internal financial control system in place and operating effectively.

The Company has been making periodical tests for storage and issue of materials, payments for goods, services and expenses, maintenance of books and records, insurance coverages, banking transactions, financial reporting as per statutory/regulatory requirements and other operations and reviewing legal compliances pertains to various statute, rules, guidelines issued by State Government and Central Government etc..

Further, the Company is in process to formalise Standard Operating Procedures (SoP) for the respective departments and to collate the respective policies in the consolidated document. The internal auditor and statutory auditor during their audit have not found any significant gaps for the financial year 2016-17 and made certain recommendation for improving the process.


In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format

is appended as Annexure 6 to the Boards report.


Pursuant to the requirement of Section 134 (3) (c) of the Companies Act, 2013, with respect to Directors Responsibility

Statement, it is hereby confirmed that :

(i) In the preparation of the annual accounts for the financials year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) The Directors have 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 profit of the Company for the year; (iii) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) The Directors have prepared the annual accounts on a going concern basis; (v) The directors have laid down internal financial controls, which are adequate and are operating effectively; (vi) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.


As required under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015, the auditors certificate regarding compliance of conditions of Corporate Governance is appended as Annexure 7 to the Boards Report.



The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the

Companies (Accounts) Rules, 2014, are enclosed as Annexure 8 to the Boards report.


The Company has set up a Whistle Blower Policy with a view to provide a mechanism for directors and employees of the Company to raise concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc. The policy is also available on the website – gb/investors/


Your Directors take this opportunity to offer their sincere thanks to various Departments of the Central and State Governments, our Bankers, Shareholders, Customers & Consultants for their unstinted support and assistance. Your Directors also place their deep appreciation to employees at all levels for their hard work, solidarity, dedication and

commitment, and look forward to their continued support in the future.

For and on behalf of the Board,

Aniruddha Karve Ian Keith Arber
(Managing Director) (Director)
DIN: 07180005 DIN: 07080539


Place: Aurangabad
Date: May 25, 2017


Statement containing the salient features of the financial statements of subsidiaries / associate companies / joint ventures

[Pursuant to first proviso to Sub-section (3) of Section 129 of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014 – AOC-1]

Name of Subsidiary Diamond Crucible Company Limited
Reporting period for the subsidiary concerned March 31,2017
Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries Not Applicable
Share capital - Equity
(Issued, Subscribed and Paid-up)
Reserve & surplus 169,667,130
Total Assets 234,059,325
Total Liabilities (excluding share capital and reserve & surplus) 60,892,195
Investments -
Turnover 292,335,374
Profit before taxation 56,921,849
Provision for taxation 23,338,234
Profit after taxation 33,583,615
Proposed Dividend Nil
% of shareholding 51

Notes : The following information shall be furnished at the end of the statement :

1. Names of subsidiaries which are yet to commence operations – Not Applicable

2. Names of subsidiaries which have been liquidated or sold during the year – Not Applicable Part "B": Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

- Not Applicable -


Statement of Disclosure of Remuneration Under Section 197 of the Companies Act, 2013 and Rule 5

(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

i. Ratio of the remuneration of each Executive Director to the median remuneration of the Employees

of the Company for the financial year 2016-17

Aniruddha Karve 11.85 6 %

Note :

- Employees for the purpose above include all employees excluding employees governed under collective bargaining.

ii. The percentage increase in remuneration of Chief Financial Officer and Company Secretary during the financial year 2016-17


iii. The percentage increase in the median remuneration of Employee for the financial year was 10.1 percent.

iv. There were 74 employees on rolls of the Company as on March 31, 2017.

v. Relationship between average increase in remuneration and Company performance

The yearly increment in the remuneration is being given based on the KRA performance, market trend and general practice in same industry.

vi. Comparison of the remuneration of the Key Managerial Personnel against the performance of the company

The increase in remuneration and variable bonus payout are based on the performance rating and market trend which was duly reviewed by Nomination and Remuneration Committee for Managing Director. vii. The Market Capitalisation of the Company as on March 31, 2017 was 248.26 crores as compared to 114.07 crores as on March 31, 2016. The price earnings ratio of the Company was 18.77 as at March 31, 2017 and was 11.55 as at March 31, 2016. The closing share price of the Company at BSE Limited on March 31, 2017 was 886.65/- per equity share of face value of 10/- each as compared to share price of 407.4/- per equity share as on March 31, 2016.

viii. Average percentage increase made in the salaries of Employees other than the managerial personnel in the financial year was 11 per cent. The average increase in employee remuneration shows competitive market and general market practice.

ix. Key parameters for any variable component of remuneration availed by the directors -

Variable component is integral part of the remuneration of all employees including Directors. Every year, the key targets are assigned to each employee including Directors over the period of one year and the rating has been given based on the performance of each individual.

x. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year

Not Applicable

xi. It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.


During the year the Company has undertaken CSR activities in line with CSR policy and as per approval of the Board. The Company was required to spent 26.42 lakh being 2 per cent of average net profits made during the three immediately preceding financial years, however the Company has spent 13.24 lakh on the following activities -

Summary of CSR Activity
Particulars Activities Amt in
Anand Aashram Distribution of Mattress
Matroshri Vradha Aashram Solor Power Grid 491,335
Iskon Meal Delivery Container 350,000
Sant Gadge Maharaj Mission Solor Power Grid or upgradation of washroom 160,000
Late Shri Ranglal Ramratan Baheti Industrial Vocational Training & Rehabilitation Centre for the Blind Raw material through our vendors so that approximately 8,000 files will be prepared 51,000
Dwarikalal Sushishit Berojgar Seva Sahkari Sanatha Maryadit Seed distribution to farmers in drought affected area 100,000
TOTAL 1,324,004