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Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

BSE: 500670 Sector: Agri and agri inputs
NSE: GNFC ISIN Code: INE113A01013
BSE 00:00 | 24 Apr Gujarat Narmada Valley Fertilizers & Chemicals Ltd
NSE 05:30 | 01 Jan Gujarat Narmada Valley Fertilizers & Chemicals Ltd
OPEN 139.90
VOLUME 131199
52-Week high 325.00
52-Week low 95.70
P/E 6.25
Mkt Cap.(Rs cr) 2,210
Buy Price 142.20
Buy Qty 96.00
Sell Price 143.10
Sell Qty 100.00
OPEN 139.90
CLOSE 138.85
VOLUME 131199
52-Week high 325.00
52-Week low 95.70
P/E 6.25
Mkt Cap.(Rs cr) 2,210
Buy Price 142.20
Buy Qty 96.00
Sell Price 143.10
Sell Qty 100.00

Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (GNFC) - Director Report

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Company director report


The Members

Your Directors have immense pleasure in presenting this 43rd Annual Report on Company'sbusiness and operations together with Audited Financial Statements (Standalone andConsolidated) for the Financial Year ended on 31st March 2019.


During the year under review the Company has achieved reasonably well progress in theareas of production marketing and finance. The Company has established total 148 newrecords on production and marketing fronts.

The financial highlights for FY 2018-19 are summarized below on standalone basis:

(Rs. in Crores)

Particulars Standalone
2018-19 2017-18
Income from operations 5896 5917
Other Income 221 141
Total Income 6117 6058
Total Expenditure 5028 4526
Profit before Depreciation Finance Cost and Tax 1089 1532
Depreciation 263 270
Finance Cost 6 100
Profit Before Tax 819 1162
Tax Expense 78 372
Net Profit for the year 741 790
Re-measurement of Losses on defined employee benefit plans (Net of tax) 48 27
Balance brought forward from previous year 1189 635
Amount available for Appropriation 1882 1398
Appropriations :
Dividend paid 117 78
Tax on Dividend 24 16
Transferred to General Reserve 175 115
Surplus carried to Balance Sheet 1566 1189


The year 2018-19 was one of the challenging years for Chemical business for the countryas well as for your Company mainly on account of overall increase in the cost of inputscoupled with increased competition due to free flow of material from internationalmarkets. As such the Company has to sale its industrial products keeping parity in priceswith imports.

1. Financial Performance :

Your Directors are happy to share with you the highlights of Annual Financial Results(AFRs) achieved by your Company for FY 2018-19 on standalone basis. The overall FinancialPerformance of your Company have been impacted mainly due to (i) substantial increase inthe prices of key raw materials namely Oil Benzene Toluene Natural Gas preciousmetals; (ii) sharp fall in the sale prices of major industrial products of lateparticularly TDI Aniline Acetic Acid etc. resulting into substantial reduction in thesales realization from these products especially in last two quarters of the year underreview and (iii) annual plant shut-down of 27 days which was longest in the last fiveyears affecting the production and sales.

During the year 2018-19 the total turnover was marginally lower to Rs.5896 Crorecompared to Rs.5917 Crore achieved during previous year. Profit Before Tax (PBT) andProfit After Tax (PAT) were Rs.819 Crore and Rs.741 crore against Rs.1162 Crore andRs.790 Crore in the previous year respectively. The Company has achieved export turnoverof Rs.437 Crore during FY 2018-19.

The Net Profit for FY 2018-19 on consolidated basis was Rs.749.74 Crore compared toRs.794.94 Crore in the previous year.

2. Operational performance :

The Company's operational performance remained satisfactory for FY 2018-19 despiteannual plants shutdown of 27 days resulting into lower production to that extent. Mostplants have performed at over 100% capacity utilization level and special focus was givenon energy conservation and cost saving measures in all operational aspects. Ever highestyearly production was achieved in TDI-I (18270 MTs - 130.5%) and TDI-II (42920 MTs -85.84%) plants. The details of production performance of various plants are furnished in'Management Discussions and Analysis' forming part of this report.

Currently TDI-II Plant Dahej is running smoothly on a consistent basis. Continuousefforts are being made for improving its operations and reliability in terms ofconsistency safety and capacity utilization. The Company is implementing variousmodifications / revamps under 'TDI-II Reliability Phase-II Scheme'. This will help indecreasing downtime and achieving sustainable production.


1. Industrial Products :

The year 2018-19 was challenging year for chemical business in the country due tosubstantial increase in cost of key inputs and moderate industrial growth coupled withincreased competition due to cheaper imports from international markets. Under thiscompetitive scenario the performance of your Company in chemicals business wassatisfactory. During FY 2018-19 the Company sold in aggregate 747718 MTs. of IndustrialProducts against 795247 MTs. in the previous year and achieved total sales turnover ofRs.3781 Crore compared to Rs.3987 Crore in the previous year. The Company has so farexported its major Industrial Products to around 82 Countries across the Globe and is oneof the leading suppliers of TDI in the markets of Middle East and Africa. The satisfactoryperformance of Chemical Segment was mainly attributed to planned marketing strategy anddynamic pricing of Company's products.

2. Fertilizer Business:

The Company performed reasonably well in fertilizers business during FY 2018-19 inspite of poor monsoon in the country. The Company achieved total sale of 6.48 lacs MTs ofUrea compared to 6.47 lacs MTs in previous year. The sale of Nitro-phosphate wasmarginally lower at 2.01 lacs MTs compared to 2.23 lacs MTs in the previous year. Lowersales volume of Nitro-phosphate was due to lower production on account of annual plantsshut down of 27 days during October 2018.

Out of the total sale of fertilizers around 0.82 Lac MTs of fertilizers were soldthrough Company's own 68 Narmada Khedut Sahay Kendras.

During the year trading activities were also continued in Muriate of Potash (MoP)Di-Ammonium Phosphate (DAP) Ammonium Sulphate (AS) Single Super Phosphate (SSP) and CityCompost. Total 17869 MTs of Fertilizers were sold as a part of trading activities.

3. (n)Code Solutions – IT Division:

During the year under review (n)Code Solutions - IT Division of the Company has alsoperformed reasonably well despite competitive environment scenario in IT business. Thisdivision has registered sales turnover of Rs.96 Crore and Profit of Rs.30 Crore across itsall business segments. (n)Code provides various IT services in the areas of DigitalSignature Certificate and e-Procurement IT-Infrastructure Software / Applicationdevelopment and support Smart City / System Integration Data Center Operations ProjectManagement Quality and Audit Consultancy etc.

In spite of challenges on Manpower iterations increased compliances and changes inAadhaar Act there is a good progress on on-going smart city projects. (n)Code hassuccessfully conducted e-Auctions for various Government Departments and efforts are beingmade to explore similar market PAN India including for non-government sector. With theincreased emphasis on e-governance and data security challenges faced by Government itwill offer good business opportunities for (n) Code solutions in the areas ofe-governance Managed Services and Smart city services projects. To achieve sustainedgrowth in IT business (n)Code has undertaken several new initiatives in the areas ofdeveloping capacity building for projects outside Gujarat get CMMi-5 certificationTie-ups with large Original Equipment Manufacturers (OEMs) and developing skills on newtechnologies viz; ERP with Business Intelligence Cloud and Managed Services IT SecurityServices Mobile Technologies Block chain and Artificial Intelligence.

A detailed analysis of Company's operational sales and financial performance ispresented under a separate section on 'Management Discussion & Analysis' forming partof this report.


Keeping in view the Company's performance for FY 2018-19 and to ensure that theshareholders get sustained return on their investment your Directors have recommended adividend of Rs.7/- per share (70%) on 155418783 equity shares of Rs.10/-each subjectto the approval of shareholders at the Annual General Meeting. On its approval thedividend payout will work out to Rs.131.15 Crore including tax on dividend. This amountsto 17.70% of the Net Profit of the Company.


Your Company has registered a Net Profit of Rs.741.17 Crore for FY 2018-19. Afterdeducting therefrom Rs.48.45 Crore being the re-measurement losses on defined employeebenefit plans and adding thereto Rs.1189.46 Crore being the balance of Statement of Profit& Loss brought forward from previous year an amount of Rs.1882.18 Crore is availablefor appropriation. Out of this Rs.140.52 Crore (inclusive of Tax on Dividend) isappropriated towards payment of dividend for FY 2017-18 and Rs.175 Crore is transferred toGeneral Reserve. The balance amount of Rs.1566.66 Crore is proposed to be carried toBalance Sheet.


The Government of India (GoI) has announced continuation of Nutrient Based Subsidy(NBS) rates of FY 2018-19 provisionally also for FY 2019-20 on the same terms andconditions. The fertilizers industry remains vital to agriculture productivity butcontinues to operate under a rigid control regime.

The Direct Benefit Transfer (DBT) scheme for sale of fertilizers has been implementedthroughout the country from March 2018. Though this scheme is called DBT the subsidycontinues to be routed through the industry. This scheme has changed the 8 business modelfor fertilizers companies. Subsidy under this scheme become due only on sale offertilizers by the retailers to farmers through POS (Point of Sales) machines. As apro-active measures your Company has adopted retailers oriented marketing strategies insuch a manner that the flow of subsidy to the Company has not been affected much.


1. Neem Project :

Your Company's Neem Project is a success story for creating shared value among ruraland urban poor people empowering communities with targeted focus on women empowermentthrough income generation and improved livelihood. During the year under review 17467MTs of Neem seeds were collected from which 932 MTs of Neem Oil and 6972 MTs of De-oiledNeem Cake were produced. With a view to encourage organic farming your Company produced152 MTs of Oiled Neem Cakes during FY 2018-19. Neem based products such as Neem soap ofdifferent variant shampoo Hand wash Mosquito repellent Hair oil Facewash etc. havereceived good response from the consumers. During FY 2018-19 the sale of Neem productsthrough Company's Neem outlets and parlors was satisfactory.

A large scale Neem oil extraction unit to produce about 2900 MTPA of Neem oil and about22000 MTPA Neem cake is under implementation.

2. Di-Calcium Phosphate Project :

The Company through its joint venture Company namely Ecophos GNFC India Pvt. Ltd.(EGIL) is implementing 2 Lac MTPA Di-Calcium Phosphate (DCP) project at Dahej. It wasreported last year that the total estimated project cost would be Rs.538 crores and thesame is expected to be completed by September 2019. However due to unforeseencircumstances the project cost is revised and the same is estimated at Rs.565 crore. Theproject is now expected to be completed by end of 2020. The Company is concentrating onspeedy implementation of the said project as downstream integration of TDI-II Plant.


(1) Formic Acid Capacity Enhancement :

Your Company being the only producer of Formic Acid (FA) in India is implementingFormic Acid Capacity enhancement project from existing 22000 MTPA to 28800 MTPA throughFA Plant Revamp.The proposed capacity enhancement will help in meeting with country'sdemand of Formic Acid and will reduce the dependency on import to that extent. The projectis expected to be completed by 2021.

(2) Acetic Acid Capacity Enhancement :

The Company being the only producer of Acetic Acid (AA) in India is activelyconsidering to set up Acetic Acid expansion project to meet with the domestic demand ofAcetic Acid. The Company has initiated actions for sourcing the technology for the saidcapacity enhancement. The level of capacity will be finalized once the technologysupplier is identified.

(3) Concentrated Nitric Acid (CNA) - IV Plant :

With a view to increase the market share of CNA in domestic market the Company isimplementing 150 MTPD CNA-IV project and actions have been initiated for setting up of thesaid plant. Necessary agreements have been executed with M/s Plinke Germany for supply ofengineering license imported critical items providing expatriate services etc. The saidproject is likely to be completed by mid 2021.

(4) Ammonia Plant Revamp :

As reported last year the revamp of Syngas loop which was under implementation wascompleted in November 2018. With the completion of this revamp the production of Ammoniahas increased from 1850 MTPD to 1900 MTPD.

With a view to further increase Ammonia production capacity from 1900 MTPD to 2050MTPD (50000 MT per annum) actions have been initiated for installation of make-up gasconverter loop in existing ammonia synthesis loop which is expected to be completed byyear 2022.

(5) Solar Power Generation Project:

In order to fulfil the Renewable Purchase Obligations (RPO) in terms of Notificationissued by Gujarat Electricity Regulatory Commission the Company is setting up 10 MW SolarPower generation project at Gujarat Solar Park PO : Charanka Dist. Patan. Letter ofIntent has been issued to M/s Bharat Heavy Electricals Ltd. (BHEL) for implementation ofthe said project on Engineering Procurement and Construction (EPC) basis. This project islikely to be completed by mid-2020.

(6) Coal based Captive Co-generation Power Plant :

Presently the requirement of captive steam and electrical power at TDI-II complexDahej is met through 100 MT/hr capacity gas based boiler and sourcing the power fromDakhshin Gujarat Vij Company Ltd. respectively. The annual cost of steam and power issubstantially high and the same is on an increasing trend on long term basis. Thereforewith a view to reduce the cost of both the key inputs and to improve their reliabilitythe Company has initiated actions for setting up Coal based Captive Co-generation PowerPlant (CCPP) with a capacity to produce 150 MT/hr steam and 18 MW power with an estimatedinvestment of Rs.432 crore.

The above mentioned new projects / revamp schemes would be implemented with estimatedinvestment between Rs.1500 ~ Rs.2000 Crore.


Your Directors are delighted to inform that the Company's overall performance has beenrecognized and honored through several prestigious Awards for its best practices businessexcellence etc. as follows :

• Porter Prize supported by the Harvard Group for Company's Outstandingperformance in the industry.

• CNBC-AWAAZ CEO Award for 'Outstanding Business Growth' from Government ofChhattisgarh in association with CNBC-Awaaz.

• Best Technical Innovation Award by Fertilizer Association of India New Delhifor reduction in down time and increase operational efficiency in ANP plant.


Pursuant to the provisions of Sections 134(3)(c) read with 134(5) of the Companies Act2013 your Directors confirm that-(i) in the preparation of Annual Accounts for thefinancial year ended 31st March 2019 the applicable Accounting Standards had beenfollowed along with proper explanation relating to material departures if any; (ii) theyhad selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at end of the financial year on 31st March 2019 and of theprofit of the Company for that period; (iii) they had taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities if any; (iv) they had prepared Annual Accountson a going concern basis; (v) they had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and (vi) they had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.


There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of financial year of the Company towhich the financial statements relate and the date of the Report.


The Company has Wholly Owned Subsidiary Company and Associate Company namely - GujaratNCode Solutions Limited (GNSL) and Gujarat Green Revolution Co. Ltd. (GGRCL) respectively.Statements containing salient features of Financial Statements of GNSL and GGRCL are givenin Form AOC-1 as Annexures to the Consolidated Financial Statements and the same have notbeen repeated here for the sake of brevity.

GNSL has not commenced its business operations during FY 2018-19 and therefore reporton its performance and financial position has not been furnished in this Report.

As GNSL has not commenced its business since its incorporation your Board of Directorshad in its meeting held on 29th May 2019 accorded its approval for removal of the name ofGNSL from the records of Register of Companies as permissible under the provisions ofSection 248 of the Companies Act 2013 which inter-alia stipulate that the Company mayafter complying with necessary formalities may file an application to the Registrar ofCompanies for removal of its name on all or any of the grounds specified in Section 248(1)of the Act.

Accordingly necessary formalities are being made for removal of name of GNSL theWholly Owned Subsidiary of the Company from the records of Registrar of Companies underSection 248(2) of the Companies Act 2013 and the Rules made thereunder. EcoPhos GNFCIndia Pvt. Ltd. (EGIL) is a Joint Venture Company and the project execution activities forsetting-up of 2 Lac MTPA Di-Calcium Phosphate Project by EGIL are underway. Thereforereport on its operational performance and financial position for FY 2018-19 has not beenfurnished in this Report.


Pursuant to Section 129(3) of the Act read with Regulation 33 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 as amended the Company hasprepared Consolidated Financial Statement in respect of its wholly owned subsidiary andAssociate Companies viz. Gujarat Ncode Solutions Ltd. and Gujarat Green Revolution Co.Ltd. respectively for FY 2018-19 and forms part of this Annual Report.

As per Indian Accounting Standards the accounts of Joint Venture Company viz. EcoPhosGNFC India Pvt. Ltd. are not required to be consolidated. Hence the same are not includedin the consolidated financial statements.


As reported last year your Company had made additional investment of Rs.12 crores inthe equity of Bhavnagar Energy Company Ltd. during FY 2018-19. Except this investment theCompany has not made any investment in other bodies corporate or given any Loan orGuarantee or provided any Security in connection with loan to any other body corporate orperson.


The Policy for Related Party Transactions (RPTs) deals with review and approval of RPTsand the same is available on the Company's website at web link The Audit Committee has grantedOmnibus approval for RPTs which are routine and repetitive in nature based on thecriteria approved by the Board of Directors within the overall framework of the saidpolicy. All RPTs under omnibus approval are placed before the Audit Committee periodicallyfor its review and approval.

The Company has not entered into any contract or arrangement with related parties asreferred to in Section 188(1) of the Companies Act 2013 during FY 2018-19. Hence thedisclosure of RPTs in Form AOC-2 as required under Section 134(3)(h) of the Act is notapplicable to your Company. Details of Related Party disclosure as per Ind AS-24 have beengiven in Note No. 37 to the Standalone Financial Statement.

Requisite details on RPTs have also been furnished in the 'Report on CorporateGovernance' forming part of this Report.


Four (4) meetings of the Board were held during the year.

(ii) Committees of the Board :

Currently there are Seven Committees of the Board as under:
1. Audit Committee;
2. Stakeholders' Relationship Committee;
3. Nomination and Remuneration Committee;
4. Corporate Social Responsibility Committee
5. Risk Management Committee;
6. Project Committee; and;
7. Human Resource Development Committee.

Details of composition of Board and its Committees which are mandatorily required tobe constituted major terms of reference of these Committees meetings held during theyear and attendance of Directors at such meetings are furnished in 'Report on CorporateGovernance' forming part of this Report.

All the recommendations made by the Audit Committee were accepted by the Board.


The Company has formulated a Nomination Remuneration & Evaluation Policy asrequired under Section 178 of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The details of remuneration paid to Directors / KeyManagerial Personnel / Senior Management and other employees are furnished in the 'Reporton Corporate Governance' forming part of this Report.


The Company has carried out annual performance evaluation of the Board its Committeesand Individual Directors in line with the provisions of the Act and SEBI (LODR)Regulations 2015 as amended from time to time.


During the year Shri V.D.Nanavaty ceased to be the Director of the Company effective3rd October 2018. Shri C.S.Mani Independent Director of the Company tendered resignationas Director from the Board of the Company effective 23rd July 2019 due to his old age andill-health.

In terms of Section 161 of the Companies Act 2013 Shri Sujit Gulati IAS ManagingDirector Gujarat State Fertilizers and Chemicals Ltd. was appointed as an AdditionalDirector on the Board of the Company effective 9th October 2018. He will hold office ofDirector up to the date of this AGM whereat he will be appointed as Rotational Director. Asuitable resolution proposing his appointment as Rotational Director is included in theNotice of this AGM for your kind approval.

Retirement of Director(s) by Rotation:

In terms of Section 152 of the Act Smt. Mamta Verma IAS will retire by rotation atthis AGM and is proposed to be re-appointed thereat.

Declaration by Independent Directors:

In terms of Section 149(7) of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Company has received necessary declarations from allIndependent Directors to the effect that they meet with the criteria of independence aslaid down in Section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations2015 as amended.

Change in Directorate :

The information relating to change in Directorate during the year is furnished in the'Report on Corporate Governance' forming part of this Report.

Your Directors place on record their deep sense of appreciation for the valuableservices rendered by the outgoing Director(s) and take this opportunity to welcome theincoming Director(s).

Key Managerial Personnel :

During the year under review there is no change in the Key Managerial Personnel of theCompany.


Pursuant to the applicable provisions of the Act read with the IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 ('the Rules') as amended all unpaidor unclaimed dividends which were required to be transferred by the Company to the IEPFwere transferred to IEPF Authority. The Company has also transferred 233203 shares heldby 3708 Shareholders in respect of which dividend amount remained unpaid / unclaimed fora consecutive period of seven years or more to IEPF Authority within stipulated time.

The details of unpaid / unclaimed dividend and the shares transferred to IEPF Authorityare available on Company's website at web link-


Requisite details have been furnished in 'Report on Corporate Governance' forming partof this Report.


The Company has in place a Risk Management Policy. Under this Policy various riskspertaining to operations & maintenance of plants financial and other organizationalrisks are assessed evaluated and continuously monitored for taking effective steps forits mitigation.

In compliance with Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 the Board has constituted a Risk ManagementCommittee (RMC) defining its terms of reference in its meeting held on 11th February2019. The details as to the constitution of RMC and its major terms of reference isincluded in the 'Report on Corporate Governance' forming part of this report.

The Risk Management Report inter-alia containing major anxiety areas of risks andaction plan for its mitigation and noteworthy risk management activities carried out bythe Company is put-up before the Meetings of the Audit Committee RMC and Board ofDirectors for its review.

The Company has adequate internal controls commensurate with the nature of businesssize and complexity of its operations. Details of internal control system and its adequacyare furnished in 'Management Discussion & Analysis Report' forming part of thisReport.


As per the requirement of Section 92(3) of the Companies Act 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 the extract of theAnnual return in Form No. MGT-9 is given in Annexure - A to this Report. The same isavailable on Company's Website at web-link -


In accordance with the requirement of Section 135 of the Act read with the Companies(CSR Policy) Rules 2014 the Company has constituted a Corporate Social ResponsibilityCommittee and formulated a CSR Policy. As a responsible corporate the Company has beenundertaking societal activities directly as well as through its CSR arm - NarmadanagarRural Development Society (NARDES) in the areas which are covered in CSR Policy andSchedule-VII to the Act.

Company's CSR Policy is available on the website of the Company at web link Annual Report on CSR activities asrequired under Rule 9 of Companies (Accounts) Rules 2014 read with Rule 8 of Companies(Corporate Social Responsibility Policy) Rules 2014 is enclosed as Annexure - B to thisReport. The said Report on CSR activities inter-alia includes the reasons for not spendingthe amount of 2% of average net profits of last three financial year by the Company asrequired under section 135(5) of the Companies Act 2013.


The Company has formulated a 'Vigil Mechanism-cum-Whistle Blower Policy' for itsDirectors and Employees to report their genuine concerns details of which have beenfurnished in the 'Report on Corporate Governance' forming part of this Report.


There are no significant or material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future.


'Management Discussion & Analysis' on the business and operations of the Companyand the Report on Corporate Governance together with the following are attached herewithand form part of this Annual Report.

• Declaration by Managing Director regarding compliance of Company's Code of Conducts by Board Members and Senior Management Personnel.
• Certificate by Practicing Company Secretary certifying :

(i) compliance of the conditions of Corporate Governance by the Company and

(ii) that none of the Directors of the Company have been debarred or disqualified frombeing appointed or continuing as Directors of Companies by the Securities and ExchangeBoard of India / Ministry of Corporate Affairs or any such statutory authority.


The Company has been conducting its business in such a way that it delivers both longterm stakeholders value and benefit society under the approach of 'Creating Shared Value'.As required under Regulation 34 of SEBI (LODR) Regulations 2015 Business ResponsibilityReport is enclosed as Annexure-C to this Report.


As required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 requisite information on conservation of energy technologyabsorption and foreign exchange earnings and outgo is furnished in enclosed Annexure - Dto this Report.


The required information under Section 197(12) of the Act read with Rule5(1)(2)&(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is furnished in enclosed Annexures - E & F to this Report.


Pursuant to the provisions of Section 139 and other applicable provisions of theCompanies Act 2013 and relevant rules made their under the members had at their 40th AGMheld on 30th September2016 appointed M/s SRBC & Co. LLP Chartered Accountants aMember Firm of E&Y India as Statutory Auditors of the Company for a term of fiveconsecutive years until the conclusion of 45th AGM to be held in the year 2021 on suchremuneration as may be determined by the Board of Directors based on the recommendation ofAudit Committee plus Applicable taxes and reasonable out of pocket expenses actuallyincurred by them during the course of Audit and subject to ratification of theirappointment at every AGM held thereafter.

In view of amendment in Section 139(1) vide the Companies Amendment Act 2017ratification for appointment of Statutory Auditors is not required at every AGM whenAuditors have been appointed for a term of five years. Hence suitable resolutiontherefore is not included in the Notice of this AGM.

Notes to Financial Statements (Standalone and Consolidated) forming part of AuditedFinancial Statements for FY 2018-19 are self-explanatory and need no further explanation.The Auditors' Reports on Audited Financial Statements (Standalone and Consolidated) do notcontain any modified opinions.


The Board of Directors had on the recommendations of Audit Committee appointed M/sDalwadi & Associates Cost Accountant Ahmedabad as the Cost Auditor of the Companyfor a period of three years from FY 2017-18 to 2019-20 at a remuneration of Rs.3.80 Lacper annum for FY 2017-18 and thereafter increase of 10% every year up to FY 2019-20 plusout of pocket expenses and statutory levies.

In accordance with Section 148 of the Act read with Rule 14 of the Companies (Audit& Auditors) Rules 2014 the remuneration of Rs.4.60 Lac per annum payable to CostAuditor for FY 2019-20 is subject to ratification by the Shareholders at the AGM.Therefore a suitable Resolution in this regard has been proposed in the Notice of thisAGM for your kind approval.

The Company had e-filed the Cost Audit Report for FY 2017-18 with the Ministry ofCorporate Affairs (Cost Audit Branch) on 18th August 2018. The due date of filing thesaid Report was 30th September 2018.


In pursuance of Section 204 of the Act and the Rules made thereunder the Board ofDirectors in its meeting held on 11th February 2019 had re-appointed M/s J.J.Gandhi &Co. Practicing Company Secretaries Vadodara as Secretarial Auditor for FY 2018-19. TheSecretarial Audit Report in Form MR-3 in respect of Secretarial Audit work carried out bythem for FY 2018-19 is enclosed as Annexure - G to this report. The said Report does notcontain any qualification reservation or adverse remark.


As per Regulation 43A of SEBI (LODR) Regulations 2015 Dividend Distribution Policy ofthe Company inter-alia set-out the various parameters and circumstances that are to betaken into account while determining the distribution of dividend to the shareholders and/ or retaining profits by the Company. The said policy is enclosed as Annexure - H to thisReport and the same is also available on the Company's website at web link


The Company has complied with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India and approved by the Central Government.


During the year there was no fraud to be reported by Auditors under Section 143(12) ofthe Act.


The Company has not accepted any Fixed Deposit during the year.


The properties insurable assets and interest of the Company such as buildings plants& machineries and stocks amongst others are adequately insured. As required underPublic Liability Insurance Act 1991 the Company has also taken necessary insurancecover.


The Industrial Relations within the Company remained cordial and harmonious throughoutthe year. Cordial Industrial Relations have been a forte at the Company. It has helped theCompany to achieve satisfactory performance on operational and financial front and inachieving targets without any difficulties.

Your Directors put on record their sincere appreciation for the dedicated and committedcontributions made by all employees at all levels for the sustainable growth of theCompany.


The Board of Directors wish to place on record their deep sense of gratitude for thekind support and guidance received from Government of India and Government of Gujarat.Your Directors also take this opportunity of extending their wholehearted thanks to allour Consumers Dealers Customers Banks Business Associates SEBI NSDL CDSL StockExchanges and other Agencies for their continued support and co-operation and valuedInvestors for strengthening their bond with the Company.

For and on behalf of the Board of Directors
Dr. J.N. Singh
Dated : 14th August 2019 Chairman