DIRECTORS’ REPORT TO THE MEMBERS Your Directors have pleasure in presenting their 33rd Annual Report together with the Audited Accounts of the Company for the Year ended March 31, 2016. OPERATIONAL REVIEW: Gross revenues increased to Rs. 125,803.83 Lacs, a growth of around 21.48 % against Rs. 1,03,556.47 Lacs in the previous year. Profit before depreciation, exceptional item and taxation was Rs. 8,984.06 lacs against Rs. 3402.07 Lacs in the previous year. After providing for depreciation and taxation of Rs. 541.32 Lacs & Rs. 2,948.15 Lacs respectively, and adding exceptional item of Rs.336.46 Lacs the net profit of the Company for the year under review was placed at Rs.5,831.05 Lacs as against Rs. 1,863.38 lacs in the previous year. Due to favorable market conditions and on account of better realization rates company’s turnover in terms of value has increased at an impressive 21 % during the year under review. The profit after tax during the year under review had increased by a record 212.93 % due to moderate levels of Raw Material/Packing Materials prices throughout the year and also due to better realisation value for the company’s products. DIVIDEND: Your Directors have pleasure in recommending for approval of the members at the Annual General Meeting a dividend of 25 % (at par with the previous year). The Dividend of 25 %, if approved at the forth coming Annual General Meeting, will result in the out flow of Rs. 292.44 lacs to the company in addition to Rs. 59.54 lacs by way of dividend distribution tax. ISSUE OF BONUS SHARES: Your Directors have pleasure in recommending for approval of the members at the Annual General Meeting issue of bonus shares in the ratio of 1 : 4 i.e. one new fully paid equity share of Rs.10 for every four equity shares of Rs.10 held in the company. The bonus issue if approved at the forth coming Annual General Meeting, will result in capitalization of share premium account and profit & loss account to the extent of Rs.2,92,44,060/-. SHARE CAPITAL: The paid up equity capital as on march 31, 2016 was Rs.1,170.61 Lakhs during the year under review. FINANCE: Cash and cash equivalents as at March 31, 2016 was Rs.3,405.08 lakhs. The company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring. FIXED DEPOSITS: Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. The details of the investments made by company are given in the notes to the financial statements. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES As part of its initiatives under “corporate social responsibility” (CSR), the company has contributed funds for the schemes of eradicating hunger and poverty, promotion of education and medical aid. The contributions in this regard have been made to the registered trust which is undertaking these schemes. The company has also undertaken schemes of distributing food to the poor directly and other activities as part of the CSR initiative. The Annual Report on CSR activities is annexed herewith as: Annexure A CONSERVATION OF ENERGY: a) Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilization and maximum possible savings of energy is achieved. b) No specific investment has been made in reduction in energy consumption. c) As the impact of measures taken for conservation and optimum utilisation of energy are not quantitative, its impact on cost cannot be stated accurately. d) Since the Company does not fall under the list of industries, which should furnish this information in Form A annexed to the aforesaid Rules, the same has not been submitted. TECHNOLOGY ABSORPTION: Company’s products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. Therefore no technology absorption is required. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal. FOREIGN EXCHANGE EARNINGS AND OUT-GO : During the period under review there was no foreign exchange earnings or out flow. INDUSTRIAL RELATIONS: During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. DIRECTORS: Directors Smt. Jyoti Jimmy Almeida & Shri. Kiran Yashawant Parashare retire by rotation and, being eligible, offer themselves for re appointment. The Directors recommend Smt. Jyoti jimmy Almeida & Shri. Kiran Yashawant Parashare for re-appointment. Shri.Shantilal V.Haria was appointed as an additional independent director of the company with effect from October 20, 2015 by the Board of Directors and holds office up to the date of this Annual General Meeting under section 161 of the Companies Act, 2013 (“the act”). The Board now recommends the appointment of Shri. Shantilal V.Haria as independent director under section 149 of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the ensuing A.G.M. to hold office for 4 (Four) consecutive years i.e. for a term up to the conclusion of 37th annual general meeting of the company in the calendar year 2020. Shri. Kiran Parashare was appointed as non executive/ non independent director on the Board with effect from January 07, 2014. The board now recommends the appointment of Shri. Kiran Parshare as wholetime director under section 196,197 & 203 read with schedule V of the Companies Act, 2013 All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 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. The Remuneration Policy is stated in the Corporate Governance Report. Meetings A calendar of Meetings is prepared and circulated in advance to the Directors During the year five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DIRECTOR’S RESPONSIBILITY STATEMENT: In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review. iii) The directors have 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. iv) The directors have prepared the annual account 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 effectively. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were on arm’s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. SUBSIDIARY COMPANIES: The Company does not have any subsidiary. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in “Zero Tolerance” against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as “code of business conduct” which forms an Appendix to the Code. The Code has been posted on the Company’s website www.gmbreweries.com. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has a vigil mechanism named Fraud and Risk Management Policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The Company has a Fraud Risk and Management Policy to deal with instances of fraud and mismanagement, if any. The FRM Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board. PREVENTION OF INSIDER TRADING: In January 2015, SEBI notified the SEBI (Prohibition of insider trading) Regulations, 2015 which came into effect from May 15, 2015. Pursant thereto, the Company has formulated and adopted a new Code for Prevention of Insider Trading. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company’s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code. AUDITOR’S REPORT/ SECRETARIAL AUDIT REPORT: The observation made in the Auditors’ Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report. Certain observations have been made in the report with regard to non compliance in respect of “composition of the Board” during a portion of the year. The non compliance was due to delay in finding a competent person as independent director in the place of Shri. Mukund Diwan, who had resigned from the Board all of a sudden due to health problems. AUDITORS: The Auditors V. P. Mehta & Co., Chartered Accountants, Mumbai, retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. SECRETARIAL AUDIT: Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Kala Agarwal, a firm of company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as “ Annexure B” EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as “ Annexure C”. BUSINESS RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & under regulation 21 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015, the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. At present the company has not identified any element of risk which may threaten the existence of the company CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexures, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated under various regulations of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015. ACKNOWLEDGEMENTS: Your Company and its Directors wish to extend their sincerest thanks to the Members of the Company, Bankers, State Government, Local Bodies, Customers, Suppliers, Executives, Staff and workers at all levels for their continuous cooperation and assistance. For and on behalf of the Board of Directors Jimmy Almeida Chairman & Managing Director Date : April 05, 2016 Place : Mumbai |