DIRECTORS' REPORT TO THE MEMBERS, Your Directors are pleased to present the FORTY FIRST ANNUAL REPORT & AUDITED ACCOUNTS (or the year ended 31st March, 2015 DIVIDEND Based on performance of the company for the year under the report, the Board recommends a dividend of Rs.11.25 per share (112.50%) for the year ended 31 st March, 2015. [Previous year total dividend was Rs.16/- per share (160%)]. OPERATIONAL PERFORMANCE AND FUTURE OUTLOOK During the financial year ended 31st March, 2015 your Company achieved a turnover of Rs.33,556 lakhs as against a turnover of Rs.30,402 lakhs in the previous year, registering a growth of 10%. The export turnover of your Company during the year was Rs.24,145 lakhs (72% of total turnover) as against Rs.21,182(70% of total turnover) achieved in the previous year. Due to smoother availability of power at the Tamil Nadu plant, capacity utilization has improved from 38% in the previous year to 82% in this year. During the year, the company has merged its two manufacturing plants in Solapur. With this, Chincholi (Solapur) plant capacity has been enhanced to 30000 MT p.a. The plant infrastructure at MIDC. Akkalkot Road, Solapur is available for future growth opportunities. The above merger will lead to improved utilization and greater economy of scale advantage. Your company availed benefit of lower energy cost at its plants in Ankleshwar and Panoli through purchase of power over energy exchange. Subsequently, from March 2014 onwards, the matter is sub-judice and therefore company's energy need has reverted to a more expensive source. Industrial polymer business of the company saw a fall in volumes on account of a weak automotive sector, causing a drop in demand. Grant of patents for an alternate process is awaited, after which this business should witness further growth. Customs die forms business witnessed muted performance. Your Company's overall capacity utilization has increased from 76% to 80%. The operating margins during the financial year ended 31 st March, 2015 have witnessed severe pressure as compared to the previous year due to stagnant sales price and increase in operational cost because of raw material prices, energy and employee cost. Fall in the prices of natural and synthetic rubber was a major cause for not being able to pass on input cost increases to sales price. The Company has taken several measures to reduce costs and optimize margins. Merger of Solapur plants and better capacity utilization of Perundurai plant is expected to result in cost optimization during the current year, amidst continuing scenario of weak natural and synthetic rubber prices. The Research and Development Centre and Nylon Recovery Pilot plant at Panoli have received approval in December 2014 from Department of Scientific & Industrial Research. Ministry of Science & Technology (DSIR) Government of India, New Delhi. The achievements of your company have been acknowledged as follows:- • All India Rubber Industries Association's Top Export Award in the Raw Material sector • Top Export Award- CAPEXIL in Rubber Product Panel. • Quality Circle Forum of India's various trophies were received by Ankleshwar and Panoli plants for Production, Maintenance, Quality Control. CDF and EHS & Administration. • Impact Positive Team of Ankleshwar plant won Excellence Trophy during National Convention of Quality Circle-2014 at Pune. • Ankleshwar plant has won a Par Excellence Trophy at a 5 S Conclave organized by QCFI at Madurai. The company has been subjected to a cyber crime during the year resulting in a sum of USD 6,38,367 equivalent to Rs.3,98,97,938/- being paid by an overseas customer into an unauthorized account. The company continues to treat this as recoverable from the customer and necessary steps in this regard have already been initiated by the company and it is hopeful about the full recovery of the same. SUBSIDIARIES Salient features of financial statement of its Wholly-owned Subsidiary company viz. Grip Polymers Limited in form AOC-1 is attached herewith. {Annexure 1) DIRECTORS Nikhil Desai and Atul Desai have resigned as directors of the company with effect from 4th February, 2015. The Board places on record its appreciation and gratitude for the valuable services rendered by them during their tenure as directors of the Company. Bhagwandas T. Doshi, Rajeev M. Pandia and Apurva R. Shah have been appointed as Independent Directors of the Company for the period of five years, by obtaining assent of shareholders on 24th March, 2015 through postal ballot process. Smt. Nayna R. Gandhi, who was appointed as an Additional Director on 30th May 2015,holds the said office till the date of the conclusion of the ensuing 41 st Annual General Meeting. Anotice has been received from a member proposing her candidature for her reappointment as a director liable to retire by rotation. In accordance with the provisions of the Companies Act, 2013. Harsh R. Gandhi, retires by rotation at the ensuing 41st Annual General Meeting and being eligible offers himself for reappointment. All the Independent Directors have submitted their declarations to the Board to the effect that they fulfill the required criteria of independence as mentioned in the provisions of Section 149(6) of the Companies Act. 2013. DIRECTORS RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act. 2013 the Board of Directors confirm that: (a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed and there had been no material departure; (b) 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 as at 31 st March, 2015 and of the profit and loss account of the company for the year ended on that date; (c) the directors had taken proper and sufficient care for the 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; (d) the directors had prepared the annual accounts on a going concern basis; (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; and (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE Report on Management discussion and analysis and corporate governance attached herewith (Annexure 2) form an integral part of this report. The certificate from auditors of the company, certifying compliance of the conditions of corporate governance as stipulated in clause 49 of the listing agreement, is annexed to the report on corporate governance.(Annexure 3) The board of directors of the company was not consisting of the required number of independent directors for the quarter October to December 2014. However with reconstitution of the board w.e.f. 4th February, 2015. the board is having the required number of independent directors. STATUTORY AUDITORS A. B. Modi & Associates, Chartered Accountants, Mumbai, the statutory auditors of the Company, will retire at the ensuing 41st annual general meeting and are eligible for reappointment. A. B. Modi & Associates has, under Section 139 of the Companies Act, 2013 furnished a certificate of their eligibility for re-appointment. SECRETARIAL AUDIT REPORT Chetan R. Shah, Practicing Company Secretary has conducted secretarial audit pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under. His secretarial audit report is attached here with. (Annexure 4) The board of directors of the company was not consisting of the required number of independent directors for the quarter October to December 2014. However with reconstitution of the board w.e.f. 4th February. 2015. the board is having the required number of independent directors. VIGIL MECHANISM The Company has established a vigil mechanism and oversees the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee in exceptional cases. Vigil Mechanism (Whistle Blower) Policy has been hosted by the company on its website. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT Periodic assessments by functional heads to identify the risk areas are carried out and management is briefed on the risks to enable the company to control risk through a properly defined plan. The risks are classified as financial risks, operational risks and market risks. The risks are taken into account while preparing the annual business plan for the year. The Board is also periodically informed of the business risks and the actions taken to manage them. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES CSR Committee has been constituted by the Board of directors. The Committee has adopted CSR policy to contribute towards social and economic development of the communities where the company operates in, and while doing the same, to build a sustainable way of life for all sections of society, with emphasis and focus on education, health care, sustainable livelihood and empowerment of women. The CSR Policy has also been uploaded on the website of the Company. The Annual Report on CSR activities of the Company is attached herewith.(Annexure 5) PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 The particulars of Loans, guarantees or investments made under Section 186 is attached here with. (Annexure 6) PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES The particulars of Contracts or Arrangements made with related parties pursuant to Section 188(1) of the Companies Act, 2013in form AOC-2 is attached herewith.(Annexure 7) COMPANY'S POLICY RELATING TO PERFORMANCE EVALUATION OF THE BOARD, DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF DUTIES : The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of the individual Directors and the Board which is based on; • Knowledge to perform the role; • Time and level of participation; • Performance of duties and level of oversight; and • Professional conduct and independence; The evaluation was carried out by means of the observations made by all the Directors on the set of questions developed by them which brought out the key attributes of the Directors, quality of interactions among them and its effectiveness. The board is collectively of the opinion that the overall performance of the board, committees thereof and the individual Directors is satisfactory and conducive to the growth and progress of the company. The Company's Policy relating to appointment of Directors, payment of Managerial remuneration. Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is attached herewith. (Annexure 8) POLICY AGAINST SEXUAL HARASSMENT The Company has in place anli sexual harassment policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Committee has been set up to redress complaints received regarding sexual harassment. Ail employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaint regarding sexual harassment has been received by the committee during the financial year 2014-15. ANNUAL RETURN The extract of Annual Return in Form MGT-9 pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies(Management and Administration) Rules, 2014 is attached herewith. (Annexure 9) DEPOSITS The Company has neither accepted nor renewed any deposits during the financial year 2014-15 under review. Company has repaid all the deposits of the kind referred to in Company (Acceptance of Deposit) Rules, 2014 which were existing as on 31" March, 2014. INFORMATION PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013 The above information (to the extent applicable) is attached here with. (Annexure 10) INFORMATION PURSUANTTOSECTION 134(3)(M)&(Q)OFTHECOMPANIESACT,2013 The above information (to the extent applicable) is attached herewith.(Annexure 11) POLICIES FOR RELATED PARTY TRANSACTIONS AND FOR DETERMINING MATERIAL SUBSIDIARIES: The web link to access the above two policies hosted by the company on its website www.grpweb.com is as under: a) <http://www.grpweb.com/pdf/Related%20Party%20Transaction%20Policy.pdf> b) http://www.grpweb.com/pdf/Policy%20for%20determining%20material%20subsidiaries.pdf> ACKNOWLEDGMENTS Your Directors place on record their sincere thanks to employees, bankers, business associates, consultants, and various Govemment Authorities for their continued support extended to your Company. Your Directors also acknowledges gratefully the support and confidence reposed by shareholders in the Company. For and on behalf of the Board of Directors Rajendra Gandhi Managing Director Harsh Gandhi Executive Director Place:Mumbai Date:30'"May2015 |