DIRECTORS’ REPORT TO, THE MEMBERS, GUJARAT AMBUJA EXPORTS LIMITED Your Directors have pleasure in presenting the 24th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2015. DIVIDEND The Board of Directors had declared interim dividend @ 42% p.a. i.e. Rs. 0.84 per Equity Share of Rs. 2/- each for F.Y. 2014-15 at its meeting held on 6th September, 2014 and the same had been paid to eligible members and/or beneficial owners. The total cash outflow for dividend during the year was Rs. 13.59 crores (P.Y. Rs. 11.33 crores) including dividend distribution tax of Rs. 1.97 crores (P.Y. Rs. 1.65 crores). In view of conserving resources for future expansion plans of the Company, your Directors do not recommend any further dividend for the financial year 2014-15. The members are requested to approve the interim dividend for F.Y. 2014-15 as final dividend. BUSINESS OPERATIONS/ STATE OF THE COMPANY’S AFFAIRS A. Operational Performance The Company recorded operational revenue of Rs. 2531.30 crores as compared to Rs. 3091.81 crores during the previous financial year. The various profit parameters have significant growth during the year. The Company achieved EBIDTA margin of 6.86%in FY 2014-15 against the same at the level of 6.61% in FY 2013-14. Export Sales for the year 2014-15 was Rs. 317.62 crores as compared to Rs. 626.11 crores for the year 2013-14 mainly due to surge in the domestic market in respect of Agro processing segment products. The Company achieved Earnings before Interest, Depreciation and Tax (EBIDTA) of Rs. 173.73 crores for the year 2014-15 against that of Rs. 205.03 crores for the year 2013-14. The Cash Profit before tax, Profit after tax and EPS for the year remained at Rs. 158.73 crores, Rs. 84.17 crores and Rs. 6.08 per share respectively. Highlights of performance are discussed in detail in the Management Discussion and Analysis report attached as Annexure to Directors’ Report. B. Capital Projects for the year 2014-15 The Company has also carried out routine modernization and improvements at all of its other manufacturing Units. The Board of Directors is proud to inform that the Company is ploughing back the retained earnings for the future growth of the Company. SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2015 was Rs. 27.67 crs. During the year under review, the Company has not issued shares with differential voting rights or granted stock options or issued sweat equity. CORPORATE MATTERS Corporate Governance The Company makes due compliance of Corporate Governance guidelines and requirements of the Listing Agreement with the Stock Exchanges, where the Company’s Equity Shares are listed. A separate report on Corporate Governance, along with a certificate from the Statutory Auditors confirming the compliance is annexed as Annexure-A and forms part of the Directors’ Report. Management Discussion and Analysis A statement on management discussion and analysis with detailed highlights of performance of different Divisions of the Company is annexed as Annexure-B to this report. SUBSIDIARY COMPANY As on March 31, 2015, the Company had one overseas wholly owned subsidiary. There has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the year under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and its subsidiary company, which is forming part of the Annual Report. Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Company’s subsidiaries in Form AOC-1 is attached to the financial statements of the Company. The statement also provides the details of performance, financial position of the subsidiary of the Company. The financial statements of the subsidiary company and related information are available for inspection by the members at the Registered Office of the Company during business hours on all days except Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of the Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of the Company (www.ambujagroup.com). FINANCE AND INSURANCE Working Capital The working capital requirements of the Company has witnessed major shift in the last Financial Year. This has been on account of change in revenue mix of Agro segment which is now largely through domestic sale. This has resulted in lower utilization of fund based limits particularly export credit in last Financial Year. In the the last Financial Year in fact the Company has surrendered the limits of INR 77 Crore of SBM and reduced the consortium size to 5 banks. In current financial year also, the Company may opt for further realignment of limits and banks. The Company has received one notch higher rating of A+ with stable outlook for short term working capital facilities from CRISIL as per the applicable regulatory norms. The Company has also been reassigned rating of A1+ from CARE of INR 20 Cr for commercial paper. Term Loans In the last financial year, the Company started drawing term loan against sanction of INR 40 cr from HDFC Bank. The modernization project of ring spinning unit is in full swing and the Company is hopeful to draw entire sanctioned amount by July 2015 -August 2015. The project is approved by ministry of textile for interest subsidy of 2% and the process for getting approval of interest subsidy of 7% from Gujarat Government under is also at advance stage. CARE has reassigned the rating of A+ as per regulatory norms. Insurance All Assets and insurable interests of the Company, including building, plant and machineries, stocks, stores and spares have been adequately insured against various risks and perils. PUBLIC DEPOSITS During the period under report, the 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. DIRECTORS The Company is well supported by the knowledge and experience of its Directors and Executives. Pursuant to provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Vijaykumar Gupta, the Chairman & Managing Director of the Company and Mr. Manish Gupta, the Managing Director of the Company are liable to retire by rotation and being eligible, have offered themselves for re-appointment. The Board of Directors of the Company at its meeting held on 6th September, 2014 has appointed Mr. Rashmikant N. Joshi as an Additional Director on the Board of Directors of the Company. Mr. Rashmikant N. Joshi, who hold office upto the date of this Annual General Meeting and in respect of whom, the Company has received a valid notice in writing from a Member of the Company proposing his candidature as Director of the Company, is recommended for appointment as an Independent Directors for five consecutive years commencing from 15th September, 2014. The Nomination & Remuneration Committee and the Board of Directors at their respective Meetings held on 25th July, 2015 have recommended and approved, subject to approval of the members at the Annual General Meeting, appointment of Mr. Rashmikant N. Joshi as an Independent Director of the Company for a period of five consecutive years commencing from 15th September, 2014. The above businesses are recommended for approval of the Members. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c)of the Companies Act, 2013, the Directors confirm that: a. in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; 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 March 31, 2015 and of the profit of the Company for the year ended 31st March, 2015; c. the Directors have 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 have prepared the annual accounts on a ‘going concern’ basis; e. the Directors have laid down internal financial controls which are reasonably adequate and operating satisfactorily; and f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is set out herewith as Annexure-C to this Report and forms part of this report. MATERIAL CHANGES AND COMMITMENTS, IF ANY, BETWEEN BALANCE SHEET DATE AND DATE OF DIRECTORS’ REPORT There were no material changes and commitments between the Balance Sheet date and date of Directors’ Report affecting the financial position of the Company. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 12, 13 and 15 to the standalone financial statement). RELATED PARTY TRANSACTIONS In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, the Company has formulated a Policy on Related Party Transactions which is also available on Company’s website at (URL: http://www.ambujagroup.com/LinkFiles/Policy%20on% 20related%20parties.pdf ). The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure-D to this Report. AUDITORS AND AUDITORS’ REPORT At 23rd Annual General Meeting of the Company held on 13th September, 2014, the Members of the Company have appointed M/s. Kantilal Patel & Co. (Firm Registration No. 104744W), Chartered Accountants, as Statutory Auditors of the Company from the conclusion of 23rd Annual General Meeting till the conclusion of the 26th Annual General Meeting to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting. The Company has received a certificate from the said Auditors that they are eligible under the provisions of the Companies Act, 2013. The Auditors’ report does not contain any qualification, reservation or adverse remark and is selfexplanatory and thus does not require any further clarifications/comments. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its all products are required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. N. D. Birla & Co., the Cost Accountants, A-3, Nirant Society, Ellisbridge, Ahmedabad (Membership No. 7907) to audit the cost accounts of the Company for the financial year 2014-15 on a remuneration of Rs. 2 lakhs. The Members may further note that, the Board of Directors of the Company at its meeting held on 25th July, 2015 have appointed M/s. N. D. Birla & Co., as Cost Auditor for Financial Year 2015-16. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM, would be not exceeding Rs. 2,00,000 (Rupees Two lacs only) excluding taxes and out of pocket expenses, if any. SECRETARIAL AUDIT REPORT Pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Dr. K. R. Chandratre, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2014-15 to conduct Secretarial Audit and provide Secretarial Audit Report in Form MR-3. The Report of the Secretarial Audit Report is annexed herewith as Annexure-E to this Report. The Secretarial Auditors’ report does not contain any qualification, reservation or adverse remark and is self-explanatory and thus does not require any further clarifications/comments. OTHER DISCLOSURE OF INFORMATION AS PER LISTING AGREEMENT ENTERED WITH STOCK EXCHANGES Listing At present, Equity Shares of the Company are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company has paid annual Listing fees for the financial year 2015-2016 to respective Stock Exchanges. Dematerialisation The Equity Shares of the Company are under compulsory demat from 24th July, 2000. The Company has already entered into agreement with Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) and ISIN No. INE036B01022 has been allotted to the Company for sub-divided Equity Shares of Rs. 2/- each. Familiarisation programmes for Independent Directors The Independent Directors are provided with necessary documents, reports to enable them to familiarise with the Company’s procedures and practices. The Independent Directors are provided visit to various Company’s Plants, to enable them to have full understanding of manufacturing Operations & Processes of various Plants of the Company and the Industry in which it operates. Periodic presentations are made at the Board Meetings, on business and performance updates of the Company, business strategy and risks involved. Details of the familiarization programme of the independent directors are available on the website of the Company (URL: http://www.ambujagroup.com/LinkFiles/Familiarization% 20programme% 20details.pdf ). VIGIL MECHANISM/WHISTLE BLOWER POLICY The Company has adopted Vigil Mechanism/Whistle Blower Policy, which was approved by the Board of Directors of the Company at its meetings held on 26th July, 2014. The said policy provides a formal mechanism for all employees of the Company to approach Chairman of the Audit Committee of the Company and make protective disclosures about the unethical behavior, actual or suspected fraud and violation of the Company’s Code of Conduct and Business Ethics. Under the Policy, each employee of the Company has an assured access to the Chairman of the Audit Committee. CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE SOCIAL RESPONSIBILITY COMMITTEE With core business interest of the Company in agro-processing and its exports, the Company plays an important role in strengthening the fabric of Society by generating employment and business opportunities. The Company is committed to continuously improving its social responsibilities as a good corporate citizen, to make positive impact on the Society. The Company has framed a policy for corporate social responsibility laying down the guidelines for sustainable development of Society. During the year, the Company has undertaken directly and indirectly various initiatives contributing to the environment including reduced waste generation, improved waste management, implementing environmental plan through power generation, etc. The Company also developed comprehensive plan for carrying out activities focusing on education, health programmes and skill development and supporting various community development projects in locations, where the Company operates. The Board of Directors at its meeting held on 24th May, 2014 approved the Corporate Social Responsibility Policy of the Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the recommendations of the CSR Committee. The initiatives undertaken by the Company during the financial year 2014-15 in CSR have been detailed in this Annual Report. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out herewith as Annexure-F to this Report MEETINGS OF THE BOARD Six meetings of the Board of Directors were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report. AUDIT COMMITTEE The Committee consists of members viz. Mr. Sudhin B. Choksey (Chairman), Mr. Rohit J. Patel and Mr. Ashok C. Gandhi, the Directors of the Company. As per section 177(8) of the Companies Act, 2013, the Board has accepted all the recommendations of the Audit Committee during the Financial Year 2014-15. RISK MANAGEMENT The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. The Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans. The Company through its risk management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors. As per the requirements of Clause 49 of the Listing Agreement, the Company has voluntarily constituted a Risk Management Committee to oversee the risk management efforts in the Company under the Chairmanship of Shri Manish Gupta, Managing Director and other Members being Mr. Mohit Gupta, Joint Managing Director, Mr. Sandeep Agrawal, Whole Time Director, Mr. N. Giridhar, Chief Financial Officer and Mr. Manan Bhavsar, Company Secretary. The Committee reports to the Board of Directors of the Company. At Plant level, Internal Committees have been formed, headed by Plant heads of respective Plants and functional departmental heads. Such Committees report to the Risk Management Committee from time to time. During the financial year 2014-15, the Board of Directors have approved the risk management policy for the Company as proposed by the Management and recommended by the Risk Management Committee. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued there under and Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on 26th July, 2014 formulated the Nomination and Remuneration Policy of the Company on the recommendations of the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have set out in Annexure-G to this Report. The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in Annexure-H to this Report. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS The Nomination and Remuneration Committee at its Meeting held on 31st March, 2015 laid down the criteria for performance evaluation of Executive and Non-Executive Director of the Company as per clause 49 of the Listing Agreement and section 178 of the Companies Act, 2013. The Criteria was set based on Profiles, experience, contribution dedication, regularity, aptitude, preparedness & participation, team work and contribution of each Director to the growth of the Company. The Company has devised the Board’s performance evaluation Policy document along with performance evaluation criteria/form for Independent and Non-independent Directors of the Company and Criteria for evaluation of Board’s/Committee’s performance along with remarks and suggestions. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Separate Meeting of Independent Directors was held on 31st March, 2015 and it has reviewed the performance of Non-Independent Directors & the Board as a whole and also reviewed the performance of Chairman of the Company. The same was discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed. INTERNAL COMPLAINTS COMMITTEE The Board of Directors of the Company at its meeting held on 25th January, 2014, has approved a policy for prevention of Sexual Harassment of Women as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013. As per the provisions of the said Act, the Company has constituted Committees in the name of “Internal Complaints Committee” for the Registered Office & Units of the Company. During the Financial Year 2014-15, there were no cases filed under the said Act. DECLARATION OF INDEPENDENCE The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued there under as well as Clause 49 of the Listing Agreement. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure-I to this Report. 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 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.ambujagroup.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. INTERNAL FINANCIAL CONTROLS AND LEGAL COMPLIANCE REVIEW The Company has in place adequate internal financial controls with reference to financial statements. During the year, the Company appointed M/s. PAM & Associates, the Chartered Accountants for review of Internal Financial Controls in the Company. Such controls were tested and no reportable material weakness in the design or operation were observed. The Company has devised systems to ensure compliance with the provisions of all applicable laws to the Company. During the year, the Company appointed M/s. Krishnamurthy & Co., the Legal Firm for review of adequacy of legal compliance systems in the Company as required under the Companies Act, 2013. Compliance with all laws applicable to the Company were checked by the Firm and no non-compliance with laws applicable to the Company were reported to the Company. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS There were no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future. HUMAN RESOURCES AND INDUSTRIAL RELATIONS The Industrial Relations of the Company with its personnel has continued to be cordial and amicable. Your Directors acknowledge and appreciate the efforts and dedication of Employees towards the Company. Your Directors wish to place on record the co-operation received from the Staff and Workers at all levels and at all Units. ENHANCING SHAREHOLDERS VALUE The Company accords top priority for creating and enhancing Shareholders Value. All the Company's Operations are guided and aligned towards maximizing Shareholders Value. APPRECIATION & ACKNOWLEDGEMENT Your Directors would like to express their appreciation for the assistance and co-operation received from the Banks, Departments of Central Government & State Government, Other Government Departments, Members, Esteemed Customers and Suppliers during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Executives, Staff and Workers of the Company. For and on behalf of the Board of Directors Vijay Kumar Gupta Chairman & Managing Director (DIN 00028173) Date : 25th July, 2015 Place : Ahmedabad |