Directors, Report To The Members, Your Directors have pleasure in presenting their 25th Annual Report on the business and operations of the Company along with the Audited Accounts of the Company for the Financial Year ended March 31, 2015 RESULT OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS During the year under review, your Company posted a stable performance with revenue of Rs 156425.04 lacs. Profit for the year 2014-15 was Rs. 12181.73 lacs. Exports during the year 2014-15 was Rs 586.71 lacs. The Company is trying to locate new export markets for its products and see good potential for growth in the exports business. As per the consolidated financial statements, the revenue from operation and profit for the year 2014- 15 were Rs 156425.04 lacs and Rs 12422.94 lacs respectively. In respect of manufacture of new value added products in the Company's existing MDF Unit at Pantnagar, Uttarakhand, your Company has started commercialproduction of 'laminated wooden flooring'. Your Company is the preferred partner of choice for a large number of office and home builders. It has a comprehensive product portfolio of servicing clients under its various brands. Your company also focused on the value added products to improve margin. During 2014-15, your Company continued its efforts in the area of product integration and deeper market penetration. Your Company is present across different price points to cater to all customers across the high-end, mid-market and value-for-money segments. OUTLOOK AND EXPANSION The Company's outlook remains favourable on account of its product integration capabilities, increasing brand visibility and the continuous support from its stakeholders. The Company's pan-India distribution network ensures easy availability of products in almost every part of India. With the emerging positive sentiment in the market-place owing to conducive investment climate the product categories in which the organization is currently operating will see healthy growth in the coming years. Greenply is currently operating primarily in the structural sphere of interior infrastructure domain with almost all the products in its basket catering to the structural needs of the customers. A growing middle class in India seeks new wood products, especially in the sustainable green wood segment. Reconstituted wood products, such as plywood, board, particleboard and medium density fibreboards are likely to be used increasingly by consumers, real estate developers, furniture makers, railways and defence, among others. Innovations and use of technology shall help the wood industry to grow profitably, and leverage opportunities in the future. Strong growth trends in the housing and real estate sectors makes us believe that the organization can reap further benefits in form of sustainable revenue growth and improved profitability by exploring diversification opportunities in areas where a latent but high potential demand is present. In respect of setting-up of the new MDF Unit in Andhra Pradesh, necessary steps are being taken to obtain various statutory approvals/licenses and technical discussions are in progress with various agencies to set up the unit. Further, in respect of manufacture of new value added products in the Company's existing MDF Unit at Pantnagar, Uttarakhand, the civil construction work and installation of machineries have been completed for the new production lines of UV Coated Panels and the trial production is in process. Your Company has decided to start new business venture of trading in wallpaper of different categories to be sourced from various overseas suppliers and marketed in India under the Company's brand. Indian wallpaper market is currently estimated to be worth Rs 800 Crores growing at a CAGR of 20%. Retail segment constitutes 46% of the totalmarket size and the balance 54% comes from sales in the Institutional segment. Globally, wallpapers have emerged as a strong substitute for textured paints. Your Directors are confident of achieving better results in the coming years. SUBSIDIARIES AND JOINT VENTURE The Company had incorporated a subsidiary viz. Greenply Industries (Myanmar) Pvt. Ltd. in Myanmar and obtained approval of the Myanmar Investment Commission to set-up a veneer or veneer cum plywood unit. Greenply Industries (Myanmar) Pvt. Ltd. has commenced commercial production of "CommercialVeneers". Further, GREENPLY ALKEMAL (SINGAPORE) PTE. LTD. (a joint venture company of Greenply Industries Limited, India and Alkemal Singapore Pte. Ltd., Singapore) was incorporated on 14.05.2014 as a Private Limited Company in Singapore. The said Joint Venture Company is equally owned (50:50 investments owned directly or through subsidiary/ affiliates) by Greenply Industries Limited and Alkemal Singapore Pte. Limited. The Joint Venture Company has started its business and subject to necessary regulatory approvals, will acquire and own 100% share of Greenply Industries (Myanmar) Pvt. Ltd. Company's wholly owned subsidiary. Greenply Trading Pte. Ltd., Singapore was incorporated with an objective to carry on the business of manufacturing and trading of Plywood, veneers, MDF, wooden flooring & allied products and investments in companies manufacturing and trading said products. The Company is exploring market for trading of Plywood, veneers, MDF, wooden flooring & allied products through its wholly owned subsidiary, Greenply Trading Pte. Ltd., Singapore. CHANGE(S) IN THE NATURE OF BUSINESS AND COMPOSITE SCHEME OF ARRANGEMENT During the year under review, the Hon'ble Gauhati High Court has, on October 31, 2014, approved the composite Scheme of Arrangement under Sections 100 to 104 and 391 to 394 of the Companies Act, 1956 between Greenply Industries Limited ("Greenply") and Greenlam Industries Limited ("Greenlam") and their respective shareholders and creditors, for demerger of the Decorative Business (comprising of Laminates and Allied Products) of Greenply with all its assets and liabilities, into Greenlam with effect from April 01, 2013 (Appointed Date). The Scheme was effective w.e.f. November 17, 2014 i.e. the date of filing of the certified copy of the order of the Hon'ble Gauhati High Court with the Registrar of Companies, Shillong. Consequent to the scheme becoming effective, shareholders of Greenply Industries Limited were allotted one fully paid up equity share of Rs 5 each of Greenlam Industries Limited for every one equity share held by them in the Company as on the record date i.e., 27th November, 2014. Further, the existing equity capital of Greenlam Industries Limited which was fully held by Greenply Industries Limited was cancelled and Greenlam Industries Limited has ceased to be a subsidiary of the Company. Pursuant to the said Scheme, overseas subsidiaries viz. Greenlam Asia Pacific Pte. Ltd., Singapore, Greenlam America, Inc., USA, Greenlam Asia Pacific (Thailand) Co., Ltd., Thailand, Greenlam Holding Co., Ltd., Thailand, PT. Greenlam Asia Pacific, Indonesia and Greenlam Europe (UK) Ltd., UK. and Indian subsidiary viz. Greenlam VT Industries Pvt. Ltd. were transferred to Greenlam Industries Limited and have ceased to be subsidiaries of the Company. CONSOLIDATED FINANCIAL STATEMENTS For the period under review, the Company has consolidated its subsidiary viz., Greenply Trading Pte. Ltd., Singapore. The financial statements of the Company's Wholly owned subsidiary Greenply Industries (Myanmar) Pvt. Ltd., Myanmar has not been considered for consolidation in the current year since the control over the same is intended to be temporary and held exclusively with a view to its subsequent disposal in the near future. In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financialstatements has been placed on the website of the Company, www.greenply.com . Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies and Joint Venture Company have also been placed on the website of the Company, www.greenply.com . Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies and Joint Venture Company may write to the Company Secretary at the Company's registered office. A statement containing salient features of the financial statement of subsidiaries/ associate companies/joint ventures is annexed to this report. CREDIT RATING This consistency in rating reflects Company's commitment and capability to persistent growth through prudence and focus on financial discipline. DIVIDEND Your Directors recommend a finaldividend of 60% i.e. Rs 3.00 per share (previous year Rs 3.00 per share) on the Company's 2,41,36,374 Equity Shares of Rs 5.00 each for 2014-15. The final dividend on the Equity Shares, if declared as above, would involve an outflow of Rs 724.09 lacs towards dividend and Rs 147.41 lacs towards dividend tax, resulting in a total outflow of Rs 871.50 lacs. TRANSFER TO RESERVES Your Directors propose to transfer Rs.6500 lacs to the General Reserve. CHANGES IN SHARE CAPITAL During the year under review, there was no change in the share capital of the Company. DIRECTORS AND KEY MANAGERIALPERSONNEL During the year under review, Mr. Saurabh Mittal who was Joint Managing Director & CEO of the Company, relinquished the office of the Company w.e.f. the close of the working hours of November 10, 2014. Mr. Shobhan Mittal has been designated as Joint Managing Director & CEO of the Company w.e.f. February 5, 2015. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Moina Yometh Konyak, non-executive director of the Company, will retire by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. Details of Mr. Moina Yometh Konyak as required under Clause 49 (VIII) (E) (1) of equity listing agreement is provided in the Corporate Governance Report and notice of 25th Annual General Meeting. None of the directors of your Company is disqualified under the provisions of Section 164(2)(a) & (b) of the Companies Act, 2013. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors of the Company have given the declaration to the Company that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the equity listing agreement. MEETINGS OF THE BOARD OF DIRECTORS Four (4) Board Meetings were held during the financialyear ended 31st March, 2015. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report. PERFORMANCE EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the equity listing Agreement, the Board has carried out the annual performance evaluation of the Directors individually as well as evaluation of the working of the Board and of the Committees of the Board, by way of individual and collective feedback from Directors. Pursuant to Para VII of Schedule IV of the Companies Act, 2013 and Clause 49(II)(B)(6) of the Equity Listing Agreement, a meeting of the Independent Directors of the Company was convened to perform the following: ¦ Review the performance of non-independent directors and the Board as a whole; Review the performance of the Chairperson of the Company, taking into account the views of executive directors and nonexecutive directors; Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. Further, the Nomination and Remuneration Committee also evaluated the performance of all the directors of the Company. The criteria for evaluation are briefly provided below: a. For Independent Directors: - General parameters - Roles & responsibilities to be fulfilled as an Independent director - Participation in Board process b. For Executive & Non-executive Directors: - Governance - Strategy - Stakeholder focus - Communication & influence - Quality or capability - Performance improvement - Financial & risk awareness The Directors expressed their satisfaction with the evaluation process. STATUTORY AUDITORS AND THEIR REPORT In compliance with the Companies (Audit and Auditors) Rules, 2014, M/s. D. Dhandaria & Company, Chartered Accountants, have been appointed as Statutory Auditors of the Company till the conclusion of Annual General Meeting for the financial year 2016-17, as approved by the members at their 24th Annual General Meeting held on 22nd August, 2014. Further, pursuant to the requirement of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is to be ratified by the members at every Annual GeneralMeeting. Members are requested to ratify their appointment for the financial year 2015-16. The Company has received written consent and certificate from M/s. D. Dhandaria & Company, Chartered Accountants in keeping with the requirements of section 139 of Companies Act, 2013 and allied Rules thereunder. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and, therefore, do not call for further clarification. The Auditor's Report for Financial Year ended March 31, 2015 does not have any qualifications. COST AUDITORS During the year under review, cost audit was not applicable to the Company. INTERNAL AUDITOR The Company has in-house Internal Audit team headed by qualified and experienced Executive. The scope, functioning, periodicity and methodology for conducting internal audit were approved by the Audit Committee. Further, the Audit committee discussed and reviewed the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. SECRETARIAL AUDITOR The Board of Directors of the Company had appointed M/s. Nidhi Bagri & Company, Practising Company Secretary, Kolkata, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report of M/s. Nidhi Bagri & Company, Practising Company Secretary for the financial year ended 31st March, 2015, is annexed to this report. RESPONSE TO SECRETARIAL AUDITOR'S OBSERVATION It has been observed by the Secretarial Auditor that during the financialyear 2014-15, the Company has spent Rs. 10.68 Lacs towards CSR activities, which is less than 2% of the average net profit of last 3 financial years. In response to the same, your Company would like to submit that this being the first year of structured implementation of CSR initiatives, considerable time was spent on deciding on the CSR projects of interest to Company and putting systems in place to ensure effective implementation of CSR initiatives. Consequently, only a part of the year was available for implementation of CSR projects and a number of initiatives pertaining to the identified CSR projects are still in the concept stage while the Company is continuing to fine-tune the execution process. Hence, the Company was unable to spend the entire allocated amount of Rs 243.79 lakhs during the financial year 2014-2015. The Company is committed to the underlying intent of CSR and is optimistic of meeting its obligations under section 135 of Companies Act, 2013 and thereby make a positive impact on the society. AUDIT COMMITTEE The Company's Audit Committee comprises four Non-Executive Independent Directors viz. Mr. Susil Kumar Pal, Mr. Vinod Kumar Kothari, Mr. Anupam Kumar Mukerji and Mr. Upendra Nath Challu and two Executive-Promoter Directors viz. Mr. Rajesh Mittal and Mr. Shobhan Mittal. The Committee inter alia reviews the Internal Control System and reports of Internal Auditors and compliance of various regulations. The Committee also reviews at length the Financial Statements and results before they are placed before the Board. The terms of reference of the Audit Committee has been provided in the Corporate Governance Report. VIGIL MECHANISM In pursuance to the provisions of section 177(9) & (10) of the Companies Act, 2013 and equity listing agreement, a vigil mechanism or 'Whistle Blower Policy' for directors and employees to report genuine concerns has been established. The same is also uploaded on the website of the Company. NOMINATION AND REMUNERATION COMMITTEE The Company's Nomination and Remuneration Committee comprises three Non-Executive Independent Directors viz. Mr. Susil Kumar Pal, Mr. Vinod Kumar Kothari, Mr. Anupam Kumar Mukerji and one Executive-Promoter Director Mr. Shiv Prakash Mittal. The Remuneration Policy of the Company prepared in accordance with the provisions of Section 178 of the Companies Act, 2013 and Clause 49 (IV) of the equity listing agreements is uploaded on the website of the Company. The web link is <http://www.greenply.com/images/pdf/Greenply->remuneration-policy.pdf. The terms of reference of the Nomination and Remuneration Committee has also been provided in the Corporate Governance Report. However, brief outline of the Remuneration Policy is as follows: The Remuneration policy applies to all the "Executives" of the Company. The Policy also helps the Company to attain Board diversity and create a basis for succession planning. In addition, it is intended to ensure that- a) the Company is able to attract, develop and retain high-performing and motivated Executives in a competitive international market; b) the Executives are offered a competitive and market aligned remuneration package, with fixed salaries being a significant remuneration component, as permissible under the Applicable Law; c) remuneration of the Executives are aligned with the Company's business strategies, values, key priorities and goals. In determining the remuneration policy, the Nomination and Remuneration Committee ensures that a competitive remuneration package for all Executives is maintained and is also benchmarked with other companies operating in national and global markets. The nomination of the Independent Directors of the Company shall be in accordance with the principles as stated under the policy. The assessment for Functional head will be done on the basis of below parameters by the concerned interview panel of the Company - a) Competencies b) Capabilities c) Compatibility d) Commitment e) Character f) Strong interpersonal skills g) Culture among others. The various remuneration components would be combined to ensure an appropriate and balanced remuneration package. The five remuneration components are - • fixed remuneration (including fixed supplements) • performance based remuneration (variable salary) • pension schemes, where applicable • other benefits in kind • severance payment, where applicable The fixed remuneration is determined on the basis of the role and position of the individual, including professional experience, responsibility, job complexity and local market conditions. The performance-based remuneration motivates and rewards high performers who significantly contribute to sustainable results, perform according to set expectations for the individual in question, and generates stakeholder value within the Group. Any fee/remuneration payable to the NonExecutive directors of the Company shall abide by the following norms - i. If any such director draws or receives, directly or indirectly, by way of fee/remuneration any such sums in excess of the limit as prescribed or without the prior sanction, where it is required, under the Applicable law such remuneration shall be refunded to the Company and until such sum is refunded, hold it in trust for the Company. The Company shall not waive the recovery of any sum refundable to it; ii. Such directors may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board, as permissible under Applicable law; iii. An independent director shall not be entitled to any stock option and may receive remuneration only by way of fees and reimbursement of expenses for participation in meetings of the Board or Committee thereof and profit related commission, as may be permissible by the Applicable law. Apart from above, the Policy also entitles Executives to a severance fee. STAKEHOLDERS RELATIONSHIP COMMITTEE The Stakeholders Relationship Committee comprises two Promoter Directors viz. Mr. Rajesh Mittal and Mr. Shobhan Mittal and two Non-Executive Independent Directors viz. Mr. Anupam Kumar Mukerji and Mr. Susil Kumar Pal. The detailed terms of reference of the Committee has been provided in the Corporate Governance Report. RISK MANAGEMENT POLICY The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. However, your company is taking necessary steps to finalize and implement an appropriate Risk Management Policy in the organization. The Board is of the opinion that there are no identified risks which may threaten the existence of the Company. EXTRACT OF THE ANNUAL RETURN The extract of Annual Return required under section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is annexed to this report. MATERIAL CHANGES AND COMMITMENTS There have been no material changes and commitments affecting the financial position of the Company since the close of financial year i.e. since 31st March, 2015 till the date of this Report. Further, it is hereby confirmed that there has been no change in the nature of business of the Company. Significant and material orders passed by the regulators / courts / tribunals impacting the going concern status and the Company's operations in future As such there is no significant and material order by the regulator/court/tribunals impacting the going concern status and the Company's operation in future. INTERNAL FINANCIAL CONTROLS The Board is of the view that the Company has laid adequate internal financial controls, commensurate with the nature, scale and complexity of its operations, in view of the following (a) Systems have been laid to ensure that all transactions are executed in accordance with management's general and specific authorization. There are well-laid manuals for such general or specific authorisation. (b) Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for aspects. (c) Access to assets is permitted only in accordance with management's general and specific authorization. No assets of the Company are allowed to be used for personal purposes, except in accordance with terms of employment or except as specifically permitted. (d) The existing assets of the Company are verified / checked at reasonable intervals and appropriate action is taken with respect to any differences, if any. INSURANCE Your Company's properties, including building, plant, machineries and stocks, among others, are adequately insured against risks. LOANS, GUARANTEE AND INVESTMENTS Details of loans granted, guarantees given and investments made during the year under review, covered under the provisions of Section 186 of the Companies Act, 2013 are annexed to this report. DEPOSITS During 2014-15, the Company did not invite or accept any deposits from the public under Section 76 of the Companies Act, 2013. RELATED PARTIES TRANSACTIONS There are no materially significant related party transactions made by the Company which may have potential conflict with the interest of the Company. There are no material related party transactions which were entered into by the Company and hence there is no information to be provided as required under section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014. The Board has approved a policy for related partytransactions which has been uploaded on the Company's website. The web link as required under Listing Agreement is as under: <http://> www.greenply.com/images/pdf/Related-Party- Transaction(s)-Policy.pdf CORPORATE GOVERNANCE The Report on corporate governance as stipulated under Clause 49 of the equity listing Agreement forms part of the Annual Report. The requisite certificate from M/s. D. Dhandaria & Company, Chartered Accountants confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Report on Management Discussion and Analysis Report as required under clause 49 of the equity listing Agreement is included in this Report. Certain Statements in the said report may be forward looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE The Company has in place a Policy on prevention of Sexual Harassment in line with the requirements of the SexualHarassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. During the year the Company had not received any complaint. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information required under section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed to this report. CORPORATE SOCIAL RESPONSIBILITY During the financial year 2014-15, the Company has spent X 10.68 Lacs towards CSR activities, which is less than 2% of the average net profit of last 3 financialyears. In response to the same, your Company would like to submit that this being the first year of structured implementation of CSR initiatives, considerable time was spent on deciding on the CSR projects of interest to Company and putting systems in place to ensure effective implementation of CSR initiatives. Consequently, only a part of the year was available for implementation of CSR projects and a number of initiatives pertaining to the identified CSR projects are still in the concept stage while the Company is continuing to fine-tune the execution process. Hence, the Company was unable to spend the entire allocated amount of Rs. 243.79 lakhs during the FY 2014-2015. The Company is committed to the underlying intent of CSR and is optimistic of meeting its obligations under section 135 of the Companies Act, 2013 and thereby make a positive impact on the society. In compliance with requirements of Section 135 of the Companies Act, 2013, the Company has laid down a CSR Policy. The composition of the Committee, contents of CSR Policy and report on CSR activities carried out during the Financial Year ended 31st March, 2015 in the format prescribed under Rule 9 of the Companies (Accounts) Rules, 2014 is annexed to this Report. DIRECTORS' RESPONSIBILITY STATEMENT In terms of provisions of Section 134(5) of the Companies Act, 2013, your directors state that: (i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) the directors had 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 of the profit of the company for that period; (iii) the directors had 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 had prepared the annual accounts on a going concern basis; (v) t he directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively and (vi) 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. CEO AND CFO CERTIFICATION Pursuant to Clause 49 of the equity listing Agreement, the CEO and CFO certification is attached with the Annual Report. The Joint Managing Director and CEO and the Chief FinancialOfficer also provide quarterly certification on financial results while placing the financial results before the Board in terms of Clause 41 of the equity Listing Agreement. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL The Code of Conduct is posted on the Company's website. The Joint Managing Director and CEO of the Company has given a declaration that all Directors and Senior Management Personnel concerned affirmed compliance with the code of conduct with reference to the year ended on March 31, 2015. Declaration is attached with the annual report. PARTICULARS OF EMPLOYEES The information required under section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this report. ACKNOWLEDGEMENTS Your Directors place on record their sincere thanks and appreciation for the continuing support of financial institutions, consortium of banks, vendors, clients, investors, Central Government, State Governments and other regulatory authorities. Directors also place on record their heartfelt appreciation for employees of the Company for their dedication and contribution. For and on behalf of the Board of Directors Shiv Prakash Mittal Executive Chairman (DIN: 00237242) Date: May 25, 2015 Place: Kolkata |