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Godrej Industries

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Directors Report Year End : Mar '16    « Mar 15
The Directors have pleasure in presenting the Annual Report along with
 the Audited Accounts for the Financial Year ended March 31, 2016.
 
 Review of Operations
 
 Your Company''s performance during the year as compared with that during
 the previous year is summarized below:
 
 				    (Rs. Crore)            Rs. Crore) 
 			    Year Ended March 31   Year Ended March 31
 					   2016                  2015
 
 
 Revenue from Operations                1,309.51              1,454.64
 
 Other Income                             297.21                233.88
 
 Total Income                           1,606.72              1,688.52
 
 Total Expenditure other 
 than Finance Costs and                 1,220.13              1,379.59
 Depreciation and Amortisation
 
 Profit before Finance Costs, 
 Depreciation and                         386.59                308.93
 Amortisation and Tax
 
 Depreciation and 
 Amortisation Expense                      44.37                 28.59
 
 Profit before Finance 
 Costs and Tax                            342.22                280.34
 
 Finance Costs (net)                      191.98                148.17
 
 Profit before Tax                        150.24                132.17
 
 Provision for Current Tax                  9.96                  4.23
 
 Provision for Deferred Tax               (17.02)               (20.87)
 
 Net Profit                               157.30                148.81
 
 Surplus brought forward                  594.98                526.88
 
 Profit after Tax available 
 for appropriation                        752.28                675.69
 Appropriation
 
 Your Directors recommend 
 appropriation as under:
 
 Interim dividend on Equity 
 Shares                                    58.80                     -
 
 Dividend on Equity Shares                     -                 58.80
 
 Tax on distributed profits                11.97                 11.97
 
 Excess Proposed Dividend 
 provided for in previous                  (0 01)                    -
 year
 
 Credit for Dividend Distribution 
 Tax on Dividend Received                  (9.75)                (7.96)
 from Subsidiaries
 
 Depreciation (in transition to 
 New Companies Act)                            -                  3.02
 
 Transfer to General Reserve                   -                 14.88
 
 Surplus Carried Forward                  691.27                594.98
 
 Total Appropriation                      752.28                675.69
 
 Dividend
 
 The Board of Directors of your Company declared an interim dividend of
 Rs. 1.75 per equity share of Rs. 1/- each, aggregating Rs. 58.80 crore 
 during FY15-16.
 
 INDUSTRY STRUCTURE AND DEVELOPMENTS
 
 The global economy was subdued for most part of 2015 and grew at a
 modest 3.1%, which was in line with what the UN and IMF had predicted
 last year. According to IMF, emerging market and developing economies-
 while still contributing to over 70 percent of global growth- declined
 for the fifth consecutive year. The advanced economies on the other
 hand showed a modest recovery. In its World Economic Outlook (WEO)
 update in January 2016, IMF highlighted three key transitions that
 significantly affected the world economy- 1) the rebalancing of
 economic activity in China away from manufacturing towards services 2)
 lower energy and commodity prices 3) tightening of monetary policy in
 the United States in the wake of the economic recovery.
 
 Going forward, the IMF expects the world economy to grow at a slightly
 faster rate of 3.4% in 2016 and 3.7% in 2017. This is a downward
 revision of 0.2% from the WEO update by IMF in October 2015. Growth in
 advanced economies is projected to rise by 0.2% point in 2016 to 2.1%,
 and hold steady in 2017. On the other hand, the growth in emerging
 economies is projected to increase from 4 percent in 2015 to 4.3% and
 4.7% in 2016 and 2017, respectively.
 
 India experienced a slightly better financial year than FY15, with
 advance GDP estimates pegging the growth at 7.6%, compared to 7.4% last
 year (like for like comparison). Latest available IIP data also shows a
 growth of over 2 percent compared to FY15. While some of the reform
 measures like deregulation of diesel prices and improving the power
 situation across the country have started to show results, delays in
 other reforms like the GST bill, have resulted in limiting the
 potential growth.  In summary, the outlook on the economy remains
 bullish, with most global forums expecting India''s GDP growth to remain
 in the 7.5% range.
 
 India was hit by two consecutive droughts - a first in the last 25
 years. As the El Nino phenomenon intensified during the year, it left
 significant distress for Indian farmers. The water levels in reservoirs
 of certain parts of the country are at multi-year low. The adverse
 conditions severely impacted all the agri input sectors i.e. seeds,
 agro-chemicals, farm mechanization. The poor monsoon was accompanied by
 a crash in the prices of livestock products - their alternate source of
 income. Milk powder prices (skimmed milk powder), broiler prices and
 egg prices remained non remunerative for large part of the year which
 adversely impacted the animal husbandry sector for the year, further
 dampening the rural income.
 
 We look at this year as an exceptional year with respect to what
 happened in Indian Agriculture rather than the norm. The focus brought
 in by the Govt, of India to promote irrigation and higher spend
 allocated to MGNREGA will help reduce the rural distress in coming
 years. We do not expect any fundamental changes in the consumption
 pattern in India. The consumption of finer food items will keep on
 increasing as the population and per capita income rise in the country.
 
 Volatility in commodity prices continued to affect the oleo-chemicals
 industry throughout the year. While the lower commodity and energy
 prices yielded some benefits, it also resulted in lower demand from the
 energy export oriented economies. The economic downturn in China,
 Brazil and some of the African economies also affected the export
 volumes from India, especially for vegetable oil based alcohols. While
 the Indian oleo-chemicals market was strong in FY16, bad monsoons
 significantly affected India''s competitiveness in the rape-mustard seed
 based oleo-chemicals. Going forward, we continue to expect good growth
 in the
 
 Indian market, while being more cautious in our global outlook.
 
 Growth in the real estate sector continued to be lukewarm during FY16.
 Residential absorption rates declined from FY15 levels, but with a
 marginal decrease in the residential overhang, mainly due to decline in
 new launches. The RBI''s consecutive rate cuts came in throughout the
 year but failed to revive the sales numbers for FY16, but should aid
 demand growth in FY17. Office space absorption levels have seen a rise
 in FY16, particularly due to improved business conditions in the
 country, as well as an uptake of office space by IT/ITES, banking and
 e-commerce companies. Costs of key input materials such as steel and
 cement have moved downward throughout FY16, continuing the trend seen
 during FY15. The passage of Real Estate Regulatory Bill will impose
 restrictions on developers, but being consumer friendly in nature is
 expected to boost consumer sentiments. This, along with continuing
 urbanization and migration, should drive growth in this sector in the
 long term.  The Make in India campaign should also positively impact
 the commercial transactions space as well.  In summary, we continue to
 remain bullish on the prospects for the real estate sector in India.
 
 There is a separate section on Management Discussion and Analysis
 appended as Annexure A to this Report, which includes the following:
 
 - Discussion on financial performance with respect to operational
 performance
 
 - Segment wise performance
 
 - Human Resources and Industrial Relations
 
 - Opportunities and Threats
 
 - Internal Control Systems and their adequacy
 
 - Risks and Concerns
 
 - Outlook
 
 Subsidiary and Associate Companies
 
 Your Company has interests in several industries including animal
 feeds, poultry, dairy and agro-products, oil palm plantation, property
 development, personal and home care, etc.  through its subsidiary and
 associate companies.
 
 GODREJ AGROVET
 
 Improve the productivity of Indian farmers by innovating products and
 services that sustainably increase crop and livestock yields.
 
 FY15-16GAVL recorded consolidated revenue of Rs. 4,351 crore against Rs.
 3,809 crore, a growth of 14% over FY14-15 sales.
 
 GAVL acquired controlling stake in Cream line Dairy products limited
 marking its entry in the fast growing Dairy business
 
 Godrej Agrovet Limited (GAVL)
 
 Godrej Agrovet Ltd., a subsidiary of your company is a diversified Agri
 Business with interests in animal feed, agri inputs, and oil palm
 business along with Joint Venture with the ACI group in Bangladesh for
 the feed business and Tyson Inc. USA for the processed poultry
 business.
 
 FY15-16 was an unusually tough year for Indian agriculture. Two back to
 back poor monsoons severely impacted the agri sector related businesses
 and crash in certain agri commodities prices compounded the rural
 distress in FY15-16.
 
 GAVL was also impacted by these adverse operating conditions; however
 it leveraged the operating environment to expand inorganically in
 FY15-16. The company acquired Astec Life Sciences Ltd. (Astec) to
 strengthen its agro chemical play in the country and took controlling
 stake in Creamline Dairy Products Limited (Creamline) - A very strong
 regional dairy company operating from South India.  Both these
 acquisitions have been partially consolidated in the FY15-16 reported
 sales and earnings.
 
 In FY15-16 GAVL recorded consolidated revenue of Rs. 4,351 crore against
 Rs. 3,809 crore, a growth of 14% over FY14-15 sales.  The reported Profit
 Before Tax for the year was down by 7% to Rs. 255 crore in FY15-16
 against Rs. 274 crore in FY14-15 largely due to subdued volumes in the
 animal feed vertical and poor crude palm oil prices in FY15-16.
 
 The animal feed business had a tough year, with farm gate prices of
 broiler, milk and eggs remaining low during the year. The same
 adversely impacted the volume growth. GAVL remains committed to invest
 in Research & Developement in the animal feed space to create
 differentiated offering to our customers over competition. We also
 commissioned two new animal feed capacities in Ajmer, Rajasthan and
 Hajipur, Bihar. The sales of the Animal feed vertical was flat at Rs.
 2,666 crore in FY15-16 against Rs. 2,689 crore in FY14-15.
 
 The agri input business grew by 13% to Rs.419 crore in FY15-16 against a
 sale of Rs. 371 crore in FY14-15. The business was able to sustain its
 growth momentum in light of poor monsoon and with acquisition of Astec.
 The business is expected to clock a healthy growth rate in future. The
 Astec acquisition strengthens the agri Input business'' retail product
 portfolio. The acquisition also helps GAVL partially de risk its India
 centric agri inputs business, as Astec has a strong export business
 spanning across many geographies.
 
 Crude palm oil prices were significantly subdued in FY15-16 as compared
 to the prices in FY14-15. Higher production volume helped GAVL offset
 the decline in realization in the prices of crude palm oil and palm
 kernel oil.  The sales of the oil palm business remained flat at Rs. 404
 crore in FY15-16 against Rs. 394 crore in FY14-15.
 
 The Joint venture business ACI Bangladesh recorded a strong growth of
 35% in sales, in FY15-16 catapulting the business into top 3 animal
 feed companies in Bangladesh. Focus on brand building has started
 yielding results in processed poultry joint venture with Sales growing
 by 15%.
 
 GAVL acquired controlling stake in Creamline marking its entry in the
 fast growing Dairy business. The value added products in dairy like
 curd, flavored milk, butter milk are growing at a faster pace as
 branded food makes inroads in the largely unorganized dairy sector in
 the country.
 
 Godrej Properties Limited (GPL)
 
 GPL registered its best ever financial year in FY15- 16. GPL achieved
 its highest ever revenue, adjusted EBITDA, EBITDA, net profit, cash
 flow, booking value, and deliveries in FY15-16. The total revenue for
 the year stood at Rs. 2,728 crore, representing a 42% increase over the
 corresponding period of the previous year. The adjusted EBITDA grew by
 40% to Rs. 714 crore. EBITDA increased by 30% to Rs. 445 crore and net
 profit increased by 21 % to Rs.231 crore. The booking value increased by
 88% year-on-year to Rs. 5,038 crore despite a decline in the overall
 market. As a result, GPL has emerged as the largest publicly listed
 developer in India by sales value in FY15-16.
 
 GPL delivered 6 million sq. ft. in FY15-16, which includes 4.2 million
 sq. ft. of residential and 1.8 million sq. ft. of commercial space
 across seven cities and recorded a growth of 71% over the previous
 year. To put this in perspective, it is greater than the area the
 company delivered in the first twenty years of its existence and the
 highest ever it has delivered in a single year.
 
 GPL achieved three important strategic milestones in FY15-16. GPL sold
 435,000 sq. ft. for Rs. 1,479 crore at Godrej BKC in the largest ever
 end- user commercial real estate transaction in India.  The price of Rs.
 34,000 per sq. ft. is 30% above the average price achieved in the
 project till date and the highest price achieved for any major
 commercial real estate deal in Mumbai. It allows GPL to fast-track its
 plans to unlock capital from the commercial portfolio, strengthen the
 balance sheet, and redeploy capital into the many high- return new
 project opportunities.
 
 The second major milestone was the launch of The Trees, which was the
 most successful launch in GPL''s history. GPL sold 470 apartments across
 two phases registering a booking value of Rs. 1,224 crore. In addition to
 the strong financial benefits, it is also a demonstration of GPL''s
 ability to create a product that enhances the overall positioning of
 Vikhroli. Vikhroli is the Group''s biggest opportunity and by
 successfully launching the residential phases at The Trees and moving
 into the new headquarters at Godrej One, GPL has ensured that FY15-16
 will go down as a key year in Vikhroli''s development.
 
 The third of the three major milestones for the year was the
 announcement of the creation of Godrej Fund Management. GPL raised $
 275 million under Godrej Residential Investment Program II (GRIP II)
 with Dutch pension fund asset manager APG as the lead investor. GPL
 will hold a 20% stake in GRIP II. This demonstrates GPL''s ability to
 attract long-term institutional capital to power the growth capital
 requirements and fits well into GPL''s strategy of increasing the depth
 of operations across the country''s real estate markets while
 maintaining an asset light strategy.  It also opens up a whole new set
 of opportunities for the company and continues the track record of
 innovation in business development. Each of these three key strategic
 highlights has fundamentally strengthened GPL''s long-term prospects.
 
 High quality business development has played a key role in transforming
 GPL''s project portfolio and its performance over the past 5 years. GPL
 added 4 new projects with saleable area of approximately 7 million sq.
 ft. in FY15-16. The year also marked GPL''s entry into the Noida and
 Thane markets. The deal pipeline for new projects looks very exciting
 as there are a large number of projects across cities where GPL is in
 advanced stages of discussion with prospective partners. The
 availability of funds through the second residential investment program
 and tough market conditions present GPL with a great opportunity to
 disproportionately scale its business development. FY16-17 has the
 potential to be GPL''s best ever year for business development.
 
 GPL received a total of 49 awards in FY15-16.  During the year, GPL was
 ranked amongst India''s Top 50 Companies to Work for in a study by the
 Great Places to Work Institute in partnership with the Economic Times.
 Given its commitment to sustainable practices, GPL has co-founded the
 Sustainable Housing Leadership Consortium (SHLC); a voluntary
 collaborative effort with leading Indian housing sector companies to
 promote sustainable development in India.
 
 GODREJ NATURE''S BASKET
 
 Total 37-store chain of premium gourmet stores strategically located at
 high street locations in Mumbai, Delhi/NCR, Pune, Hyderabad and
 Bangalore
 
 The sales turnover for NBL in FY15-16 was Rs. 271 crore, delivering a
 growth of 30% YOY.
 
 NBL continued to win awards in forums like India Retail Forum, Food &
 grocery forum, Asia Retail Congress, Franchise India and CMO Asia
 awards etc.
 
 Natures Basket Limited (NBL)
 
 Natures Basket Ltd. continued on its growth path, much above industry
 standards. The sales turnover for NBL in FY15-16 was Rs. 271 crore,
 delivering a growth of 30% YOY.
 
 With a strategy of consolidating and leveraging right catchments that
 was started 2 years ago, stores at Lokhandwala and Churchgate in Mumbai
 were expanded to offer wider assortment and range of services to
 customers. 2 stores (one each in Bangalore and Pune) were closed and 6
 new stores were opened in Mumbai, Bengaluru and Delhi/NCR, taking the
 total store count to 37. Improved availability, aggressive introduction
 of new products and smart marketing initiatives ensured that growth for
 physical stores at 25% continued to be ahead of the industry.
 
 Online sales contributed approx. 4.5% of total sales for the year and
 grew over the previous year by a very robust 750%, clearly signifying
 the importance of the channel in the future. 15 e-hubs that were
 co-located with the physical stores helped us achieve this benchmark.
 The brand also launched its updated website and mobile App during the
 year as well as made ambient products available to customers across 125
 cities.
 
 While the in-store consumer experience and brand imagery continued to
 be differentiated, our business wide programs drove growth in the
 contribution of gifting sales, private label brands as well as ready to
 go fresh foods as a % of total sales. Private label sales more than
 doubled to nearly 9.7% of total sales while gifting was at 7.4% of
 sales and fresh foods contributed nearly 2.5% of total sales. These
 programs delivered both sales growth as well as higher margins to the
 business.
 
 The loyalty program base continued to grow and was at about 7.5 lac
 customers by the end of FY15-16 with nearly 79% of business being
 contributed by loyal customers.
 
 Also, the brand continued to win awards in forums like India Retail
 Forum, Food & grocery forum, Asia Retail Congress, Franchise India and
 CMO Asia awards etc.
 
 GODREJ CONSUMER PRODUCTS
 
 GCPL was ranked number 9 on the ''Great Place to Work - Best Workplaces
 in Asia 2016 and ranked among the top 25 ''Aon Hewitt Best Employers in
 India - 2016'' survey
 
 Godrej Consumer Products Limited (GCPL)
 
 GCPL, an associate of your Company, has continued to grow ahead of the
 overall FMCG sector, as well as the home and personal care categories
 that it participates in, despite a challenging macro environment.
 
 On a consolidated basis, GCPL reported a total income of Rs. 8,968 crore
 during the FY15-16 compared to Rs. 8,276 crore for FY14-15. The Net
 Profit grew by 23% at Rs. 1,119 crore as compared to Rs. 907 crore during
 the FY14-15.
 
 GCPL''s expanding footprint is driven by a focused 3x3 strategy - a
 presence in three business categories (personal care, hair care and
 home care) in three geographies (Asia, Africa and Latin America) - to
 become an emerging markets FMCG leader. Despite challenges across
 geographies, its businesses have performed well, with the company''s
 salience of international revenues at 47%.  GCPL''s focus has been to
 accelerate innovation and back new products with strong marketing
 investments. In the past year, GCPL made several new launches in the
 domestic and international businesses, expected to further enhance the
 company''s competitiveness, improve the equity of its brands and drive
 increased penetration and consumption. Over 40% of GCPL''s growth now
 comes from new products and renovations. It was also the highest ranked
 Indian company (at number 24) on Forbes'' list of the ''World''s 100 Most
 Innovative Growth Companies 2015'', for the second year in a row.
 
 Today, GCPL is one of the largest household and personal care companies
 in India; the leader in hair colour, household insecticides and liquid
 detergents, and the number two player in toilet soaps and air care.
 Significant marketing investments have driven higher consumption and
 penetration across the board. GCPL''s superior global supply chain and
 future ready sales organisation leverage the latest technology for
 sharper execution and better decision making, thus strengthening market
 positions.
 
 It was ranked the number 1 FMCG Company to work for in the ''Great Place
 to Work - Best Workplaces in India 2015'' list; its twelfth consecutive
 year on the list. It was also ranked number 9 on the ''Great Place to
 Work - Best Workplaces in Asia 2016'' list and ranked among the top 25
 ''Aon Hewitt Best Employers in India - 2016'' survey.
 
 Other Subsidiaries
 
 Godrej International Limited (GINL), incorporated in the Isle of Man,
 is a wholly owned subsidiary of the Company. GINL trades worldwide in
 vegetable oils and concentrates on palm, lauric and soya oils.
 
 The year under review saw the emergence of a powerful EL Nino weather
 phenomenon and that led to a sharp rise in prices. The Company was able
 to catch this big upward move in prices successfully. The EL Nino is
 likely to be followed by La Nina which may bring further volatility in
 weather conditions.
 
 Godrej International Limited, Labuan is incorporated in the financial
 centre of Labuan. This Company has remained dormant and is not actively
 trading as yet. All trading activities have been successfully centred
 into the older and more mature entities incorporated in Isle of Man and
 in Singapore.
 
 Our international companies have developed a worldwide reputation for
 research into commodity pricing and are often invited to make
 presentations at prestigious venues and are frequently quoted in the
 media.
 
 Ensemble Holding and Finance Limited (EHFL), a wholly owned subsidiary
 of your Company, is a Non-Banking Finance Company. The total income of
 EHFL for FY15-16 was Rs. 1.03 crore as against that of Rs. 0.97 crore 
 last year. The Profit before Tax of EHFL remained the same at Rs. 0.95 
 crore as against last year.
 
 Pursuant to Regulation 16(1)(c) of the SEBI (Listing obligations and
 disclosure requirements) Regulations, 2015 (Listing Regulations), your
 Company has formulated a policy for determining its ''material
 subsidiaries''. The said policy has been uploaded on the Company''s
 website http://www.godrejindustries.com/Resources/pdf/compliances/
 material_subsidiaries.pdf
 
 Amalgamation
 
 During the year under review, GIL Vikhroli Real Estate Limited, a
 wholly owned subsidiary of the Company, was amalgamated with GPL. In
 terms of the Scheme of Amalgamation (''Scheme'') sanctioned by the
 Hon''ble Bombay High Court vide order dated February 26, 2016, the
 appointed date of the Scheme was August 01, 2015. The effective date of
 the scheme was March 15, 2016.  Pursuant to the scheme, the Company was
 allotted 1,67,45,762 equity shares of GPL.
 
 Financial Position
 
 The loan funds at the end of the year stand at Rs. 2,661 crore as
 compared to Rs. 2,022 crore for the previous year. The debt equity ratio
 is 1.51 as compared to 1.16 last year. Your Company continues to hold
 the top most rating of [ICRA]A1  from ICRA for its commercial paper
 program (Rs. 1000 crore) (previous year Rs. 700 crore). ICRA has reaffirmed 
 an [ICRA]A1  rating for its short term debt instruments/other banking 
 facilities (Rs. 800 crore) (previous year Rs. 800 crore). This rating of 
 ICRA represents highest-credit quality carrying lowest-credit risk. ICRA 
 also reaffirmed [ICRA] AA rating with stable outlook for long-term debt, 
 Non-convertible Debentures, working capital and other banking facilities 
 (Rs. 1015 crore) (previous year Rs. 940 crore). This rating represents 
 high-credit quality carrying low-credit risk. ICRA has also assigned a 
 rating of MAA  with stable outlook for our Public Deposit scheme. The 
 Public Deposit scheme under the Companies Act, 1956 has been discontinued. 
 Instruments with this rating are considered to have the high-credit 
 quality and low credit risk.
 
 Manufacturing Facilities
 
 The chemicals division of your Company has manufacturing units at
 Ambernath, Valia, Wadala and Dombivali.
 
 The Ambernath factory is ISO-9001:2008, ISO 14001:2004, ISO 18001:2007,
 ISO 27001: 2005 certified. Over the last year the factory also got
 certified for FSSC 22000 and ISO 22716 for Food safety and GMP
 respectively. The factory has also achieved considerable energy savings
 over the year.
 
 The Valia factory is ISO-9001:2008, ISO 14001:2004, ISO 18001:2007, ISO
 27001: 2005 certified.  The Factory has also got certification from
 FDA, FSSAI and Kosher. We are member of Roundtable on Sustainable Palm
 Oil. The Valia factory has successfully got GMP  B2 certification for
 palmitic acid used as animal feed during this year. The Company has
 invested in plants for making specialty products.
 
 The Vegoils Division (Wadala) was operating as contract processor of
 edible oils upto August 2015. From September 2015, the unit is
 manufacturing and selling edible oils under Godrej Brand.  The total
 turnover has increased to Rs. 61 crore as against Rs. 6 crore in previous
 year.
 
 The Dombivali unit has flexibility of producing multiple value added
 products, mainly fatty esters and amide, used in personal and home care
 products.
 
 Research and Development (R&D)
 
 In the year under consideration our R&D activities have resulted in the
 launch of several new products, each of them being high value
 derivatives of fatty acids and fatty alcohols, having specialty
 applications in home and personal care products, animal feeds and agri
 products.  Innovations in existing processes and the endeavor to
 develop new processes and technologies will be an ongoing activity. So
 too, will be our efforts to manufacture premium quality fatty acids and
 fatty alcohols from alternate raw materials. We will also continue to
 focus our attention on high value fractionated fatty acids and fatty
 alcohols for the polymer, oilfield, lubricant and paper industries.
 Parallel to all the above oleo-chemicals projects, R&D continues its
 efforts in developing improved and customized specialty surfactants &
 bio-surfactants through in house and external consultation routes.
 
 Human Resource Development and Industrial Relations
 
 During the year under review, industrial relations at all plant
 locations remained harmonious.
 
 Your Company emphasizes on the safety of people working in its
 premises. Structured safety meetings were held and safety programmes
 were organized for them throughout the year.
 
 Business Responsibility Report
 
 SEBI, vide its circular SEBI/LAD-NRO/GN/2015-16/27 dated December 22,
 2015 had mandated inclusion of Business Responsibility Reports (BRR) as
 part of the Annual Reports for top 500 listed entities based on market
 capitalisation as on March, 31 of every financial year.
 
 A detailed report on your Company''s sustainability initiatives is
 published in the Business Responsibility Report, as ''Annexure B'' and
 forms a part of this report. The BRR describes the initiatives taken by
 the company from an environmental, social and governance perspective.
 
 Information Systems
 
 Your Company has awarded IT outsourcing contracts to manage Infra and
 SAP application support to IBM & Numantra Technologies Ltd. for better
 support and savings on annual cost.
 
 Mobile application was developed for Sales & Marketing team to have
 online access to product pricing policy thus helping them to get the
 online Net Realisation rates for quoting. It is also a two way
 communication tool whereby the field sales manager can give their
 feedback on competition pricing. It helps them in taking corrective
 action and decision making. Also, it carries out pricing trend analysis
 for various products.
 
 Employee Stock Grant Scheme 2011 (ESGS) and Employee Stock Option Plan
 (ESOP)
 
 On May 27, 2015, the Nomination and Compensation Committee approved a
 total of 1,68,084 stock grants equivalent to 1,68,084 equity shares of
 the Company to eligible employees in terms of the ESGS 2011 Scheme. The
 exercise price is Rs.1/- per equity share. As on March 31, 2016 and in
 terms of the ESGS Scheme, 2011, a total of 1,09,370 grants were vested,
 out of which 1,06,748 were exercised and allotted.
 
 Disclosure in compliance with section 62 of the Companies Act,2013,
 Rule 12 of Companies (Share Capital and debentures) Rules, 2014, SEBI
 (Share Based Employee Benefits) Regulations, 2014 and The SEBI
 (Employee Stock Options Scheme and Employee Stock Purchase Scheme)
 Guidelines 1999 is given in Annexure C attached and forms a part of
 this report.
 
 Fixed Deposits
 
 Your Company is currently not accepting public deposits. The management
 of the Company is thankful to all the investors for their continued
 trust in the Company. During the year ended March 31, 2016, deposits
 aggregating Rs. 32.11 crore. has been repaid on maturity. The Company has
 no overdue deposits other than unclaimed deposits.
 
 Depository System
 
 Your Company''s equity shares are available for dematerialization
 through National Securities Depository Limited and Central Depository
 Services (India) Limited. As of March 31, 2016, 99.80% of the equity
 shares of your Company were held in demat form.
 
 Directors
 
 In accordance with the Articles of Association of the Company, the
 following directors retire by rotation at the ensuing Annual General
 Meeting and being eligible offer themselves for reappointment;
 
 - Mr. J. N. Godrej (DIN 00076250)
 
 - Mr. N. S. Nabar (DIN 06521655)
 
 Your Company had appointed following Non-Executive (Independent)
 Directors pursuant to Regulation 17 of the (Listing Regulations) and
 they are not liable to retire by rotation as per the Companies Act,
 2013 (the Act);
 
 - Mr. S. A. Ahmadullah (DIN 00037137)
 
 - Mr. A. B. Choudhury (DIN 00557547)
 
 - Mr. K. K. Dastur (DIN 00050199)
 
 - Mr. K. M. Elavia (DIN 00003940)
 
 - Mr. A. D. Cooper (DIN 00026134)
 
 - Mr. K. N. Petigara (DIN 00066162)
 
 Your Company has received declarations from all the Independent
 Directors of the Company confirming that they meet with the criteria of
 independence as prescribed under sub-section (7) of Section 149 of the
 Act.
 
 Your Company has conducted a formal Board Effectiveness Review as part
 of its efforts to evaluate, identify improvements and thus enhance the
 effectiveness of the Board, its Committees and Individual Directors.
 This was in line with the requirements mentioned in the Act.
 
 The HR team of the Company worked directly with the Chairman and the
 Nomination and Compensation Committee of the Board, to design and
 execute this process which was adopted by the Board. Each Board Member
 completed a confidential online questionnaire, providing vital feedback
 on how the Board currently operates and how it might improve its
 effectiveness.
 
 The survey comprised four sections and compiled feedback and
 suggestions on:
 
 - Board Processes (including Board composition, strategic orientation
 and team dynamics);
 
 - Individual Committees;
 
 - Individual Board Members; and
 
 - the Chairman
 
 The following reports were created, as part of the evaluation:
 
 - Board Feedback Report;
 
 - Individual Board Member Feedback Report; and
 
 - Chairman''s Feedback Report
 
 The overall Board Feedback Report was facilitated by Mr. A. B. Godrej,
 Chairman. The Individual Committees and Board Members'' feedback was
 shared with the Chairman. Following his evaluation, a Chairman''s
 Feedback Report was also compiled.
 
 On the recommendation of the Nomination and Compensation Committee, the
 Board had framed a policy for selection and appointment of Directors,
 Senior Management and their remuneration.  The details of the Board
 Appointment Policy are stated below:
 
 Board Appointment Policy - Godrej Industries Limited (the Company)
 
 The Company is committed to equality of opportunity in all aspects of
 its business and does not discriminate on the grounds of nationality,
 race, colour, religion, caste, gender, gender identity or expression,
 sexual orientation, disability, age or marital status.
 
 The Company recognises merit and continuously seeks to enhance the
 effectiveness of its Board.  The Company believes that for effective
 corporate governance, it is important that the Board has the
 appropriate balance of skills, experience and diversity of
 perspectives.
 
 Board appointments will be made on merit basis and candidates will be
 considered against objective criteria with due regard for the benefits
 of diversity on the Board. The Board believes that such merit-based
 appointments will best enable the Company to serve its stakeholders.
 
 The Board will review this Policy on a regular basis to ensure its
 effectiveness.
 
 for the financial year ending March 31, 2017. They are required to
 submit the report to the Central Government within 180 days from the
 end of the accounting year.
 
 Secretarial Auditors
 
 The Board has appointed M/s. A. N. Ramani & Co., Company Secretaries,
 Practising Company Secretary, to conduct Secretarial Audit for the
 financial year 2015-16. The Secretarial Audit Report for the financial
 year ended March 31, 2016 is annexed herewith marked as Annexure ''G'' to
 this Report. The Secretarial Audit Report does not contain any
 qualification, reservation or adverse remark.
 
 Audit Committee
 
 The Audit Committee, constituted pursuant to the provisions of the Act,
 and the Listing Regulations, has reviewed the Accounts for the year
 ended March 31, 2016. The members of the Audit Committee are Mr. K. K.
 Dastur, Mr. S. A. Ahmadullah, Mr. K. N. Petigara and Mr. A. B.
 Choudhury, all Independent Directors.
 
 Policy to Prevent Sexual Harassment at Work Place
 
 Your Company is committed to creating and maintaining an atmosphere in
 which employees can work together without fear of sexual harassment,
 exploitation or intimidation. As required under the provisions of
 Sexual Harassment of Women at Workplace (Prevention, Prohibition and
 Redressal) Act, 2013, your Company has constituted an Internal
 Complaints Committee. No complaints were received by the committee
 during the year under review. Since the number of complaints filed
 during the year was NIL, the Committee prepared a NIL complaints
 report. This is in compliance with section 22 of the Sexual Harassment
 of Women at Workplace (Prevention, Prohibition and Redressal) Act,
 2013.
 
 Directors'' Responsibility Statement
 
 The Board has laid down Internal Financial Controls within the meaning
 of the explanation to section 134 (5) (e) (IFC) of the Act. The Board
 believes the Company has sound IFC commensurate with the nature and
 size of its business. Business is however dynamic. The Board is seized
 of the fact that IFC are not static and are in fact a fluid set of
 tools which evolve over time as the business, technology and possibly
 even fraud environment changes in response to competition, industry
 practices, legislation, regulation and current economic conditions.
 There might therefore be gaps in the IFC as Business evolves. The
 Company has a process in place to continuously identify such gaps and
 implement newer and/or improved controls wherever the effect of such
 gaps might have a material effect on the Company''s operations.
 
 Pursuant to the provisions contained in Section 134 of the Act, the
 Directors of your Company confirm:
 
 a) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any;
 
 b) that such accounting policies have been selected and applied
 consistently, and such judgments and estimates have been made 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 or loss of the Company for that period;
 
 c) that proper and sufficient care has been taken for the maintenance
 of adequate accounting records in accordance with the provisions of
 this Act for safeguarding the assets of the Company, for preventing and
 detecting fraud and other irregularities;
 
 d) that the annual accounts have been prepared on a going concern
 basis.
 
 e) that the proper policies and procedures have been adopted for
 ensuring the orderly and efficient conduct of its business, including
 adherence to code of conduct and policies, the safeguarding of assets,
 the prevention and detection of frauds and errors, the accuracy and
 completeness of the accounting records, and the timely preparation of
 reliable financial information and that such policies and procedures
 are adequate and were operating effectively.
 
 f) that proper systems are in place to ensure compliance of all laws
 applicable to the Company and that such systems are adequate and
 operating effectively.
 
 Corporate Governance
 
 As required by the existing Regulation 34(3) of the Listing Regulation,
 a detailed report on Corporate Governance is included in the Annual
 Report. The Auditors have certified the Company''s compliance of the
 requirements of Corporate Governance in terms of Regulation 34(3) of
 the Listing Regulation and the same is annexed to the Report on
 Corporate Governance.
 
 Disclosures and Information under the Companies Act, 2013
 
 Pursuant to section 134 and any other applicable section of the Act,
 following disclosures and information is furnished to the shareholders:
 
 (a) Conservation of Energy, Technology absorption and Foreign Exchange
 Earnings and Outgo
 
 ''Annexure D'' to this Report gives information in respect of
 Conservation of Energy, Technology absorption and Foreign Exchange
 Earnings and Outgo, required under Section 134(3)(m) of the Act, and
 forms a part of the Board''s Report.
 
 (b) Extract of Annual return
 
 The extract of the annual return as provided under sub section (3) of
 Section 92 of the Act is given in Form No. MGT 9 as ''Annexure E'',
 attached and forms a part of this report.
 
 (c) Board meetings
 
 The Board of Directors of your Company met 6 (six) times during the
 year under review. The details of Board meetings and the attendance of
 the Directors are provided in the Corporate Governance Report.
 
 (d) Loans, Guarantees & Investments
 
 Details of Loans, Guarantees and Investments covered under the
 provisions of Section 186 of the Act, are given in the notes to the
 Financial Statements.
 
 (e) Related Party Transactions
 
 All related party transactions entered into by your Company during the
 financial year were on an arm''s length basis and were in the ordinary
 course of business.  There were no materially significant related party
 transactions made by the Company with related parties. Prior omnibus
 approval of the Audit Committee was obtained for those transactions
 which were of routine nature. Accordingly, the disclosure of Related
 Party Transactions as required under Section 134(3) (h) of the Act, in
 Form AOC-2 is not applicable. Attention of members is also drawn to the
 disclosure of transactions with related parties set out in Note No. 44
 of Standalone Financial Statements, forming part of the Annual Report.
 None of the Directors has any pecuniary relationships or transactions
 vis-a-vis the Company.
 
 The policy on Related Party Transactions is uploaded on the Company''s
 website http://www.godrejindustries.com/Resources/pdf/compliances/
 Policy-on-Related-Party-Transaction.pdf.
 
 (f) Particulars of Employees:
 
 Disclosures with respect to the remuneration of Directors and employees
 as required under Section 197 of the Act, and Rule 5(1) of the
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014 has been appended as Annexure ''F'' to this Report.  The information
 required pursuant to Section 197 of the Act read with Rule 5(2)&(3) of
 the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014 in respect of employees of your Company is available for
 inspection by the members at registered office of the Company during
 business hours on working days up to the date of the ensuing Annual
 General Meeting. If any member is interested in obtaining a copy
 thereof, such member may write to the Company Secretary, whereupon a
 copy would be sent.
 
 (g) Risk Management
 
 Your Company had formed a Risk Management Committee consisting of the
 Managing Director and the Whole time Directors. The Committee
 identifies, evaluate business risks and opportunities. This Committee
 has formulated and implemented a policy on risk management to ensure
 that the company''s reporting system is reliable and that the company
 complies with relevant laws and regulations. The Board of Directors of
 your Company are of the opinion that, at present, there are no elements
 of risks which may threaten the existence of the Company.
 
 Your Company has a vigil mechanism named Whistle Blower Policy to deal
 with instance of fraud and mismanagement, if any. The details of the
 Whistle Blower Policy are explained in the Corporate Governance Report
 and also posted on the website of the Company.
 
 (h) Nomination & Remuneration Policy for Senior Management
 
 The details relating to ratio of the remuneration of each director to
 the median remuneration of the employees of the Company for FY15-16 is
 given in ''Annexure F'' attached and forms part of this Report.
 
 The policy of your Company on director''s appointment and remuneration
 of the directors, key managerial personnel and other employees
 including criteria for determining qualifications, positive attributes,
 independence of a director, is stated below:
 
 TOTAL REWARDS PHILOSOPHY GODREJ INDUSTRIES LIMITED (the Company)
 
 Our Total Rewards Framework aims at holistically utilising elements
 such as fixed and variable compensation, long-term incentives, benefits
 and perquisites and non-compensation elements (career development, work
 life balance and recognition).
 
 Highlights
 
 The rewards framework offers you the flexibility to customise different
 elements, basis need. It is also integrated with our performance and
 talent management processes and designed to ensure sharply
 differentiated rewards for our best performers.
 
 The total compensation for a given position is influenced by three
 factors: position, performance and potential. As a broad principle, for
 our high performers and potential employees, we strive to deliver total
 compensation at the 90th percentile of the market.
 
 Total Compensation
 
 The total compensation has three components:
 
 1.  ''Fixed Compensation'' comprises of basic salary and retirement
 benefits, like provident fund and gratuity
 
 2.  ''Flexible Compensation'' is a fixed pre-determined component of the
 compensation.
 
 3.  ''Variable Compensation (Performance Linked Variable Remuneration)''
 rewards one for delivering superior business results and individual
 performance. It is designed to provide a significant upside earning
 potential without cap for over achieving business results. It has a
 ''Collective'' component, which is linked to the achievement of specified
 business results, measured by Economic Value Added or other related
 metrics, relative to the target set for a given financial year and an
 ''Individual'' component, based on the performance, as measured by the
 performance management process.
 
 Long Term Incentives (Employee Stock Grant Scheme)
 
 This scheme aims at driving a culture of ownership and focus on
 long-term results. It is applicable to senior managers. Under this
 scheme, performance based stock grants are awarded on the basis of
 performance.
 
 (i) Financials
 
 There are no material changes and commitments affecting the financial
 position of the Company which have occurred between the end of the
 financial year to which the financial statement relates and the date of
 the report.
 
 There are no qualifications, reservations or adverse remarks in the
 Auditors Report and the Secretarial Audit Report for FY15-16.
 
 (j) Share Capital
 
 During the year under review your company allotted 1,06,748 equity
 shares of Rs.1 each upon exercise of stock option under Company''s
 Employee Stock Grants Scheme and 85 bonus equity shares on ESGS in
 compliance with the scheme of amalgamation of Wadala Commodities
 Limited with the Company. Consequently, the paid up share capital of
 your Company has increased from Rs.33,58,81,974/- divided into
 33,58,81,974 equity shares of Rs.1 each to Rs.33,59,88,807 divided into
 33,59,88,807 equity shares of Rs.1 each.
 
 (k) Significant Court Order received
 
 During the year under review, the Hon''ble High Court of judicature at
 Bombay had, on February 26, 2016, passed an order approving the scheme
 of amalgamation of GIL Vikhroli Real Estate Limited with Godrej
 Properties Limited.
 
 Additional Information
 
 The consolidated financial statements of the Company forms a part of
 this Annual Report.  Accordingly, this Annual Report of your Company
 does not contain the financial statements of its subsidiaries. The
 Audited Annual Accounts and related information of the Company''s
 subsidiaries will be made available upon request. These documents will
 also be available for inspection during business hours at the Company''s
 registered office in Mumbai, India. The subsidiary companies'' documents
 will also be available for inspection at the respective registered
 offices of the subsidiary companies during business hours.
 
 Acknowledgement
 
 Your Directors thank the Union Government, the Governments of
 Maharashtra and Gujarat as also all the Government agencies, banks,
 financial institutions, shareholders, customers, employees, fixed
 deposit holders, vendors and other business associates, who, through
 their continued support and co-operation, have helped as partners in
 your Company''s progress.
 
 For and on behalf of the Board of Directors
 
 A. B. Godrej
 
 Chairman                                     Mumbai, May 25, 2016.
Source : Dion Global Solutions Limited
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