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Greenply Industries Ltd.

BSE: 526797 | NSE: GREENPLY |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE461C01038 | SECTOR: Miscellaneous

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

To

The Members,

The Directors have pleasure in presenting their 28th 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, 2018.

Financial highlights

The financial performance of your Company, for the year ended March 31, 2018 is summarized below:

(Rs. in lacs)

2017-18

2016-17

Particulars

Standalone

Consolidated

Standalone

Consolidated

Turnover

167511.75

170795.76

176882.53

177344.71

Profit before finance charges, Tax, Depreciation/Amortization (PBITDA)

24348.73

23290.33

25759.72

24866.32

Less: Finance Charges

947.23

1135.63

1811.77

1891.94

Profit before Depreciation/ Amortization (PBTDA)

23401.50

22154.70

23947.95

22974.38

Less: Depreciation

4481.41

4981.11

4853.09

5066.28

Net Profit before Taxation (PBT)

18920.09

17173.59

19094.86

17908.10

Provision for taxation

5350.63

5350.63

5587.65

5587.65

Profit/(Loss) after Taxation (PAT)

13569.46

11822.96

13507.21

12320.45

Share of profit/(loss) of Joint Venture

NA

(760.25)

NA

223.92

Profit/(Loss) after Taxation and share of profit/(loss) of Joint Venture

13569.46

11062.71

13507.21

12544.37

Transfer to General Reserve

6500.00

6500.00

6500.00

6500.00

Result of operations and the state of Company’s affairs

During the year under review, your Company has achieved revenue of Rs.167511.75 lacs as against Rs.176882.53 lacs in the previous year. Profit for the year 2017-18 was Rs.13569.46 lacs as against Rs.13507.21 lacs in the previous year.

Exports during the year 2017-18 was Rs.3301.73 lacs. Your Company is continuously 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 operations and profit for the year 2017-18 were Rs.170795.76 lacs and Rs.11062.71 lacs respectively as against Rs.177344.71 lacs and Rs.12544.37 lacs in the previous year.

Your Company is the preferred partner of choice for a large number of offices and home builders, having a comprehensive product portfolio servicing clients at every point of the price spectrum. Your Company continues to retain and reinforce its market share under organised sector with a pan-India distribution network comprising of distributors/dealers and retailers. Your Company is present across different price points to cater to the needs of all customers across the high-end, midmarket and value-for-money segments. The Company’s pan-India distribution network ensures easy availability of products in almost every part of India. During the year under review, your Company is continuously trying to locate new markets for its business venture of trading in Acrylic Solid Surface sheets, sourced from various overseas suppliers and marketed in India.

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. Wood panel market is one of the major verticals of the interior infrastructure, comprising materials used in building furniture. Such materials include plywood, engineered wood panels and decorative surface products. Your Company 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. The demand for readymade furniture, manufactured with engineered panels like medium density fibreboards (MDF), is growing. The real estate industry is one of the most significant growth drivers for the plywood sector. Your company also focused on the value added products to improve margin.

An increasing shift towards the organised sector is foreseen in the industry. Growing customer awareness, brand consciousness and a plethora of choices at the disposal of consumers is encouraging product innovation and quality focus from the organised players. However, high price differentiation between the unorganised and organised segment persists. The industry is hopeful that the implementation of GST will bridge this price gap and lead to formalisation of the industry.

Indian furniture industry is one of the world’s largest furniture markets. It is primarily driven by a substantial middle-class population, rapid urbanisation, favourable demographics, increasing per capita income and growing nuclear families. This will encourage strong demand growth for plywood, MDF and allied products. Reconstituted wood products, such as plywood, board and medium density fibreboards are likely to be used increasingly by consumers, real estate developers, furniture makers, railways and defence, are among others users. Innovations and use of technology shall help the wood industry to grow profitably, and leverage opportunities in the future.

Going forward, there is an increasing shift being witnessed towards the organised sector owing to brand and quality awareness. With wider choice, product innovation and warranty, being offered by organised players, customers are putting more focus on this segment.

In respect of setting-up of new MDF manufacturing unit in Routhu Suramala, Chittoor, Andhra Pradesh, necessary steps are being taken to obtain the remaining statutory approvals/licenses. Civil construction and Structural work are completed. Installation of all imported and domestic machineries are approaching completion and trail production has commenced. The said facility is expected to be commissioned shortly.

In respect of setting-up of new Veneer, Lumber and Panel products manufacturing unit at Nkok SEZ, Gabon, West Africa, through step-down wholly owned subsidiary Greenply Gabon SA, the Company has started commercial production of Veneer and getting good response from the market. The Board of Directors of the Company accorded their approval for the expansion of Veneer line in the existing manufacturing unit of Greenply Gabon SA, Gabon, step-down wholly owned subsidiary of the Company, situated at Nkok SEZ, Gabon, West Africa.

The Company has commenced commercial production of “Decorative Plywood / Decorative Veneers” at its manufacturing unit situated at Bamanbore, Gujarat.

In respect of setting-up of new unit in Sandila Industrial Area, Sandila, Dist: Hardoi, Uttar Pradesh for manufacturing of Plywood and its allied products, the Company has received land allotment letter from the respective government authority. Transfer of forest licenses in the name of the Company are under process.

Your Directors are confident of achieving better results in the coming years.

Subsidiaries and Joint Venture

Presently, your Company has three overseas wholly owned subsidiaries viz.(i) Greenply Trading Pte. Ltd., Singapore, engaged in the business of trading and marketing of veneers, panel products, wooden flooring & allied products and also investments in companies engaged in manufacturing and trading of said products. (ii) Greenply Holdings Pte. Ltd., Singapore, with the objective to hold the investment (presently held by Greenply Trading Pte. Limited, Singapore) in Greenply Alkemal (Singapore) Pte. Ltd., Singapore. (iii) Greenply Middle East Limited, Dubai, UAE, with the objective to manage, control and hold investment in Greenply Gabon SA, Gabon, West Africa and general trading business.

Further, your Company has an overseas step-down wholly owned subsidiary viz. Greenply Gabon SA, Gabon, West Africa, (Subsidiary of Greenply Middle East Limited, Dubai, UAE) having manufacturing unit at Nkok SEZ in Gabon, West Africa. The same is engaged in the business of manufacturing and marketing of veneers.

Your Company also has one overseas joint venture namely Greenply Alkemal (Singapore) Pte. Ltd. (a joint venture company of Greenply Industries Limited, India through its wholly owned subsidiary Greenply Trading Pte.Ltd., Singapore and Alkemal Singapore Pte. Ltd., Singapore) engaged in the business of trading and marketing of commercial veneers and panel products. Further, the joint venture Company has a subsidiary in Myanmar which is engaged in the business of manufacturing and trading of veneer and lumber.

During the year under review, your Company has incorporated Greenpanel Industries Limited, a wholly owned subsidiary in India. The Board of Directors at its meeting held on March 20, 2018 has consented to explore an option to de-merge few businesses of the Company into Greenpanel Industries Limited.

The statement in form AOC-1 containing the salient features of the financial statements of subsidiaries/ associate companies/joint ventures pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014 is annexed to this Report. Further, the contribution of Greenply Trading Pte. Ltd., Singapore, Greenply Holdings Pte. Ltd., Singapore, Greenply Middle East Limited, Dubai, UAE, and Greenpanel Industries Limited, India, wholly owned subsidiaries to overall performance of the Company during the year under review is as mentioned below:

Net Assets

i.e. Total Assets minus Total Liabilities

Share in Profit or Loss

As % of consolidated

As % of consolidated

Net Assets

Rs.in Lacs

Profit or Loss

Rs. in Lacs

Parent - Greenply Industries Limited

104.28%

91505.38

122.66%

13569.46

Subsidiary

Greenply Trading Pte. Ltd.

-3.52%

(3094.24)

-16.81%

(1859.46)

Greenply Holdings Pte. Ltd.

-0.01%

(10.04)

-0.04%

(4.66)

Greenply Middle East Ltd.

-0.74%

(645.37)

-5.76%

(637.44)

Greenpanel Industries Ltd.

-0.01%

(5.19)

-0.05%

(5.19)

Total

100.00%

87750.54

100.00%

11062.71

Share in Other Comprehensive Income

Share in Total Comprehensive Income

As % of consolidated

As % of consolidated

Other Comprehensive Income

Rs.in Lacs

Total Comprehensive Income

Rs. in Lacs

Parent - Greenply Industries Limited

38.87%

119.41

120.40%

13688.87

Subsidiary

Greenply Trading Pte. Ltd.

-4.66%

(14.32)

-16.48%

(1873.78)

Greenply Holdings Pte. Ltd.

-0.01%

(0.04)

-0.04%

(4.70)

Greenply Middle East Ltd.

65.80%

202.17

-3.83%

(435.27)

Greenpanel Industries Ltd.

0.00%

0.00

-0.05%

(5.19)

Total

100.00%

307.22

100.00%

11369.93

Change(s) in the nature of business

There has been no change in the nature of business of the Company.

Consolidated financial statements

For the period under review, the Company has consolidated the financial statements of its wholly owned subsidiaries viz. Greenply Trading Pte. Ltd., Singapore, Greenply Holdings Pte. Ltd., Singapore, Greenply Middle East Limited, Dubai (UAE) and Greenpanel Industries Limited, India. 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 financial statements 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 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 statements of subsidiary/associate companies/joint venture in form AOC -1 is annexed to this Report.

Credit Rating

During the year “Credit Analysis and Research Ltd. (CARE)”and “India Ratings & Research” have re-affirmed our external credit rating for both long term and short term borrowings as detailed below:

Rating Agency

Instrument

Rating

CARE

Banking Facilities -Long Term

CARE AA-

CARE

Banking Facilities -Short Term

CARE A1

CARE

Short Term Debt (including Commercial Paper)

CARE A1

India Ratings & Research

Banking Facilities -Long Term

IND AA-

India Ratings & Research

Banking Facilities -Short Term

IND A1

India Ratings & Research

Short Term Debt (including Commercial Paper)

IND A1

Above credit rating reflects Company’s commitment and capability to persistent growth through prudence and focus on financial discipline.

Dividend

Your Directors recommend a final dividend of 60% i.e. Re.0.60 per equity share (previous year 60% i.e.Re.0.60 per equity share of Re.1/-) on the Company’s 122627395 equity shares of Re.1/- each for financial year 2017-18. The final dividend on the equity shares, if declared as above, would involve an outflow of Rs.735.76 lacs towards dividend and Rs.149.78 lacs towards dividend distribution tax, resulting in a total outflow of Rs.885.54 lacs.

Transfer to Reserves

Your Directors propose to transfer Rs.6500 lacs to the General Reserve.

Share Capital

During the year under review there is no change in the share capital of the Company.

Directors and Key Managerial Personnel

Mr. Moina Yometh Konyak, Non-Executive & NonIndependent Director of the Company has passed away on 8th January, 2018. The Board of the Company conveyed their sympathy, sorrow and condolences to his family.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Shobhan Mittal [DIN: 00347517), Joint Managing Director & CEO of the Company, will retire by rotation at the ensuing Annual General Meeting and is eligible for re- appointment.

The Board of Directors of the Company at its meeting held on 7th February, 2018 has appointed Mr. Sanidhya Mittal, as an Additional Director of the Company with effect from 7th February, 2018. Pursuant to Section 161 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Sanidhya Mittal holds office as such upto the ensuing 28th Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Companies Act, 2013 from a Member proposing his candidature for appointment as director of the Company, liable to retire by rotation. The Board of Directors at their said meeting, subject to approval of Members of the Company has accorded their approval to appoint Mr. Sanidhya Mittal, as an Executive Director of the Company for a period of 5 years w.e.f. 07.02.2018. The same was recommended to the Board of Directors by the Nomination and Remuneration Committee at its meeting held on 7th February, 2018. The detailed terms and conditions including remuneration have been mentioned in the Notice convening 28th Annual General Meeting. Further, the details of Mr. Sanidhya Mittal [DIN: 06579890) as required under Listing Regulations and SS-2 have also been provided in the Corporate Governance Report and the Notice of 28th Annual General Meeting.

The SEBI has recently come out with a Notification on 9th May, 2018 amending the existing Listing Regulations by issuing the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (hereinafter referred to as “New Regulations”). The New Regulations shall be effective from 1st April, 2019 unless any other specific date is provided for a specific Regulation. Regulation 17 is one of the provisions in which the amendments have been made by insertion of a new sub- regulation (1A) thereunder and the same shall be applicable with effect from 1st April, 2019. In terms of the said new sub- regulation, a person shall not be eligible to get appointed as a non-executive director or in case of an existing non- executive director, shall not be eligible to continue such directorship, if he/she has attained the age of seventy five years unless the approval of the shareholders of the company is obtained by way of a special resolution. Though, the aforesaid provision shall be applicable to the Company from 1st April, 2019, however, considering the implication of such amendment, the same shall result in the immediate vacation of such directors as the restriction is not imposed only on the appointment but on the continuation of the existing tenure too. In view of the above, the Company is required to take approval from the shareholders by way of a special resolution beforehand so that the existing nonexecutive directors attaining such age can complete their existing term as approved by the shareholders earlier. This is to inform that Mr. Susil Kumar Pal (DIN: 00268527) and Mr. Anupam Kumar Mukerji (DIN: 00396878) were appointed as Non-Executive Independent Directors by the Company in its Annual General Meeting held on 22nd August, 2014 for a period of five years from the said date till the Annual General Meeting to be held in 2019. Since Mr. Pal and Mr. Mukerji, both have already attained the specified age limit of 75 years, continuation of their directorship shall require approval of shareholders by way of special resolutions. Keeping in view that both the aforesaid directors possess requisite qualifications and also carry rich and varied experience in the industry in which the Company operates and that their continued association with the Company would be of immense benefit to the Company, it is desirable to continue to avail their services as Non-executive Independent Directors of the Company. Accordingly, the Board recommends their continuation in the Company.

None of the Directors of your Company is disqualified under the provisions of Section 164(2)(a) & (b) of the Companies Act, 2013. However, the name of Ms. Sonali Bhagwati Dalal, Independent Director of the Company was published by the Ministry of the Corporate Affairs (MCA) on its website in the list of directors disqualified under Section 164(2) of the Companies Act, 2013. Subsequently a petition was filed by her before the Hon’ble High Court of Delhi and the Hon’ble High Court of Delhi has stayed the impugned list of Disqualified Directors to the extent it includes her name. Further, to avail the Condonation of Delay Scheme (CODS), 2018, she has filed an appeal before the National Company Law Tribunal (NCLT) for revival of the concerned defaulting company and the same is pending for disposal. In view of the pendency of the said appeal before NCLT, the Hon’ble High Court of Delhi has vide its order dated May 07, 2018 has extended the stay till disposal of the said appeal by MCA.

Declaration by Independent directors

The Independent Directors of the Company have given their declarations to the Company that they meet the criteria of independence as provided in Section 149 (7) read with Section 149(6) of the Companies Act, 2013 and Listing Regulations.

Meetings of the Board of Directors

Five (5) Board Meetings were held during the financial year ended 31st March, 2018. The details of the Board Meetings with regard to their dates and attendance of each of the Directors there at have been provided in the Corporate Governance Report.

Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, 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 Listing Regulations, a meeting of the Independent Directors of the Company was convened on March 20, 2018 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 non-executive 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.

Familiarisation Programme

The details of the familiarisation programme undertaken have been provided in the Corporate Governance Report along with the web link thereof.

Managerial Remuneration

As per the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company is required to disclose the following information in the Board’s Report.

(a) ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year;

Name

Designation

Ratio to median remuneration of employees

Mr. Shiv Prakash Mittal

Executive Chairman

304.49

Mr. Rajesh Mittal

Managing Director

297.58

Mr. Shobhan Mittal

Joint Managing Director & CEO

208.02

Mr. Sanidhya Mittal

Executive Director (w.e.f 7th Feb 2018)

51.26

Mr. Moina Yometh Konyak

Non-executive Director

Nil

Mr. Susil Kumar Pal

Independent Director

5.65

Mr. Vinod Kumar Kothari

Independent Director

5.65

Mr. Anupam Kumar Mukerji

Independent Director

5.65

Ms. Sonali Bhagwati Dalal

Independent Director

5.65

Mr. Upendra Nath Challu

Independent Director

5.65

(b) percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Name

Designation

% Increase

Mr. Shiv Prakash Mittal

Executive Chairman

-00.48

Mr. Rajesh Mittal

Managing Director

-00.50

Mr. Shobhan Mittal

Joint Managing Director & CEO

03.23

Mr. Sanidhya Mittal

Executive Director (w.e.f 7th Feb 2018)

338.06

Mr. Moina Yometh Konyak

Non-executive Director

-100.00

Mr. Susil Kumar Pal

Independent Director

00.00

Mr. Vinod Kumar Kothari

Independent Director

00.00

Mr. Anupam Kumar Mukerji

Independent Director

00.00

Ms. Sonali Bhagwati Dalal

Independent Director

00.00

Mr. Upendra Nath Challu

Independent Director

00.00

Mr. Vishwanathan Venkatramani

Chief Financial Officer

05.47

Mr. Kaushal Kumar Agarwal

Company Secretary & Vice President-Legal

08.68

(c) percentage increase in the median remuneration of employees in the financial year 2017-18;

1 3.56

(d) number of permanent employees on the rolls of Company;

3655

(e) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

9.72% (non-Managerial personnel) 6.77% (Managerial Personnel)

(f) We hereby affirm that the remuneration paid to the Executives is as per the Remuneration Policy of the Company approved by the Board of Directors.

(g) Managing Directors and Whole-time Directors of the Company do not receive any commission from its subsidiary companies. However, Mr. Shobhan Mittal, Joint Managing Director & CEO of the Company is drawing remuneration from Greenply Trading Pte. Ltd., WOS of the Company.

All elements of remuneration package as required under Listing Regulations have been provided in the Corporate Governance Report.

Statutory Auditors and their report

The Shareholders of the Company at their 27th Annual General Meeting held on 21.08.2017, approved appointment of M/s. B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) as the Statutory Auditors of the Company to hold office for a term of 5 (five) consecutive years from the conclusion of 27th Annual General Meeting, until the conclusion of the 32nd Annual General Meeting.

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, 2018 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 Board of Directors and reviewed by the Audit Committee from time to time. 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 (Membership No. ACS 24765/COP No.9590), Kolkata, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report of M/s. Nidhi Bagri & Company, Practising Company Secretary, in Form MR-3, for the financial year ended 31st March, 2018, is annexed to this report.

Response to Secretarial Auditor’s observation

It has been observed by the Secretarial Auditor that during the financial year 2017-18, though the Company has spent Rs.341.72 lacs towards CSR activities (directly and through Trust-Greenply Foundation) during the year under review but the maximum amount was relating to earlier year(s) lying with the Trust and implementing agencies. Accordingly, the amount spent is less than the minimum allocation of CSR being 2% of the average net profit of last 3 financial years amounting to Rs.341.69 lacs in total. In response to the same, your Company would like to submit that the Trust has utilized unspent amount lying with it as on 31.03.2017 for the CSR activities. Further, to maintain the integrity of CSR expenditure, the Company has transferred Rs.267.00 lacs to the Trust during FY 2017-18. Though the Company has spent Rs.341.72 lacs towards CSR activities (directly and through Trust-Greenply Foundation) during the year under review but the maximum amount was relating to earlier year(s) lying with the Trust and Implementing Agencies. Accordingly, the amount spent is less than the minimum allocation of CSR being 2% of the average net profit of last 3 financial years amounting to Rs.341.69 lacs in total. The Trust has also earned Rs.5.76 lacs on temporary investment with Banks during FY 2017-18. The unutilized fund lying with the Trust as on 31.03.2018 amounting to Rs.296.66 lacs (net of liabilities of Rs.0.98 lacs) will be used for CSR activities along with fresh funding, if any, from the Company, during FY 2018-19. 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.

Audit Committee

The Company’s Audit Committee comprises of 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, reports of Internal Auditors, compliance of various regulations and evaluates the internal financial controls and risk management system of the Company. 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 and other details have 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 erstwhile equity listing agreement, a vigil mechanism or ‘Whistle Blower Policy’ for directors and employees to report genuine concerns had been established and implemented. The policy safeguards the whistle blowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of the Audit Committee. The policy has been uploaded on the website of the Company and is available at the weblink at http://www.greenply.com/ images/pdf/Vigil Mechanism Policy.pdf.

Nomination and Remuneration Committee

The Company’s Nomination and Remuneration Committee comprises of 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 is uploaded on the website of the Company. The weblink is http://www. greenply.com/images/pdf/Greenply-remuneration-policy.pdf. The terms of reference and other details 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 creates 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 framing the aforesaid 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 said Policy.

The assessment for Functional Heads are 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 Non-Executive 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 and other details of the Committee has been provided in the Corporate Governance Report.

Risk Management Policy

On the basis of risk assessment criteria, your Company has identified risks as minor/moderate/important/ material or severe depending on their impact on turnover, profit after tax and return on capital employed. A risk library wherein the Company has allotted scores to the risks based on risk significance and risk likelihood. On the basis of risk scores the Company has identified few material risks for the organisation. The risks scores were initially done at the level of Operational Heads of Finance & Accounts, Sales, Production and HR and finally assessment was done based on scores given by an internal committee of the Company. However, the risks are dynamic and the Company will be adding new risks and removing some of the existing risks as and when the Company develop solutions for the existing risks. Accordingly, the Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. The Audit Committee of the Board evaluating risks management policy of the company on quarterly basis.

Extract of the annual return

The extract of Annual Return as required under section 134(3) (a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 in Form No. MGT-9, 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, 2018 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 has been passed by any Regulator/Court/Tribunals impacting the going concern status and the Company’s operation in future.

Internal financial controls

Your Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting are operating effectively based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control. Your Company had laid down guidelines, policies, procedures and structure for appropriate internal financial controls across the company. These control processes enable and ensure orderly and efficient conduct of Company’s business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation & disclosure of financial statements. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively. The Audit Committee evaluated the internal financial controls based on the following criteria:

1. 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 authorization.

2. 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 and the timely preparation of reliable financial information.

3. 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.

4. The existing assets of the Company are verified/ checked at reasonable intervals and appropriate action is taken with respect to any differences, if any.

5. Proper systems are in place for prevention and detection of frauds and errors and for ensuring adherence to the Company’s policies.

A report on the internal financial controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 issued by M/s. B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Statutory Auditors of the Company is attached with their Independent Auditor’s report and the same is self-explanatory.

Indian Accounting Standards (Ind AS) -IFRS Converged Standards

Your Company has adopted Ind AS with effect from April 1, 2016 pursuant to Ministry of Corporate Affairs notification dated February 16, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015.

Insurance

Your Company’s properties, including building, plant, machineries and stocks, among others, are adequately insured against risks.

Particulars of loans/advances/ investments as required under Schedule V of the Listing Regulations

The details of related party disclosures with respect to loans/advances/investments at the year end and maximum outstanding amount thereof during the year as required under Part A of Schedule V of the Listing Regulations have been provided in the notes to the Financial Statements of the Company.

Loans/advances, guarantee and investments under Section 186 of the Companies Act, 2013

Details of loans/advances 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 the financial year 2017-18, the Company did not invite or accept any deposits from the public under Section 76 of the Companies Act, 2013.

Related party transactions

There are no materially significant related party transactions made by the Company which may have potential conflict with the interest of the Company. Related party transactions that were entered into during the year under review were on arm’s length basis and were in ordinary course of business. The Particulars of material related party transaction is provided in Form AOC-2 as required under section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014. Further, suitable disclosure as required by the Accounting Standards (Ind AS 24) has been made in the notes to the Financial Statements. The Board has approved a policy for related party transactions which has been uploaded on the Company’s website. The web link as required under Listing Regulations is as under: http://www.greenply.com/images/pdf/Related-Party-Transaction(s)-Policy.pdf

Corporate Governance

Your Company is committed to observe good Corporate Governance practices. The report on Corporate Governance for the financial year ended March 31, 2018, as per Regulation 34(3) read with Schedule V of the Listing Regulations forms part of this Annual Report and annexed to this Report. The requisite certificate from Statutory Auditors, M/s. B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) confirming compliance with the conditions of corporate governance, is attached to this Report on Corporate Governance.

Management Discussion and Analysis Report

The Report on Management Discussion and Analysis Report as required under Listing Regulations forms part of this Annual Report and is annexed to 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 Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. There were no complaints pending for the redressal at the beginning of the year. One complaint received during the financial year, which was redressed by the Company.

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 year under review, the Company has undertaken CSR activities directly and through its Trust namely GREENPLY FOUNDATION. The Trust has utilized unspent amount lying with it as on 31.03.2017 for the CSR activities. Further, to maintain the integrity of CSR expenditure, the Company has transferred Rs.267.00 lacs to the Trust during FY 2017-18. Though the Company has spent Rs.341.72 lacs towards CSR activities (directly and through Trust-Greenply Foundation) during the year under review but the maximum amount was relating to earlier year(s) lying with the Trust and Implementing Agencies. Accordingly, the amount spent is less than the minimum allocation of CSR being 2% of the average net profit of last 3 financial years amounting to Rs.341.69 lacs in total. The Trust has also earned Rs.5.76 lacs on temporary investment with Banks during FY 2017-18. The unutilized fund lying with the Trust as on 31.03.2018 amounting to Rs.296.66 lacs (net of liabilities of Rs.0.98 lacs) will be used for CSR activities along with fresh funding, if any, from the Company, during FY 2018-19. 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 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, 2018 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 financial statements for the financial year ended March 31, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(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) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and

(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CEO and CFO certification

Pursuant to the Listing Regulations, the CEO and CFO certification is attached with the Annual Report. The Joint Managing Director &CEO and the Chief Financial Officer also provide quarterly certification on financial results while placing the financial results before the Board in terms of the Listing Regulations.

Code of Conduct for Directors and senior management personnel

The Code of Conduct is posted on the Company’s website. The Joint Managing Director & 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, 2018. Declaration is attached with the annual report.

Compliance certificate regarding compliance of conditions of Corporate Governance

The certificate received from M/s. B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Statutory Auditors of the Company, to the effect of compliance of conditions of Corporate Governance as required under Schedule V of the Listing Regulations is annexed with the Report.

Business Responsibility Report

The Business Responsibility Report, describing the initiatives taken by the Company during the period under review from an environmental, social and governance perspective, has been annexed to this Report in the format suggested under the Listing Regulations.

Demerger

During the year under review, the Board of Directors has consented to explore an option for the demerger of few businesses into Greenpanel Industries Ltd., a wholly owned subsidiary of the Company. The same is under consideration.

Fraud Reporting

There have been no frauds reported by the Auditors of the Company to the Audit Committee or the Board of Directors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year.

Disclosures with respect to Demat Suspense Account/ Unclaimed Suspense Account

The relevant details in this regard have been provided in the Corporate Governance Report annexed to this 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. The Directors also place on record their heartfelt appreciation for the commitment and dedication of the employees of the Company across all the levels who have contributed to the growth and sustained success of the Company.

For and on behalf of the Board of Directors

Shiv Prakash Mittal

Place: Kolkata Executive Chairman

Date: May 29, 2018 DIN: 00237242

Director’s Report