Annual Report 2017-18
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Godrej Industries Ltd. www.godrejindustries.com ANNUAL REPORT 2017-18 Contents Board of Directors 02 Corporate Information 04 Chairman’s Statement 06 Financial Highlights 11 Notice & Explanatory Statement 13 Board's Report 27 Report on Corporate Governance 93 Auditor’s Report (Consolidated) 113 Consolidated Accounts 120 Auditor's Report (Standalone) 217 Standalone Accounts 224 Statement Pursuant to Section 129 283 1 BOARD OF DIRECTORS A. B. Godrej Chairman N. B. Godrej Managing Director T. A. Dubash Executive Director & Chief Brand Officer J. N. Godrej V. M. Crishna N. S. Nabar Executive Director & President (Chemicals) K. K. Dastur S. A. Ahmadullah A. B. Choudhury A. D. Cooper K. N. Petigara K. M. Elavia Corporate Information AUDITORS : BSR & Co. LLP, Chartered Accountants BOARD COMMITTEES Audit Committee : K. K. Dastur (Chairman) S. A. Ahmadullah K. N. Petigara A. B. Choudhury Nomination & : S. A. Ahmadullah (Chairman) Compensation Committee A. B. Choudhury K. N. Petigara Stakeholders Relationship/ : A. B. Godrej (Chairman) Shareholders Committee N. B. Godrej T. A. Dubash N. S. Nabar Corporate Social : N. B. Godrej (Chairman) Responsibility Committee: T. A. Dubash K. N. Petigara A. B. Choudhury Risk Management Committee : N. B. Godrej (Chairman) T. A. Dubash N. S. Nabar Management Committee : A. B. Godrej (Chairman) N. B. Godrej A. D. Cooper T. A. Dubash N. S. Nabar CHIEF FINANCIAL OFFICER : Clement Pinto COMPANY SECRETARY : Nilufer Shekhawat REGISTERED OFFICE : Godrej One, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079. Phone: 022-2518 8010, 2518 8020, 2518 8030 Fax: 022-2518 8066 website: www.godrejindustries.com CIN No.: L24241MH1988PLC097781 4 REGISTRARS & TRANSFER AGENT : Computech Sharecap Ltd. 147, Mahatma Gandhi Road, Opp. Jahangir Art Gallery, Fort, Mumbai 400 001. Phone: 022 - 2263 5000, 2263 5001 Fax: 022 - 2263 5001 E-Mail: [email protected] Website: www.computechsharecap.com FACTORIES Ambernath : Plot No.N-73, Additional Ambernath Industrial Area, Anand Nagar, Village Jambivali, Taluka Ambernath (East), District Thane, Maharashtra. Pin - 421 506 Phone: 0251 - 2624000 Valia : Burjorjinagar, Plot No. 3, Village Kanerao, Taluka - Valia, District Bharuch, Gujarat 393 135. Phone: 02643 - 270756 to 270760 Fax: 02643 – 270018 Wadala : L.M. Nadkarni Marg, Near M.P.T. Hospital, Wadala (East), Mumbai 400 037. Phone: 022 - 2415 4816, 2414 8770 Fax: 022 - 2414 6204 Dombivali : Plot No: W-61, MIDC Phase II, Sagaon, Sonarpada, Dombivali – East Thane, Maharashtra, 421204 Phone: 0251 - 2871177 BANKERS Central Bank of India State Bank of India Bank of India HDFC Bank Ltd. Citibank N.A. HSBC Ltd. DBS Bank Ltd. Kotak Mahindra Bank Ltd. 5 Adi Godrej Chairman CHAIRMAN’S Dear Shareholders, STATEMENT I am delighted to share with you the events and developments of your Company during the course of the financial year 2017-18. The overall performance of your Company has witnessed a healthy growth in profits with consolidated Net Profit increasing by 64% over the previous year. We continue to do well in most of our core businesses. The year gone by is representative of the value Godrej Industries continues to create for all its stakeholders. As a conglomerate with diverse business interest, growth at consolidated level is pursued through competitively growing your Company’s core businesses, building an environment to achieve transformation while also nurturing and investing in emergent businesses of the future. This approach of your Company’s business strategy is captured in the approach called CREATE which stands for: 6 Consumer & Agri Transformation Emergent Chemicals Real Estate 4 core businesses Drive to full Focussed potential incubation of new businesses I would like to summarize the performance for each dimension of your Company’s CREATE strategy: C – Consumer and Chemicals Consumer (GCPL) GCPL, an associate of your company, continues to Best Employers India 2018 study. About 125 make strong progress on its exciting journey to be companies from 10 industries, representing almost a leading FMCG player in emerging markets. 329,000 employees were assessed as part of this study. On a consolidated basis, GCPL reported sales of ` 9862 crore in FY2017-18, a comparable growth Chemicals of 6% over the previous year. Net profit grew by 25% at ` 1634 crore as compared to ` 1304 crore Our Chemicals business has delivered a strong during the previous year. GCPL continues to make fiscal with PBIT increasing by 18% over the healthy investments in strengthening our brands previous year. The chemicals business continued and enhancing our capabilities for sustainable its strong focus on cost control and operational future growth. efficiencies. We have also done very well on the exports front, with a revenue of ` 539 crore, a GCPL is building a presence in 3 emerging markets growth of 35%. I am pleased to share with you that (Asia, Africa, Latin America) across 3 categories the Chemicals business received the Trishul Award (home care, personal wash, hair care). GCPL ranks from CHEMEXCIL for outstanding performance in amongst the largest household insecticide and hair exports. care players in emerging markets. In household insecticides, it is the leader in India, the second I am also happy to share that our Valia (Gujarat) largest player in Indonesia and is expanding its factory was awarded the “Most Environment- footprint in Africa. It is the leader in serving the Friendly Company” at the FICCI Chemicals & hair care needs of women of African descent, the Petrochemicals Awards 2017 and was also number one player in hair colour in India and Sub- awarded by Confederation of Indian Industries the Saharan Africa, and among the leading players in “Energy initiatives award” for a third time in a row. Latin America. It also ranks number two in soaps in Our Ambernath (Maharashtra) factory was also India and is the number one player in air fresheners awarded the “Excellence in Energy Conservation and wet tissues in Indonesia. and Management” by ICC. GCPL is amongst the top 16 companies in Aon’s 7 R E – Real Estate (GPL) A – Agri Business (GAVL) FY18 has been the best ever year for Godrej Properties GAVL, a subsidiary of your company had a Limited (GPL) on three most important parameters - successful Initial Public Offer (IPO) and got listed on sales, collections and business development. For the the Stock Exchanges (NSE/BSE) on 16th October, first time in GPL’s history, GPL has delivered sales of 2017. The IPO was oversubscribed by 96 times. more than ` 1,000 crore in each of the four quarters of the financial year. For FY18, GAVL recorded consolidated revenues of ` 5,206 crore as compared to revenues of ` 4,926 GPL crossed `.5000 crore in booking value for the crore during the previous financial year, registering second time in our history and ended the year with a year-on-year growth of 5.7%. Revenue growth a booking value of ` 5083 crore, which represents was mainly driven by crop protection, vegetable oil year-on-year increase of 152%. and dairy business segments. Total Income for the year grew by 38% and Net Profit The animal feed business has shown a volume increased by 14%. growth of 7.4% during the financial year 2017- 18 driven by cattle feed and layer feed segments. FY18 has also been the best ever year for business GAVL was also successful in arresting the volume development in the history of GPL in terms of the decline seen in the past few years in the broiler number of new projects added. GPL added 12 new feed segment, despite intense competition. projects with saleable area of 23.5 million sq. ft. More than 80% of the area added in FY18 is in partnership GAVL’s Crop Protection business recorded an with other real estate developers and all the projects increase in revenue of 15.3% in the consolidated added are in the four largest real estate markets in revenues. Herbicides and Fungicides category India. continue to grow at a fast pace during the current financial year. The Indian real estate sector has undergone a lot of disruption in the past couple of years- starting Astec LifeSciences Ltd., a subsidiary of GAVL with demonetization in 2016 and continued with the recorded a revenue growth of 18.6% and PBT Real Estate Regulatory Act (RERA) and GST being growth of 31.4%. introduced in the last financial year. These measures are helping to drive consolidation in the sector. A In FY18, Oil Palm business grew by 15.5% as weak property market and increasing customer compared to the previous financial year. A project preference for stronger developers has created an to convert the oil palm biomass into value added unprecedented business development opportunity product has also started to contribute to the for developers with strong customer franchises and profitability of the business. development capabilities. We believe GPL is well placed to capitalize on these opportunities in the Creamline Dairy Products Limited, a subsidiary of business development space. GAVL recorded a revenue growth of 14.6% during financial year 2017-18. However, profitability of the I am extremely happy to share with you that this year business was impacted by adverse milk prices and GPL was ranked 2nd in Asia & 6th globally by the high provisioning costs due to poor butter prices Global Real Estate Sustainability Benchmark, which during the financial year. is an industry-driven organization that assesses Environmental, Social, and Governance performance Godrej Tyson Foods Limited, GAVL’s joint venture of real estate companies globally. GRESB is widely reported revenues of ` 434 crore. We will continue recognized as the global standard for portfolio- our strategy of building a brand based business level sustainability and governance reporting and under ‘Real Good Chicken’ and ‘Yummiez’ benchmarking in the real estate sector. brands. 8 GAVL’s another joint venture (ACI Godrej Agrovet NBL’s strategy is to be a leading Omni Channel Private Limited - Bangladesh) continues to remain player by focusing strongly on In-store as well among the top four players in Bangladesh in all the online business channels in Daily Food Delight feed categories it operates.