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Disclosure in board of directors report explanatory [Text Block]
Dear Members,
The Board of Directors hereby submits the 31st Annual Report on business and operations of Gandhar Oil Refinery (India) Limited ("The Company") along with the Audited Financial Statements (Standalone & Consolidated) for the financial year ended 31 March, 2023. The consolidated performanc of the Company and its subsidiaries has been referred to wherever required.
SHARE CAPITAL:
During the year under review the Company has neither issued nor allotted any further Shares and accordingly there was no change in share capital of the Company. The authorized share capital of the company as on 31 March, 2023 is Rs. 300,000,000 divided into 150,000,000 equity shares of face value Rs. 2 /- each. The issued, subscribed and paid-up share capital of the Company as on March 31, 2023 is Rs. 160,000,000 divided into 80,000,000 equity shares of Rs. 2/- each. The Company has formulated and approved the Gandhar ESOP Plan 2022 which was approved by the shareholders in the Extra- Ordinary General Meeting held on February 16, 2023.
Global Economy Outlook
Global gross domestic product (GDP) is estimated to grow at 2.2 in calendar year 2023. Rising interest rates, the unprecedented European energy crisis, and the lingering effects of COVID-19 are battering growth across geographies, though Asia-Pacific remains
a relative outperformer. Biggest hit to growth from the Russia- Ukraine war, given its proximity to the war zone and higher exposure to volatile global energy costs. A sharp slowdown is expected in eurozone growth in near-term. An unprecedented deterioration in the terms of trade has pushed inflation to record highs.
Fragile amid record inflation
The global economy is sputtering, and financial markets are flashing red due to surging inflation, a hawkish central banks' response, the impact of Russia's aggression in Ukraine, and anxious investors following Russia's invasion of Ukraine, global economic growth is slowing more than anticipated, and major economies are at risk of entering recession because of the energy and inflation crises. Global economic growth is forecast to be 2.2% in 2023, owing to rising stagflation risks worldwide. The global environment has become more fragile as record-high inflation continues to gain momentum and growth decelerates.
Indian Economy Outlook
The Indian economy has fully recovered to the pre-pandemic real GDP level of fiscal 2020. Real GDP growth was 7.00% for fiscal 2022 which reflect a faster growth momentum, which suggests higher economic demand. Future capital expenditures of the Indian government are anticipated to be supported by elements including tax buoyancy, a simplified tax system, rationalization of the tariff structure, and digitization of tax filing. Growth multipliers are expected to rise in the medium term as capital expenditures on infrastructure and asset-building projects rise. India's economy is predominantly driven by domestic demand, with consumption and investments accounting for 70% of all economic activity.
The economy is confronted with newer risks, past the impact of the pandemic. Like other countries, it faces high commodity prices fueled by the Russia-Ukraine strife. Economic recovery is continuing in India with strong service sector activity. Consumer demand is recovering, and we expect a pickup in growth momentum from the third quarter, which will support growth through the rest of the year. Though investments have shown some pick up, it will remain tied to consumption momentum.
Industry Overview
Gandhar Oil Refinery India Limited is a leading manufacturer of White Oils by revenue with a growing focus on the consumer and healthcare end-industries.
The product categories and primary end-industries for our three main business divisions are as follows:
Strategic decision to exit coal-trading business
Our Company was involved in two main businesses: non-coking coal trading through Gandhar Oil & Energy DMCC (Gandhar DMCC) and specialty oils. However, as part of a strategic move to concentrate on the specialty oils sector, the Company decided to divest its interests in the coal trading business.
In light of this decision, the Company successfully sold Gandhar DMCC to a group company named Gandhar Coals & Mines Pvt. Ltd. The sale was executed with the intention of allowing Gandhar Coals & Mines Pvt. Ltd. to take over and manage the coal trading operations effectively. Furthermore, the Company also conducted a slump sale of its entire coal business to Gandhar Coals & Mines Pvt. Ltd. This move was a part of the Company's overall plan to shift its focus and resources toward the specialty oils segment, which holds greater strategic significance for future growth and profitability.
With these transactions, the Company has streamlined its operations and can now concentrate exclusively on the specialty oils business, thereby positioning itself for enhanced success and sustainability in its chosen field.
UPDATE ON INITIAL PUBLIC OFFER:
The Board of Directors and the shareholders of the Company by resolutions passed on September 27, 2022 and November 10, 2022 respectively, have approved, subject to necessary approvals, a proposed initial public offering of equity shares of the Company, and consequent listing of such equity shares on the relevant stock exchanges in India (the "Offer"). On December 22, 2022, the Company filed the draft red herring prospectus dated December 21, 2022 (the "DRHP") in respect of the Offer, consisting of a fresh issue of equity shares up to Rs. 3,570 million and an offer for sale by certain shareholders of up to 12,036,380 equity shares, with the SEBI on December 22, 2022.
CORPORATE GOVERNANCE
Your Company believes in conducting its affairs in a fair, transparent and professional manner and maintaining the good ethical standards, transparency and accountability in its dealings with all its constituents. As required under the Listing Regulations, a detailed report on Corporate Governance along with the Auditors' Certificate thereon forms part of this report as "Annexure – E".
MEETINGS OF THE BOARD AND AUDIT COMMITTEE:
The Board met on various occasions to discuss and decide on affairs, operations of the Company and to supervise and control the activities of the Company.
During the Financial Year 2022-23, 5 (Five) Board Meeting and Audit Committee Meetings were conveyed which were held on June 06, 2022, September 27, 2022, December 13, 2022, January 09, 2023 and March 21, 2023. Some of the meetings were held through Video Conferencing as permitted by Ministry of Corporate Affairs (MCA). The intervening gap between two consecutive meetings was within the maximum period mentioned under Section 173 of the Act except the relaxation given by MCA to hold such meetings and Secretarial Standard on Board Meetings (SS-1) issued by the Institute of Company Secretaries of India ("ICSI"). The details of these Meetings, including of other committee meetings, with regard to their dates and attendance of each of the Directors thereat, have been set out in the Report on Corporate Governance.
AUDITORS:
The present Statutory Auditors, M/s. Kailash Chand Jain & Co., Chartered Accountants, Mumbai, (Firm Registration No. 112318W), were
re-appointed at the 28th Annual General Meeting of the Company held on 20th November, 2020 for a period of five years to hold the office till the conclusion of the 33rd Annual General Meeting of the Company to be held in the year 2025.
There are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors in their Report dated 24th May, 2023. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.
Pursuant to the provisions of Section 148 of the Act, read with Companies (Cost Record and Audit) Rules, 2014 and on recommendation of the Audit Committee, the Board of Directors appointed M/s. Maulin Shah & Associates, Cost Accountant, Ahmedabad (FRN No. 101527) as Cost Auditor of the Company to conduct audit of cost records of the Company for the financial year 2023-24 at a remuneration of Rs. 1,10,000/- (Rupees One Lakh Ten Thousand Only) plus applicable taxes and out of pocket expenses, subject to approval of members in the ensuing AGM.
Pursuant to the provisions of Section 204 of the Act, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and as recommended by the Audit Committee, M/s. Manish Ghia & Associates, Company Secretaries, Mumbai are appointed as the Secretarial Auditors of the Company to undertake the Secretarial audit of the Company for financial year 2023-24. The Secretarial Audit Report received from M/s. Manish Ghia & Associates, Company Secretaries, Mumbai for the year ended 31st March, 2023, is annexed as "Annexure B" and forms part of this report.
There are no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors in their report dated 24th May, 2023.
Pursuant to the provisions of Section 138 of the Act, read with Companies (Accounts) Rules, 2014, M/s. Grant Thornton Bharat LLP, act as Internal Auditors of the Company. The Internal Auditor submits his reports to the Audit Committee. Based on the report of internal audit, management undertakes corrective actions in their respective areas and thereby strengthens the controls.
The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company Policies, safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.
The Audit Committee evaluates the efficiency and adequacy of financial control system in the Company, its compliance with operating systems, accounting procedures at all locations of the Company and strives to maintain a high Standard of Internal Financial Control.
DETAILS IN RESPECT OF FRAUD REPORTED BYAUDITORS:
Pursuant to Section 143(12) of the Companies Act, 2013, during the year under review there were no frauds reported by the Auditors of the Company to the Audit Committee or the Board of Directors. Hence, there is nothing to report under Section 134(3)(ca) of the Companies Act, 2013.
COMPLIANCE WITH SECRETARIAL STANDARDS:
The Company has devised proper systems to ensure compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and the Company complies with all the applicable provisions of the same during the year under review.
MAINTAINENCE OF THE COST RECORDS:
Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained by the Company.
INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under.
The Company has duly set up an Internal Complaints Committee (ICC) in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, to redress complaints received regarding sexual harassment.
The Company did not receive any complaint of sexual harassment during the year 2022-23.
RISK AND AREAS OF CONCERN:
The major risks faced by your Company are on account of volatility in the prices of its raw materials and foreign exchange rates. The Company has laid down a well-defined Risk Management Policy to mitigate its risks, covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is carried out by the employees designated by Board to identify, evaluate, manage and monitor both business and non-business risk. In this regard, your Company continues to exercise prudence in its inventory control and hedging policies. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.
DISCLOSURE IN RESPECT OF STATUS OF APPLICATION OR PROCEEDING PENDING UNDER THE INSOLVENCYAND BANKRUPTCY CODE:
During the year under review and as at 31st March, 2023, no application was made or any proceedings were pending under the Insolvency and Bankruptcy Code, 2016.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
Independent Directors ('IDs') inducted to the Board are provided orientation on the Company's business operations, products, organization structure as well as the Board constitution and its procedures through various programmes / presentations.
The IDs are also provided with an opportunity to visit the Company's plants. The Company as on date of this report has three (3) Independent Directors on its board. Details of familiarization given to the Independent Directors in the areas of business, strategy, governance, operations, safety, health, environment are available on the website of the Company.
OTHER INFORMATION
a. Green Initiative:
To support the "Green Initiative" undertaken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same since 2010-11. As permitted, delivery of notices, documents, annual reports etc. are being sent to shareholders via electronic mode.
General:
No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
Your Company promotes an open and transparent working environment to enhance teamwork and build business focus.
Your Company gives equal importance to development of human resources (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company has performance /
production-linked incentive schemes. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment.
ACKNOWLEDGEMENT:
The Directors convey their appreciation for the admirable performance of the Company, which has been made possible by the sterling efforts of the employees. They have exhibited time and again their deep commitment and passion for results, which has propelled the Company to the vaunted position it enjoys today. Further, your Directors wish to place on record their appreciation for the continuous co-operation, assistance and support extended by all stakeholders, Government Authorities, Financial Institutions, Banks, Customers, Dealers, Suppliers, Consultants, Solicitors and Shareholders of the Company. In this profound journey, the Directors stand committed as ever to steer the Company towards an even more promising future.