Your Directors are pleased to present the 87th Annual Report on the business and operations along with the Audited Financial Statements of the Company for the financial year ended 31st March 2024.
ECONOMIC ENVIRONMENT
The global economy demonstrated resilience and robust performance in 2023. Despite challenges such as high inflation, tightening monetary policies, geopolitical risks, and elevated debt levels, global GDP achieved considerable growth, expanding by an estimated 3.2%. The US economy advanced with a growth rate of 2.5%, marking a significant improvement from the previous year. Similarly, the European Union saw a turnaround, registering a modest expansion of 0.4% after a contraction in 2022. This performance underscores the resilience and adaptability of these economies in navigating through difficult times. Looking ahead, while projections indicate a potential slowdown in growth for 2024, the momentum gained in 2023 provides a strong base for continued economic recovery. (Source: IMF WOE April 2024 Page No.10).
Inflation remained a persistent concern throughout 2023, with global rates showing signs of moderation but remaining elevated overall. From 8.1% in 2022, inflation dropped to an estimated 5.7%, reflecting efforts to mitigate inflationary pressures. Nevertheless, many economies continued to deal with inflation rates exceeding central bank targets, leading to gradual adjustments in monetary policies to achieve desired levels. Factors such as persistent disruptions in supply chains, ongoing adjustments in labor markets, and geopolitical tensions contributed to the inflationary environment, necessitating vigilant monitoring and strategic interventions to ensure stability and sustainable economic growth. (Source: UN WESP 2024 Executive Summary 4 and 5)
On the domestic front, the Indian economy consistently demonstrated strong growth and resilience throughout 2023. With an estimated GDP growth of approximately 6.3%, India maintained its position as one of the fastest-growing large economies globally. This achievement underscores the nation's commitment to economic development and prosperity. However, challenges such as tightening financial conditions, balance of payments concerns, and potential impacts from climate changes posed significant hurdles. Nevertheless, strong domestic demand, along with government initiatives in infrastructure development, drove the economy forward, demonstrating India's potential as a significant contributor to the global economic landscape. Looking ahead, with GDP growth expected to remain strong at 6.8% during 2024-25, India is well-prepared to navigate through challenges and capitalize on the opportunities. (Source: MF WOE April 2024 Page No.10)
TOBACCO INDUSTRY
India continues to maintain its position as the world's second-largest producer of tobacco, a significant indicator of its role in global agricultural markets. With an estimated annual production of approximately 800 million kilograms, the tobacco sector remains a crucial component of India's agricultural landscape, contributing to employment, revenue generation, and foreign exchange earnings. Tobacco cultivation occupies a modest 0.24% of the country's total arable land area, predominantly in semi-arid and rain-fed regions where cultivating alternative crops is mostly economically unviable. Tobacco cultivation in India spans across 13 states, with diverse varieties cultivated under varying agroecological conditions. India's production pattern, including Flue-Cured Virginia (FCV), Non-FCV, and Non-Cigarette Tobacco products, deviates from global trends, showcasing its adaptability to meet diverse market demands. India is the third-largest producer of FCV tobacco globally, with an annual production of around 230 million kilograms. (Source: https://www.tiionline.org/facts-sheets/tobacco-production/)
India has a competitive advantage in the global tobacco trade, owing to its low production costs and diverse product offerings. While the country's share in world cigarette exports remains modest, it excels in exporting scented Bidis, Hookah tobacco paste, chewing tobacco, and Zarda, thus catering to diverse consumer preferences worldwide. Over the past five years, exports of tobacco and tobacco products have recorded an increase of 76% and 209% in quantity and value terms, respectively. (Source: https://www.ctri.icar.gov.in/for tobaccoEconomy.php)
The tobacco industry in India sustains livelihoods for millions of individuals, offering employment opportunities to farmers, laborers, and those involved in processing and manufacturing. Approximately 45.7 million people are directly and indirectly employed in the sector, benefiting small-scale farmers, rural women, and tribal communities. In FY2022-23, tobacco and tobacco products contributed Rs. 72,788 crores to the government's tax revenue, underscoring its significance in fiscal planning and resource allocation. Additionally, tobacco exports generated approximately Rs. 9,700 crores in foreign exchange, highlighting its role in strengthening India's trade balance. (Source: https://www.tiionline.org/facts-sheets/livelihood/)
Despite its economic importance, the tobacco industry in India faces challenges, including heightened health awareness, higher taxes, and regulatory restrictions. The implementation of higher taxes and regulatory measures has inadvertently fueled the growth of the illegal cigarette trade, posing threats to public health and national security. To address these challenges, the government has intensified its efforts to combat the illegal cigarette trade through regular raids and seizures. However, the scale of illegal trade remains significant, necessitating continued vigilance and collaborative efforts between industry stakeholders and law enforcement agencies.(Source: https://www.tiionline. org/publications/tii-booklets/).
Looking ahead, India's tobacco industry remains ready for growth, leveraging its diverse product offerings and improving quality standards. By embracing sustainable practices and fostering innovation, the sector can further strengthen its position in the global tobacco trade, contributing to economic development and livelihood enhancement across the country.
CONSUMER AND RETAIL INDUSTRY
The Indian FMCG segment, plays a key role in propelling India's economic growth. In 2023, the FMCG market was valued at USD 121.8 billion and is projected to surge to approximately USD 615.87 billion by 2027, achieving a compound annual growth rate (CAGR) of 27.9% from 2021. This strong growth trajectory is largely driven by India's expanding internet user base, which reached around 780 million in 2023. This increase in connectivity is enhancing digital market integration and significantly influencing consumer behaviors, with the FMCG online market expected to grow from USD 4,540 million in 2022 to USD 76,761 million by 2032. Additionally, the sector's emphasis on digital marketing is evidenced by its 42% share of the total USD 9.92 billion digital advertising expenditure in 2023, and it has also seen active investment activities aimed at enhancing production capabilities and market expansion. (Source: https://www.ibef.org/download/1714543650_FMCG_March_2024.pdf)
Despite the growth prospects, the sectors face several challenges that could influence their development trajectory in India. These include the need to adapt to rapidly changing technological advancements, need to manage supply chain disruptions effectively, thin margins, surging real estate rent, online business including quick commerce and need to navigate an evolving regulatory landscape. Furthermore, there is a pressing requirement to align with consumer preferences that are increasingly shifting towards more sustainable and health-conscious products. This shift demands continuous innovation and adaptation in product offerings and business models.
SEGMENTWISE PERFORMANCE IN 2023-24
Cigarettes
The domestic cigarettes Industry, after the strong bounce-back of FY23, showcased a volume consolidation on a high base and largely remained stable. The industry faced an increasing impact of the global geopolitical tensions which began last year and has caused further strain on the global supply chain. The industry also experienced sharp escalation in tobacco prices and other input costs which put pressure on margins. However, improving macro-economic indicators. Prospects of normal monsoon and recent trends in rural demand recovery after a long gap is expected to propel volume growth in near term.
During the year, your company not only managed these accentuated challenges but also leveraged our brand equity and regained back shares in one of our core markets. The Company continued its strong performance in Regular Size FilterTipped (RSFT) segment with core variants like Four Square Special and Four Square Crush showcasing good growth. Your Company has also established a foothold in King Size Filter-Tipped (KSFT) segment with some of our recent additions in the portfolio like Stellar in a contemporary format. This has been achieved by relentless pursuit of spends efficiency and effectively deploying support to these variants.
In continuation of Company's mission to deliver consumer delight, the endeavour remains to make our brands more and more relevant to the target consumers. We remain committed to delivering higher value to our shareholders by improving the image equity of our core brands and adding pricing power to them, bringing more cost efficiency in our business, leading with innovation to gain market share and mind share of our consumers while using our sales & distribution strength and expanding our reach further into untapped markets.
Confectionary Products
Your Company's confectionery business has shown growth during the year and gross sales grew by 30% over last year. Growth has largely come from Naturalz Imli which is the flagship brand of the Company, backed by strong distribution network available across markets. Funda Gumshums chewing gum is also gaining consumer traction.
Exports
The following table shows the status of exports for different products during the year under report:
|
Commodity/Product
|
2023-24
|
2022-23
|
|
Value (Rs. in crores)
|
Value (Rs. in crores)
|
|
Cigarettes
|
108.65
|
149.71
|
|
Unmanufactured tobacco/CLB
|
1206.38
|
779.69
|
|
Cut tobacco
|
28.37
|
25.30
|
|
Total
|
1343.40
|
954.70
|
In line with other business goals, your Company has surpassed targets across all categories.
As like earlier years, unmanufactured tobacco exports have been growing year on year and this year your Company has done commendably well by achieving the highest ever export revenue of Rs. 1206 Crores, which is a 55% increase over the previous year. Your Company has now increased its customer base and started exporting to various new geographies. We are continuously focussing on strengthening our relationship with the non-FCV tobacco farmers and are aiming at bringing efficiency in both tobacco buying and processing processes.
Retail
The Company operates 'round the clock's convenience store format under the name 24Seven having more than 150 stores/kiosks spread largely across Delhi NCR, Punjab, Telangana etc. Gross sales during the year were Rs.484 crores. However, the Board of Directors of the Company at its meeting held on 12th April 2024, after due consideration of the stakeholders' feedback, long-term performance of the retail business since inception, prevailing market conditions of retail sector and long-term business strategy of the Company, has decided to exit from carrying out the business operations of its Retail Business Division. The exit will be subject to completion of the necessary formalities.
HUMAN RESOURCE DEVELOPMENT
Your Company's "People First" philosophy has been at the core of its Human Resources strategy. This has resulted in progressive and contemporary people processes and practices, aimed to deliver best in class business results and exemplary employee experience. Your Company's consistent focus on building leadership and managerial capabilities, enhancing skills and competencies of the workforce, providing a safe and inclusive work environment and sustaining a strong performance culture, has accelerated organizational performance and helped deliver better business results. The recognition of your Company as a Great Place to Work, for the 6th consecutive year, reflects its "High Trust - High Performance" work culture. The Company's unwavering commitment to its people instils a sense of pride and confidence in your workforce as well as all other stakeholders. The Company's operating leadership has always been connected to employees and has played a pivotal role in inspiring and motivating people to do their best, and this has laid the foundation of the rising growth trajectory of the organization.
INFORMATION TECHNOLOGY (IT)
Your Company continues to leverage technology to increase digital footprint and realize operational efficiencies. It has made significant progress in digitization of core processes across the enterprise to improve visibility. There have been substantial initiatives to modernize and upgrade some of the core operational support systems including ERP and Data Lake platforms thereby ensuring scalability and improved user experience. Your Company continues to realize benefits of improved collaboration and productivity through its Digital Supply Chain planning platform.
Also, we have modernized our IT Infrastructure components to improve scalability and offer higher resiliency through deployment of SD-WAN (Software Defined - Wide Area Network) solution across locations. Your Company continues to build on its Green IT journey through cloud adoption and consolidation thereby enabling better manageability, efficiencies, and availability of core operational platforms.
We continue to improve on our IT security footprint across the enterprise by leveraging state-of-the-art solutions for cloud security, network traffic segmentation and ongoing threat assessment across its IT landscape. Your Company continues to emphasize on strong IT governance practices through well-defined processes and has been recently re-certified for ISO-27001.
TREASURY OPERATIONS
Your Company continues to enjoy the highest rating of 'CRISIL A1 ' for short term debt program, 'CRISIL AA / Stable' for long term loan, 'CRISIL AA /Stable' for fund-based credit facilities and long term non-fund based facilities & 'CRISIL A1 ' for short term non-fund-based facilities. With these ratings in place, your Company can raise funds at most competitive terms. Following the principles of liquidity, safety and tax efficient returns, your Company has been deploying its long term surplus funds primarily in debt-oriented schemes of reputed mutual funds. Also, the Company continued to park its temporary surpluses in liquid/short-term schemes of various mutual funds.
FINANCIAL RESULTS
| |
2023-24
|
2022-23
|
| |
Rs. in Lakhs
|
Rs. in Lakhs
|
|
Profit before Depreciation and Tax
|
122924.26
|
94025.32
|
|
Less: Depreciation and amortization
|
14267.69
|
15064.64
|
|
Profit before tax
|
108656.57
|
78960.68
|
|
Less: Provision for tax
|
|
|
|
- current tax
|
19798.34
|
18439.82
|
|
- deferred tax
|
773.86
|
(316.84)
|
|
Profit after tax for the year
|
88084.37
|
60837.70
|
|
Add: Other comprehensive income/(loss)-net of tax
|
(383.43)
|
191.57
|
|
Total comprehensive income
|
87700.94
|
61029.27
|
During the year, the gross sales value registered a growth of 23.89% by reaching the level of Rs. 5274.68 crores from Rs. 4257.65 crores last year. Similarly, the profit after tax is Rs.880.84 crores as compared to Rs. 608.38 crores last year.
DIVIDEND
Your Directors are pleased to recommend the dividend of 2800% i.e. Rs. 56 per equity share of face value of Rs.2/-each. The proposed dividend will absorb Rs. 291.16 crores. There is no amount proposed to be transferred to the general reserves.
DEPOSITS
Your Company has not accepted any deposits, covered under Chapter V of the Companies Act, 2013 and hence, no details pursuant to Rules 8(v) and 8(vi) of the Companies (Accounts) Rules, 2014 are required to be reported.
ANNUAL RETURN
As required under Section 134(3)(a) and section 92(3) of the Companies Act, 2013, the Annual Return as on 31st March 2024 has been uploaded on the Company's website and the same can be accessed at https://www.godfrevphillips.co.in/sustainabililtv/annual-return.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
As on 31st March 2024, your Company had five operating subsidiaries, two associate companies and a controlled entity. The basic details of these companies form part of the Annual Return as on 31st March 2024, which can be accessed through the link given above.
Form AOC-1 containing the salient features of financial statements of the Company's subsidiaries and associates is attached as 'Annexure - 1'. Note 47 of the consolidated financial statements shows the share of each subsidiary, associate, and controlled entity in the consolidated net assets and profits of the Company. The audited financial statements of these entities will be available for inspection during business hours at the Registered Office of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Indian Accounting Standard (IndAS-110)-Consolidated Financial Statements, Group Accounts form part of this Annual Report. The Group Accounts have been prepared based on financial statements received from the subsidiary, associate and controlled entities, as approved by their respective Boards.
INTERNAL CONTROL SYSTEMS
Your Company has a robust system of internal controls commensurate with the size of the Company and the nature of its business, which ensures that transactions are recorded, authorised and reported correctly apart from safeguarding its assets against loss from wastage, unauthorised use and disposition.
The internal control systems are supplemented by well documented policies, guidelines and procedures which are in line with the internal financial control framework requirements. There is an extensive programme of internal audit by a firm of chartered accountants followed by periodic management reviews.
The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under report, the Company has made significant progress in its Corporate Social Responsibility (CSR) efforts. The Company focused on analysing and assessing its CSR strategies to better align with its ESG goals and sustainability journey. The initiatives were tailored to address the urgent and long-term needs of the communities served, especially focusing on the well-being of non-FCV tobacco farmers. Efforts included initiatives for water and soil conservation, environmental enhancement, improved healthcare access, eradication of child labour, promotion of education, and support for sustainable agriculture.
The Company advanced toward its goal of providing safe drinking water by constructing 5 new RO water plants, bringing the total to 63 in the region. Additionally, 6 health camps were organized, benefiting 770 individuals, adding to the over 280 health camps that have directly benefited over 50,000 people.
To support livelihoods, the Company built 52 community agri-sheds, providing essential shelter for harvested produce and livestock for over 265 farmers. Since the start of our CSR operations, dedicated to good agriculture practices, the Company has constructed 36 check dams in water-stressed regions, ensuring additional water sources for irrigation and other purposes. Furthering efforts towards water conservation, this year the Company assessed all the existing check dams spread across our areas of operations to measure total and actual water storage capacity, identify needs of repair and map requirements for new check dams.
The commitment to education and eliminating child labour was demonstrated through awareness campaigns in 70 villages and awarding scholarships to 420 deserving students for their academic dedication and high attendance.
Environmental sustainability remained a priority, with the maintenance of 4 biodiversity parks that house 9450 trees of native species and the planting of new 70,000 saplings in a 300 acres of semi-arid region of Andhra Pradesh with the objective of turning it into a lush green space for the community.
Further, Dr. Bina Modi, Chairperson and Managing Director of the Company has been recognized by the Hon'ble Vice President of India for 'Outstanding Contributions to the cause of Corporate Social Responsibility'. These accomplishments underscore our unwavering commitment to holistic community development and the Company's dedication to making a positive impact in the regions it serves.
The Company has constituted a CSR Committee of the Board in accordance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The composition, terms of reference and details of meeting of CSR Committee forms part of Corporate Governance Report. The brief outline of the CSR policy, overview of the activities undertaken with amounts spent/unspent thereon during the year, reason for unspent CSR thereof and composition of the Committee has been disclosed in 'Annexure - 2'.
DIRECTORS
Based on the recommendation of the Nomination and Remuneration Committee ('NRC'), Mr. Ajay Vohra was appointed as Non-Executive Independent Director of the Company for a period of five consecutive years w.e.f. 1st July 2023 by the Board at its meeting held on 27th May 2023, which appointment was subsequently approved by the shareholders at the 86th Annual General Meeting held on 1st September 2023.
Based on the recommendation of the NRC, Mrs. Nirmala Bagri, Non-Executive Independent Director was re-appointed for the second term of five consecutive years w.e.f. 1st April 2024 by the Board at its meeting held on 27th May 2023, which appointment was subsequently approved by the shareholders at the 86th Annual General Meeting held on 1st September 2023.
The Independent Directors of your Company have confirmed that:
(a) they meet the criteria of Independence as prescribed under Section 149 of the Companies Act, 2013 and Regulation 16 of the SEBI (LODR) Regulations, 2015; and
(b) they are not aware of any circumstance or situation which could impair or impact their ability to discharge duties with an objective independent judgement and without any external influence.
Further, in the opinion of the Board, the Independent Directors fulfill the conditions prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ('SEBI Listing Regulations') are competent, experienced, proficient and possess necessary expertise and integrity to discharge their duties and functions as Independent Directors and are independent of the management of the Company.
PERFORMANCE EVALUATION OF THE BOARD, ETC.
Details pertaining to the manner of evaluation of the Board, its committees and individual Directors including Chairperson has been carried out, form part of Corporate Governance Report.
KEY MANAGERIAL PERSONNEL
Dr. Bina Modi, Chairperson and Managing Director, Mr. Samir Kumaar Modi, Executive Director, Mr. Sharad Aggarwal, Whole-time Director, Mr. Sunil Agrawal, Chief Financial Officer and Mr. Sanjay Kumar Gupta, Company Secretary of the Company are considered to be Key Managerial Personnel of the Company as per the provisions of the Companies Act, 2013 and the rules made thereunder.
BOARD MEETINGS
Details of the meetings of the Board held during the year, form part of the Corporate Governance Report.
AUDIT COMMITTEE
The composition, functions and details of the meetings of the Audit Committee held during the year, form part of the Corporate Governance Report.
RISK MANAGEMENT
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Company management periodically assesses risks in the internal and external environment and incorporates suitable risk treatment processes in its strategy and business and operating plans. The details of practices being followed by the Company in this regard, form part of the Corporate Governance Report.
There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges faced by it have been dealt with under Management Discussion and Analysis which forms part of this Report. Your Company has a Risk Management Policy in place and is available on the Company's website at https://www.godfrevphillips.co.in/sustainabililtv/policies. The Risk Management Committee reviews the Policy, its effectiveness and adequacy in periodic manner.
Details regarding constitution of Risk Management Committee and its role and responsibilities, form part of the Corporate Governance Report.
ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) COMMITTEE
The Company has made sustainability as part of its ways of working during the year. The Board has set up a committee to monitor progress in this regard and the Business Responsibility and Sustainability Report attached herewith provides the necessary information on it.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 (the 'Act'), the Directors, to the best of their knowledge, confirm that:
(i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(ii) Appropriate accounting policies have been applied consistently and judgements and estimates that are reasonable and prudent have been made 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 the period;
(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) The Annual Accounts have been prepared on a going concern basis;
(v) The internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and are operating effectively; and
(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
The above statements were also noted by the Audit Committee at its meeting held on 30th May 2024.
RELATED PARTY TRANSACTIONS
Form AOC-2 containing particulars of contracts or arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013 is attached as 'Annexure - 3'.
Details of related party transactions and related disclosures are given in the notes to the financial statements.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of loans, guarantees and investments covered by the provisions of Section 186 of the Companies Act, 2013 (if any) are given in the notes to the standalone financial statements.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
Details of Whistle Blower Policy/Vigil Mechanism form part of the Corporate Governance Report.
NOMINATION AND REMUNERATION POLICY
The appointment and remuneration of the Directors is recommended by the Nomination and Remuneration Committee and approved by the Board, subject to approval of the shareholders.
The remuneration payable to the Directors is decided keeping into consideration long term goals of the Company apart from the individual performance expected from them in pursuit of the overall objectives of the Company.
The remuneration of the Executive Directors including Managing Director and Whole-time Director, may consist of both fixed compensation (which may be subject to annual increments) & variable compensation and shall be paid as salary, commission, performance bonus, perquisites and fringe benefits, as may be approved by the Board and within the overall limits as may be approved by the shareholders.
In accordance with the provisions of the Articles of Association of the Company and the Companies Act, 2013, a sitting fee (presently fixed at Rs. 1,00,000 per meeting) is paid to the Non-executive Directors, including Independent Directors, of the Company who are not drawing any remuneration, for attending any meeting of the Board or of any Committee thereof.
The remuneration payable to the Directors shall be governed by the ceiling limits specified under section 197 of the Companies Act, 2013 and shareholders' approval taken from time to time.
The remuneration policy for other senior management employees including key managerial personnel aims at attracting, retaining and motivating high calibre talent and ensures equity, fairness and consistency in rewarding the employees. The remuneration to management grade employees involves a blend of fixed and variable component with performance forming the core. The components of total remuneration vary for different employee grades and are governed by industry practices, qualifications and experience of the employees, responsibilities handled by them, their potentials, etc. Remuneration of senior management employees is also being looked at by the Nomination and Remuneration Committee.
During the year under review, the Board of Directors reviewed the Nomination and Remuneration Policy and amended it to make it more comprehensive by adding detailed clauses on appointment, tenure, removal of Directors and also added the clause for review of the Policy. The Nomination and Remuneration Policy is available on the Company's website at https://www.godfrevphillips.co.in/sustainabililtv/policies.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
As mandated by the SEBI Listing Regulations, the Business Responsibility and Sustainability Report has been included separately, as part of the Annual Report.
UNCLAIMED SHARES
Status of the unclaimed shares as on 31st March 2024 has been mentioned in the Corporate Governance Report.
CORPORATE GOVERNANCE
The Company is committed to maximise the value for its stakeholders by adopting the principles of good Corporate Governance in line with the provisions of law and particularly those stipulated in the SEBI Listing Regulations. Its objective and that of its management and employees is to manufacture and market the Company's products in a way so as to create value that can be sustained over the long term for consumers, shareholders, employees, business partners and the national economy in general.
Certificate from the statutory auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in the SEBI Listing Regulations, is enclosed.
Certificate from Dr. Bina Modi, Chairperson and Managing Director as the Chief Executive Officer (CEO) and Mr. Sunil Agrawal, Executive Vice President-Finance as the Chief Financial Officer (CFO) in relation to the financial statements for the year along with declaration by the Functional CEO regarding compliance with the code of business conduct of the Company by the Directors and the members of the senior management team of the Company during the year, were submitted to and taken note of by the Board.
STATUTORY AUDITORS
In compliance with the provisions of Section 139 and other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s)/re-enactment(s)/ amendment(s) thereof, for the time being in force), S. R. Batliboi & Co. LLP, Chartered Accountants, (FRN 30l0o3E/E300005) were re-appointed as the Statutory Auditors for another term of five (5) consecutive years until the date of conclusion of the 90th Annual General Meeting, by the Shareholders in the 85th Annual General Meeting of the Company held on 26th August 2022.
Auditors' Report on the financial statements of the Company forms part of the Annual Report and does not contain any qualification, reservation, adverse remark or disclaimer. However, as an exception, the Auditors' in their report, have commented on the audit trail (edit log) feature of the accounting software used by the Company for maintaining its books of accounts. The Auditors' Report along with Note 54 to the financial statements of the Company, is selfexplanatory in this regard. The Audit report is not modified to that extent.
COST AUDIT
The provisions of Cost Audit are not applicable on the Company.
SECRETARIAL AUDIT
The Secretarial Audit Report from Chandrasekaran Associates, Practicing Company Secretaries, for the year under report is attached as 'Annexure - 4' and does not contain any qualification, reservation, adverse remark or disclaimer.
REPORTING OF FRAUDS BY AUDITORS
During the year under report, the Statutory Auditors and Secretarial Auditors have not reported any instance of fraud committed against your Company by its officers or employees, to the Audit Committee or the Board, under section 143(12) of the Companies Act, 2013.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETING
Pursuant to Clause 9 of Revised Secretarial Standard -1 (SS -1), your Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India, during the financial year under report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under report, no significant and material order was passed by the Regulators/Courts that could impact the going concern status of the Company and its future operations.
There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016. There was no instance of onetime settlement with any Bank or Financial Institution.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as 'Annexure - 5'.
Pursuant to the provisions of Section 136(1) of the Companies Act, 2013 and as advised, the statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be available for inspection at the Registered Office of the Company during working hours and Members interested in obtaining a copy of the same may write to the Company Secretary and the same will be furnished on request. Hence, the Annual Report is being sent to the Members excluding the aforesaid information.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars prescribed under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are attached as 'Annexure - 6'.
DIVIDEND DISTRIBUTION POLICY
As mandated by the SEBI Listing Regulations, the Board has formulated a dividend distribution policy and the same is attached as 'Annexure - 7' and is also available on the Company's website at: https://www.godfreyphillips. co.in/sustainabililty/policies
KEY FINANCIAL RATIOS
Key Financial Ratios for the financial year 2023-24 with comparatives for the year 2022-23, are disclosed in 'Annexure - 8' attached herewith.
EMPLOYEES SHARE PURCHASE SCHEME
During the year under report, the Company has implemented a share-based employee long term incentive plan in the name "Godfrey Phillips Employees Share Purchase Scheme-2023" ("ESPS 2023") which is being administered through an irrevocable Trust formed for this purpose in the name of "Godfrey Phillips ESPS Trust". ESPS 2023 is being supervised by the Nomination and Remuneration Committee.
The ESPS 2023 was implemented in compliance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and there has been no change in the scheme during the year under report. The Company has received a certificate from the Secretarial Auditors that the ESPS 2023 have been implemented in accordance with the applicable SEBI Guidelines and the resolutions passed by the shareholders. The Certificate will be placed at the Annual General Meeting for inspection by Members.
Details of the share based payments made during the year are provided in Note 48 to the financial statements of the Company. Further, the disclosures pursuant to the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations in respect of ESPS 2023 are available on the website of the Company at https://www.godfreyphillips. co.in/sustainabililty/annual-reports
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy on prevention, prohibition and redressal of sexual harassment of women at workplace in line with the requirements of the above Act.
Under the said policy, an Internal Complaints Committee (ICC) has been set up to redress complaints received relating to sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy.
During the year under report, no complaint was filed with the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF YOUR COMPANY, WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT
Subsequent to the year end, the Board of Directors of the Company at its meeting held on 12th April 2024, after due consideration of the stakeholders' feedback, long-term performance of the retail business since inception, prevailing market conditions of retail sector and long-term business strategy of the Company, has decided to exit from carrying out the business operations of its Retail Business Division ('Division). The exit will be subject to completion of the necessary formalities.
THE FUTURE
Availability of best in the class manufacturing facilities with right blend of technology, vast distribution network, adequate financial resources, stable tax regime and motivated manpower backed by 'people first' policy, will facilitate your Company to continue to drive growth across its various product categories both in domestic and international markets. Your Directors are confident that the Company will continue to create value for its shareholders and other stakeholders.
ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation to the Government authorities, Company's bankers, customers, vendors, investors and all other stakeholders for their continued support during the year. Your Directors are also pleased to record their appreciation for the dedicated services of employees at all levels of operations in the Company.
For and on behalf of the Board
DR. BINA MODI CHAIRPERSON
Place: New Delhi Dated: 30th May 2024
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