MANAGEMENT DISCUSSION AND ANALYSIS

AN OVERVIEW OF INDIAN ECONOMY

The Indian economy during the Financial Year 2014-15 has emerged as one of the largest economies in the world with a promising economic outlook on the back of controlled inflation, decline in oil prices, increase in investments, rise in domestic consumption and commitment of the Government for continuity of ongoing reform process. The growth prospects for the Indian economy are firming up and the various estimates, including those by International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD), indicate that India will be one of the fastest-growing economies in coming years. The “Composite Leading Indicators” released by the OECD on a monthly basis, designed to anticipate turning points in economic activities, has increased for India from 99 in September, 2014 to 99.5 in January, 2015. The IMF, attributing the revival in economy to positive policy actions, has projected the GDP growth rate to rise to 7.5% in 2015-16, from 7.3% in the Financial Year 2014-15, while the Government of India envisages a growth of 8.5% in 2015-16.

The Indian Economy grew 7.3% in Financial Year 2014-15. The industry sector has registered a growth of 5.9% whereas, service sector has registered growth of 10.6% in 2014-15 as compared to 4.5% and 9.1% during 2013-14 respectively. In case of agriculture and allied sectors, because of various reasons including suboptimal monsoon, the pace in growth has slowed down to 1.1% in 2014-15 as against 3.7% in 2013-14. All the major service sectors, including finance, insurance, realty and business services have exhibited sizable growth. Contribution of service sector in GVA (Gross Value Addition) has been constantly increasing in last 3 years from 49.6% in 2012-13 to 50.9% in 2013-14 and further to 52.7% in 2014-15. The share of agriculture and industry in GVA has remained moderate in last 3 years.

INDIAN CHLOR-ALKALI INDUSTRY AT A GLANCE

There are 34 active Chlor-Alkali Units in India. The production of Caustic Soda during the Financial Year 2014-15 has been approximately 27.45 Lacs MTPA. The products from the alkali industry are the basic raw materials for various industries like Alumina, Paper & Pulp, Soaps & Detergents, Pharmaceuticals, Dyes, Pesticides & Water Treatment etc.

The additional capacity of Caustic Soda in India during the Financial Year 2014-15 was about 1.58 Lacs MTPA mainly because of expansion of existing Plants.

However, due to fall in global Ethylene Dichloride (EDC) price, many Indian producers opted to import EDC which is the key input in the production of Poly Vinyl Chloride (PVC) as also due to new Chlor-Alkali capacity addition and expansion of existing ones, Chlorine demand remain debrssed whereas supplies were in excess during the entire fiscal year. Debrssed Chlorine demand and negative Chlorine values impacted overall capacity utilizations of Chlor-Alkali plants across the industry, which reduced domestic availability of Caustic Soda.

THE CAUSTIC SODA MARKET SCENARIO

Your Company is a multi-product Company, having 37 products in its basket, yet the major revenues are coming from Caustic Soda Group and therefore market scenario of Caustic Soda and Chlorine is of utmost importance to us.

The installed capacity of Caustic Soda in the country is about 34.30 Lacs MTPA as on 31.03.2015 as compared to 34.02 Lacs MTPA as on 31.03.2014. Out of the installed capacity of 34.30 Lacs MTPA, about 0.46 Lacs MTPA is based on Mercury Cell and remaining 33.84 Lacs MTPA on Membrane Cell. The Membrane Cell process is energy efficient as the power requirement is much less which is in the range of 2300-2450 kwh / MT as compared to Mercury Cell where it is around 3150- 3300 kwh / MT. GACL has the advantage of having its entire production from Membrane Cell. However, now most of the medium and large scale Chlor-Alkali units have converted their plants to Membrane Cell Technology.

ABOUT GACL

The Company was established in 1973 and over a period of time, it has emerged as one of the largest producers of Caustic Soda in India with brsent installed production capacity of 4,29,050 MT of Caustic Soda as on 31st March, 2015 and enjoys the economies of scale. The Company has about 14% share in the domestic Chlor-Alkali market.

Your Company has achieved ISO 9001:2008 (Quality Management System), ISO 14001:2004 (Environment Management System), BS/OHSAS 18001:2007 (Operational Health & Safety Management System) in its pursuit for excellence and sustainable growth. The Quality Policy of the Company reflects its emphasis and commitments. Since inception, the Company has from time to time expanded its operations in Chlor-Alkali Sector and also diversified into several higher end products, through forward & backward integrations.

GACL has always ensured upgrading and adapting eco-friendly and green technologies while it ensured the capacity utilization of 89% in Caustic Soda during Financial Year 2014-15. Further, the Company has achieved optimum capacity utilization of more than 100% in some of the plants/products viz. Chloromethanes, Potassium Hydroxide and Aluminium Chloride. Whereas in Hydrogen Peroxide and Phosphoric Acid plants about 100% capacity utilization was achieved during the Financial Year 2014-15. Being a chemical manufacturing Company, GACL carries its passion for protecting the environment at every stage of its operation, keeping interest of Customers, Shareholders, Employees, Society and Nature.

The Company’s products basket comprises total 37 products including Caustic Soda, Chlorine, Hydrochloric Acid, Hydrogen, Chloromethanes, Potassium Hydroxide, Potassium Carbonate, Phosphoric Acid (85%), Sodium Cyanide, Sodium Ferro Cyanide, Hydrogen Peroxide, Calcium Chloride, Sodium Chlorate, Stable Bleaching Powder, Poly Aluminium Chloride, Anhydrous Aluminium Chloride, Toluene based chemicals, Chlorinated Paraffin Wax etc. The major revenues are derived from Caustic Soda Group and therefore, Caustic Soda and Chlorine market scenario has a wide impact on the Company’s performance.

The Company’s products are used by various industries viz. Textiles, Pulp & Paper, Soaps & Detergents, Alumina, Water Treatment, Petroleum, Plastics, Fertilizers, Pharmaceuticals, Agrochemicals, Plant Protection, Dyes & Dyes Intermediates, refrigeration gases, epoxy etc. and it has marked its brsence across the globe even against stiff international competition by exporting its World class products viz. Aluminium Chloride, Hydrogen Peroxide, Caustic Soda Flakes and Prills, Caustic Potash Flakes, Sodium Cyanide, Benzyl Alcohol, Calcium Chloride Powder, Methylene Chloride, Poly Aluminium Chloride, Potassium Carbonate and Chlorinated Paraffin Wax to various Countries.

Production of Caustic Soda by electrolysis process is highly power intensive and the Company devised a sustainable strategy to meet its growing energy demands. Besides 90 MW gas based Captive Power Plant and participation in a 140 MW Joint Captive Co-generation Power Plant, the Company has taken major initiative for green energy by setting up Wind Farms for a total installed capacity of 125.75 MW as on 31st March, 2015. Further, the Company is in the process of installing 31 MW Wind Farm Project under Phase VIII and IX and upon commissioning, the total installed capacity will be 156.75 MW. The Company is aiming to meet substantial part of its power requirements through environment friendly sustainable renewable energy sources.

BUSINESS, OPERATIONS AND FINANCIAL PERFORMANCE

The total production of all the products of the Company has increased by 1.54% to 14,47,788 MT during the Financial Year 2014-15 from 14,25,853 MT in brvious year. The production of Caustic Soda Lye, Caustic Potash Lye/Flakes, Liquid Chlorine, Chloromethanes, Phosphoric Acid, Hydrogen Peroxide, Aluminium Chloride, Poly Aluminium Chloride and Hydrochloric Acid has increased during Financial Year 2014-15 as compared to the brvious year. However, the production of Caustic Soda Flakes / Prills has decreased during Financial Year 2014-15 mainly due to market conditions.

The Financial Year 2014-15 was a challenging year for Chloralkali sector. The price of Caustic Soda remained under brssure due to huge imports during most of the part of the Financial Year 2014-15. However, the Company was able to sustain the cut-throat competition due to its nation-wide distribution network, operational excellence, higher efficiency and well executed business strategy. During the Financial Year 2014-15, the Company has achieved highest ever productions in Caustic Soda, Chloromethanes and Hydrogen Peroxide at Vadodara Complex and highest ever productions in Hydrogen Peroxide, Poly Aluminium Chloride and Anhydrous Aluminium Chloride at Dahej Complex.

During the Financial Year 2014-15, your Company has achieved highest ever sales of Rs.2,157.17 crore (including Excise Duty), as against Rs.2,087.50 crore in the brvious year.

The other operating income, for the Financial Year 2014-15 had been Rs.16.31 crore, as compared with Rs.13.21 crore for the brvious year and the other income increased to Rs.48.95 crore as compared with Rs.30.26 crore for the brvious year. The other income includes Rs.10.94 crore for receipt of dividend, Rs.28.51 crore towards interest income and Rs.8.41 crore towards profit on sale of investments.

The Earning Per Share (EPS) of Rs.31.03 per Share as on 31.03.2015 has been achieved as compared to Rs.25.20 per Share as on 31.03.2014. Cash Earning of Rs. 42.69 per Share has been achieved as on 31.03.2015 as compared to Rs.54.09 per Share as on 31.03.2014. Book value of Share has improved to Rs.286.14 per Share as on 31.03.2015 as compared to Rs.262.71 per Share as on 31.03.2014. The Return on Capital Employed at 10.80% has been achieved as on 31.03.2015 as compared to 9.18% as on 31.03.2014. During the year, the Company has decreased its total debts level to Rs.94.90 crore as on 31.03.2015 as compared to Rs.155.89 crore as on 31.03.2014, which resulted into improvement in the Debt : Equity Ratio to 0.05 : 1 as on 31.03.2015, as compared to 0.08 : 1 as on 31.03.2014.

The Interest Coverage Ratio has decreased to 34.58 times as on 31.03.2015, as compared to 63.50 times as on 31.03.2014. The overall Raw Material expenses have decreased to Rs.675.57 crore as compared with Rs.717.22 crore for the brvious year, mainly due to reduction in consumption of Natural Gas for captive power plant at Dahej Complex due to replacement of captive power by low cost power from other sources. However, it has increased due to general increase in the procurement cost of various raw materials like Common Salt, Sulphuric Acid, Sodium Bi-carbonate, Aluminium Ingots, Hydrocyanic Acid, Barium Carbonate, Soda Ash, Hydrated Lime, ISO Amyl Alcohol and Natural Gas etc. Electricity charges have increased by 29.20% to Rs.482.52 crore in the current Financial Year from Rs.373.48 crore during the brvious year mainly due to increase in external power consumption during the current Financial Year. Employees’ remuneration has increased to Rs.166.99 crore as compared with Rs.151.44 crore for the brvious year mainly due to restructuring of pay structure, normal increments and absorption of casual labourers under fixed term contract. Debrciation and amortization expense has decreased to Rs.98.06 crore in the current Financial Year as compared with Rs.150.65 crore for the brvious year due to debrciation charged as per useful life of assets in accordance with the Schedule II of the New Companies Act, 2013. Other expenses (excluding power, fuel, Natural Gas and Water Charges) have increased by 8.46% to Rs.225.78 crore in the current Financial Year from Rs.208.16 crore for the brvious year. The finance costs have increased to Rs.9.33 crore from Rs.6.35 crore in the brvious year due to interest on ECB loan for Sodium Chlorate project now being treated as revenue expense upon commissioning last year

During the Financial Year 2014-15, gross profit has decreased to Rs.322.87 crore from Rs.403.73 crore in the brvious year. The Profit after finance costs but before debrciation and amortization (Cash Profit) has decreased to Rs.313.54 crore in the Financial Year 2014-15 from Rs.397.38 crore in the brvious year. Your Company has achieved Profit Before Tax of Rs.215.48 crore for the Financial Year 2014-15 as compared with Rs.246.55 crore of the brvious year. The Profit After Tax for the Financial Year increased to Rs.227.86 crore as compared to Rs.185.02 crore of the brvious year due to MAT status and deferred tax reversals.

RESEARCH AND DEVELOPMENT

Our long term vision for Research and Development is to strategically align the activities with the brsent and future needs of the organization. Research and Development Department is continuously working in a direction to ensure that the organization maintains the competitive edge in terms of environment friendly technologies, product quality and total customer satisfaction.

The R & D activities are designed on new product / process development, process improvement, product variation, cost reduction, import substitutes, cooling water treatment, environment protection, water conservation etc.

In line with Company’s long term business plan, the work continued on several products based on Hydrogen Peroxide. During the year, the Company has successfully developed Hydrogen Peroxide based process for Hydrazine Hydrate at pilot plant scale in collaboration with Indian Institute of Chemical Technology (IICT), Hyderabad. The work has already been started to commercialize the process.

The other focus areas have been to work out the innovative ways for the minimization and value addition of solid waste, effective measures to achieve zero liquid discharge and water recycling & conservation. Your Company has signed a Memorandum of Understanding with IICT, Hyderabad to jointly work in these areas.

The detailed studies are regularly carried out on raw material, in process streams, intermediates and final products to achieve the optimum productivity in terms of energy and raw material consumption as well as the quality of the final products.

R&D Department has successfully carried out the work in other areas, viz. cooling water treatment including the work on new formulations, cleaning formulations, electrolytic solution for on site Disinfectant solution generation, iodized salt field testing kit, and also providing technical services to operations in terms of corrosion and microbiological growth monitoring.

EXPANSION AND DIVERSIFICATION

The Company has taken up various projects for expanding its current product lines through de-bottlenecking and putting up additional capacities through new plants. The Company is also considering plans for introducing new products through forward integration.

Such projects include increasing the production capacity of Chloromethanes from 110 TPD to 170 TPD and of Potassium Hydroxide from 60 TPD to 120 TPD, both at Vadodara Complex. The Company is putting up a new 800 TPD Caustic Soda Plant together with a Coal based Power Plant at Dahej as a Joint Venture with National Aluminium Company Ltd. (NALCO). For gainful utilization of Chlorine from this plant, a new Chloromethanes Plant and a new Phosphoric Acid Plant are also being considered to be put up at Dahej. Besides, the Company is planning to establish a Chlorine Park at Dahej from where Chlorine will be supplied to bulk consumer units through pipeline.

The commercial plant to manufacture 8000 TPA of Hydrazine Hydrate shall be put up after optimizing & stabilizing the process developed at the pilot scale.

In addition, the Company is also exploring the possibilities of putting up plants for producing new value added products having their applications in pharmaceuticals, cosmetics & personal care products, liquid detergent, epoxy resins etc.

The Company has been approached by Rebrsentatives of Government of Republic of Congo with a request to provide necessary guidance and assistance for putting up facilities in Republic of Congo for the manufacture of Chemicals, especially Fertilizers, Methanol and Caustic Soda, wherein the feasibility largely depends on the availability of Natural Gas at a competitive price. They have further requested the Company for equity participation in such projects. Their proposal for participation by GACL in such projects is being evaluated by studying various aspects such as availability of uninterrupted supplies of Natural Gas, Cost of Natural Gas, Cost of power, availability of Raw Materials, availability of various infrastructures, availability of skilled manpower, potential market in Republic of Congo and surrounding regions etc.

After detailed study on these aspects, the Company will consider getting the Detailed Project Report (DPR) brpared by a reputed consultant and may further consider participation in such project depending on the outcome of the DPR and subject to receipt of the necessary approvals from the Government of State and Central level.

In order to continue promoting Green technology, the Company has further taken up Wind Farm Projects for 31 MW during the current Financial Year. A Wind Farm Project-Phase VIII with the capacity of 10.0 MW is expected to be commissioned by August 2015 and 21.0 MW Wind Farm Project-Phase IX is expected to be commissioned by November 2015. The total Wind energy generation capacity of the Company after implementation of these Projects will rise to 156.75 MW. Following Projects were commissioned during the Financial Year 2014-15:

10.5 MW Wind Farm Project – Phase VI

10.5 MW Wind Farm Project Phase VI was commissioned on July 18, 2014 raising the installed Wind power capacity to 115.25 MW.

10.5 MW Wind Farm Project – Phase VII

10.5 MW Wind Farm Project Phase VII was commissioned on September 29, 2014 raising the installed Wind power capacity further to 125.75 MW.

RISK MANAGEMENT

Risk Management is the identification and measurement of risks, which can affect the Organisation and implementation of strategy for monitoring, controlling and mitigation of these risks by systematic actions in a planned manner. Continuous risk management is a br-requisite for a sustainable growth and has to be integrated in day to day activities and decisions. Adequate policy, procedures, checks and balances are put in place and steps are taken for earlier recognition and corrective measures to overcome the same. In case of external drivers, a continuous cost benefit analysis is done to take a proactive approach and safeguard the business outcome on a substantial basis. The Board reviews Risk Management

Reports on quarterly basis.

During the year, the Company has constituted Internal Risk Management Committee comprising of senior executives of the Company who are heading respective departments viz. Finance, Manufacturing, Marketing, Purchase, Project, HR, Secretarial and Legal functions. The Executive Director (Fin.) & CFO is the Chairman of the Internal Risk Management Committee. The Internal Risk Management Committee reports to the Managing Director and the risks identified by the said Committee alongwith proposed mitigation actions are discussed periodically with the Managing Director. Out of the various risks identified by the Internal Risk Management Committee, the Audit Committee has identified certain criticalrisks, which are reviewed by Audit Committee and by the Board of Directors on quarterly basis. A Report on the steps taken to mitigate those critical risks is also submitted to the Audit Committee and the Board of Directors.

STRENGTHS, OPPORTUNITIES & THREATS / RISKS & CONCERNS

The strengths of the Company are economies of scale, state of the art eco-friendly technologies, extensive usage of renewable energy, integrated down stream plants, strong network for Marketing and Distribution, In-house Research and Development facilities, proximity to major raw material source and markets etc. However, economical power supply has been a major area of concern during the year under review.

The Company has followed a business plan for growth and sustained performance. The Company has continued to concentrate both on top and bottom lines. The increase in net sales by 2.60%, increase in other income, decrease in insurance cost and decrease in consumption of natural gas, are the main factors for contributing profitability of the Company, during the Financial Year 2014-15. However, due to increase in power and utilities cost, employees cost, increase in raw material and packing material cost and job work / processing charges and lower contribution from Caustic Soda group, Cyanide group, Hydrogen Peroxide, Aluminium Chloride and Chloro Toluene, the profitability of the Company for the year under review has been adversely affected.

The manpower of the Company with high morale and motivation always endeavours to bring better results. However, in next 3 to 4 years, considerable numbers of employees will retire from services of the Company due to superannuation.

The Company is in process of identifying succession plan and will implement the same in due course of time. Keeping in view, the current trends of Indian and global economy, the time ahead may prop-up newer hurdles. To overcome such hurdles, the Company has planned new projects during next 3 to 4 years, to diversify, add new products, enlarge portfolio and expand its existing capacities. The Company is also considering various Chlorine / HCL based projects so that the production of Caustic Soda can be optimized. It will also enable us to consolidate and maintain our prime position in Chlor- Alkali and other integrated downstream products. Our continuous efforts to upgrade the technology has enabled us to optimize the cost of production and increasing revenues. Our commitment to deliver quality products to the customers has ensured that our products are well accepted, both in India and abroad. The customers are assured of timely delivery of quality products through its well-established marketing network.

The Company is operating in a competitive market both in domestic and international sector. However, the increasing cost of power and utilities and impact of apbrciation of USD on the cost of imported materials such as Rock Phosphate and Potassium Chloride etc. are the areas of concern. The Company’s total Wind Energy Generation Capacity has now gone up to 125.75 MW to augment its power requirement with eco-friendly renewable energy which will further increase to 156.75 MW in 2015-16. Further, the Company has also taken actions to source power from IPPs on bilateral arrangements. In the international market, the Company competes with manufacturers in China and Middle East, who have their own typical location advantages with respect to energy cost and size of operations. Domestically, the import of several items is becoming cheaper with reduction in custom duty. Globally for Chlor-Alkali Industry, Chlorine is the driving product whereas in India, Caustic Soda is the driving product. Hence, Indian Industry faces competition from cheaper imports with reduction in custom duty. To protect against unfair competition in products like Caustic Soda Lye / Flakes and Potassium Carbonate, the Indian manufacturers had approached the Designated Authority to impose Anti-dumping duty against such imports and Anti-dumping duty has been imposed on imports of these products from various countries.

All Chemical products generally pass through cyclic phase. While some products are in short supply, some others do not move satisfactorily. Owing to availability of 37 products in its basket, the products in short supplies provide some leverage against slow moving products.

The Company had only single source procurements for the raw materials viz. : Rock Phosphate from Jordan and Potassium Chloride from Canada. The Company has successfully started using Rock Phosphate of Morocco origin blending with the Rock Phosphate from Jordan. Efforts are on to search for other suppliers of the above materials of technical suitability for the designed plant at brsent, through domestic dealers / foreign suppliers.

During the current Financial Year, the Company has temporarily shut down its Sodium Cyanide Plant due to non-availability of raw material, viz. HCN, from the single supplier by pipeline.

The Company shall resume the production of Sodium Cyanide, as soon the raw material, viz. HCN is available from supplier. The Company is in dialogue with the supplier for resumption of production.

The Calcium Chloride Plant of Vadodara Complex has been incurring losses and in order to improve the profitability, the Company decided to close the said plant and mothball it for some time till the mode of disposal of the plant is decided. The Company is exploring the options to sell or otherwise dispose off the plant. This plant is having a very small capacity and was set up mainly to consume the excess Chlorine and Hydrochloric Acid.

In Financial Year 2014-15, the Company has received a demand notice for Rs.42.07 Crore from GAIL India Limited (GAIL) under take or pay clause (Pay if not Taken Liability Clause) under the long term Gas Supply Agreement entered into between the Company and GAIL. The Company has filed petition before the Hon. High Court of Delhi under the Arbitration and Conciliation Act to protect its interest.

As a part of the ongoing expansion and cost reduction, the Company has embarked upon increasing its capacity for renewable energy generation through Windmills from 125.75 MW as at end of March 2015 by additional 31 MW during Financial Year 2015-16 making a total capacity of 156.75 MW.

To part finance the cost of the expansion, the Company has availed during Financial Year 2015-16 financial assistance by way of External Commercial Borrowing (ECB) of USD 30 Million from The Hongkong and Shanghai Banking Corporation Limited, Hong Kong for the tenure of seven years including moratorium period of two years. The Company has opted the above financial assistance instead of Rupee Term Loan with a view to minimise the interest outgo. The said ECB Loan has been kept unhedged considering low risk profile of the Company.

MARKETING STRATEGY

The Company deals in marketing of Caustic Soda (Lye, Flakes and Prills), Liquid Chlorine, Hydrochloric Acid, Chloromethane, Hydrogen Peroxide, Caustic Potash (Lye and Flakes), Sodium Cyanide, Sodium Ferro Cyanide, Potassium Carbonate, Phosphoric Acid, Aluminum Chloride, Calcium Chloride Powder, Chlorinated Paraffin, Poly Aluminum Chloride, Chloro- Toluene, Sodium Chlorate etc.

Most of the plants are integrated in such a way that part of finished product of one plant is consumed as a raw material in other plant. The Company thus enjoys some leverage over its competitors due to its integration philosophy.

As a value addition to Hydrochloric Acid, the Company has commissioned Poly Aluminum Chloride (PAC) and been able to capture sizable domestic market for various grades of PAC, as a value addition to Hydrochloric Acid.  

The Company has also put up Stable Bleaching Powder facility as a value addition to Chlorine at Dahej Complex and the production is optimized and our product has been widely accepted among various segments like Water Treatment plants, Disinfection, Aquaculture etc. across India. Further, the Company has successfully started its Sodium Chlorate Plant at Dahej, which finds applications primarily in Paper & Pulp Industry for “Elemental Chlorine Free Bleaching”. Gujarat is brdominantly an industrial state, which contains a number of large, medium & small businesses units in the Chemical, Petrochemical, Plastics, Textile and Fertilizer & other Industries.

As a part of market development, the emphasis is to interact with customers and develop new market potential for the products. Providing prompt after sales service as and when required is part of this strategy and this helps the Company to increase the volume especially for new products.

GACL is also exporting some of its products, viz. Caustic Soda Flakes, Caustic Soda Prills, Potassium Hydroxide Flakes, Hydrogen Peroxide, Liquid Chlorine, Aluminum Chloride, PAC and CPW to Europe, West Asia, South East Asia, Africa, Middle East/Far East, Australia, SAARC countries etc.

The Company is facing import threat and dumping of various products at low prices, which affects its capacity utilization, prices etc. and is pro-actively taking corrective action for imposition of Anti Dumping Duty within the WTO guidelines.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company has taken pro-active approach for various activities related to increase in export volume, revenue and the development of new export markets for existing and new products.

In the current Financial Year also, the Company targets at wider markets for export of various products including HCL.

SAFETY & ENVIRONMENT

Our commitment to safety and brservation of environment has been encompassed in our “Quality Health, Safety and Environment (QHSE) Policy”. The Company has achieved a new record of more than 4268 Accident Free Days at Vadodara as on 31.03.2015.

The Company has implemented elaborate Environment Management System (EMS), Occupational Health & Safety (OH & S) Plan and has embarked on continual improvement. TUV (India) Private Limited has granted ISO 9001 : 2008, ISO 14001 : 2004 and BS/OHSAS 18001 : 2007 Integrated Management System Certificates and Energy Management 50000 Certificate to the Company. The Company has continued its emphasis on safety awareness for its employees, contract labourers, customers handling our products and among communities in neighbourhood of our plants. The Company regularly organizes safety awareness programme for the employees, contract labourers etc. The Company has also initiated a unique concept of “Plant Healthiness Check-up” to identify and address weakness of the manufacturing facility.

The Company has also its Emergency Planning and Response (ERP) System to minimize effect of any Emergency like situations. Preparedness and response to this ERP is checked periodically by conducting Mock-drill.

Adequate steps have been taken for Pollution Control, Green Belt Development besides due compliance with statutory requirements for the protection of environment. In Vadodara Complex, green belt has been developed and maintained in 28 acres of land having about 27,800 trees of various varieties. The Company has also developed and maintained about 30000 sq. mtrs. green area including lawn gardens in the Plant area. A recharge Bore Well has been constructed for harvesting rainwater to effectively recharge ground water table and raising the ground water level. In the Dahej Complex of the Company, a large area has been covered by development and maintenance of green belt, landscaping, Flora & Fauna, rainwater harvesting and natural ponds. The Company has undertaken water conservation by channelizing cooling tower blow down, treated sewage and drip irrigation. Nearly 33,275 nos. of trees planted and 40,356 sq. mtrs. Garden developed till 31.03.2015 at Dahej Complex.

The canteen and garden waste is being converted into organic manure through in-house vermi-composting facility on regular basis at both the complexes.

The product, Carbon Tetrachloride (CTC) comes under Ozone Depletion Substance (ODS) Rules, (2000) as per the guidelines of Montreal Protocol framed by Government of India. Under these Rules, production of CTC for non-feed stock application has been phased out while production of CTC only for feed stock application is continued.

A step further to its environment brservation philosophy and commitments, the Company is seriously exploring possibility of achieving Zero Liquid Discharge (ZLD) status for its liquid effluent stream.

CORPORATE SOCIAL RESPONSIBILITY

Your Company, during the year under review, has continued to fulfil its Corporate Social Responsibilities to enhance Human Development Index (HDI) by undertaking various thematic activities in various areas. Promoting inclusive growth has been a priority area for GACL from both a social and business perspective. The Company strives to make a difference to its customers, to the society and to the nation’s development directly through its products and services, as well as through its development initiatives and community outreach.

Your Company always comes forward with relevant aid to the society at large; one of such initiative has taken up to provide underground drainage network and sewage treatment plant facility for entire Dahej Village which is in a close proximity of our Dahej Complex. Such an initiative by the Company was in line with our State Government’s coveted dream of ‘NIRMAL GUJARAT’. In line with the same, during The Vadodara International Art and Culture Festival (VadFest 2015), your Company has also contributed to ‘Art & Culture Foundation’, Vadodara towards sponsoring 10,000 students playing drums for ‘Swachchhata Ahwan’ (Awakening the Nation) for Cleanliness.

Education and education related promotional activities are closely monitored by your Company. Many such activities were taken up by the Company by providing financial assistance for providing school bag kits with necessary stationery items during Kanya Kelavani & Shala Praveshotsav – 2014 to the schools children of Tal. Kaprada Dist. Valsad and at Naswadi Dist. Vadodara. Moreover, the Company has also sponsored lunch for graduating students and their parents during the 3rd Convocation Ceremony of Pandit Deendayal Petroleum University (PDPU) and has also extended financial assistance to Indian Institute of Technology, Gandhinagar (IITGN) towards sponsoring Blithchron’15 - the Annual Cultural Festival organized by the Student of the institute. The Company has provided Multimedia System (MMS) for Schools of surrounding area of our Baroda Complex through Society for Village Development in Petrochemicals Area (SVADES) and has sponsored the English language training for 100 Officials of Vadodara Police force; an initiative of Society for Creation of Opportunity through Proficiency in English (SCOPE).

The Company has taken initiative for the noble cause of helping children with learning difficulties such as Dyslexia, Dyscalculia and Dysgraphia by extending financial assistance to Osmosis Centre and Education Games Library Trust, Bharuch. Similarly, the Company sponsored food during “Navrachana Vishesh Kreeda Mahotsav”: National level Basketball Tournament for Mentally Challenged Young Sportspersons, organized by Navrachana Education Society (NES). The Company has also contributed Teesari Aankh Network News (TNN) – Vadodara towards organizing Navratri Garba Mahotsav-2014 for specially abled children.

Efforts to uphold the cultural legacy were also embarked upon to brserve our cultural heritage. The Company has extended financial assistance to Komal Nishad Charitable Trust for organizing festivals of Indian classical music featured internationally reputed artists.

With a view to provide nutritive and hygienic Mid Day Meal to about 1 lac children of Government Schools and Government Aided Schools of Vadodara District, in Financial Year 2014-15 also the Company has supported the project - implemented and monitored by “The Akshaya Patra Foundation”. Your Company has also taken care of promoting sports and related activities by supporting Vadodara Badminton Lovers Association, Vadodara (VBLA) towards first badminton tournament - ‘VBLA Senior Team Doubles Championship’. Supported Hockey Gujarat towards organizing 4th Sub Junior Hockey National Tournament 2014 - Men and extended financial assistance to The Table Tennis Association of Baroda (TTAB) towards sponsoring Advance Table Tennis Coaching Camp 2014 and also co-sponsored its Inter District Table Tennis Championships - 2014. The Company has also supported Baroda District Basketball Association by sponsoring Gujarat State Youth Basketball Championship 2014.

HUMAN RESOURCES DEVELOPMENT

Employees are the primary assets for any organization. The Company combrhends this assessment. We believe in enriching every individual working with us and it has become an integral part of our work culture. We believe in, ‘practice makes perfect’ and to increase the efficiency level of the employees; we plan regular trainings and development programmes. In the Financial Year 2014-15, the Company conducted 103 training programmes for our employees. For the smooth operation of any organization, it is crucial to have harmonious Industrial Relations. The Company has made insistent efforts in achieving harmonious industrial relations in its true sense.

AWARDS AND RECOGNITIONS

The Company is a proud recipient of Safety Awards – 2013 – “SURAKSHA PURASKAR” awarded by National Safety Council of India for developing and implementing very effective management systems and procedures in October, 2014 for its Vadodara Complex.

INFORMATION TECHNOLOGY

GACL considers the effective use of Information Technology (IT) and business analytics to be essential in raising productivity and achieving excellence in its business operations. GACL believes that IT is an important enabler for integration of all activities, ensuring transaction efficiency, integrity, transparency and control. The Company has implanted its IT initiatives to corroborate its vision and business plan.

The Company has Enterprise Resource Planning (ERP) in place, which is backbone for its information base. The Vadodara and Dahej Complexes of the Company are connected through reliable WAN with solution implemented to get almost 100% uptime. A Decision Support System (DSS) is also implemented in addition to ERP, which helps top management in taking strategic and timely business decisions. Management has adopted a total transparent system of business with optimal use of the state of art technologies and IT tools. It also provides information required by its business partners through website.

The Company has its own mail server to achieve fast and reliable messaging solutions. Information about Company is available on its website: www.gacl.com.

NEW INITIATIVE

In a first of its kind endeavor, GACL has begun transporting Caustic Soda Lye (CSL) and other value added liquid products from its Dahej Plant through a specially constructed pipeline to the Dahej Railway yard. The products then will be loaded into Rail containers at the yard, for onward transportation to the destined consumers, pan-India. The 1.6 kilometer long pipeline is an investment towards meeting the long distance logistic requirements of various consumers for optimizing logistic cost.

This step will increase GACL's brsence on pan-India basis at competitive prices. The new pipeline infrastructure will also reduce the transfer time of liquid products into rail cargo, which will bring down overall costs and results into simplification of the entire process of safe loading of various liquid products.

In order to balance Western market, we have taken some initiatives and explored market in Eastern part of India and accordingly, we have successfully executed supplies to M/s. NALCO and M/s. SESA GOA, Orissa, through Rail racks. We have also successfully executed supplies of Caustic Soda Lye to Nagpur (Maharashtra) through Rail racks, where we have established our new Consignment Centre. This step has strengthened our position in that far distant market, where transportation cost is a major constraint. We have also explored another logistic option i.e. Sea route and accordingly, all arrangements have been made to store required quantum of CSL at the storage tank of GCPTCL, Dahej (hired by us for such transactions) and successfully dispatched to M/s. NALCO, Orissa by ship through Sea route.

CAUTIONARY STATEMENT

The Company assumes no responsibility in respect of forward looking statements, expectations and assumptions herein which may undergo changes in future on the basis of subsequent development, information, or unforeseen circumstances or force majeure events. This shall not be considered as investment guidance or advise or invitation. The readers are advised to make their own independent assessment and judgement.

For and on behalf of the Board

 (A.M. Tiwari) Managing Director

(Dr. J.N. Singh) Director

Place: Gandhinagar

Date : 6th August, 2015