DIRECTORS' REPORT

Dear shareholders,

Your Directors have pleasure in presenting their 15th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015.

Your Company continued to deliver strong financial performance with healthy growth in revenues and high quality earnings. This performance is particularly commendable when viewed against the backdrop of the extremely challenging business context in which it was achieved.

Gross Revenue for the year grew by 23% to Rs. 430.34 crores. Net Revenue at Rs.402.16 crores grew by 23.6% primarily driven by export of two onsite plants to Bangladesh and commencement of production of LG DMH and MDP at Muzaffarnagar plant of the Company. Cash flows from operations aggregated to Rs. 49.79 crores compared to Rs. 32.24 crores in the previous year, and were adequate to meet the cash flows for the investment activities amounting to Rs. 11.35 cores and for financing activities Rs. 1.62 crores resulting in closing cash & cash equivalents as at 31st March, 2015 in the sum of Rs. 69.28 crores, compared to Rs. 32.46 crores in the previous year.

During the year the business and affairs of the Company have been carried out in its normal course and no significant events have taken place, which are harmful.

TRANSFER TO RESERVES

Your Board recommends to transfer to general reserves of Rs. 3.00 crores (previous year f 3.00 cores). Consequently, the surplus in the statement of Profit and Loss as at 31st March, 2015 would stand at f 127.28 crores (Previous Year Rs. 109.51 crores).

DIVIDEND

During the year, the Board of Directors had declared interim dividend of 35% on equity shares amounting to f 1.75 per share. Your Directors are pleased to recommend a final dividend of 35% on equity shares amounting to f 1.75 per share for the year ended 31st March, 2015, subject to the approval of the members at this Annual General Meeting. Thus, total dividend for the year amounts to 70% on equity shares i.e. f 3.50 per share compared to f 2.50 per share in the previous year.

4. FUND RAISING

a. Equity & Convertible Warrants - through Preferential Allotment

In the FY 2014-15, the Company allotted 4,35,000 equity shares and 5,00,000 Convertible Warrants under Preferential Issue to the shareholder of non-promoter category namely Antara India Evergreen Fund Ltd. (a Foreign Portfolio Investor) at a price of f 175/- each. The allotment of these shares and warrants was made on 9th October, 2014 and the equity shares were listed and permitted to trade in by Bombay Stock Exchange with effect from 12th November, 2014.  Consequent to the above, the paid up equity share capital of the Company stands increased from f 4,22,42,020 to f 4,44,17,020 divided into 88,83,404 equity shares of 5 each fully paid up.

b. External Commercial Borrowings (ECBs) - Term Loans

During the year under review, your Company repaid ECB loan installments that fell due, equivalent to USD 631,580 million. No fresh Term Loan was availed during the year.  As at 31st March , 2015, long term borrowings stood at f 45.87 crores as against f 43.89 crores on 31st March, 2014.

5. NEW DEVELOPEMENTS

The Ongoing capex programme is focused on exploration and developmental activities across all assets and in potential areas of growth. As part of this programme, during the FY 2014-15, the company has made additions of f 17.33 crores to its gross fixed assets (previous year f 62.66 crores). In addition to it, the company has capital work in progress of f 6.57 crores (previous year f 1.86 crores).

The Company has embarked on implementation of three major On-site PCC projects and other projects:

> As a milestone achievement, your Company has set up an onsite PCC Plant for ITC Limited for their Cigarette Paper Making plant at Tribeni, West Bengal. ITC showed preference for your Company for its quality & time delivery in comparison to various global suppliers of repute. This is the 3rd Onsite PCC plant set up by the Company in India for supply of specialty PCC suitable for Paper industry.

> Company has entered into agreement with Orient Paper Mills (OPM), a Birla group company for setting up an Onsite PCC plant at their location in Amlai, district Shahdol, Madhya Pradesh.

> The Company has successfully executed Onsite PCC and WGCC plant for Basundhara Multi Paper Industries Limited (BMPIL) and exported it to Bangladesh.

• Your Company has successfully commissioned plant & equipment for enhancing production capacity for manufacturing Sorbitol at Bharuch, Gujarat. It has also upgraded the technology and made the production process environmental friendly.

• Your Company has achieved another milestone of being the first Indian Company to produce Dextrose Monohydrate (DMH) Maltodextrin Powder (MDP) and Liquid Glucose from rice at its GPD (Grain Processing division) plant at Muzaffarnagar, Uttar Pradesh

• Commercial production of Indian Made Foreign Liquor (IMFL) has commenced at its bottling unit situated at Borgaon, Madhya Pradesh. The product is very well received in the market under the brand name of 'Tiger Gold'.

• The Company has received environmental clearance from Ministry of Environment and Forest (MOEF), for setting up a Grain based distillery for manufacturing potable alcohol in Chhindwara, M.P. Company has started site development, construction and errection of palnt for the project which is expected to be commissioned by end of March 2016.

6. PUBLIC DEPOSITS

Your Company has not accepted or renewed any deposits from the public during the year under review.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no. 13 to the Financial Statements.

8. DISCLOSURE REGARDING SUBSIDIARIES, JOINT VENTURE OR ASSOCIATE COMPANIES

As on 1st April, 2014, Gulshan Holdings Pvt. Ltd. (GHPL) was holding Company of your Company with 51.76% equity shareholding. Consequent to preferential allotment of 4,35,000 equity share to a non promoter shareholder, the shareholding of GHPL fell below the threshold limit of 51% and it ceased to remain a holding Company w.e.f. 9th October, 2014. The present status of GHPL is that it is an associate company by holding 42% equity share capital of the Company. There are no other holding, subsidiary, and joint venture or associate company.

9. CREDIT RATINGS

Your Company has adequate liquidity and a strong Balance Sheet. During the year, Credit Analysis & Research Limited (CARE) has upgraded the ratings to CARE A+ [Single A Plus] from CARE A [Single A] for your Company's long- term facilities having tenure of more than one year and CARE A1 + [A one plus] for your Company's short-term facilities having a tenure upto one year.

10. LISTING OF SHARES

The Equity shares of the Company are listed on the Bombay Stock Exchange Limited (BSE). During the period under review, the Equity Shares of the Company have also been admitted for listing and trading on National Stock Exchange of India Limited (NSE), Mumbai with effect from 28th January, 2015. Now therefore, the Equity Shares of the Company stands listed on NSE along with BSE.

11. BLOCK DEAL WITH RELAINCE MUTUAL FUND

During the year, there was block deal between a promoter i.e. Mrs. Mridula Jain and RELIANCE CAPITAL TRUSTEE CO. LTD- A/C RELIANCE MID & SMALL CAP FUND for 5,95,000 equity shares at a price of f 250/- each on 27th March, 2015.

12. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31st MARCH, 2015 AND 30th MAY, 2015 (DATE OF THE REPORT)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (31st March, 2015) and the date of the Report (30th May, 2015).

13. MATERIAL ORDERS BY GOVERNING AUTHORITIES AND COURTS

There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company.

14. ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH RESPECT TO THE FINANCIAL STATEMENT

The Company has laid down proper and adequate internal financial control with respect to internal financial statement.

15. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure-A to this report.

16. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY

As part of its initiatives under "Corporate Social Responsibility" (CSR), the Board of Directors of your Company has constituted a CSR Committee. The committee met two times during the year on 28.05.2014 & 14.02.2015 for discussing contribution require to made by the company for fulfilling the objectives as per Company's CSR policy. The contributions in this regard have been made by both ways i.e. directly and corpus to the registered trust. The Annual report on CSR activities is annexed herewith as Annexure B.

17. DIRECTORS & KEY MANAGERIAL PESSONNEL (KMP)

Change in Directors and KMPs

At a board meeting held on 2nd August, 2014, the board had appointed Mr. Jeewan Jyoti Bhagat and Mr. Rakesh Kumar Gupta as Additional Directors in the category of Independent Director and, thereafter, approved by the shareholders in the AGM of the Company held on 20th September, 2014. Their first term of appointment has commenced with effect from 2nd August, 2014 for five consecutive years. They are not liable to retire by rotation during the aforesaid period.

The contract for appointment of Dr. Chandra Kumar Jain as Managing Director and Mr. Ashwani Kumar Vats as Whole Time Director of the Company completed on 31st March, 2015. Being eligible, they both expressed their willingness to be re-appointed as Managing Director and Whole Time Director of the Company respectively. The Board of Directors in their meeting held on 14th February, 2015 re-appointed Dr. Chandra Kumar Jain as Managing Director of the Company designated him as Chairman & Managing Director (CMD) and Mr. Ashwani Kumar Vats as Whole Time Director of the Company designated him as CEO and Executive Director of the Company with effect from 1st April, 2015 for a term of five years.

Retirement by rotation

In terms of Section 152 of the Companies Act, 2013, Ms. Arushi Jain, Executive Director would retire by rotation at the forthcoming AGM. Being eligible, she has offered herself for re-appointment.

Statement on declaration given by Independent Directors

The Board of the Company consist five independent directors and all the Independent Directors have given the declaration that they meet the criteria of independence as provided in section 149 (6) of the Companies Act 2013.

Statement on annual evaluation of Board, Committees and Individual Directors

The Board has empowered the remuneration committee to evaluate the performance of the Chairman, Independent director, Executive directors and committees in terms of the criteria of evaluation laid down by the Board. The evaluation includes various criteria including performance, targets, sincerity towards roles and responsibilities etc. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Detailed policy is available on Website of the Company.

Number of Meetings

The Board of Directors duly met 6 times in the financial year 2014-15 on 28th May 2014, 2nd August 2014, 22nd August, 2014, 9th October 2014, 14th November 2014 and 14th February 2015.

18. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' state that;

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

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

f. the Directors' have devised proper systems to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectually.

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-C.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.gulshanindia.com <http://www.gulshanindia.com> under investor relations/ policy documents/Related Party Policy link.

20. DEMAT OF SHARES

Necessary arrangements are made for Dematerialization of Shares, with NSDL and CDSL. Out of the total, 95.39% of the equity shares of the company are already in Demat form. Since the shares of the company are traded on stock exchange in compulsory Demat form, the shareholders holding shares in physical form may avail this facility in their own interest.

21. VIGIL MECHANISAM

Pursuant to the provisions of Section 177(10) and Listing Agreement, the Company has established a Vigil Mechanism for directors and employees to report the instances of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.gulshanindia.com <http://www.gulshanindia.com> under investors/policy documents/Vigil Mechanism Policy link.

The said mechanism is available to all the employees of the Company and operating effectively. During the year the Company has not received complaint through such mechanism.

22. INDUSTRIAL RELATIONS

The industrial relations have been cordial at all the plants of the Company. The Board records its appreciation of the commitment and support of employees at all levels.

23. INSURANCE

All the insurable interests of your company, including inventories, buildings, plant & machinery are insured against risk of fire and other risks.

24. SAFETY AND ENVIRONMENT

All the manufacturing plants of your company are running in an eco-friendly manner and have a focus on workplace health and safety.

25. STATEMENT ON RISK MANAGEMENT POLICY

The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness

The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report

27. AUDIT OBSERVATIONS

Auditors' observations are suitably explained in notes to the Accounts and are self-explanatory.

28. AUDITORS

i) Statutory Auditors:

M/s. Shahid & Associates (Firm Registration No.002140-C), Chartered Accountants have been appointed as Statutory Auditors of the Company at the last Annual General Meeting held on 20th September, 2014 for a period of three years subject to ratification by members at every consequent Annual General Meeting.

ii) Internal Auditors:

M/s Pankaj K. Goyal & Co., Chartered Accountant performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time.

iii) Cost Auditors:

M/s Rahul Jain & Associates, Cost Accountants were appointed as Cost Auditors for auditing the cost accounts of your Company for the year ended 31st March, 2016 by the Board of Directors. The Cost Audit Report for the year 2013-14 has been filed under XBRL mode within the due date of filing.

iv) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and (The Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Sanjay Chugh, Practicing Company Secretary (CP No.:3073, FCS: 3754) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as 'Annexure D'.

29. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as 'Annexure E'.

30. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexure F, together with the Certificate from the Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENT

Your Directors express their appreciation of sincere co-operation and assistance of Sate & Central Govt. authorities, bankers, customers and suppliers as well as all of the Company's employees & Shareholders of the Company.

For and on behalf of the Board of Directors

( Dr. C.K. Jain )

Chairman and Managing Director