Mar 31, 2023
Your Directors take immense pleasure in presenting the 34th Annual Report of the Company together with the Audited Annual Financial Statements (Standalone and Consolidated) showing the financial position of the Company for the Financial Year ended March 31, 2023.
The financial performance of your Company for the Financial Year ended March 31, 2023 is highlighted below:
(H in crore) |
||||||
Standalone |
Consolidated |
|||||
Particulars |
FY |
FY |
% of |
FY |
FY |
% of |
2022-23 |
2021-22 |
Change |
2022-23 |
2021-22 |
Change |
|
Revenue from Operations |
13,167.34 |
8,592.33 |
53% |
14,352.15 |
9,316.57 |
54% |
Other income |
42.84 |
37.09 |
16% |
37.47 |
32.49 |
15% |
Profit for the year before finance cost, depreciation and tax |
1,192.29 |
537.13 |
122% |
1,264.42 |
580.34 |
118% |
expenses. |
||||||
Deducting therefrom: |
||||||
- Depreciation / amortisation |
91.94 |
86.73 |
6% |
104.34 |
97.84 |
7% |
- Finance Costs |
290.76 |
134.80 |
116% |
305.50 |
140.62 |
117% |
PROFIT BEFORE TAXATION FOR THE YEAR* |
809.59 |
315.60 |
157% |
854.58 |
341.88 |
150% |
Deducting therefrom: |
||||||
- Tax expenses |
206.93 |
82.00 |
152% |
216.84 |
85.27 |
154% |
NET PROFIT FOR THE YEAR AFTER TAXATION |
602.66 |
233.60 |
158% |
637.74 |
256.61 |
149% |
Adjustment of : |
||||||
Share in Profit / (Loss) of Associates |
- |
- |
- |
(0.02) |
0.12 |
-116% |
NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS |
602.66 |
233.60 |
158% |
637.72 |
256.73 |
148% |
Add: Profit brought forward from |
932.17 |
758.92 |
23% |
1,049.43 |
853.06 |
23% |
previous year |
||||||
Amount available for appropriations: |
||||||
- General Reserves |
(60.00) |
(24.00) |
150% |
(60.00) |
(24.00) |
150% |
- Dividend |
(57.40) |
(36.36) |
58% |
(57.40) |
(36.36) |
58% |
Leaving balance of profit carried to balance sheet |
1,417.43 |
932.17 |
52% |
1,569.75 |
1,049.43 |
50% |
Earnings per equity share (EPS) |
157.48 |
61.04 |
158% |
166.64 |
67.09 |
148% |
6. MANAGEMENT DISCUSSION AND ANALYSIS
2. INDIAN ACCOUNTING STANDARDS
The Financial Statements for the year ended on March 31, 2023 have been prepared in accordance with the Companies (Indian Accounting Standard) Rules, 2015, prescribed under Section 133 of the Companies Act, 2013 (''the Act'') and other recognized accounting practices and policies to the extent applicable.
Please refer Para 6 on Management Discussion and Analysis (MDA).
Pursuant to the Requirements of Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''the Listing Regulations''), the Company has formulated its Dividend Distribution Policy, the details of which are available on the Company''s website at https://
apar.com/wp-content/uploads/2021/02/4.-Policy-on-
Considering the financial results and the performance of the Company during the year under review, as compared to the previous year, the Board of Directors is pleased to recommend a dividend of H 40 (400 %) per share on 3,82,68,619 Equity Shares of the face value of H 10 each for the Financial Year 2022-23.
This dividend amounting to H 153.07 Crores is payable after declaration by the Shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.
The Company proposes to transfer an amount of H 60 Crore to the General reserves. An amount of H 1,569.75 Crore is proposed to be retained in the Consolidated Statement of Profit and Loss for Financial Year 2022-23.
In the back drop of the difficult Global Economic Conditions
India is set to be the second-fastest growing economy in the G20 in FY 2022-23, despite decelerating global demand and the tightening of monetary policy to manage inflationary pressures. GDP growth will slow to 5.7% in FY 2023-24, as exports and domestic demand growth moderate. Inflation will crimp private consumption but moderate at the end of the projection period, helping, along with improved global conditions, to boost growth to 6.9% in FY 2024-25, in line with the 20-year average (excluding the COVID-19 recession). After a spike in 2022, the current account deficit will narrow as import price pressures abate.
The Indian economy has proven to be remarkably resilient in the face of the deteriorating global situation due to the strong macroeconomic fundamentals that place it well ahead of other emerging market economies.
The New Year brings hopes for continued momentum in India''s growth story, backed by the sustained strength in domestic demand, with significant addition in intrastructure, including in renewable Power Generation, transmission and through RDSS and other Government sponsored scheme in distributions of Power. According to a recent report by Morgan Stanley, India could become the second-fastest growing economy among the G20 nations in FY 2022-23, after Saudi Arabia. This is expected despite a potential slowdown in global demand, inflationary pressures and continued monetary policy tightening.
APAR Industries is a leading global manufacturer of conductors, cables, speciality oils, lubricants and polymers. Your Company is well diversified across industries and segments. Today, APAR Industries targets:
Global economic activity is experiencing a broad-based slowdown, with fallouts from inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions with sharp interest rate hikes, Russia''s invasion of Ukraine, and the lingering effects of the COVID-19 pandemic all weigh heavily on the outlook.
Global growth is forecast to slow from 6.0 percent in
2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. The main positive surprise in late
2022 came from the United States, with continued labour market resilience outweighing the impact of higher interest rates on private investment. However, the major forces that affected the world 2022 as explained above will continue in 2023 and possibly beyond.
Industries |
APAR products |
APAR advantage |
|
Power T&D and Renewable Energy |
Conductors, Cables and Transformer oils (T-oils) |
? |
APAR Industries has been one of the largest manufacturers of aluminium and alloy conductors in the world |
? |
The third-largest global manufacturer of transformer oil. |
||
? |
Wide range of cable solutions viz., solar, wind, nuclear, mining, defence, navy, railways, housewires in India |
||
Indian Railways |
Copper Conductors, XLPE & Elastomeric Cables & Harnesses |
? |
Largest manufacturer of conductors and works on a wide variety of cables |
Automotive Sector |
Auto Lubes, Automotive Cables |
? |
10th largest domestic player in lubricant |
? |
Established a strong foundation for Automotive Lubricants under a license agreement with ENI Italy to manufacture and market high-end automotive and specialty lubricants |
||
Telecom Industry |
Optical Fibre Cables (OFC), Optical Ground Wire (OPGW) |
? |
Manufacturer of wide range of power and telecom cables. |
Industries |
APAR products |
APAR advantage |
Defence Sector |
Elastomeric Cables & Speciality Cables |
Major supplier of speciality elastomeric cables to the Indian Navy manufacturing establishments and to DRDO |
Exports |
49% of revenue contribution in FY |
Exports in over 140 countries. |
2023 |
The company has a global presence and exports its products to countries in Europe, Africa, the Middle East, Asia, and the Americas. |
|
APAR Industries has received several awards and certifications for its export performance, including the Top Exporter Award from the Engineering Export Promotion Council of India. |
Total Installed Capacity (As on 31.03.2023) - Source : Central Electricity Authority (CEA) |
||
Installed generation capacity (sector wise) as on 31.03.2023 |
||
Sector |
MW |
% of Total |
Central Sector |
1,00,055 |
24% |
State Sector |
1,05,726 |
25.40% |
Private Sector |
2,10,278 |
50.50% |
Total |
4,16,059 |
T&D Industry
Indian power sector is undergoing a significant change that has redefined the industry outlook. The power industry''s future in India is bright, and sustained economic growth continues to drive electricity demand in India. The Government of India''s focus on attaining ''Power for all'' has accelerated capacity addition in the country.
Addition in Transmission line (ckm) |
Addition in Transformation capacity (MVA) |
|
FY 2014-15 |
22,101 |
65,554 |
FY 2015-16 |
28,114 |
62,849 |
FY 2016-17 |
26,300 |
81,816 |
FY 2017-18 |
23,119 |
86,193 |
FY 2018-19 |
22,437 |
72,705 |
FY 2019-20 |
11,664 |
68,230 |
FY 2020-21 |
16,750 |
57,575 |
FY 2021-22 |
14,895 |
78,982 |
FY 2022-23 |
14,625 |
75,902 |
Total |
1,80,005 |
6,49,806 |
1. H 35,000 crore (US$ 4.3 billion) outlay for energy security, energy transition and net zero objectives.
2. Battery energy storage systems to be promoted to steer the economy on the sustainable development path.
3. H 20,700 crore (US$ 2.52 billion) outlay provided for renewable energy grid integration and evacuation from Ladakh.
Renewable Energy Industry
India''s installed renewable energy capacity has increased 396% in the last 8.5 years and stands at more than 174.53 Giga Watts (including large Hydro), which is about 42.5% of the country''s total capacity (as of February 2023). India saw the highest year on year growth in renewable energy additions of 9.83% in 2022.
India has set a target to reduce the carbon intensity of the nation''s economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables and achieve net-zero carbon emissions by 2070. Low-carbon technologies could create a market worth up to $80 billion in India by 2030.
Indian Railways Industry
Indian Railways (IR) is rapidly progressing to accomplish Mission 100% Electrification and become the largest green railway network in the world. 6,542 RKMs has been achieved in IR history during 2022-23.
Electrification of 1,973 Route km (2,647 TKM) has been achieved during 2022-23, which is 41% higher as compared to corresponding period of 2021-22. As of February 2023, 85% of the total Broad-Gauge network has been electrified. With this, Indian Railways has completely electrified 6 zonal railways and is rapidly progressing towards its target of 100% electrification and becoming the largest green railway network in the world. The railway sector of India aims to electrify the entire network by 2023 which will lead to annual energy savings of $1.55 Bn.
Indian Railway Outlook
Indian Railway network is growing at a healthy rate. In the next five years, Indian railway market is expected to be the third largest, accounting for 10% of the global market. The government has announced two key initiatives for seeking private investments-running passenger trains by private operators across the railways network and redevelopment of railway stations across the country. According to Indian Railways, these projects have the potential of bringing an investment of over US$ 7.5 billion in the next five years.
The Indian Railway launched the National Rail Plan, Vision 2024, to accelerate implementation of critical projects.
Automotive Industry
The Indian automobile industry is setting out on a journey with hopes for a sustained growth momentum in 2023 and further embracing clean technology amid the lurking speed breakers of rising interest rates and cost increases due to new emission and safety norms, having witnessed a strong comeback from the COVID-led downturn this year.
Telecom Industry
The government has allocated H 1.23 trillion for telecom and postal projects. The total allocation includes H 975.79 billion for the Department of Telecommunications and H 258.14 billion for postal projects.
The Indian telecom market saw 36 per cent value growth in offline retail last year, and 2023 is expected to be stable with value-driven growth for the domestic telecom market compared to 2022. While the global telecom market closed 2022 with a 9.7 per cent decline in revenue compared to the previous year.
Telecom Industry Outlook
India''s 5G subscriptions to have 350 million by 2026. Accounting for 27% of all mobile subscriptions.
By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.
Defence Industry
Capital expenditure in the defence sector is crucial for India''s aim to become self-reliant in defence manufacturing and adopting modern technology.
India is positioned as the 3rd largest military spender in the world, with its defence budget accounting for 2.15% of the country''s total GDP. Over the next 5-7 years, the Government of India plans to spend $ 130 Bn for fleet modernisation across all armed services. The industry gets H 5.94 lakh crore in Budget 202324, a jump of 13% over previous year.
Defence Industry Outlook
Ministry of Defence has set a target of achieving a turnover of H 1.75 lakh crore in aerospace and defence manufacturing by 2025, which includes exports of H 35,000 crore. Till April 2023, a total of 606 Industrial Licences have been issued to 369 companies operating in Defence Sector.
Exports
It is estimated that India''s combined exports of merchandise and services will experience a positive growth of 13.84% in the fiscal year 2022-23 (April-March) compared to the previous fiscal year 2021-22 (April-March). Despite the global economic downturn, India''s domestic demand has remained stable. On the other hand, overall imports are expected to grow by 17.38% in the fiscal year 2022-23 (April-March) compared to the previous fiscal year 202122 (April-March).
In March 2023, the exports of electronic goods surged by 57.36% to reach USD 2.86 billion, which is a significant increase from USD 1.82 billion in March 2022. For the entire fiscal year 2022-23 (April-March), the exports of electronic goods were reported at USD 23.57 billion, reflecting a growth of 50.52% from the previous fiscal year 2021-22 (April-March) when exports stood at USD 15.66 billion.
OVERALL BUSINESS PERFORMANCE |
||||||
In J Cr |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
FY23 |
Revenue |
5,819 |
7,964 |
7,443 |
6,410 |
9,317 |
14,352 |
EBITDA |
419 |
483 |
484 |
437 |
581 |
1,320 |
PAT |
145 |
136 |
135 |
161 |
257 |
638 |
Cash Profit |
201 |
203 |
222 |
254 |
355 |
742 |
ROE |
13% |
12% |
11% |
13% |
16% |
32% |
D/E |
0.17 |
0.14 |
0.19 |
0.17 |
0.18 |
0.14 |
The company has cable, conductor and speciality oils & lubricants which cater to each of the segments above. A unique distinction achieved in FY 2023 is that each of APAR''s major 3 divisions were individually the highest exporter from India in their segments.
Consolidated revenue in FY 2023 was at H14,352 crores, up 54% YoY, with growth coming from all the divisions on the back of higher volumes and growth in export of cable and conductor business. Export revenue increased 97% YoY, accounting for 49% of FY 2023 revenues. Consolidated EBITDA was at H1,320 crores up 130% YoY. Conductor business recorded all time high EBITDA post forex of H44,114 MT. Cable business recorded strong EBITDA post forex of 10.7%. Oil business recorded EBITDA post forex at 4,781 per KL
The Company posted 148% YoY growth in PAT in FY 2023 on the back of high margins in conventional conductors, higher share of premium conductors, increase in cable business and overall increase in exports.
Your Company is one of the largest global manufacturers of Conductors. H 433 crore of strategic capex was undertaken over FY 2016-FY 2023 to launch several innovative solutions in the space:
The company has successfully embarked on a premiumisation exercise to reinvent it business with the addition of Copper conductors for Railways, Copper Transpose Conductors for transformers, OPGW wires for power & telecommunication, a comprehensive range of high efficiency conductors including turnkey solutions and a range of aluminium alloy rods for special applications. In FY 2023 43% of revenue comes from these premium products. The globalisation initiative has also resulted in 51% of revenue coming outside of the Indian market.
Revenue for the conductors'' segment increased 67% YoY to H 7,013 crore on the back of higher share of premium products and export. Export revenues grown over 2 times as compared to previous year.
Your Company witnessed a strong performance with higher margins in most of the product lines. Profitable export opportunities, low cost of logistics, steel and aluminium premium augmented in achieving historic high margins.
Your Company has planned capital expenditure to the tune of H 102 crore, majorly towards de-bottlenecking, capacity/capability enhancement, productivity/cost reduction and R&D.
An uptick in the T&D sector, coupled with increased renewable energy projects in the pipeline and infrastructure spends on a global scale to become key demand drivers.
Risks and Concerns: Ongoing geopolitical tensions may pose unprecedented challenges and could pushed up the prices of commodities. Increased competition in the domestic market and high volatility in raw material cost can impact the performance. However, being prudent, your Company uses hedging strategy to mitigate commodity and forex risk. The cyclical nature of the power business has some impact on your Company''s performance. Project delays from customers'' side may have an impact. Sharp increase interest rates can affect the financing pattern of infrastructure projects leading to delays and possible cancellations of announce projects.
Your Company is the 3rd largest global manufacturer of transformer oils and the 10th largest lubricant marketer in India. This puts the Company at an advantage in terms of economies of scale for manufacture and distribution, adding to the premiumisation of the oils business. Your Company invested H 250 crore during FY16-23 on higher-value products:
In J Cr |
FY 2023 |
FY 2022 |
Growth (%) |
Order Book |
5,124 |
3,079 |
66% |
Turnover |
7,013 |
4,200 |
67% |
Segment Profit/ |
682 |
163 |
318% |
(Loss) |
|||
Volume (MT) |
1,60,131 |
1,07,357 |
49% |
In J Cr |
FY 2023 |
FY 2022 |
Growth (%) |
Turnover |
4,656 |
3,560 |
31% |
Segment Profit/ (Loss) |
225 |
268 |
(16%) |
Volume (MT) |
4,86,582 |
4,61,589 |
5% |
EBITDA per KL after forex adjustment in FY 2023 was at H 4,781, down 24% YoY from H 6,331. The focus remains on per unit profitability rather than on volumes.
High level of global inflation has induced interest rate hikes. Profitability of the segment is sensitive to the rise in the cost of funding.
Higher or increased prices of finished goods due to global inflation and rising cost of borrowing may impact the volumes.
Focus will be on per unit profitability compared to total volumes, along with keeping the cash flows in focus by maintaining the lowest possible level of inventory.
Risks and Concerns: Your Company is exposed to the volatility in prices of raw materials, interest rate and foreign exchange rate. Higher prices amidst global inflation and rising rate of interest may impact the business. Your Company uses hedging strategy to mitigate the forex risk. In the event of volatility in oil prices, the prices of longterm buy contracts take time to adjust since formula prices are backward looking. Performance may be impacted by competition in the transformer oils and auto lubricants subsegments. Rapid commoditization at the lower end of the market, particularly in technical grade white oils, might bear an impact on profitability.
Cables segment â Largest domestic player in renewables and No. 1 exporter of cables and wires from India:
The Company is the largest domestic player in renewables with one of the widest ranges of medium-voltage and low-voltage XLPE cables, elastomeric cables, fibre optic cables and speciality cables. H 397 crore has been invested over FY16-23 towards developing new-age solutions:
High-voltage power cables using the latest CCV technology.
Product portfolio includes Medium Voltage Covered Conductor (MVCC) for increased safety and uninterrupted power distribution in high population density and forest areas.
Additional import substitution products for the defence sector.
Highest number of UL certificate of compliance from India for sale of cable in the United States.
Additional E-Beam capacity to produce more Anushakti house wires, railway cables and solar cables.
In J Cr |
FY 2023 |
FY 2022 |
Growth (%) |
Turnover |
3,263 |
1,994 |
64% |
Segment Profit/ |
317 |
80 |
296% |
(Loss) |
Exports'' contribution at 52% as against 29% in FY 2022, total exports tripled compared to last year.
Power cable continues to be highly competitive; more focus being put on export opportunities.
Active state presence in retail light duty cable business gone up from 2 in FY 2022 to 13 in FY 2023.
EBITDA margin post forex adjustments up 225% YoY to H 344 crore in FY 2023.
Prepared to capture export markets:
Exports are up 190% YoY to H 1,658 crore from H 572 crore in FY 2022, contributing to the increased revenue of the segment. With major exports done to several countries new opportunities are expected to be opened in FY 2024.
With product approvals in place, appreciated product quality and increased acceptance. Your Company is prepared to exploit the opportunity presented by the negative sentiments towards Chinese products.
In FY 2024, the Company will continue its focus on premium products: and continue to focus on exports.
In FY 2024, the Company will also continue to increase its volumes in light duty cable business penetrating to newer distributors and new states.
Risks and Concerns: Pricing is influenced by surplus capacity in the power cables market. Due to lack of financial arrangements by key customers in the renewable energy sector and by EPC contractors, collection periods could be prolonged and delivery timelines delayed. Low or no ordering by big telecom firms may have an influence on performance in optical fibre lines. The cyclical nature of their tendering has an impact on the industry''s order position. Any fluctuations in fibre or polymer costs may have an influence on performance.
General risks and concerns
Prolonged extension of the geopolitical situation without any resolution may impact performance. Volatile commodity prices, technical developments, currency rate fluctuation and any influence on the broader macro-economic outlook may all have an impact on the Company''s success. Any geopolitical or economic upheavals on a local, regional or worldwide scale may have a negative influence on demand or cause input cost volatility, all of which can have a negative impact on performance. Your company is subject to the risk of SOFR rate volatility, which might raise our interest expenses and have an impact on our performance. Due to clients'' difficult financial situation, the collection period for debtors may increase.
Internal Control Systems (ICS) and Their Adequacy
Your Company has established adequate ICS in respect of all the divisions of the Company. The ICS aims to promote operational efficiencies and achieve savings in cost and overheads in all business operations. System Application and Product (SAP), a world-class business process integration software solution, which was implemented by the Company at all business units, has been operating successfully. The Company has appointed M/s. Deloitte Touche Tohmatsu India LLP as its Internal Auditors. The system-cum-internal audit reports of the Internal Auditors were discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segments prepare their annual budgets, which are reviewed along with performance at regular intervals.
Development of human resources
Your Company promotes an open and transparent working environment to enhance teamwork and build business focus. Your Company gives equal importance to development of human resources (HR). It updates its HR policy in line
with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company has performance / production-linked incentive schemes. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment.
The Company has identified the following as key financial ratios:
Cautionary statement:
The statements made in the Management Discussion & Analysis section, describing the Company''s goals, expectations and predictions, among others, do contain some forward-looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management, viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in the foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country, among others.
7. DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Your Company has the following subsidiaries and associates as at March 31, 2023:
1. Petroleum Specialities Pte. Ltd. Singapore (PSPL) â Wholly Owned Subsidiary of the Company,
2. Petroleum Specialities FZE, Sharjah (PSF) - Wholly Owned Subsidiary of PSPL,
Consolidated ratios |
FY 2023 |
FY 2022 Variance % |
|
EBITDA Margin |
9.2% |
6.2% |
3.0% |
PAT Margin |
4.4% |
2.8% |
1.6% |
ROE |
32.3% |
16.5% |
15.8% |
Debtors Turnover |
73 |
86 |
18.0% |
Inventory Turnover |
80 |
94 |
17.0% |
Current Ratio |
1.22 |
1.22 |
0.0% |
Debt/ Equity Ratio |
0.14 |
0.17 |
(20.1%) |
Interest Coverage |
4.1 |
3.4 |
21.0% |
Ratio |
|||
Net Fixed Asset |
14.3% |
10.0% |
4.3% |
Turnover Ratio |
3. APAR Transmission & Distribution Projects Private Limited (ATDPPL) â Wholly Owned Subsidiary of the Company,
4. APAR Distribution & Logistics Private Limited â Wholly Owned Subsidiary of the Company,
5. Cema Wires & Cables Inc.*, USA., Wholly Owned Subsidiary of the Company,
6. Ampoil Apar Lubricants Private Limited â Associate of the Company with 40% stake along with PPS Motors Private Limited and Others.
7. Clean Max Rudra Private Limited â Associate of the Company with 26% stake.
* Not consolidated as there are no operations till March 31, 2023
The Company has not attached the Balance Sheet, statement of profit & loss and other related documents of its five Subsidiaries and two Associates. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the Subsidiaries and Associate for the Financial Year ended March 31, 2023 in Form AOC â 1 is included in the annual report and shall form part of this report as "Annexure VIII". The annual accounts of the said Subsidiaries and Associate and other related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.
Further, pursuant to provisions of Section 136 of the Act, the financial statements, including Consolidated Financial Statements of the Company along with relevant documents and separate audited accounts in respect of Subsidiaries and Associate, are available on the website of the Company at www.apar.com.
The Company has incorporated a new Wholly Owned Subsidiary Company, in the form of C- Corporation entity, in the name of CEMA WIRES & CABLES INC. having registered office situated at 251 Little Falls Drive, in the City of Wilmington, County of New Castle, 19808 in the State of Delaware, on April 26, 2022, interalia for carrying out the trading business in Cable & Wires and other products including warehousing / storing activities.
8. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed during the year by the regulators or courts or tribunals impacting the going concern status of the Company and operations of the Company in future.
Your Company believes in conducting its affairs in a fair, transparent and professional manner and maintaining the good ethical standards, transparency and accountability in its dealings with all its constituents. As required under the Listing Regulations, a detailed report on Corporate Governance along with the Auditors'' Certificate thereon forms part of this report as "Annexure â V".
10. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT (BRSR)
Business Responsibility & Sustainability Report (BRSR) as stipulated under Regulation 34(2)(f) of the Listing Regulations forms a part of this Annual Report as "Annexure â VI".
11. MANAGEMENT - DIRECTORS AND KEY MANAGERIAL PERSONNEL
DIRECTORS:
Resignation:
During the year under review, Mr. Fatehchand B. Virani (DIN : 00062278), an Independent Director (NonExecutive) of the Company, vide his letter dated September 8, 2022 expressed his inability to continue as Director of the Company due to his advancing age and certain personal commitment / pressing engagements and accordingly, tendered his resignation as an Independent Director (Non-Executive) of the Company and consequently as a Chairman / Member of the following Committees of the Board, effective from the closure of Company''s Board Meeting dtd. November 3, 2022.
i. Share Transfer & Shareholders'' Grievance-Cum-Stakeholders Relationship Committee (Chairman)
ii. Audit Committee (Member)
iii. Corporate Social Responsibility Committee (Member) and
iv. Nomination and Compensation-cum-Remuneration Committee (Member)
The Board placed on record its appreciation for the valuable contribution and quality expert advices given by Mr. Virani during his tenure as Director and as a Member of the various Committees of the Board.
Re-appointment:
At the 34th Annual General Meeting (AGM), following appointment / re-appointment is being proposed:
a. Mr. Chaitanya N. Desai, Director (DIN: 00008091), shall retire by rotation and being eligible, offers himself, for re- appointment.
Details of the proposal for re-appointment of Mr. Chaitanya N. Desai along with his brief resume is mentioned in the Explanatory Statement under Section 102 of the Act and disclosure under Regulation 36(3) of the Listing Regulations as annexed to the Notice of the 34th AGM.
The Board recommends re-appointment / appointment of the above Director.
KEY MANAGERIAL PERSONNEL:
As on March 31, 2023, Mr. Kushal N. Desai, Managing Director and Chief Executive Officer, Mr. Chaitanya N. Desai, Managing Director, Mr. Ramesh Seshan Iyer, Chief Financial Officer and Mr. Sanjaya Kunder, Company Secretary are the Key Managerial Personnel of the Company.
During the year, five Board Meetings and four Audit Committee Meetings were convened and held. All the Meetings were held through Video Conferencing as permitted by the Law. The intervening gap between the Meetings was within the period prescribed under the Act. The details of these Meetings, including of other committee meetings, with regard to their dates and attendance of each of the Directors thereat, have been set out in the Report on Corporate Governance.
13. DECLARATION BY INDEPENDENT DIRECTORS
Mr. Rajesh Sehgal, Mrs. Nina Kapasi and Mr. Kaushal J. Sampat were the Independent Directors (Non-Executive) of the Company as on March 31, 2023.
The Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee
and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out, has been explained in the Corporate Governance Report.
15. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
i. that in the preparation of the Annual Financial Statements for the Financial Year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the Profit of the Company for the period ended on that date.
iii. that proper and sufficient care has been taken for the 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. that the annual accounts have been prepared on a going concern basis.
v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all applicable laws were devised and in place and were adequate and operating effectively.
16. REMUNERATION POLICY
The Board has, on the recommendation of Nomination and Compensation-cum-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.
Particulars of information as per Section 197 of the Act read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a
Statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set in the Rules and Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as "Annexure â III" forming part of this Report.
17. RISK MANAGEMENT (RISK ASSESSMENT & MINIMISATION PROCEDURES)
The Board of Directors has constituted a Risk Management Committee. Your Company has implemented a mechanism for risk management and formulated a Risk Management Policy. The policy provides for identification of risks and formulating mitigation plans. The Risk Management Committee, Audit Committee and the Board of Directors review the risk assessment and minimization procedures on regular basis.
18. ANNUAL RETURN
In compliance with Section 92(3) and 134(3)(a) of the Act, Annual Return is uploaded on Companies website and can be accessed at https://apar.com/investor/.
19. RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into 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 made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Form AOC-2 relating to Disclosure of Particulars of Contracts / arrangements entered into by the Company with related parties is annexed as "Annexure â IX" and forming part of Directors'' Report.
All Related Party Transactions are placed before the Audit Committee as also the Board for review and approval. A statement giving details of all related party transactions were placed before the Audit Committee and the Board of Directors for their review, approval and noting on a quarterly basis.
The policy on Related Party Transactions as approved and revised by the Board from time to time in line with the amended provisions of Act and Listing Regulations has been uploaded on the Company''s website.
There were no materially significant Related Party transactions during the year under review.
20. AUDIT COMMITTEE
The Company has an Audit Committee pursuant to the requirements of the Act read with the rules framed thereunder and Listing Regulations. The details relating to the same are given in the report on Corporate Governance forming part of this Report.
During the year under review, the Board has accepted all recommendations of Audit Committee and accordingly, no disclosure is required to be made in respect of nonacceptance of any recommendation of the Audit Committee by the Board.
21. REPORTING OF FRAUDS
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act and rules framed thereunder either to the Company or to the Central Government.
22. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT
There are no Material changes and commitments, if any, affecting the financial position of the Company which have occurred from the end of the Financial Year till the date of the Report.
23. DEPOSITS
Your Company has not accepted deposits within the meaning of Section 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the year and hence there were no outstanding deposits and no amount remained unclaimed with the Company as on March 31, 2023.
24. PARTICULARS OF LOANS, GUARANTEES, SECURITIES OR INVESTMENTS
Details of Loans, Guarantees, Securities and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
25. STATUTORY AUDITORS
The observations made by the statutory auditors in their report read with the relevant notes as given in the notes to the financial statement for the Financial Year ended on March 31, 2023 are self- explanatory and are devoid of any reservation, qualification or adverse remarks.
The present Statutory Auditors, M/s. C N K & Associates LLP, Chartered Accountants (Firm Registration No. 101961W/W100036), Mumbai were appointed at the 31st Annual General Meeting of the Company held on August 17, 2020 for a first term of 5 years so as to hold office upto the 36th Annual General Meeting of the Company. The Auditors have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.
26. COST AUDITORS
Pursuant to Section 148 of the Act, read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils, Cables and Polymer Divisions of the Company are required to be audited by a qualified Cost Accountant.
The Board of Directors of the Company, on the recommendation of the Audit Committee, has appointed M/s. Rahul Ganesh Dugal & Co., a Proprietary Firm, who are in Whole Time Practice as Cost Accountant, having Firm Registration no. 103425 and Membership no. 36459 as the Cost Auditor to conduct the audit of the cost records of the Company for the Financial Year ending on March 31, 2024 (2023-24) on a remuneration not exceeding H 1,32,000 p.a.
A Resolution seeking members'' ratification of remuneration payable to M/s. Rahul Ganesh Dugal & Co., Cost Auditor is included at Item No. 4 of the Notice convening the AGM and Board recommends the said Resolution.
27. SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Hemang Mehta, Proprietor of M/s. H. M. Mehta & Associates, Practicing Company Secretaries, Vadodara, Gujarat, to undertake the Secretarial Audit of the Company for the Financial Year 2022-23. The Secretarial Audit Report (Form No. MR-3) is annexed herewith as "Annexure - I". The Secretarial Audit Report does not contain any qualification, reservation, disclaimer or adverse remarks.
28. VIGIL MECHANISM
As per the provisions of Section 177 (9) of the Act read with Regulation 22(1) of the Listing Regulations, the Company is required to establish an effective vigil mechanism for directors and employees to report genuine concerns. The Company has introduced Whistle Blower Policy (APAR''s OMBUDSMEN Policy) effective from March 1, 2014 by setting a vigil mechanism in place, the details of the whistle blower policy are provided in the report on Corporate
3) No Managing Director of the Company receives any remuneration or commission from any of its subsidiaries.
4) The Company has in place the Policy on Prevention of Sexual Harassment at Workplace (POSH) in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints regarding sexual harassment. There were no complaints registered during the Financial Year 2022-23 under review.
5) There has been no change in the nature of business of the Company.
6) There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.
7) There was no instance of one time settlement with any Bank or Financial Institution.
31. ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere
appreciation for the continuous cooperation, support
and assistance provided by all stakeholders, financial
Governance forming part of this report. The Whistle Blower Policy is being reviewed by the Audit Committee and Board of Directors at regular intervals.
To support the "Green Initiative" undertaken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same since 201011. As permitted, delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode only, unless a request for physical copy of aforesaid document is sought by the shareholders.
Further, the Company has started using recyclable steel drums in place of wooden pallets in order to protect the environment and reduce costs for the Company and other initiatives are provided in the Report of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo in Annexure IV and BRSR in Annexure VI.
The CSR Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Act reviews and restates the Company''s CSR policy in order to make it more comprehensive and aligned in line with the activities specified in Schedule VII of the Act.
The policy on Corporate Social Responsibility can be accessed at https://apar.com/wp-content/ uploads/2022/09/CSR-Policy R.pdf
With the strong belief in the principle of Trusteeship, APAR Group continues to serve the community through a focus on healthcare and upliftment of weaker sections of society, Promoting Education and health care including preventive health care (Medical), Environmental sustainability and Rural Development, Welfare of under privileged and destitute children, including girl children, Empowerment of physically / mentally challenged and underprivileged children, adults and providing free education and Empowering women socially & economically etc.
The Annual Report on CSR activities is annexed herewith as "Annexure - II".
c. Employee Stock Options:
Members'' approval was obtained at the AGM held on August 9, 2007 for introduction of Employee Stock Option Plan to issue and grant upto 1,616,802 options
and it was implemented by the Company. Out of the above options, 175,150 Options have been granted in 2008, of which 26,338 Options were exercised upto May, 2015 and balance options were lapsed. Please refer "Annexure -VII" forming part of this Report providing information as required to be made under the provisions of the Act.
Further, there has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the year under review. The disclosure relating to ESOPs required to be made under the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, confirming compliance, is available on the Company''s website at www.apar.com.
d. Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo in accordance with Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed hereto as "Annexure â IV" which forms part of this Annual Report.
The Company has complied with all the applicable provisions of Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India (ICSI).
No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1) Issue of equity shares with differential rights as to dividend, voting or otherwise.
2) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.
institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. We thank the Government of Sharjah, UAE, Singapore and USA, where we have our operations.
Your Directors also wish to place on record their sincere appreciation for the contribution made by our dedicated and loyal employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.
For and on behalf of the Board of Directors
Sd/-
Kushal N. Desai
Place: Mumbai Chairman & Managing Director
Date: May 08, 2023 DIN - 00008084
Mar 31, 2022
Your Directors take immense pleasure in presenting the 33rd Annual Report of the Company together with the Audited Annual Financial Statements (Standalone and Consolidated) showing the financial position of the Company for the financial year ended March 31, 2022.
1. FiNANCiAL pERFoRMANCE The financial performance of your Company for the financial year ended March 31, 2022 is |
highlighted below: |
('' in crore) |
||||
particulars |
Company |
Consolidated |
||||
FY2021-22 |
FY2020-21 |
% of Change |
FY2021-22 |
FY2020-21 |
% of Change |
|
Revenue from Operations |
8,595.75 |
5,960.82 |
44% |
9,319.99 |
6,388.02 |
46% |
Other income |
37.09 |
22.12 |
68% |
32.49 |
18.61 |
75% |
Profit for the year before finance cost, depreciation and tax expenses. |
537.13 |
398.81 |
35% |
580.34 |
437.75 |
33% |
Deducting therefrom: |
||||||
- Depreciation / amortisation |
86.73 |
84.87 |
2% |
97.84 |
93.44 |
5% |
- Finance Costs |
134.80 |
129.24 |
4% |
140.62 |
136.04 |
3% |
profit before taxation for the year |
315.60 |
184.70 |
71% |
341.88 |
208.27 |
64% |
Deducting therefrom: |
||||||
- Tax expenses |
82.00 |
47.88 |
71% |
85.26 |
47.77 |
79% |
NET profit for THE YEAR AFTER taxation and before minority interest |
233.60 |
136.82 |
71% |
256.62 |
160.50 |
60% |
Adjustment of : |
||||||
Share in Profit (Loss) of Associate |
- |
- |
- |
0.12 |
(0.00) |
-4998% |
NET pRoFiT AFTER TAXATON AND above ADJUSTMENTS |
233.60 |
136.82 |
71% |
256.73 |
160.50 |
60% |
Add: Profit brought forward from previous year |
758.93 |
636.10 |
19% |
853.06 |
706.52 |
21% |
Amount available for appropriations: |
||||||
- Reserves |
(24.00) |
(14.00) |
71% |
(24.00) |
(13.96) |
72% |
- Dividend |
(36.36) |
- |
- |
(36.36) |
- |
- |
Leaving balance of profit carried to balance sheet |
932.17 |
758.93 |
23% |
1,049.43 |
853.06 |
23% |
Earnings per equity share (EpS) |
||||||
- Basic & Diluted before & after extraordinary items in '' |
61.04 |
35.75 |
71% |
67.09 |
41.94 |
60% |
2. iNDiAN ACCOUNTING STANDARDS
The Financial Statements for the year ended on March 31, 2022 have been prepared in accordance with the Companies (Indian Accounting Standard) Rules, 2015, prescribed under Section 133 of the Companies Act, 2013 (''the Act'') and other recognized accounting practices and policies to the extent applicable.
Please refer Para 6 on Management Discussion and Analysis (MDA).
Pursuant to the Requirements of Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''the Listing Regulations''), the Company has formulated its Dividend Distribution Policy, the details of which are available on the Company''s website at https://apar.com/wp-content/ uploads/2021/02/4.-Policy-on-Dividend-Distribution.pdf
Considering the financial results and the performance of the Company during the year under review, as compared to the previous year, the Board of Directors is pleased to recommend
a dividend of ''15.00 (150 %) per share on 38,268,619 Equity Shares of the face value of ''10/- each for the Financial Year 20212022.
This dividend amounting to ''57.40 Crores is payable after declaration by Shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.
The Company proposes to transfer an amount of ''24 Crore to the General reserves. An amount of ''233 Crore is proposed to be retained in the Consolidated Statement of Profit and Loss for FY 2021-22.
6. MANAGEMENT DiSCUSSiON AND ANALYSiS (MDA) ECONOMiC overviewGlobal Economy & outlook
Global economic growth recovered strongly in 2021 to an estimated 6.1% after a 3.3% contraction in 2020. The recovery, however, was not smooth and kept getting decelerated due to continued flare-ups of COVID-19, lag in policy support, and persistent supply-side issues during the year. The tail-end of the year witnessed the start of the ongoing geopolitical tensions that are causing economic fragmentation and rising uncertainty.
Fragmentation and Fragility set to slow growth in 2022
The global economy entered 2022 on a weak note with the spread of the Omicron variant of COVID-19, rising energy prices, and supply disruptions, resulting in higher-than-expected and more broad-based inflation. The war in Ukraine is resulting in an
expanding humanitarian crisis, triggering the biggest refugee crisis in Europe since World War II. The economic damage will lead to slower growth in 2022, projected at 3.6%.
However, the Indian economy bounced back from a 6.6% contraction in FY21 and is estimated to grow at 8.9% in FY22. All sectors are expected to surpass pre-pandemic Gross Value Added (GVA) levels in FY22, barring the contact-intensive segments of Trade, Hotels, Transport, Communication & Broadcasting Services.
The Gross Domestic Product (GDP) for FY22 is estimated to grow at 7.4%. However, the overall situation remains volatile, and the outlook uncertain, with risks amplified on the downside. The demand situation is yet to move back to pre-pandemic levels, and any further impact of the volatile global economic situation due to the Ukraine conflict could worsen things. Trade is already being disrupted by a relapse in supply-side constraints, and stress on already high global commodity prices has also aggravated.
14,895 ckms of transmission lines were added in FY22, down 11% YoY. 78,982 MVA of sub-station transformation capacity was added in FY22, up 37% YoY.
The Indian renewable energy segment is expected to grow at a CAGR of more than 10% for the next 5-6 years, driven by rising environmental concerns, and supportive government policies. As part of the Paris Climate Agreement, India has committed installation of 40% of its generation capacity from renewable energy by 2030.
India''s installed capacity grew at 3.8% CAGR between FY18-FY22. India''s power consumption has been creating records. During FY22, the national peak demand for electricity hit an alltime record of 200.5 GW with 5.5% growth, while demand for electricity grew by around 1% YoY to 1371.7 bn units (BU), led by demand from the industrial sector due to rapid economic recovery, and extreme weather conditions. Investments in the transmission segment are set to rise by ''4-4.5 trillion over the next five years to support generation additions and push toward rural electrification.
¦ ''16,074 crore to the Power Ministry, up 4.9% YoY
⢠Announced issuance of green bonds for mobilising green infra to reduce carbon intensity.
¦ ''6,900 crore outlay to Ministry of New and Renewable Energy (MNRE), down by 10.2 % over FY21 (Revised Estimates)
⢠Green energy corridors at ''300 crore, unchanged.
⢠Wind power (grid interactive off-grid) at ''1,102 crore, down 5.5% YoY.
⢠Solar power (total) at ''5,205 crore, up 55% YoY. indian railways industry
Indian Railways achieved the highest electrification of sections in FY22, covering 6,366 rkms, up 5.8% YoY. It has now electrified 52,247 rkms or 80.2% of the total broad-gauge network. After a slowdown in production in FY21, Indian Railways bumped up production with the addition of 1,110 electric locomotives and 8,115 coaches in FY22.
With the focus on ''PM Gati Shakti'', the capex of Indian Railways is set to be the highest ever, a record ''2.45 tn for 2022-23, up by 14% YoY. In addition to integrating the Postal and Railway networks for seamless transportation of parcels, Railways is planning to build new offerings and logistic services for Small and Medium Enterprises (SMEs) and farmers.
Railways has revised upwards the production of new coaches by 878 units to 8,429 units for FY23. As part of the multi-prolonged approach to be a net-zero carbon emitter by 2030, solar panels are to be installed on the rooftops of all narrow-gauge trains and 33,000 kms is to be electrified till FY23. Under the Atmanirbhar Bharat'' initiative, Railways will bring 2,000 kms of rail network under ''Kavach'', the indigenously developed world-class technology for safety and capacity augmentation. 400 NewGen Vande Bharat trains will be developed in the next three years, along with 100 PM Gati Shakti Cargo terminals for multimodal logistics facilities.
Domestic tractor demand is estimated to drop by 7-9% YoY in FY22 after reaching a peak with 27% YoY growth in FY21. The government announced the development of a battery-swapping policy to further develop special mobility zones for Electric Vehicles (EVs).
Higher inventory levels, lower replacement demand and negative retail sentiments due to higher retail prices are expected to hamper demand in H1FY23. Price hikes to the tune of 2-4% are expected to be taken by OEMs in Q1FY23 to counter rising commodity inflation and high base impact in Q1FY23, which are expected to further dampen sales prospects in H1FY23. Demand in H2FY23 is expected to pick up during the festival season coupled with an uptick in replacement sales, which will be postponed from Q1FY23 to Q3FY23 due to the ongoing negative trends. Budget FY23 allocated ''2,908 crore, up 3.6x to the Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME India, Phase II) scheme to provide clean mobility solutions.
Network capex in FY22 remained healthy with the strengthening of fibre footprint and expansion of 4G sites. The Production-Linked Incentive (PLI) scheme, with an outlay of ''12,195 crore, became effective in FY22 to support manufacturing of telecom and networking products. BBNL invited a global tender for the development of BharatNet through the Public-Private Partnership (PPP) mode across 16 states.
Telecom industry Outlook: Contracts for laying optical fibre in villages, including remote areas, will be awarded under the BharatNet project through PPP in FY23. While the majority of expected capex in FY23 of ''145,000 â 155,000 crore will be driven by regulatory expenses, FY24 will witness network capex to the tune of ''57,500 â 62,500 crore on account of rollout obligations, investments in expanding 4G sites, strengthening fibre footprint and quality enhancement of services. By 2024, DoT plans 50 lakh kms of optical fibre spread across the country. The investment is to be pepped up in rural areas too, looking at the aggressiveness of players to tap rural customers.
The ongoing geopolitical tensions, India''s stand-off with China and conflict with Pakistan have forced the country to further expand its defence capabilities. The country signed contracts and projects for ''54,000 crore to locally produce weapons, including tanks, counter-drone systems, etc., to enhance its military capability. The aim is to be self-sufficient with focus on the ''Make in India'' initiative. The export of indigenously-produced defence goods has grown more than 4 times to ''84,300 crore from ''19,400 crore in 2014-15.
Defence industry Outlook: The Indian defence industry is expected to grow at a CAGR of 4% for the next 8-9 years. Budget FY22 has allocated ''5,300 crore, a rise of 10% YoY. 68% of the allocation is earmarked for procurement from indigenous companies. The government targets $2,500 crore worth of defence production by 2025.
With an export target of $ 80,000 crore in FY23, up 19.5% YoY, the government has rationalised custom duties to promote domestic manufacturing and make prices competitive in the international markets. Export opportunities remain buoyed with multiple tailwinds:
¦ Driven by electrical grid upgradation and expansion in developing countries, the global transformer oil market is expected to reach $300 crore by 2025, growing at a CAGR of 6.9%.
¦ By 2026, global renewable electricity capacity is estimated to rise more than 60% from 2020 levels to over 4,800 GW, equivalent to the current total global power capacity of fossil fuels and nuclear combined.
¦ The United States is rolling out a sweeping plan to overhaul the nation''s infrastructure, following Congressional approval in November, 2021 of a historic $1-tn infrastructure investment.
¦ The ''China Plus One'' supply chain diversification strategy is creating rapid opportunities for India.
overall business performance |
||||||
in '' Cr |
FY17 |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
Revenue |
4,832 |
5,819 |
7,964 |
7,443 |
6,410 |
9,346 |
EBITDA |
433 |
419 |
483 |
484 |
438 |
574 |
PAT |
177 |
145 |
136 |
135 |
161 |
257 |
Cash Profit |
222 |
201 |
203 |
222 |
254 |
354 |
ROE |
19% |
13% |
12% |
11% |
13% |
17% |
D/E |
0.11 |
0.17 |
0.14 |
0.19 |
0.17 |
0.15 |
Numbers are as per Ind AS. |
The Company posted 60% YoY growth in PAT in FY22 despite the unprecedented disruptions caused by the pandemic. Consolidated revenue in FY22 was at ''9,346 crore, up 46% YoY led by 54% increase in domestic revenue. Export revenue increased 35% YoY, accounting for 38% of FY22 revenues. Consolidated EBITDA was at ''574 crore up 36% YoY and margin maintained despite elevated freight cost and global inflationary pressure in Aluminium, Copper, Steel, base oils and Packing Materials etc. Speciality oils achieved EBITDA of ''6,347 per KL in FY22, down 10% YoY from the historically high figure of ''7,032 per KL in FY21.
Your Company is one of the largest global manufacturers of Conductors with 1,80,000 MTPA capacity. ''343 crore of strategic capex was undertaken over FY16-FY22 to launch several innovative solutions in the space:
From being aluminium conductor company with 90% its revenues coming from standard product lines, the company has successfully embarked on a premiumisation exercise to reinvent it business with the addition of Copper conductors for Railways, Copper Transpose Conductors for transformers, OPGW wires for power & telecommunication, a comprehensive range of high efficiency conductors including turnkey solutions and a range of aluminium alloy rods for special applications. In FY22 49% of revenue comes from these premium products. The globalisation initiative has also resulted in 38% of revenue coming outside of the Indian market. Revenue for the conductors'' segment increased 44% YoY to ''4,200 crore as domestic revenues increased 78.1% YoY. Export revenues remained flat at FY21 levels due to multiple headwinds round the year, especially freight cost. Exports contributed 38.1% to revenues versus 52.1% in FY21.
In '' Crore |
FY22 |
FY21 |
Growth (%) |
Order Book |
3,079 |
1,649 |
87% |
Turnover |
4,200 |
2,908 |
44% |
Segment Profit/(Loss) |
163 |
68 |
140% |
Volume (MT) |
1,07,357 |
1,28,460 |
-16% |
¦ Higher-value products (High-Efficiency Conductors (HEC) Copper Conductors OPGW Copper Transpose Conductors (CTC)) contribution was at 49% vs. 33% in FY21.
⢠HEC: Revenue was up 148% YoY.
⢠Copper conductor for Railways: Revenue was up 103% YoY.
⢠CTC: Revenue up 120% YoY.
¦ New order inflow of ''5,409 crore in FY22 was up 123% YoY.
¦ Strong & healthy order book of ''3,079 crore, up 87% YoY, with 53% share from higher-value products.
Your Company witnessed a robust performance with improved margins in most of the product lines. Copper conductor for railways exceeded the targeted volume with healthy margin. Unexpected profitable export opportunities helped to compensate the increased cost of logistics, elevated raw material, cost of steel, fuel and other commodities to a large extent.
¦ Expect the prices of steel and other raw materials to be elevated in H1FY23 in light of increased geopolitical tensions and high inflation rate.
¦ Your Company has planned capital expenditure to the tune of ''31 crore, majorly towards de-bottlenecking, capacity/ capability enhancement, productivity/cost reduction, and R&D.
¦ An uptick in the T&D sector, coupled with increased renewable energy projects in the pipeline and fast pace of electrification of railways to become key demand drivers.
Risks and Concerns: International freight costs continue to remain elevated, which can be a factor for the export business of the Company. The ongoing geopolitical tensions have further pushed up the prices of already elevated commodities. A few of the postponed projects may be executed at a loss, sharing the increased freight cost with the clients. Increased competition in the domestic market and high volatility in raw material cost can impact the performance. However, being prudent, your Company uses hedging strategy to mitigate commodity and forex risk. The cyclical nature of the power business has an obvious impact on Your Company''s performance. Project delays from customers'' side may have an impact. Regional political instability and changes in the external environment in certain export markets may affect execution.
^ Speciality Oils â All time high volumes and good profitability
Your Company is the 3rd largest global manufacturer of transformer oils and the 10th largest lubricant marketer in India. This puts the Company at an advantage in terms of economies of scale for manufacture and distribution, adding to the premiumisation of the oils business. Your Company invested ''229 crore during FY16-22 on higher-value products:
FY22 continued as the best performing year for the division: |
|||
In '' Crore |
FY22 |
FY21 |
Growth (%) |
Turnover |
3,560 |
2,364 |
51% |
Segment Profit/(Loss) |
268 |
266 |
1% |
Volume (MT) |
4,61,589 |
3,99,214 |
16% |
Revenue grew 51% YoY to ''3,560 crore, driven by 61% YoY growth
in exports. This was achieved despite losing competitiveness in
many geographies due to high freight rates.
¦ Exports contribution up at 44% versus 41% in FY21.
¦ White oil sales volumes up 16.1% YoY, driven by strong growth in exports.
¦ Transformer oil volumes up 9.6% YoY. Lower demand and poor financial health of discoms affected the volumes.
¦ Revenue from lubricants up 28% YoY at ''780 crore, making APAR the 10th largest lubricant manufacturer in India.
¦ The Hamriyah plant operated at 104% capacity utilization in FY22, up from 79% in FY21.
EBITDA per KL after forex adjustment maintained above threshold level
EBITDA per KL after forex adjustment in FY22 was at''6,347, down 10% YoY from ''7,032. The per unit profitability remains far above the minimum threshold level of ''5,000. The focus remains on per unit profitability rather than on volumes.
¦ FY23 outlook will get impacted, given the Russian invasion of Ukraine and the resultant sanctions. Though hydrocarbon products are out of the gamut of sanctions till now, refined products have been massively impacted.
¦ FY23, H2 will be challenging given the war-induced elevated base oil prices. The premium of Lower Sulphur Gas Oil is currently trading at 6-7x times its normal price range. Due to this, volumes will be impacted as there could be some demand destruction from postponed consumption. But the lag effect in the pricing of base oil will allow higher profitability for the company in earlier part of 1st half with considerable pressure in the second half.
¦ High level of global inflation has induced interest rate hikes. Profitability of the segment is sensitive to the rise in the cost of funding.
¦ Higher or increased prices of finished goods due to global inflation and rising cost of borrowing may impact the volumes.
¦ Focus will be on per unit profitability compared to total volumes, along with keeping the cash flows in focus by maintaining the lowest possible level of inventory.
Risks and Concerns: The ongoing geopolitical tensions and the consequent sanctions on Russia by the West have hampered the demand-supply equation for oil. Going forward, hydrocarbon too, could come under the risk of sanctions. Your Company is exposed to the volatility in prices of raw materials, interest rate and foreign exchange rate. Higher prices amidst global inflation and rising rate of interest may impact the business. Your Company uses hedging strategy to mitigate the forex risk. In the event of volatility in oil prices, the prices of long-term buy contracts take time to adjust since formula prices are backward looking. Performance may be impacted by competition in the transformer oils and auto lubricants sub-segments. Rapid commoditization at the lower end of the market, particularly in technical grade white oils, might bear an impact on profitability.
j
.-jjL Cables segment â Largest domestic player in renewables
The Company is the largest domestic player in renewables with one of the widest ranges of medium-voltage and low-voltage XLPE cables, elastomeric cables, fibre optic cables and speciality cables. ''309 crore has been invested over FY16-22 towards developing new-age solutions:
¦ High-voltage power cables using the latest CCV technology.
¦ Introduced Medium Voltage Covered Conductor (MVCC) for increased safety and uninterrupted power distribution in high population density and forest areas.
¦ Additional import substitution products for the defence sector.
¦ 18 UL approved grades which allow for marketing cables in the US market.
¦ Additional E-Beam capacity to produce more Anushakti house wires, railway cables and solar cables.
Focus on exports during low domestic demand:
In '' Crore |
FY22 |
FY21 |
Growth (%) |
Turnover |
1,993 |
1,270 |
57% |
Segment Profit/(Loss) |
80 |
33 |
142% |
Segment Profit margin |
4.0% |
2.6% |
Revenues from the Cables segment grew 57% YoY to reach ''1,993 crore as revenues from Elasto/E-beam cable business rose 64% to ''508 crore, led by offtake in solar, wind, railways and defence business.
¦ Exports'' contribution at 29% versus 20% in FY21.
¦ Power cable continues to be highly competitive, more focus being put on export opportunities.
¦ Telecom cables/OFC revenue up by 38% YoY.
¦ EBITDA margin post forex adjustments up 77% YoY to ''106 crore in FY22.
¦ Exports are up 129% YoY to ''572 crore from ''250 crore in FY21, contributing to the increased revenue of the segment. With major exports done to several countries in East Africa, Latin America, USA, and Australia, new opportunities are opened for FY23.
¦ With product approvals in place, appreciated product quality and increased acceptance. Your Company is prepared to exploit the opportunity presented by the negative sentiments towards Chinese products.
¦ In FY23, the Company will continue its focus on growing exports, amidst negative sentiment on China, and focus on premium products: MVCC, automotive cables and harnesses.
¦ The Company plans to launch Light-Duty Cables (LDC) at pan-India level in FY23, on the strength of improved sales and presence in Gujarat and Kerala.
¦ Strong demand is expected with the expanding Solar & Windmill segment along with support from Railways and mining activities. In the upcoming years, moving towards ''Aatmanirbharta'' of the defence sector will pose strong demand.
¦ New CCV lines and a new 2.5 MeV E-Beam are being installed to increase rubber cable expansion.
Risks and Concerns: Pricing is influenced by surplus capacity in the power cables market. Due to lack of financial arrangements by key customers in the renewable energy sector and by EPC contractors, collection periods could be prolonged and delivery timelines delayed. Low or no ordering by big telecom firms may have an influence on performance in optical fibre lines. The
cyclical nature of their tendering has an impact on the industry''s order position. Any fluctuations in fibre or polymer costs may have an influence on performance.
Prolonged extension of the geopolitical situation without any resolution may impact performance. Volatile commodity prices, technical developments, currency rate fluctuation, and any influence on the broader macro-economic outlook may all have an impact on the Company''s success. Any geopolitical or economic upheavals on a local, regional, or worldwide scale may have a negative influence on demand or cause input cost volatility, all of which can have a negative impact on performance. Your company is subject to the risk of SOFR rate volatility, which might raise our interest expenses and have an impact on our performance. Due to clients'' difficult financial situation, the collection period for debtors may increase.
Your Company has established adequate ICS in respect of all the divisions of the Company. The ICS aims to promote operational efficiencies and achieve savings in cost and overheads in all business operations. System Application and Product (SAP), a world-class business process integration software solution, which was implemented by the Company at all business units, has been operating successfully. The Company has appointed M/s. Deloitte Touche Tohmatsu India LLP as its Internal Auditors. The system-cum-internal audit reports of the Internal Auditors were discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segments prepare their annual budgets, which are reviewed along with performance at regular intervals.
Your Company promotes an open and transparent working environment to enhance teamwork and build business focus. Your Company gives equal importance to development of human resources (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company has performance / production-linked incentive schemes. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment.
Key Financial Ratios with details of significant changes The Company has identified the following as key financial ratios: |
|||
Consolidated Ratios |
FY2022 |
FY2021 |
Variance % |
EBITDA Margin |
6.2% |
6.9% |
-9.1% |
PAT Margin |
2.8% |
2.5% |
9.6% |
ROE |
16.5% |
12.6% |
31.2% |
Debtors - Days |
86 |
108 |
-19.8% |
Inventory - Days |
94 |
110 |
-14.8% |
Current Ratio |
1.22 |
1.22 |
-0.1% |
Debt/ Equity Ratio |
0.15 |
0.17 |
-15.0% |
Interest Coverage Ratio |
3.4 |
2.5 |
35.6% |
Net Fixed Asset Turnover Ratio |
10.2 |
6.9 |
47.5% |
The statements made in the Management Discussion & Analysis section, describing the Company''s goals, expectations and predictions, among others, do contain some forward-looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management, viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in the foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country, among others.
Your Company has the following subsidiaries and associate as at March 31, 2022:
1. Petroleum Specialities Pte. Ltd. Singapore (PSPL) â Wholly Owned Subsidiary of the Company,
2. Petroleum Specialities FZE, Sharjah (PSF) - Wholly Owned Subsidiary of PSPL,
3. APAR Transmission & Distribution Projects Private Limited (ATDPPL) â Wholly Owned Subsidiary of the Company,
4. APAR Distribution & Logistics Private Limited â Wholly Owned Subsidiary of the Company and
5. Ampoil Apar Lubricants Private Limited â Associate of the Company with 40% stake along with PPS Motors Private Limited and Others.
The Company has not attached the Balance Sheet, Statement of Profit & Loss Accounts and other documents of its four Subsidiaries and Associate. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the Subsidiaries and Associate for the financial year ended March 31, 2022 in Form AOC â 1 is included in the annual report and shall form part of this report as "Annexure VIII". The annual accounts of the said Subsidiaries and Associate and other related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.
Further, pursuant to provisions of Section 136 of the Act, the financial statements, including Consolidated Financial Statements of the Company along with relevant documents and separate audited accounts in respect of Subsidiaries and Associate, are available on the website of the Company at www.apar.com.
The Company has incorporated a new Wholly Owned Subsidiary Company, in the form of C- Corporation entity, in the name of CEMA WIRES & CABLES INC. having registered office situated at 251 Little Falls Drive, in the City of Wilmington, County of New Castle, 19808 in the State of Delaware, on April 26, 2022, inter-alia for carrying out the trading business in Cable & Wires and other products including warehousing / storing activities.
8. SiGNiFiCANT AND MATERiAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed during the year by the regulators or courts or tribunals impacting the going concern status of the Company and operations of the Company in future.
9. corporate governance
Your Company believes in conducting its affairs in a fair, transparent and professional manner and maintaining the good ethical standards, transparency and accountability in its dealings with all its constituents. As required under the Listing Regulations, a detailed report on Corporate Governance along with the Auditors'' Certificate thereon forms part of this report as "Annexure â V".
10. BUSiNESS RESPONSiBiLiTY REPORT
Business Responsibility Report as stipulated under Regulation 34 of the Listing Regulations forms a part of this Annual Report as "Annexure â Vi".
11. MANAGEMENT - DiRECTORS AND KEY MANAGERiAL PERSONNELDiRECTORS:Appointment/s
During the year under review, Mr. Kaushal Jaysingh Sampat was appointed as an Additional Director in the category of Independent Director (Non-Executive) by the Board of Directors of the Company at its Meeting held on January 31, 2022. Subsequently, necessary approval of the Shareholders was also sought for his appointment by way of Postal Ballot on March 18, 2022 through remote e-Voting, to hold the office of Independent Director (NonExecutive) for a period of upto 5 consecutive years from January 31, 2022 to January 30, 2027.
At the 33rd Annual General Meeting (AGM), following appointments / re-appointments are being proposed:
a. Mr. Kushal N. Desai, Director (DIN: 00008084), shall retire by rotation and being eligible, offers himself, for reappointment.
b. On the recommendation of Nomination and Compensation - cum - Remuneration Committee, the Board of Directors has re-appointed Mr. Kushal N. Desai as a Managing Director and Chief Executive Officer (CEO) of the Company for a further period of five years fromJanuary 1, 2023 to December 31,2027.
c. On the recommendation of Nomination and Compensation-cum-Remuneration Committee, the Board of Directors has reappointed Mr. Chaitanya N. Desai as a Managing Director of the Company for a further period of five years from January 1, 2023 to December 31, 2027.
d. Pursuant to Sections 149, 152 and all other applicable provisions of the Companies Act, 2013 and Listing Regulations, Mr. Rajesh
Sehgal is holding the office of an Independent Director (NonExecutive) for the 1st term of five consecutive years upto the conclusion of 33rd Annual General Meeting of the Company to be held in the calendar year 2022. Based on performance evaluation and as per recommendation of Nomination and Compensation-cum-Remuneration Committee, Mr. Rajesh Sehgal is proposed to be re-appointed as an Independent Director (Non-Executive) of the Company, not liable to retire by rotation, for his second term of five consecutive years with effect from August 12, 2022 upto August 11, 2027. In the opinion of the Board, he possesses requisite skills, capabilities, expertise, integrity and experience for re-appointment as an Independent Director (Non Executive) of the Company and the Board considers his professional background, experience and contributions made by him during his first tenure, therefore the continued tenure of Mr. Sehgal would be beneficial and in the interest of the Company.
Details of the proposal for re-appointment of Mr. Kushal N. Desai, Mr. Chaitanya N. Desai and Mr. Rajesh Sehgal along with their brief resumes are mentioned in the Explanatory Statement under Section 102 of the Act and disclosure under Regulation 36 of the Listing Regulations as annexed to the Notice of the 33rd AGM.
The Board recommends re-appointment / appointment of all the above Directors.
During the year under review, Mr. V. C. Diwadkar, Chief Financial Officer (CFO), resigned and relinquished his office of CFO w.e.f. February 2, 2022 due to his formal retirement from the Company which happened on March 31, 2022.
Board of Directors of the Company based on the recommendations of Nomination and Compensation-cum-Remuneration Committee and Audit Committee appointed Mr. Ramesh Seshan lyer as a Chief Financial Officer (CFO) of the Company w.e.f. February 3, 2022, who has been appointed to succeed Mr. Diwadkar through a planned transition process.
As on March 31, 2022, Mr. Kushal N. Desai, Managing Director and Chief Executive Officer, Mr. Chaitanya N. Desai, Managing Director, Mr. Ramesh Seshan Iyer, Chief Financial Officer and Mr. Sanjaya Kunder, Company Secretary are the Key Managerial Personnel of the Company.
During the year, four Board Meetings and four Audit Committee Meetings were convened and held. All the Meetings were held through Video Conferencing as permitted by the Law. The intervening gap between the Meetings was within the period prescribed under the Act (except the relaxation given by MCA and SEBI to hold such meetings). The details of these Meetings, including of other committee meetings, with regard to their dates and attendance of each of the Directors thereat, have been set out in the Report on Corporate Governance.
13. DECLARATION BY iNDEPENDENT DiRECTORS
Mr. F. B. Virani, Mr. Rajesh Sehgal, Mrs. Nina Kapasi and Mr. Kaushal J. Sampat were the Independent Directors of the Company as on March 31, 2022.
The Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out, has been explained in the Corporate Governance Report.
15. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
i. that in the preparation of the Annual Financial Statements for the financial year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the Profit of the Company for the period ended on that date.
iii. that proper and sufficient care has been taken for the 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. that the annual accounts have been prepared on a going concern basis.
v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all applicable laws were devised and in place and were adequate and operating effectively.
16. remuneration policy
The Board has, on the recommendation of Nomination and Compensation-cum-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.
Particulars of information as per Section 197 of the Act read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a Statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set in the Rules and Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as "Annexure â III" forming part of this Report.
17. RISK MANAGEMENT (RISK ASSESSMENT & MINIMISATION PROCEDURES)
The Board of Directors has constituted a Risk Management Committee. Your Company has implemented a mechanism for risk management and formulated a Risk Management Policy. During the year under review, the policy has been revised in line with the amended provisions of the Listing Regulations. The policy provides for identification of risks and formulating mitigation plans. The Risk Management Committee, Audit Committee and the Board of Directors review the risk assessment and minimization procedures on regular basis.
In compliance with Section 92(3) and 134(3)(a) of the Act, Annual Return is uploaded on Companies website and can be accessed at https://apar.com/investor/.
19. RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into 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 made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Form AOC-2 relating to Disclosure of Particulars of Contracts / arrangements entered into by the Company with related parties is annexed as "Annexure â IX" and forming part of Directors'' Report.
All Related Party Transactions are placed before the Audit Committee as also the Board for review and approval. A statement giving details of all related party transactions were placed before the Audit Committee and the Board of Directors for their review, approval and noting on a quarterly basis.
The policy on Related Party Transactions as approved and revised by the Board from time to time in line with the amended provisions of Act and Listing Regulations has been uploaded on the Company''s website.
There were no materially significant Related Party transactions during the year under review.
The Company has an Audit Committee pursuant to the requirements of the Act read with the rules framed thereunder and Listing Regulations. The details relating to the same are given in the report on Corporate Governance forming part of this Report.
During the year under review, the Board has accepted all recommendations of Audit Committee and accordingly, no disclosure is required to be made in respect of non- acceptance of any recommendation of the Audit Committee by the Board.
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act and rules framed thereunder either to the Company or to the Central Government.
22. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE Financial poSITioN oF THE CoMpANYwhich have occurred from the end of THE FINANCIAL YEAR TILL THE DATE oF THE REpoRT
There are no material changes and commitments, if any, affecting the Financial position of the Company which have occurred from the end of the Financial year till the date of the Report.
Your Company has not accepted deposits within the meaning of Section 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the year and hence there were no outstanding deposits and no amount remaining unclaimed with the Company as on March 31, 2022.
24. pARTICULARS oF LoANS, GUARANTEES oR INvESTMENTS
Details of Loans, Guarantees, Securities and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
The observations made by the statutory auditors in their report read with the relevant notes as given in the notes to the financial statement for the financial year ended on March 31, 2022 are self- explanatory and are devoid of any reservation, qualification or adverse remarks.
The present Statutory Auditors, M/s. C N K & Associates LLP, Chartered Accountants (Firm Registration No. 101961W/ W100036), Mumbai were appointed at the 31st Annual General Meeting of the Company held on August 17, 2020 for a first term of 5 years so as to hold office upto the 36th Annual General Meeting of the Company. The Auditors have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.
Pursuant to Section 148 of the Act, read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit
records maintained by the Company in respect of Conductors, Oils, Cables and Polymer Divisions of the Company are required to be audited by a qualified Cost Accountant.
The Board of Directors of the Company, on the recommendation of the Audit Committee, has appointed M/s. Rahul Ganesh Dugal & Co., a Proprietary Firm, who are in Whole Time Practice as Cost Accountant, having Firm Registration no. 103425 and Membership no. 36459 as the Cost Auditor to conduct the audit of the cost records of the Company for the financial year ending on March 31, 2023 (2022-23) on a remuneration not exceeding ''1,20,000/- p.a.
A Resolution seeking members'' ratification of remuneration payable to M/s. Rahul Ganesh Dugal & Co., Cost Auditor is included at Item No. 7 of the Notice convening the AGM and Board recommends the said Resolution.
27. SECRETARIAL AUDIToRS
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Hemang M. Mehta, Proprietor of M/s. H. M. Mehta & Associates, Practicing Company Secretaries, Vadodara, Gujarat, to undertake the Secretarial Audit of the Company for the financial year 2021-22. The Secretarial Audit Report (Form No. MR-3) is annexed herewith as "Annexure - I". The Secretarial Audit Report does not contain any qualification, reservation, disclaimer or adverse remarks.
28. VIGIL MECHANISM
As per the provisions of Section 177 (9) of the Act read with Regulation 22(1) of the Listing Regulations, the Company is required to establish an effective vigil mechanism for directors and employees to report genuine concerns. The Company has introduced Whistle Blower Policy (APAR''s OMBUDSMEN Policy) effective from March 1, 2014 by setting a vigil mechanism in place, the details of the whistle blower policy are provided in the report on Corporate Governance forming part of this report. The Whistle Blower Policy is being reviewed by the Audit Committee and Board of Directors at regular intervals.
29. INTERNAL CoNTRoL SYSTEMS (ICS) AND THEIR ADEQUACY
The Company has established adequate Internal Control Systems (ICS) in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving savings in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution, which was implemented by the Company at all business units has been operating successfully. The Company has appointed M/s. Deloitte Touche Tohmatsu India LLP as its Internal Auditors. The system cum internal audit reports of the Internal Auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular intervals.
To support the "Green Initiative" undertaken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same since 2010-11. As permitted, delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode.
Further, the Company has started using recyclable steel drums in place of wooden pallets in order to protect the environment and reduce costs for the Company and other initiatives are provided in the Report of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo in Annexure iV and Business Responsibility Statement in Annexure Vi.
The CSR Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Act reviews and restates the Company''s CSR policy in order to make it more comprehensive and aligned in line with the activities specified in Schedule VII of the Act.
The policy on Corporate Social Responsibility can be accessed at https://apar.com/wp-content/uploads/2021/03/CSR-Policy.pdf
With the strong belief in the principle of Trusteeship, APAR Group continues to serve the community through a focus on healthcare and upliftment of weaker sections of society, Promoting Education and health care including preventive health care (Medical), Environmental sustainability and Rural Development, Welfare of under privileged and destitute children, including girl children, Empowerment of physically / mentally challenged and underprivileged children, adults and providing free education, Relief and rehabilitation for combating with COVID-19 pandemic related activities, Empowering women socially & economically etc.
The Annual Report on CSR activities is annexed herewith as "annexure - ii".
Members'' approval was obtained at the AGM held on August 9, 2007 for introduction of Employee Stock Option Plan to issue and grant upto 1,616,802 options and it was implemented by the Company. Out of the above options, 175,150 Options have been granted in 2008, of which 26,338 Options were exercised upto May, 2015 and balance options were lapsed. Please refer "Annexure -Vii" forming part of this Report providing information as required to be made under the provisions of the Act.
Further, there has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the year under review. The disclosure relating to ESOPs required to be made under the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, confirming compliance, is available on the Company''s website at www.apar.com.
d. Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo in accordance with Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed hereto as "Annexure â iV" which form part of this Annual Report.
The Company has complied with all the applicable provisions of Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India (ICSI).
No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1) Issue of equity shares with differential rights as to dividend, voting or otherwise.
2) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.
3) No Managing Director of the Company receives any remuneration or commission from any of its subsidiaries.
4) The Company has in place the Policy on Prevention of Sexual Harassment at Workplace (POSH) in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. There were no complaints registered during the financial year 2021-22 under review.
5) There has been no change in the nature of business of the Company.
6) There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.
7) There was no instance of onetime settlement with any Bank or Financial Institution.
Your Directors wish to place on record their sincere appreciation for the continuous cooperation, support and assistance provided by all stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. We thank the Government of Sharjah, UAE and Singapore, where we have operations.
Your Directors also wish to place on record their sincere appreciation for the contribution made by our dedicated and loyal employees at all levels particularly, during the pandemic. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.
Place: Mumbai Chairman & Managing Director
Date: May 27, 2022. DiN: 00008084
Mar 31, 2018
Dear Shareholders,
The Directors takes immense pleasure in presenting the 29th Annual Report of the Company together with the Audited Annual Financial Statements (Standalone and Consolidated) showing the financial position of the Company for the year ended 31st March, 2018.
1. FINANCIAL PERFORMANCE
The financial performance of your Company for the year ended 31st March, 2018 is highlighted below:
(Rs. in crore)
Particulars |
Company |
Consolidated |
||||
2017-18 |
2016-17 |
% of Increase |
2017-18 |
2016-17 |
% of Increase |
|
Sales turnover (after deduction of excise duty / GST / other taxes) |
5,515.74 |
4,775.58 |
15.50 |
5818.53 |
4,831.98 |
20.42 |
Other income |
10.92 |
15.80 |
11.11 |
15.96 |
||
Profit for the year before finance cost, depreciation and tax expenses. |
405.88 |
436.56 |
(7.03) |
418.64 |
432.73 |
(3.26) |
Deducting therefrom: |
||||||
- Depreciation / amortisation |
49.59 |
43.45 |
55.87 |
44.97 |
||
Finance Costs |
134.93 |
113.66 |
140.00 |
114.36 |
||
PROFIT BEFORE TAXATION FOR THE YEAR |
221.36 |
279.45 |
(20.79) |
222.77 |
273.40 |
(18.52) |
Deducting there from: |
||||||
- Tax expenses |
77.31 |
97.13 |
78.03 |
97.15 |
||
Net profit for the year after taxation and before minority interest |
144.05 |
182.32 |
(20.99) |
144.74 |
176.25 |
(17.88) |
Adjustment of: |
||||||
- Share in Profit (Loss) of JV |
0 |
0 |
0 |
0.32 |
||
NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS |
144.05 |
182.32 |
144.74 |
176.57 |
||
Add: Profit brought forward from previous year |
437.20 |
274.18 |
521.78 |
364.51 |
||
Amount available for appropriations |
581.25 |
456.50 |
666.52 |
541.08 |
||
- Reserves |
(15.00) |
(20.00) |
(15.00) |
(20.00) |
||
- Dividend (including tax ) |
(46.07) |
* |
(46.07) |
* |
||
- Refund of dividend tax |
- |
0.93 |
- |
0.93 |
||
- Capital Redemption Reserve |
- |
(0.23) |
- |
(0.23) |
||
Leaving balance of profit carried to balance sheet |
520.18 |
437.20 |
605.45 |
521.78 |
||
Earnings per equity share (EPS) |
||||||
- Basic & Diluted before & after extraordinary items |
37.64 |
47.38 |
37.82 |
45.88 |
*Note: In accordance with Ind AS, dividend of Rs. 9.50 (95 % ) per share recommended by the Board of Directors for FY 17-18 (refer para 3 below) along with the Dividend Distribution Tax is recognized as a liability in the period in which it is declared by shareholders in a general meeting and paid.
2. INDIAN ACCOUNTING STANDARDS
The Company had adopted Ind AS with effect from 1st April, 2016 with the transitional date as 1st April, 2015 pursuant to the Ministry of Corporate Affairs notification dated 16th February, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015. Accordingly, the Financial Statements for the year ended on 31st March, 2018 have been prepared in accordance with the Companies (Indian Accounting Standard) Rules, 2015, prescribed under Section 133 of the Companies Act 2013 (the Actâ) and other recognized accounting practices and policies to the extent applicable.
3. DIVIDEND
Pursuant to the Requirements of Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (the Listing Regulationsâ), the Company has formulated its Dividend Distribution Policy, the details of which are available on the Companyâs website www.apar.com.
Considering the financial results and the performance of the Company during the year under review, as compared to the previous year, the Board of Directors has recommended the dividend of Rs. 9.50 (95%) per share on the capital of 38,268,619 Equity Shares of the face value of Rs. 10/- each fully paid for FY 2017-18.
This dividend amounting to Rs.36.35 crore (excluding dividend tax) is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.
4. TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs. 15 crore to the General reserves. An amount of Rs. 605.45 crore is proposed to be retained in the Consolidated Statement of Profit and Loss.
5. SUBSIDIARY AND JOINT VENTURE COMPANIES
During the Financial Year 2017-18, M/s. Cema Optilinks Private Limited was incorporated as a Majority Owned Subsidiary of the Company on June 12, 2017 with the main object of carrying out small scale business of manufacturing and trading in Fiber Optic cables. The Company is yet to commence its manufacturing operations.
The Company has also entered into a Joint venture agreement with M/s. PPS Motors Private Limited (PMPL) and others and for the purpose incorporated a Company in the name of âM/s Ampoil Apar Lubricants Private Limitedâ (AALPL) on July 18, 2017 which shall carry out the activities such as sale and / or distribution of lubricants including Engine Oils for various kinds of vehicles, machinery, mechanised equipment under the brand name âAmpoilâ. The share of the Company in the Joint Venture will be 40%.
Your Company has the following subsidiaries as at 31st March, 2018:
1. Petroleum Specialities Pte. Ltd. Singapore (PSPL) -Wholly Owned Subsidiary of the Company,
2. Petroleum Specialities FZE, Sharjah (PSF) - Wholly Owned Subsidiary of PSPL,
3. Apar Transmission & Distribution Projects Private Limited (ATDPPL) - Wholly Owned Subsidiary of the Company and
4. Cema Optilinks Private Limited (COPL) - Majority Owned Subsidiary of the Company.
The Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its four subsidiaries. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the subsidiaries for the year ended March 31, 2018 in Form AOC - 1 is included in the annual report and shall form part of this report as â Annexure IXâ. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.
Further, pursuant to provisions of Section 136 of the Act, the financial statements, including Consolidated Financial Statements of the Company along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.
6. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed during the year by the regulators or courts or tribunals impacting the going concern status and operations of the Company in future.
7. CORPORATE GOVERNANCE
Your Company believes in conducting its affairs in a fair, transparent and professional manner and maintaining the good ethical standards, transparency and accountability in its dealings with all its constituents. As required under the Listing Regulations, a detailed report on Corporate Governance along with the Auditorsâ Certificate thereon forms part of this report as âAnnexure - VIâ.
8. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as stipulated under Regulation 34 of the Listing Regulations is annexed herewith as âAnnexure - VIIâ forms a part of this Annual Report.
9. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointments / Re-appointments
- During the year under review, Mr. Rajesh Sehgal was appointed as an Independent Director by the Shareholders of the Company in their meeting held on 09th August, 2017 for a period of five years upto the conclusion of 33rd Annual General Meeting of the Company to be held in the calendar year 2022.
- At the 29th Annual General Meeting (AGM), following appointments / re-appointments are being proposed:
a. On the recommendation of Nomination and Compensation - cum - Remuneration Committee, Mr. Kushal N. Desai was reappointed as Managing Director and Chief Executive Officer (CEO) of the Company for a further period of five years from 1st January, 2018 to 31st December, 2022.
b. On the recommendation of Nomination and Compensation-cum-Remuneration Committee, Mr. Chaitanya N. Desai was reappointed as Managing Director of the Company for a further period of five years from 1st January, 2018 to 31st December, 2022.
c. Mr. Chaitanya N. Desai, Director shall retire by rotation and being eligible, offers himself, for reappointment.
Details of the proposal for re-appointment of Mr. Kushal N. Desai and Mr. Chaitanya N. Desai along with their brief resume are mentioned in the Explanatory Statement under Section 102 of the Act and disclosure under Regulation 30 of the Listing Regulations as annexed to the Notice of the 29th Annual General Meeting.
The Board recommends re-appointment / appointment of all the above Directors.
Retirement / Resignations:
- During the year under review, Dr. N. K. Thingalaya, resigned as an Independent Director of the Company and consequently as a member of Audit and Nomination and Compensation-cum-Remuneration Committee of the Company w.e.f. 1st November, 2017 in view of his intention to retire from active life. The Board placed on record its appreciation for the valuable contribution and quality expert advices given by Dr. Thingalaya during his tenure as Director and as a Member of the Committees of the Board.
Key Managerial Personnel:
- Mr. Kushal N. Desai, Managing Director and Chief Executive Officer, Mr. Chaitanya N. Desai, Managing Director, Mr. V. C. Diwadkar, Chief Financial Officer and Mr. Sanjaya Kunder, Company Secretary are the Key Managerial Personnel of the Company as on 31st March, 2018.
10. MEETINGS
During the year, four Board Meetings and Audit Committee Meetings were convened and held. The intervening gap between the Meetings was within the period prescribed under the Act. The details of these Meetings with regard to their dates and attendance of each of the Directors thereat have been set out in the Report on Corporate Governance.
11. DECLARATION BY INDEPENDENT DIRECTORS
Mr. F. B. Virani, Mr. Suyash Saraogi, Mr. Rajesh Sehgal and Mrs. Nina Kapasi were the Independent Directors of the Company as on 31st March, 2018.
In accordance with Section 149(7) of the Act, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Listing Regulations.
12. BOARD EVALUATION
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility (CSR) Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
13. DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
i. that in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the period ended on that date.
iii. that proper and sufficient care has been taken for the 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. that the annual accounts have been prepared on a going concern basis.
v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all applicable laws were devised and in place and were adequate and operating effectively.
14. REMUNERATION POLICY
The Board has, on the recommendation of Nomination and Compensation-cum-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.
Particulars of Information as per Section 197 of the Act read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - a Statement showing the names and other particulars of the Employees drawing remuneration in excess of the limits set in the Rules and Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as âAnnexure - IIIâ forming part of this Report.
15. RISK ASSESSMENT & MINIMISATION PROCEDURES
The Company has laid down procedure to inform the Members of the Board about the risk assessment and minimisation procedures. These procedures are periodically placed and are reviewed by the Audit Committee and Board of Directors.
16. EXTRACT OF ANNUAL RETURN
The extracts of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 forms part of this Report as âAnnexure - Vâ.
17. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on an armâs length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Form AOC-2 relating to Disclosure of Particulars of Contracts/ arrangements entered into by the Company with related parties is annexed as âAnnexure - Xâ and forming part of Directorsâ Report.
All Related Party Transactions are placed before the Audit Committee as also the Board for approval. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board has been uploaded on the Companyâs website.
There were no materially significant Related Party transactions.
18. AUDIT COMMITTEE
The Company has an Audit Committee pursuant to the requirements of the Act read with the rules framed thereunder and Listing Regulations. The details relating to the same are given in the report on Corporate Governance forming part of this Report.
During the year under review, the Board has accepted all recommendations of Audit Committee and accordingly, no disclosure is required to be made in respect of nonacceptance of any recommendation of the Audit Committee by the Board.
19. REPORTING OF FRAUDS
There have been no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Act and rules framed thereunder either to the Company or to the Central Government.
20. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT
There have been no material changes and commitments which have occurred from the end of financial year till the date of this report affecting the financial position of the Company.
21. DEPOSITS
The Company has not accepted deposits within the meaning of Section 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the year and hence there were no outstanding deposits and no amount remaining unclaimed with the Company as on 31st March, 2018.
22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
23. STATUTORY AUDITORS
The members of the Company at their 28th Annual General Meeting held on 9th August, 2017 appointed M/s. Sharp & Tannan (Firm Registration No. 127145W) (S & T) as Statutory Auditors of the Company for the remaining term of three years upto the conclusion of the Annual General Meeting to be held in the year 2020.
The Company was informed by the said firm, Sharp & Tannan that they have been converted into a Limited Liability Partnership (LLP) and they have accordingly, received the new Firm Registration No. 127145W / W100218 for the said LLP from the Institute of Chartered Accountants of India and that they would like to continue to act as Auditors of the Company under their converted firm being LLP carrying new Registration Number viz. No. 127145W / W100218.
Based on the recommendation of the Audit Committee, the Board of Directors of the Company at their meeting held on 9th August, 2017 has noted the conversion of Sharp & Tannan into Sharp & Tannan LLP Registration Number viz.
No. 127145W / W100218 for the remaining period of their term.
The Company has received necessary eligibility certificate from Sharp & Tannan LLP (Firm Registration No. 127145W / W100218) under Section 141 of the Companies Act, 2013 to act as Statutory Auditors of the Company for the financial year 2018-19.
The observations made by the auditors in their report read with the relevant notes as given in the notes to the financial statement for the year ended on 31st March, 2018 are self-explanatory and are devoid of any reservation, qualification or adverse remarks.
24. COST AUDITORS
Pursuant to Section 148 of the Act, read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils and Cables Divisions of the Company are required to be audited by a Cost Accountant.
Your Directors, on the recommendation of the Audit Committee, appointed Mr. T. M. Rathi to audit the cost accounts of the Company for the financial year 2018-19 on a remuneration of Rs. 120,000/-.
A Resolution seeking membersâ ratification for the appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor is included at Item No. 6 of the Notice convening the AGM and Board recommends the said Resolution.
25. SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Hemang M. Mehta, Proprietor of M/s. H. M. Mehta & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2017- 18. The Secretarial Audit Report is annexed herewith as âAnnexure - Iâ. The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.
26. VIGIL MECHANISM
As per the provisions of Section 177 (9) of the Act read with Regulation 22(1) of the Listing Regulations, the Company is required to establish an effective vigil mechanism for directors and employees to report genuine concerns. The Company has introduced Whistle Blower Policy (Aparâs OMBUDSMEN Policy) effective from 1st March, 2014 by setting a vigil mechanism in place, the details of the whistleblower policy are provided in the report on corporate governance forming part of this report.
27. INTERNAL CONTROL SYSTEMS (ICS) AND THEIR ADEQUACY
The Company established adequate ICS in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving savings in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution, which was implemented by the Company at all business units has been operating successfully. The Company has appointed M/s Deloitte Haskins & Sells as its Internal Auditors. The system cum internal audit reports of the Internal Auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular intervals.
28. OTHER INFORMATION
a. Green Initiative :
To support the âGreen Initiativeâ undertaken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same from the year 2010-11. As permitted, delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible.
Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to protect the environment and reduce costs for the Company.
b. Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Act reviews and restates the Companyâs CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Act.
With the strong belief in the principle of Trusteeship, Apar Group continues to serve the community through a focus on healthcare and upliftment of poor sections of society, education, Food and mid-day meal for children, Environmental sustainability and Health and Welfare of Senior Citizens initiatives.
The Annual Report on CSR activities is annexed herewith as âAnnexure - IIâ.
c. Employee Stock Options:
Members approval was obtained at the Annual General Meeting held on August 9, 2007 for introduction of Employee Stock Option Scheme to issue and grant upto 1,616,802 options and it was implemented by the Company. Out of the above options, 175,150 Options have been granted in 2008, of which 26,338 Options were exercised upto May, 2015 and balance options were lapsed. Please refer âAnnexure -VIIIâ forming part of this Report.
d. Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo in accordance with Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed hereto as âAnnexure - IVâ forms a part of this Annual Report.
29. GENERAL
No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.
3. No Managing Director of the Company receives any remuneration or commission from any of its subsidiaries.
4. The Company has complied with all the applicable provisions of Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India.
5. The Company has in place the Policy on Prevention of Sexual Harassment at Workplace (POSH) in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were no complaints during the year under review.
30. ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.
For and on behalf of the Board
Kushal N. Desai
Place : Mumbai Chairman & Managing Director
Date : May 30, 2018. DIN - 00008084
Mar 31, 2017
Dear Shareholders,
Your Directors have immense pleasure in submitting the 28th Annual Report of the Company together with the audited annual financial statements showing the financial position of the Company for the year ended 31st March, 2017. Consolidated accounts include it''s subsidiaries. Financial Statements have been prepared in accordance with the Companies (Indian Accounting Standard) Rules, 2015 (as amended) (Ind AS), prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable. Beginning 1st April, 2016, the Company has for the first time adopted Ind AS with a transition date of 1st April, 2015. Consequently, the figures for the year ended 31st March , 2016 have been restated to comply with Ind AS to make them comparable.
1. Financial results
(Rs, in crore)
Particulars |
Company |
Consolidated | |
||||
2016-17 |
2015-16 |
% of Increase |
2016-17 |
2015-16 |
% of Increase |
|
Sales turnover (after deduction of excise duty ) |
4,775.58 |
5,024.36 |
(4.95) |
4,831.98 |
5,078.49 |
(4.85) |
Other income |
15.80 |
9.92 |
15.96 |
10.09 |
||
Profit for the year before finance cost, depreciation and tax expenses. |
436.56 |
367.65 |
18.74 |
432.73 |
372.62 |
16.13 |
Deducting there from: |
||||||
- Depreciation / amortization |
43.45 |
37.69 |
44.97 |
37.76 |
||
Finance Costs |
113.66 |
157.33 |
114.36 |
157.32 |
||
PROFIT BEFORE TAXATION FOR THE YEAR |
279.45 |
172.63 |
61.88 |
273.40 |
177.54 |
53.99 |
Deducting there from: |
||||||
- Tax expenses |
97.13 |
56.93 |
97.15 |
57.26 |
||
Net profit for the year after taxation and before minority interest |
182.32 |
115.70 |
57.58 |
176.25 |
120.28 |
46.53 |
Adjustment of: |
||||||
- Share in Profit (Loss) of JV |
0 |
0 |
0.32 |
1.41 |
||
NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS |
182.32 |
115.70 |
176.57 |
121.69 |
||
Add: Profit brought forward from previous year |
274.18 |
218.45 |
364.51 |
310.44 |
||
Amount available for appropriations |
456.50 |
334.15 |
541.08 |
432.13 |
||
- Reserves |
(20.00) |
(15.00) |
(20.00) |
(22.64) |
||
- Dividend (including tax ) |
*- |
(44.98) |
*- |
(44.98) |
||
- Refund of dividend tax |
0.93 |
0.93 |
||||
- Capital Redemption Reserve |
(0.23) |
0 |
(0.23) |
0 |
||
Leaving balance of profit carried to balance sheet |
437.20 |
274.18 |
521.78 |
364.51 |
||
Earnings per equity share (EPS) |
||||||
- Basic & Diluted before & after extraordinary items |
47.38 |
30.88 |
45.88 |
32.48 |
*Note: In accordance with Ind AS, final divided of Rs. 10/- (100%) per share recommended by the Board of Directors for FY 16-17 (refer para 2 below) is recognized as a liability in the period in which it is declared by shareholders in a general meeting and paid.
2. Dividend:
The Board of Directors of the Company have approved the Dividend Distribution Policy on 5th August, 2016 in line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is available on Company''s website www.apar.com
Considering the financial results achieved during the year
under review as compared to the previous year, the Board of Directors has recommended the dividend for FY 2016-17 on the capital of 38,268,619 Equity Shares of the face value of Rs. 10/- each fully paid @ Rs. 10/- (100.00 %) per share [(previous year '' 6.50 (65.00 %) per share that included special dividend of Re. 1 per share.)]
This dividend amounting to Rs, 38.27 Crores is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.
3. BUYBACK OF COMPANYâS EQUITY SHARES
During the year under review, the Company had offered to buyback up to 450,000 Equity Shares of face value of Rs. 10/- each at a price of Rs. 660/- per Equity Share ("Buyback Priceâ) (including premium of Rs. 650/- per Equity Share) payable in cash for an aggregate amount of up to Rs. 29.70 Crores through Tender Offer.
Against the offer, 2,28,150 Equity Shares were tendered by the shareholders for an aggregate amount of Rs. 15.06 Crores and buyback was completed .
Consequently, Issued, Subscribed and Paid-up Share Capital of the Company has thus reduced to Rs. 382,686,190/- divided into 38,268,619 Equity Shares of Rs. 10/- each and Rs. 0.23 Crores being the nominal value of the shares bought back were transferred to Capital Redemption Reserve from General Reserve.
4. Transfer to Reserves:
The Company proposes to transfer an amount of Rs. 20 Crores to the General reserves. An amount of Rs. 521.78 Crore is proposed to be retained in the Consolidated Statement of Profit and Loss. As stated above, Rs. 0.23 Crores being the nominal values of the shares bought back were transferred to Capital Redemption Reserve from General Reserve.
5. Management Discussion and Analysis
Financial Year 2016-17 was a year of profitable growth for your Company as all segments showed strong progress. Your Company''s focus on building a future-oriented basket of new-generation products and expanding global presence while managing costs have effectively helped buoy profitability.
The year gone by was one full of promise and progress for the Indian power sector. This is evident from the number of States which joined the Ujwal DISCOM Assurance Yojana (UDAY) going up to 27; power generation capacity crossing the 300-GW milestone; power deficit dropping to a historical low of less than 1%; renewable energy cost falling drastically (tariff for solar energy down to Rs. 2.97 per unit and Rs. 3.46 per unit for wind energy) and an $840-million mega project of 800-KV, ultra-high-voltage DC transmission line being awarded.
As we move into FY18, the momentum seems set to grow with the initiation of the 13th Electricity Plan, which estimates an investment of Rs. 2.6 trillion in the Indian power transmission sector by the end of 2022 and total generation capacity addition of 1,87,821 MW. Power Grid Corporation of India Ltd. (PGCIL) is expected to spend Rs. 1 trillion over the next 4 years to expand its Transmission &
Distribution (T&D) network. On the exports front, FY17 saw a revival as commodity prices stabilised; going forward, these exports markets are expected to grow well in FY18.
As the benefits of the above-mentioned developments gradually percolate down, Apar Industries Ltd. with leading presence in India''s T&D sector and 70% of its revenue coming from the power sector, is poised to grow. Apar is the fourth-largest manufacturer of transformer oil in the world and is among the world''s top 3 largest conductor manufacturers. Your Company is a leading player in cables and the largest in cables for the renewable sector. Apart from being a market leader in India, your Company has a formidable global presence, exporting to over 100 countries.
Apar''s in-house R&D initiatives and strategic tie-ups with global firms, such as CTC Global, USA, and ENI S.p.A, Italy, have resulted in a portfolio of new-technology products such as extra-high-voltage transformer oils, high-temperature conductors, Elastomeric, E-Beam and optical fibre cables (OFC). The strong basket of new-generation value-added products developed by your Company is already garnering rising traction. Going forward, Apar is positioned well to gain from the Government''s increased focus on building high-quality T&D infrastructure and increasing efficiency in T&D, as depicted in the 13th Electricity Plan.
The year gone by also saw your Company''s expansion plan and capacities go live. The conductor plant in Jharsuguda and the Oils Plant in Sharjah became operational during the year. Your Company''s cable expansion plan also moved forward as per schedule.
Your Company''s strong leadership position across businesses, higher-value-added product offerings, strong global presence, technical capabilities, continued focus on R&D, and sizeable capacities following the recent expansions, along with higher industry opportunities will take Apar to a higher profitable growth path.
The opportunities and outlook that exist for your Company are as follows:
Global scenario
Investment in the Global Power sector rose to a record $690 bn in 2015, driven primarily by the expansion of renewable and networks. The global power sector is expected to attract investments worth $19 trillion from 2016 to 2040.
Global renewable energy capacity additions in 2016 reached record levels at 138.5 GW, up from 127.5 GW in 2015, accounting for 55% of all new generating capacity. New investment in the solar segment was at $113.7 bn, and investment in wind stood at $112.5 bn.
Thus, there is a requirement for massive investment in T&D infrastructure to accommodate these projects, to meet the growing demand for electricity, and replace aging T&D assets. Over the next decade, electric utilities are expected to invest $3.2 trillion globally in new and replacement T&D infrastructure. The largest new investments over the next decade will be in China and India as they seek to meet rising electricity demand while also modernizing their grids. Developed countries will also be investing significantly, particularly in smart grid infrastructure and renewable energy integration.
Indiaâs power plan
India''s Power sector will require investment of Rs. 10.3 lakh crore during the period 2017-22, for generation capacity addition of 1,87,821 MW, during which no coal-based capacity addition is expected. As on March, 2017, installed capacity of Power Plants has increased to about 3,19,606 MW, and total installed capacity from Renewable segment reached 42,849 MW. The target for Renewable Energy capacity, to be achieved by 2021-22, has been revised to 175 GW. For the year ended 2021-22, the projected Peak Demand is estimated at 235 GW and Energy requirement at 1,611 BU.
The T&D segment also witnessed many positive developments and achievements in FY17, including commissioning of 26,300 ckm of transmission lines, which is 112.5% of the annual target. Similarly, transformation capacity addition during the year increased by 30.2%YoY to 81,816 MVA, equivalent to 181.1% of the target. The transmission system capacity of 220 kV and above voltage levels at the end of the year was 3,67,851 ckm of transmission lines and 7,40,765 MVA of transformation capacity of substations. The total transmission capacity of the Inter-Regional Links was 75,050 MW at the end of the year.
Now with the start of the 13th Plan (2017-2022), the future augurs well. The Plan is estimated to involve T&D investment of Rs. 2.6 lakh crore, including an estimated Rs. 30,000 crore in transmission systems of under 220 kV. About Rs. 1.6 lakh crore would come from States and another Rs. 1 lakh crore from PGCIL. About 1,05,580 CKM of transmission lines, 2,92,000 MVA (220 kV and above voltage levels) and 14,000 MW (HVDC) of transformation capacity is expected to be added during the period. Also, about 45,700 MW of inter-regional capacity addition is planned during the period to take the capacity to 118,050 MW by the end of the 13th Plan from the current capacity of 72,350 MW.
The flagship project of the Indian government, UDAY, continues to garner positive response. As on March end, 27 states have joined the scheme. UDAY aims at fixing the weakest link in the Indian Power sector; the scheme aspires to financially turn around distribution companies. However, there are still execution issues and some delays continue to be seen at the implementation level.
Other initiatives in the T&D sector include schemes such as Deen Dayal Upadhyaya Gram Jyoti Yojana (Rs. 75,893 crore) and Integrated Power Development Scheme (Rs. 65,424 crore). In the current Budget, allocations under these schemes have been increased by over 25% to Rs. 10,635 crore for the current fiscal.
Conductors: It is estimated that during the 13th Plan period, transmission lines of 1,05,580 CKM, including 4,280 ckm of HVDC, 27,300 ckm (765 kV), 46,000 ckm (400 KV) and 28.000 ckm (200 KV) would be added.
Transformers: Transformation capacity of 2,92,000 MVA, including 1,14,000 MVA (765 KV), 1,03,000 MVA (400 KV), 75.000 MVA (200 KV) and 14,000 MW (HVDC) is expected to be added during the 13th Plan period.
Cables: The Indian Electric Wire and Cable market is expected to grow steadily at a CAGR of 16% till 2020. This is mainly due to the lack of T&D infrastructure at locations where renewable energy resources are set up.
Auto Lubes: FY17 ended on a positive note for the automobile industry, which faced slowdown for a few months as a result of demonetization. Sale of passenger vehicles in India crossed the three million mark for the first time, growing at the fastest rate in 6 years. SIAM expects sales growth to be in the range of 7-9% for FY18, driven by lower finance costs, the economy''s recovery from the effects of demonetization and improved consumer confidence. Sale of two-wheelers grew 6.9%; going forward, it is expected to grow in the range of 9-11% in FY18. The roll-out of GST is expected to impact short-term sales volumes across segments. However, the Indian automotive market is expected to witness growth in several pockets in FY18 as the various reforms and increased spending/investments kick in.
(a) Overall Business performance
We are happy to report that Apar has delivered strong performance during FY17 backed by sturdy show across all the 3 businesses. Profitability increased significantly driven by increased contribution from higher-value-added products across businesses. This improvement in profitability is actually a testimony to the efforts that the company has put in by way of bringing in higher-value-added products. The EBITDA margin increased to 8.8% during the year from 7.2% in the previous year, primarily led by improvement in profitability in the Conductors and Cables business. Profit after tax (PAT) came in at Rs. 176 crore up from Rs. 121 crore in the previous year. Revenue, however, was marginally impacted, largely due to lower input prices. Your Company reported consolidated revenue of Rs. 5,289 crore (gross of excise) in FY17 compared to Rs. 5,551 crore in FY16. Your Company commenced production of Conductors and Specialty Oils at its new facilities. Apar''s overall outlook remains positive as your Company expects all the planned capex in the domestic T&D segment to start getting converted into new orders in FYI8, even as the exports market continues to do well. Post the recently commenced capacities, your Company is very well placed to monetise this growth opportunity.
Business Segments (i) Conductor segment reports significant expansion in Profitability
(Rs, in crore)
*Turnover includes Interest Income of Rs, 0.09 Cr. for FY17 and Rs, 1 Cr. for FY16.
- Robust growth in profitability: EBITDA per metric tonne post forex adjustment came in at Rs. 11,882, compared to Rs. 7,469 in FY16. This is on account of increased contribution from high efficiency conductors (HEC), which came in at 11% of the overall sales revenue from conductors, compared to 6% a year ago. Apar won the award for the Best Company for HTLS, given by PGCIL, for 2016-17. Your Company executed some challenging Re-conduct ring projects in Kerala, and Telangana, among others.
- Revenue and Volumes declined on account of higher share of HEC: Sales Revenue came in at Rs. 2,462 crore, compared to Rs. 2,784 crore in the previous year, the decline being on account of slightly lower commodity prices and increased share of HEC. Exports accounted for 37% of revenue. Volumes for the year were lower at 1,58,835 MT, compared to 1,72,257 MT in the previous year, as the company produced more of the high temperature conductors, which carry a larger value per unit of volume.
- Exports market revived while Domestic market remained subdued: Demand in the domestic market was slightly subdued, as some of the T&D projects awarded were yet to result in orders for conductors, which is witnessing increased competitive intensity in the domestic market. However, at Apar, we have been able to shift our focus to the exports market, which has helped us to counter the effect in the short to medium term.
Particulars |
Company |
Consolidated |
||||
2016-17 |
2015-16 |
Variation (%) |
2016-17 |
2015-16 |
Variation (%) |
|
Turnover* (Gross of Excise) |
1,827 |
1,957 |
-7% |
1,883 |
2,011 |
-6% |
Segment profit / (loss) |
174 |
192 |
-10% |
169 |
197 |
-14% |
Exports |
517 |
558 |
-7% |
573 |
612 |
-6% |
- Jharsuguda plant ramping up quickly; GST to have further positive impact: Your Company''s new plant at Jharsuguda, which commenced production during the year, is ramping up. Your Company has started bidding for new business with Jharsuguda as a source of supply. GST is expected to kick in from July, 2017 and this will have positive impact on profitability.
- Strong order book, with higher contribution from exports: Your Company''s order book stood at Rs. 1,519 crore as of March 31, 2017, marginally lower than the Rs. 1,751 crore as on March 31, 2016. However, this order book contains a much shorter delivery cycle as the T&D project developers have tighter delivery cycles than of traditional orders. Export orders have contributed 48% to the order book, compared to 29% in FY16, as the company witnessed better traction in exports compared to domestic business. Apar has won orders in new geographies and also received its first large export order for high temperature conductors. This order worth Rs. 100 crore was received in Q3 from an EPC contractor in North America.
- FY18 expected to be promising year: Going forward, demand for conductors is expected to grow with a big surge in orders coming in from UDAY in the domestic market and export growth led by commodity price stabilization.
Risks and concerns
Competition from China along with Midal in Export business and from other Indian companies for local business may impact the business. Any further delay in UDAY-driven orders is expected to have an impact on performance.
The cyclical nature of the power business has an obvious impact on your Company''s performance. Project delays from the customers'' side may result in under-utilization of capacity even though the order book may remain robust.
There can be delay in debtor collections due to stress at the customers'' end. Regional political instability and changes in the external environment in certain export markets affect execution of delivery. Volatility in Aluminum premiums has been an area of concern, mainly with respect to exports, and is a challenge in the absence of any hedging mechanism.
Efforts by various aluminum manufacturers may result in imposition of Safeguard Duty which will increase the raw material prices and have a negative impact on fixed price contracts in the short to medium term. . ,
(Rs, in crore)
ii) Specialty Oil profitability in line with the long-term average
- Profitability in line with expectation: EBITDA per KL after forex adjustment for the year was at Rs. 4,931, compared to the higher base of Rs. 5,439 in the previous year. This is very much in line with the expectation for the year.
- Volumes up 4% but Revenue down due to lower raw material prices: Aggregate volumes were up by 4% at 3,52,655 KL led by increase in Transformer Oils (domestic), Transformer Oils (export), White Oil, Rubber Processing Oils, and Auto Oils, while consolidated Sales revenue for the year was Rs. 1,881 crore, 6% lower than last year, primarily due to lower raw material prices.
- Sharjah plant commences production: Your Company''s plant in Hamriyah (Sharjah) Port has commenced commercial production and is gradually ramping up.
- Auto Lubes delivers strong performance despite demonetization: The Auto Lubes segment delivered 6% volume growth to reach 24,893 KL, from 23,480 KL, despite the impact of demonetization, which hit both the aftermarket segment as well as OEM sales in the short term. Net sales stood at Rs. 222 crore compared to Rs. 263 crore in the previous year. Your Company''s product lines across all segments consist of top-performance products comparable to the best offered in the Indian market. Apar''s strong focus on expanding the distribution network and increasing the share of higher-margin products will further drive growth in this segment.
- FY18 expected to be promising year: In FY18, your Company expects good growth in volumes; especially if UDAY starts picking up, Apar will see a significant uptick in distribution transformer volumes as well as HVDC projects. Profitability is expected to increase further, aided by benefits arising out of GST implementation.
Risks and Concerns
Your Company is exposed to volatility in raw material prices and foreign exchange rates. However, in order to mitigate these risks, your Company continues to exercise prudence in its inventory control and hedging strategies. Also, addition in global refining capacities has resulted in a mismatch in demand and supply, which has an effect on base oil prices. The prices of long-term buy contracts take time to correct in case of fluctuations in crude prices as formula prices are always backward looking. Debtors'' collection period can increase on account of stressed financial condition of customers. Your Company had to implement strict credit controls to limit exposure to customers facing cash flow issues. Rapid commoditization taking place at the lower end, especially in technical grade white oils, may have an impact on margins.
iii) Cables business delivers its best performance
(Rs, in crore)
Particulars |
2016-17 |
2015-16 |
Variation (%) |
Turnover* (Gross of Excise) |
929 |
746 |
25% |
Segment profit / (loss) |
61 |
29 |
110% |
Exports |
129 |
100 |
29% |
- Robust revenue growth: Sales Revenue was up 25% at Rs. 926 crore led by 44% and 31% growth in Elastomeric Cables and Power Cables, respectively.
- Significant expansion in profitability: EBITDA margin post forex adjustment has increased by 288 basis points, to 8.6% in FY17 from 5.7% in FY16. This is also thanks to various cost control measures and the strategic focus on the specialty cables segment.
- Order book up 13% Y-o-Y led by strong traction in Renewable, Defense and Railways: Your Company''s order book as on March 31, 2017 stood at around Rs. 224 crore, compared to Rs. 199 crore as on March 31, 2016. The increase has come from Elastomeric cables and Power Cables. Apar has continued to see further growth in the non-conventional energy side of the business â windmill and solar segments â during the year. Currently, Apar is the largest supplier of specialty cables in this segment in India. The power cables segment also witnessed increased demand. While margins have remained stagnant because of competitive pressures, volumes have clearly expanded. Going forward, your Company expects the renewable segment to continue to grow. Your Company has also started seeing more traction in orders from the Defence sector and Railways.
- Expansion going ahead as per plan: Your Company''s capex in the segment is focused around debottlenecking the Elastomeric cables side of the business, and on the power cable''s side where Apar is putting up significant new machinery. The expansion is going ahead as per schedule.
- FY18 expected to be promising year: Your Company expects the growth momentum seen in the current year to continue in FY18. Profitability should also grow driven by orders from high-profitability segments such as Defence.
Risks and concerns.
The excess capacity in the power cables segment impacts pricing. Collection periods can get extended and delivery schedules can get delayed due to lack of financial arrangements by key customers in the renewable energy sector and by EPC contractors. In optical fibre cables, the clientele is concentrated among a handful of telecom companies and BBNL where the capex spending has been severely impacted. The cyclical nature of their tendering, too, has a bearing on the order situation in the industry.
(b) Operations of subsidiaries:
(i) Petroleum Specialties Pte. Ltd, Singapore (PSPL), a Wholly-Owned Subsidiary (WOS):
During the year under review, net sales of PSPL stood at $9.31 million, compared to $7.93 million in the previous year. Profit after tax (PAT) stood at $0.82 million, compared to $0.65 million in the previous year. Operations of its downstream subsidiaries are as follows:
- Quantum Apar Specialty Oils Pty. Ltd., Australia (Quantum)
PSPL holds 65% equity in Quantum. Pursuant to the resolution passed by the shareholders, your Company completed the process of closing down Quantum and made an application for voluntary de-registration with the Registrar of Companies. During the period, it reported net sales of AUD 1.78 million, compared to AUD 8.27 million in the previous year and PAT of AUD 0.01 million, compared to AUD 0.41 million in the previous year. Total Retained Profit of AUD 0.82 million was distributed as dividend to shareholders.
- Petroleum Specialties FZE (PSF)
PSF was registered in November, 2014 as a Free Zone Establishment under an Industrial License issued by the Hamriyah Free Zone Authority, Government of Sharjah, UAE, for setting up manufacturing facility for a comprehensive range of Specialty Oils and Lubricants. PSPL holds 100% equity in PSF. During the year under review, net sales of PSF stood at $1.07 million and gross profit at $0.22 million and loss for the year stood at $1.01 million.
(ii) Apar Transmission & Distribution Projects Private Limited (ATDPPL) :
The Company was incorporated as a Wholly-owned Subsidiary of Apar Industries Limited on August 26, 2016 with the main objective of construction and installation, re-conduct ring, and erection of overhead & underground T&D lines, among others. The Company is set to commence commercial activities shortly.
During the year under review, the Company incurred a loss of Rs. 0.08 million.
A statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached along with the financial statements of Apar Industries Ltd.
(c) Cautionary statement
The statements made in the Management Discussion & Analysis section, describing the Company''s goals, expectations and predictions among others do contain some forward looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in the foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country among others.
(d) Internal control systems (ICS) and their adequacy
The Company established adequate ICS in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving savings in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution, which was implemented by the Company at all business units (including Cable unit) has been operating successfully. The Company changed the Internal Auditors M/s KPMG India Pvt. Ltd. and appointed
M/s Deloitte Haskins & Sells. The system cum internal audit reports of the Internal Auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular intervals.
(e) Development of human resources
The Company promotes an open and transparent working environment to enhance teamwork and build business focus. The Company equally gives importance to the development of human resource (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company practices performance / production linked incentive schemes and introduced Employees Stock Option Scheme. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment.
6. BUSINESS RESPONSIBILITY REPORT :
Business Responsibility Report as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms a part of this Annual Report. - Annexure - VIII
7. SALE OF SHARES BY TEMPLETON AND CONSEQUENTIAL ALTERATION OF ARTICLES OF ASSOCIATION OF THE COMPANY :
During the year under review, Templeton Strategic Emerging Markets Fund III, L.D.C. (Templeton - Investor) sold the entire 3,636,363 Equity Shares held by it in the Company. Templeton thereupon withdrew the nomination of Mr. Rajesh Sehgal as Investor Director of the Company and ceased to be Investor Director w.e.f. March 30, 2017.
The existing Articles of Association (AoA) contain several specific articles pertaining to rights of the Templeton under the Subscription & Investor Rights Agreement (SIRA) dated March 31, 2011 entered into between the Company and Templeton. Consequent upon the termination of the said Agreement, these specific articles are no longer required.
It is therefore, proposed to adopt a new set of Articles of Association (AoA), by replacing the existing AoA by members and a Special Resolution to this effect is included at Item No. 7 in the Notice of the Annual General Meeting (AGM). The Board recommends the Resolution for adoption by members.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
(a) Dr. Narendra D. Desai, Chairman and Founder Promoter of the Company expired on 17th October, 2016. Dr. Desai was not only a chief architect of Apar''s success but also a key stalwart in the Indian electrical industry. He was a true visionary leader, an amazing human being and an inspiring mentor always ready to help. Under his leadership, the Apar Group had grown up by leaps and bounds. His contribution towards the Company''s growth cannot be measured, but can be felt.
The Board of Directors places on record their sincere appreciation for the valuable guidance and leadership provided by late Dr. Desai during his tenure as a Chairman and Managing Director till 2004 and thereafter as Non Executive Chairman of the Company and as a Chairman and Member of various Committees of the Directors of the Company.
The Board of Directors have appointed Mr. Kushal N. Desai, the Managing Director and Chief Executive Officer of the Company as Chairman and Managing Director, who will also act as Chief Executive Officer of the Company.
(b) Mr. Kushal N. Desai, Director shall retire by rotation at the ensuing annual general meeting of the Company and he, being eligible, offers himself for re-appointment.
(c) During the year under Review -
i. As stated above, Mr. Rajesh Sehgal, ceased to be Investor Director w.e.f. 30th March, 2017.
ii. Mr. Sehgal was appointed as an Additional Director of the Company w.e.f. 24th April, 2017 in the category of Independent Director Mr. Sehgal will hold office up to the date of the ensuing Annual General Meeting. The Company has received notice under Section 160 of the Companies Act, 2013 from a member proposing his appointment as Director of the Company. The Board proposes to appoint him for a period of five consecutive years up to the conclusion of 33rd Annual General Meeting of the Company to be held in the calendar year 2022.
In accordance with Section 149(7) of the Act, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI Regulations.
Details of the proposal for re-appointment / appointment of Mr. Kushal N. Desai and Mr. Rajesh Sehgal are mentioned in the Statement pursuant to Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as annexed to the Notice of the 28th Annual General Meeting.
The Board recommends re-appointment / appointment of all the above Directors.
(d) Dr. N. K. Thingalaya resigned as Chairman of Audit Committee on 23rd May, 2017 due to health constraint. However, he continues to be a member of the Audit Committee. In his place, Mrs. Nina Kapasi was appointed as Chairman of the Audit Committee w.e.f. 30 th May, 2017.
BOARD EVALUATION :
Pursuant to the provisions of the Companies Act, 2013 and SEBI Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility (CSR) Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
The Board has, on the recommendation of Nomination and Compensation-cum-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.
MEETINGS :
During the year, five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
9. DEPOSITS :
Company has not accepted deposits during the year. There were no outstanding deposits and no amount remaining unclaimed with the Company as on 31st March, 2017.
10. 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 notes to the Financial Statements.
11. DIRECTORSâ RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013 :
i. that in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the profit of the Company for the financial year ended on that date.
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. that the annual accounts have been prepared on a going concern basis.
v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
12. RELATED PARTY TRANSACTIONS :
All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Form AOC-2 (Disclosure of particulars of contracts / arrangements entered into by the company with related party) is annexed here to and forming part of Directors'' Report.
All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board has been uploaded on the Company''s website.
None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
13. AUDITORS : STATUTORY AUDITORS :
M/s. Sharp & Tannan (Firm Registration No. 109982W), Chartered Accountants, have been Statutory Auditors of the company since Financial Year 2010-11. As a part of their internal reorganization, they are not seeking reappointment at the ensuing Annual General Meeting and they seek appointment in the name of Sharp & Tannan (Firm Registration No. 127145W) for the remaining term up to the conclusion of the Annual General Meeting of the Company to be held in the year 2020 as available under provisions of Companies Act, 2013. Based on the recommendation of the Audit Committee, the Board of Directors of the Company at their meeting held on 30th May, 2017 approved such appointment and recommended the members to approve the same.
The Company has received necessary eligibility certificate from Sharp & Tannan (Firm Registration No. 127145W) under Section 141 of the Companies Act, 2013. Accordingly, an Ordinary Resolution at Item No. 4 of the Notice of AGM is included in respect of seeking the approval of the Shareholders for their appointment. The Board recommends the said Resolution.
The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
. COST AUDITORS :
Pursuant to Section 148 of the Companies Act, 2013, read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils and Cables Divisions of the Company are required to be audited by a Cost Accountant. Your Directors, on the recommendation of the Audit Committee, appointed Mr. T. M. Rathi to audit the cost accounts of the Company for the financial year 2017-18 on a remuneration of Rs. 1,20,000/-. A Resolution seeking members'' ratification for the appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor is included at Item No. 6 of the Notice convening the AGM and Board recommends the said Resolution.
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. Hemang M. Mehta of H. M. Mehta & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure
- I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.
14. OTHER INFORMATION
a. Green Initiative
To support the "Green Initiativeâ undertaken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same from the year 2010-11. As permitted, delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible.
Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to protect the environment and reduce costs for the Company.
b. Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Companies Act, 2013 reviews and restates the Company''s CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013.
With the strong belief in the principle of Trusteeship, Apar Group continues to serve the community through a focus on healthcare and upliftment of poor sections of society, education, Food and mid-day meal for children, Environmental sustainability and Health and Welfare of Senior Citizens initiatives.
The Annual Report on CSR activities is annexed herewith as "Annexure - II".
c. Employee Stock Options :
Members'' approval was obtained at the Annual General Meeting held on August 9, 2007 for introduction of Employee Stock Option Scheme to issue and grant up to 16,16,802 options and it was implemented by the Company. Out of the above options, 175,150 Options have been granted in 2008, of which 26,338 Options were exercised up to May, 2015 and balance options were lapsed. Please refer Annexure IX forming part of this Report.
d. Attached to and forming part of this report are the following inter alia :
i) Particulars of Information as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - a Statement showing the names and other particulars of the Employees drawing remuneration in excess of the limits set in the Rules - "Annexure - III" and Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - "Annexure - IV."
ii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo - "Annexure - V".
iii) Report on Corporate Governance and auditors'' certificate regarding compliance of conditions of corporate governance. "Annexure - VII".
iv) Statement containing brief financial details of the subsidiaries in Form AOC-1 which is attached to the financial statements of the Company.
v) disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 in Form AOC - 2.
e. Extract of Annual Return :
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - VI".
f. The Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its four subsidiaries. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the subsidiaries for the year ended March 31, 2017 in Form AOC - 1 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.
Further, pursuant to provisions of Section 136 of the Act, the financial statements of the Company,
Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.
15. General :
No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.
3. No Managing Director of the Company receives any remuneration or commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.
5. The Company has in place the Policy on Prevention of Sexual Harassment at Workplace (POSH) in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the year under review, the Company received one complaint which was investigated and closed.
16. Acknowledgement :
Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.
Registered Office : By Order of the Board
301, Panorama Complex, For Apar Industries Limited
R. C. Dutt Road,
Vadodara - 390 007, Gujarat.
Place : Mumbai Sanjaya Kunder
Date : May 30, 2017. Company Secretary
Mar 31, 2016
Dear Shareholders,
The Directors have immense pleasure in submitting the 27th Annual
Report of the Company together with the audited annual accounts showing
the financial position of the Company for the year ended 31st March, 2016. Consolidated results include the results of (a) Petroleum Specialities
Pte. Ltd., Singapore (PSPL), a Wholly-Owned Subsidiary of the Company
(WOS), (b) Quantum Apar Speciality Oils Pty. Ltd., Subsidiary of PSPL
and (c) Petroleum Specialities FZE, Sharjah, a WOS of PSPL.
1. Financial results
Particulars Company
2015-16 2014-15 % of
Increase
Sales turnover 5,009.95 5,010.97 -0.02%
(after deduction of
excise duty )
Other income 3.37 8.37
Profit for the year
before finance cost,
depreciation / 359.01 249.61 43.83%
amortisation, tax expenses
and exceptional items
Deducting there from:
- Depreciation /
amortisation 37.69 31.04
Finance Costs 151.56 150.09
Profit before adjustment of
exceptional items, taxation 169.76 68.48 147.92%
and minority interest
Exceptional items (Profit on
sale of Trust Shares - Refer (43.15) 0.25
Note 20 (a) of Annual
Audited Accounts)
Profit before taxation for
the year 212.91 68.23 212.07%
Deducting there from:
- Tax expenses 55.93 20.37
Net profit for the year
after taxation and before 156.98 47.86 227.99%
minority interest
Adjustment of:
- Minority Interest (profit)
/loss .. ..
Net profit after taxation and
above adjustments 156.98 47.86 227.99%
Add: Profit brought forward
from previous year 208.84 183.71
Add/(Less) :Adjustment (net)
on account of Amalgamation 0.00 ..
of Subsidiary w.e.f. 01st
January, 2015
Amount available for
appropriations 365.82 231.57
Appropriation made by
the Board of Directors:
- Transitional provisions for
depreciation net of deferred .. 2.84
tax
- General reserve 15.00 5.00
- Tax on Dividend paid by
Subsidiary company .. ..
Dividends on Equity shares :
- Interim-cum-Final Dividend
at Rs. 6.50 (65.00 %) per 25.02 ..
share
- Proposed dividend at Rs.
Nil (0.00 %) per share (previous .. 13.47
year Rs. 3.50 (35.00%)
- Income tax on dividends 5.06 1.42
- Leaving balance of profit
carried to balance sheet 320.74 208.84
Earnings per equity share (EPS)
- Basic & Diluted before & after
extraordinary items 40.78 12.44
Particular Consolidated
2015-16 2014-15 % of Increase
Sales turnover 5,080.03 5,121.86 -0.82%
(after deduction of
excise duty)
Other income 3.37 1.75
Profit for the year
before finance cost
,depreciation/
amortisation, tax
expenses 366.65 253.78 44.48%
-Depreciation 37.77 31.21
Finance cost 151.38 149.85
Profit before
adjustment of exceptional
items taxation 177.50 72.72 144.09%
Exceptional (43.15) 0.25
Profit before taxation
for the year 220.65 72.47 204.48%
-tax expenses 57.10 23.06
Net profit for the year
after taxation and before
minority interest 163.55 49.41 231.01%
Minority interest Profit/
loss (0.76) 0.10
Net profit after taxation
and above adjustment 162.79 49.51 228.79%
Profit brought forward
from previous year 299.40 272.72
Add/Less Adjustment
on account of Amalgamation
of Subsidiary 1st January,
2015 (7.57) ..
Amount Available for
appropriations 454.62 322.23
Transitional Provisions for
Depreciation net of deferred
tax .. 2.83
General reserve 15.00 5.00
Tax on Dividend Paid
Subsidiary Company .. 0.11
Interim cum final
Dividend at 6.50
per share 25.02 ..
Proposed dividend at
Rs.Nil 0,00% Per share
year Rs 3.50 .. 13.47
Income tax on dividends 5.06 1.42
Leaving balance of profit
carried to balance sheet 409.54 299.40
basics & Diluted before
extraordinary items 42.29 12.87
2. Dividend:
Your Company has paid an interim dividend @ Rs. 6.50 (65.00 %),
[including Special Dividend @ Re. 1.00 (10.00 %) on account of 100th
Birth Anniversary of Late Shri Dharmsinh D. Desai, Founder of the
Company ] per Equity Share for the financial year 2015-2016 on
38,496,769 Equity Shares of the face value of Rs. 10/- each, amounting
to Rs. 25.02 Crores for the financial year 2015-2016.
The members are requested to confirm the above interim dividend at the
ensuing Annual General Meeting (AGM) of the Company.
The Board of Directors do not recommend any Final Dividend for the
Financial Year 2015-16 and accordingly, the Interim Dividend @ Rs. 6.50
(65.00 %) declared and paid in March, 2016 may be treated as
Interim-cum-Final Dividend.
3. Amalgamation of Apar Lubricants Limited with the Company :
The Company''s Wholly-owned Subsidiary, Apar Lubricants Limited (ALL)
(formerly Apar ChemateK Lubricants Limited) was amalgamated with the
Company by Order of the Hon''ble High Court of Gujarat dated 23rd
October, 2015. The Scheme of Amalgamation has become effective from
10th November, 2015 with retrospective effect from 1st January, 2015,
being the Appointed Date and the said business is now carried on as
part of Company''s Oil Division.
Consequent to the Amalgamation of ALL with the Company, the entire
Authorised Share Capital of ALL viz 1,00,00,000 Equity Shares of Rs.
10/- each aggregating to Rs. 10,00,00,000/- has been added to the
Authorised Share Capital of the Company. Hence the Authorised Share
Capital of the Company now stands at Rs. 1,019,987,500/- divided into
101,998,750 Equity Shares of Rs. 10/- each.
4. Transfer to Reserves:
The Company proposes to transfer an amount of Rs. 15.00 Crores to the
General reserves. An amount of Rs. 409.54 Crore is proposed to be
retained in the Consolidated Statement of Profit and Loss.
5. Management Discussion and Analysis / Outlook :
Management Discussion and Analysis FY16 was a pivotal year for the
Indian power sector, which saw the government setting the stage for the
next round of initiatives to move the sector forward. With strong focus
on 24x7 power for all, revival of Discoms through UDAY, amendments to
the national tariff policy and strong capital expenditure in
Transmission and Distribution (transmission projects worth Rs. 1 lakh
Crores were launched in the year), India''s power sector is well poised
for take-off.
As the benefits of these measures gradually percolate down, Apar, with
70% of its revenue coming from the power sector, and a leading presence
in India''s Transmission & Distribution (T&D) sector stands to strongly
benefit. Apar is the fourth-largest transformer oil manufacturer in the
world and among the world''s top five largest conductor manufacturers.
The company is a leading player in cables, largest in cables for
Renewable sector. Apart from being a market leader in India, the
Company has a formidable global presence, exporting to over 100
countries.
The company has built a strong basket of futuristic value- added
products focussed on increasing efficiency in T&D. Already the
government has announced its emphasis on building high-quality T&D
infrastructure with a shift in favour of efficient transmission
structures. Apar''s in-house R&D initiatives and strategic tie-ups with
global firms, such as CTC Global, USA, and ENI S.p.A, Italy, have
resulted in a portfolio of new technology products like extra-high-
voltage transformer oils, high temperature conductors, Elastomeric,
E-Beam and optical fibre cables (OFC).
During the year, the Company bagged Four awards: Indian Wind Energy
Forum Excellence Award for Outstanding Achievements and Leadership in
the Wind industry; Indian Rooftop Solar Summit (IRSS) 2016 Award for
Outstanding Contribution in the Development of the Rooftop Solar
Industry; the First Few Intelligence Business Award as the Solar Cable
Company of the Year and for development of New Conductor viz High
Temperature Low Sag by Power Grid Corporation India Ltd.
The awards are in recognition to the Company''s extensive R&D efforts.
Our leadership across businesses, higher-value-added product offerings,
strong global presence, technical capabilities and continued focus on
R&D, coupled with industry opportunities like turnaround of discoms,
expected shift towards high-efficiency T&D network and increased
investment in the renewable sector & railways will lead to Pair''s
profitable growth, going forward.
The opportunities and outlook that exist for the Company are as
follows:
Global scenario
The global power sector is expected to attract investments worth $19.7
trillion from 2015 to 2040. In line with the 2°C climate change goal,
concerted efforts are being made to reduce the environmental
consequences of power generation. Renewable energy investment witnessed
a new world record in 2015 with investment of $286 billion flowing into
green energy projects and is expected to account for half of the
additional global power generation overtaking coal around 2030 to
become the largest power source.
Increasing global energy production over the past decade has led to the
rising need for expanding T&D networks globally. It has been estimated
that new T&D infrastructure would require a cumulative investment of
$1.9 trillion by 2024 to meet the growing energy demands. This includes
substations, power lines, and associated equipment and new technology.
The power transformer market is projected to reach $29.9 billion by
2020, from $20.7 billion in 2015, at a CAGR of 7.6%. The global low
voltage cable & accessories market is projected to grow to $147.3
billion at a CAGR of 7.0% from 2015 to 2020.
The year gone by saw commodity driven economies like Australia, South
Africa, other parts of Africa and the Middle East facing a cash crunch
due to fall in commodity prices. These economies have huge need for
T&D Investment, however the cash crunch has led to a curtailment or
delay of investment spending. However, keeping these factors in mind,
Apar has been strategically focussing on the domestic market in the
short to medium term.
India''s path to power
India''s power sector is expected to receive investments of about $250
billion over the next 5 years to catch up and keep pace with
electricity demand, which is increasing at 5% per annum. With renewable
energy being a thrust area, the government has set an ambitious plan to
add 175 GW of renewable energy generation capacity with addition of
100GW under Solar and 60 GW under wind energy by 2022 at total
investment of $120 billion. Transmission segment is expected to see
investment of $50 billion.
UDAY - Government''s flagship initiative to fix the weakest link in the
Indian Power Sector: The Ujwal Discom Assurance Yojna or UDAY aspires
to financially turn around distribution companies by:
a) Reducing the interest cost of discoms,
b) Improving the operational efficiencies of discoms,
c) Lowering the cost of power, and
d) Enforcing financial discipline on discoms through state finances.
Under UDAY, states will take over 75% of the outstanding debt of
discoms as on 30th September, 2015, over the next two years, and will
issue non-SLR, including state development bonds to the respective
financial institutions (FIs) holding the discom debt. The expected rate
of interest on these bonds will be 8-9% versus 13-15% on existing debt,
savings of Rs. 15,000 Crores per year for the discoms. The future
losses of the discoms will be taken over and funded by the states
progressively from 5% in FY18 to 50% by FY21. As at the end of this
fiscal year, 10 states, i.e. Jharkhand, Bihar, Uttar Pradesh, Madhya
Pradesh, Gujarat, Rajasthan, Haryana, Punjab, Jammu & Kashmir and
Uttarakhand, had signed the respective Memorandum of Understanding to
join UDAY.
Other initiatives in the T&D sector include schemes, such as Deen Dayal
Upadhyaya Gram Jyoti Yojana (Rs. 75,893 Crores) and Integrated Power
Development Scheme (Rs. 65,424 Crores), among others.
Conductors: The market for Electrical Conductors is expected to grow at
13.5% till 2018. During FY17, 7,500 MW of inter-regional transmission
capacity, along with about 19,436 circuit km (ckm) of transmission
lines and 3,934 MW HVDC terminal capacity are expected to be added, so
as to reach the targets specified in the 12th Plan. It is estimated
that during the 13th Plan period, about 62,800 circuit kilometres (ckm)
of transmission lines of 400 kV and above voltage level transmission
systems would be required.
Transformers: Transformer orders of around Rs. 13,070 Crores are
expected to materialize in FY17. To achieve the targets specified in
the 12th Plan, a total of 25,852 MVA of AC transformation capacity and
7,500 MW of HVDC systems are estimated to be added in FY17. During the
13th Plan period, ~1,28,000 MVA of transformation capacity of the 400
kV and above voltage level & 15,000 MW of HVDC terminal capacity is
planned to be added.
Cables: The market has been growing steadily and is expected to touch
Rs. 57,200 Crores by 2018. The wire and cables market in India
comprises nearly 40% of the electrical industry. The industry is
growing at a CAGR of 15% as a result of growth in the power and
infrastructure segments. Rollout of 3G and broadband on a pan-India
basis and revival of distribution companies will be important drivers
of growth.
Auto Lubes: FY16 ended on a positive note for the automobile industry,
with all the segments  cars, two-wheelers, CVs and tractors  posting
good growth in the month of March. The Society of Indian Automobile
Manufacturers (SIAM) has forecast a positive outlook for overall sales
across vehicle categories for 2016-17 motorcycle sales are forecast to
grow between 0-3% compared to decline in FY16, Passenger vehicle sales
are projected to grow between 6-8%. Industry experts expect low fuel
prices, benign interest rates and benefits from the 7th Pay Commission
to drive four-wheeler volumes. A sustainable recovery in demand linked
to the rural markets will be dependent on normal monsoons.
(a) Overall Business performance
We are happy to report Apar delivered strong performance despite a
challenging environment during the year which saw: a lack of long term
visibility in the domestic market led to volatile ordering, a credit
crunch in various commodity driven economies impacting investment in
global T&D markets, coupled with falling raw material prices, and a
volatile foreign exchange rate. The Company reported consolidated
revenue (net of excise) of Rs. 5,080 Crores in FY16 as compared to Rs.
5,121 Crores in FY15, driven by revenue growth of over 20% in Cables
and 10% in Conductors, which partially offset the decline in Specialty
Oils, which was affected by the fall in crude prices. Not only were our
volumes across all business segments at historical highs, there has
been significant improvement in our profitability across segments.
EBITDA margin increased from 5.0% to 7.2% during the year. This was
primarily led by the improvement in profitability in our Specialty Oils
and Cables business. The margin expansion has been possible because of
better cost management and a focused approach to increase contribution
of higher value-added products. The profit after tax, excluding an
exceptional gain of Rs. 43 Crores from the placement of treasury stock,
came in at Rs. 120 Crores as compared to Rs. 49 Crores in the previous
year. The Company is undergoing capacity expansion in the Conductors
and Specialty Oils segments and is at an advanced stage of planning an
expansion of its Power Cables capacity. Our overall outlook remains
positive as we expect both the domestic and export scenarios to improve
in all our business segments.
Business Segments (i) Conductors
Performance review 2015-16
(Rs, in crore)
Particulars 2015-16 2014-15 Variation (%)
Turnover 2,550 2,320 10%
Segment profit / 131 117 12%
(Loss)
Export 1,025 997 3%
The Conductors business reported revenue growth of 10%, driven by
improved market conditions in the domestic market. Exports contributed
~ 40.3% of revenue from Conductors. Volumes for the year grew by 13% to
reach 170,070 tonnes compared to 150,557 tonnes in previous year. In
the export market, the biggest positive development has been the
reduction of the cost difference between the London Metal Exchange and
the Shanghai Metal Exchange where the peak difference was as high as
$400 per tonnes. This restores a level playing field for the company
to participate in most of the export opportunities.
EBITDA per metric ton post forex adjustment for the period came in at
Rs. 7,606 compared to Rs. 7,698 in the previous year, as the orders
that were executed at the beginning of the year were booked at a time
of aggressive pricing in the domestic market. EBITDA per metric ton
post-forex adjustments for the last quarter was at Rs. 9,705 compared
to Rs. 6,717 in the first quarter of the year.
The Company has been actively growing its presence in the High
Efficiency Conductors (HEC) segment. HEC revenue grew to 6.2% of
overall Conductor revenue in FY16, from 1.1% in FY15. During the year,
we also received our biggest order of ACCC & AL59 from UPPTCL and
GETCO, respectively. In both cases, these orders are in excess of Rs.
50 Crores. We have also received an order for GAP Conductors from
GETCO. We successfully completed the First Longest transmission line
Re-Conduct ring work with ACCC Casablanca conductor for Odisha Power
Transmission Corporation ltd. Other projects Export orders have
contributed 29% of the order book. Our Conductor capacity utilization
stands at 100% for the entire year.
Demand for Conductors is expected to grow strongly, driven by
successful implementation of UDAY, which aims to reduce AT&C losses to
15% in 2018-19 from 32% in 2013-14, inducing huge investments in T&D
infrastructure.
Risks and concerns
The cyclical nature of the power business has an obvious impact on our
performance. Project delays from the customers'' side may result in
underutilization of capacity even though the order book remains robust.
There can be delay in debtor collections due to stress at the
customers'' end. Regional political instability and changes in the
external environment in certain export markets affect execution of
delivery. The volatility in Aluminium premiums has been an area of
concern, mainly with respect to exports, and is a challenge to manage
in the absence of any hedging mechanism. Efforts by various aluminium
manufacturers may result in implementation of Safeguard duty which will
increase the raw material prices and have a negative impact on fixed
price contracts in the short to medium term. Any delay in the
implementation of GST may impact the competitiveness of our new
facility at Jharsuguda.
(ii) Specialty Oil
Performance review 2015-16
(Rs, in crore)
Company Consolidated
Particular
2015-16 2014-15 Variation
(%) 2015-16 2014-15 Variation
(%)
Turnover 1,771 2,115 -16% 1,841 2,251 -18%
Segment
profit /
(Loss) 187 98 91% 195 102 91%
Export 548 640 -17% 618 751 -18%
completed in the high efficiency segment were: Varanasi to Sarnath
Substation, Chinhat-Barabanki line, Hardoi Rd- NKN line for UPPTCL and
New Pirana to Pirana Feeders (ACCC DRAKE), Pirana to Jamalpur S/S (ACCC
LISBON), Vinzol-Vastral (ACCC Lisbon) for Torrent Power and Bamnauli
Naraina DC Line for PGCIL. We are clearly seeing that the off take of
HECs is now gradually showing a rising trend on all parameters like
volume of orders, number of clients adopting these technologies,
variety of HECs being deployed, as well as repeat orders of
progressively larger sizes. The margins for these HECs are higher as
compared to conventional conductors, and are likely to improve the
profitability of the Conductor business.
The Company is setting up a Conductor plant in Jharsuguda (Orissa) of
30,000 MT capacity at an investment of Rs. 36 Crores. The plant is
strategically located, given increasing generation capacity in eastern
India, along with its proximity to smelters, for logistical benefits.
Work on the plant is in full swing and it should be commissioned on
schedule by October-17.
The segment''s order book is at Rs. 1,751 Crores as of March 31, 2016,
compared to Rs. 1,452 Crores as on March 31, 2015.
In Specialty Oils, revenue for the year came in at Rs. 1,841 Crores,
lower than last year, primarily due to falling Crude oil prices.
However, we posted 2.6% growth in aggregate volume, highest ever volume
till date led by Rubber processing oil, Auto & Industrial Lubricants
and White Oils.
EBITDA per KL after forex adjustment for the year increased
significantly to Rs. 5,407, up from Rs. 2,722 in the previous year,
which can be attributed to sale of richer product mix, disciplined
pricing, good client mix and lower raw material costs.
The Company is setting up a port-based plant at Hamriyah, Sharjah, of
100,000 KL capacity at an investment of $ 15.5 million (Rs. 100
Crores). This will add new opportunities like bulk exports and is
strategically located in terms of proximity to customers.
The Auto Lubes segment continued to grow and delivered 2.9% volume
growth to reach 23,480 KL, highest ever achieved despite demand from
the rural sector being especially low. The net sales stood at Rs. 263
Crores compared to Rs. 273 Crores in the previous year. Profitability
in the segment continues to be relatively better due to improved
product mix, clients mix, disciplined pricing and lower raw material
cost. As the Company implements its strategy of expanding distribution
network and continuous efforts towards increasing share of
higher-margin products, we are quite confident that in the coming year
we should see relatively good results for the segment.
Risks and concerns
The Company is exposed to volatility in the prices of its raw materials
and in foreign exchange rates. However, in order to mitigate its risks,
the Company continues to exercise prudence in its inventory control and
hedging strategies. Also, addition in global refining capacities has
resulted in a mismatch in demand and supply, which has an effect on
base oil prices. The prices of long-term buy contracts take time to
correct in case of fluctuations in crude prices as formula prices are
always backward looking. Debtors'' collection period can increase on
account of stressed financial condition of customers. The Company had
to implement strict credit controls to limit exposure to customers
facing cash flow issues. Rapid commoditization taking place at the
lower end especially at technical grade white oils may have an impact
on the margins. Exports markets are facing the heat as Cash strapped
commodity driven developing markets are forced to cut key investments
like Transmission & Distribution Investments.
(iii) Cables division
Performance review 2015-16
(Rs, in crore)
Particulars 2015-16 2014-15 Variation (%)
Turnover 675 560 20%
Segment profit / 28 20 40%
(Loss)
Export 101 78 29%
The Cables business delivered strong revenue growth of 20%, despite
lower metal, commodity and polymer prices. Revenue growth was driven
by growth in our Elastomeric, and Power Cables segments. These segments
grew by 68% and 24%, respectively. Copper and Aluminium processing
increased by 76 % and 29 % YOY respectively - depicting the increased
volumes. The EBITDA margins post forex adjustment has increased by 20
basis points, from 5.5% in FY15 to 5.7% in FY16.
Our focus on the Renewable Energy sector, both Wind and Solar, has been
yielding good results. Today, we are the largest supplier in the
country to the segment and are working with major companies, such as
Suzlon, Wind World, Gamesa etc. Besides, orders from Defence and
Railways, involving electron beam cables, are also likely to improve as
several projects in both these sectors are being announced. The order
book as on March 31, 2016, is up 8% to reach Rs. 199 Crores versus Rs.
184 Crores in the previous year.
The Company is also at an advanced stage of planning an expansion of
its power cables capacity as demand for power cables is expected to
increase, driven by the increased spending capability of discoms
following successful implementation of UDAY. We also expect EBITDA in
the coming year to further improve in the Cables segment as a
reflection of better product mix and higher volumes.
Risks and concerns
The excess capacity in the power cables segment impacts pricing.
Collection periods can get extended and delivery schedules delayed due
to lack of financial arrangements by key customers in the renewable
energy sector and EPC contractors. In optical fiber cables, clientele
is concentrated among a handful of telecom companies and BBNL wherein
the Capex spending have been severely impacted. The cyclical nature of
their tendering too, has a bearing on the order situation in the
industry.
(b) Operations of subsidiaries:
(i) Petroleum Specialities Pte. Ltd, Singapore (PSPL), a Wholly Owned
Subsidiary (WOS) :
During the year under review, Net sales of PSPL was US$ 7.93 Million as
against US$ 24.52 Million in the previous year and Profit after tax
stood at US$ 0.65 Million as against US$ 0.61 Million in the previous
year. Operations of its downstream subsidiaries are :
- Quantum Apar Speciality Oils Pty. Ltd., Australia (Quantum)
PSPL holds 65% equity in Quantum. It has reported Net sales of AUD 8.38
Million as against AUD 9.02 Million in the previous year and Profit
after tax of AUD 0.41 Million as against AUD 0.07 Million in the
previous year.
After the end of the Financial Year, the Directors and Shareholders of
the Company decided to cease the business, liquidate all the Assets and
payout all the liabilities and return the net proceeds to shareholders.
It is anticipated that the whole process will complete in 6 months
period. Company has appointed a Distributor for sale of Petroleum
Products and Lubricants in Australian & New Zealand markets.
- Petroleum Specialities FZE (PSF)
PSF was registered in November, 2014 as Free Zone Establishment under
an Industrial License issued by Hamriyah Free Zone Authority Government
of Sharjah, UAE for setting manufacturing facility for manufacture of a
comprehensive range of Speciality Oils and Lubricants. During the year
Share Capital of PSF increased from US$ 40825 to US$ 34,05,995. PSPL
holds 100% equity in PSF. As at the end of March, 2016 total US$ 10.02
million capital expenditure has been incurred for setting up the Plant.
The Construction of the Plant is under progress. There has been no
material change in the nature of the business of the subsidiaries. A
statement containing salient features of the financial statements of
the Company''s subsidiaries in Form AOC-1 is attached to the financial
statements of the Company.
(c) Cautionary statement
The statements made in the Management Discussion & Analysis section,
describing the Company''s goals, expectations and predictions among
others do contain some forward looking views of the management. The
actual performance of the Company is dependent on several external
factors, many of which are beyond the control of the management viz.
growth of Indian economy, continuation of industrial reforms,
fluctuations in value of Rupee in the foreign exchange market,
volatility in commodity prices, applicable laws / regulations, tax
structure, domestic / international industry scenario, movement in
international prices of raw materials and economic developments within
the country among others.
(d) Internal control systems (ICS) and their adequacy
The Company established adequate ICS in respect of all the divisions of
the Company. The ICS are aimed at promoting operational efficiencies
and achieving savings in cost and overheads in all business operations.
The System Application and Product (SAP), a world class business
process integration software solution, which was implemented by the
Company at all business units (including Cable unit) has been operating
successfully. For tightening and more effective internal control
systems and risk management, the Company continued the engagement of
M/s. KPMG India Pvt. Ltd., Chartered Accountants as Internal Auditors
of the Company. The system cum internal audit reports of the Internal
Auditors are discussed at the Audit Committee meetings and appropriate
corrective steps have been taken. Further, all business segment prepare
their annual budget, which are reviewed along with performance at
regular intervals.
(e) Development of human resources
The Company promotes an open and transparent working environment to
enhance teamwork and build business focus. The Company equally gives
importance to the development of human resource (HR). It updates its HR
policy in line with the changing HR culture in the industry as a whole.
In order to foster excellence and reward those employees who perform
well, the Company practices performance / production linked incentive
schemes and introduced Employees Stock Option Scheme as detailed in an
attachment to this report. The Company also takes adequate steps for
in-house training of employees and maintaining a safe and healthy
environment.
6. Directors and Key Managerial Personnel :
Mr. Chaitanya N. Desai, Director shall retire by rotation at the
ensuing annual general meeting of the Company and he, being eligible,
offers himself for re-appointment.
The Independent Directors hold office for a fixed term of five years.
In accordance with Section 149(7) of the Act, all Independent Directors
have given declarations that they meet the criteria of independence as
laid down under Section 149(6) of the Companies Act, 2013 and SEBI
Regulations.
Details of the proposal for re-appointment of Mr. Chaitanya N. Desai
are mentioned in the Statement pursuant to Regulation 36(3) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015
with the Stock Exchanges as annexed to the Notice of the 27th Annual
General Meeting.
The Board recommends re-appointment of Mr. Chaitanya N. Desai as a
Director of the Company.
Board Evaluation :
Pursuant to the provisions of the Companies Act, 2013 and SEBI
Regulations, the Board has carried out an annual performance evaluation
of its own performance, the directors individually as well as the
evaluation of the working of its Audit Committee, Nomination and
Compensation-cum- Remuneration Committee, Corporate Social
Responsibility (CSR) Committee and Share Transfer and Shareholders
Grievance-cum-Stakeholders Relationship Committee. 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 Nomination and
Compensation-cum-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.
Meetings :
During the year five Board Meetings and four Audit Committee Meetings
were convened and held, the details of which are given in the Corporate
Governance Report. The intervening gap between the Meetings was within
the period prescribed under the Companies Act, 2013.
7. Deposits :
Company has not accepted deposits during the year. There were no
outstanding deposits and no amount remaining unclaimed with the Company
as on 31st March, 2016.
8. 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
notes to the Financial Statements.
9. Directors'' Responsibility Statement :
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013 :
i. that in the preparation of the annual accounts for the financial
year ended March 31, 2016, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes
to the Financial Statements have been selected and applied consistently
and judgments and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31st March, 2016 and of the profit of the Company for
the financial year ended on that date.
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. that the annual accounts have been prepared on a going concern
basis.
v. that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
10. Related Party Transactions :
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially significant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a quarterly basis for the transactions which
are of a foreseen and repetitive nature. A statement giving details of
all related party transactions is placed before the Audit Committee and
the Board of Directors for their approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board has
been uploaded on the Company''s website.
None of the Directors has any pecuniary relationships or transactions
vis-Ã -vis the Company.
11. Adoption of New Articles :
The Companies Act, 2013 and The Companies (Amendment) Act, 2015 have
necessitated changes in the Articles of Association of the Company. It
is accordingly, proposed that a new set of Articles of Association be
adopted by the members and a Special Resolution to this effect is
included at Item No. 6 in the Notice of the Annual General Meeting
(AGM). The Board recommends the resolution for adoption by the Members.
12. Auditors : Statutory Auditors
In terms of Section 139 of the Companies Act, 2013 read with The
Companies (Audit and Auditors) Rules, 2014 and in terms of the Ordinary
Resolution passed by the Shareholders of the Company at the 26th Annual
General Meeting, M/s. Sharp & Tannan, the present Statutory Auditors of
the Company have been appointed to hold office from the conclusion of
the 26th AGM till the Conclusion of 31st AGM to be held in the year
2020 subject to ratification by the Members at every Annual General
Meeting. An Ordinary Resolution in this respect is included in item No.
4 of the Notice of AGM and Board recommends the said Resolution.
M/s. Sharp & Tannan, have confirmed their eligibility under Section 141
of the Companies Act, 2013 and the Rules framed there under for
re-appointment as Auditors of the Company.
The Notes on financial statement referred to in the Auditors'' Report
are self-explanatory and do not call for any further comments. The
Auditors'' Report does not contain any qualification, reservation or
adverse remark.
Cost Auditors :
Pursuant to Section 148 of the Companies Act, 2013, read with The
Companies (Cost Records and Audit) Amendment Rules, 2014, the cost
audit records maintained by the Company in respect of Conductors, Oils
and Cables Divisions of the Company are required to be audited by a
Cost Accountant. Your Directors, on the recommendation of the Audit
Committee, appointed Mr. T. M. Rathi to audit the cost accounts of the
Company for the financial year 2016-17 on a remuneration of Rs.
1,20,000/-. A Resolution seeking members'' ratification for the
appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor
is included at Item No. 5 of the Notice convening the AGM and Board
recommends the said Resolution.
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. Hemang M. Mehta
of H. M. Mehta & Associates, Company Secretary in Practice to undertake
the Secretarial Audit of the Company. The Secretarial Audit Report is
annexed herewith as "Annexure - I". The Secretarial Audit Report does
not contain any qualification, reservation or adverse remarks.
13. Other Information :
a. Green Initiative
To support the "Green Initiative" under taken by the Ministry of
Corporate Affairs (MCA), to contribute towards a greener environment,
the Company has already initiated / implemented the same from the year
2010-11. As permitted delivery of notices / documents and annual
reports etc. are being sent to the shareholders by electronic mode
wherever possible.
Further, the Company has started using recyclable steel drums in place
of wooden pallets in its Conductors Divisions in order to protect the
environment and reduce costs for the Company.
b. Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) Committee constituted by the
Board of Directors in terms of the provisions of Section 135(1) of the
Companies Act, 2013 reviews and restates the Company''s CSR policy in
order to make it more comprehensive and aligned with the activities
specified in Schedule VII of the Companies Act, 2013.
With the strong belief in the principle of Trusteeship, Apar Group
continues to serve the community through a focus on healthcare and
up liftmen of poor sections of Society, education, Food and mid-day
meal for children, Environmental sustainability and Health and Welfare
of Senior Citizens initiatives.
The Annual Report on CSR activities is annexed herewith as "Annexure -
II".
c. Attached to and forming part of this report are the following inter
alia:
i) Particulars relating to Employee Stock Option Scheme  "Annexure Â
III"
ii) Particulars of Information as per Section 197 of the Companies Act,
2013 read with Rule 5 of The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 - a Statement showing the names and
other particulars of the Employees drawing remuneration in excess of
the limits set in the Rules - "Annexure - IV (a)" and Disclosures
pertaining to remuneration and other details as required under Section
197(12) of the Act read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 - "Annexure - IV
(b)".
iii) Particulars relating to conservation of energy, technology
absorption, research & development and foreign exchange earnings and
outgo - "Annexure - V".
iv) Report on Corporate Governance and auditors'' certificate regarding
compliance of conditions of corporate governance.
v) Statement containing brief financial details of the subsidiaries in
form AOC-1 which is attached to the financial statements of the
Company.
d. Extract of Annual Return :
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as "Annexure - VI".
e. The company has not attached the Balance Sheet, Profit & Loss
Accounts and other documents of its wholly-owned foreign subsidiaries
viz. Petroleum Specialities Pte. Ltd., Singapore as well as its
subsidiaries, Quantum Apar Speciality Oils Pty. Ltd., Australia and
Petroleum Specialities FZE, Sharjah, WOS of PSPL. As per the provisions
of Section 129(3) read with Section 136 of the Companies Act, 2013, a
statement containing brief financial details of the said subsidiaries
for the year ended March 31, 2016 are included in the annual report and
shall form part of this report. The annual accounts of the said
subsidiaries and the related information will be made available to any
member of the Company seeking such information at any point of time and
are also available for inspection by any member of the Company at the
registered office of the Company.
Further, pursuant to provisions of Section 136 of the Act, the
financial statements of the Company, Consolidated Financial Statements
along with relevant documents and separate audited accounts in respect
of subsidiaries, are available on the website of the Company.
14. General :
No disclosure or reporting is required in respect of the following
items as there were no transactions on these items during the year
under review:
1. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except ESOP referred to in this
Report.
3. No Managing Director of the Company receive any remuneration or
commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
There were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
15. Acknowledgement :
Your Directors wish to place on record their sincere appreciation for
continuous cooperation, support and assistance provided by
stakeholders, financial institutions, banks, government bodies,
technical collaborators, customers, dealers and suppliers of the
Company. Your Directors also wish to place on record their appreciation
for the dedicated services rendered by the loyal employees of the
Company.
For and on behalf of the Board
Dr. N. D. Desai
Place : Mumbai Chairman
Date : May 25, 2016. DIN - 00005285
Mar 31, 2015
Dear Shareholders,
The Directors have immense pleasure in submitting the 26th Annual
Report of the Company together with the audited annual accounts showing
the financial position of the Company for the year ended 31st March,
2015. Consolidated results include the results of (a) Petroleum
Specialities Pte. Ltd., Singapore (PSPL), a Wholly-Owned Subsidiary of
the Company (WOS) (b) Apar Lubricants Limited, a WOS (c) Quantum Apar
Speciality Oils Pty. Ltd., Subsidiary of PSPL and (d) Petroleum
Specilities FZE, Sharjah, a WOS of PSPL.
1. Financial results
(Rs in crore)
Particulars Company
2014-15 2013-14
Sales turnover 5,010.97 4,481.90
(after deduction of excise duty )
Other income 8.37 4.47
Profit for the year before finance cost,
depreciation / amortisation, tax expenses
and 249.62 279.90
exceptional items
Deducting therefrom:
- Depreciation / amortisation 31.04 26.89
Finance Costs 150.09 145.81
Profit before adjustment of exceptional
items, transfer to capital assets, 68.49 107.20
taxation and minority interest
Exceptional items 0.25 0.86
Transfer to Capital Assets 0.01 3.51
Profit before taxation for the year 68.23 102.83
Deducting therefrom:
- Tax expenses 20.37 34.04
Net profit for the year after taxation and
before minority interest 47.86 68.79
Adjustment of:
- Minority Interest (profit)/loss .. ..
Net profit after taxation and above
adjustments 47.86 68.79
Add: Profit brought forward from previous
year 183.71 158.55
Amount available for appropriations 231.57 227.34
Appropriation made by the Board of
Directors:
- Transitional provisions for depreciation
net of deferred tax - 2.84
- General reserve 5.00 20.00
- Tax on Dividend paid by Subsidiary company
Dividends on Equity shares:
- Proposed dividend at Rs. 3.50 (35.00%) per
share (previous year Rs.5.25 (52.50%) 13.47 20.20
- Income tax on dividends 1.42 3.43
- Leaving balance of profit carried to
balance sheet 208.84 183.71
Earnings per equity share (EPS)
- Basic & Diluted before & after
extraordinary items 12.44 17.88
Paticular Consolidated
2014-15 2013-14
Sales turnover
(after deduction of excise duty 5,121.86 4,631.63
Other income 1.75 4.47
Profit for the year before
finance cost, depreciation /
amortisation, tax expenses
and exceptional items 253.79 305.40
Deducting therefrom:
-Depreciation / amortisation 31.21 27.02
Finance Costs 149.85 145.48
Profit before adjustment of 72.73 132.90
exceptional items, transfer to
capital assets, taxation
and minority interest
Exceptional item s 0.25 0.86
Transfer to Capital Asset 0.01 3.51
Profit before taxation for the year 72.47 128.53
Deducting therefrom:
-Tax expenses 23.06 38.62
Net profit for the year after taxation
and before minority interest
Adjustment of: 49.41 89.91
-Minority Interest (profit)/loss 0.1 -0.26
Net profit after taxation and above 49.51 89.65
adjustments
Add: Profit brought forward from previous 272.72 227.70
year
Amount available for appropriations 322.23 317.35
Appropriation made by the Board of
Directors:
-Transitional provisions for depreciation 2.83 -
net of deferred tax
-General reserve 5.00 21.00
-Tax on Dividend paid by Subsidiary 0.11 -
company
Dividends on Equity shares :
-Proposed dividend at Rs. 3.50
(35.00%) per share (previous
year Rs. 5.25 (52.50%) 13.47 20.20
-Income tax on dividends 1.42 3.43
-Leaving balance of profit
carried to balance sheet
Earnings per equity share (EPS) 299.40 272.72
-Basic & Diluted before & after 12.87 23.30
extraordinary items
2. Dividend:
Despite unforeseen circumstances in terms of sudden reduction in base
oil prices as explained in the following paras, the Board of Directors
have maintained its policy on dividend payout ratio of 25 to 30% and
recommended the dividend for FY 2014-15 on the capital of 38,496,769
Equity Shares of the face value of Rs. 10/- each fully paid @ Rs. 3.50
(35 %) per share [(previous year Rs. 5.25 (52.50 %) per share.)]
This dividend amounting to Rs. 14.89 Crores (including dividend tax) is
payable after declaration by shareholders at the ensuing Annual General
Meeting (AGM) and you are requested to declare the same.
3. Share Capital:
During the year under review, the Company has issued and allotted
26,072 Equity Shares of Rs. 10/- each at the premium of Rs.197.05 per
share to the Employees of the Company under Apar Industries Limited
Stock Option Plan - 2007 at an exercise price of Rs. 207.05 per share.
Thereafter, on 14th May, 2015, the Company has further issued and
allotted 266 Equity shares to the Employees under the said Plan.
Consequently, the Issued, Subscribed and Paid-up Equity Share Capital
of the Company have increased to Rs. 38.50 Crores divided into
38,496,769 Equity Shares of Rs. 10/- each.
4. Amalgamation of Apar Lubricants Limited with the Company :
The Company''s Wholly-owned Subsidiary, Apar Lubricants Limited (ALL)
(formerly Apar ChemateK Lubricants Limited) is in the business of
distribution and marketing of "ENI" brand, and its erstwhile AGIP
brand auto lubricants, manufactured by the Company. In order to combine
the said business with the existing Oil business of the Company, the
Board of Directors of the Company have decided to amalgamate the said
Wholly-Owned Subsidiary (WOS), ALL with the Company with effect from
the Appointed Date of 1st January, 2015 subject to the approval of the
Hon''ble High Court of Gujarat and other regulatory authorities. The
Company has made necessary application to both NSE (designated Stock
Exchange) and BSE under Clause 24(f) of the Listing Agreement for
approval of the Scheme of Amalgamation.
6. Directors and Key Managerial Personnel :
Mr. Kushal N. Desai, Director shall retire by rotation at the ensuing
annual general meeting of the Company and he, being eligible, offers
himself for re-appointment.
At the Annual General Meeting held on 1st August, 2014, the
shareholders of the Company-
a. re-appointed the existing Independent Directors, Dr.
N. K. Thingalaya and Mr. F. B. Virani as Independent
Directors of the Company under the Companies Act, 2013 each to hold
office for five consecutive years upto the conclusion of 30th Annual
General Meeting of the Company in the calendar year 2019.
b. appointed Mr. Suyash Saraogi and Mrs. Nina Kapasi as Independent
Directors under the Act for a period of five consecutive years upto the
conclusion of 30th Annual General Meeting of the Company in the
calendar year 2019.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
The Board of Directors had on the recommendation of Nomination and
Compensation-cum-Remuneration Committee re-appointed -
a. Mr. Kushal N. Desai as Managing Director and Chief Executive Officer
of the Company for a further period of three years from 1st January,
2015 to 31st December, 2017.
b. Mr. Chaitanya N. Desai as Managing Director of the Company for a
further period of three years i.e. from 1st January, 2015 to 31st
January, 2015 as Joint Managing Director and from 1st February, 2015 to
31st December, 2017 as Managing Director.
Details of the proposal for re-appointment of Mr. Kushal N. Desai and
Mr. Chaitanya N. Desai are mentioned in the Explanatory Statement under
Section 102 of the Companies Act, 2013 and Statement pursuant to Clause
49 of the Listing Agreement with the Stock Exchanges as annexed to the
Notice of the 26th Annual General Meeting.
The Board recommends re-appointments / appointments of all the above
Directors.
Pursuant to the provisions of Section 203 of the Companies Act 2013,
appointments of Mr. Kushal N. Desai, Managing Director and Chief
Executive Officer, Mr. V.C. Diwadkar, Chief Financial Officer and Mr.
Sanjaya Kunder, Company Secretary as Key Managerial Personnel (KMPs) of
the Company were formalized.
Board Evaluation :
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the directors individually as well
as the evaluation of the working of its Audit Committee, Nomination and
Compensation-cum-Remuneration Committee, Corporate Social
Responsibility (CSR) Committee and Share Transfer and Shareholders
Grievance-cum-Stakeholders Relationship Committee. 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 Nomination and
Compensation-cum-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.
Meetings :
A calendar of Meetings is prepared and circulated in advance to the
Directors.
During the year, four Board Meetings and four Audit Committee Meetings
were convened and held, the details of which are given in the Corporate
Governance Report. The intervening gap between the Meetings was within
the period prescribed under the Companies Act, 2013.
7. Deposits :
In view of the new Companies Act, 2013, the Company has decided not to
accept any further deposits and repaid all the deposits prematurely.
There were no outstanding deposits and no amount remaining unclaimed
with the Company as on 31st March, 2015.
8. 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
notes to the Financial Statements.
9. Directors'' Responsibility Statement :
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013:
i. that in the preparation of the annual accounts for the financial
year ended March 31, 2015, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii. that such accounting policies as mentioned in Note 1 of the Notes
to the Financial Statements have been selected and applied consistently
and judgments and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31st March, 2015 and of the profit of the Company for
the financial year ended on that date.
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013, 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. that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
10. Related Party Transactions :
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially significant related party
transactions made by the Company
with Promoters, Directors, Key Managerial Personnel or other designated
persons which may have a potential conflict with the interest of the
Company at large.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a quarterly basis for the transactions which
are of a foreseen and repetitive nature. A statement giving details of
all related party transactions is placed before the Audit Committee and
the Board of Directors for their approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company''s website.
None of the Directors has any pecuniary relationships or transactions
vis-a-vis the Company.
11. Auditors :
Statutory Auditors
In terms of Section 139 of the Companies Act, 2013, the first term of
appointment of M/s. Sharp & Tannan, the Statutory Auditors of the
Company shall expire on the conclusion of ensuing 26th AGM. In terms of
the said Section read with The Companies (Audit and Auditors] Rules,
2014, they can be appointed for another term of 5 years subject to
ratification by the Members at every Annual General Meeting.
M/s. Sharp & Tannan, have confirmed their eligibility under Section 141
of the Companies Act, 2013 and the Rules framed thereunder for
re-appointment as Auditors of the Company.
The Audit Committee at its meeting held on 14th May, 2015 has
recommended their appointment as Statutory Auditors of the Company for
the 2nd term of 5 years to end on conclusion of 31st Annual General
Meeting to be held in the year 2020. You are requested to approve their
appointment.
Cost Auditors :
Pursuant to Section 148 of the Companies Act, 2013, read with The
Companies (Cost Records and Audit] Amendment Rules, 2014, the cost
audit records maintained by the Company in respect of Conductors, Oils
and Cables Divisions of the Company are required to be audited by a
Cost Accountant. Your Directors, on the recommendation of the Audit
Committee, appointed Mr. T.M.Rathi to audit the cost accounts of the
Company for the financial year 2015 on a remuneration of Rs.
1,20,000/-. A Resolution seeking members'' ratification for the
appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor
is included at Item No. 7 of the Notice convening the Annual General
Meeting.
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. Hemang M. Mehta
of H. M. Mehta & Associates, Company Secretary in Practice to undertake
the Secretarial Audit of the Company. The Secretarial Audit Report is
annexed herewith as "Annexure I".
12. Other Information : a. Green Initiative
To support the "Green Initiative" taken by the Ministry of Corporate
Affairs (MCA], to contribute towards
a greener environment, the Company has already initiated / implemented
the same from the year 2010- 11. As permitted by Circular Nos. 17/2011
dated April 21, 2011 and 18/2011 dated April 29, 2011 issued by the
MCA, delivery of notices / documents and annual reports etc. are being
sent to the shareholders by electronic mode wherever possible.
Further, the Company has started using recyclable steel drums in place
of wooden pallets in its Conductors Divisions in order to protect the
environment and reduce costs for the Company.
b. Corporate Social Responsibility (CSR)
The Board of Directors constituted a Corporate Social Responsibility
(CSR] Committee in terms of the provisions of Section 135(1] of the
Companies Act, 2013 on 30th May, 2014. This CSR Committee reviews and
restates the Company''s CSR policy in order to make it more
comprehensive and aligned with the activities specified in Schedule VII
of the Companies Act, 2013.
With the strong belief in the principle of Trusteeship, Apar Group
continues to serve the community through a focus on healthcare,
education, Food and mid-day meal for children, Environmental
sustainability and Health and Welfare of Senior Citizens initiatives.
The Annual Report on CSR activities is annexed herewith as "Annexure
- II".
c. Attached to and forming part of this report are the following inter
alia:
i] Particulars relating to Employee Stock Option Scheme
- "Annexure - III"
ii] Particulars of Information as per Section 197 of the
Companies Act, 2013 read with Rule 5 of the Companies (Appointment and
Remuneration of Managerial
Personnel] Rules, 2014 - a Statement showing the names and other
particulars of the Employees drawing remuneration in excess of the
limits set in the Rules
- "Annexure - IV (a)" and Disclosures pertaining to
remuneration and other details as required under Section 197(12] of the
Act read with Rule 5(1] of the Companies (Appointment and Remuneration
of Managerial
Personnel] Rules, 2014 - "Annexure - IV(b)".
iii] Particulars relating to conservation of energy, technology
absorption, research & development and foreign exchange earnings and
outgo - "Annexure - V".
iv] Report on Corporate Governance and auditors'' certificate regarding
compliance of conditions of corporate governance.
v] Statement containing brief financial details of the subsidiaries.
d. Extract of Annual Return :
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as "Annexure - VI".
e. The Company has not attached the Balance Sheet, Profit & Loss
Accounts and other documents of its
wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte.
Ltd., Singapore as well as its subsidiaries, Quantum Apar Speciality
Oils Pty. Ltd., Australia and Petroleum Specialities FZE, Sharjah, WOS
of PSPL and Apar Lubricants Limited, a WOS of the Company. As per the
provisions of Section 129(3) read with Section 136 of the Companies
Act, 2013, a statement containing brief financial details of the said
subsidiaries for the year ended March 31, 2015 are included in the
annual report and shall form part of this report. The annual accounts
of the said subsidiaries and the related information will be made
available to any member of the Company seeking such information at any
point of time and are also available for inspection by any member of
the Company at the registered office of the Company.
13. General :
No disclosure or reporting is required in respect of the following
items as there were no transactions on these items during the year
under review:
1. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except ESOP referred to in this
Report.
3. No Managing Director of the Company receive any remuneration or
commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
There were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
14. Acknowledgement :
Your Directors wish to place on record their sincere appreciation for
continuous cooperation, support and assistance provided by
stakeholders, financial institutions, banks, government bodies,
technical collaborators, customers, dealers and suppliers of the
Company. Your Directors also wish to place on record their appreciation
for the dedicated services rendered by the loyal employees of the
Company.
Mar 31, 2013
To The Shareholders,
The Directors have immense pleasure in submitting the 24th Annual
Report of the Company together with the Audited Annual Accounts showing
the financial position of the Company for the year ended 31st March,
2013.
1. Financial results
Standalone results for the year 2012-13 include effect of amalgamation
of Marine Cables & Wires Private Limited (MCWPL) with the Company from
1st April, 2012 being the transfer date as detailed in para 2(a) of
this report. However, the same for the year 2011-12 are without such
inclusion and therefore not comparable.
Consolidated results include the results of (a) Petroleum Specialities
Pte. Ltd, Singapore (PSPL), a wholly-owned subsidiary (WOS) of the
Company (b) Apar ChemateK Lubricants Ltd., a subsidiary company and (c)
Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL.
Rs. in Crore
Company Consolidated
Particulars Increase
over Increase
over
2012-13 2011-12 2012-13 2011-12
previous
year previous
year
Sales turnover
(after deduction
of excise duty ) 4,532.19 3,453.26 31.2% 4,650.69 3,594.89 29.4%
Other income 7.70 0.54 2.25 0.54
Profit for the
year before
finance cost,
depreciation / 303.09 196.94 53.9% 313.50 216.00 45.1%
amortisation,
tax expenses and
exceptional items
Deducting there from:
- Depreciation /
amortisation 23.86 21.28 24.01 21.77
Finance Cost 134.31 114.13 134.57 115.52
PROFIT BEFORE
ADJUSTMENT OF
EXCEPTIONAL 144.92 61.53 154.92 78.71
ITEMS, TAXATION
AND MINORITY
INTEREST
Exceptional items 4.62 1.96 4.62 1.96
PROFIT BEFORE
TAXATION FOR
THE YEAR 140.30 59.57 135.5% 150.30 76.75
95.8%
Deducting there
from:
- Tax expenses 38.14 0.25 40.17 2.65
Net profit for
the year after
taxation and
before 102.16 59.32 72.2% 110.13 74.10 48.6%
minority interest
Adjustment of:
- Minority
Interest (profit)/
loss (0.68) (1.06)
NET PROFIT AFTER
TAXATION AND
ABOVE 102.16 59.32 109.45 73.04
ADJUSTMENTS
Add: Profit
brought forward
from previous year 104.12 173.54 160.14 155.08
(Less) : Loss of
Amalgamating
Subsidiary (5.76) (101.95) 0.08 (41.19)
Amount available
for appropriations 200.52 130.91 269.67 186.93
Appropriation made
by the Board of
Directors:
- General reserve (18.34) (8.90) (18.34) (8.90)
Dividends on Equity
Shares :
- Proposed final
dividend at Rs. 5.25
(52.50%) per (20.20) (15.39) (20.20) (15.39)
share (previous
year Rs. 4.00 (40%)
- Income tax on
dividends (3.43) (2.50) (3.43) (2.50)
- Leaving balance of
profit carried to
balance sheet 158.55 104.12 227.70 160.14
Earnings per
Equity Share (EPS)
- Basic & Diluted
before & after
extraordinary items 26.56 15.55 28.45 19.15
2. a) Rehabilitation Scheme of Marine Cables & Wires Private Limited, a
wholly-owned subsidiary company (MCWPL) through amalgamation with the
Company:
The Hon''ble Board for Industrial and Financial Reconstruction (BIFR) at
its hearing on May 16, 2013 sanctioned the Rehabilitation Scheme of
Marine Cables & Wires Private Limited (MCWPL) envisaging its''
amalgamation with the Company from transfer date 1st April, 2012. After
the amalgamation, MCWPL''s business is carried on in the name and style
as ''Apar Industries Limited (Unit: Uniflex Cables- Plant 2)''.
b) Discharge of erstwhile Uniflex Cables Ltd. from purview of SICA:
Upon implementation of the Rehabilitation Scheme of erstwhile Uniflex
Cables Ltd., the then subsidiary company, Hon''ble BIFR vide its Order
dated January 8, 2013 have discharged the UCL from the purview of Sick
Industrial Companies (Special Provisions) Act, 1985 (SICA);
c) Enhancement in shareholding in Apar ChemateK Lubricants Limited
(ACLL):
During the year under consideration, Company purchased 47.5% Equity
Shares of ACLL from joint venture partner, Chematek SpA and
consequently, ACLL has become a subsidiary of the Company.
3. Dividend:
Considering the financial results achieved during the year under review
as compared to the previous year, the Board of Directors has
recommended the dividend for financial year 2012-13 on the capital of
38,470,431 Equity Shares of the face value of Rs. 10/- each fully-paid
@ Rs. 5.25 ( 52.50 %) per share [(previous year Rs. 4.00 (40%) per
share)].
This dividend amounting Rs. 20.20 crore is payable after declaration by
shareholders at the ensuing Annual General Meeting (AGM) and you are
requested to declare the same.
4. Directors
Dr. N. K. Thingalaya and Mr. F. B. Virani, Directors shall retire by
rotation at the ensuing annual general meeting of the Company and they,
being eligible, offer themselves for reappointment. The Board
recommends the reappointment of these Directors.
6. Directors'' responsibility statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with regard to directors'' responsibility statement, it is
hereby confirmed that -
i. In the preparation of the annual accounts for the financial year
ended March 31, 2013, the applicable accounting standards were followed
along with proper explanation relating to material departures, if any.
ii. Appropriate accounting policies were selected and applied
consistently and judgments and estimates were made that were 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 of
the Company for the financial year under review.
iii. Proper and sufficient care was taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. The annual accounts were prepared on a ''going concern'' basis.
7. Audit
M/s. Sharp & Tannan, Chartered Accountants, Mumbai, Statutory Auditors
of the Company shall be retiring at the ensuing Annual General Meeting,
and they being eligible, offer themselves for reappointment. The Audit
Committee of Directors at its meeting held on 31st May, 2013
recommended re-appointment of M/s. Sharp & Tannan as Statutory Auditors
of the Company for the financial year 2013-14.
8. Other information
a. Green Initiative
To support the ''Green Initiative'' taken by the Ministry of
Corporate Affairs (MCA), to contribute towards a greener environment,
the Company has already initiated /implemented the same from the year
2010-11. As permitted by Circular Nos. 17/2011 dated April 21, 2011 and
18/2011 dated April 29, 2011 issued by the MCA, delivery of
notices/documents and annual reports etc. are being sent to the
shareholders by electronic mode wherever possible.
Further, the Company has started using recyclable steel drums in place
of wooden pallets in its conductors division in order to protect the
environment and reduce costs for the Company.
b. Corporate Social Responsibility (CSR)
With the strong belief in the principle of trusteeship, Apar Group
continues to serve the community through a focus on education,
healthcare and mid-day meal initiatives. During the year, the Company
has contributed to the Dharmsinh Desai Foundation/Dharmsinh Desai
University for its project for establishment of the Faculty of Medical
Sciences leading to MBBS (Project). Apar Group has been an active
participant in the free mid-day meal programmes across rural villages
and schools in the Mumbai hinterland, feeding over 600,000 children a
day and providing medical aid, clothing, books and education.
c. Attached to and forming part of this report are the following:
i) Particulars relating to Employee Stock Option Scheme.
ii) Particulars of Information as per Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975.
iii) Particulars relating to conservation of energy, technology
absorption, research & development and foreign exchange earnings and
outgo.
iv) Report on Corporate Governance and auditors'' certificate regarding
compliance of conditions of corporate governance. The Ministry of
Corporate Affairs has issued ''Corporate Governance Voluntary
Guidelines'' in December 2009. While these guidelines are recommendatory
in nature, the Company is in the process of adopting these guidelines
gradually.
v) Statement containing brief financial details of the subsidiaries.
d. In accordance with the General Circular dated February
8, 2011 issued by Ministry of Corporate Affairs, granting exemption
under Section 212(8) of the Companies Act, 1956, the Company has not
attached the Balance Sheet, Profit & Loss Accounts and other documents
of its wholly-owned foreign subsidiaries viz. Petroleum Specialities
Pte. Ltd., Singapore as well as its subsidiary Quantum Apar Speciality
Oils Pty. Ltd., Australia, and Apar ChemateK Lubricants Limited,
subsidiary of the Company. As per the terms of Circular, a statement
containing brief financial details of the said subsidiaries for the
year ended March 31, 2013 are included in the annual report and shall
form part of this report. The annual accounts of the said subsidiaries
and the related information will be made available to any member of the
Company seeking such information at any point of time and are also
available for inspection by any member of the Company at the registered
office of the Company.
e. As on March 31, 2013, there was no fixed deposit remained unclaimed.
9. Acknowledgement
Your Directors wish to place on record their sincere appreciation for
continuous cooperation, support and assistance provided by
stakeholders, financial institutions, banks, government bodies,
technical collaborators, customers, dealers and suppliers of the
Company. Your Directors also wish to place on record their appreciation
for the dedicated services rendered by the loyal employees of the
Company.
For and on behalf of the Board
Place: Mumbai Dr. N. D. Desai
Date: May 31, 2013 Chairman
Mar 31, 2011
The Shareholders,
The Directors have pleasure in submitting the 22nd Annual Report of
the Company together with the audited annual accounts showing the
financial position of the Company for the year ended 31st March, 2011.
1. A) Financial results (rs. in million)
Particulars Company Consolidated *
2010-11 2009-10 2010-11 2009-10
Sales turnover (after deduction
of excise duty) 27,184.69 19,980.54 30,283.00 22,355.45
Other income 70.51 166.39 61.86 160.00
Profit for the year before
interest, depreciation /
amortisation,taxation and
exceptional items 1,701.65 1,385.11 1,878.25 1,532.76
Deducting there from:
- Depreciation / amortisation 137.09 118.79 205.16 185.13
- Interest -32.06 195.60 134.65 331.99
PROFIT BEFORE ADJUSTMENT OF
EXCEPTIONAL ITEMS, TAXATION,
AND MINORITY INTEREST 1,596.62 1,070.72 1,538.44 1,015.64
Exceptional items 1.97 22.61 - 11.56
PROFIT BEFORE TAXATION FOR THE
YEAR 1,594.65 1,048.11 1,538.44 1,004.08
Deducting there from:
- Provision for taxation 536.12 186.74 578.03 223.86
Net profit for the year after
taxation and before minority
interest 1,058.53 861.37 960.41 780.22
Adjustment of :
- Minority interest (profit)/loss - - (7.15) 67.21
NET PROFIT AFTER TAXATION AND ABOVE
ADJUSTMENTS 1,058.53 861.37 953.26 847.43
Extraordinary items - impairment
loss on investments # - 555.54 - 603.08
Balance profit 1,058.53 305.83 953.26 244.35
Add: Balance of profit brought
forward from the previous year 1,027.96 998.17 948.63 980.32
Amount available for
appropriations 2,086.49 1,304.00 1,901.89 1,224.67
Appropriations made by the
Board of Directors
- General reserve 110.00 87.50 110.00 87.50
Dividends on equity shares
- Interim dividend at Rs 2.50
(25%) per share 80.84 - 80.84
- Income tax on Interim dividends 13.43 - 13.43
- Proposed dividend at Rs. 3.50
(35%) per share 125.90 161.68 125.90 161.68
- Income tax on dividends 20.91 26.86 20.91 26.86
Leaving balance of profit carried
to balance sheet 1,735.41 1,027.96 1,550.81 948.63
Earnings per equity share (EPS)
- Basic and diluted before
extraordinary items 32.74 26.64 29.48 26.21
- Basic and diluted after
extraordinary items 32.74 9.46 29.48 7.56
* Consolidated results include the results of -
a) Petroleum Specialities Pte. Ltd, Singapore (PSPL) and ## Poweroil
Speciality Products FZE, Sharjah, wholly-owned subsidiaries (WOS) of
the Company;
b) Uniflex Cables Ltd (UCL), a subsidiary company
c) Apar ChemateK Lubricants Ltd., a joint venture company
d) Marine Cables & Wires Private Limited (MCWPL), WOS of UCL and
e) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL
# Non-cash loss on impairment of equity investment in UCL & MCWPL
##Since Closed.
1. B) Financial positions of the Company after considering the effect
of draft scheme of the amalgamation (DRS) of UCL with the Company are
as under. DRS has been submitted to BIFR for it's final approval.
(refer para 3(c)) (Rs. in million)
Particulars Standalone Consolidated
(as at 31st March, 2011) (as at 31st March, 2011)
Pre-amalgamation Post-amalg
amation Pre-amalga
mation Post-amalga
mation
Sales (net of
excise duty) 27,184.69 29,206.24 30,283.00 30,283.00
Profit before tax 1,594.65 1,311.83 1,538.44 1,538.44
Profit after tax 1,058.53 1,174.23 953.26 1,351.78
Earnings per share 32.74 33.71 29.48 38.81
Share Capital 323.36 348.34 323.36 348.34
Reserve and Surplus 3,423.93 3,468.47 3,190.85 3,589.37
2. Dividend:
a. Your Company has paid an interim dividend @ Rs. 2.50 (25%) per
share on 32,336,031 Equity Shares of the face value of Rs. 10/- each,
amounting to Rs. 80.84 Million for the financial year 2010-2011.
The members are requested to confirm the above interim dividend at the
ensuing Annual General Meeting (AGM) of the Company.
b. Final Dividend:
Considering the improved financial results achieved during the year
under review as compared to the previous year, the Board of Directors
has recommended the final dividend for financial year 2010-11 on
35,972,394 Equity Shares of the face value of Rs.10/-each fully paid @
Rs. 3.50 (35 %) per share.
Total dividend for the financial year 2010-11 including interim
dividend already paid aggregating to Rs 6.00 (60%) per equity share.
This final dividend amounting to Rs. 125.90 Million is payable after
declaration by shareholders at the ensuing Annua General Meeting (AGM)
and you are requested to declare the same.
4. Issue of Further Shares
During the year under review, the Board of Directors at its meeting
held on 30th March, 2011, approved the issue of 3,636,363 Equity Shares
of Rs. 10/- each at a Premium of Rs. 210/- per share to Templeton
Strategic Emerging Markets Fund III, L.D.C., Cayman Islands
(Templeton), a Foreign investor, on Preferential Allotment basis and
Shareholders of the Company at their Extra-Ordinary General Meeting
(EGM) held on 29th April, 2011 approved the above issue in terms of
provisions of Section 81(1A) of the Companies Act, 1956 by passing a
Special Resolution to that effect.
The Committee of Board of Directors at its meeting held on 4th May,
2011, upon receipt of the full subscription amount approved the
allotment of the said 3,636,363 Equity Shares of Rs. 10/- each at a
Premium of Rs. 210/- per share to Templeton and consequently Issued,
Subscribed and Paid-up Equity Share Capital of the Company have
increased to Rs. 359,723,940/- divided into 35,972,394 Equity Shares of
Rs. 10/- each fully paid.
5. Directors
a) Mr. Rajesh Sehgal was appointed as an Additional Director of the
Company w.e.f. June 27, 2011. He has been nominated as a Director in
the capacity of an Investor Director by Templeton, in terms of the
provisions of the Subscription and Investor Rights Agreement entered
into between the Company and Templeton, the allottee of 3,636,363
Equity Shares of Rs. 10/- each. In pursuance of the provisions of
Section 260 of the Companies Act, 1956, Mr. Sehgal will hold office as
director upto the date of ensuing Annual General Meeting. The Company
has received a Notice under Section 257 of the Companies Act, 1956,
proposing his candidature as Director, not liable to retire by
rotation. The Board recommends his appointment.
b) Mr. F. B. Virani and Mr. Kushal N. Desai, Directors shal retire by
rotation at the ensuing annual general meeting of the Company and they,
being eligible, offer themselves for reappointment. The Board
recommends the re-appointment of these Directors.
6. Directors' responsibility statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with regard to directors' responsibility statement, it is
hereby confirmed that-
i. In the preparation of the annual accounts for the financia year
ended March 31, 2011, the applicable accounting standards were followed
along with proper explanation relating to material departures, if any.
ii. Appropriate accounting policies were selected and applied
consistently and judgments and estimates were made that were 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 of
the Company for the financial year under review.
iii. Proper and sufficient care was taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. The annual accounts were prepared on a going concern basis.
7. Audit
The qualification in paragraph 2(f) of attached Auditors' Report are
self-explanatory and do not call for any further comments or
explanations. In this regard, attention is also invited to paragraph 3
(a) (ii) of this Report.
M/s. Sharp & Tannan, Chartered Accountants, Mumbai, Statutory Auditors
of the Company shall be retiring at the ensuing Annual General Meeting,
and they being eligible, offer themselves for reappointment. The Audit
Committee of Directors at its meeting held on 27th May, 2011
recommended reappointment of M/s. Sharp & Tannan as Statutory Auditors
of the Company for the financial year 2011-12.
8. Other information
a. Attached to and forming part of this report are the following:
i) Particulars relating to Employee Stock Option Scheme.
ii) Particulars of Information as per Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975
iii) Particulars relating to conservation of energy, technology
absorption, research & development and foreign exchange earnings and
outgo.
iv) Report on Corporate Governance and auditors' certificate regarding
compliance of conditions of corporate governance. The Ministry of
Corporate Affairs has issued "Corporate Governance Voluntary
Guidelines" in December 2009. While these guidelines are recommendatory
in nature, the Company is in the process of adopting these guideline
gradually.
v) Statement containing brief financial details of the subsidiaries.
b. Ministry of Corporate Affairs vide its letter dated February 14,
2011 has informed the Company that vide its Genera Circular dated
February 8, 2011, Companies have been granted exemption under Section
212 (8) of the Companies Act, 1956. In accordance with Circular, the
Company has not attached the Balance Sheet, Profit & Loss Accounts and
other documents of its wholly-owned foreign subsidiaries viz.
Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiary
Quantum Apar Speciality Oils Pty. Ltd., Australia and
Poweroil Speciality Products FZE, Sharjah, Uniflex Cables Limited
(UCL), subsidiary of the Company and Marine Cables & Wires Private
Limited, wholly-owned subsidiary of UCL. As per the terms of circular,
a statement containing brief financial details of the said subsidiaries
for the year ended March 31, 2011 are included in the annual report and
shall form part of this report. The annual accounts of the said
subsidiaries and the related information will be made available to any
member of the Company seeking such information at any point of time and
are also available for inspection by any member of the Company at the
registered office of the Company.
c. As on March 31, 2011 the aggregate fixed deposits of Rs. 0.059
million were due for repayment but remained unclaimed. Letters have
been sent to such depositor to claim the amounts due to them.
9. Acknowledgement
Your Directors wish to place on record their sincere appreciation for
continuous cooperation, support and assistance provided by
stakeholders, financial institutions, banks, government bodies,
technical collaborators, customers, dealers and suppliers of the
Company. Your Directors also wish to place on record their appreciation
for the dedicated services rendered by the loyal employees of the
Company.
For and on behalf of the Board
Place: Mumbai Dr. N. D. Desai
Date: 27th June, 2011 Chairman
Mar 31, 2010
The Directors have pleasure in submitting the 21st Annual Report of
the Company together with the audited annual accounts showing the
financial position of the Company for the year ended March 31, 2010.
1. Financial results Rs. in millions
Particulars Company Consolidated*
2009-10 2008-09 2009-10 2008-69
Sales turnover 19,980.54 24,634.13 22,355.45 26,370.60
(after deduction of excise
duty amount of)
Other income 166.39 63.23 60.00 62.26
Profit for the year before
interest, depreciation/
amortisation, taxation and
exceptional items 1,385.11 524.03 1,532.76 565.02
Deducting there from:
- Depreciation / amortization 118.79 109.93 185.13 147.15
-Interest 195.60 312.49 331.99 412.50
PROFIT BEFORE ADJUSTMENT OF
EXCEPTIONAL ITEMS, TAXATION,
SHARE OF ASSOCIATES NET LOSS
AND MINORITY INTEREST 1,070.72 101.61 1,015.64 5.37
Exceptional items 22.61 17.40 11.56 17.40
PROFIT BEFORE TAXATION FOR THE
YEAR 1,048.11 84.21 1,004.08 (12.03)
Deducting there from:
- Provision for taxation 186.74 31.14 223.86 23.41
Net profit for the year after
taxation and before share of
associatesnet loss and
minority interest 861.37 53.07 780.22 (35.44)
Adjustment of:
-loss of associate concern
(prior to it becoming
subsidiary) 0.00 0.00 0.00 57.89
-Minority interest in
subsidiary/joint venture
(profit)/loss 67.21 40.11
NET PROFIT AFTER TAXATION AND
ABOVE ADJUSTMENTS. 861.37 53.07 847.43 (53.22)
Extraordinary items
- impairment loss on
investments # 555.54 0.00 603.08 0.00
Balance profit 305.83 53.07 244.35 (53.22)
Add: Balance of profit brought
forward from the previous year 998.17 945.10 980.32 1,033.54
Amount available for
appropriations 1,304.00 998.17 1,224.67 980.32
Appropriations made by the
Board of Directors:
- General reserve 87.50 - 87.50 -
- Dividends on equity shares:
- Proposed dividend at Rs. 5
(50%) per share 161.68 - 161.68 -
- Income tax on dividends 26.86 - 26.86 -
- Leaving balance of profit
carried to balance sheet 1,027.96 998.17 948.63 980.32
Earnings per equity share
(EPS)
- Basic and diluted before
extraordinary items 26.64 1.64 26.21 (1.65)
- Basic and diluted after
extraordinary items 9.46 1.64 7.56 (1.65)
* Consolidated results include the results of-
(a) Petroleum Specialities Pte. Ltd, Singapore (PSPL) and Poweroil
Speciality Products FZE, Sharjah, wholly-owned subsidiaries (WOS) of
the Company:
(b) Uniflex Cables Ltd (UCL), a subsidiary company
(c) Apar ChemateK Lubricants Ltd., a joint venture company
(d) Marine Cables & Wires Private Limited, WOS of UCL (MCWPL) and
(e) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL
# Non-cash loss on impairment of equity investment in UCL & MCWPL (see
para 3 (c) of this Report).
2. Dividend
The Board of Directors recommended final dividend for 2009-10 on
32,336,031 equity shares at Rs. 5 (50%) per share.
This final dividend is payable after declaration by shareholders at the
ensuing Annual General Meeting (AGM) and you are requested to declare
the same.
3, Management discussion and analysis/ outlook
(a) Industry structure, development, opportunities, threats, outlook
and risk and concerns
The Indian power sector continues to see substantial investment in the
generation, transmission and distribution segments. The power
generation should increase by about 50 KMW in the Eleventh Five Year
Plan compared to 52.3 KMW in past 1 5 years. As a consequence, there
will be a significant spending on the Transmission and Distribution
(T&D) segment to transmit and distribute the power. The Twelfth Five
Year Plan is expected to add about 100,000 MW additionally. Given that
the additions in the Eleventh Plan is back ended, there is an
expectation that T&D investment will accelerate over the next 5-7
years.
The Company has two business segments, each of which continued to
maintain significant market share positions. The Company is deriving
about 75% of its revenue from power sector on the basis of use by the
end customer. Margins from the manufacturing activities during 2009-10
were substantially improved to Rs. 1,385.11 million from Rs. 524.03
million in the previous year. The segment-wise operations were as
under:
(i) Transformer oil and speciality oils segment
This division contributed 51 % of the Companys revenue. Details of
production, sales revenue and segment profit (standalone basis) are:
2009-10 2008-09 Variation
Turnover
KL #2,47,689 #1,99,648 (+) 48,041
Rs/million 10,251.51 10,804.33 *(-) 552.82
Segment profit-
Rs/million 879.54 (377.73) (+) 1,257.27
# Includes conversion by the Company on customers account. *Due to
reduced sale price in line with reduced cost of base oils (an
international phenomena).
After the business suffered very badly in Q3FY09 and Q4FY09 (a
world-wide phenomena), there was a very strong turnaround both in terms
of volume and margins during the financial year 2009-10. This is
attributed to growth in sales of transformer oil, white oils and
industrial oil sub-segments, both in the domestic and exports markets.
The sales mix of transformer oils improved on account of more sales to
higher rating power transformers and special requirements.
The Company expects continued growth of at least 15% in the transformer
oil segment for the next 3-4 years based on indications of the ongoing
expansions in the power sector in India. More specifically, the growth
in the EHV segment as the transmission networks being built are
expected to increase the demand, where the Company has a clear
leadership position with approvals from major transformer OEMs and
utilities like Power Grid Corporation of India Ltd. (PGCIL).
The Company has also established itself as the largest marketer in
India of new generation eco-friendly non-labelled rubber process oils
for the tire sector that meets the new European and Japanese standards.
The net sales turnover of the "Agip" brand automotive lubricants
produced by the Company with license and technical know-how of
ENI-S.p.A of Italy and marketed by Apar ChemateK Lubricants Ltd.,
(50:50 joint venture company with ChemateK SpA) (ACL) increased
substantially by 31.1%. ACL earned a profit of Rs. 49.98 million
during the FY 2009-10 as against loss of Rs. 41.54 million in the
previous year.
Risk and concerns
The Company imports over 90% of its base oils. There has been
continuous volatility in base oil prices and in foreign exchange rates.
To protect itself, the Company has been quoting prices only on a
monthly basis or using the IEEMA price - variation formula for long
term deals. It has also been following a hedging strategy to cover
foreign exchange exposure as soon as sales prices are fixed, thereby
converting $ payables to Rs. for pricing of products. There is a cost
for taking forward covers which the Company needs to absorb. However,
given the current volatility, it is a prudent strategy to follow.
(ii) Conductor division
Sales revenue in FY10 was down by 28.9% from Rs. 13,860.16 million to
Rs. 9,858.18 million on account of reduction in volume by 16.3% from
89,71 5 MT to 75,075 MT.
Segment level profit for the year was down by 38.4% from Rs. 975.98
million to Rs. 601.02 million.
There were several factors that resulted in the above lower
performances.
- Second half FY10 had lower order execution as there were
delays/re-schedulement of several orders that had been booked. Some of
this is attributable to delayed financial closures (from FY09 crisis
post September 2008) or project delays due to customer having right of
way issues. However, the postponement of these orders execution will
result in a substantially higher volume in FY11.
- There were delays in both tenders and awarding contracts from power
grid which resulted in these getting shifted into FY11.
- After the 2008 financial crisis, the demand for conductors was
affected in the short term. It resulted in a very competitive
environment, where the Company was out- priced in bidding for some
contracts.
- However, the order book as of April 1, for FY11 is Rs. 10,832.4
million in confirmed orders and Rs. 2,865 million in the pipeline. We
expect total volume to grow by about 30% in FY11 over FY10 with a
corresponding increase in profitability for this segment.
Approximately, 75% of these orders (confirmed and pipeline) will be
executed in FY11.
The Company followed a conservative hedging strategy both on foreign
exchange and metal front. All fixed price contracts were hedged on a
back to back basis. The mark to market losses (MTM) on such contracts
as of March 31, 2010 in accordance with announcement dated March 28,
2008, issued by the Institute of Chartered Accountants of India,
amounting to Rs. 400.03 million have not been provided in the accounts,
as it is notional in nature and said loss would get extinguished on
execution of firm sale price orders corresponding to these commodity
contracts. The MTM loss is largely due to a single large export order
which has delivery schedule that runs through
the end of calendar year 2011.
Risk and concerns
There is continued volatility in the commodity markets. Even though,
the Company hedges the metal on LME, there can be mark to market losses
until completion of the Contract. There is also substantial volatility
in the foreign exchange market which can lead to changes in the value
addition, that the company has targeted.
(b) Qualified institutional / private placement
In order to meet the funds requirement and to strengthen the financial
position and capital base of the Company by augmenting its long-term
resources, the Company would need access to external funds at different
points of time in the future. It is proposed to seek an enabling
resolution of the members at the ensuing Annual General Meeting (AGM)
and for the purpose, appropriate resolutions with explanatory statement
are incorporated in the notice of AGM. The Board of Directors
recommends the resolutions.
(c) Operations of subsidiaries Uniflex Cables Ltd. (UCL) and its
wholly-owned subsidiary, Marine Cables & Wires Private Limited (MCWPL)
The Company got involved in day to day management of UCL, since
September 2008 and thereafter, it has taken several steps in the area
of productivity improvement, debottlenecking of manufacturing facility,
expansion of production lines and markets and strengthening of
managerial resources. This resulted in UCL being prepared for facing
long term challenges and steps taken during the year for improvement of
operations were reflected in its increased net sales during the last
four month period (December 2009 to March 2010) of Rs. 876.1 million as
against total net sales of Rs. 930.08 million for the first eight
months of the financial year 2009-10. Accordingly net sales, during
2009-10, were Rs. 1,806.18 million against Rs. 1,278.59 million in the
previous financial year 2008-09. Net loss in the last quarter of FY
2009-10 were Rs. 51.49 million against the average loss per quarter of
Rs. 74.32 million in the preceding three quarter of the financial year
2009-10. However, this was not sufficient to break-even and UCL has
incurred a net loss of Rs. 274.58 million after tax as against a loss
of Rs. 286.75 million for the previous year 2008-09.
UCL faced a very competitive environment in which there was severe
margin erosion in the face of diminishing demand. However, in second
half of FY10, the demand for power cables improved considerably. This
resulted in better sales and margins improved to some extent, but still
not fully recovered to the extent pre-September 2008 levels. UCL,
however, streamlined production, invested in upgrading equipment,
manpower and processes and expects to do over Rs. 2,750 million in net
sales in Prl 1, with a cash break-even level of profitability.
On account of losses incurred during the year under review and also
with carried forward losses of past years, the entire net worth of the
UCL got eroded as at the end of the financial year March 31, 2010. UCL
is required under the provisions of Sick Industrial Companies (Special
Provisions) Act, 1985 (SICA) to make a reference to the Board for
Industrial & Financial Re- construction (BIFR) for determination
whether the UCL is a sick industrial company or not and UCL will
shortly file the same. The Company shall provide required support for
revival of the unit.
The Company has an equity investment of Rs. 834.37 million in UCL as at
March 31, 2010. Considering the present net worth position of UCL the
Company deems it prudent to provide for impairment in the value of
equity investment in UCL. Accordingly, the Company provided (non-cash
charge) Rs. 555.4 million in its 2009-10 accounts as an extraordinary
item.
During the year ended March 31, 2010, MCWPL earned profit of Rs. 6.62
million (before tax) as against loss of Rs. 5.79 million in the
previous year. On account of brought forwarded losses of the previous
years, its entire net worth got eroded as at the end of financial year
March 31, 2009 and MCWPL had filed required reference to BIFR in the
month of October 2009. BIFR vide its order dated February 5, 2010 has
declared MCWPL as sick industrial company and directed MCWPL to submit
Draft Rehabilitation Scheme (DRS) for its revival which will be
submitted shortly by MCWPL. The Company shall provide required support
for its revival and the Board authorised the management to discuss the
proposal to be submitted by MCWPL to BIFR for amalgamation of MCWPL
with the Company.
(d) Cautionary statement
The statements made in the management discussion & analysis
section, describing the Companys goals, expectations, or predictions
etc. do contain some forward looking views of the management. The
actual performance of the Company is dependent on several external
factors many of which are beyond the control of the management viz.
growth of Indian economy, continuation of industrial reforms,
fluctuations in value of Rupee in foreign exchange market. Volatility
in commodity prices applicable laws/ regulations, tax structure,
domestic/ international industry scenario, movement in international
prices of raw materials and economic developments within the country
etc.
(e) Internal control systems (ICS) and their adequacy
The Company established adequate ICS in respect of all the divisions of
the Company. The ICS are aimed at promoting operational efficiencies
and achieving saving in cost and overheads in all business operations.
The System Application and Product (SAP), a world class business
process integration software solution which was implemented by the
Company at all business units has been operating successfully.
For tightening and more effective internal control systems and risk
management, the Company continued the engagement of M/s. KPMG India
Pvt. Ltd., Chartered Accountants as internal auditors of the Company.
The system cum internal audit reports of the internal auditors are
discussed at the Audit Committee meetings and appropriate corrective
steps have been taken.
Further, all business segment prepare their annual budget, which are
reviewed along with performance at regular interval.
(f) Development of human resources
The Company promotes open and transparent working environment to
enhance teamwork and build business focus. The Company equally gives
importance to the development of human resource (HR). It updates its HR
policy in line with the changing HR culture in the industry as a whole.
In order to foster excellence and reward those employees who perform
well, the Company practices performance/production linked incentive
schemes and introduced Employees Stock Option Scheme referred to in
para 7 (a)(i) and as detailed in an attachment to this report. The main
object of the Scheme is to create and maintain optimum performance
level and profit driven culture and improve productivity.
The Company also takes adequate steps for in-house training of
employees and maintaining safety and healthy environment for workers
working within the factory premises.
4. Directors
a) Mr.V A Gore, Director of the Company and Chairman of the Audit
Committee expired on December 2, 2009 after short duration of illness.
Mr. Gore was associated with the Company for the last over 15 years.
The Board deeply mourns the sad demise of Mr. V A Gore and place on
record their sincere appreciation for the valuable guidance and
assistance provided by Mr. Gore during his tenure as a Director of the
Company.
b) Mr. Gary Ng Jit Meng, who was appointed by M/s. Shinny Limited in
terms of Clause 7 of the investment agreement, ceased to be a director
by resignation w.e.f. conclusion of the Board of Directors meeting on
January 21, 2010. The Board places on record its appreciation for the
valuable guidance and support rendered by Mr. Gary Ng Jit Meng during
the tenure of his association with the Company.
c) Mr. C N Desai and Dr. N KThingalaya, Directors shall retire by
rotation at the ensuing annual general meeting of the Company and they,
being eligible, offer themselves for reappointment. The Board
recommends the re-appointment of these Directors.
5. Directors responsibility statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with regard to directors responsibility statement, it is
hereby confirmed that-
i. In the preparation of the annual accounts for the financial year
ended March 31, 2010, the applicable accounting standards were followed
along with proper explanation relating to material departures, if any.
ii. Appropriate accounting policies were selected and applied
consistently and judgements and estimates were made that were
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 of the Company for the financial year under review.
iii. Proper and sufficient care was taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. The annual accounts were prepared on a going concern basis.
6. Audit
The qualification in paragraph 4 of attached Auditors Report are self-
explanatory and do not call for any further comments or explanations.
In this regard attention is also invited to paragraph 3(a) (ii) of this
Report.
M/s. Price WaterHouse (PW), Chartered Accountants, Mumbai, Statutory
Auditors of the Company shall be retiring at the ensuing Annual General
Meeting, and they being eligible, offer themselves for reappointment.
The Audit Committee of Directors at its meeting held on May 25, 2010
recommended reappointment of M/s. PW as statutory auditors of the
Company for the financial year 2010-11.
7. Other information
a. Attached to and forming part of this report are the following:
(i) Particulars relating to Employee Stock Option Scheme.
(ii) Particulars relating to conservation of energy, technology
absorption, Research and Development and foreign exchange earnings and
outgo.
(iii) Report on Corporate Governance and auditors certificate
regarding compliance of conditions of corporate governance. The
Ministry of Corporate Affairs has issued "Corporate Governance
Voluntary Guidelines" in December 2009. While these guidelines are
recommendatory in nature, the Company is in the process of adopting
these guideline gradually.
b. Particulars of employees - Information as per Section 217(2A) of
the Companies Act, 1956 read with the Companies (particulars of
employees) Rules, 1975, forms part of this Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Act, the report and the
accounts are being sent excluding the statement containing the
particulars to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
registered office of the Company or write to the Company Secretary for
a copy thereof.
c. The Company has been granted exemption for the year ended March 31,
2010 by the Ministry of Corporate Affairs vide its letter dated March
19, 2010 (Exemption Letter), from attaching to its Balance Sheet, the
annual report of Companys wholly- owned foreign subsidiaries viz.
Petroleum Specialities Pte. Ltd.. Singapore as well as its subsidiary
Quantum Apar Speciality Oils Pty. Ltd., Australia and Poweroil
Speciality Products FZE, Sharjah, Uniflex Cables Limited, subsidiary of
the Company and Marine Cables & Wires Private Limited, subsidiary of
Uniflex Cables Limited. As per the terms of exemption, a statement
containing brief financial details of the said subsidiaries for the
year ended March 31, 2010 are included in the annual report. The annual
accounts of the said subsidiaries and the related information will be
made available to any member of the Company seeking
such information at any point of time and are also available for
inspection by any member of the Company at the registered office of the
Company.
d. As on March 31, 2010, the aggregate fixed deposits of Rs. 0.761
million were due for repayment but remained unclaimed. Letters have
been sent to such depositors to claim the amounts due to them.
8. Acknowledgement
Your Directors wish to place on record their sincere appreciation for
continuous cooperation, support and assistance provided by
stakeholders, financial institutions, banks, government bodies,
technical collaborators, customers, dealers and suppliers of the
Company. Your Directors also wish to place on record their appreciation
for the dedicated services rendered by the loyal employees of the
Company.
For and on behalf of the Board
Place: Mumbai Dr. N. D. Desai
Date: May 25, 2010 Chairman