Dec 31, 2022
The Board of Directors of your Company ("Board") is pleased to present the Forty Fifth Annual Report of Castrol India Limited ("Castrol" or "Company") for the financial year ended 31 December 2022 ("year under review" or "year" or "FY22").
In compliance with the applicable provisions of Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) thereof, for time being in force) ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year ended 31 December 2022 and upto the date of the Board meeting held on 13 February 2023 to approve this report, in respect of the Company.
The Company''s financial performance for the financial year ended 31 December 2022 is summarized below:
Particulars |
For the year ended 31 December 2022 (Rs. in Crores) |
For the year ended 31 December 2021 (Rs. in Crores) |
Sales (a) |
4774.49 |
4192.06 |
Other income (b) |
67.05 |
48.43 |
Total Revenue (a b) |
4841.54 |
4240.49 |
Profit before tax and depreciation |
1174.14 |
1111.98 |
Depreciation and amortization |
81.39 |
82.70 |
Profit before tax |
1092.75 |
1029.28 |
Tax expense (including deferred tax) |
277.60 |
271.19 |
Profit after tax |
815.15 |
758.09 |
Other Comprehensive income (net of tax) |
(0.94) |
(0.79) |
Total Comprehensive income |
814.21 |
757.30 |
Balance brought forward |
1095.58 |
882.30 |
Profit available for appropriation |
814.21 |
757.30 |
Dividend (incl. tax) |
593.47 |
544.02 |
Balance carried forward |
1316.32 |
1095.58 |
Revenue from operations of your Company has increased by 14% mainly on account of strategic price interventions. Costs of materials were higher by about 21% over the previous year mainly due to unprecedented rise in input costs combined with supply chain disruptions due to Russia-Ukraine crisis and adverse Forex. Operating and Other expenses increased by Rs. 96 Crores as compared to the previous year on account of investment in people, safety, brand and business growth opportunities. Profit before Tax increased by about 6% over previous year to Rs. 1093 Crores. Your Company''s performance has been discussed in detail in the ''Management Discussion and Analysis Report''. Your Company does not have any subsidiary or associate or joint venture company. There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the year and date of this report. Further, there has been no change in the nature of business of the Company.
RESERVES
There is no amount proposed to be transferred to the reserves.
During the year under review, there was no change in the paid-up share capital of the Company.
3. RETURNS TO INVESTORS (DIVIDEND)
The Board of Directors of the Company has approved and adopted the Dividend Distribution Policy in line with Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The policy is separately provided as Annexure I forming an integral part of this Report and is also uploaded on the website of the Company at https://www. castrol.com/content/dam/castrol/country-sites-new/ en_in/india/home/documents/investors/dividend_ distribution_policy.pdf
The Board has recommended a final dividend of Rs. 3.50/- per equity share for the financial year ended 31 December 2022 (2021: Final dividend was Rs. 3/-per equity share) subject to the approval of Members at the ensuing Annual General Meeting of the Company. The Board also declared interim dividend of Rs. 3/- per equity share for the financial year ended 31 December 2022 on 1 August 2022. (2021: interim dividend was Rs. 2.50/- per equity share).
The dividend payout for the year under review is in accordance with your Company''s policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.
4. TRANSFERS TO THE INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to applicable provisions of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund ("IEPF" or "Fund") established by the Central Government, after completion of seven years from the date the dividend is transferred to unpaid/unclaimed account. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the Members for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority.
The Company had sent individual notices and also advertised in the newspapers seeking action from the Members who have not claimed their dividends for seven consecutive years or more. Thereafter, the Company has transferred such unpaid or unclaimed dividends and corresponding shares to IEPF, up to and including the interim dividend for the financial year ended 31 December 2015.
Members/claimants whose shares or unclaimed dividend, have been transferred to the IEPF demat Account or the Fund, as the case may be, may claim the shares or apply for a refund by approaching the company for issue of Entitlement Letter along with all the required documents before making an application to the IEPF Authority in Form IEPF - 5 (available on http://www.iepf.gov.in) along with requisite fee as decided by the IEPF Authority from time to time.
The member/claimant can file only one consolidated claim in a financial year as per the IEPF Rules.
The Company will be transferring the final dividend and corresponding shares for the financial year ended 31 December 2015 and the interim and special dividend and corresponding shares for the financial year ended 31 December 2016 within statutory timelines. Members are requested to ensure that they claim the dividends and shares referred above, before they are transferred to the said Fund. The due dates for transfer of unclaimed dividend to IEPF are provided in the report on Corporate Governance.
Details of shares/shareholders in respect of which dividend has not been claimed, are provided on website of the Company at https://www.castrol. com/en_in/india/home/investors/statement-of-unclaimed-dividend-and-shares.html. The shareholders are encouraged to verify their records and claim their dividends of all the earlier seven years, if not claimed.
The impact of supply chain disruptions for import materials continued to be visible in parts of the portfolio in 2022. Additionally, Russia-Ukraine war worsened the external environment and with western world imposing sanctions on Russia, crude witnessed sharp & sudden increase in price - resulting in higher inflation, raw material shortages and uncertainties across the globe including India. Due to this, Base Oil prices which were originally forecasted to go down in 2022 versus 2021, started increasingly rapidly and significantly. In this volatile environment, your supply chain has supported timely pricing decisions through frequent forecasting & scenario planning. Your sourcing teams also undertook strategic sourcing of raw materials both for supply security and cost avoidance. Your supply chain team continued its focus on servicing the customers & ensuring supply continuity in an uncertain supplier market scenario. Your Company continued to transform while performing, with projects both to digitize our processes as well as initiatives to reduce carbon emissions.
Health, Safety, Security and Environment continued to be at the core of the operations. The COVID surge tapered after the first quarter and the plants did not see any disruption subsequently. The plants continued to operate through the year taking care of your employees and ensuring highest safety protocols. A key project on roof sheet replacement, spanning over 18 months, was completed in your Silvassa plant, with 1Lac man hours of activity, safely delivering the desired outcome. A high-risk tank lifting activity, first of its kind in many years, was completed safely. New Weigh bridge was installed leading to all unidirectional movements and risk reduction due to movements in one of your manufacturing plants.
Your plants continued to receive external recognition, from other organizations as well as the large bp group in continuing the safety journey. Paharpur plant won the Platinum Award under Apex India Occupational Health & Safety Awards 2022. Your plants were also recognized with wider bp group in form of Safety leadership awards for safety leadership & behaviors.
Multiple community activities in the areas around manufacturing plants were undertaken under the Castrol Ujjwal Kal program to support communities near plants, including collaboration with Child Welfare, Women & Community development department of the local government, children''s day engagements & equipment donation to local Industrial Training Institute.
Program Lakshya has been launched across your Manufacturing Plants - focusing on three key pillars of Efficiency, Capability, Continuous Improvement. This Lakshya journey will continue to take your organization forward and stand out as a supplier who is reliable, agile and also cost competitive giving best value for you customers. This journey will involve everyone at all levels and will offer your people an opportunity where they push boundaries, learn from the best, solve challenging problems and grow their capabilities. This journey will also allow your teams to systemically reduce losses and invest these into new tools, systems and process that continue its focus on performance improvements.
Your company is now AEO T2 (Authorized Economic Operator- Tier 2) Certified organization. This has been awarded by India Customs in recognition of the high standards that your company has demonstrated in Safety, Security, Compliance and Integrity. This is an international recognition. Sustainability continued to be at the core of operations & practices through continuous focus on flush oil reuse and waste
reduction. The specific power consumption & specific fuel consumption continued to show a downward trend during the year due to the optimum blending temperature initiated in 2021 and other energy optimization initiatives.
During the year which had supply uncertainties, agile planning continued to be at the heart of robust supply to market. This process was managed through formulation transition and activating relevant back up scenario to ensure availability of products on shelves. Close coordination with the suppliers and leveraging relationships helped us successfully anticipate risks and plan mitigation your company. In addition, supply chain teams constantly engaged with business teams to identify critical business requirements to optimize resource allocation for potential challenges.
Logistics teams continue to deliver a safe, reliable, and efficient operation to ensure continuity of supply to our customers at the most optimum cost. There has been a continuous review of the logistics network to make it more fit-for-purpose, modernize the infrastructure, optimize the space while leveraging technology to deliver superior customer experience. These efforts have helped to deliver a 3% YoY (Year on Year) savings on the logistics spend, in an inflationary environment.
The supply chain team continued to lead as business owners and demonstrated great agility in pursuing all avenues to support volume and without compromising service, product quality, integrity, and compliance requirements.
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The following changes took place in the Directors and Key Managerial Personnel during the financial year ended 31 December 2022:
a) Appointment of Mr. Saugata Basuray (DIN: 09522239) as an Wholetime Director for a period of five (5) years with effect from 1 April 2022.
b) Cessation of Mr. Ramchander Avanavadi (DIN: 00046647) as Nominee Director of the Company with effect from 30 September 2022.
c) Appointment of Ms. Nicola Buck (DIN: 09785756) as Nominee Director with effect from 9 November 2022.
In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Sandeep Sangwan (DIN: 08617717), Managing Director and
Mr. Mayank Pandey (DIN 09274832) Wholetime Director of the Company, shall retire by rotation at the ensuing Annual General Meeting, and being eligible have offered themselves for re-appointment. Details of the Directors proposed to be re-appointed at the ensuing Annual General Meeting, as required by Regulation 36(3) of the SEBI Listing Regulations and SS - 2 (Secretarial Standards on General Meetings) are provided at the end of the Notice convening the 45th Annual General Meeting. Further, details of the Directorships held by Mr. Sandeep Sangwan (DIN: 08617717), and Mr. Mayank Pandey (DIN 09274832) in other companies, are given in the Corporate Governance Report.
The Independent Directors of your Company have certified their independence to the Board, stating that they meet the criteria for independence as mentioned under Section 149(6) of the Act. There was no change in the composition of the Board of Directors and Key Managerial Personnel during the year under review, except as stated above.
The Board is of the opinion that the Independent Directors of the Company have fulfilled the conditions as specified in SEBI Listing Regulations, are independent of the management, possess requisite qualifications, experience, proficiency and expertise in the fields of finance, people management, strategy, auditing, tax and risk advisory services, banking, financial services, investments and they hold highest standards of integrity.
The Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs, Manesar (''IICA'') as required under Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014. The Independent Directors of the Company have served for more than three years on board of listed entities and hence shall not be required to pass the online proficiency selfassessment test as per the proviso to Rule 6(4) of Companies (Appointment and Qualification of Directors) Rules, 2014.
7 POLICY ON NOMINATION, INDEPENDENCE,REMUNERATION, DIVERSITY AND EVALUATION
The Policy on Nomination, Independence, Remuneration, Diversity and Evaluation, approved by the Nomination and Remuneration Committee of your Company and which has been adopted by the Board of Directors, is annexed as Annexure II to this report of the Board to the Members. This policy is available on the
website of the Company at https://www.castrol.com/ content/dam/castrol/country-sites-new/en_in/india/ home/documents/investors/nrc_policy_cil_2018.pdf
The Nomination and Remuneration Committee of your Company approved the Policy on Nomination, Independence, Remuneration, Diversity and Evaluation ("Policy"), which has been adopted by the Board of Directors. The Policy provides for evaluation of the Board, the Committees of the Board and individual Directors, including the Chairman of the Board. The Policy provides that evaluation of the performance of the Board as a whole and the Board Committees and individual Directors shall be carried out annually.
Your Company has appointed a reputed agency that engages with the Chairman of the Board and Chairperson of the Nomination and Remuneration Committee in respect of the evaluation process. The agency prepares an independent report which is used for giving appropriate feedback to the Board/ Committees/ Directors for discussions in the meetings.
The evaluation cycle was completed by the Company which included evaluation of the Board as a whole, Board Committees and individual Directors. The evaluation process focused on various aspects of the Board and Committees'' functioning such as composition of the Board and its Committees, experience and competencies, performance of specific duties, obligations and governance issues. A separate exercise was carried out to evaluate the performance of individual Directors on parameters such as attendance, contribution and exercise of independent judgment.
The results of the evaluation of the Board and its Committees were shared with the Board and its respective Committees. The Chairman of the Board had discussions with members of the Board to discuss the performance feedback based on self-appraisal and peer review. The Nomination and Remuneration Committee Chairman discussed the performance review with the Chairman of the Board.
The Independent Directors met on 31 October 2022 to review performance evaluation of Non-Independent Directors and the Board of Directors and also of the Chairman taking into account views of Executive Directors and Non-Executive Directors.
Based on the outcome of the evaluation, the Board and its Committees have agreed on various action
points, which would result in the Board, its Committees and each Director playing more meaningful roles to increase shareholder value.
The Board met five times during the year, details of which are given in the Corporate Governance Report that forms part of this Annual Report. Additionally, there was a Strategy meeting held in May 2022 where the Board met and discussed the medium to longterm strategy of the Company and its preparedness to pursue the same. The intervening gap between the meetings was within the period prescribed under the Act and the SEBI Listing Regulations and as per the Circulars issued by the Ministry of Corporate Affairs and SEBI. During the year under review, the Board has accepted the recommendations of the Audit Committee. Details of all the Committees of the Board have been given in the Corporate Governance Report.
Your Company is a part of BP Group which is known globally for best standards of governance and business ethics. Your Company has put in place governance practices as prevalent globally. The Corporate Governance Report and the Auditor''s Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.
11. CORPORATE SOCIAL RESPONSIBILITY
At Castrol India Limited, we believe that we have a responsibility to bring enduring positive value to communities we work with. In line with our core theme to keep India moving, we have and will continue to build enduring and engaging relationships with key stakeholders in the mobility sector.
Truck drivers and mechanics are two key partners who play a significant role in keeping the wheels of this sector moving. Truck drivers carry the majority of freight traffic in the country while mechanics service one of the largest automotive markets in the world. However, their skills, livelihood opportunities and socio-economic conditions need more focus.
At Castrol India Limited, we are committed to making a positive impact in the lives of truck drivers and mechanics by preparing them to face today''s reality and leverage tomorrow''s opportunity.
I n line with this vision, Castrol India Limited now focusses on two key flagship CSR programs:
⢠Programs for holistic development of truck drivers
- Castrol Sarathi Mitra.
⢠Program for mechanics with an aim to strengthen skills development in automotive and industrial sectors, with a focus on technology -Castrol Eklavya.
Additionally, Castrol India Limited continues to support community development initiatives around areas of operations and presence. The Company, from time to time, supports humanitarian aid activities in India, by providing relief and rehabilitation to people impacted by natural disasters.
The Corporate Social Responsibility Policy is available on the website of the Company at https://www. castrol.com/content/dam/castrol/country-sites-new/en_in/india/home/documents/about-castrol/ cil-csr-policy-2021.pdf
The Annual Report on CSR activities is annexed to this report as Annexure III.
12. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Sections 134(3)(c) and 134(5) of the Act, with respect to the Directors'' Responsibility Statement, it is hereby confirmed:
a. In the preparation of the annual accounts for the year ended 31 December 2022, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31 December 2022 and of the profit of your Company for the year ended on that date;
c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
d. The Directors have prepared the annual accounts on a ''going concern'' basis;
e. The Directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively and
f. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are efficient and operating effectively.
13. RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Company has set up a Risk Management Committee. Your Company has also adopted a Risk Management Policy, the details of which are given in the Corporate Governance Report that forms part of this Annual Report.
Your Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe guarded against significant misuse or loss. An independent internal audit function is an important element of your Company''s internal control system. The internal control system is supplemented through an extensive internal audit programs and periodic review by management and Audit Committee.
Your Company has in place, adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
14. RELATED PARTY TRANSACTIONS
Your Company has adopted a Related Party Transactions Policy. The Audit Committee reviews this policy from time to time and also reviews and approves all related party transactions, to ensure that the same are in line with the provisions of applicable law and the Related Party Transactions Policy. The policy was amended by the Board of Directors on 31 March 2022 to incorporate the new requirements introduced under the SEBI Listing Regulations.
The Committee approves related party transactions and wherever it is not possible to estimate the value, approves limit for the financial year, based on best estimates. All related party transactions are reviewed by an independent accounting firm to establish compliance with policy and limits approved.
All related party transactions entered during the year were in the ordinary course of the business and on arm''s length basis except the transaction entered into by the Company, particulars of which are given in Form AOC-2 attached as Annexure IV to this report. No material related party transactions were entered into during the year by your Company.
In conformity with the requirements of the Act, read with the SEBI Listing Regulations, the policy to deal with related party transactions is also available on Company''s website at https://www. castrol.com/content/dam/castrol/country-sites-new/en_in/mdia/home/documents/mvestors/rpt-policy-v4-01042022.pdf
15. DEPOSITS
Your Company has not accepted any deposits under Chapter V of the Act during the financial year and as such, no amount on account of principal or interest on deposits from public is outstanding as on 31 December 2022.
16. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Pursuant to Section 186 of the Companies Act, 2013 and Schedule V of the Listing Regulations, disclosure on particulars relating to Loans, Guarantees and Investments are provided as part of the financial statements in Note No. 4.6.
17 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT (R&D) AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided as Annexure V.
18. MATERIAL CHANGES OCCURRED AFTER END OF FINANCIAL YEAR
No material changes and commitments which could affect your Company''s financial position have occurred between the end of the financial year of your Company and date of this report.
19. AUDITORS
a. STATUTORY AUDITOR
The Members at the 44th Annual General Meeting held on 8 June 2022, approved the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants, for a second term of 5 (five) years to hold office till the conclusion of 49th Annual General Meeting of the Company.
The Statutory Auditors have confirmed their eligibility and submitted the certificate in writing that they are not disqualified to hold the office of the Statutory Auditor. The report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. There is no qualification, reservation, adverse
remark or disclaimer given by the statutory auditor in their report.
b. COST AUDITOR
M/s. Kishore Bhatia & Associates, Cost Accountants, carried out the cost audit for the Company for the year under review. They have been re-appointed as cost auditors for the financial year ending 31 December 2023. A remuneration of Rs. 4,10,000/- (Rupees Four lac Ten Thousand only) plus applicable taxes and out of pocket expenses has been fixed for the Cost Auditors subject to the ratification of such fees by the Members at the 45th AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending 31 December 2023 is placed at the 45th AGM. The Company has maintained cost records as specified under sub-section (1) of section 148 of the Companies Act, 2013 and the same shall be audited by the cost auditor i.e. M/s. Kishore Bhatia & Associates, Cost Accountants for the financial year 2023.
c. SECRETARIAL AUDITOR
The Board had appointed M/s. S. N. Ananthasubramanian & Co., Company Secretaries in Whole-time Practice, to carry out secretarial audit under the provisions of Section 204 of the Act, for the financial year ended 31 December 2022. The Secretarial Auditor''s report to the shareholders does not contain any qualification and is annexed to this report marked as Annexure VI.
20. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
During the financial year, your Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as Annexure VII.
Details of employee remuneration as required under provisions of Section 197 of the Act, and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, form part of this report. As per the provisions of Section 136 of the Act, the Report and Financial Statements are being sent to the Members of your Company and others entitled thereto, excluding the statement on particulars of employees.
Copies of said statement are available at the registered office of the Company during the designated working hours from 21 days before the Annual General Meeting till date of the Annual General Meeting. Any member interested in obtaining such details may also write to the corporate secretarial department at the registered office of the Company.
22. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company firmly believes in providing a safe, supportive and friendly workplace environment - a workplace where our values come to life through the supporting behaviors. Positive workplace environment and a great employee experience are integral part of our culture. Your Company believes in providing and ensuring a workplace free from discrimination and harassment based on gender.
Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment. Your Company has created the framework for individuals to seek recourse and redressal to instances of sexual harassment.
Your Company has a Sexual Harassment Prevention and Grievance Handling Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was one training session conducted for the POSH Committee, Human Resource function and some of the Leaders.
During the year there was no complaint of sexual harassment that was reported.
Your Company has a very strong whistle blower policy viz. ''Open Talk''. All employees of your Company also have access to the Chairman of the Audit Committee in case they wish to report any concern. Your Company has provided a dedicated e-mail address for reporting such concerns. All cases registered under Whistle Blower Policy of your Company are reported to and are subject to the review by the Audit Committee. The Board adopted revised bp code of conduct at its meeting held on 13 February 2023 to align the Code with the new purpose, strategy, and safety leadership principles of the Company. The revised Code of Conduct brings in aspects
of sustainability and digital ethics and has increased focus on risk areas like data privacy, discrimination and harassment, and counter-party due diligence.
The annual return of the Company as required under the Companies Act, 2013 will be available on the website of the Company at https://www.castrol.com/ en_in/india/home/investors/general-meeting.html
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no such transactions during the year under review:
1. Issue of Equity Shares with differential rights as to dividend, voting or otherwise.
2. I ssue of Equity Shares (including Sweat Equity Shares) to employees of your Company, under any scheme.
3. Your Company has not resorted to any buy back of its Equity Shares during the year under review.
4. Your Company does not have any subsidiaries.
5. Hence, neither the Managing Director nor the Wholetime Directors of your Company received any remuneration or commission during the year, from any of its subsidiaries.
6. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Company''s operations in future.
7. No fraud has been reported by auditors under sub-section (12) of section 143.
8. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable
9. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year- Not Applicable
Your Company was recognized with many prestigious and diverse external accolades in 2022 which include:
1. Castrol India Limited''s Paharpur Plant was conferred the Platinum award at the Apex India Occupational Health & Safety Awards 2022 under the Oil & Gas Sector in the Large Enterprise category by the Hon''ble Health Minister of Punjab for utmost commitment to Health and Safety of the workforce.
2. Castrol India''s flagship CSR programs - Castrol Eklavya and Castrol Sarathi Mitra for upskilling of mechanics and for the holistic development of truck drivers - won the ''Best Innovative CR Project'' at the 4th CSR Summit & Awards 2022 organized by UBS forums.
3. Castrol POWER1 ULTIMATE was recognized with the Best use of Machine Learning award for its rephrase.ai activation at the 13th edition of CMO Asia''s Excellence award held in Singapore. This initiative helped reach over 130,000 mechanics using personalized videos making it the first such campaign in the category to deploy personalized content at such a large scale.
4. Castrol Magnatec won the ''Product of the Year 2022'', in the Engine Oil - Car''s category, recognizing the brands'' innovative DUALOCK technology that offers superior protection and reduces engine wear by 50%.
5. Castrol Super Mechanic Contest conducted using both physical and digital media to comply with Covid-19 requirements, registered a record participation from more than 1,40,000 mechanics. India''s largest mechanic skilling program won several accolades across the traditional and digital brand forums and bagged 11 honors at the Indian Digital Marketing Awards (IDMA), Emvies, SMARTIES India and exchange4media Mobile Marketing and Digital Influencer Awards.
6. The supply chain team won awards at the Warehouse & Logistics Excellence Awards 2022 in the Best Supply Chain Company - Oil & Gas category and at the Future of Logistics & Supply Chain Summit and Awards 2022 in the Innovator in SCM & Logistic category, respectively.
The Board wishes to place on record its sincere appreciation of the efforts put in by your Company''s employees for achieving encouraging results. The Board also wishes to thank the Members, distributors, vendors, customers, bankers, government and all other business associates for their support during the year.
On behalf of the Board of Directors
Sandeep Sangwan Deepesh Baxi
Managing Director Chief Financial Officer &
DIN: 08617717 Wholetime Director
DIN:02509800
Place: Mumbai
Date: 13 February 2023
Dec 31, 2018
To the Members,
The Companyâs Directors are pleased to present the 41st Annual Report of the Company, along with Audited Financial Statement for the year ended 31 December 2018.
1. FINANCIAL RESULTS
Particulars |
For the year ended 31 December 2018 (INR in crores) |
For the year ended 31 December 2017 (INR in crores) |
Sales (excluding excise duty) (a) |
3905 |
3,584 |
Other income (b) |
84 |
84 |
Total Revenue (a b) |
3989 |
3,668 |
Profit before tax and depreciation |
1154 |
1,116 |
Depreciation and amortization |
56 |
46 |
Profit before tax |
1098 |
1,070 |
Tax expense |
390 |
378 |
Profit after tax |
708 |
692 |
Other Comprehensive income (net of tax) |
(1.1) |
(2) |
Total Comprehensive income |
707 |
690 |
Balance brought forward |
503 |
564 |
Profit available for appropriation |
708 |
692 |
Appropriation |
||
Dividend (incl. tax) |
566 |
655 |
Bonus issue |
- |
98 |
Balance carried forward |
643 |
503 |
2. PERFORMANCE
Revenue from operations of your Company has increased by about 9% over the previous year to INR 3,905 crores.
Costs of materials were higher by about 14% over the previous year at INR 1,907 crores mainly due to rise in input costs. Operating and other expenses (excl. excise) increased by INR 42 crores as compared to the previous year mainly due to higher volume. Profit before Tax increased by about 3% over previous year to INR 1,098 crores. Tax rate for the current year has remained at nearly the same level as that of the previous year. Profit after Tax increased by 2% over the previous year to INR 708 crores.
Your Companyâs performance has been discussed in detail in the âManagement Discussion and Analysis Reportâ.
Your Company does not have any subsidiary or associate or joint venture company.
3. RETURNS TO INVESTORS (DIVIDEND)
The Board of Directors of the Company recommended a final dividend of INR 2.75 per share for the financial year ended 31 December 2018 (2017: final dividend INR 2.50 per share). This is in addition to an interim dividend of INR 2.25 per share (2017: interim dividend of INR 4.50 pre bonus issue per share) for the financial year ended 31 December 2018.
The final dividend, subject to approval of members, will be paid within statutory period, to those members whose names appear in the register of members, as on the date of book closure.
The dividend payout for the year under review is in accordance with your Companyâs policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.
The Dividend Distribution Policy is annexed as Annexure I to this Report. The same is also available on the website of the Company at https:// www.castrol.com/content/dam/castrolcountry/en in/About%20Us/DividendDistributionPolicy.pdf.
4. TRANSFERS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to applicable provisions of the Companies Act, 2013 (âActâ) read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âIEPF Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund (âIEPFâ or âFundâ) established by the Central Government, after completion of seven years from the date of dividend becoming unpaid / unclaimed. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the members for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority.
The Company had sent individual notices and also advertised in the newspapers seeking action from the members who have not claimed their dividends for seven consecutive years or more. Accordingly, the Company has transferred such unpaid or unclaimed dividends and corresponding shares to IEPF, up to and including the interim dividend for the financial year ended 31 December 2011.
Members/claimants whose shares and/or unclaimed dividend, have been transferred to the IEPF Demat Account or the Fund, as the case may be, may claim the shares or apply for refund by making an application to the IEPF authority in Form IEPF-5 (available on http://www.iepf.gov.in) along with requisite fee as decided by the IEPF authority from time to time. The member/claimant can file only one consolidated claim in a financial year as per the IEPF Rules.
The Company will be transferring the final dividend and corresponding shares for the financial year ended 31 December 2011 and the interim dividend and corresponding shares for the financial year ended 31 December 2012 on or before 21 June 2019 and 20 September 2019 respectively. Members are requested to ensure that they claim the dividends and shares referred above, before they are transferred to the said Fund. The due dates for transfer of unclaimed dividend to IEPF are provided in the report on Corporate Governance.
Details of shares/shareholders in respect of which dividend has not been claimed, are provided on our website at https://www.castrol.com/en in/ india/investors/statement-of-unclaimed-dividend-and-shares.html. The shareholders are encouraged to verify their records and claim their dividends of all the earlier seven years, if not claimed.
5. SUPPLY CHAIN
Your Companyâs supply chain function remained an important enabler for the organization. The five strategic pillars of supply chain continued to be:
1. Contemporary, differentiated and competitive customer service
2. Premium quality - a source of enhanced customer experience
3. Supply chain capabilities - assets and resources to support growth
4. Consistent processes
5. Generating value for business through efficiency initiatives
Health, Safety, Security and Environment, along with Ethics and Values formed the core of our operations.
The safety agenda continued to be driven strongly through plant safety and road safety initiatives. We conducted our annual road safety campaign with heavy vehicle drivers. With a strong focus on safe driving, it continued to be an important forum for engagement with an overwhelming participation from our employees to initiate and continue conversations on safety with the heavy vehicle drivers.
As part of the safe control and monitoring mechanism, safety observations continued to be recorded and proactively addressed. The Control of Work guidelines and Operating Management System processes across the plants and other supply chain functions continued to be strengthened. We reported zero injuries in our operations and also received recognition at multiple, country wide fora for our excellent quality and safe operations. To name a few, we received the Golden Peacock Award for Patalganga plant, Greentech Safety Award for Silvassa and Paharpur plants and CII Award - HSSE for Patalganga plant.
Customer service and product availability continued to be driven by proactively anticipating demand changes and variability, and through the order fulfillment processes. We managed our operations without impact to service despite of adverse incidents such as the transporters strike. Plant production, raw materials and packaging supplier reliability were also important pillars for a strong service delivery. With a close ear to the ground and sensing our customer needs, we introduced a variety of new products across various segments. We served our existing customers and OEM partners with a focus on premium brand experience and also expanded our partnerships with new OEM contracts. Ford QI Certification is a demonstration of our focus on customer service.
The team continued to focus on quality by using stringent input measures and processes - helping drive a premium image in the market. Strong inspection programmes at supplier and at process levels continued through the year.
In order to support growth operations, your Company continued to invest in projects and initiatives to make the operations robust for future. The total capital investment across multiple supply chain projects for financial year 2018 was about INR 22.85 crores.
Throughout the year, there was a strong focus on generating value through standardization and simplification. Efficient sourcing and transportation initiatives, focusing on cost optimization, were led successfully, helping deliver additional value for business.
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Your Board appointed Ms. Sangeeta Talwar (DIN 00062478), as an Additional (Independent) Director of the Company with effect from 23 July 2018 for a period of 5 (five) years subject to the approval of the members.
Your Board re-appointed Ms. Rashmi Joshi (DIN: 06641898) as Whole-time Director of the Company with w.e.f. 1 August 2018 for a period of 5 (five) years subject to the approval of the members.
Your Board re-appointed Mr. Omer Dormen (DIN: 07282001) as Managing Director of the Company with w.e.f. 12 October 2018 for a period of 1 (one) year subject to the approval of the members and the Central Government. The Company has made an application to the Central Government in Form MR-2 for the said re-appointment of Mr. Omer Dormen.
Your Board appointed Mr. Siddharth Shetty, Managing Counsel as Key Managerial Personnel of the Company for a period of 3 (three) years with effect from 3 May 2018.
Ms. Shiva McMahon (DIN: 07770783), ceased to be a Nominee Director of the Company, with effect from close of business hours on 15 November 2018.
In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Omer Dormen, Managing Director and Ms. Rashmi Joshi, Whole-time Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.
Details of each of the Directors proposed to be re-appointed at the ensuing Annual General Meeting, as required by Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulations 2015â) and SS - 2 (Secretarial Standards on General Meetings) are provided in the Notice convening the 41st Annual General Meeting of the Company.
Further, details of the directorships held by Mr. Omer Dormen and Ms. Rashmi Joshi in other companies, are also given in the Corporate Governance section of this Annual Report.
The Independent Directors of your Company have certified their independence to the Board, stating that they meet the criteria for independence as mentioned under Section 149 (6) of the Act.
There was no change in the composition of the Board of Directors and Key Managerial Personnel during the year under review, except as stated above.
7. POLICY ON NOMINATION, INDEPENDENCE, REMUNERATION, DIVERSITY AND EVALUATION.
The Policy on Nomination, Independence, Remuneration, Diversity and Evaluation, approved by the Nomination and Remuneration Committee of your Company and which has been adopted by the Board of Directors, is annexed as Annexure II to this report of the Board to the Members. The policy is available on the website of the Company at https://www.castrol.com/ content/dam/castrolcountry/en in/About%20Us/ Financials/CIL-NRC-Policy-CIL-2018-FINAL.pdf
8. BOARD EVALUATION
The Nomination and Remuneration Committee of your Company approved the Policy on Nomination, Independence, Remuneration, Diversity and Evaluation (âPolicyâ), which has been adopted by the Board of Directors. The Policy provides for evaluation of the Board, the committees of the Board and individual directors, including the Chairman of the Board. The Policy provides that evaluation of the performance of the Board as a whole and the Board committees and individual directors shall be carried out annually.
Your Company has appointed a reputed agency that engages with the Chairman of the Board and Chairman of the nomination and remuneration committee in respect of the evaluation process. The agency prepares an independent report which is used for giving appropriate feedback to the Board/Committees/Directors for discussions in the meetings.
During the year, the evaluation cycle was completed by the Company which included the evaluation of the board as a whole, board committees and individual directors. The evaluation process focused on various aspects of the board and committeesâ functioning such as composition of the board and committees, experience and competencies, performance of specific duties, obligations and governance issues. A separate exercise was carried out to evaluate the performance of individual directors on parameters such as attendance, contribution and exercise of independent judgment.
The results of the evaluation of the board and committees were shared with the board and respective committees. The Chairman of the board had individual discussions with each member of the Board to discuss the performance feedback based on self-appraisal and peer review. The nomination and remuneration committee Chairman discussed the performance review with the Chairman of the Board.
The independent directors met on 31 October 2018 to review performance evaluation of non-independent directors and the Board and also of the Chairman taking into account views of executive directors and non-executive directors.
Based on the outcome of the evaluation, the Board and committees have agreed on various action points, which would result in each director, its committees and the board, its committees and each director playing more meaningful roles to increase shareholder value.
9. BOARD AND COMMITTEES
The Board met four times during the year, details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Act and the SEBI Listing Regulations 2015. Details of all the Committees of the Board have been given in the Corporate Governance Report.
10. CORPORATE GOVERNANCE
Your Company is part of BP Group which is known globally for best standards of governance and business ethics. Your Company has put in place governance practices as prevalent globally. The Corporate Governance Report and the Auditorâs Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.
11. CORPORATE SOCIAL RESPONSIBILITY
Your Company recognizes the need and importance of a focused and inclusive social and economic development, especially of the industries and communities within which it operates. Your Company seeks to build open and constructive relationships with all its stakeholders and wants them to benefit from your Companyâs presence and this is set out in the Code of Conduct and values of your Company.
Over the years, Castrol Indiaâs Corporate Social Responsibility (CSR) activities have evolved from charitable giving to a strategic CSR programme, working in collaboration with key stakeholders. The CSR programme of your Company aligns business risks and opportunities with the national agenda of development priorities to meet the needs and aspirations of the populace.
Your Company aims to provide a safer and better quality of life for the communities it serves, whilst ensuring the long-term sustainability of the Companyâs operations in the relevant industries where it operates. In alignment with this vision the Company now focuses on two key flagship CSR programmes:
- Programme for holistic development of truck drivers - Castrol Sarathi Mitra
- Programme for mechanics with an aim to strengthen skills development in automotive and industrial sectors, with a focus on technology - Castrol Eklavya
Additionally, the Company continues to support community development initiatives around areas of operations and presence. The Company, from time to time, supports humanitarian aid activities in India, by providing relief and rehabilitation to people impacted by natural disasters.
Corporate Social Responsibility committee of the Board has recommended and the Board has approved a Corporate Social Responsibility Policy in line with the requirements of Section 135 of the Act.
The Corporate Social Responsibility Policy is available on the website of the Company at http:// www.castrol.com/en in/india/about-us/csr.html.
The Annual Report on Corporate Social Responsibility activities is annexed to this report as Annexure III.
12. DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirement under sections 134(3) (c) and 134(5) of the Act, with respect to the Directorsâ Responsibility Statement, it is hereby confirmed:
(a) in the preparation of the annual accounts for the year ended 31 December 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
(b) the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31 December 2018 and of the profit of your Company for the year ended on that date;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a âgoing concernâ basis;
(e) the directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively; and
(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
13. RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Company has set up a Risk Management Committee. Your Company has also adopted a Risk Management Policy, the details of which are given in the Corporate Governance Report that forms part of this Annual Report.
Your Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe-guarded against significant misuse or loss. An independent internal audit function is an important element of your Companyâs internal control system. The internal control system is supplemented through an extensive internal audit programme and periodic review by management and Audit Committee.
Your Company has in place, adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
14. RELATED PARTY TRANSACTIONS
Your Company has adopted a Related Party Transactions Policy. The audit committee reviews this policy from time to time and also reviews and approves all related party transactions, to ensure that the same are in line with the provisions of applicable law and the Related Party Transactions Policy. The committee approves the related party transactions and wherever it is not possible to estimate the value, approves limit for the financial year, based on best estimates. All related party transactions are reviewed by an independent firm of chartered accountant to establish compliance with law and limits approved.
All related party transactions entered during the year were in the ordinary course of the business and on arms length pricing basis. No material related party transactions were entered into during the year by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable to your Company.
In conformity with the requirements of the Act, read with SEBI Listing Regulations, 2015, the policy to deal with related party transactions is also available on Companyâs website at https://www.castrol. com/content/dam/ castrolcountry/en in/About%20Us/Financials/ related-party-transactions-policy-cil-2018-final-website.pdf.
1 5. DEPOSITS
Your Company has not accepted any fixed deposits under Chapter V of the Act during the financial year and as such, no amount on account of principal or interest on deposits from public was outstanding as on 31 December 2018.
16. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans, guarantees, investments made and securities provided by your Company pursuant to Section 186 of the Act, are given in the notes to the financial statements, which form part of the Annual Report.
17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT (R&D) AND FOREIGN EXCHANGE EARNING AND OUTGO
The particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided as Annexure IV.
18. MATERIAL CHANGES OCCURRED AFTER END OF FINANCIAL YEAR
No material changes and commitments which could affect your Companyâs financial position have occurred between the end of the financial year of your Company and date of this report.
19. AUDITORS STATUTORY AUDITOR
The statutory auditor of your Company, Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed for a period of 5 (five) years at the Annual General Meeting held on 31 May 2017. The Companies (Amendment) Act, 2017 has waived the requirement for ratification of the appointment of statutory auditor by the shareholders at every Annual General Meeting. Hence, the approval of the members is not being sought for the re-appointment of the statutory auditor and in line with their resolution of appointment passed at the Annual General Meeting held on 31 May 2017, the statutory auditor will continue to hold office till the conclusion of the 44th Annual General Meeting of the Company. The statutory auditor have confirmed their eligibility and submitted the certificate in writing that they are not disqualified to hold the office of the statutory auditor. The report given by the statutory auditor on the financial statements of the Company is part of the Annual Report. There is no qualification, reservation, adverse remark or disclaimer given by the statutory auditor in their report.
COST AUDITOR
M/s. Kishore Bhatia & Associates, Cost Accountants carried out the cost audit for the Company. They have been re-appointed as cost auditor for the financial year ending 31 December 2019.
Your Company is required to maintain the cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013. Your Company has accordingly maintained the same and has filed the Cost Audit Report for Formulations and Compliance Report for the financial year ended 31 December 2017 on 10 May 2018 which is within the stipulated timeline prescribed under the applicable regulations. The Cost Audit Report for the financial year ended 31 December 2018 is due to be filed in the current financial year.
SECRETARIAL AUDITOR
The Board had appointed S. N. Ananthasubramanian & Co., Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Act, for the Financial Year 2018. The Secretarial Auditorâs report to the members does not contain any qualification, and is annexed to this report marked as Annexure V.
20. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
During the Financial Year, your Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
21. PARTICULARS OF EMPLOYEES
Disclosures with respect to the remuneration of Directors and employees as required under section 197 of the Act, and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as Annexure VI.
Details of employee remuneration as required under provisions of section 197 of the Act, and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, form part of this report. As per the provisions of section 136 of the Act, the report and financial statements are being sent to the members of your Company and others entitled thereto, excluding the statement on particulars of employees. Copies of said statement are available at the registered office of the Company during the designated working hours from 21 days before the Annual General Meeting till date of the Annual General Meeting. Any member interested in obtaining such details may also write to the corporate secretarial department at the registered office of the Company.
22. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company firmly believes in providing a safe, supportive and friendly workplace environment -a workplace where our values come to life through the supporting behaviors. Positive workplace environment and a great employee experience are integral part of our culture. Your Company believes in providing and ensuring a workplace free from discrimination and harassment based on gender.
Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment; Your Company has created the framework for individuals to seek recourse and redressal to instances of sexual harassment.
Your Company has a Sexual Harassment Prevention and Grievance Handling Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the year there was one complaint of sexual harassment that was reported which was reviewed by the Internal Committee. Pursuant to the review, disciplinary action was taken.
23. VIGIL MECHANISM
Your Company has a very strong whistle blower policy viz. âOpen Talkâ. All employees of your Company also have access to the Chairman of the Audit Committee in case they wish to report any concern. Your Company has provided a dedicated e-mail address for reporting such concerns. All cases registered under Whistle Blower Policy of your Company are reported to and are subject to the review of the Audit Committee.
24. ANNUAL RETURN
The annual return of the Company as required under the Companies Act, 2013 will be available on the website of the Company at www.castrol.co.in.
25. GENERAL DISCLOSURES
Your Directors state that 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 Equity Shares (including Sweat Equity Shares) to employees of your Company, under any scheme
3. Your Company has not resorted to any buy back of its Equity Shares during the year under review
4. Your Company does not have any subsidiaries. Hence, neither the Managing Director nor the Wholetime Directors of your Company received any remuneration or commission during the year, from any of its subsidiaries
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Companyâs operations in future.
6. No fraud has been reported by auditors under sub-section (12) of section 143.
26. AWARDS AND RECOGNITIONS
Your Company was recognized with many prestigious and diverse external accolades in 2018 which include:
- IMC Ramkrishna Bajaj National Quality Awards 2018 in the Manufacturing category.
- Golden Peacock Innovation Management Award for the year 2018.
- Gold award at the Asia Pacific Smarties Awards under the category of âRelationship Buildingâ and a Silver at the Maddies Awards for Castrol CRB Mini-Truck mobile campaign.
- Golden Peacock Occupational Health & Safety Award 2018 for Patalganga plant.
- âOverall Performanceâ Award from Maruti Suzuki India Limited in recognition of quality and customer excellence.
- Castrol India recognized as runners up in the classical category at The Mint Corporate Strategy Awards 2018.
- Castrol Indiaâs Patalganga plant was awarded as runners-up in Manufacturing Category (Large) at the 13th CII (WR) Safety, Health and Environment Excellence and Innovation Award 2018.
- Silvassa plant became the first lubricants plant in India to receive Ford Q1 certification recognizing its quality excellence.
- Ms. Rekha Pillai, Head - CSR won CSR Leader of 2018 at the Sabera Social and Business Enterprise Awards 2018.
- Ms. Rashmi Joshi, Chief Financial Officer & Wholetime Director was honoured as CFO of the year in Large Enterprise category at Financial Express CFO of the year Awards 2018.
- Castrol Turbomax Truck Aasana campaign for truck drivers was recognized with a silver and bronze prize at the coveted Effies Award.
- Silvassa Plant won the 17th Annual Greentech Safety Award 2018 for the forth year in succession.
- Castrol Turbomax Truck Aasana campaign won the campaign of the year at ET Brand Equity Kaleido Awards 2019.
27. ACKNOWLEDGEMENT
The Board wishes to place on record its sincere appreciation of the efforts put in by your Companyâs employees for achieving encouraging results under difficult conditions. The Board also wishes to thank the members, distributors, vendors, customers, bankers, government and all other business associates for their support during the year.
On behalf of the Board of Directors
Omer Dormen Rashmi Joshi
Managing Director Chief Financial Officer
DIN: 07282001 & Whole time Director
DIN: 06641898
Place : Mumbai
Date : 30 January 2019
Dec 31, 2016
To the Members,
Your Companyâs Directors are pleased to present the 39th Annual Report of the Company, along with Audited Financial Statement for the year ended 31 December 2016.
1. FINANCIAL RESULTS
Particulars |
For the year ended 31 December 2016 (Rupees in Crores) |
For the year ended 31 December 2015 (Rupees in Crores) |
Profit before Depreciation, Exceptional Items & Tax |
1,038.89 |
947.46 |
Interest Income (Net of Finance Cost) |
51.77 |
42.46 |
Profit before Depreciation & Tax |
1,090.66 |
989.92 |
Depreciation & Amortisation |
44.96 |
38.97 |
Tax Expenses |
||
Current Tax |
388.04 |
323.80 |
Deferred Tax |
(17.25) |
11.89 |
Profit after Tax |
674.91 |
615.26 |
Adding thereto: |
||
Balance as per last Balance Sheet brought forward |
166.33 |
87.50 |
Profit available for Appropriation |
841.24 |
702.76 |
The Appropriations are: |
||
Dividend |
||
Interim |
222.55 |
197.82 |
Special |
98.91 |
â |
Final |
222.55 |
247.28 |
Tax on Dividend |
||
Interim |
45.31 |
40.27 |
Special |
20.14 |
â |
Final |
45.31 |
50.34 |
Tax on Final Dividend - 2014 |
â |
0.72 |
Net surplus in the Statement of Profit & Loss |
186.47 |
166.33 |
841.24 |
702.76 |
2. PERFORMANCE
Net revenues from operations of your Company have increased by about 2% over the previous year to Rs. 3,370 Crores, mainly due to 4.4% rise in volumes driven by growth in Power Brands and personal mobility segment. Costs of materials were lower by about 4% over the previous year at Rs. 1,532 Crores mainly due to drop in input costs. operating and other expenses increased by Rs. 31.51 Crores as compared to the previous year. Profit Before Tax increased by about 10% over previous year to Rs. 1,046 Crores. Tax rate for the current year has remained at nearly the same level as that of the previous year. Profit After Tax increased by 10% over the previous year to Rs. 675 Crores.
Your Companyâs performance has been discussed in detail in âManagement Discussion and Analysis Reportâ.
Your Company does not have any subsidiary or associate or joint venture company.
3. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs. 4.50/- per equity share (2015: Rs. 5/per share) for the Financial Year ended 31 December 2016. This is in addition to the interim dividend of Rs. 4.50/- per share (2015: interim dividend Rs. 4/- per share) paid on 18 August 2016 and a special dividend of Rs. 2/- per share (2015: Nil per share) to be paid on or before 23 March 2017.
The final dividend, subject to approval of Members, will be paid within statutory period, to those Members whose names appear in the Register of Members, as on the date of book closure. The total dividend for the Financial Year ended 31 December
2016, including the proposed final dividend, amounts to Rs. 11/- per equity share (220% on paid-up equity share capital) (2015: Rs. 9/per share) and will absorb Rs. 544.01 Crores (2015: Rs. 445.10 Crores).
The dividend payout for the year under review is in accordance with your Companyâs policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.
The dividend distribution policy is given as Annexure-I to this Report. The same is also available on the website of the Company at http://www.castrol.com/en_in/india/financials/ other-financial-documents-policies.html
4. TRANSFER TO RESERVE
Your Directors do not propose to transfer any amount to the General Reserves for the Financial Year ended 31 December 2016.
5. INDIAN ACCOUNTING STANDARDS (IND AS) -IFRS CONVERGED STANDARDS
Your Company will adopt Ind-AS with effect from 1 January 2017 pursuant to Ministry of Corporate Affairsâ notification dated 16 February
2015 notifying the Companies (Indian Accounting Standard) Rules, 2015.
6. SUPPLY CHAIN
Your Companyâs Supply Chain function remained an important enabler for the organization. The five strategic pillars of Supply Chain continued to be:
(1) Contemporary, differentiated and competitive customer service;
(2) Premium quality - a source of enhanced customer experience;
(3) Supply Chain capabilities - assets and resources to support growth;
(4) Consistent processes;
(5) Generating value for business through efficiency initiatives.
Health, Safety, Security and Environment, along with Ethics and Values formed the core of operations.
The safety agenda continued to be driven strongly through plant safety and road safety initiatives. The Family Connect programme for heavy vehicle drivers continued to be an important forum for engagement with the drivers across multiple locations. Within plants, as part of the safe control and monitoring mechanism, Safety observations continued to be recorded and proactively addressed. The Control of Work guidelines and operating Management System processes across the plants and other Supply Chain functions continued to be strengthened.
Customer service and product availability were key priorities for Supply Chain. They were driven by proactively anticipating demand changes and variability, as well as continuous improvement in order fulfilment processes. The improvements in customer service were fully supported by plant production reliability as well as raw materials and packaging suppliers.
The team continued to focus on quality by using stringent input measures and processes - helping drive a premium image in the market. Strong inspection programmes at supplier and process levels continued through the year. As a result of continuous improvement in customer complaints, the quality complaint closure rate for the period was increased to 92.6%.
In order to support growth operations, your Company continued to invest in projects and initiatives to make the operations robust for future. The total capital investment across multiple Supply Chain projects for 2016 was about Rs. 22.5 Crores.
Throughout the year, there was strong focus on generating value through standardization and simplification. Efficient sourcing and transportation initiatives, focusing on cost optimization, were led successfully, helping deliver additional value for business.
7. DIRECTORS AND KEY MANAGERIAL PERSONNEL
At the 38th Annual General Meeting held on 5 May 2016, Members approved appointment of Mr. Omer Dormen as the Managing Director of the Company.
Mr. Ralph Hewins ceased to be a Nominee Director of the Company with effect from 31 August 2016 as your Company had received a letter from Castrol Limited UK intimating the withdrawal of his nomination, consequent to his resignation from Castrol Limited UK. Your Board places on record its appreciation for outstanding contributions made by Mr. Ralph Hewins during his tenure as the Nominee Director of the Company.
Mr. Sandeep Deshmukh resigned as Company Secretary with effect from 14 March 2016. Your Board places on record its appreciation for contributions made by Mr. Sandeep Deshmukh during his tenure as the Company Secretary of your Company.
Your Board at its meeting held on 16 December 2016 appointed Ms. Chandana Dhar, as Company Secretary and Compliance officer of the Company effective from 12 January 2017 on the recommendation made by Nomination and Remuneration Committee.
In accordance with the provisions of the Companies Act, 2013 (the "Actâ) and the Articles of Association of the Company, Mr. omer Dormen and Ms. Rashmi Joshi, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.
A brief resume of each of the Directors proposed to be re-appointed at the ensuing Annual General Meeting, and the details of the Directorships held by them in other companies are given in the Corporate Governance section of this Annual Report. Appropriate resolutions for the re-appointment of the aforesaid Directors are being moved at the ensuing Annual General Meeting, which the Board recommends for your approval.
The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Act.
There is no change in the composition of the Board of Directors and Key Managerial Personnel during the year under review, except as stated above.
8. BOARD EVALUATION
The Nomination and Remuneration Committee of your Company approved Board Performance Evaluation Policy (the "Policyâ) during the year, which was adopted by the Board of Directors. The Policy provides for evaluation of the Board, the Committees of the Board and individual Directors, including the Chairman of the Board. The Policy provides that evaluation of the performance of the Board as a whole and the Board Committees and individual Directors shall be carried out annually.
Your Company has appointed a reputed agency that engages with the Chairman of the Board and Chairman of the Nomination and Remuneration Committee in respect of the evaluation process. The agency prepares an independent report which is used for giving appropriate feedback to the Board/Committees/Directors for discussions in the meetings.
During the year, the evaluation cycle was completed by the Company which included the evaluation of the Board as a whole, Board Committees and individual Directors. The evaluation process focused on various aspects of the Board and Committees'' functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties, obligations and governance issues. A separate exercise was carried out to evaluate the performance of individual Directors on parameters such as attendance, contribution and exercise of independent judgment.
The results of the evaluation of the Board and Committees were shared with the Board and respective Committees. The Chairman of the Board had individual discussions with each member of the Board to discuss the performance feedback based on self-appraisal and peer review. The Nomination and Remuneration Committee Chairman discussed the performance review with the Chairman of the Board.
The Independent Directors met on 14 November 2016 to review performance evaluation of Non Independent Directors and the Board of Directors and also of the Chairman taking into account views of Executive Directors and Non-Executive Directors.
Based on the outcome of the evaluation, the Board and Committees have agreed on various action points, which would result in each Director, its Committees and the Board playing more meaningful roles to increase shareholder value.
9. POLICY ON DIRECTORSâ APPOINTMENTS, REMUNERATION, ETC.
Policy on Remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Employees and Policy on Appointment of Directors, Independence of Directors and Board Diversity are given as Annexure II & III to this report.
10. BOARD AND COMMITTEES
A calendar of proposed dates for meetings is prepared and circulated in advance to the Directors. The Board met five times during the year, details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Act and the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations 2015â). Details of all the Committee of the Board have been given in the Corporate Governance Report.
11. CORPORATE GOVERNANCE
Your Company is part of BP Group which is known globally for best standards of governance and business ethics. Your Company has put in place governance practices as prevalent globally. The Corporate Governance Report and the Auditorâs Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.
12. CORPORATE SOCIAL RESPONSIBILITY
Your Company recognizes the need and importance of a focused and inclusive social and economic development, especially of the industries and communities within which it operates. Your Company seeks to build open and constructive relationships with all its stakeholders and wants them to benefit from your Companyâs presence and this is set out in the Code of Conduct and values of your Company. over the last hundred years of the Companyâs presence in India, Castrol Indiaâs Corporate Social Responsibility (CSR) activities have evolved from charitable giving to a strategic CSR programme, working in collaboration with key stakeholders. The CSR programme of your Company aligns business risks and opportunities with the national agenda of development priorities to meet the needs and aspirations of the populace.
Your Company aims to provide a safer and better quality of life for the communities it serves, whilst ensuring the long-term sustainability of the
Companyâs operations in the relevant industries where it operates. In alignment with our core skills and vision of building a safer and better quality of life, underpinned by our focus on progressive technology and in line with the aspirations of the countryâs youth, the Company focuses on the following programmes:
i. Eklavya: Strengthening skills in the automotive and industrial sectors, with a focus on technology
ii. Ehtiyat: Collaborating for safer mobility
iii. Ekjut: Community Development in areas of operation and presence
iv. Ehsaas: Humanitarian aid
Corporate Social Responsibility Committee of the Board has recommended and the Board has approved a CSR Policy in line with the requirements of Section 135 of the Act.
The Corporate Social Responsibility Policy is available on the website of the Company at http://www.castrol.com/en_in/india/about-us/csr. html.
The Annual Report on CSR activities is annexed to this report as Annexure-IV.
The Business Responsibility Report also contains information on work done on CSR.
13. DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Sections 134(3)(c) and 134(5) of the Act, with respect to the Directorsâ Responsibility Statement, it is hereby confirmed:
(a) in the preparation of the annual accounts for the year ended 31 December 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
(b) t he Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31 December 2016 and of the profit of your Company for the year ended on that date;
(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a âgoing concern'' basis;
(e) the Directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively; and
(f) t he Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
14. RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Company has set up a Risk Management Committee. Your Company has also adopted a Risk Management Policy, the details of which are given in the Corporate Governance Report that forms part of this Annual Report.
Your Company maintains an adequate and effective Internal Control System commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with Management authorisation and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe-guarded against significant misuse or loss. An independent Internal Audit function is an important element of your Company''s internal control system. The internal control system is supplemented through an extensive internal audit programme and periodic review by Management and Audit Committee.
Your Company has in place, adequate Internal Financial Controls with reference to Financial Statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
15. RELATED PARTY TRANSACTIONS
Your Company has adopted a Related Party Transactions Policy. The Audit Committee reviews the Policy from time to time and also approves and reviews all Related Party Transactions, to ensure that the same are in line with the provisions of applicable law and the Policy. The Committee approves the Related Party Transactions and wherever it is not possible to estimate the value, approves limit for the Financial Year, based on best estimates. All Related Party Transactions are reviewed by an independent accounting firm to establish compliance with law and limits approved.
All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm''s Length basis. No Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable to your Company.
In conformity with the requirements of the Act, read with SEBI Listing Regulations, 2015 the policy to deal with Related Party Transactions is also available on Companyâs website at http:// www.castrol.com/en_in/india/about-us/financials/ other-financial-documents-policies.html
16. DEPOSITS
Your Company has not accepted any Fixed Deposits under Chapter V of The Act during this Financial Year and as such, no amount on account of Principal or Interest on Deposits from Public was outstanding as on 31 December 2016.
17. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans, guarantees and investments made by your Company pursuant to Section 186 of the Act, are given in the Notes to the Financial Statement which forms part of the Annual Report.
18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT (R&D) AND FOREIGN EXCHANGE EARNING AND OUTGO
The particulars relating to conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo, as required to be disclosed under the Act, are provided as Annexure-V.
19. MATERIAL CHANGES OCCURRED AFTER END OF FINANCIAL YEAR
Except as disclosed elsewhere in this Annual Report, no material changes and commitments which could affect your Companyâs financial position have occurred between the end of the Financial Year of your Company and date of this Annual Report.
20. AUDITORS
M/s. SRBC & Co. LLP, Chartered Accountants, retire as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting. The Audit Report given by the Auditors on the financial statements of your Company is part of the Annual Report. There has been no qualification, reservation or adverse remark given by the Auditors in their Report.
I n accordance with Section 139 of the Act, listed companies cannot appoint or re-appoint the auditor for more than two terms of five consecutive years, if the auditor is an audit firm. Existing companies, which are covered under auditor rotation requirement, should comply with these requirements within three years from the date of commencement of the Act.
SRBC & Co, LLP, Chartered Accountants (ICAI Firm Registration No. 324982E), Mumbai have been the Auditors of your Company since 2001 and have completed a term of sixteen years (including three years of transitional period). It is now proposed to appoint M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration Number 117366W-100018) as Statutory Auditors of your Company. Further, M/s. Deloitte Haskins & Sells LLP have consented to be appointed as Statutory Auditors of the Company and have confirmed that their appointment, if made, would be in compliance with the provisions of Sections 139 and 141 of the Act and Rules framed there under.
The Audit Committee and the Board, at their respective meetings held on 21 February 2017, have recommended appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration Number 117366W-100018), as Statutory Auditors of the Company, from the conclusion of ensuing Annual General Meeting until conclusion of 44th Annual General Meeting.
M/s. Kishore Bhatia & Associates, Cost Accountants carried out the Cost Audit for applicable business segment. It is proposed to re-appoint them as Cost Auditors for the Financial Year ending 31 December 2017.
The Board had appointed M/s. S. N. Ananthasubramanian & Co., Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Act, for the Financial Year 2016. The Secretarial Audit report is annexed to this report marked as Annexure-VI.
The qualification made by the Secretarial Auditor in the Secretarial Audit Report is pertaining to non-appointment of Company Secretary within the statutorily permitted period of six months from the vacancy of office of the whole-time Key Managerial Personnel pursuant to Section 203(4) of the Companies Act, 2013 for which your Company has filed a suo-moto application for compounding of the contravention of said provision of the Act before the Hon''ble National Company Law Tribunal, Mumbai Bench.
Your Board has appointed Ms. Chandana Dhar as Company Secretary with effect from 12 January 2017.
21. EXTRACT OF THE ANNUAL RETURN
Details forming part of the extract of the Annual Return in Form MGT 9 as per provisions of the Act, and rules thereto are annexed to this report as Annexure VII.
22. PARTICULARS OF EMPLOYEES
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as Annexure-VIII.
Details of employee remuneration as required under provisions of Section 197 of the Act, and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, form part of this Report. As per the provisions of Section 136 of the Act, the Report and Financial Statement are being sent to the shareholders of your Company and others entitled thereto, excluding the statement on particulars of employees. Copies of said statement are available at the Registered office of the Company during the designated working hours up to 21 days before the Annual General Meeting. Any Member interested in obtaining such details may also write to the Secretarial Department at the Registered Office of the Company.
23. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company firmly believes in providing a safe, supportive and friendly workplace environment - a workplace where our values come to life through the supporting behaviours. Positive workplace environment and a great employee experience are integral part of our culture. Your Company believes in providing and ensuring a workplace free from discrimination and harassment based on gender.
Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment, your Company provides the mechanism to seek recourse and redressal to the concerned individual subjected to sexual harassment.
Your Company has a Sexual Harassment -Prevention and Grievance Handling Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the year there was one complaint of sexual harassment that was reported which was reviewed by the Internal Complaints Committee. Pursuant to the review, disciplinary action was taken against the employee accused of sexual harassment.
24. VIGIL MECHANISM
Your Company has a very strong whistle blower policy viz. âOpen Talkâ. All employees of your Company also have access to the Chairman of the Audit Committee in case they wish to report any concern. Your Company has provided a dedicated e-mail address for reporting such concerns. All cases registered under Whistle Blower Policy of your Company are reported to and are subject to the review of the Audit Committee.
25. GENERAL DISCLOSURES
Your Directors state that 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. I ssue of Equity Shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (including Sweat Equity Shares) to employees of your Company under any scheme. Your Company has not resorted to any buy back of its shares during the year under review.
3. Neither the Managing Director nor the Whole time Directors of your 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 Companyâs operations in future.
26. ACKNOWLEDGEMENT
The Board wishes to place on record its sincere appreciation of the efforts put in by your Companyâs employees for achieving encouraging results under difficult conditions. The Board also wishes to thank its members, distributors, vendors, customers, bankers, government and all other business associates for their support during the year.
on behalf of the Board of Directors
omer Dormen Rashmi Joshi
Managing Director Director Finance &
DIN: 07282001 Chief Financial Officer
DIN: 06641898
Place : Mumbai
Date : 21 February 2017
Dec 31, 2014
Dear Members,
Report of the Directors to the Shareholders of the Company in
respect of the year ended 31st December, 2014.
For the year ended For the year ended
Particulars 31st December, 2014 31st December, 2013
(Rupees in crores) (Rupees in crores)
Profit before Interest,
Depreciation, Exceptional
Items & Tax 732.78 722.54
Interest Income
(Net of Finance Cost) 29.66 46.87
Exceptional items  22.80
Profit before Depreciation & Tax 762.44 792.21
Depreciation & Amortisation 36.13 30.45
Tax Expenses
Current Tax 260.60 241.06
Deferred Tax (8.85) 12.13
Profit after Tax 474.56 508.57
Adding thereto:
Balance as per last Balance Sheet
brought forward 94.86 43.53
Profit available for Appropriation 569.42 552.10
The appropriations are:
Dividend
Interim 173.10 173.10
Final 197.82 173.10
Tax on Dividend
Interim 29.42 29.42
Final 39.55 29.42
Final - 2013 Â 1.34
Tax on Capital Reduction 42.03 Â
Transfer to General Reserves  50.86
Net surplus in the Statement of
Profit & Loss 87.50 94.86
569.42 552.10
PERFORMANCE
Sales realisation of the Company has increased by about 7% over the
previous year to Rs. 3,907 crores, mainly due to an increase in per
unit sales realizations. However, the sales volumes have declined by
1% over the previous year. Cost of material, has increased by about 8%
over the previous year to Rs. 1,938 crores primarily due to weakening
of Rupee. Despite the challenging economic environment, its the
performance of personal mobility brands which has helped your Company
to improve its unit gross margins and gross profit. Operating and other
expenses increased by about Rs. 40 crores as compared to the previous
year mainly due to inflation. Profit from operations has increased by
about 4%.
Profit Before Tax decreased by about 5% over previous year to Rs. 726.3
crores. Profit After Tax decreased by 7% over the previous year to Rs.
474.6 crores.
The Company''s performance has been discussed in detail in Management
Discussion and Analysis Report.
DIVIDEND
Your Directors are pleased to recommend a Final Dividend of Rs. 4.00
per equity share of Rs. 5/- each, for the year ended 31st December,
2014. The Interim Dividend of Rs. 3.50 per equity share was paid in
August, 2014.
The Final Dividend, subject to approval of members, will be paid within
statutory period, to the members whose names appear in the Register of
Members, as per the book closure. The total dividend for the financial
year, including the proposed Final Dividend, amounts to Rs. 7.50 per
equity share and will absorb Rs. 370.9 crores (Previous year Rs. 7.00
per equity share amounting to Rs. 346.20 crores). The Company also
returned Rs. 5 per share to its shareholders (Rs. 247.28 crores) under
Capital Reduction Scheme, in March, 2014.
DIRECTORS
In accordance with the provisions of Section 161 of the Companies Act,
2013 (the Act) and Article 115(a) of the Articles of Association, Mr.
Jayanta Chatterjee was appointed as an Additional Director with effect
from 30th October, 2014. Mr. Chatterjee was also appointed as
Whole-time Director, designated as ''Director -
Supply Chain'' with effect from 30th October, 2014. His appointment
has been put up for approval of Members of the Company through Postal
Ballot and approval of Central Government is also being obtained.
Pursuant to provisions of the Act and Clause 49 of the Listing
Agreement, Mr. S.M. Datta, Mr. R. Gopalakrishnan and Mr. Uday Khanna
were appointed as Independent Directors for a period of 5 years from
1st October, 2014 and shall not be liable to retire by rotation. Mr.
Ravi Kirpalani and Mr. Peter Weidner retire by rotation and being
eligible, offer themselves for re-appointment. The information of
directors seeking appointment/re-appointment as required under Clause
49 of the Listing Agreement has been given in Corporate Governance
section of the Annual Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same.
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st December, 2014 and of the profits of the
Company for the year ended 31st December, 2014.
(iii) the Directors have taken proper and sufficient care 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) t he Directors have prepared the annual accounts on a going
concern basis.
AUDITORS
The present statutory auditors of the Company, M/s. S.R. Batliboi & Co.
LLP, Chartered Accountants, have communicated that from FY 2015 the
statutory audit will be conducted by their associate firm M/s. SRBC &
Co. LLP, Chartered Accountants, due to internal restructuring. The
Board of Directors, on recommendation of the Audit Committee,
recommends the appointment of M/s. SRBC & Co. LLP, Chartered
Accountants (Firm Registration No. 324982E), as the Statutory Auditors
of the Company from the conclusion of this Annual General Meeting until
the conclusion of the next Annual General Meeting of the Company. A
certificate from them has been received, to the effect that their
appointment as Statutory Auditors of the Company, if made, would be in
accordance with the provisions of Sections 139 and 141 of the Companies
Act, 2013 and rules framed thereunder.
Further, the Board of Directors, on recommendation of the Audit
Committee, have appointed M/s. Kishore Bhatia & Co., Cost Accountants,
as Cost Auditors of the Company, for the Financial Year 2015, subject
to the approval of the Members, which is being obtained in the ensuing
Annual General Meeting. A certificate from M/s. Kishore Bhatia & Co.
has been received assuring that their appointment as Cost Auditors of
the Company, if made, would be in accordance with the limits specified
under of Section 141 of the Companies Act, 2013 and rules framed
thereunder.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Following steps were taken at Patalganga, Silvassa and Paharpur
factories:
- Usage of LED lights across different areas in the plant to reduce
power consumption and increase in lux level.
- Maximize output in general shift by ensuring uptime of equipment,
so as to minimize power and utility operations in second shift.
- Provide timers for ACs in IT server room, to run in alternate mode
thereby reducing total power consumption.
- Change stacking in pail line from 3*3 to 3*4 matrix, resulting in
reduction of cycle time.
- Replace the conventional float valves by SS PUF filled floats of
water storage tank.
- Reduction in lighting power consumption by usage of automated plant
lights during night time.
- Air leakage audits and addressing most of identified leak points.
- Usage of energy efficient luminaries in the filling area.
- Provision of solar tube on plant shed roofs for utilization of
natural light.
- Fuel saving in Hot Oil System (HSD) by insulation & repair, and
creating awareness by monitoring & sharing of information to run the
operation efficiently.
- Replacement of water cooled induction sealers with energy efficient
air cooled induction sealers.
- Provision of control with timer mechanism for switching on/off of
air conditioners in administration office.
- Provision of aluminum cladding on thermic fluid heater line to
minimize the heat transfer loss.
- Usage of Jet mixers for blenders which help in reducing the batch
cycle time.
- Rationalization of certain blending operations for a few products
with reduced temperature, to reduce energy consumption.
- Increasing awareness level amongst the work force for various
energy conservation measures at the plant level.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy.
Nil
(c) Impact of Measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.
The improvement measures have led to efficient use of energy and
optimization in the production per unit cost.
TECHNOLOGY ABSORPTION
1. Your Company continues to derive sustainable benefits from its India
Technology Centre located in Mumbai. The year 2014 was yet another year
where your Company''s product development capability helped the
business meet pressing consumer needs, partner closely with its
customers and leverage strengths of its global affiliates to meet the
needs of the local market.
2. In the year under review, your Company continued its investment in a
world-class two-wheeler oil product development team, based out of the
India Technology Centre to support the needs of the domestic and global
market. To enable this team in its work, your Company further added
state-of- the-art test rigs specific to two-wheeler engine oil
development. This has helped us to study friction properties and screen
candidates for further engine trials. It not only helps us develop
differentiation, but also hastens the product development cycle.
3. With Intelligent Molecules that cling and protect, Castrol Magnatec
is an engine-oil for cars with a unique proposition. But with unique
requirements of city driving with multiple start and stops in a
journey; Castrol embarked on a journey to launch a custom made oil for
driving in these conditions - yet fulfilling the Magnatec promise of
cling and protect. Your Company launched a project focused on the
Indian passenger car market aimed to develop a fuel efficient, durable
SAE 5W-30, ACEA A5/B5 2012 compliant Engine oil for Maruti Suzuki
diesel engines. This was a first ever co-engineering project with this
important passenger car OEM with dominant market share in the domestic
market that resulted in Castrol being the only oil marketer to supply
oil that optimized fuel efficiency performance, while maintaining
engine protection. In 2014, your Company also focused on the Indian
passenger car market to develop a fuel efficient, durable SAE 5W-30,
ACEA A5/B5 2012 compliant engine oil common for Tata Motors covering
entire range of Gasoline and Diesel engines. This product is
extensively tested for durability and fuel efficiency in Tata Motors
gasoline and diesel cars. This is also the only and first lubricant to
be approved for the Tata new generation "Revotron Series of Engine"
with optimized fuel efficiency performance while maintaining engine
protection.
4. India, where the hub and spoke model plays a key role in its supply
chain - has a large number of ultra-light commercial vehicles. To cater
to this unique demand - where the engine is constantly under stress -
your Company developed and launched Castrol CRB Mini Truck -
specifically designed and locally tested for these vehicles.
5. Building capability within to sell the technologically superior
products developed by your Company is a critical link to ensure our
customers understand the superior value they are getting when they
purchase our products. Towards this end, your company had invested in a
"Liquid Engineering Centre" (LEC) a few years ago. This year your
Company launched the virtual engine training program to bring multiple
locations together using virtual reality platform. This created a huge
impact in the market wherein the benefits of our products could be
technically explained to the customers. Your Company invests in
creating a state-of-the- art semi replica of the liquid engineering
centre at our key customer - Maruti Suzuki India Ltd.
6. Another major milestone that was achieved in the year 2014 was the
renewal of the ISO 14001 and 9001:2008 certification for the India
Technology Centre. Both these certifications are effectively a
license-to-operate today for a reputed organization such as your
Company. The ISO 9001:2008 assures the management of your Company that
the operations of the Centre continue to be streamlined and efficient.
The ISO 14001 certification is a mark of your Company''s commitment to
the customer and shareholder to be environmentally responsible and to
adopt sustainable business practices.
RESEARCH & DEVELOPMENT(R&D)
(A) Specific areas in respect of which R&D was carried out:
(i) New product launches with stronger consumer benefit:
Following brands were re-launched during the year with strong consumer
benefits viz.:
a. Magnatec 5W-30 Stop Start with intelligent molecules that give you
instant protection from the moment you start - every time you start.
b. Magnatec Professional A1 5W-30
c. CRB Mini Truck - to cater to the fast growing category of mini
trucks
d. SF0007 RP - a mid-flash rust preventive for tube industry
e. Optigear MX320 - for wind turbines
(ii) New products and offers for Original Equipment Manufacturers
(OEM''s):
Your Company has been successful in obtaining endorsement for fuel
efficient products from two of the leading car manufacturers viz. TATA
Motors and Maruti Suzuki.
(iii) Driving efficiencies:
Several initiatives were taken during the year to ensure that your
Company availed of the maximum efficiencies by creating alternative raw
material options. This will also ensure a strong security of supply in
case of any crisis.
(B) Benefits derived as a result of R&D
Based on the R&D activities mentioned above being implemented, your
Company was able to further strengthen its connect with its consumers
and the OEM''s. It also helped your Company in forging new
partnerships with OEM''s and demonstrating its technical superiority.
(C) Future plan of action
Innovation is a journey and your Company is well placed to ensure that
it continues to maintain a strong track record in this field. Your
Company will continue its focus on generating fuel efficient products
for its consumers, strengthening its synthetic technology based
portfolio and working on the state-of-the-art technologies of modelling
to fast track product development cycles.
(D) Expenditure on R&D (Rs. in crores)
(i) Capital 3.65
(ii) Recurring 10.56
(iii) Total 14.21
FOREIGN EXCHANGE EARNING AND OUTGO
1. Activities relating to Export
There were no significant exports by the Company during the year.
However, some quantities of the products were exported to China,
Thailand & Saudi Arabia.
2. Earning and Outgo
Members are requested to refer to note Nos. 32 and 33 of notes to
Financial Statements for the year ended 31st December, 2014.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of
Section 217(2A) of the Companies Act, 1956 (the Act) read with
Companies (Particulars of Employees) Rules, 1975 as amended, is
provided in the Annexure forming part of the Report. In terms of
Section 219(1 )(b)(iv) of the Act, the Report and Accounts are being
sent to the Members excluding the aforesaid Annexure. Any member
interested in obtaining a copy of the same may write to the Company
Secretary at the Registered Office address.
ACKNOWLEDGEMENT
The Board wishes to place on record its sincere appreciation of the
efforts put in by the Company''s workers, staff and executives for
achieving encouraging results in difficult environment. The Board also
wishes to thank its members, distributors, vendors, customers, bankers,
government and all other business associates for their support during
the year.
On behalf of the Board of Directors
Ravi Kirpalani Rashmi Joshi
Managing Director Director - Finance
Mumbai
Dated: 25th February, 2015
Dec 31, 2013
Dear Members
Report of the Directors to the Members of the Company in respect of the
year ended 31st December, 2013.
For the year
ended For the
year ended
31st December,
2013 31st
December,
2012
(Rupees in
crores) (Rupees in
crores)
Profit before Depreciation, Exceptional
Items & Tax 769.41 692.96
Exceptional items 22.80 -
Profit before Depreciation & Tax 792.21 692.96
Depreciation & Amortisation 30.45 26.64
Tax Expenses
Current Tax 241.06 227.78
Deferred Tax 12.13 (8.85)
Profit after Tax 508.57 447.39
Adding thereto:
Balance as per last Balance Sheet
brought forward 43.53 43.24
Profit available for Appropriation 552.10 490.63
The appropriations are:
Dividend
Interim 173.10 173.10
Final 173.10 173.10
Tax on Dividend
Interim 29.42 28.08
Final 29.42 28.08
Final-2012 1.34 -
Transfer to General Reserve 50.86 44.74
Net surplus in the Statement of
Profit & Loss 94.86 43.53
552.10 490.63
PERFORMANCE
Sales realisations of the Company have increased by about 2% over the
previous year to Rs. 3,664 crores, mainly due to an increase in unit
sales realizations. However, the sales volumes have declined by 3%
over the previous year. Costs of materials have decreased by about 2%
over the previous year to Rs. 1,788 crores. Despite the challenging
economic environment, a pro-active margin management strategy helped
your Company to improve its unit gross margin and gross profit.
Operating and other expenses increased by about Rs. 34 crores as
compared to the previous year mainly due to inflation. Profit Before
Tax increased by about 14% over previous year to Rs. 762 crores.
Tax rate for the current year has remained at nearly the same level as
that of the previous year. Profit after tax increased by 14% over the
previous year to Rs. 509 crores.
The Company''s performance has been discussed in detail in ''Management
Discussion and Analysis Report'' at Annexure ''A'' and is part of this
Report.
DIVIDEND
The Interim Dividend in respect of the year ended 31st December, 2013
of Rs. 3.50 per share on 49,45,61,192 Equity Shares was paid to the
Members of the Company whose names appeared in the Register of Members
on 7th August, 2013.
The Directors have recommended payment of Final Dividend of Rs. 3.50
per share on 49,45,61,192 Equity Shares. The dividend, if approved by
the Members will be paid to all the eligible Members and reduction in
share capital from Rs. 10/- to Rs. 51- per share, will not affect the
entitlement (amount) of the dividend to be received.
REDUCTION OF SHARE CAPITAL
The Board of Directors had approved the reduction of Share Capital so
as to reduce the fully paid-up face value of equity shares from Rs.10/-
per share to Rs. 5/- per share, subject to the approval of the Members
and the Hon''ble Bombay High Court. Accordingly, the reduction of Share
Capital was approved by the Members by Postal Ballot on 9th October,
2013 and was confirmed by the Hon''ble Bombay High Court on 20th
December, 2013. The said Reduction of Share Capital became finally
effective on 20th January, 2014 upon obtaining the Certificate of
Registration of Order and minutes of reduction of Capital from
Registrar of Companies, Maharashtra, Mumbai. Consequently, the existing
Issued, Subscribed and Paid-up Capital Share Capital of the Company is
reduced from Rs. 494,56,11,920 (Rupees Four Hundred Ninety Four Crores
Fifty Six Lakhs Eleven Thousand Nine Hundred and Twenty only)
comprising of 49,45,61,192 (Forty Nine Crores Forty Five Lakhs Sixty
One Thousand One Hundred Ninety Two) Equity Shares of the face value of
Rs. 10/- each fully paid-up to Rs. 247,28,05,960 (Rupees Two Hundred
Forty Seven Crores Twenty Eight Lakhs Five Thousand Nine Hundred Sixty
only) comprising of 49,45,61,192 (Forty Nine Crores Forty Five Lakhs
Sixty One Thousand One Hundred Ninety Two) Equity Shares of the face
value of Rs. 5/- each fully paid-up.
DIRECTORS
Mr. Sujit Vaidya, Director - Finance of the Company (since November,
2010), resigned from the Board of Directors of the Company with effect
from 17th May, 2013.
Mr. Bijay Kamath, Director - Supply Chain of the Company (since
November, 2012), resigned from the Board of Directors of the Company
with effect from 31st July, 2013.
The Board places on record its appreciation of the contributions made
by them during their respective tenures on the Company''s Board as
Directors of the Company.
Mr. Ravi Kirpalani was appointed as a Whole-time Director designated as
Managing Director of the Company for the period of 5 years effective
from 27th April, 2013, subject to the approval of the Members. An
abstract and memorandum of interest under Section 302 of the Act, was
sent to the Members of the Company.
Ms. Rashmi Joshi was appointed as Additional Director effective from
1st August, 2013. In accordance with the provisions of Section 260 of
the Companies Act, 1956 (the Act) and Article 115(a) of the Company''s
Articles of Association, she will cease to hold this office at the
forthcoming Annual General Meeting and is eligible for re-appointment.
Ms. Rashmi Joshi is also appointed as the Whole-time Director
designated as ''Director - Finance'' of the Company for a period of 5
years with effect from 1st August, 2013, subject to the approval of the
Members and the Central Government. An abstract and memorandum of
interest under Section 302 of the Act, was sent to the Members of the
Company. Pursuant to Section 257 of the Companies Act, 1956, notice
has been received from a Member, together with necessary deposit,
proposing the appointment of Ms. Rashmi Joshi as a Director retiring by
rotation on the Board of the Company.
Mr. S.M. Datta and Mr. Uday Khanna retire by rotation and being
eligible, offer themselves for re-appointment at the ensuing Annual
General Meeting.
The brief profile of directors seeking appointment/ re-appointment, as
required under Clause 49 of the Listing Agreement has been given in the
Report on Corporate Governance.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same.
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st December, 2013 and of the profits of the
Company for the year ended 31s'' December, 2013.
(iii) the Directors have taken proper and sufficient care 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 Directors have prepared the annual accounts on a going concern
basis.
AUDITORS
M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, the Statutory
Auditors of the Company, hold office until the conclusion of the
ensuing Annual General Meeting and are eligible for re-appointment. The
Company has received letters from them to the effect that their
re-appointment, if made, would be within the prescribed limits under
Section 224(1 B) of the Companies Act, 1956 and that they are not
disqualified for re-appointment within the meaning of Section 226 of
the said Act.
COST AUDITORS
The Board of Directors had on the recommendation of the Audit Committee
appointed M/s. N. I. Mehta & Co. as the Cost Auditors of the Company
for the financial year 2013 to carry out a Cost Audit in relation to
the cost accounting records for the manufacture of Lubricants. The said
appointment has also been filed in the prescribed format with the
Central Government. The Cost Auditors had certified that their
appointment was within the limits of Section 224(1 B) of the Act. The
Audit Committee had also received a certificate from the Cost Auditors
certifying their independence and arm''s length relationship with the
Company.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Energy conservation during the financial year has accrued as a result
of the following steps taken at the various factories of the Company:
Patalganga:
1) In Boilers
Addition of Fuel Additives.
- Survey on Hi-Firing/Low Firing was done. Based on that modulation
was fine tuned to optimum pressure.
- Regular blow down and effective maintenance of condensate recovery
system.
- Installation of flash steam recovery system for tanker heating
system.
Providing condensate return line for tanker unloading system.
2) Electricity Energy reduction
- Installation of VFD (Variable Frequency Drive) for most of the pumps
in the system.
- Maintaining unity power factor through Auto Power Factor Controller.
- Installation of harmonics filtration system.
- Provided sensor and timer for barrel conveyor.
- Sensor for switching on/off the street lights automatically based on
the natural light.
3) Water Conservation measures
- Maintaining water sprinklers provided on all gardens which operates
at set intervals.
- Identified water leakage from many places and plugged them.
- Replaced conventional float valves by SS Puf filled float valves
which prevented water overflowing from water tank.
Savings in water consumption from the year 2012 to 2013 is 3320 cubic
meters which is about 24.5% reduction.
Silvassa:
Optimizing power and utility operations by
- Running of utility pumps closer to their best efficiency point.
- Air leakage audit conducted for site and arrested leakages.
- Energy efficient luminaries changed in production area.
Fire pump & water line leakages arrested to reduce raw water
consumption.
- Created awareness by monitoring/forecasting and sharing the
information to run the operations, efficiently.
Paharpur:
- Installed new capacitor panel to improve the power factor of the site
saving electrical losses.
- Rationalised blending of few products with reduced temperature which
reduced the fuel consumption.
- Executed three key de-bottlenecking projects and improved the
efficiency- viz batch cycle time i.e. producing identical volumes in
lesser number of days in a month.
- Reduced water consumption by providing additional water meters,
on/off type of sanitary fittings, better management of water supply
during out of office hours and reduced the annual water consumption by
around 300 KL. This also helped in reducing the power consumed by water
pump saving electricity.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy.
Nil
(c) Impact of Measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.
The measures mentioned above have led to reduction in fuel and
electricity consumption as well as improvement in the productivity.
TECHNOLOGY ABSORPTION
1. Your Company continues to derive sustainable benefits from its
India Technology Centre located in Mumbai. The year 2013 was yet
another year where your Company''s product development capability helped
the business meet pressing customer needs, partner closely with its
customers and leverage strengths of its global affiliates to meet the
needs of the local market.
2. In the year under review, your Company continued its investment in
a world-class motorcycle oil product development team based out of
Technology Centre in India to support the needs of the domestic market.
To support this team in its work, your Company also installed
state-of-the- art test rigs specific to motorcycle oil development.
This was imperative as India has emerged as the world''s second largest
two-wheeler market and winning in this category in India has been
identified as a part of your Company''s core strategy.
3. In a scenario where goods movement is impaired, freight rates are
soft and diesel prices are rising, a product that reduces cost of
operations for commercial vehicle customers was the need of the hour.
Your Company''s OEM Technology and Global product development team, had
the opportunity to work with the engineers at Tata Motors, one of the
most esteemed customers, to co-engineer the first-ever OEM-endorsed
fuel-efficient engine oil - RX Turbo Fuel Saver. The product was
launched at a glittering event attended by the leadership team of our
customer organization, bearing testimony to the landmark joint
achievement.
4. With Intelligent Molecules that cling and protect, Castrol Magnatec
is an engine-oil for cars with a unique proposition. But with leaps in
diesel engine technology and OEMs introducing diesel variants for all
their popular models, there was an opportunity to expand the
application of the Magnatec portfolio from beyond its main-stay of
petrol engines. Support from BP''s research facility at Pangbourne, UK,
helped in shortening development cycle for a diesel variant for
Magnatec and your Company could respond to the market quickly.
5. Building capability within the organization to sell the
technologically superior products developed by your Company is a
critical link to ensure our customers understand the superior value
they are getting when they purchase our products. Towards this end,
your Company had invested in a "Liquid Engineering Centre" (LEC) a few
years ago. The year witnessed significant improvements to the customer
experience and knowledge transfer capabilities of the Liquid
Engineering Centre. It also served as a platform to showcase your
Company''s product capabilities to key members of business-to-business
customer organizations. In the year under review, over 450 customers
visited the LEC. Using modern technology and innovative ideas we were
able to contact more than 2000 customers (and OEM employees) through in
field demonstrations. We also conducted training to more than 400
employees and partners.
6. The year was also marked by an organization- wide initiative, titled
PICASSO, within your Company to further raise the profile of quality
within the organization, especially on the aspect of product
development. The initiative involved internal audits conducted by the
BP Group on quality processes and assurance programs, and the auditors
found all processes satisfactory. Another major milestone that was
achieved in the year 2013 was the renewal of the ISO 14001 and
9001:2008 certification for the Centre. Both these certifications are
effectively a license-to- operate today for a reputed organization such
as your Company. The ISO 9001:2008 assures the management of your
Company that the operations of the Centre continue to be streamlined
and efficient. The ISO 14001 certification is a mark of your Company''s
commitment to the customer and shareholder to be environmentally
responsible and to adopt sustainable business practices.
RESEARCH & DEVELOPMENT (R&D)
(A) Specific areas in respect of which R&D was carried out:
(i) New product launches with stronger consumer propositions/benefits:
Following brands were re-launched during the year with strong consumer
benefits viz.
(i) Castrol Magnatec Diesel with intelligent molecules;
(ii) RX Turbo Fuel Saver;
(iii) Power 1; and
(iv) Safecoat DW27 VC - high flash rust preventive oil.
(ii) New products and offers for Original Equipment Manufacturers
(OEMs):
Your Company was successful in obtaining endorsements for its product
RX Turbo Fuel Saver from Tata Motors with fuel efficiency numbers.
Your Company has obtained an approval for fuel efficient diesel engine
oil for Maruti diesel cars.
(Hi) Driving efficiencies:
Several initiatives were taken during the year to ensure that your
Company availed of the maximum efficiencies by creating alternative raw
material options. This will also ensure a strong security of supply in
case of any crisis. During the year, your Company also renewed its ISO
certificates of 9001:2008 and 14001 in 2013.
(B) Benefits derived as a result of R&D
Based on the R&D activities mentioned above being implemented, your
Company was able to further strengthen its connect with its consumers
and the OEMs. It also helped your Company in forging new partnerships
with OEMs and demonstrating its technical superiority.
(C) Future plan of action
Innovation is a journey and your Company is well placed to ensure that
it continues to maintain a strong track record in this field. Your
Company will continue its focus on generating fuel efficient products
for its consumers, strengthening its synthetic technology based
portfolio and working on the state of the art technologies of modelling
to fast track product development cycles.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of
Section 217(2A) of the Companies Act, 1956 (the Act) read with
Companies (Particulars of Employees) Rules, 1975 as amended, is
provided in the Annexure forming part of the Report. In terms of
Section 219(1)(b)(iv) of the Act, the Report and Accounts are being
sent to the Members excluding the aforesaid Annexure. Any member
interested in obtaining a copy of the same may write to the Company
Secretary at the Registered Office address.
ACKNOWLEDGEMENT
The Board wishes to place on record its sincere appreciation of the
efforts put in by the Company''s workers, staff and executives for
achieving encouraging results under difficult conditions. The Board
also wishes to thank its Members, distributors, vendors, customers,
bankers, government and all other business associates for their support
during the year.
On behalf of the Board of Directors
Ravi Kirpalani Rashmi Joshi
Managing Director Director - Finance
Mumbai
Dated: 17th February, 2014
Dec 31, 2012
The Directors have pleasure in presenting their Report and Statement of
Accounts for the year ended 31st December, 2012
For the
year ended For the
year ended
31st
December,
2012 31st
December, 2011
(Rupees in
Crores) (Rupees in
Crores)
Proft before Depreciation, Exceptional
Items & Tax 692.96 741.06
Deducting therefrom:
Depreciation & Amortisation 26.64 25.11
Tax Expenses
Current Tax 227.78 255.44
Deferred Tax (8.85) (19.13)
Short/(Excess) provision for tax
relating to earlier years - (1.39)
Proft after Tax 447.39 481.03
Adding thereto:
Balance as per last Balance Sheet
brought forward 43.24 40.65
Proft Available for Appropriation 490.63 521.68
The appropriations are:
Dividend
Interim 173.10 173.10
Final 173.10 197.82
Tax on Dividend
Interim 28.08 28.08
Final 28.08 32.09
Final  2010 - (0.76)
Transfer to General Reserve 44.74 48.11
Net surplus in the Statement of Proft & Loss 43.53 43.24
490.63 521.68
PERFORMANCE
Sales realizations have increased by 5% over the previous year to Rs.
3593 crores mainly due to an increase in unit sales realizations.
However the sales volumes have declined by 2% over the pervious year.
Costs of materials have increased by 8% over the previous year to Rs.
1824 crores mainly driven by the devaluation of Indian Rupee against US
Dollar.
Despite increasing cost pressures and lower volumes, pro-active margin
management strategy helped your Company to maintain its Gross Proft and
Unit Gross Profts.
Operating & other expenses increased by Rs. 45 crores as compared to
2011 as your Company continued to invest in its brands, business growth
opportunities and people.
Proft before tax decreased by 7% over previous year to Rs. 666.3
crores.
Tax rate for the current year has remained at nearly the same level as
that of the previous year. Proft after tax decreased by 7% over the
previous year to Rs. 447.4 crores.
BONUS SHARES
As the members are aware, the Board of Directors had recommended,
subject to the approval of the shareholders, one Bonus equity share for
every one equity share of Rs. 10/- each held on the Record Date.
Accordingly, the approval of the shareholders was obtained on 23rd
August, 2012 to the said issue of Bonus shares through a Postal Ballot.
The Bonus shares were allotted on 6th September, 2012 to those who were
the shareholders of your Company on the Record Date fxed in
consultation with the stock exchanges.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement, a Management Discussion
and Analysis Report and a Report on Corporate Governance are given as
Annexure ''A'' and ''B'' respectively to this Report.
A certifcate from the Statutory Auditors of your Company regarding the
Compliance by the Company of the conditions stipulated under Clause 49
of the Listing Agreement is also attached to this Report.
The declaration by the Chief Operating Offcer pursuant to Clause
49(1)(D) of the Listing Agreement stating that all the Board Members
and Senior Management Personnel have affrmed their compliance with the
Company''s Code of Conduct for the year ended 31st December, 2012 is
given as Annexure "C" in this Report.
BUSINESS RESPONSIBILITY REPORT
In terms of the new Clause 55 of the Listing Agreement, your Company is
required to inform the shareholders in a prescribed format, viz.
Business Responsibility Report (BR Report), of the initiatives taken by
your Company from an Environmental, Social and Governance perspective.
Accordingly, the BR Report forms part of this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors confrm that:
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same.
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of your Company as on 31st December, 2012 and of the profts of the
Company for the year ended 31st December, 2012.
(iii) The Directors have taken proper and suffcient care 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 Directors have prepared the annual accounts on a going concern
basis.
DIVIDEND
The Interim Dividend in respect of the year ended 31st December, 2012
of Rs. 7/- per share on 24,72,80,596 Equity Shares was paid to the
Shareholders of your Company whose names appeared in the Register of
Members on 3rd August, 2012.
The Directors recommend a payment of final dividend of Rs. 3.50/- per
share on 49,45,61,192 Equity Shares of Rs. 10/- each i.e. inclusive of
the Bonus Shares allotted on 6th September, 2012.
DIRECTORS
Mr. N. K. Kshatriya, Vice Chairman & Nominee Director ceased to be a
Director of your Company with effect from 5th April, 2012 and in his
place, with effect from the said date, Mr. P. Weidner was nominated as
a Director of your Company pursuant to Article 112 of the Articles of
Association of your Company.
Mr. Soren Malekar resigned with effect from the close of business hours
on 31st October, 2012 as the Wholetime Director of your Company,
designated as Director  Supply Chain.
Mr. Bijay Kamath was with effect from 1st November, 2012 appointed as
an Additional Director of your Company. Consequent to the said
appointment, he was appointed as a Wholetime Director of the Company
designated as Director  Supply Chain. In accordance with Section 260
of the Companies Act, 1956 (the Act), Mr. Kamath holds offce upto the
date of the forthcoming Annual General Meeting of your Company. Notice
has been received under Section 257 of the Act along with the requisite
deposit from a shareholder proposing Mr. Kamath as a candidate for the
offce of Director.
Mr. A. Moore was nominated with effect from 18th July, 2012 to the
Board pursuant to Articles 112 & 114 of the Articles of Association of
your Company as Alternate Director to Mr. R. Hewins in place of Ms. H.
McCabe.
Your Directors wish to place on record their gratitude for the guidance
and advice received from Mr. Kshatriya, Mr. Malekar & Ms. H. McCabe
during their tenures as Directors of the Company.
Mr. R. Gopalakrishnan and Mr. S. Vaidya retire by rotation and are
eligible for re-appointment.
The information on the particulars of Directors seeking
appointment/re-appointment as required under Clause 49 of the Listing
Agreement executed with the BSE Limited and the National Stock Exchange
of India Limited have been given under Corporate Governance (Annexure
''B'') of this Report.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Energy conservation during the fnancial year has accrued as a result of
the following steps taken at the various plants of the Company:
Patalganga:
1. Installed new energy effcient Variable Frequency Drive (VFD) to
pumps resulting in reduction of electrical energy.
2. Installation of solar tube units in A-14 flling area, LED street
lights across plant and replacement of 40W tubelight with energy
effcient 27W CFL ftting.
3. Replacement of old MCC-5 and PDB electrical panels with new and
safe panels.
4. Synchronization of 130 CFM air compressor which has VFD for the
motor with 200 CFM air compressor to have a balanced load.
5. Using fuel additive with furnace oil to obtain best fuel effciency.
6. Boiler condensate recovery and maintenance done resulting in lower
furnace oil consumption.
Silvassa:
1. Optimizing power and utility operations by:
- Running of utility pumps closer to their best effciency point.
- Decreasing head of thermic fuid pump.
- Optimum temperature supply for hot oil supply.
- Voltage optimizing of transformer for energy saving.
2. Creating awareness by:
- Monitoring/forecasting and sharing of information to run the
operation effciently.
- Stabilizing lighting costs.
Paharpur:
1. Installation of LED street lights led to reduction in the unit
consumption of street lights.
2. Reduction in water consumption by plugging leaks and other control
measures. This also saved energy by stopping running hours of water
pumps.
3. All street lights ftted with solar sensors thereby eliminating
manual switching.
4. Installation of VFD for flling pump helped reduced the power
consumption considerably.
5. Change of fuel: Site shifted from LDO to HSD which is a cleaner
fuel and helps in greater combustion. This reduced the specifc fuel
consumption of the site.
6. Recycling water: The treated water from ETP which used to be
drained in public drain is now being used for sanitation. This has
reduced the water consumption of the site by 10%.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy.
New high capacity air compressor, energy effcient boiler and new
generation auto power factor control panel to maintain power factor to
unity.
(c) Impact of Measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.
The measures mentioned above in (a) and (b) above have led to reduction
in fuel and electricity consumption as well as improvement in the
productivity which in turn has impacted the cost of production.
TECHNOLOGY ABSORPTION
1. Site safety and security continued to remain an area of focus at
the Technology Centre. The Technology Centre was audited and certifed
for the ''Operating Management System'' by the BP Group.
2. The focus on safety at all levels ensured that your Company
completed the year without a single incident. The Technology Centre
also installed a state of the art fre hydrant system to take care of
any exigencies that could occur.
3. Both ISO specifcations viz. 9001 Â 1998 as well as 14001 were
renewed during the year vis-a-vis the Technology Centre.
4. Huge emphasis was laid to ensure product integrity and formulation
compliance. Several internal and external audits were carried out both
at the plant level as well as at the formulation level to ensure that
only compliant products reached the customers.
5. Your Company secured approvals for various new products from
Original Equipment Manufacturers (OEMs) in India like Daimler  Bharat
Benz, Mahindra two-wheelers, Ford.
6. The agreement with TELCON was renewed in 2012.
7. Your Company partnered with Volkswagen to set up a training centre
in their premises.
8. Your Company conducted a technology day at the premises of Ford
India Limited.
9. Your Company launched various products throughout the year with
superior properties and stronger differentiations. Some key launches
were Castrol CRB plus and Castrol CRB Turbo with Durashieldtm Boosters,
re-launch of BP brand of lubricants, revamp of the Castrol RX
portfolio, Castrol Activ with Actibondtm molecules and Castrol Magnatec
with Intelligent molecules. Work is already in progress to make sure
your Company has the product pipeline managed for product launches
throughout 2013 and beyond.
10. Formulation optimization initiatives by Technology team with
support from Supply Chain and Marketing was an area of focus during
2012, which resulted in signifcant savings in raw material costs as
well helped to manage the security of supplies for your Company''s raw
materials.
RESEARCH & DEVELOPMENT (R&D)
(a) Specifc areas in respect of which R&D was carried out.
There were three specifc areas under which R&D activities can be
clubbed. These were:
(a) New product launches with stronger consumer propositions/benefts:
In this category, three major brands were re-launched during the year
with strong consumer benefts viz. (i) Castrol Magnatec with
Intelligent molecules, (ii) Castrol Activ with Actibondtm molecules and
(iii) Castrol CRB Plus and Castrol CRB Turbo were re-launched with
Durashieldtm Boosters which provide stronger wear protection to the
engines.
(b) New products and offers for Original Equipment Manufacturers
(OEMs): In this connection, your Company was successful in obtaining
approvals for its products with three OEM''s namely Bharat Benz
(Daimler), Mahindra for two-wheelers and Ford motors. Your Company
also took its offer to the next level by partnering with Volkswagen to
build a technology centre in their premises and conducting a technology
day at Ford India.
(c) Driving effciencies: Several initiatives were taken during the year
to ensure that your Company availed of the maximum effciencies by
creating alternative raw material options. This will also ensure a
strong security of supply in case of any crisis. During the year, your
Company also renewed its ISO certifcates of 9001:2008 and 14001 in
2012.
(b) Benefts derived as a result of the above R&D.
Based on the R&D activities mentioned above being implemented, your
Company was able to further strengthen its connect with its consumers
and the OEMs. It also helped your Company in forging new partnerships
with OEMs and demonstrating its technical superiority.
(c) Future plan of action.
Innovation is a journey and your Company is well placed to ensure it
continues to maintain a strong track record in this feld. Your Company
will continue its focus on generating fuel effcient products for its
consumers, strengthening its synthetic technology based portfolio and
working on the state of the art technologies of modeling to fast track
product development cycles.
(d) Expenditure on R&D (Rs. in crores)
(i) Capital 1.25
(ii) Recurring 8.58
(iii) Total 9.83
(iv) Total R&D expenditure as a
percentage of Net Sales 0.32
FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to export
There were no signifcant exports by your Company during the year.
However, some products were exported to Group companies in China and
Malyasia.
2. Earnings and outgo
Members are requested to refer to note Nos. 32 & 33 forming part of the
fnancial statements for the year ended 31st December, 2012.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of
Section 217(2A) of the Companies Act, 1956 (the Act) read with
Companies (Particulars of Employees) Rules, 1975 as amended, forms part
of this Report.
AUDITORS
The Shareholders of the Company are requested to appoint Auditors and
to fx their remuneration. M/s. S.R. Batliboi & Co., Chartered
Accountants, the retiring Auditors, have furnished to the Company the
required certifcate under Section 224(1B) of the Companies Act, 1956
and are therefore eligible for re- appointment as Auditors of the
Company.
Cost Auditors
The Board of Directors pursuant to the Notifcation No. GSR 430 (E)
dated 3rd June, 2011 issued by the Central Government under Section
233B of the Companies Act, 1956 (the Act) had on the recommendation of
the Audit Committee appointed M/s. N. I. Mehta & Co. as the Cost
Auditors of the Company for the fnancial year 2012 to carry out a
Cost Audit in relation to the cost accounting records for the
manufacture of "Lubricants". The said appointment has also been fled in
the prescribed format with the Central Government.
The Cost Auditors had certifed that their appointment was within the
limits of Section 224(1B) of the Act. The Audit Committee had also
received a certifcate from the Cost Auditors certifying their
independence and arm''s length relationship with the Company.
PERSONNEL
The Board wishes to place on record its sincere appreciation of the
efforts put in by your Company''s workers, staff and executives for
achieving excellent results under diffcult conditions.
STAKEHOLDERS
The Board also wishes to thank its Shareholders, Distributors, Bankers
and other business associates for their support during the year.
On behalf of the Board of Directors
R. Kirpalani S. Vaidya
Director  Automotive & Director  Finance
Chief Operating Offcer
B. Kamath
Director  Supply Chain
Mumbai
Dated: 15th March, 2013
Dec 31, 2010
The Directors have pleasure in presenting their Report and Statement of
Accounts for the year ended 31st December, 2010.
For the year ended For the year ended
31st December, 2010 31st December, 2009
(Rupees in Crores) (Rupees in Crores)
FINANCIAL RESULTS
Profit before Depreciation,
Exceptional Items & Tax 762.17 607.98
Deducting therefrom:
Depreciation 24.33 27.18
Provision for Tax
Current [Including Wealth Tax of
Rs. 0.16 Crore
(2009: Rs. 0.16 Crore)] 251.09 206.83
Deferred Taxation (2.49) (7.80)
Fringe Benefit Tax - 0.71
Excess Income Tax provision for
earlier years written back (1.07) --
Prof it after Tax 490.31 381.06
Adding thereto:
Balance as per last Balance Sheet
brought forward 31.18 50.75
Profit Available for Appropriation 521.49 431.81
The appropriations are:
Dividend
Interim 173.10 123.64
Final 197.82 61.82
Special - 123.64
Tax on Dividend
Interim 28.75 21.01
Final 32.86 10.51
Final 2009 (0.24) -
Special-2009 (0.48) 21.01
Transfer to General Reserve 49.03 39.00
Balance carried forward 40.65 31.18
521.49 431.81
PERFORMANCE
Sales increased by 18% over the previous year to Rs. 2735 crores mainly
due to an increase in unit sales realizations and higher volumes.
Costs of materials have increased by 23% over the previous year to
Rs.1385 crores due to an increase in Base oil prices and higher
volumes.
Pro-active Cost Containment Strategies helped your Company to grow its
gross profits by 13%.
Operating & other expenses increased by Rs. 6 Crores only compared to
2009, though there was an increase in spend on Advertisement & Sales
Promotion expenses by Rs. 13 Crores, the same being offset by savings
in processing charges and miscellaneous expenditure.
Profit before tax increased by 27% over the previous year to Rs. 738
Crores.
Tax rate for the current year has remained at nearly the same level as
that of the previous year. Profit after tax increased by 29% over the
previous year to Rs. 490 Crores.
BONUS SHARES
As the members are aware, the Board of Directors had recommended,
subject to the approval of the shareholders, one Bonus Equity Share for
every one Equity Share of Rs. 10/- each held on the Record Date.
Accordingly, the approval of the shareholders was obtained by way of a
Postal Ballot on 30th March, 2010. The Bonus Shares were thereafter
allotted on 13th April, 2010.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement, a Management Discussion
and Analysis Report and a Report on Corporate Governance are given as
Annexure A and B respectively to this Report.
A certificate from the Statutory Auditors of the Company regarding the
Compliance by the Company of the conditions stipulated under clause 49
of the Listing Agreement is also attached to this Report.
The declaration by the Chief Operating Officer pursuant to clause 49(1)
(ii) of the Listing Agreement stating that all the Board Members and
Senior Management Personnel have affirmed their compliance with the
Companys Code of Conduct for the year ended 31st December, 2010 is
also attached to this Report and marked Annexure "C".
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors confirm that:
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same.
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st December, 2010 and of the profits of the
Company for the year ended 31st December, 2010.
(iii) The Directors have taken proper and sufficient care 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 Directors have prepared the annual accounts on a going concern
basis.
DIVIDEND
The Interim Dividend in respect of the year ended 31st December, 2010
of Rs. 71- per share on 24,72,80,596 Equity Shares was paid to the
Shareholders of the Company whose names appeared on the Register of
Members on 2nd August, 2010.
The Directors recommend a payment of final dividend of Rs. 8/- per
share on 24,72,80,596 Equity Shares.
DIRECTORS
Mr. Amish Mehta resigned with effect from close of business hours of
15th November, 2010 as the Wholetime Director of the Company designated
as Director - Finance.
Mr Sujit Vaidya was at the Board Meeting held on 12th October, 2010 and
was appointed with effect from the said date as an Additional Director
of the Company. At the said Board Meeting, he was also appointed with
effect from 16th November, 2010 as a Wholetime Director of the Company
designated as Director - Finance.
In accordance with section 260 of the Companies Act, 1956 (the Act),
Mr. Vaidya holds office up to the date of the forthcoming Annual
General Meeting of the Company. Notice has been received under section
257 of the Act along with the requisite deposit from a shareholder
proposing Mr. Vaidya as a candidate for the office of Director.
Your Directors wish to place on record their gratitude for the guidance
and advice received from Mr. Mehta during his tenure as a Director of
the Company.
Mr. R. Gopalakrishnan and Mr. S. Malekar retire by rotation and are
eligible for re-appointment.
The information on the particulars of Directors seeking
appointment/re-appointment as required under Clause 49 of the Listing
Agreement executed with the Bombay Stock Exchange Limited and the
National Stock Exchange of India Limited have been given under
Corporate Governance (Annexure B) of this Report.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Energy conservation during the financial year has accrued as a result
of the following steps taken at the various factories of the Company:
Patalganga:
1. Tube lights were replaced with compact fluorescent lamps
2. Variable Frequency Drives have been installed on pumps.
3. Energy savers have been installed on air conditioners.
4. Auto on /off system provided for street lighting with day light
sensor.
Silvassa:
1. Installation of Variable Frequency Drive for transfer and filling
pumps.
2. Automatic stoppage of blending agitators on completion of blending
recipe.
Paharpur:
1. Automation of power factor panel to ensure high power factor close
to one.
2. Optimising the thermopack efficiency by preventive maintenance.
3. Installation of solar lighting panel for street lights during the
night.
4. Variable Frequency Drives installed for air compressor & thermopack
pump which has led to energy efficiency.
5. Replacement of pumps with energy efficient pumps.
6. Optimising blending temperature of products which helped reduce
energy consumption.
(b) Additional Investments and proposals, if any, being implemented for
reduction of consumption of energy.
The measure mentioned in (a) above have led to reduction in fuel and
electricity consumption as well as improvement in the productivity.
Further energy efficient luminaries have been installed in the
laboratory, supply and dispatch area.
(c) Impact of measures at (a) and (b) above for reduction of energy
consumption and the consequent impact on the cost of production of
goods.
The measure mentioned above have led to reduction in fuel and
electricity consumption as well as improvement in the productivity.
TECHNOLOGY ABSORPTION
1. Site Safety and Security continued to remain an area of focus at
the Technology Centre. The Technology Centre transitioned into the
"Operating Management System" with a management of change to align with
Global Standards.
2. The year 2010 was a year of site upgradation for the Technology
Centre. The focus on safety at all levels ensured that your Company
completed the year without a single incident.
3. The Research & Development centre was recertified to the latest ISO
specification of 9001 - 2008.
4. Huge emphasis was laid on technology protection and alignment with
global requirements by ensuring that all product formulations and raw
materials have global codes and are entered in databases like
Streamline and Fusion.
5. Your Company secured business for various new products with OEMs
in India to further strengthen its partnership (TATA Nano, Mahindra &
Mahindra, Maruti etc.).
6. Various products were launched throughout the year with superior
properties and stronger differentiations. Some key launches were
Magnatec 5W-30 and RX CNG. Work is already in progress to make sure
your Company has the pipeline managed for product launches throughout
the years 2011 and 2012.
7. Formulation optimization initiatives by Technology team with
support from Supply Chain and Marketing was an area of focus, which
brought about significant savings in raw material costs as well help to
manage the security of supplies for our raw materials.
8. Your Company has developed and installed "Truck Driving Simulator"
at their Technology Centre to meet increasing requirement for fuel
economy and safe driving in India. The project, costing Rs. 4.8 million
is aimed at providing such training to drivers. Fuel Economy is a key
development area for all the OEMs but limitations are being faced in
significantly improving the same by conventional means. A two hour
training session of drivers can improve their driving habits resulting
in fuel efficient and safe driving contributing to cleaner environment
and reduced number of accidents.
FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to Export
There were no significant exports by the Company during the year.
However, some of the countries where our products were exported were
China, Saudi Arabia, and Thailand.
2. Earnings and Outgo
Members are requested to refer to note Nos. 18 & 19 and of Schedule L
forming part of the Balance Sheet and Profit and Loss Account for the
year ended 31st December, 2010.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of
section 217(2A) of the Companies Act, 1956 (the Act) read with
Companies (Particulars of Employees) Rules, 1975 as amended, forms part
of this Report.
AUDITORS
The Shareholders of the Company are requested to appoint Auditors and
to fix their remuneration. M/s. S. R. Batliboi & Co., Chartered
Accountants, the retiring Auditors have furnished to the Company the
required certificate under section 224(1 B) of the Companies Act, 1956
and are therefore eligible for re-appointment as Auditors of the
Company.
PERSONNEL
The Board wishes to place on record its sincere appreciation of the
efforts put in by the Companys workers, staff and executives for
achieving excellent results under difficult conditions.
STAKEHOLDERS
The Board also wishes to thank its Shareholders, Distributors, Bankers
and other business associates for their support during the year.
On behalf of the Board of Directors
N. K. Kshatriya R. Kirpalani
Vice Chairman Director - Automotive &
Chief Operating Officer
S. Malekar S. Vaidya
Director - Supply Chain Director - Finance
Mumbai
Dated: 27th April, 2011
Dec 31, 2009
The Directors have pleasure in presenting their Report and Statement of
Accounts for the year ended 31st December, 2009.
For the year ended For the year ended
31st December, 2009 31st December, 2008
(Rupees in Crores) (Rupees in Crores)
FINANCIAL RESULTS
Profit before Depreciation,
Exceptional Items & Tax 607.98 437 88
Deducting therefrom:
Depreciation 27.18 25.68l
Provision for Tax
Current [Including Wealth
Tax of Rs. 0.16 Crore
(2008: Rs. 0.12 Crore)] 206.83 151.00
Deferred Taxation (7.80) (8.60)
Fringe Benefit Tax 0.71 5.75
Excess Income Tax provision
for earlier years written back -- 1.68
Profit after Tax 381.06 262.37
Adding thereto:
Balance as per last Balance
Sheet brought forward 50.75 32.36
Profit Available for
Appropriation 431.81 294.73
The appropriations are:
Dividend
Interim 123.64 74.18
Final 61.82 111,28
Special 123.64 _
Tax on Dividend
Interim 21.01 12.61
Final 10.51 18.91
Special 21.01 __
Transfer to General Reserve 39.00 27.00
Balance carried forward 31.18 50.75
431.81 294.73
PERFORMANCE
Sales increased by 6% over the previous year to Rs. 2685 Crores mainly
due to an increase in unit sales realizations and better sales mix.
Costs of Materials have reduced by 14% over the previous year to Rs.
1124 Crores due to a reduction in Base Oil prices.
Pro-active Margin Management strategy helped us to grow our gross
profits by 34%.
Operating & other expenses increased by 26%, mainly due to increase in
advertisement cost, sales promotion expenses & Salaries.
Profit before tax has increased by 41% over previous year to Rs. 581
Crores.
Tax rate for the current year has remained at nearly the same level as
that of the previous year. Fringe Benefit Tax was lower by Rs. 5 Crores
during the year as the same was abolished from 1st April, 2009. As a
result Profit after Tax increased by 45% over the previous year to Rs.
381 Crores.
BONUS SHARES
The Board of Directors, have at their Board Meeting held on 18th
February, 2010, recommended the issue of Bonus shares in the ratio of
one Bonus Equity Share for every one Equity Share of Rs. 10/- each held
on the Record Date to be fixed in consultation with the stock exchange
and subject to the approval of the shareholders and other requisite
approvals.
The approval of the shareholders would be obtained by way of a Postal
Ballot.
The Bonus shares are entitled to receive dividend that may be
declared/paid on or after the allotment of Bonus shares for the
financial year ending 31st December, 2010.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement, a Management Discussion
and Analysis Report and a Report on Corporate Governance are given as
Annexures A and B respectively to this Report.
A certificate from the Statutory Auditors of the Company regarding the
Compliance by the Company of the conditions stipulated under Clause 49
of the Listing Agreement is also attached to this Report.
The declaration by the Chief Operating Officer pursuant to Clause
49(1)(D)(ii) of the Listing Agreement stating that all the Board
Members and Senior Management Personnel have affirmed their compliance
with the Companys Code of Conduct for the year ended 31st December,
2009 is also attached to this Report and marked Annexure "C".
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956 your
Directors confirm that:
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same.
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st December, 2009 and of the profits of the
Company for the year ended 31st December, 2009.
(iii) The Directors have taken proper and sufficient care 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 Directors have prepared the annual accounts on a going concern
basis.
DIVIDEND
The Interim Dividend in respect of the year ended 31st December, 2009
of Rs. 10/- per share on 12,36,40,298 Equity Shares was paid to the
Shareholders of the Company whose names appeared on the Register of
Members on 3rd August, 2009.
The Directors recommend a payment of final dividend of Rs.15/- per
share (which includes a Special Dividend of Rs. 10/- per share) on
12,36,40,298 Equity Shares.
FIXED DEPOSITS
There were no fixed deposits outstanding and unclaimed as on 31st
December, 2009.
DIRECTORS
Mr. S. Mukundan was nominated with effect from 21st April, 2009 to
the Board pursuant to Article 112 : of the Articles of Association of
the Company in place of Mr. A. K. Jhawar.
Ms. Helen McCabe was nominated with effect from 21st April, 2009 to the
Board pursuant to Articles 112 & 114 of the Articles of Association of
the Company as an Alternate Director to Mr. P. Hughes in place of Mr.
Udayen Sen.
Mr. A. S. Ramchander Wholetime Director of the Company designated as
Director - Automotive resigned as a Director of the Company with effect
from 30th April, 2009.
Mr. Naveen Kumar Kshatriya resigned with effect from 8th May, 2009 as
the Managing Director of the Company. He was thereafter nominated to
the Board pursuant to Article 112 of the Articles of Association of the
Company as a Non-Executive Director designated as Vice Chairman.
Mr. Ravi Kirpalani was with effect from 1st May, 2009 appointed as an
Additional Director of the Company. Consequent to the said
appointment, he was also appointed as a Wholetime Director of the
Company designated as Director - Automotive and Chief Operating
officer. In accordance with Section 260 of the Companies Act, 1956 (the
Act), Mr. Kirpalani holds office upto the date of the forthcoming
Annual General Meeting of the Company. Notice has been received under
Section 257 of the Act along with the requisite deposit from a
shareholder proposing Mr. Kirpalani as a candidate for the office of
Director.
Mr. R. Hewins was nominated with effect from 28th December, 2009 to the
Board pursuant to Article 112 of the Articles of Association of the
Company in place of Mr. P. Hughes. Therefore, Ms. H. McCabe who was
nominated as an Alternate Director to Mr. Hughes was nominated as an
Alternate Director to Mr. Hewins.
Your Directors wish to place on record their gratitude for the guidance
and advice received from Mr. Naveen Kumar Kshatriya and Mr. A. S.
Ramchander during their tenures as Managing Director and Wholetime
Director respectively of the Company.
Your Directors also wish to place on record their gratitude for the
guidance and advice received from Mr. A. K. Jhawar, Mr. Udayen Sen and
Mr. P. Hughes during their respective tenures as Directors of the
Company.
Mr. S. M. Datta and Mr. D. S. Parekh retire by rotation and are
eligible for re-appointment.
The information on the particulars of Directors seeking
appointment/re-appointment as required under Clause 49 of the Listing
Agreement executed with the Bombay Stock Exchange Limited and the
National Stock Exchange of India Limited have been given under
Corporate Governance (Annexure B) of this Report.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Energy conservation during the financial year has accrued as a result
of the following steps taken at the various factories of the Company:
Patalganga:
1. Provision of CFL in the filling and blending plant, Administration
block and Quality Control laboratory.
2. Replacement of old air-conditioners with 3 star rating
air-conditioners which are more energy efficient.
3. Provision of Variable Frequency drives for few pumps for higher
motor rating for energy consumption reduction.
4. Power factor improvement to 0.99 with the installation of
additional capacitor banks.
5. Replacement of old defective insulation for a few blenders in the
plant for improved heat transfer and reduced heat losses.
6. Reduction in batch cycle time through lean six sigma methodology.
7. Boiler and steam distribution system audit through external agency.
Silvassa:
1. Installation of servo controlled stabilizer in lighting circuits
has helped to cut down the wastage of electrical energy.
2. Installation of new air receiver of similar capacity to reduce the
energy waste.
3. Fuel Saving through measures such as use of combustion efficiency
enhancing additives, regular monitoring of excess air in Thermopack &
Operational control to switch off firing of thermopack 2 hours before
switching of the unit.
4. Variable Frequency Drive installed to regulate the speed and
optimize the head of hot oil circulation pump leading to energy saving.
Tondiarpet:
1. Reduction in the specific consumption of electricity by optimizing
its usage.
2. Initiatives in maintaining the power consumption and demand within
the sanctioned load. This includes auto cut off switch for the
air-conditioners in the plant and monitoring of the light load.
3. Effective planning of blending operations leading to reduction in
boiler run hours.
4. Insulation of few blenders done to improve heat transfer and reduce
heat losses. Automatic blow down control for boiler thereby
eliminating wastages due to uncontrolled/ manual operation.
5. Process Improvements through implementation of lean project
recommendations on process optimizing and elimination of wastages.
Paharpur:
1. Replaced a few inefficient pumps by energy efficient pumps.
2. Old office air-conditioners replaced by energy efficient
air-conditioners.
3. Effective monitoring and corrective actions to eliminate water
leakages & wastages.
4. Up-gradation of Capacitor Panel and replacement of Automatic Power
Factor controller relay for maintaining close to unity power factor.
5. Up-gradation of Temperature Controller Panel to eliminate wastages
and conserve energy.
6. Reduction in Batch Cycle Time of some of the blends through process
optimization.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:
1. Steam pipeline modification in blending Plant. Additional steam
traps and flash vessels for better condensate recovery.
2. Variable frequency drive for tanker unloading & additive transfer
pumps.
3. Solar lights for the boundary wail.
(c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods:
The measure mentioned in (a) and (b) above have led/would lead to
reduction in fuel and electricity consumption as well as improvement in
the productivity.
TECHNOLOGY ABSORPTION
1. Site Safety and Security remained an area of focus at the
Technology Center. Operating Management System was initiated to
identify safety critical processes and align compliance with Giobal
Standards. Integrity Management was also implemented.
2. Year 2009 was a year of Site upgradation for the Technology Center.
The focus on safety at all levels ensured that the Company completed
the year without a single incident.
3. Old Electrical Panels were removed and modern compact Electrical
room with possibility of reduced power factor was constructed.
4. Critical contributions made towards Project Tansen, which was
launched globally for creating superior technology communications for
target customers.
5. Old Machine Test Laboratory was renovated to design a world class
Customer Engagement Centre as well as Canteen Extension was carried
out.
6. Plant area which was being used for storage was demolished and the
Company is in the process of having a recreation centre along with car
parking facilities.
7. Automotive and Industrial laboratories were audited by global teams
and found to comply with global standards.
8. Greater emphasis was laid on technology protection and alignment
with global requirements by ensuring all product formulations and raw
materials have global codes and are entered in databases like Stremline
and Fusion.
9. Syntheticisation journey continued with more products like Activ4T
being manufactured with synthetic technology and product superiority
communications made for the target customer segments.
10. Project Pavarotti activities continued in India to improve
awareness of lubricant technology amongst all levels of staff. More
than 100 staff members at Plants and offices were trained for the basic
Bronze module. Advanced training was also provided to marketing/sales
staff as well as new recruits through Silver and product immersion
modules. This was extended to cover external customers through
conducting technology CAFE.
11. Formulation optimization initiatives by the Technology team with
support from Supply Chain and Marketing departments was an area of
focus, which brought about significant savings in raw material costs.
FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to Export
There were no significant exports by the Company during the year.
2. Earnings and Outgo
Members are requested to refer to note Nos. 18 and 19 of Schedule M
forming part of the Balance Sheet and Profit and Loss Account for the
year ended 31st December, 2009.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of
Section 217(2A) of the Companies Act, 1956 (the Act) read with
Companies (Particulars of Employees) Rules, 1975 as amended, forms part
of this Report.
AUDITORS
The Shareholders of the Company are requested to appoint Auditors and
to fix their remuneration. M/s. S. R. Batliboi & Co., Chartered
Accountants, the retiring Auditors have furnished to the Company the
required certificate under Section 224(1 B) of the Companies Act, 1956
and are therefore eligible for re-appointment as Auditors of the
Company.
PERSONNEL
The Board wishes to place on record its sincere appreciation of the
efforts put in by the Companys workers, staff and executives for
achieving excellent results under difficult conditions.
STAKEHOLDERS
The Board also wishes to thank its Shareholders, Distributors, Bankers
and other business associates for their support during the year.
On behalf of the Board of Directors
N. K. Kshatriya R. Kirpalani
Vice Chairman Director - Automotive &
Chief Operating Officer
A. P. Mehta S. Malekar
Finance Director Director - Supply Chain
Mumbai
Dated: 19th March, 2010