Mar 31, 2015
The Directors are pleased to present the Fifty Fifth Annual Report and the Company''s audited financial statement for the financial year ended 31 March 2015
The Company''s financial performance, for the year ended 31 March 2015 is summarized below:
(Rs in lacs)
Parameters 2014-151 2013-14
Gross Revenue 2,00,477.12 1,88,909 28
Less: Excise duty 14,413 80 13,887 77
Net Revenue 1,86,063.32 1,75,021.51
EBIDTA 34,504 90 27,111 72
Profit before taxation and 15,224 64 9,751 81 extraordinary items
Add: Exceptional item - -
Profit before taxation 15,224 64 9,751 81
Less: Provision for taxation 4,809 67 4,131 84
Profit after taxation 10,414 97 5,619 97
Add: Balance brought forward 34,350 06 33,120 07
Amount available for appropriation 44,765 03 38,740 04
Operating loss due to merger of GPPL - 71 85
Carrying value of assets which has 435.14 - completed its depreciation period charged to opening balance of retained earning as per note 7(b) of Schedule II of Companies Act, 2013 (net of deferred tax)
Transferred to General Reserve 2,000 00 2,000 00
Proposed Dividend on equity shares 2,532 37 1,981 39
Tax on Proposed Dividend 503 93 336 74
Balance carried forward 39,293 59 34,350 06
Your Company performed satisfactorily, reinforcing its market position across business segments Your Company''s net sales grew by 6 06% to reach Rs 1,82,088 96 lacs in 2014-15, compared to Rs 1,71,683 29 lacs in 2013-14 The EBITDA went up by 27 27% to Rs 34,504 90 lacs in 2014-15 from Rs 27,111 72 lacs in 2013-14 Cash profit stood at Rs 21,473 60 lacs in 2014-15, compared to Rs 16,072 48 lacs in 2013- 14 Your Company''s PAT accelerated by 85 32% to Rs 10,414 97 lacs, compared to Rs 5,619 97 lacs in 2013-14 Your Company''s EPS grew to Rs 15 70 in 2014- 15, compared to Rs 8 51 in 2013-14, registering a 84 49% increase
Building Products Division
The gross revenue of the division grew by 6 21% to reach to Rs 98,698 90 lacs during 2014-15 from Rs 92,927 65 lacs in 2013-14 The operating profit grew to Rs 19,903 58 lacs in 2014-15 from Rs 19,701 75 lacs in 2013-14, registering a 1 02% increase Capital employed grew by 8 34% to Rs 94,991 35 lacs in 2014-15 as against Rs 87,676 06 lacs in 2013-14
The division undertook multiple initiatives to stay ahead of the curve
* Commenced commercial production at the Greenfield state- of-the-art highly automated ''faucet'' plant at Kaharani, Rajasthan, with an annual capacity of 2 5 million pieces
*Inducted Shah Rukh Khan (SRK) as the brand ambassador for hindware brand He will feature in hindware''s new 360-degree integrated campaigns across all media channels
* The division''s luxury brand Queo, inducted Jacqueline Fernandez as brand ambassador Her association will boost visibility and awareness of Queo as the bathroom space gradually shifts towards luxury
* Entered into an exclusive distribution agreement with Groupe Atlantic of France The alliance will augment the import of water heaters for the Indian market, co-branded as ''hindware - atlantic''
Packaging Products Division
The gross revenue for the division increased by 6 04%, and was marked at Rs 1,01,571 91 lacs in 2014-15, compared to Rs 95,788 32 lacs in 2013-14 The year under review also registered excellent operational profit at a staggering growth rate of 80 98%, surging the figures from Rs 9,784 78 lacs in 2013-14 to Rs 17,708 80 lacs in 2014-15 The capital employed in this division decreased from Rs 1,32,058 28 lacs in 2013-14 to Rs 1,23,119 18 lacs in 2014-15
The division witnessed an operational turnaround and put in place a robust operational architecture
* The division registered a produce of 1,660 million units of glass containers in 2014-15
* Changed over to alternate fuel in container glass production to reduce operational costs
* Invested in modern technology and equipment to upgrade the quality and functionality of products to address changing industry trends and consumer requirements
* Focused on debottlenecking of existing facilities to improve operating efficiencies
* Increased the average container glass capacity utilisation to 68 8% in 2014-15, through process up- gradation and higher demand Fifty new glass bottles were introduced, including 21 light-weight bottle varieties and 20 new PET bottles
*Reduced the manufacturing cost to improve the profit margin
* Added 102 new clients to the existing customer base
* PET production grew from 6,177 Mts in 2013-14 to 6,438 Mts in 2014-15, while average PET capacity utilisation grew to 65 9% in 2014-15
There is no change in the nature of the business(es) during the year
No material changes and commitments affecting the financial position of the Company occurred between the end of financial year of the Company to which the financial statements relates and the date of this Report
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The company has no material subsidiary in accordance with the provisions of clause 49 of the Listing Agreement No company ceased or became the subsidiary/ joint venture/associate company of the Company during the Financial Year 2014-15
During the year the Board of Directors reviewed the affairs of the subsidiaries In accordance with section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report
Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 forms part of the consolidated financial statement and hence not repeated here for the sake of brevity
The statement provides the details of performance, financial positions of each of the subsidiary
In accordance with Section 136 of the Companies Act, 2013, the audited financial statement, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on Company''s website http://www hindwarehomes com These documents will also be available for inspection during business hours at our registered office in Kolkata, India, between 12-00 Noon to 2-00 P M till the date of AGM
The Policy for determining material subsidiaries as approved may be accessed on the Company''s website at the link: http://www hindwarehomes com/ pdf/Policy-on-Material-Subsidiaries pdf
Your Directors have recommended a dividend of Rs 3 50 (i e 175%) per equity share (last year Rs 3 00 (i e 150%) per equity share) on equity shares of Rs 2/- each for the financial year ended 31 March 2015, amounting to Rs 3036 30 lacs (inclusive of Dividend Distribution Tax Rs 503 93 lacs) The dividend payout is subject to approval of members at the ensuing Annual General Meeting
The dividend will be paid to members whose names appear in the Register of Members as on 16 September 2015 and in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on 15 September 2015
TRANSFER TO RESERVES
The Company proposes to transfer Rs 2,000 lacs to the general reserves
We have not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and as such no amount of principal or interest was outstanding as on the Balance Sheet date
AUDITORS AND AUDITORS'' REPORTS
M/sWalker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors of the Company, having Firm''s Registration No 001076N/N50001 3 hold office till the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment The Company has obtained written confirmation from the Statutory Auditors, confirming that they are eligible for appointment as Auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified under Section 141 of the Companies Act, 2013
The Audit Committee and the Board of Directors recommend re-appointment of M/sWalker Chandiok & Co LLP, Chartered Accountants, having firm Registration No 001076N/N500013 as the Company''s Statutory Auditors from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting of the Company
The Notes on Financial Statement referred to in the Auditors'' report are self-explanatory and therefore do not require any further comments
The Board had appointed M/s Drolia & Company,Practicing Company Secretaries, Kolkata, having CP No 1362 to conduct Secretarial Audit for the financial year 2014-15, pursuant to the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The Secretarial Audit Report in Form MR - 3 for the financial year 2014- 15 is enclosed herewith as Annexure A to this Report The Secretarial Audit Report does not contain any observation or adverse remark
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed in sub- section (3)(m) of section 134 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014 are enclosed as Annexure B to this Report
During the year under review, the Company has issued 6,250,000 equity shares of Rs 2/- each at a premium of Rs 398/- to Qualified Institutions Buyers under Qualified Institutional Placement The paid-up Equity Share Capital as on 31 March 2015 was Rs 1,445 97 lacs
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, the extract of the Annual Return in Form No MGT - 9 is enclosed as Annexure C to this Report
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors in terms of Section 134(3) (c) of the Companies Act, 2013 state that:
a) in the preparation of the annual accounts for the year ended 31 March 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, had been followed and there are no material departures from the same;
b) the Directors had 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 the Company as at 31 March 2015 and of the profit of the Company for the year ended on that date;
c) the Directors had 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 the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a ''going concern'' basis;
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively
The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis and therefore provisions of section 188 of the Companies Act, 2013 are not attracted Thus, disclosure in Form AOC-2 is not required During the year, the Company has not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Policy of the Company on materiality of related party transactions
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www hindwarehomes com/ pdf/Related-Party-Transaction-Policy pdf
Your Directors draw attention of the members to Note 39 to the financial statement which sets out related party disclosures
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per provisions under Section 135 of the Companies Act, 2013, all companies having net worth of Rs 500 crores or more, or turnover of Rs 1,000 crores or more or a net profit of Rs 5 crores or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of Board of Directors comprising three or more directors, at least one of whom should be an Independent Director and such Company shall spend 2% of the average net profits of the Company made during the three immediately preceding financial years
Accordingly CSR Committee has been constituted by the Company comprising Mr Salil Bhandari (Chairman), Mr Rajendra Kumar Somany and Mr Sandip Somany as other members of the Committee
The CSR Committee has also framed a Corporate Social Responsibility Policy (CSR Policy) duly approved by the Board, indicating the activities to be undertaken by the Company to fulfil the expectation of our Stakeholders and to continuously improve our social, environmental and economical performance while ensuring sustainability and operational success of our Company The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013
The guiding principles for all CSR initiatives of the Company are as follows:
* Establishing a guideline for compliance with the provisions of Regulations to dedicate a percentage of Company''s profits for social projects
* Ensuring the implementation of CSR initiatives in letter and spirit through appropriate procedures and reporting
* Creating opportunities for employees to participate in socially responsible initiatives
The CSR Policy may be accessed on the Company''s website at the link: http:// www hindwarehomes com/pdf/CSR Policy HSIL pdf
The Annual Report on CSR Activities is enclosed as Annexure D
NUMBER OF BOARD MEETINGS
During the year under review, four Board Meetings were convened and held For further details, please refer Report on Corporate Governance which is forming part of this Annual Report
The Audit Committee comprises Independent Directors namely Mr V K Bhandari (Chairman), Mr Salil Bhandari, Mr N G Khaitan and Mr Ashok Jaipuria For further details, please refer Report on Corporate Governance which is forming part of this Annual Report
All the recommendations made by the Audit Committee were accepted by the Board
VIGIL MECHANISM (WHISTLE BLOWER)
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors/Employees and other stakeholders of the Company to report concerns affecting the smooth and efficient running of operations of the Company This Policy documents the Company''s commitment to maintain an open work environment in which employees, consultants and contractors are able to report instances of unethical or undesirable conduct, actual, suspected fraud or violation of the Company''s Code of Conduct
The Vigil Mechanism (Whistle Blower) Policy is available on Company''s website at the link: http://www hindwarehomes com/vigil-mechanism aspx
On the recommendation of the Nomination and Remuneration Committee, the Board has formulated Remuneration Policy for appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration
The Remuneration Policy of the Company is enclosed as Annexure E to this Report
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of loans, guarantees and investments covered under section 186 of the Companies Act, 2013 forms part of the notes to the Financial Statements (Please refer Note Nos 15, 16, 21 and 39)
PARTICULARS OF EMPLOYEES
Information required as per Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure F forming part of this Report
The Company has in place adequate internal control systems, which commensurate with its size, nature of business and complexity of its operations and are designed to provide a reasonable degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguard for assets, internal control over financial reporting, and compliance with applicable laws and regulations
Internal audit function evaluates the adequacy of and compliance with policies, plans,regulatory and statutory requirements The Internal Auditors directly report to the Board''s Audit Committee, thus ensuring the independence of the process It also evaluates and suggests improvement in effectiveness of risk management, controls and governance process The Audit committee and Board provides necessary oversight and directions to the Internal audit function and periodically reviews the findings and ensures corrective measures are taken
The Company has adopted several strategies for Risk Management to mitigate risks and uncertainties Controls have been put in place to quickly and systematically identify, prioritise, monitor and mitigate such risks on a constant basis This is a real-time and ever-evolving area, given the dynamic nature of the environment
The Company has devised its Risk Management Policy and also constituted a Risk Management Committee which ensures that the Company has an appropriate and effective Risk Management System with appropriate Policies and Process which carries out risk assessment and ensures that risk mitigation plans are in place In addition, all the key risks get continuously deliberated and discussed at the Group Executive Committee level as well as the Business Unit level
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a Sexual Harassment Policy in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment The Internal Complaints Committee (ICC) has been set up to redress complaints regarding sexual harassment, if any
The Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, the members approved the appointment of Ms Sumita Somany as a Non-executive Non-Independent Director who is liable to retire by rotation and Mr N G Khaitan, Mr Salil Bhandari, Mr V K Bhandari, Mr Ashok Jaipuria and Dr Rainer Siegfried Simon as Independent Directors who are not liable to retire by rotation The members have also re-appointed Mr Rajendra Kumar Somany as Chairman and Managing Director of the Company
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ms Sumita Somany, Non executive Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible have offered herself for re-appointment
During the year, Mr Rajendra Kumar Somany, Chairman and Managing Director, Mr V K Ajmera, Chief Financial Officer and Ms Payal M Puri, Company Secretary, were designated as Key Managerial Personnel of Company However, due to the enhanced roles and responsibilities of Hindware Home Retail Private Limited (wholly owned subsidiary of the Company), Mr V K Ajmera assumed the complete responsibility of Hindware Home Retail Private Limited and resigned as Chief Financial Officer of the Company with effect from 6 April 2015 Mr Sandeep Sikka was appointed as Chief Financial Officer of the Company and Key Managerial Personnel with effect from 6 April 2015
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges
In accordance with Clause 49 of the Listing Agreement, it is mandatory that the Board shall monitor and review the Board Evaluation Framework The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated
The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria and framework adopted by the Board In addition, the performance of Board as a whole and committees were evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria
In a separate meeting of Independent Directors, performance of Non Independent Directors, performance of Board as a whole and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors
The evaluation process has been explained in the Corporate Governance Report section of the Annual Report
None of the Independent Directors are due for re-appointment
TRAINING OF INDEPENDENT DIRECTORS
The details of programmes conducted for familiarization of Independent Directors with the Company, nature of the industry in which the Company operates, business model of the Company has been uploaded on the Company''s website at the web link http://www hindwarehomes.com/training of directors aspx For further details, please refer Report on Corporate Governance which is forming part of this Annual Report
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 Details relating to deposits covered under Chapter V of the Act
2 Issue of equity shares with differential rights as to dividend, voting or otherwise
3 Issue of shares (including sweat equity shares) to employee of the Company under any scheme
4 Issue of Employees Stock Option to employee of the company under any scheme
5 Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission 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 Company''s operations in future
7 Business Responsibility Report as per Clause 55 of the Listing Agreement with the Stock Exchange, describing the initiatives taken by Company from an environmental, social and governance perspective is not applicable to the Company, as per SEBI Circular CIR/CFD/ DIL/8/2012, dated 13 August 2012
Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives and staff of the Company
For and on behalf of the Board of Directors
Place: Gurgaon Rajendra Kumar Somany Date: 18 May 2015 Chairman and Managing Director
Mar 31, 2014
The Directors are pleased to present the 54th Annual Report and Audited Financial Statements of your Company for the year ended 31 March 2014.
(Rs. in crores) Parameters 2013-14 2012-13*
Gross Revenue 1,889.09 1,709.96
Less: Excise duty 138.88 131.61
Net revenue 1,750.21 1,578.35
EBITDA 271.11 264.11
Profit before taxation and extraordinary 97.52 115.09 items
Add: Exceptional item - 23.66
Profit before taxation 97.52 138.75
Less: Provision for taxation 41.32 39.63
Profit after taxation 56.20 99.12
Add balance brought forward 331.20 275.26
Amount available for appropriation 387.40 374.38 Appropriations
Operating Loss due to merger of GPPL 0.72 -
Transferred to General Reserve 20.00 20.00
Proposed dividend on equity shares 19.81 19.81
Tax on Proposed Dividend 3.37 3.37
Balance carried forward 343.50 331.20
* Previous year figure are not comparable due to merger of Garden Polymers Private Limited (Wholly owned subsidiary) with HSIL Limited
Your Company recorded an improved performance backed by the merger of Garden Polymers. The consolidated revenues went up by 10.48% to Rs. 1,889 crores in 2013-14 compared to Rs. 1,709 crores in 2012-13. The EBITDA went up by 2.65% to Rs. 271.11 crores in 2013-14 from Rs. 264.11 crores in 2012-13. Your Company''s Cash Profit stood at Rs. 160.72 crores in 2013-14 as against Rs. 220.46 crores in 2012-13. However, Net Profit declined by 43.30% at Rs. 56.20 crores in 2013-14 from Rs. 99.12 crores in 2012-13. But not considering exceptional item of last year''s positive, fall in net profit is 25.52%.
The Building Products Division recorded an impressive 17.88% increase in the gross revenues to Rs. 929.28 crores in 2013-14 from Rs. 788.44 crores in the previous year. Gross revenues for your Company''s Packaging Products Division* stood at Rs. 957.88 crores in 2013-14 which represented an increase of 4.28% from Rs. 918.54 crores in 2012-13.
*The Container Glass Division has been re-named as the ''Packaging Products Division'' following the merger of Garden Polymer Pvt. Ltd. As such, the figures for the Packaging Products Division will not be comparable to the previous year''s figures for the Container Glass Division.
Business Division Review
Performance of the Building Products Division
Several factors, such as enhanced and enriched product mix, increase in prices and volume growth, resulted in an impressive 18.01% growth in net sales for the Building Products Division in 2013-14. The robust sales growth can be vastly attributed to numerous new product launches under hindware Italian Collection range and first full year of operations of Queo brand of products which have been very well received in the market.
Some of the major achievements of our Building Products Division include:
* BWe are the first Company in India to introduce water efficient products in the market. We launched an exclusive eco-ware range of star-rated water efficient closets that have been certified by the International Association of Plumbing and Mechanical Officials (IAPMO), USA.
* Our observation and analysis of market dynamics coupled with consumer''s need for choice and design, we launched 100 new designs across our range of Bathroom Suites constituting European Water Closets (EWC), Wash Basins and Faucets characterised by clean lines, smooth surfaces with intricate details under our hindware Italian Collection. Luxury brand QUEO also introduced high end bathroom products designed by reputed international designers highlighted by their signature styles.
* 2013-14 marked the launch of our QUEO Emporio showrooms, in Gurgaon and Delhi. These experiential showrooms not only display the complete range of QUEO products for our discerning customers they allow the patrons to familiarise with the brand and build a relationship before buying.
* In early 2013, we launched the ''hindware'' experiential store, ''hindware Arcade'' in Chennai. The newly inaugurated hindware Arcade exhibits the entire product basket marketed under hindware, Amore and Vents brand under one roof.
* We introduced a new category for wellness range of bathroom products under brand ''Amore''. The progressing view of bathrooms as spa initiated this move, which broadened our product portfolio.
* We expanded our tile range with the launch of HD Digital (high definition image digital printing technology). HD Digital technology allows printing variety of vibrant colours with sharpness and accurate details in designs on the entire surface till edges including structure surfaces and bevelled edges.
Performance of the Packaging Products Division
The Company''s newly named Packaging Products Division (earlier known as Container Glass Division) witnessed a 4.64% rise in net sales this year. Several factors such as the GPPL merger, adoption of customised technologies to produce specially coloured bottles, chemical and lightweight bottles contributed to this.
Some of the major milestones achieved by our Packaging Products Division include:
* We have pioneered the manufacturing of specially coloured bottles - a new product category in the domestic market segment. This was made possible by the adoption of specialised German technology and advanced machinery for this purpose. We currently produce dead leaf, dark green and dark blue coloured bottles under this category. These bottles are import substitutes and have been well received by customers.
* We have significantly increased our capacity for the manufacture of chemical bottles.
* We have successfully commenced the production of lightweight wine bottles, which too fall under import substitutes.
Your Directors recommend a dividend of Rs. 3.00 per share (previous year Rs. 3.00 per share) on equity shares of Rs. 2.00 each, for the year ended 31 March 2014, for consideration of the Members at their ensuing Annual General Meeting. Total outgo on this account will be Rs. 23.18 crores, including dividend distribution tax Rs. 3.37 crores.
A sum of Rs. 20 crores has been transferred to the General Reserve account of the Company and the balance of Rs. 343.50 crores has been carried to surplus in statement of profit and loss.
A Company with a rich legacy of more than five decades backed by operational excellence, HSIL is a largest player in the domestic sanitaryware segment and ranks second in the Container Glass industry in India. Backed by a well-entrenched large distribution network in the industry, we are engaged in a process of uninterrupted practice for innovation and product upgradation. This enables us to significantly improve our product portfolio, even as we widen our presence along the entire value chain and across all possible price points. This working methodology helps us to meet the shifting requirements of our aspirational customer base under both the Building Products and Packaging Products Divisions. Our enhanced production efficiencies and a cost-effective service delivery model further develops our long-term growth prospects to provide value to all concerned stakeholders.
Scheme of Amalgamation
Garden Polymers Private Limited, (GPPL), a wholly owned subsidiary of the Company stood merged with the Company with effect from 1 April 2012, the appointed date fixed for the purpose in terms of the Scheme of Amalgamation approved by the Hon''ble High Court, Calcutta, vide Order dated 9 January 2014, certified copy of which was made over to the Company on 13 March 2014 and subsequently filed with Registrar of Companies, West Bengal. Consequent upon this all the assets and liabilities of GPPL became the assets and liabilities of the Company and accordingly given effect of the same in the financials of the Company.
The present term of Mr. Rajendra Kumar Somany, the Chairman and Managing Director, will expire by efflux of time on 8 January, 2015. The Board is seeking re-appointment of Mr. Rajendra Kumar Somany as the Chairman and Managing Director, whose office will be liable to retire by rotation, for a further period of 3 years commencing from 9 January 2015 upto 8 January 2018. Profile of Mr. Rajendra Kumar Somany is given in the Statement under Section 102 of the Companies Act, 2013 to the Notice of the 54th Annual General Meeting of the Company.
In pursuance of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. Ashok Jaipuria, Mr. Vijay Kumar Bhandari, Mr. N.G Khaitan and Mr. Salil Bhandari as Independent Directors not liable to retire by rotation for a term upto five consecutive years commencing from 27 September 2014. Profile of all such Directors are mentioned in the Statement under Section 102 of the Companies Act, 2013 attached to the Notice of the 54th Annual General Meeting of the Company. The Company has received declarations from all the above Independent Directors confirming that they meet with the criteria of Independence as prescribed both under sub-section (6) of section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has received requisite notice in writing from Members proposing their appointments as Independent Directors not liable to retire by rotation, at the ensuing Annual General Meeting of the Company.
Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Sumita Somany was appointed as an Additional Director w.e.f 29 May 2014 and she shall hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Ms. Sumita Somany for appointment as Director liable to retire by rotation at the ensuing Annual General Meeting of the Company.
In accordance with the provisions under Section 152 of the Companies Act, 2013, read with the Company''s Articles of Association, Mr. G. L Sultania, Director of the Company retires by rotation at the ensuing Annual General meeting and being eligible, offers himself for re-appointment.
A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement are given in a separate section and forms part of this Annual Report.
Further, the Management Discussion and Analysis Report is appended to and forms part of the Annual Report.
As per the requirement under Section 212 (3) of the Companies Act, 1956, a statement of particulars of the Company''s Subsidiaries for the year ended 31 March 2014, is annexed hereto and forms part of this Report.
Particulars under Section 212(8) of the Companies Act, 1956
In terms of general exemption granted by the Ministry of Corporate Affairs, copies of Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of the Subsidiary Companies (including step down Subsidiary Companies) have not been attached to the Company''s Balance Sheet, as required under Section 212 (8) of the Companies Act, 1956. These documents will be made available upon receipt of request from the Company''s shareholders and shall be kept open for inspection by any shareholder at the Registered Office of the Company and that of the respective Subsidiary Companies.
However, as directed by the said Ministry, the financial data of the Company''s Subsidiaries have been furnished under Financial Information of Subsidiary Companies forming a part of the Annual Report. Further, pursuant to Accounting Standard-21, specified in the Companies (Accounting Standards) Rules, 2006, the Consolidated Financial Statements presented by the Company include the financial information of its Subsidiaries.
At HSIL, our highly skilled workforce is our most valuable asset. The Company''s people development endeavours are designed to ensure optimal utilisation of employee potential which would, in turn, provide us with a competitive advantage over our competitors. We continue to empower our employees in every possible manner as per individual requirements which will help them realise their true potential and consequently help HSIL to grow as well. We make every attempt to connect with our employees much beyond the professional realm of their activities, and thereby strive to become a preferred employer by choice.
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars of Employees) Rules, 1975, the statement giving names and other particulars of the employees annexed hereto forms part of this Report.
Your Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act, 1956, during the year.
Directors'' Responsibility Statement pursuant to section 217 (2AA) of the Companies Act, 1956
Your Directors hereby confirm that to prepare the annual accounts, applicable accounting standards were followed, along with proper explanation relating to material departures, if any.
Your Directors selected such accounting policies, applied them consistently, and judged and estimated reasonably and prudently to give a true and fair view of your Company''s state of affairs and its profit at the end of the financial year.
Your Directors took proper and sufficient care to maintain adequate accounting records, in accordance with the provisions of this Act, for safeguarding your Company''s assets, and for preventing and detecting fraud and other irregularities.
Your Directors prepared the annual accounts on a going concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo
Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in Report of the Board of Directors) Rules, 1988, is annexed to this Report.
The Company''s Statutory Auditors, M/s Walker Chandiok & Co LLP, Chartered Accountants, retire at the ensuing Annual General Meeting. They have confirmed their eligibility for re-appointment in terms of Section 139 of the Companies Act, 2013.
The Audit Committee and the Board of Directors recommend appointment of M/s Walker Chandiok & Co LLP as the Company''s Statutory Auditors from the conclusion of the ensuing Annual General Meeting to the end of the next one.
The notes to the accounts referred to in the Auditors'' Report are self- explanatory and, therefore, do not require any further comments under Section 217 (3) of the Companies Act, 1956.
The Company has appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad, for auditing the cost accounting records of the Company''s Glass Division and Building Products Division (Sanitaryware and Faucets) for the financial year 2013-14.
The Company maintains a system of internal controls designed to provide a high degree of assurance regarding effectiveness and efficiency of operations, safeguard of assets, reliability of financial controls, and compliance with applicable laws and regulations.
Recognising the important role of Internal audit, the Company has an internal audit function which independently evaluate the appropriateness of, and compliance with policies, plans, regulatory and statutory requirements. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in Company''s operations. It also assesses and suggests improvement in risk management efficacy, controls and governance process. The Audit committee and Board provides necessary oversight and directions to the Internal audit function and periodically reviews the findings and ensures corrective measures are taken.
HSIL''s manufacturing facilities endorses the highest health, safety, security and environmental standards.
Your Directors would like to express their sincere appreciation to all the banks, financial institutions, Government authorities, customers, vendors and members who have extended their unstinted support and co-operation during the year under review. The Board would also like to take this opportunity to express their deep sense of gratitude, commitment and dedication shown by the Company''s executives, staff and workers during the course of its operations in this year.
For and on behalf of the Board of Directors
Rajendra K Somany Chairman and Managing Director
Place: Gurgaon Date: 29 May 2014
Mar 31, 2012
The Directors are pleased to present their 52nd Annual Report and Audited Financial Statements of your Company for the year ended 31 March 2012.
FINANCIAL RESULTS AT A GLANCE (Rs. in lacs)
Parameters 2011-12 2010-11
Gross revenue 1,44,416 1,12,977
Less excise duty 9,930 7,396
Net revenue 1,34,486 1,05,581
EBITDA 25,828 21,659
Profit before taxation and extraordinary items 16,266 12,746
Less extraordinary item - -
Profit before taxation 16,266 12,746
Less provision for taxation 5,256 4,011
Profit after taxation 11,010 8,735
Add balance brought forward 20,819 15,003
Amount available for appropriation 31,829 23,738
Transferred to General Reserve 2,000 1,000
Proposed dividend on equity shares 1,981 1,651
Corporate dividend tax 322 268
Balance carried forward 27,526 20,819
During the year 2011-12, revenues strengthened 27.83% from Rs. 1,12,977.38 lacs to Rs. 1,44,415.87 lacs, EBIDTA increased 19.25% from Rs. 21,659.42 lacs to Rs. 25,827.86 lacs, cash profits improved 4.79% from Rs. 15,985.00 lacs to Rs. 16,751.20 lacs and PAT surged 26.04% from Rs. 8,735.20 lacs to Rs. 11,009.90 lacs.The gross revenues from the Container Glass Division increased 31.21% from Rs. 60,089.21 lacs to Rs. 78,842.27 lacs while the Building Products Division witnessed a gross revenue growth of 23.85% from Rs. 52,681.06 lacs to Rs. 65,246.65 lacs.
PAT and EBIDTA margins, however, declined marginally owing to higher raw material, logistics, fuel cost and initial cost of new product / brand launches. Thanks to the Company's excellent operational efficiencies, the overall impact on the margins was much lower.
Interest cover went up from 6.08 to 6.64 times, reflecting balance sheet strength. EPS went up 15.21% from Rs. 14.47 to Rs. 16.67, strengthening shareholder's value.
There are number of factors attributable to Company's satisfactory performance despite a challenging scenario. These include:
Ongoing business expansions, resulting in higher volumes
Consistent product quality aligned to customer expectations resulting in higher realisations
Introduction of new product range in the existing line of business
Introduction of products targeting premium and super premium segment of the market
Strengthening distribution reach to tier II and tier III cities by adding new dealers and retailers
Focussing towards improving operational excellence
BUSINESS DIVISION REVIEW
Performance of the Building Products Division
The divisional net revenues increased 23.70%, owing to additional sale generated from the increased capacities at the Bibinagar facility as well as introduction of new products.
Added 510 dealers and penetrated into 125 new towns
Added new products in the sanitaryware, faucets, kitchen appliances and tiles
Introduced extractor fans through a strategic alliance with one of the largest European manufacturer
Added new brand QUEO targeting the luxury and super premium segment of the market
Chalked out greenfield expansion plans for sanitaryware and faucets
Completed brownfield expansion at Bibinagar adding 0.7 million pieces
Performance of the container Glass Division
The divisional net revenues increased 30.62%, owing to higher production volumes and addition of new customers during the year.
Completed brownfield capacity expansion, increasing its total capacity from 1,125 tpd (1,643 million units) to 1,600 tpd (2,300 million units)
Acquired Garden Polymers Private Limited and marked an entry into the PET bottle segment
Implemented measures towards improving plant efficiencies and cost reduction
ACQUISITION OF GRADEN POLYMERS PRIVATE LIMITED
HSIL has acquired 100% equity share capital of M/s Garden Polymers Private Limited with effect from 12 August 2011 under Share Purchase Agreement dated 2 June 2011 and Amendment Agreement dated 8 June 2011.
M/s Garden Polymers Pvt. Ltd. is engaged in the business of manufacturing PET bottles, caps and closures, having plants at Dharwad (Karnataka) and Selaqui (Uttarakhand). It is a leading supplier to premier customers in Liquor, Pharma and FMCG Industry.
This acquisition has synergies with company's container glass division which supplies to the similar set of customers. This will further strengthen company's position as packaging solution provider and will be value accretive for its shareholders.
Your Directors recommend a dividend of Rs. 3.00 per share (previous year Rs. 2.50 per share) on equity shares of Rs. 2.00 each for the year ended 31 March 2012, for consideration of the Members at the ensuing Annual General Meeting. Total outgo on this account including tax thereon will be Rs. 2,302.82 lacs.
SCHEME OF ARRANGEMENT / BUSINESS RECONSTRUCTION RESERVE
In accordance with the Scheme of Arrangement sanctioned by Hon'ble High Court Calcutta under Section 391-394 of the Companies Act, 1956, on 26 March 2010, the Board of Directors have approved creation of additional Business Reconstruction Reserve of Rs. 22,500.00 lacs by revaluation of land owned by the Company at Sanathnagar and Isnapur, Andhra Pradesh.
HSIL has maintained its leadership position in the Sanitaryware market and continues to be the second largest player in the Container Glass Industry. Your Company further seeks to sustain its leadership by aligning its capacities with the market demand and delivering upon the customer's expectations. Strong logistics and distribution network, innovative ATL and BTL promotions, brand portfolio, design engineering, production efficiencies and efficient service delivery model will further augment our long-term growth prospects.
The management also seeks to invest in good governance and fiscal discipline in accordance with the best practices relevant globally.
In accordance with the applicable provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Mr. V.K. Bhandari, Mr. S.B. Budhiraja and Mr. Binay Kumar, Directors of the Company retire by rotation at the ensuing Annual General Meeting.
Mr. V.K. Bhandari, being eligible, offers himself for re-appointment.
Mr. S.B. Budhiraja and Mr. Binay Kumar have expressed their inability to be re-appointed. The Board records its deep appreciation for the valuable contribution made by both Mr. Budhiraja and Mr. Binay Kumar during their tenure as Directors of the Company.
Mr. Salil Kumar Bhandari appointed as an Additional Director on the Board with effect from 29 May 2012, holds office till the ensuing Annual General Meeting of the Company. Notice under Section 257 of the Companies Act, 1956 has been received from a Member of the Company signifying his candidature, for his appointment as a Director of the Company.
A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement are given in a separate section in this Annual Report.
Further, the Management Discussion and Analysis Report is appended to and forms a part of the Annual Report.
WHOLLY OWNED SUBSIDIARIES
As per the requirements under Section 212 (3) of the Companies Act, 1956, a statement of particulars of the Company's subsidiaries for the year ended 31 March 2012, is annexed hereto and forms part of this Report.
PARTICULARS UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956
In terms of general exemption granted by the Ministry of Corporate Affairs, copies of Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of the subsidiary Companies (including step down subsidiary Companies) have not been attached to the Balance Sheet of the Company as required under Section 212 (8) of the Companies Act, 1956. These documents will be made available upon receipt of request from shareholders of the Company and shall be kept open for inspection by any shareholder at the Registered Office of the Company and that of the respective subsidiary Companies.
However, as directed by the said Ministry, the financial data of the Company's subsidiaries have been furnished under Financial Information of Subsidiary Companies forming part of the Annual Report. Further, pursuant to Accounting Standard-21 specified in the Companies (Accounting Standards) Rules, 2006, the Consolidated Financial Statements presented by the Company include financial information of its Subsidiaries.
The leadership position attained by the Company over the years is largely due to the dedication and commitment of our people - the most valuable assets of the Company. Our scalable recruitment and human resources management process enable us to attract and retain high-caliber employees. We encourage innovation, meritocracy and the pursuit of excellence. Besides, we continuously impart adequate training and ensure right environment to maximise team effort while enhancing individual growth potential. The Directors record their appreciation of the support and contribution of all employees towards the growth of the Company.
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars of Employees) Rules, 1975, the statement giving names and other particulars of the employees annexed hereto forms part of this report.
Your Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act,1956, during the year under review.
DIRECTOR'S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956
Your Directors hereby confirm that in the preparation of annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures, if any.
Your Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period.
Your Directors took proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities.
Your Directors prepared the annual accounts on a going concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS / OUTGO
Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed to this Report.
The Statutory Auditors of the Company, M/s Walker, Chandiok & Co., Chartered Accountants retire at the ensuing Annual General Meeting and have confirmed their eligibility for reappointment in terms of Section 224 (1B) of the Companies Act, 1956.
The Audit Committee and the Board of Directors recommend appointment of M/s Walker, Chandiok & Co. as Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting upto the conclusion of the next Annual General Meeting of the Company.
The notes to the accounts referred to in the Auditors' Report, are self-explanatory and therefore, do not require any further comments under Section 217 (3) of the Companies Act, 1956.
In accordance with Order F. No. 52/26/CAB-2010 dated 30 June 2011, issued by Ministry of Corporate Affairs, Government of India, the Board of Directors of the Company appointed M/s. Narasimha Murthy & Co., Cost Accountants, Hyderabad, as the Cost Auditor for the Glass Division of the Company for conducting audit of cost accounts of the said division for the year ended 31 March 2012.
The Company has in place adequate internal control systems commensurate with its size and nature of business. These are routinely tested by Internal Auditors and cover all offices, factories and key areas of business to provide a reasonable assurance in respect of providing financial and operational information, compliance with applicable statutes, safeguarding assets of the Company and compliance with policies and procedures.
Independence of the audit is ensured by their direct reporting to the Audit Committee of the Board. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations including those relating to strengthening of the Company's risk management policies and systems.
Your Directors would like to express their sincere appreciation for the valuable support and cooperation received from bankers, business associates, financial institutions, shareholders, various departments of Governments and other stakeholders during the year under review.
Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by the entire team of the Company, resulting in the successful performance of the Company during the year.
For and on behalf of the Board of Directors
Place: Gurgaon Rajendra K Somany
Date: 29 May 2012 Chairman and Managing Director