Mar 31, 2023
Financial Performance
Comments on Financial Performance are included in Management Discussion and Analysis section.
Dividend
Your Directors recommend a dividend of '' 11.00 per equity share of '' 1/- each, (previous year '' 10.00 per equity share of '' 1/-each) amounting to '' 559.15 crores (previous year '' 508.30 crores) out of the current year''s profit, on '' 50.83 crores equity capital (previous year '' 50.83 crores). Dividend is subject to approval of members at the ensuing Annual General Meeting and shall be subject to deduction of income tax at source. The dividend payout amount has grown at a CAGR of 14.08% during the last 5 years.
Your Directors take pleasure in presenting the Fifty-Fourth Annual Report together with Audited Financial Statements for the year ended 31st March, 2023.
Financial Results (Standalone) |
||
('' in crores ) |
||
2022-23 |
2021-22 (Restated)$ |
|
Sales |
10,545.12 |
8,852.31 |
Operating Profit |
1,939.10 |
1,825.94 |
Finance Costs |
(28.53) |
(27.24) |
Depreciation and Amortisation Expense |
(221.97) |
(194.38) |
Net Foreign Exchange Loss |
(20.88) |
(13.58) |
Profit Before Exceptional Items and Tax |
1,667.72 |
1,590.74 |
Exceptional Items |
- |
- |
Profit Before Tax |
1,667.72 |
1,590.74 |
Current Year''s Tax |
(423.05) |
(39753) |
Deferred Tax |
12.51 |
(1.80) |
Profit After Tax |
1,257.18 |
1,191.41 |
Profit Brought Forward |
4,877.86 |
4,123.49 |
Other Comprehensive Income Included in Retained Earnings (Net of tax) |
1.45 |
(9.06) |
Due to Business Combination |
- |
3.95 |
Profit Available for Appropriation |
6,136.49 |
5,309.79 |
Appropriations |
||
Dividend Paid |
(508.30)* |
(431.93) # |
Closing balance of Retained Earnings |
5,628.19 |
4,877.86 |
$ During previous year, the Company had filed two merger applications with National Company Law Tribunal (NCLT) with respect to the merger of its wholly owned subsidiaries namely Pidilite Adhesives Pvt. Ltd (PAPL) and Cipy Polyurethanes
Pvt. Ltd (CIPY). Consequent to the filing of NCLT orders approving the mergers with Registrar of Companies, mergers have become effective from the Appointed date being 1st April 2022. The above being a common control transaction, the previous year figures have been restated for the accounting impact of the merger, as if the merger had occurred from the beginning of previous year.
* Pertaining to dividend for FY 2021-22
# Pertaining to dividend for FY 2020-21
The dividend payout is in accordance with the Dividend Distribution Policy, which is available on the website of the Company https://pidilite. com/investors/corporate-governance
The Company does not propose to transfer amounts to the general reserve.
The Company has no outstanding term loans (previous year NIL).
The total capital expenditure during the year was '' 456.94 crores (previous year '' 377.32 crores) primarily spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on Information Technology.
Deposits
The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 during the financial year 2022-23 (previous year NIL).
Investment in Subsidiaries
During the year, total investment of '' 78.59 crores (previous year '' 104.94 crores) was made in subsidiaries. Of this, '' 53.38 crores was invested in domestic subsidiaries and '' 25.21 crores in overseas subsidiaries.
The investments in domestic subsidiaries were in
Pidilite Ventures Pvt Ltd amounting to ('' 28.12 crores),
Pidilite Litokol Pvt Ltd ('' 12.22 crores) and Pidilite Grupo
Puma Manufacturing Ltd ('' 13.04 crores)
The investments in overseas subsidiaries were in
Pidilite Middle East Ltd ('' 17.03 crores) and Pidilite
International Pte Ltd ('' 8.18 crores).
a. A new Company in name of Solstice Business Solutions Pvt. Ltd (SBSPL) was incorporated on 6th April, 2023, a wholly owned subsidiary of Pidilite Ventures Private Limited, which is a wholly owned subsidiary of the Company.
SBSPL, is intended to carry out inter alia the business of providing services, for construction, repair, renovation.
b. The Company through its subsidiary Pidilite Ventures Private Limited made investments in early-stage companies, which would augment our capabilities.
c. Plus Call Technical Services LLC, a Joint Venture, where Pidilite Middle East Limited, wholly owned subsidiary of the Company holds 40% of the share capital, was dissolved.
Amidst uncertain global economic conditions and inflationary pressures, International Subsidiaries reported moderate sales growth along with improvement in EBITDA.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as ''the Act''), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ''Listing Regulations'') and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2022-23, together with the Auditor''s Report, form part of this Annual Report. A statement containing the salient features of the Company''s subsidiaries and associate companies in the prescribed Form AOC- 1, are set out in Note No. 59 to the Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate companies and joint venture, as approved by their respective Board of Directors except Pulvitec Do Brazil Industria e Comercio de Colas e Adesivos Ltda which has been approved by the local administrator.
The accounts of the subsidiaries are also uploaded on the website of the Company, https://pidilite.com/ investors/financials/
Directors and Key Managerial Personnel
The Board of Directors, on the recommendation of Nomination and Remuneration Committee, has recommended to the Members:
(a) re-appointment of Shri M B Parekh as the Whole Time Director designated as the Executive Chairman of the Company for a further period of 5 years with effect from 1st August, 2023.
(b) re-appointment of Shri A B Parekh as the Whole-time Director designated as Executive Vice Chairman of the Company for a further
period of 5 years with effect from 1st August, 2023.
Shri Piyush Pandey was re-appointed as an Independent Director of the Company by the Board on the recommendation of Nomination and Remuneration Committee for a second term of five consecutive years upto 10th April, 2028, subject to the approval of the Members through Postal Ballot.
Shri Joseph Varghese was appointed as an Additional Director and also as a Whole Time Director designated as Director-Operations for a period of 5 years by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 9th November, 2022 and Member''s approved the said appointment through Postal Ballot on 27th December, 2022.
Shri Sandeep Batra was appointed as an Additional Director and also as a Whole Time Director designated as Executive Director - Finance in addition to his current position as Chief Financial Officer of the Company for a period of 5 years, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 9th November, 2022 and Member''s approved the said appointment through Postal Ballot on 27th December, 2022.
Shri Debabrata Gupta, resigned with effect from 9th November, 2022, as the Whole Time Director designated as Director-Operations. The Board places on record its appreciation for the services rendered by Shri Debabrata Gupta during his tenure as the Whole Time Director.
Shri N K Parekh has stepped down as the Non-Executive Vice-Chairman but continues as Non-Executive Director and Shri A N Parekh has been designated as the Executive Vice-Chairman w.e.f. 8th May, 2023.
In accordance with the Act and the Articles of Association of the Company, Shri A N Parekh and Shri Sudhanshu Vats, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.
None of the Directors of the Company are disqualified for being appointed as Directors as specified under Section 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Policy on Directors'' remuneration The policy on Directors'' remuneration is available on the website of the Company, https://pidilite.com/ investors/corporate-governance/. The remuneration paid to the Directors is as per the terms laid out in the said policy.
Directors'' Responsibility Statement
Your Directors confirm that:
⢠in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
⢠they 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 at the end of the financial year ended 31st March, 2023 and of the profit of the Company for that period;
⢠they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
⢠they have prepared the annual accounts on a going concern basis;
⢠they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
⢠they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Annual Evaluation by the Board of its own performance, its Committees and individual Directors
The Board has put in place a mechanism for evaluation of its own performance and performance of its Committees and individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
The Company has put in place an induction and familiarization programme for all its Directors including the Independent Directors.
The familiarization programme for Independent Directors in terms of provisions of Regulation 46(2)(i)
of the Listing Regulations is uploaded on the website of the Company.
Number of Meetings of Board of Directors
Five meetings of the Board of Directors of the Company were held during the financial year 2022-23. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that:
a. they meet the criteria of independence as laid down under the Act and the Listing Regulations;
b. they have complied with the Code of Independent Directors prescribed under Schedule IV of the Act; and
c. they have registered themselves with the Independent Directors'' Database maintained by the Indian Institute of Corporate Affairs.
Corporate Governance
The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requisite certificate from M/s Parikh & Associates, Practising Company Secretaries, is attached to the Report on Corporate Governance, which forms a part of this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a section forming part of this Annual Report. For the sake of brevity the items covered in this Report are not repeated in the Management Discussion and Analysis Report.
The following are the statutory Committees constituted by the Board and they function according to their respective roles and defined scope:
⢠Audit Committee
⢠Nomination and Remuneration Committee
⢠Corporate Social Responsibility Committee
⢠Stakeholders Relationship Committee
⢠Risk Management Committee
There is no qualification or adverse remark in Auditors'' Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.
The Board of Directors have recommended the appointment of M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No 101248W/W-100022) as the Statutory Auditors of the Company, for a term of 5 consecutive years commencing from the conclusion of 54th AGM till the conclusion of 59th AGM of the Company.
M/s. B S R & Co. LLP have confirmed their eligibility and qualification required under the Act for holding the office as Statutory Auditors of the Company.
Cost Auditor
The Company has maintained cost records as specified by Central Government u/s 148(1) of the Act. M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2022-23 to conduct the audit of the cost records of the Company and they have been reappointed as the Cost Auditor for the financial year 2023-24. In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM, the Board seeks ratification of the remuneration payable to the Cost Auditor for the financial year 2023-24.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Parikh & Associates, Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2022-23.
The Secretarial Audit Report for the financial year 2022-23 under the Companies Act, 2013 read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in Annexure 2 to this
report. There is no qualification or adverse remark in their Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached as Annexure 3 to this Report.
Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.
Corporate Social Responsibility (CSR) Report and CSR Policy
The CSR Report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments thereto, is attached as Annexure 1 to this Report. The details of CSR Initiatives forms part of Social & Community Service Initiatives section of this Annual Report. CSR Policy can be accessed on website of the Company https://pidilite. com/investors/corporate-governance/.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees. The said policy has been communicated to the Directors and employees of the Company and is also posted on the website of the Company https://pidilite. com/investors/corporate-governance/. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Policy relating to Prevention of Sexual Harassment
In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Actâ) and Rules made thereunder, the Company has formulated a Prevention of Sexual Harassment Policy, which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has formed an Internal Complaints Committee to redress and resolve any complaints arising under the POSH Act. To build awareness in this area, Company has been conducting induction/ training programmes in the organisation on a periodical basis. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) will complete their present term on conclusion of the ensuing 54th AGM.
Risk Management
In compliance with Regulation 21 of the Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as The Risk Management Oversight Committee, is entrusted with roles and powers as specified in Part D of Schedule II of Listing Regulations.
The Company has laid out a risk management policy for identification and mitigation of risks. The Company
has also constituted a Management Risk Committee which is chaired by the Managing Director and has Senior Leadership of the Company as its members.
The Management Risk Committee identifies the key risks for the Company, develops and implements the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritises the risks, if required, depending upon the effect on the business/reputation.
The other details in this regard are provided in the
Report on Corporate Governance, which forms a part of this Annual Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements/transactions entered into by the Company during the financial year under
review with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an arm''s length basis. During the year, the Company did not enter into any contract/ arrangement/transaction with related parties, which could be considered as material in accordance with the Policy of the Company on Materiality of Related Party Transactions (RPT Policy) or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The RPT Policy, as approved by the Board, is available on the Company''s website: https://pidilite.com/ investors/corporate-governance/.
Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per the Indian Accounting Standards, are set out in Note No. 44 of the Standalone Financial Statements of the Company.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered
under the provisions of Section 186 of the Act are given in the Notes to the Financial Statements.
Employees Stock Option Scheme
The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014. The certificate of Secretarial Auditors regarding implementation of the Scheme is available for inspection of Members in electronic mode.
The applicable disclosure, as stipulated under
Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations,
2021, as on 31st March, 2023 with regard to Scheme, is provided in Annexure 4 to this Report.
Annual Return
Annual Return of the Company is available on the
website of the Company viz. https://pidilite.com/ investors/general-meetings/
Business Responsibility and Sustainability Report
A Business Responsibility and Sustainability Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, forms an integral part of this Report.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/Material Orders passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Particulars of Employees and Related Disclosures
Disclosures pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 5 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) shall be made available to any shareholder, on request.
General
The Company has neither issued equity shares with differential rights nor any sweat equity shares.
There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.
Appreciation
Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 8th May, 2023 Executive Chairman
Mar 31, 2022
Your Directors take pleasure in presenting the Fifty-Third Annual Report together with Audited Financial Statements for the year ended 31st March, 2022.
Financial Results (Standalone)Financial Performance
Comments on Financial Performance are included in Management Discussion and Analysis section.
Your Directors recommend a dividend of '' 10.00 per equity share of '' 1/- each (previous year '' 8.50 per equity share of '' 1/- each) amounting to '' 508.29 crores (previous year '' 431.93 crores) out of the current yearâs profit, on '' 50.83 crores equity capital (previous year '' 50.82 crores). The dividend payout amount has grown at a CAGR of 13.65% during the last 5 years.
('' in crores ) |
||
2021-22 |
2020-21 |
|
Sales |
8,298.49 |
6,186.67 |
Operating Profit |
1,842.38 |
1,623.30 |
Finance Costs |
(26.42) |
(16.99) |
Depreciation, Amortisation and Impairment Expense |
(175.12) |
(147.10) |
Net Foreign Exchange Loss |
(13.35) |
(2.13) |
Profit Before Exceptional Items and Tax |
1,627.49 |
1,457.08 |
Exceptional Items |
- |
(0.45) |
Profit Before Tax |
1,627.49 |
1,456.63 |
Current Yearâs Tax |
(360.95) |
(375.05) |
Deferred Tax |
2.08 |
(0.12) |
Profit After Tax |
1,268.62 |
1,081.46 |
Profit Brought Forward |
4,123.49 |
3,042.74 |
Other Comprehensive Income Included in Retained Earnings (Net of tax) |
(9.07) |
(0.71) |
Profit Available for Appropriation |
5,383.04 |
4,123.49 |
Appropriations |
||
Dividend Paid |
(431.93)# |
- |
Closing balance of Retained Earnings |
4,951.11 |
4,123.49 |
# Pertaining to dividend for FY 2020-21 |
The dividend payout is in accordance with the Dividend Distribution Policy
which is available on the website of the Company
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve.
Term Finance
The Company has no outstanding term loans (previous year NIL).
Capital Expenditure
The total capital expenditure during the year was '' 370.45 crores (previous year '' 336.69 crores) primarily spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.
Deposits
The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 during the financial year 2021-22 (previous year NIL).
Subsidiaries
Investment in Subsidiaries
During the year, total investment of '' 104.94 crores (previous year '' 2,323.04 crores) was made in domestic subsidiaries.
The investments in domestic subsidiaries were in Madhumala Ventures Pvt Ltd amounting to ('' 54.96 crores), Pidilite C-Techos Walling Ltd ('' 1.21 crores) and Cipy Polyurethanes Private Limited (? 48.77 crores).
During the year
a. Scheme of Amalgamation of Pidilite Adhesives Private Limited (PAPL) with the Company was
Performance of Major Domestic and Overseas Subsidiaries
(? in crores) |
||||||
Name of Subsidiary |
Sales |
Sales |
% Growth |
EBITDA |
EBITDA |
% Growth |
2021 -22 |
2020-21 |
2021-22 |
2020-21 |
|||
Nina Percept Pvt Ltd |
258.59 |
176.63 |
46.4% |
(25.42) |
(26.93) |
5.6% |
ICA Pidilite Pvt Ltd |
272.12 |
178.21 |
52.7% |
40.99 |
25.19 |
62.7% |
CIPY Polyurethanes Pvt Ltd |
126.84 |
89.68 |
41.4% |
12.35 |
1.63 |
658.0% |
Pidilite Adhesives Pvt Ltd |
495.74 |
168.32* |
194.5% |
160.86 |
60.32* |
166.6% |
Pidilite Speciality Chemicals Bangladesh Pvt Ltd |
171.74 |
110.80 |
55.0% |
31.47 |
17.04 |
84.7% |
Pidilite Lanka (Pvt) Ltd |
59.58 |
42.17 |
41.3% |
4.53 |
6.45 |
(29.8%) |
Pidilite USA Inc |
128.49 |
141.30 |
(9.1%) |
8.24 |
18.61 |
(55.7%) |
Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda |
95.50 |
105.65 |
(9.6%) |
1.30 |
23.70 |
(94.5%) |
Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company |
46.78 |
36.90 |
26.8% |
(4.22) |
(0.77) |
(445.4%) |
Pidilite Bamco Ltd includes Bamco Supply and Services Ltd (Thailand) |
56.66 |
62.37 |
(9.2%) |
6.86 |
8.76 |
(21.7%) |
Pidilite MEA Chemicals LLC (UAE) |
133.93 |
110.22 |
21.5% |
1.22 |
(3.13) |
138.9% |
Overseas subsidiaries figures are at constant currency.
''Sales and EBITDA for Pidilite Adhesives Pvt. Ltd. for FY 2020-21 are from 4th November, 2020 to 31st March, 2021 and therefore not comparable with FY 2021-22.
approved by the Honâble National Company Law Tribunal, Mumbai Bench on 7th March, 2022. The scheme is effective from 1st April, 2022 which is the appointed date. The Company has completed the statutory requirements including filing of Form INC28 with the Ministry of Corporate Affairs and hence PAPL stands dissolved.
b. Scheme of Amalgamation of Cipy Polyurethanes Private Limited (CIPY) with the Company was approved by the Honâble National Company Law Tribunal, Mumbai Bench on 23rd March, 2022. The scheme is effective from 1st April, 2022 which is the appointed date. The Company has completed the statutory requirements including filing of Form INC28 with the Ministry of Corporate Affairs and hence CIPY stands dissolved.
c. The Company through its subsidiary Madhumala Ventures Pvt. Ltd. made investments in early-stage companies which would augment our capabilities.
d. The names of following two subsidiaries have been struck off by the Registrar of Companies u/s 248 of the Companies Act during the F Y 2021-22 in absence of any business, since their incorporation:
(i) Pidilite C-Techos Pvt. Ltd. and (ii) Pidilite Grupo Puma Pvt.Ltd.
e. ICA Pidilite Pvt Ltd, subsidiary of the Company made Buy back of shares from all shareholderâs resulting into reduction in investments of the Company
by '' 11.28 crores.
Domestic Subsidiaries in Consumer and Bazaar segment registered good sales growth and healthy margins. The Subsidiaries sales growth in Business to Business segment showed signs of revival but EBITDA remained under pressure due to higher input costs.
Pidilite Bangladesh reported strong volume-led growth across categories with healthy EBITDA margin on back of improved gross margin due to pricing actions and cost control measures.
Pidilite Lanka continued with its sales growth momentum in a very challenging economic environment. However, the profitability was significantly impacted due to socioeconomic and political crisis and steep currency devaluation.
Pidilite USA posted sales and EBITDA decline primarily due to moderation of demand in hobby and craft products in the post pandemic period as well as material cost increases.
Pidilite Brazil recorded lower sales mainly on account of overall economic slowdown and higher growth in the prior year due to fiscal stimulus. Operating profits remain low due to significant input cost inflation and competitive pricing pressure.
Our subsidiary in the Middle East reported healthy
sales performance on account of good demand from re-export market.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as âthe Actâ), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as âListing Regulationsâ) and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2021 -22, together with the Auditorâs Report, form part of this Annual Report. A statement containing the salient features of the Companyâs subsidiaries, associate and joint venture company in the prescribed Form AOC- 1, are set out in Note No. 59 to the Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate company and joint venture, as approved by their respective Board of Directors except Pulvitec Do Brazil Industria e Comercio de Colas e Adesivos Ltda which has been approved by the local administrator and Plus Call Technical Services LLC, Dubai for which the financial statements has been approved by the management.
The accounts of the subsidiaries are also uploaded on the website of the Company, www.pidilite.com.
Directors and Key Managerial Personnel
Smt. Meher Pudumjee was appointed as an Additional Director of the Company, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 18th May, 2022. Membersâ approval is sought for her appointment as an Independent Director of the Company for a period of five years with effect from 18th May, 2022.
Shri Sudhanshu Vats was appointed as an Additional Director designated as Deputy Managing Director, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 18th May,
2022. Membersâ approval is sought for his appointment as Whole Time Director designated as Deputy Managing Director of the Company for a period of five years with effect from 18th May, 2022.
Shri A B Parekh Whole Time Director has been appointed by the Board as Executive - Vice Chairman with effect from 11th August, 2021.
Shri Puneet Bansal, resigned with effect from 16th September 2021, as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company. Shri Pradip Menon, Chief Financial Officer (Key Managerial Personnel) of the Company, resigned with effect from 21st December, 2021.
In terms of Section 203 of the Act and applicable provision of Listing Regulations, the Board of Directors have appointed Smt. Manisha Shetty as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company with effect from 11th March, 2022 and Shri Sandeep Batra as Chief Financial Officer (Key Managerial Personnel) of the Company with effect from 1st June, 2022.
In accordance with the Act and the Articles of Association of the Company, Shri A B Parekh and Shri N K Parekh, Directors of the Company, retire by rotation and being eligible, offers themselves for re-appointment.
Amendment of Article 22 of Articles of Association of the Company
The Board of Directors have approved amendment of Article 22 of Articles of Association of the Company to increase the limit on maximum number of Directors from
existing 15 Directors to 18 Directors. As per the amended Article 22 the number of Directors of the Company shall not be less than 3 (three) and not more than 18 (eighteen). Membersâ approval is sought to amend the existing Article 22 and to increase the maximum number of Directors.
Policy on Directorsâ remuneration
The policy on Directorsâ remuneration is available on the website of the Company, www.pidilite.com. The remuneration paid to the Directors is as per the terms laid out in the said policy.
Directorsâ Responsibility Statement
Your Directors confirm that:
⢠in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
⢠they 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 at the end of the financial year ended 31st March, 2022 and of the profit of the Company for that period;
⢠they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
⢠they have prepared the annual accounts on a going concern basis;
⢠they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
⢠they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Annual Evaluation by the Board of its own performance, its Committees and individual Directors
The Board has put in place a mechanism for evaluation of its own performance and performance of its Committees and individual Directors. The evaluation of the Board,
Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
The Company has put in place an induction and familiarization programme for all its Directors including the Independent Directors.
The familiarization programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of the Listing Regulations is uploaded on the website of the Company. Number of Meetings of Board of Directors
Seven meetings of the Board of Directors of the Company were held during the financial year 2021 -22. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that:
a. they meet the criteria of independence as laid down under the Act and the Listing Regulations and
b. they have registered their names in the Independent Directorsâ Databank.
Corporate Governance
The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requisite certificate from M/s M. M. Sheth & Co., Practising Company Secretaries, is attached to the Report on Corporate Governance, which forms a part of this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a section forming part of this Annual Report. For the sake of brevity the items covered in this Report are not repeated in the Management Discussion and Analysis Report.
The following are the statutory Committees constituted by the Board and they function according to their respective roles and defined scope:
⢠Audit Committee
⢠Nomination and Remuneration Committee
⢠Corporate Social Responsibility Committee
⢠Stakeholders Relationship Committee
⢠Risk Management Committee
Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.
Corporate Social Responsibility (CSR) Report and Policy
The CSR Report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments thereto, is attached as Annexure 1 to this Report. The details of CSR Initiatives forms part of Social & Community Service Initiatives section of this Annual Report. CSR Policy can be accessed on website of the Company www.pidilite.com.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees. The said policy has been communicated to the Directors and employees of the Company and is also posted on the website of the Company. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formed Internal Complaints Committee, as per statutory requirements. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
In accordance with the provisions of the Act,
M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W/W-100018) have been appointed as the Statutory Auditors of the Company,
for a period of five years i.e., upto the conclusion of 54th AGM to be held for the adoption of accounts for the year ending 31st March 2023. Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.
There is no qualification or adverse remark in Auditorsâ Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.
The Company has maintained cost records as specified by Central Government u/s 148(1) of the Act. M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2021-22 to conduct the audit of the cost records of the Company and they have been reappointed as the Cost Auditor for the financial year 2022-23. In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM, the Board seeks ratification of the remuneration payable to the Cost Auditor for the financial year 2022-23.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s M. M. Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2021-22. The Report of the Secretarial Auditors attached as Annexure 2 to this Report. There is no qualification or adverse remark in their Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached as Annexure 3 to this Report.
Risk Management
In compliance with Regulation 21 of the Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers as specified in Part D of Schedule II of Listing Regulations.
The Company has laid out a risk management policy for identification and mitigation of risks. The Company has also constituted a Management Risk Committee which is chaired by the Managing Director and has Senior Leadership of the Company as its members.
The Management Risk Committee identifies the key risks for the Company, develops and implements the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritises the risks, if required, depending upon the effect on the business/reputation.
The other details in this regard are provided in the Report on Corporate Governance, which forms a part of this Annual Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered into by the Company during the financial year under review, with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an armâs length basis. During the year, the Company did not enter into any contract/arrangement/transaction with related parties which could be considered as material in accordance with the Policy of the Company on Materiality of Related Party Transactions (RPT Policy) or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)
(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The RPT Policy, as approved by the Board, is available on the Companyâs website: www.pidilite.com.
Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per the Indian Accounting Standards, are set out in Note No. 44 the Standalone Financial Statements of the Company.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statements.
Employees Stock Option Scheme
The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations). The certificate of Secretarial Auditors regarding implementation of the Scheme is available for inspection of Members in electronic mode.
The applicable disclosure, as stipulated under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as on 31st March 2022 with regard to Scheme, is provided in Annexure 4 to this Report.
Extract of Annual Return of the Company is available on the website of the Company viz. www.pidilite.com.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, forms an integral part of this Report.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/Material Orders Passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 5 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Act, and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) shall be made available to any shareholder, on request.
The Company has neither issued equity shares with differential rights nor any sweat equity shares.
There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.
Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 18th May, 2022 Executive Chairman
Mar 31, 2021
The Members
Your Directors take pleasure in presenting the Fifty-Second Annual Report together with Audited Financial Statements for the year ended 31st March 2021.
Financial Results (Standalone)
('' |
in crores ) |
|
2020-21 |
2019-20 |
|
Sales |
6,186.67 |
6,290.43 |
Operating Profit |
1,623.30 |
1,637.28 |
Finance Costs |
(16.99) |
(13.40) |
Depreciation, Amortisation and Impairment Expense |
(147.10) |
(125.79) |
Net Foreign Exchange Loss |
(2.13) |
(1.86) |
Profit Before Exceptional Items and Tax |
1,457.08 |
1,496.23 |
Exceptional Items |
(0.45) |
(59.28) |
Profit Before Tax |
1,456.63 |
1,436.95 |
Current Year''s Tax |
(375.05) |
(368.65) |
Profit After Current Year''s Tax |
1,081.58 |
1,068.30 |
Deferred Tax |
(0.12) |
33.32 |
Profit After Tax |
1,081.46 |
1,101.62 |
Profit Brought Forward |
3,042.74 |
2,779.09 |
Other Comprehensive Income Included in Retained Earnings (Net of tax) |
(0.71) |
(11.20) |
Profit Available for Appropriation |
4,123.49 |
3,869.50 |
Appropriations |
||
Dividend Paid |
- |
(330.18) # |
Interim Dividend Paid |
- |
(355.61) |
Tax on Dividend |
- |
(140.97) |
Total |
- |
(826.76) |
Closing Balance of Retained Earnings |
4,123.49 |
3,042.74 |
# Pertaining to dividend for FY 2018-19 |
The dividend payout is in accordance with the Dividend Distribution Policy which is available on the website of the Company www.pidilite.com.
During the year
a. The Company acquired 100% share capital of Huntsman Advanced Materials Solutions Pvt. Ltd. for cash consideration of '' 2,196.46 crores. The acquisiton process was completed on
3rd November 2020. The name of the said subsidiary has been changed to Pidilite Adhesives Pvt. Ltd. with effect from 13th January 2021.
b. The Company acquired the balance 30% stake in its subsidiary namely Cipy Poly Urethanes Pvt. Ltd. (CIPY), by purchasing 28,249 equity shares from certain other shareholders of CIPY, for a cash consideration of '' 60.49 crores (excluding certain contingent payment). The acquisition process was completed on 22nd April 2021. Consequent to this, CIPY became a wholly owned subsidiary of the Company.
c. The Company has completed the acquisition of the business of wholly owned entity
M/s. Nitin Enterprise, (a partnership firm having two partners, both of which are wholly owned subsidiaries of the Company).
Performance of Major Domestic and Overseas Subsidiaries |
('' in crores) |
|||||
Name of Subsidiary |
Sales |
Sales |
% Growth |
EBITDA |
EBITDA |
% Growth |
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|||
Nina Percept Pvt Ltd |
176.63 |
267.76 |
(34.0%) |
(26.93) |
11.50 |
(333.9%) |
ICA Pidilite Pvt Ltd |
178.21 |
185.83 |
(4.1%) |
25.19 |
24.13 |
4.5% |
CIPY Poly Urethanes Pvt Ltd |
89.68 |
121.38 |
(26.1%) |
1.63 |
15.38 |
(89.4%) |
Pidilite Adhesives Pvt Ltd* |
168.32 |
- |
- |
60.32 |
- |
- |
Pidilite Speciality Chemicals Bangladesh Pvt Ltd |
111.10 |
124.50 |
(10.8%) |
17.09 |
19.19 |
(11.0%) |
Pidilite Lanka (Pvt) Ltd |
45.43 |
41.34 |
9.9% |
6.95 |
2.90 |
139.7% |
Pidilite USA Inc |
140.70 |
119.14 |
18.1% |
18.53 |
(0.45) |
4,262.8% |
Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda |
103.84 |
70.14 |
48.0% |
23.29 |
1.58 |
1,378.7% |
Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company |
36.73 |
37.93 |
(3.2%) |
(1.00) |
(0.08) |
(1,133.9%) |
Pidilite Bamco Ltd includes Bamco Supply and Services Ltd (Thailand) |
65.41 |
63.37 |
3.2% |
9.18 |
5.38 |
70.8% |
Pidilite MEA Chemicals LLC (UAE) |
109.81 |
114.69 |
(4.3%) |
(3.12) |
(4.33) |
28.0% |
Overseas subsidiaries figures are at constant currency.
* Figures are for the period from 4 th November 2020 to 31st March 2021
The Company does not propose to transfer amounts to the general reserve.
The Company has no outstanding term loans (previous year NIL).
The total capital expenditure during the year was '' 336.69 crores (previous year '' 369.03 crores) primarily spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.
Deposits
The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 during the financial year 2020-21 (previous year NIL).
Subsidiaries
Investment in Subsidiaries
During the year, investment of '' 2,333.82 crores (previous year '' 146.18 crores) was made in subsidiaries. Of this, '' 2,323.04 crores (including contingent consideration) was invested in domestic subsidiaries and '' 10.78 crores in overseas subsidiaries.
The investments in domestic subsidiaries were in Madhumala Ventures Pvt Ltd ('' 10.51 crores),
Nina Percept Pvt Ltd ('' 4.82 crores), Pidilite Litokol Pvt Ltd ('' 14.28 crores), Pidilite Grupo Puma Manufacturing Ltd ('' 11.71 crores), Pidilite C-Techos Walling Ltd ('' 0.60 crores) and in the newly acquired subsidiaries Tenax Pidilite India Pvt Ltd (formerly known as Tenax India Stone Products Pvt Ltd) ('' 84.66 crores) and Pidilite Adhesives Pvt Ltd (formerly known as Huntsman Advanced Materials Solutions Pvt. Ltd.) ('' 2,196.46 crores).
The investments in overseas subsidiaries were in Pidilite Middle East Ltd ('' 10.33 Crores) and Pidilite Chemical PLC ('' 0.45 crores).
Performance of domestic subsidiaries was impacted due to nationwide lock-down in the country. Performance improved during second half of the year with good sales achievement by ICA Pidilite and Pidilite Adhesives.
Performance of subsidiaries in Bangladesh, Middle East and Egypt was impacted due to lockdowns.
Pidilite Lanka continues to perform well despite challenging business environment and posted a significant increase in EBITDA margin owing to lower material costs and local manufacturing.
Pidilite USA sales and profit grew well due to higher demand of hobby & craft products during the pandemic and increased focus on e-commerce.
Pidilite Brazil reported good sales and profit growth due to operational improvements and higher economic growth due to fiscal stimulus.
The subsidiaries in Thailand reported marginal sales growth driven by project business. EBITDA improved due to softer input costs and controlled spends.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as âthe Actâ), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (hereinafter referred to as âListing Regulationsâ) and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2020-21, together with the Auditorâs Report, forms part of this Annual Report. A statement containing the salient features of the Companyâs subsidiaries, associate and joint venture company in the prescribed Form AOC- 1, are set out in Note No. 59 to the Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate Companies and joint venture, as approved by their respective Board of Directors except Pulvitec Do Brazil Industria e Comercio de Colas e Adesivos Ltda which has been approved by the local administrator and Plus Call Technical Services LLC, Dubai for which the financial statements has been approved by the management. The requisite applications have been filed with Ministry of Corporate Affairs for striking off the names of Pidilite C-Techos Pvt. Ltd. and Pidilite Grupo Puma Pvt. Ltd., in absence of any business, since their incorporation.
The accounts of the subsidiaries are also uploaded on the website of the Company, www.pidilite.com.
Directors and Key Managerial Personnel
The Board of Directors, on the recommendation of Nomination and Remuneration Committee, has recommended to the Members the re-appointment of Shri Vinod Dasari as an Independent Director of the Company for a second consecutive term, commencing from the conclusion of 52nd AGM upto 31st August, 2025.
Shri Rajeev Vasudeva was appointed as an Additional Director (Independent) of the Company by the Board on the recommendation of Nomination and Remuneration Committee with effect from 10th September, 2020. Membersâ approval is sought for his appointment as an Independent Director of the Company for a period of 5 consecutive years i.e upto 9th September 2025.
In accordance with the Act and the Articles of Association of the Company, Shri A N Parekh and Shri Debabrata Gupta, Directors of the Company, retire by rotation and being eligible, offers themselves for re-appointment.
Policy on Directorsâ Remuneration
The policy on Directorsâ remuneration is available on the website of the Company, www.pidilite.com. The remuneration paid to the Directors is as per the terms laid out in the said policy.
Directorsâ Responsibility Statement
Your Directors confirm that:
⢠in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
⢠they 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 at the end of the financial year ended 31st March 2021 and of the profit of the Company for that period;
⢠they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
⢠they have prepared the annual accounts on a going concern basis;
⢠they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
⢠they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Annual Evaluation by the Board of its own performance, its Committees and individual Directors
The Board has put in place a mechanism for evaluation of its own performance and performance of its Committees and individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Familiarisation Programme
The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of the Listing Regulations is uploaded on the website of the Company.
Number of Meetings of Board of Directors
Seven meetings of the Board of Directors of the Company were held during the financial year 2020-21. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that:
a. they meet the criteria of independence as laid down under the Act and the Listing Regulations; and
b. they have registered their names in the Independent Directorsâ Databank.
Corporate Governance
The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requisite certificate from M/s M. M. Sheth & Co., Practising Company Secretaries, is attached to the Report on Corporate Governance, which forms a part of this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a section forming part of this Annual Report. For the sake of brevity the items covered in this Report are not repeated in the Management Discussion and Analysis Report.
Committees of the Board
The following are the statutory Committees constituted by the Board and they function according to their respective roles and defined scope:
⢠Audit Committee
⢠Nomination and Remuneration Committee
⢠Corporate Social Responsibility Committee
⢠Stakeholders Relationship Committee
⢠Risk Management Committee
Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.
Corporate Social Responsibility (CSR) Report and Policy
The CSR Report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments thereto, is attached as Annexure 1 to this Report. The details of CSR Initiatives forms part of Social & Community Service Initiatives section of this Annual Report.
CSR Policy can be accessed on website of the Company www.pidilite.com.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and
employees.The said policy has been communicated to the Directors and employees of the Company and is also posted on the website of the Company.
For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formed Internal Complaints Committees, as per statutory requirements. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.
Statutory Auditors
In accordance with the provisions of the Act,
M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W/ W-100018) have been appointed as the Statutory Auditors of the Company, for a period of five years i.e. upto the conclusion of 54th AGM to be held for the adoption of accounts for the year ending 31st March 2023. Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.
There is no qualification or adverse remark in Auditorâs Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.
Cost Auditor
The Company has maintained cost records as specified by Central Government u/s 148(1) of the Act. M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2020-21 to conduct the audit of the cost records of the Company and they have been reappointed as the Cost Auditor for the financial year 2021-22. In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM, the Board seeks ratification of the remuneration payable to the Cost Auditor for the financial year 2021-22.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/Material Orders Passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 5 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Act, and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) shall be made available to any shareholder, on request.
of Managerial Personnel) Rules, 2014, the Company has appointed M/s M. M. Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2020-21. The Report of the Secretarial Auditor is attached as Annexure 2 to this Report. There is no qualification or adverse remark in their Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached as Annexure 3 to this Report.
In compliance with Regulation 21 of the Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers which includes (a) Review and approval of risk management plan (b) Review progress on the risk management plan (c) Propose methodology on risk classification and measurement.
The Company has laid out a risk management plan for identification and mitigation of risks. The Company has also constituted a Management Risk Committee which is chaired by the Managing Director and has Senior Leadership of the Company as its members. The Management Risk Committee identifies the key risks for the Company, develops and implements the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritises the risks, if required, depending upon the effect on the business/ reputation.
The other details in this regard are provided in the Report on Corporate Governance, which forms a part of this Annual Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered into by the Company during the financial year under review with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an armâs length basis. During the year, the Company did not enter into any contract/ arrangement/transaction with related parties which
could be considered as material in accordance with the Policy of the Company on Materiality of Related Party Transactions (RPT Policy) or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The RPT Policy, as approved by the Board, is available on the Companyâs website: www.pidilite.com.
Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per the Indian Accounting Standards, are set out in Note No. 44 of the Standalone Financial Statements of the Company.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statements.
Employees Stock Option Scheme
The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations).
The certificate of Auditors regarding implementation of the Scheme is available for inspection of Members in electronic mode.
The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2021 with regard to Scheme, is provided in Annexure 4 to this Report.
Extract of Annual Return of the Company is available on the website of the Company viz. www.pidilite.com.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, forms an integral part of this Report.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has neither issued equity shares with differential rights nor any sweat equity shares.
There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.
Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 12th May 2021 Executive Chairman
Mar 31, 2019
To
The Members
The Directors take pleasure in presenting the Fiftieth Annual Report together with Audited Financial Statements for the year ended 31st March 2019.
Financial Results (Standalone)
(Rs.in crores ) |
||
2018-19 |
2017-18 |
|
Gross Turnover |
6,048.18 |
5,445.67 |
Turnover, Net of Excise |
6,048.18 |
5,309.11 |
Operating profit |
1,489.74 |
1,430.30 |
Finance Costs |
(7.14) |
(6.06) |
Depreciation, Amortisation and Impairment Expense |
(99.83) |
(91.48) |
Net Foreign Exchange Loss |
(6.32) |
(1.48) |
Profit Before Tax |
1,376.45 |
1,331.28 |
Current Yearâs Tax |
(385.56) |
(356.89) |
Profit After Current Yearâs Tax |
990.89 |
974.39 |
Deferred Tax |
(11.45) |
(19.20) |
Profit After Tax |
979.44 |
955.19 |
Profit Brought Forward |
2,166.95 |
1,504.72 |
Other Comprehensive Income included in retained earnings (net of tax) |
(2.98) |
0.13 |
Profit available for appropriation |
3,143.41 |
2,460.04 |
Appropriations |
||
Dividend paid |
(304.69) * |
(243.52) # |
Tax on Dividend |
(59.63) * |
(49.57) # |
Total |
(364.32) * |
(293.09) # |
Closing balance of Retained Earnings |
2,779.09 |
2,166.95 |
* Pertaining to dividend for FY 2017-18 |
||
# Pertaining to dividend for FY 2016-17 |
||
Dividend Your Directors recommend a dividend of Rs. 6.50 per equity share of Rs. 1/- each (previous year a dividend of Rs. 6.00 per equity share of Rs. 1/- each), out of the current yearâs profit, on Rs. 50.80 crores equity capital amounting to Rs. 330.19 crores (previous year Rs. 304.69 crores on equity capital of Rs. 50.78 crores). The dividend payout amount has grown at a CAGR of 22.1% during the ast 5 years. The dividend payout is in accordance with the Dividend Distribution Policy which is given as an annexure and the same is also available on the website of the Company. |
Financial Performance
On a comparable basis, after reflecting accounting impact of GST, the Net Sales grew by 14.5% with sales volume and mix growth of 10.4%. The volume growth in Consumer and Bazaar products segment was 12.2% (previous year 12.1%). However, due to competitive pressure and market conditions, the Industrial Products segment volume grew only by 1.9%, as compared to 7.6% growth in the previous year.
Operating Profit for the year at Rs. 1,489.74 crores increased by 4.2% . Further, Net Profit at Rs. 979.44 crores increased by 2.5%. The slight decline in profit margin is due to higher input cost.
The Indian Rupee was at Rs. 69.17 to a US$ as on 31st March 2019 as compared to Rs. 65.17 to a US$ as on 31st March 2018.
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve.
Term Finance
The Company has no outstanding term loans (previous year NIL).
Capital Expenditure
The total capital expenditure during the year was Rs. 186.23 crores, spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.
Fixed Deposits
The Company has not accepted any fixed deposits during the financial year 2018-19.
Subsidiaries
Investment in Subsidiaries
During the year, investment of Rs. 61.04 crores (previous year Rs. 151.19 crores) was made in the subsidiaries. Of this, Rs. 26.24 crores was invested in the overseas subsidiaries and Rs. 34.80 crores in the domestic subsidiaries.
The investments in overseas subsidiaries were in Pidilite Middle East Ltd (Rs. 5.31 crores) and Pidilite International Pte Ltd (Rs. 4.17 crores) for onward investments in their step down subsidiaries and Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda (Rs. 9.35 crores) and in newly incorporated subsidiary Pidilite Ventures LLC (Rs. 7.41 crores).
The investments in domestic subsidiaries were in ICA Pidilite Pvt. Ltd. (Rs. 26.64 crores) and Cipy Polyurethanes Pvt. Ltd. (Rs. 8.16 crores).
During the year
a. Percept Waterproofing Services Limited (Percept)
(80% subsidiary of the Company) was merged with Nina Waterproofing Systems Private Limited (Nina) (70% subsidiary of the Company), pursuant to the Honâble National Company Law Tribunal, Mumbai Bench Order dated 11th January 2019 w.e.f. the appointed date i.e. 1st April 2017 and consequently, Percept stands dissolved without winding up.
Further, post the said merger w.e.f. 27th March 2019, Ninaâs name was changed to AEKAM Construction Specialties Private Limited (AEKAM) and w.e.f. 15th April 2019, AEKAM is known as Nina Percept Private Limited. Accordingly, the Companyâs investment in Percept is merged with Nina Percept Private Limited and the Company now holds 71.53% stake in the merged entity.
b. The Company incorporated a wholly owned subsidiairy in USA, Pidilite Ventures LLC, which shall be engaging mainly in the investments in early stage operating companies in USA.
c. Pidilite Lanka (Private) Limited (Pidilite Lanka)
(a step down subsidiary of the Company in Sri Lanka) has entered into an agreement with Nina Waterproofing Systems Private Limited now known as Nina Percept Private Limited (Nina) and Nina Lanka Construction Technologies (Pvt) Ltd (Nina Lanka) (a wholly owned subsidiary of Nina in Sri Lanka and also a step down subsidiary of the Company) to acquire up to 40% of the share capital in Nina Lanka. As on 31st March 2019, Pidilite Lanka has acquired 25.2% stake in Nina Lanka.
d. Pidilite International Pte. Ltd., a wholly owned subsidiary of the Company in Singapore, alongwith Crown Classics Limited, a company in Kenya, has promoted a joint venture company in Kenya namely Pidilite east Africa Limited (Peal) to carry on business of construction chemicals and waterproofing material. PEAL, by virtue of control, is a step-down subsidiary of the Company.
Performance of Major Domestic and Overseas Subsidiaries (Rs. in crores)
Name of Subsidiary |
Sales 18-19 |
Sales 17-18 |
% Growth |
Ebitda 18-19 |
EBITDA 17-18 |
% Growth |
Nina Percept Pvt Ltd |
305.04 |
239.18 |
27.5% |
34.58 |
29.99 |
15.3% |
ICA Pidilite Pvt Ltd |
168.33 |
102.76 |
63.8% |
1.69 |
1.43 |
18.0% |
CIPY Poly Urethanes Pvt Ltd (Acquired on 8th February 2018) |
155.43 |
26.72* |
na |
21.12 |
2.18* |
na |
Pidilite Speciality Chemicals Bangladesh Pvt Ltd |
98.47 |
85.26 |
15.5% |
17.02 |
15.84 |
7.4% |
Pidilite USA Inc |
103.55 |
113.71 |
(8.9%) |
1.38 |
7.54 |
(81.6%) |
Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda |
86.77 |
85.67 |
1.3% |
0.34 |
0.66 |
(47.8%) |
Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company |
29.44 |
28.13 |
4.7% |
(1.74) |
(1.52) |
(14.4%) |
Pidilite Bamco Ltd includes Bamco Supply and Services Ltd (Thailand) |
60.08 |
55.79 |
7.7% |
3.79 |
4.82 |
(21.3%) |
Pidilite MEA Chemicals LLC (UAE) |
99.40 |
89.63 |
10.9% |
(7.45) |
(10.00) |
25.4% |
Pidilite Lanka (Pvt) Ltd |
36.83 |
31.28 |
17.7% |
(0.63) |
1.02 |
(162.0%) |
Previous year figures, wherever applicable, are made comparable after reflecting impact of GST for the full year.
* For the period from 08.02.2018 to 31.03.2018
Overseas subsidiaries figures are at constant currency. Figures given above do not include Sales and EBITDA of Cyclo division of Pidilite USA Inc., which was sold by Pidilite USA Inc. in June 2017.
Nina Percept Pvt Ltd, engaged in waterproofing services, reported good sales and EBITDA growth in current year. During the year, ICA Pidilite has acquired brands and technical knowhow of certain wood finish products from the Company. Like for like sales growth after excluding these products is 26% over the last year. EBITDA was impacted by higher input cost and foreign exchange losses. Going forward, local manufacturing is expected to scale up and this should result in improvement in margins. CIPY was acquired in February 2018, hence its performance is not comparable with last year.
The subsidiary in Bangladesh reported good sales growth with healthy profitability, though the profit growth was impacted due to higher input cost.
Pidilite USA sales and EBITDA declined over previous financial year due to drop in sales of pencils and markers catering to adult colouring books mainly because of change in trend.
Pulvitec do Brasil reported marginal sales growth for current year. EBITDA declined due to competitive pressure in key products.
The subsidiaries in Egypt reported lower sales growth due to market conditions. The subsidiaries in Thailand reported modest sales growth. EBITDA in these subsidiaries declined due to lower sales growth and higher input costs. The subsidiary in UAE reported reduction in EBITDA losses due to higher sales and control on expenses.
Pidilite Lanka continued to grow in current year, however EBITDA remains under pressure due to higher input cost and forex losses.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as âthe Actâ), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as âListing Regulationsâ) and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2018-19, together with the Auditorsâ Report, form part of this Annual Report. A statement containing the salient features of the Companyâs subsidiaries, associate and joint venture company in the prescribed Form AOC- 1, are set out in Note No. 59 to the Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate company and joint venture, as approved by their respective Board of Directors except Pulvitec do Brazil Industria e Comercio de Colas e Adesivos Ltda. which has been approved by the local administrator and Plus Call Technical Services LLC, Dubai for which the financial statements have been approved by the management. There has been no transaction in Pidilite East Africa Ltd. from the date of formation till 31st March 2019.
The accounts of the subsidiaries are also uploaded on the website of the Company, www.pidilite.com.
Directors and Key Managerial Personnel
In terms of the Regulation 17(1A) of the Listing Regulations members have approved by passing Special Resolution by means of Postal Ballot the continuation of tenure of Directorship of Shri B S Mehta as Non-Executive Independent Director and Shri N K Parekh as Nonexecutive Director upto the conclusion of ensuing 50th Annual General Meeting (AGM).
The Board of Directors, on the recommendation of Nomination & Remuneration Committee, has recommended to the members, for re-appointment of Shri Bansi Mehta, Shri Uday Khanna and Smt. Meera Shankar as Independent Directors of the Company for a second consecutive term commencing from the conclusion of 50th AGM.
In accordance with the Act and the Articles of Association of the Company, Shri N K Parekh and Shri A N Parekh, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.
Smt Savithri Parekh, resigned with effect from 10th October 2018, as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company. Shri P. Ganesh, Chief Financial Officer of the Company has resigned from the services of the Company effective 25th May 2019.
In terms of Section 203 of the Act and applicable provision of Listing Regulations, the Board of Directors has appointed Shri Puneet Bansal as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company with effect from 20th February 2019.
Policy on Directorsâ remuneration
The Policy on Directorsâ remuneration is given as an annexure and is also available on the website of the Company, www.pidilite.com. The remuneration paid to the Directors is as per the terms laid out in the said policy.
Directorsâ Responsibility Statement
Your Directors confirm that:
- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
- 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 at the end of the financial year ended 31st March 2019 and of the profit of the Company for that period;
- the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the directors have prepared the annual accounts on a going concern basis;
- the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
- 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.
Annual evaluation by the Board of its own performance, its Committees and individual Directors
The Board has put in place a mechanism for evaluation of its own performance, its Committees and individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to Corporate Governance section of this Annual Report.
Familiarisation Programme
The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.
Number of meetings of Board of Directors
Eight meetings of the Board of Directors of the Company were held during the year. For further details, please refer to Corporate Governance section of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations.
Corporate Governance
The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requiste certificate from M/s M. M. Sheth & Co., Practising Company Secretaries, is attached to the Report on Corporate Governance.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulations, is presented in a section forming part of this Annual Report. For sake of brevity the items covered in Boardâs Report are not repeated in the Management Discussion and Analysis Report.
Committees of the Board
The following statutory Committees constituted by the Board function according to their respective roles and defined scope:
- Audit Committee
- Nomination and Remuneration Committee
- Corporate Social Responsibility Committee
- Stakeholders Relationship Committee
- Risk Management Committee
Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.
Corporate Social Responsibility Committee
The report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as annexure 1. The details of CSR Initiatives forms part of Social & Community Service Initiatives.
Vigil mechanism / whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees.
The said Policy has been communicated to the Directors and employees of the Company and also posted on the website of the Company. For further details, please refer to the Corporate Governance section of this Annual Report.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formed an Internal Complaints Committee. For further details, please refer to the Corporate Governance section of this Annual Report.
Statutory auditors
In accordance with the provisions of Act, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W/W-100018) have been appointed as the Statutory Auditors of the Company, for a period of 5 years i.e. upto the conclusion of 54th AGM to be held for the adoption of accounts for the year ending 31st March 2023.
There is no qualification or adverse remark in Auditorsâ Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.
Cost auditor and Cost audit Report
M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2018-19 to conduct the audit of the cost records of the Company.
M/s V J Talati & Co., Cost Accountants, have been reappointed as the Cost Auditor for the financial year 2019-20. In terms of the provisions of Section 148(3) of the Act read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM the Board seeks ratification of the remuneration payable to the Cost Auditors for the financial year 2019-20.
Secretarial auditor and Secretarial audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s M. M. Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is attached as annexure 2. There is no qualification or adverse remark in their Report.
Conservation of Energy, Technology absorption and Foreign Exchange Earnings and outgo
The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached to this Report as annexure 3.
Risk management
In compliance with Regulation 21 of Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers which includes (a) Review and approval of risk management plan (b) Review progress on the risk management plan (c) Propose methodology on risk classification and measurement.
The Company has laid out a risk management plan for identification and mitigation of risks. The Company has also constituted a Management Risk Committee which is chaired by an Executive Director and has various Functional Heads of the Company as members of the Committee. The other Business/Function heads are invited as and when required. The Management Risk Committee identifies the key risks for the Company, develop and implement the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritize the risks, if required depending upon the effect on the business/reputation.
The other details are provided in the Corporate Governance Report section of this Annual Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered by the Company during the financial year with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an armâs length basis. During the year, the Company did not enter into any contract/ arrangement/ transaction with related parties which could be considered as material.
The Policy on materiality of related party transactions and dealing with related party transactions, as approved by the Board, is available on the website: www.pidilite.com. Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per Indian Accounting Standards, are set out in Note No. 43 of the Standalone Financial Statements of the Company.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
Employees Stock option Scheme
The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations). The certificate of Auditors regarding implementation of the Scheme would be placed at the ensuing AGM for inspection by Members.
The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2019 with regard to Scheme is provided in Annexure 4 to this Report.
Extract of Annual Return
Extract of Annual Return of the Company is attached as Annexure 5 to this Report. It is also available on the website: www.pidilite.com.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front forms an integral part of this Report.
Industry Structure and Development
There is no material change in the industry structure as was reported last year.
The Company operates under two major business segments i.e. Branded Consumer & Bazaar Products and Industrial Products.
Products such as Adhesives, Sealants, Art & Craft Materials and Others, Construction and Paint Chemicals are covered under Branded Consumer & Bazaar products segment. These products are widely used by carpenters, painters, plumbers, mechanics, households, students, offices etc. Sale of these products to joineries and projects are also covered under this segment.
Industrial Products segment covers products such as industrial adhesives, synthetic resins, organic pigments, pigment preparations, surfactants, etc. and caters to various industries like packaging, textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large companies with national presence and a large number of small companies which are active regionally. Multinational companies are also present in many of the product categories in which the Company operates.
Current Year outlook
The prices of key raw materials which had increased significantly during the first half of the year under review started declining in the later part of the fiscal. Barring unforseen circumstances this trend is likely to continue during the initial months of the current year.
Continued slow down in construction industry and slow down in economic growth in recent months can impact sales growth for current year.
Major subsidiaries in India are taking initiatives to improve margins and achieve consistent sales growth in their respective businesses.
The Companyâs major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh.
The Company is in the process of commissioning a second plant in Bangladesh during the year 2019.
The US subsidiary plans to increase its focus on retail and e-commerce. Various initiatives are being taken to improve sales and margin in Brazil. The business environment in some of these countries remain subdued. outlook on opportunities, Threats, Risks and Concerns The Indian economy provides a large opportunity to the Company to market its differentiated products.
Slower growth of the Indian economy and stress in sectors such as construction could impact the performance of the Company.
Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.
Internal Financial Control Systems and their adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/material orders passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Particulars of Employees and related disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as annexure 6 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) are available at the Registered Office of the Company during working hours and shall be made available to any shareholder on request.
Human Resources
The year under review saw substantial progress in people practices, as the Company continued on its journey of excellence in people management policies and processes.
The Companyâs âHappy and Healthyâ (HAH) movement saw great participation with almost 50% of the employees engaging in various activities.
The Company enhanced the people processes like Career Navigator, Individual Development Plans and Career Paths. Signature capability-building programs like Ignite (for Marketing Managers), Ascent (for Sales Managers), Capstone (for Middle Managers) and Edge (for Young Managers) strengthened the Learning & Development initiative and were well-received by participants and leaders.
Progressive HR policies such as work from home, paternity leave, saturdays offs, etc. were introduced as part of the journey to become a great place to work. Many existing employee benefit policies were revised to make them best in class.
The Company is committed to building a âlistening organizationâ through multiple platforms. Workplace, our in-house social network platform, has played a key role in promoting two-way communication with employees.
The new Human Resource Management System Workline introduced during the year has strengthened the online HR systems and provided employees with a better user experience.
The total number of employees as on 31st March 2019 was 5,742.
General
The Company has not issued equity shares with differential rights as well as sweat equity shares.
There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.
Appreciation
Your Directors wish to place on record their appreciation of the contribution made by employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 14th May 2019 Executive Chairman
Mar 31, 2018
To
The Members
The Directors take pleasure in presenting the Forty Ninth Annual Report together with Audited Financial Statements for the year ended 31st March, 2018.
Financial Results (Standalone)
(Rs. in crores ) |
||
2017-18 |
2016-17 |
|
Gross Turnover |
5445.67 |
5270.30 |
Turnover, Net of Excise |
5309.11 |
4837.02 |
Operating profit |
1430.30 |
1338.94 |
Exceptional items |
- |
94.34 |
Profit Before Tax |
1331.28 |
1144.72 |
Current Yearâs Tax |
356.89 |
362.66 |
Profit After Current Yearâs Tax |
974.39 |
782.06 |
Deferred Tax |
19.20 |
8.27 |
Profit After Tax |
955.19 |
773.79 |
Profit Brought Forward |
1504.72 |
763.76 |
Other comprehensive income (net of tax) |
0.13 |
(1.98) |
Profit available for appropriation |
2460.04 |
1535.57 |
Appropriations |
||
Dividend paid |
243.52 * |
25.63 |
Tax on Dividend |
49.57 * |
5.22 |
Total |
293.09 |
30.85 |
Closing balance of Retained Earnings |
2166.95 |
1504.72 |
* Pertaining to dividend for FY 2016-17
Financial Performance
On a comparable basis after reflecting accounting impact of GST for the full year, net sales grew by 12.0%, with sales volume and mix growth of 11.2%. Consumer and Bazaar products grew by 12.1% and Industrial Products grew by 7.6%.
The Operating Profit for the year at Rs.1430.30 crores increased by 6.8% and Net Profit at Rs.955.19 crores increased by 23.4%. Income tax for the current year at Rs.356.89 crores (including reversal of excess tax provision of Rs.46.47 crores of earlier years) is lower by 1.6%.
The Indian Rupee was at Rs.65.17 to a US $ as on 31st March 2018 as compared to Rs.64.81 to a US $ as on 31st March 2017.
Dividend
Your Directors recommend a dividend of Rs.6/- per equity share of Rs.1 each (previous year a total dividend of Rs.4.75 per equity share of Rs.1 each), out of the current yearâs profit, on 50.78 crores equity capital of Rs.1/- each amounting to Rs.304.69 crores (previous year Rs.243.52 crores on equity capital of 51.27 crores). Dividend for the current year will be free of tax in the hands of shareholders, upto an amount aggregating to Rs.10 lacs. The dividend payout amount has grown at a CAGR of 22.68 % during the last 5 years. The dividend payout is in accordance with the Dividend Distribution Policy as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), is given as an annexure and the same is also available on the website of the Company.
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation and an amount of Rs.2166.95 crores is proposed to be retained in the profit and loss account.
Term Finance
The Company has no outstanding term loans.
Capital Expenditure
The total capital expenditure during the year was Rs.131.94 crores, spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.
Fixed Deposits
The Company has not accepted any fixed deposits during the year 2017-18.
Subsidiaries
Investment in Subsidiaries
During the year, investment of Rs.151.19 crores was made in subsidiaries. Of these Rs.33.92 crores was invested in overseas subsidiaries and Rs.21.02 crores was invested in domestic subsidiaries. The balance represents the consideration paid for the acquisition of 70% equity stake in CIPY Poly Urethanes Pvt. Ltd. (excluding fair valuation of derivative option to buy balance 30% equity stake).
The investments in overseas subsidiaries were in Pidilite Middle East Ltd (Rs.16.54 crores) and Pidilite International Pte Ltd (Rs.15.91 crores) for onward investments in their step down subsidiaries and Pidilite Chemical PLC (Rs.1.47 crores).
The investments in domestic subsidiaries were in ICA Pidilite Pvt. Ltd (Rs.20.46 crores) and Fevicol Company Ltd. (Rs.0.56 crores)
During the year
a) A petition has been filed with National Company Law Tribunal, Mumbai division (NCLT) for amalgamation of Percept Waterproofing Services Limited (Percept) with Nina Waterproofing Systems Private Limited (Nina).
The Company holds 80% equity capital in Percept and 70% equity capital in Nina and shall hold 71.53% equity capital post merger in Nina. The said petition is pending for approval by NCLT.
b) The Company acquired 70% stake in CIPY Poly Urethanes Pvt Ltd
c) Building System Solution Trading Limited Liability Company (BSST) incorporated in Qatar, ceased to be a step down subsidiary of the Company with effect from 5th March 2018.
d) Pidilite USA Inc., a wholly owned subsidiary of the Company sold the Cyclo Division which was engaged in the business of automobile grooming, performance and maintenance products and other such products.
Some of the Trademarks used by the Cyclo Division which were owned by Pidilite International Pte Ltd., Singapore (a wholly owned subsidiary of the Company) were also assigned.
During the year CIPY Poly Urethanes Private Limited became a subsidiary of the Company.
Performance of Major Domestic and overseas Subsidiaries
Nina and Percept, domestic subsidiaries engaged in waterproofing services, reported strong sales and EBITDA growth in current year.
ICA Pidilite Private Limited (ICA Pidilite), a joint venture (JV) of the Company and ICA Spa of Italy, commenced operations in 2016-17. As a part of the Technology Transfer Agreement with ICA Spa, the JV is setting up a plant to manufacture high end wood finishes in India. Sales of ICA Pidilite for the fourth quarter was impacted by a classification dispute with regulatory authorities. The matter is being contested by the Company.
Pidilite USA sales for the year declined over previous financial year due to drop in demand of products for adult coloring segment. EBITDA for the year grew over the previous year, as the previous year results include provision for voluntary recall of Tempra and Fingerpaint products based on routine quality control inspections.
(Rs. in crores)
Name of Subsidiary |
Sales 17-18 |
Sales 16-17 |
% Growth |
EBITDA 17-18 |
EBITDA 16-17 |
% Growth |
Nina Waterproofing Systems Pvt Ltd |
183.61 |
150.69 |
21.8% |
22.95 |
11.17 |
105.5% |
Percept Waterproofing Services Ltd |
55.58 |
43.64 |
27.4% |
7.09 |
4.76 |
48.9% |
ICA Pidilite Pvt Ltd |
102.76 |
94.94 |
8.2% |
1.43 |
10.30 |
(86.1%) |
CIPY Poly Urethanes Pvt Ltd (Acquired on 8th February 2018) |
26.72 |
- |
- |
2.22 |
- |
- |
Pidilite USA Inc |
108.48 |
143.80 |
(24.6%) |
7.05 |
(2.00) |
452.5% |
Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda |
93.60 |
97.21 |
(3.7%) |
0.72 |
5.21 |
(86.2%) |
Pidilite Speciality Chemicals Bangladesh Pvt Ltd |
85.07 |
75.62 |
12.5% |
15.20 |
13.50 |
12.6% |
Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company |
26.34 |
21.40 |
23.1% |
(1.40) |
(3.32) |
57.8% |
Pidilite Bamco Ltd includes Bamco Supply and Services Ltd |
51.33 |
46.66 |
10.0% |
4.43 |
4.86 |
(8.7%) |
Pidilite MEA Chemicals LLC |
84.00 |
72.29 |
16.2% |
(9.28) |
(18.02) |
48.5% |
Pidilite Lanka (Pvt) Ltd |
31.84 |
26.28 |
21.2% |
1.03 |
1.80 |
(42.5%) |
Previous year figures, wherever applicable, are made comparable after reflecting impact of GST for the full year.
Overseas subsidiaries figures are at constant currency. Figures given above do not include Sales and EBITDA of Cyclo Division of Pidilite USA as Cyclo business was sold by Pidilite USA in June 2017.
Pulvitec do Brasil sales declined due to competitive pressure in key products. The demand situation in Brazil continues to be uncertain.
The subsidiaries in Bangladesh and Thailand reported reasonable sales growth. EBITDA for subsidiaries in Thailand declined on account of higher material cost.
The subsidiaries in Egypt and UAE reported reduction in EBIDTA losses due to good sales growth and control on expenses.
Pidilite Lanka continued to report good sales growth. However, EBITDA declined due to higher investments to support future sales growth.
Consolidated Financial Statements
In accordance with the requirements of Indian Accounting Standards AS 110 (read with IND AS 28 and IND AS 31) issued by Central Government under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, the Consolidated Financial Statements of the Company are provided in the Annual Report. A statement containing the salient features of the Companyâs subsidiaries, associate and joint venture company in the prescribed form in Form AOC - 1 is attached.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate company and joint venture, as approved by their respective Board of Directors except Plus Call Technical Services LLC for which the financial statements have been approved by the management of the Joint Venture.
The Consolidated Financial Statements of the Company for the financial year 2017-18 are prepared in compliance with applicable provisions of the Companies Act, 2013, Indian Accounting Standards and presented in compliance with Listing Regulations. The accounts of the subsidiaries are also uploaded on the website of the Company, www.pidilite.com.
Directors and Key Managerial Personnel
Members approval is sought by way of Special Resolution for re-appointment of Shri M B Parekh as Whole Time Director for a further period of 5 yea rs with effect from 1st August 2018. Shri M B Parekh is the Executive Chairman of the Company.
Members approval is sought for re-appointment of
(i) Shri A B Parekh, as a Whole Time Director, for a further period of 5 years with effect from 1st August 2018 and
(ii) Shri Sabyaschi Patnaik, as a Whole Time Director, for a further period of 3 years with effect from 19th May 2018.
In accordance with the Articles of Association of the Company, Shri A B Parekh and Shri Sabyaschi Patnaik, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.
Shri Ranjan Kapur, Director of the Company passed away on 27th January 2018. He was a director in the Company since 17th October 2000. The Directors place on record their sincere appreciation of the valuable services rendered by Shri Ranjan Kapur during his tenure as Director of the Company.
Shri Piyush Pandey was appointed as an Additional Director of the Company with effect from 11th April 2018. Members approval is sought for appointment of Shri Piyush Pandey as an Independent Director for a period of 5 years.
In terms of Section 203 of the Companies Act, 2013, the Board has appointed Shri P Ganesh as the Chief Financial Officer (Key Managerial Personnel) of the Company with effect from 20th November 2017.
Policy on Directorsâ remuneration
The Policy on Directorsâ remuneration is given as an annexure and is also available on the website of the Company, www.pidilite.com. There has been no change except an increase in the commission payable to non-executive Directors. The remuneration paid to the Directors is as per the terms laid out in the said policy of the Company.
Buyback of shares
In terms of the special resolution passed by the members, by postal ballot procedure, the Company has completed buyback of 50,00,000 (Fifty Lakhs) fully paid-up equity shares of Rs.1/- each (representing about 0.975% of the total outstanding pre buyback equity shares of the Company) at a price of Rs.1,000/- (Rupees One Thousand only) per equity share for an aggregate amount of Rs.500,00,00,000/-(Rupees Five Hundred Crores only) from the equity shareholders/ beneficial owners holding equity shares as on Record Date i.e. 12th February 2018, on proportionate basis through the tender offer route in accordance with the provisions of the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made thereunder.
Consequent to above change, the paid up share capital of the Company has decreased from 51,28,10,330 equity shares of Rs.1/- each to 50,78,10,330 equity shares of Rs.1/- each.
Directorsâ Responsibility Statement
Your Directors confirm that:
- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
- 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 at the end of the financial year ended 31st March 2018 and of the profit of the company for that period;
- the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the directors have prepared the annual accounts on a going concern basis;
- the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
- 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.
Annual evaluation by the Board of its own Performance, its Committees and Individual Directors
The Board has put in place a mechanism for evaluation of its own performance, Committee and Individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters such as Board composition and Structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc.
Familiarisation Programme
The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.
Number of Meetings of Board of Directors
Seven meetings of the Board of Directors of the Company were held during the year. For further details, please refer to Corporate Governance section of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Listing Regulations.
Corporate Governance
The Company is committed to good corporate governance practices. The Report on Corporate Governance as stipulated under Listing Regulations forms an integral part of this Report. The requiste certificate from M/s M. M. Sheth & Co., Practising Company Secretaries, is attached to the Report on Corporate Governance.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review as stipulated under Listing Regulations is presented in a section forming part of Annual Report.
Items covered in Boardâs Report are not repeated in the Management Discussion and Analysis Report.
Statutory auditors
The members on 25th September 2014 had appointed M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 117364W) for a period of 4 years upto the conclusion of the 49th Annual General Meeting of the Company. M/s. Deloitte Haskins & Sells are not seeking re-appointment as Statutory Auditors of the Company.
In accordance with the provisions of Companies Act, 2013 it is proposed to appoint M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) (which belongs to the same network as that of existing Statutory Auditors), as Statutory Auditors of the Company, for a period of 5 years i.e. upto the conclusion of Annual General Meeting to be held for the adoption of accounts for the year ending 31st March 2023.
M/s Deloitte Haskins & Sells LLP, Chartered Accountants, have consented to be the Auditors of the Company, if appointed by the members at the Annual General Meeting and have also confirmed that their appointment is as per the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rule, 2014.
There is no qualification or adverse remark in Auditorsâ report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Companies Act, 2013.
Corporate Social Responsibility Committee
The details of Corporate Social Responsibility Committee has been provided under Corporate Governance section of this Annual Report and is also posted on the website of the Company.
The report as per Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure 1.
Audit Committee
The Audit Committee was reconstituted on 11th April 2018 by appointing Shri Sanjeev Aga as a member of the Committee. Shri Ranjan Kapur ceased to be member of the Committee due to his demise. The Audit Committee comprises of Directors namely Shri B S Mehta (Chairman), Shri M B Parekh, Shri Uday Khanna and Shri Sanjeev Aga as other members. All the recommendations made by the Audit Committee were accepted by the Board.
Vigil Mechanism / whistle Blower Policy
The Company has established a Vigil mechanism and Whistle Blower Policy for Directors and employees. It has been communicated to the Directors and employees of the Company and also posted on the website of the Company.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formed an Internal Complaints Committee. 1 complaint was received during the year and the same was resolved.
Cost auditor and Cost audit Report
M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2017-18 to conduct the audit of the cost records of the Company. M/s V J Talati & Co., Cost Accountants, have been reappointed as the Cost Auditor for the financial year 2018-19. In terms of the provisions of Section 148(3) of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company. Accordingly, the Board seeks ratification at the ensuing AGM of the remuneration payable to the Cost Auditors for the financial year 2018-19.
Secretarial auditor and Secretarial audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s M.M. Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is attached as Annexure 2. There is no qualification or adverse remark in their report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo
The particulars under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are attached to this Report as Annexure 3.
Risk Management
In compliance with Regulation 21 of Listing Regulations, a Risk Management Committee has been constituted by the Board. Risk Management Committee also known as Risk Management Oversight Committee has been entrusted with roles and powers which includes: a) Review and approval of risk management plan b) Review progress on the risk management plan c) Propose methodology on risk classification and measurement.
The Company has laid out a risk management plan for identification and mitigation of risks. The Company has constituted a Management Risk Committee which is chaired by an Executive Director and has functional heads as members of the Committee. Business heads are invited as and when required. Risks (Business / Reputation) and mitigation plans are considered by this committee. The Risk Management Committee of the Board provides reasonable oversight of the risks.
The other details are provided in the Corporate Governance Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company did not enter into any contract/ arrangement/transaction with related parties which could be considered as material.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is available on the website: www.pidilite.com.
Your Directors draw attention of the members to Note No. 44 to the standalone financial statement which sets out related party disclosures pursuant to IND AS.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
Employees Stock option Scheme
The Employees Stock Option Scheme is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 [SBEB Regulations]. The certificate of auditors regarding implementation of the Scheme being in accordance with SBEB Regulations would be placed at the Annual General Meeting for inspection by Members.
The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2018 with regard to Employee Stock Option Scheme is provided in Annexure 4 to this Report.
Extract of Annual Return
Extract of Annual Return of the Company is attached as Annexure 5 to this Report.
Particulars of Employees and related disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 6 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) are available at the Registered Office of the Company during working hours and shall be made available to any shareholder on request.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front forms an integral part of this report.
Industry Structure and Development
There is no material change in the industry structure as was reported last year.
The Company operates under two major business segments i.e. Branded Consumer & Bazaar products and Industrial products.
Products such as Adhesives, Sealants, Art & Craft Materials and Others, Construction and Paint Chemicals as well as joineries are covered under Branded Consumer & Bazaar products segment.
These products are widely used by carpenters, painters, plumbers, mechanics, households, students, offices etc. Industrial Products segment covers products such as industrial adhesives, synthetic resins, organic pigments, pigment preparations, surfactants etc and caters to various industries like packaging, textiles, paints, printing inks, paper, leather etc.
In both the above business segments, there are a few medium to large companies with national presence and a large number of small companies which are active regionally. There is a growing presence of multinationals in many of the product categories in which the Company operates.
Current Year outlook
The GST regime is stabilizing and is expected to have a positive influence on the Companyâs business in the long run.
The prices of raw material and packing material have further increased. The Company will take necessary steps to mitigate this increase.
The major subsidiaries in India are taking initiatives to improve the market shares in their respective businesses.
The Companyâs major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh.
The business environment in some of these countries remain subdued. However, the management is taking various steps to improve the performance of these subsidiaries.
Outlook on opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to market its differentiated products. Higher growth in select global economies could provide a boost to exports.
Slower growth of the Indian economy could impact the performance of the Company.
Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.
Internal Financial Control Systems and their adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan, periodically reviews the progress of audits as per approved audit plans, critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/Material orders passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Human Resources
The focus for the year was on Capability Building, Employee Engagement and Key Talent Management. Capability building was taken forward by introducing Signature Programs across disciplines. These programs focus on building sales, marketing and excellence management.
This year the development Centre for frontline sales and field marketing employees covered over 500 employees across all divisions. This has facilitated frontline development, appropriate staffing for new opportunities and building frontline capability.
Employee Engagement activities have been now brought under the new theme of âHAHâ- Happy And Healthy Pidilite. This enables building an engaging workplace for the employees. Coupled with Facebookâs Workplace which was launched last year, a young and vibrant workplace is now offered across all locations to all employees.
The total number of employees as on 31st March 2018 was 5382.
General
The Company has not issued equity shares with differential rights as well as sweat equity shares.
The details of constitution of Nomination and Remuneration Committee and Stakeholders Relationship Committee are given in the Corporate Governance Report.
There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.
Appreciation
Your Directors wish to place on record their appreciation of the contribution made by employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 24th May 2018 Executive Chairman
Mar 31, 2017
The Directors take pleasure in presenting the Forty Eighth Annual Report together with Audited Financial Statements for the year ended 31st March 2017.
Financial Results (Standalone)
(Rs. in crores ) |
||
2016-17 |
2015-16 * |
|
Gross Turnover |
5270.30 |
5034.99 |
Turnover, Net of Excise |
4837.02 |
4702.96 |
Operating profit |
1338.94 |
1191.55 |
Exceptional items |
94.34 |
27.00 |
Profit Before Tax |
1144.72 |
1069.50 |
Current Yearâs Tax |
362.66 |
298.77 |
Profit After Current Yearâs Tax |
782.06 |
770.73 |
Deferred Tax |
8.27 |
24.01 |
Profit After Tax |
773.79 |
746.72 |
Profit Brought Forward |
763.76 |
421.41 |
Other comprehensive income (net of tax) |
(1.98) |
(0.22) |
Profit available for appropriation |
1535.57 |
1167.91 |
Appropriations |
||
Dividend paid |
25.63 |
335.79 |
Tax on Dividend |
5.22 |
68.36 |
Total |
30.85 |
404.15 |
Closing balance of Retained Earnings |
1504.72 |
763.76 |
* figures as per IND AS.
Financial Performance
The Operating Profit for the year at Rs. 1338.94 crores increased by 12.37% and Net Profit at Rs. 773.79 crores increased by 3.63%. Income tax for the current year at Rs. 362.66 crores is higher by 21.38%.
Gross margin for the year improved mainly on account of lower raw material prices.
The Indian Rupee was at Rs. 64.81 to a US $ as on 31st March 2017 as compared to Rs. 66.31 to a US $ as on 31st March 2016.
Dividend
Your Directors recommend a dividend of Rs. 4.75 per equity share of Rs. 1 each (previous year a total dividend of Rs. 4.15 per equity share of Rs. 1 each) , out of the current yearâs profit, on 51.27 crores equity shares of Rs. 1/- each amounting to Rs. 243.52 crores (previous year Rs. 212.76 crores).
Dividend for the current year will be free of tax in the hands of shareholders, upto an amount aggregating to Rs. 10 lacs. The dividend payout amount has grown at a CAGR of 17.09% during the last 5 years. During the financial year 2016-17, the Board of Directors approved a Dividend Distribution Policy as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) which is available on the website of the Company.
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation and an amount of Rs. 1504.72 crores is proposed to be retained in the profit and loss account.
Term Finance
The Company has no outstanding term loans.
Capital Expenditure
The total capital expenditure during the year was Rs. 120.88 crores, spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.
Synthetic Elastomer Project at Dahej The Company has initiated manufacturing of adhesives for export market at Dahej site. The Company has made and is continuing to make attempts to find a strategic partner for Synthetic Elastomer project. In line with this strategy, the Company has fair valued items of plant and machinery alongwith the integrated patents, designs and drawings (currently included in Capital work in progress) and adjusted the difference between the carrying value and the fair value against the opening reserves of the Company as on 1st April 2015 as permitted by IND AS 101. The Capital work in progress of the project as on 31st March 2017 is Rs. 101 crores.
Manufacturing
The new manufacturing facility at Nalagarh (Himachal Pradesh) to produce adhesives, was commissioned during the year.
Fixed Deposits
The Company has not accepted any fixed deposits during the year 2016-17.
Subsidiaries
Investment in Subsidiaries
During the year, investment of Rs. 89.23 crores was made in subsidiaries. Of these Rs. 8.75 crores was invested in overseas subsidiaries and Rs. 80.48 crores was invested in domestic subsidiaries.
The investments in overseas subsidiaries were in Pidilite Middle East Ltd. (Rs. 8.00 crores) for onward investments in Pidilite MEA Chemicals LLC, Pidilite Industries Egypt SAE (Rs. 0.09 crores) and Pidilite Chemical PLC (Rs. 0.66 crores). The investments in domestic subsidiaries were in Fevicol Company Ltd (Rs. 1.63 crores) and ICA Pidilite Pvt Ltd ('' 78.85 crores).
During the year
a) The name of the subsidiary Wood Coat Pvt Ltd. was changed to ICA Pidilite Pvt Ltd.
b) Pidilite International Pte. Ltd and Pidilite Middle East Ltd, wholly owned subsidiaries of the Company, acquired shares of Nebula East Africa Pvt Ltd (NEAPL), a Company incorporated in Kenya. With this acquisition, the wholly owned subsidiaries of the Company jointly hold 100% of the paid up share capital of NEAPL.
c) Nina Waterproofing Systems Pvt Ltd., a subsidiary of the Company incorporated a subsidiary in Srilanka in the name of Nina Lanka Construction Technologies (Pvt) Ltd.
During the year the following companies became subsidiaries of the Company
a) Nebula East Africa Pvt Ltd
b) Nina Lanka Construction Technologies (Pvt) Ltd.
Performance of Major Domestic and Overseas Subsidiaries
(Rs. in crores)
Name of Subsidiary |
Sales 16-17 |
Sales 15-16 |
% Growth |
EBITDA 16-17 |
EBITDA 15-16 |
% Growth |
Nina Waterproofing Systems Pvt Ltd |
150.69 |
143.74 |
4.84% |
11.07 |
16.99 |
(34.84)% |
Percept Waterproofing Services Ltd |
43.64 |
29.16 |
49.66% |
4.76 |
2.02 |
135.64% |
ICA Pidilite Pvt Ltd |
101.08 |
NA |
- |
10.30 |
NA |
- |
Pidilite USA Inc. |
235.96 |
248.36 |
(5.00)% |
5.21 |
21.31 |
(75.50)% |
Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda |
94.50 |
101.03 |
(6.50)% |
5.18 |
1.22 |
325.60% |
Pidilite Speciality Chemicals Bangladesh Pvt Ltd |
78.76 |
71.07 |
10.80% |
14.04 |
15.48 |
(9.30)% |
Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company |
33.11 |
20.82 |
59.00% |
(5.05) |
(0.15) |
(3371.80)% |
Pidilite Bamco Ltd includes Bamco Supply and Services Ltd. |
43.99 |
47.63 |
(7.60)% |
4.60 |
7.91 |
(41.80)% |
Pidilite MEA Chemicals LLC |
75.32 |
70.51 |
6.80% |
(18.19) |
(12.89) |
(41.10)% |
Pidilite Lanka Pvt Ltd |
27.64 |
10.80 |
155.90% |
1.88 |
0.68 |
176.80% |
Overseas subsidiaries figures are at constant currency.
Sales growth of Nina and Percept, domestic subsidiaries engaged in waterproofing services, was impacted by slowdown in real estate segment. ICA Pidilite, joint venture of the Company and ICA of Italy, commenced operations in 2016-17 and is in the process of setting up of a manufacturing facility for wood finishes at Jambusar, Gujarat.
Pidilite USA reported decline in sales & EBITDA due to slowdown in export of automotive care products to Middle East and Latin America and voluntary recall of tempra & finger paint products based on routine quality control inspections. Sales of Pulvitec do Brasil declined due to economic slowdown. However, EBITDA improved due to cost and margin improvement initiatives.
Pidilite Bangladesh reported decline in EBITDA due to increase in expenses to support future sales growth. Pidilite Lanka commenced operations in October 2015. Sales of Pidilite Bamco and Bamco Supply and Services, subsidiaries in Thailand, declined due to political and economic instability.
The subsidiaries in Egypt reported good sales growth but EBITDA declined due to sharp devaluation of Egyptian currency. Increase in selling, general and administrative expenses at Pidilite MEA, subsidiary in Middle East, did not result in commensurate increase in sales. Actions have been initiated to reduce these expenses.
Consolidated Financial Statements
In accordance with the requirements of Indian Accounting Standards AS 110 (read with IND AS 28), issued by, Central Government under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, the Consolidated Financial Statements of the Company and its subsidiaries, associate and joint venture company are annexed to this Annual Report.
A statement containing the salient features of the Companyâs subsidiaries, associate and joint venture company in the prescribed form is attached.
The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate company and joint venture, as approved by their respective Board of Directors except Plus Call Technical Services LLC for which the financial statements have been approved by the management of the Joint Venture.
The Consolidated Financial Statements of the Company for the financial year 2016-17 are prepared in compliance with applicable provisions of the Companies Act, 2013, Indian Accounting Standards and presented in compliance with Listing Regulations. The accounts of the subsidiaries are also uploaded on the website of the Company.
Directors and Key Managerial Personnel
In accordance with the Articles of Association of the Company, Shri N K Parekh and Shri A N Parekh, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.
Shri Pradeep Jain, resigned with effect from 24th March 2017, as the Chief Financial Officer (Key Managerial Personnel) of the Company.
Adoption of new Articles of Association
The existing Articles of Association (AOA) of the Company are based on the provisions of the Companies Act, 1956 and several regulations in the existing AOA contain references to specific sections of the Companies Act, 1956. In order to make the Articles of Association of the Company in tandem with the relevant sections/ provisions under the Companies Act, 2013 and rules made thereunder, it is proposed to replace the existing Articles of Association of the Company by a new set of Articles. Accordingly, in lieu of amendments to various articles in the existing Articles of Association, it is considered prudent and desirable to adopt a new set of Articles of Association of the Company, in substitution for, and to the exclusion of the existing Articles of Association of the Company. Pursuant to Section 14 of the Companies Act, 2013, the consent of the members of the Company by way of a Special Resolution is required for adoption of a new set of Articles of Association of the Company. Accordingly, this matter has been placed before the Members for approval.
Directorsâ Responsibility Statement
Your Directors confirm that:
- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
- 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 at the end of the financial year ended 31st March 2017 and of the profit of the company for that period;
- the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the directors have prepared the annual accounts on a going concern basis; and
- the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;
- 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.
Annual Evaluation by the Board of its Own Performance, its Committees and Individual Directors
The Board of Directors of the Company has put in place a mechanism for evaluation of its own performance, its Committees and Individual Directors. The evaluation process inter alia considers attendance of Directors at Board and committee meetings, participation at meetings, domain knowledge, cohesion in the Boardâs meeting, awareness and observance of governance, etc. The Board carried out annual performance evaluation of the Board, Board Committees and Individual Directors and Chairperson.
The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.
Familiarisation Programme
The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.
Number of Meetings of Board of Directors
Six meetings of the Board of Directors of the Company were held during the year. For further details, please refer to Corporate Governance section of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Listing Regulations.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis, in accordance with Listing Regulations, along with a certificate from M/s M M Sheth & Co., Practicing Company Secretaries, are given separately in this Annual Report.
Statutory Auditors
In accordance with the provisions of Companies Act, 2013, at the Annual General Meeting held on 25th September 2014, the shareholders had appointed M/s Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company, for a period of 4 years i.e. upto the conclusion of 49th Annual General Meeting to be held for the adoption of accounts for the financial year ending 31st March 2018. M/s Deloitte Haskins & Sells, Chartered Accountants, have consented to be the Auditors of the Company, if their appointment is ratified by the members at the Annual General Meeting and have also confirmed that their appointment is as per the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules, 2014.
There is no qualification or adverse remark in Auditorsâ report. There is no incident of fraud requiring reporting by the auditors under Section 143(12) of the Companies Act, 2013.
Corporate Social Responsibility Committee
The details of Corporate Social Responsibility Committee has been provided under Corporate Governance section of this Annual Report.
The report as per Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure 1.
Audit Committee
The Audit Committee comprises of Directors namely Shri B S Mehta (Chairman), Shri Ranjan Kapur, Shri M B Parekh and Shri Uday Khanna as other members. All the recommendations made by the Audit Committee were accepted by the Board.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil mechanism for Directors and employees and the same has been communicated to the Directors and employees of the Company and the same is also posted on the website of the Company.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formed an Internal Complaints Committee. No complaints have been received during the year.
Cost Auditor and Cost Audit Report
M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2016-17 to conduct the audit of the cost records of the Company. M/s V J Talati & Co., Cost Accountants, have been reappointed as the Cost Auditor for the financial year 2017-18. In terms of the provisions of Section 148(3) of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company. Accordingly, the Board seeks ratification at the ensuing AGM of the remuneration payable to the Cost Auditors for the financial year 2017-18.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s M M Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is attached as Annexure 2. There is no qualification or adverse remark in their report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are attached to this Report as Annexure 3.
Risk Management
In compliance with Regulation 21 of Listing Regulations, a Risk Management Committee has been constituted by the Board. Risk Management Committee also known as Risk Management Oversight Committee has been entrusted with roles and powers which include a) Review and approval of risk management plan b) Review progress on the risk management plan c) Propose methodology on risk classification and measurement.
The Company has laid out a risk management plan for identification and mitigation of risks. The Company also has a Management Risk Committee which is chaired by an Executive Director and has functional heads as members of the Committee. Business heads are invited as and when required. Risks (Business / Reputation) and mitigation plans are considered by this committee. The Risk Management Committee provides reasonable oversight of the risks.
The other details are provided in the Corporate Governance Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company did not enter into any contract/ arrangement/transaction with related parties which could be considered as material.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is available on the website : www.pidilite.com.
Your Directors draw attention of the members to Note No. 44 to the financial statement which sets out related party disclosures.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
Employees Stock Option Scheme
The Employees Stock Option Scheme is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 [SBEB Regulations]. The certificate of auditors regarding implementation of the Scheme being in accordance with SBEB Regulations would be placed at the Annual General Meeting for inspection by Members.
The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2017 with regard to Employee Stock Option Scheme is provided in Annexure 4 to this Report.
Extract of Annual Return
Extract of Annual Return of the Company is attached as Annexure 5 to this Report.
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 6 to this Report.
Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours and shall be made available to any shareholder on request.
Disclosure Relating to Remuneration of Directors and Key Managerial Personnel
The remuneration paid to the Directors is in accordance with the Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front forms an integral part of this report.
Industry Structure and Development
There is no material change in the industry structure as was reported last year.
The Company operates under two major business segments i.e. Branded Consumer & Bazaar products and Industrial products.
Products such as Adhesives, Sealants, Art & Craft Materials and Others, Construction and Paint Chemicals are covered under Branded Consumer & Bazaar Products segment. These products are widely used by carpenters, painters, plumbers, mechanics, households, students, offices etc. Industrial Products segment covers products such as industrial adhesives, synthetic resins, organic pigments, pigment preparations, surfactants etc and caters to various industries like packaging, textiles, paints, printing inks, paper, leather etc.
In both the above business segments, there are a few medium to large companies with national presence and a large number of small companies which are active regionally. There is a growing presence of multinationals in many of the product categories in which the Company operates.
The VAM plant has been modified to make a range of Speciality Acetates as import of VAM continues to remain more viable as opposed to in-house manufacture. Plans are underway to manufacture Isopropyl Alcohol which is a widely used solvent having good domestic market.
Current Year Outlook
During the year 2017-18, it is expected that Goods and Service Tax (GST) will be implemented.
The prices of raw materials and packing materials have firmed up.
One manufacturing unit in Himachal Pradesh will be completing its income tax holiday period in the financial year 2017-18. One manufacturing unit in Assam enjoys exemption from excise duty and income tax. The newly set up unit at Himachal Pradesh will continue to enjoy excise benefit.
Domestic subsidiaries are largely represented by Nina Waterproofing Systems Pvt Ltd., Percept Waterproofing Services Limited and ICA Pidilite Pvt Ltd (ICA). During the financial year 2016-17, ICA commenced operations in the wood finish business. The major subsidiaries in India are in the nascent stages of operation. These companies are taking initiatives to increase their presence in the market.
The Companyâs major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh. The business environment in some of these countries remain subdued. However, the management is taking various steps to improve the performance of these subsidiaries.
Outlook on Opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to market its differentiated products. Higher growth in select global economies could provide a boost to exports.
Slower growth of the Indian economy could impact the performance of the Company.
The domestic subsidiaries are dependent on the construction activity.
Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.
The Audit Committee of the Board of Directors approves the annual internal audit plan, periodically reviews the progress of audits as per approved audit plans, critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.
Significant/Material orders passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.
Human Resources
Several initiatives were undertaken to strengthen the Employee Connect and Talent Development Process.
âMy Pidiliteâ, an employee helpline, was launched across all locations to facilitate timely redressal of employee queries. An internal communication and collaboration tool - âWorkplace by Facebookâ was also launched for internal communication, sharing of ideas and employee recognition.
This year the Founderâs Day was celebrated on 14th March 2017 in a grand manner. The spirit of the event embodied the beliefs of our beloved founder late
Shri B K Parekh. Employees who personified the values of the organisation were recognised during the event and were awarded the âLate Shri B K Parekh Excellence Awardsâ. The event also provided a platform to showcase homegrown talent, with finalists performing and competing for the title of âPidiliteâs Got Talent.â The celebrations were streamed live on Workplace @ FB to enable employees across locations to witness the event and cheer their colleagues.
Opportunities for career growth to the in-house talent, was enhanced by strengthening the Internal Job Posting process and talent development interventions.
The Young Talent Programme was further enhanced through the internship programs and facilitation of career path movements for Young Managers, thus creating the talent pipeline.
The total number of employees as on 31st March 2017 was 5247.
General
The Company has not issued equity shares with differential rights as well as sweat equity shares.
The details of constitution of Nomination and Remuneration Committee and Stakeholders Relationship Committee are given in the Corporate Governance Report.
Appreciation
Your Directors wish to place on record their appreciation of the contribution made by employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 18th May 2017 Executive Chairman
Mar 31, 2015
The Members
The Directors take pleasure in presenting the Forty Sixth Annual
Report for the year ended 31st March, 2015.
Financial Results
2014-15 2013-14
Gross Turnover 46582 41037
Turnover, Net of Excise 43748 38561
Profit Before Tax 6685 6310
Current Year's Tax 1561 1599
Profit After Current Year's Tax 5124 4711
Deferred Tax 106 25
Profit After Tax 5018 4686
Profit Brought Forward 2184 1792
Profit available for appropriation 7202 6478
Appropriations
Proposed Dividend on Equity Shares 1487 1384
Tax on Dividend 303 235
Transfer to Debenture Redemption Reserve - 41
Transfer to General Reserve 750 2500
Total 2540 4160
Balance Carried to Balance Sheet 4662 2318
7202 6478
*Net of depreciation of Rs. 133.93 million on transition to schedule II
of the Companies Act, 2013 on tangible fixed assets with nil remaining
useful life (Net of deferred tax).
Financial Performance
The Operating Profit for the year at Rs. 8058 million increased by 11.8%
and Net Profit at Rs. 5018 million increased by 7.1%. Income tax for the
current year at Rs. 1561 million is lower by 2.4%.
Due to the slow down in the overall economic environment and in
particular in the second half of the year, sales of the Company's
products were affected.
Sales of Consumer and Bazaar Products grew by 15%, lower than the
growth rates recorded in the last 5 years.
Sales of Industrial Products grew at a much slower rate of 6.6% due to
weak domestic environment and slowdown in exports.
Margins were adversely impacted by steep increase in input costs
particularly in the first half of the year. Selective price increases
were taken in a phased manner. Input prices also came down in the
second half of the year and this along with the pricing action helped
improve margins in the second half.
The Indian Rupee was at Rs. 62.62 to a US $ as on 31st March, 2015 as
compared to Rs. 60.05 to a US $ as on 31st March, 2014.
Dividend
The Directors recommend a dividend of Rs. 2.90 per equity share of Rs. 1
each, out of the current year's profit, on 512.66 million equity
shares of Rs. 1 each (previous year @ Rs. 2.70 per equity share) amounting
to Rs. 1487 million (previous year Rs. 1384 million). Dividend for the
current year will be free of tax in the hands of shareholders. The
dividend payout amount has grown at a CAGR of 14.8% during the last 5
years.
Term Finance
The Company has no outstanding term loans.
Capital Expenditure
The total expenditure during the year was Rs. 3747 million, spent on
fixed assets for various manufacturing units, offices, laboratories,
warehouses and on information technology. This also includes the
acquisition cost for the adhesive business of Bluecoat Private Ltd.
Synthetic Elastomer Project
As mentioned in the last year's report, the Company was in discussion
with several interested parties with a view to finding a strategic
partner for the project. While discussions have continued in the last
year, they have not reached a conclusive stage. The total investment in
the project stands at Rs. 3657.03 million.
Manufacturing Plants
The manufacturing facility at Guwahati to produce Fevikwik and M-seal,
was commissioned and commercial despatches commenced from April, 2014.
Equity Dividend Payout & % of Net Profit (excluding exceptional items)
Dividend Payout
including tax on dividend (Rs. in million)
 Dividend Payout (%)
Integration process of the business acquired from Bluecoat Private Ltd.
was completed during the year. Capacity expansions were undertaken in
Kalaamb Unit 2 for select Fevicol products.
Operations at two units located at Panvel and Taloja were discontinued
during the year and capacity augmented in other existing units.
Fixed Deposits
The Company has not accepted any fixed deposits during the year
2014-15.
Subsidiaries
Investment in Subsidiaries
During the year, investment of Rs. 384.7 million was made in
subsidiaries. Of these Rs. 382.4 million was invested in overseas
subsidiaries and Rs. 2.3 million was invested in a domestic subsidiary.
The investments in overseas subsidiaries were mainly in Pulvitec do
Brazil Industria e Comercio de colas e adesivos Ltda. (Rs. 179 million),
Pidilite Middle East Ltd.
(Rs. 189.9 million) for onward investments in Jupiter Chemicals (LLC) and
Pidilite Chemical PLC (Rs. 12.1 million).
During the financial year, the Company acquired 70% shareholding in
Nina Waterproofing Systems Private Ltd. (Nina), making Nina a domestic
subsidiary of the Company. Subsequently, in April, 2015, Nina acquired
the water proofing business of Nina Concrete Systems Private Ltd. on a
slump sale basis. Nina is engaged in the business of supply and
installation of waterproofing systems.
Performance of Domestic Subsidiaries
Percept Waterproofing Services Ltd which commenced operations in
February, 2014 reported sales ofRs. 200 million and Profit after Tax ofRs.
7.7 million.
Hybrid Coatings reported sales ofRs. 88.6 million and a Profit after Tax
ofRs. 10.3 million. Sales have improved in the second half as the
Company's products gained greater acceptance with customers.
Performance of Overseas Subsidiaries
Total revenue grew by 15.1% in constant currency terms. However, due
to an unfavourable translation impact, the reported growth is 14.2%.
The subsidiary in US reported sales growth of 11.2% at constant
currency. The growth in business was driven by strong growth of Sargent
Art business in retail segment.
As a part of business strategy, the subsidiary invested in getting more
products approved, improve visibility and
build up supply chain for supporting increased business in retail
segment. The subsidiary in US reported 8% growth in profit before tax.
The subsidiary in Brazil reported sales growth of 3.1% at constant
currency. This was partly due to slow growth in Brazilian economy.
During the year, the company undertook various cost reduction and
efficiency improvement initiatives. This resulted in 38% reduction in
losses at EBITDA level over last year.
The subsidiary in Bangladesh reported net sales growth of 21.2% at
constant currency. Higher sales coupled with pricing actions resulted
in 21.3% growth in EBITDA.
The subsidiary in Egypt reported sales growth of 22.1% at constant
currency. Margins were under stress due to sharp devaluation (~15%) of
local currency against the USD.
The subsidiary reported marginal losses of Rs. 5 million at the EBITDA
level.
Sales of the subsidiaries in Thailand grew by 10% at constant currency.
Business was affected due to political disturbance / elections and
slowdown in economy. Margins during the period improved by 200 bps
driven by improved product mix. EBITDA grew by 8.5%.
The subsidiary in Dubai reported sales growth of 74.6% at constant
currency on comparable basis. Effective November, 2014, the subsidiary
expanded its business to include import and distribution of the parent
company's products in the GCC and CIS countries. During the year, the
subsidiary acquired a brand 'ROK' and hired a new management team.
Losses at EBITDA level have reduced by 27% over last year.
The subsidiary in Singapore reported drop in sales by 20%. Losses were
lower than last year by 10.3%.
Full year loss (PBT) incurred by overseas subsidiaries was Rs. 20.2
million as compared to loss of Rs. 180.1 million last year. Excluding
extraordinary expenses, the overseas subsidiaries have made a profit of
Rs. 4.4 million as compared to loss of Rs. 11.2 million last year.
During the year, Pidilite Chemical PLC was incorporated in Ethiopia, as
a subsidiary of the Company. The Company has invested Rs. 12.1 million in
Pidilite Chemical PLC (as on 31st March, 2015).
During the year the following companies became subsidiaries of the
Company
1. Nina Waterproofing Systems Private Ltd.
2. Pidilite Chemical PLC
Consolidated Financial Statements
In accordance with the requirements of Accounting Standards AS 21 (read
with AS 23), issued by the Institute of Chartered Accountants of India,
the Consolidated Financial Statements of the Company and its
subsidiaries and associate are annexed to this Annual Report.
A statement containing the salient features of the Company's
subsidiaries and associate company in the prescribed form is attached.
The consolidated financial statements have been prepared on the basis
of audited financial statements of the Company, its subsidiaries and
associate company, as approved by their respective Board of Directors
except the newly incorporated subsidiary Pidilite Chemical PLC for
which the financial statements have been approved by the management of
the Company.
The consolidated financial statements of the Company for the financial
year 2014-15 are prepared in compliance with applicable provisions of
the Companies Act, 2013, Accounting Standards and Listing Agreement as
prescribed by the Securities and Exchange Board of India (SEBI).
Directors and Key Managerial Personnel
There has been a change in designation of Shri M B Parekh who ceased to
be the Managing Director of the Company with effect from 10th April,
2015 and has been designated as a Whole Time Director and as the
Executive Chairman of the Company.
The Board has appointed Shri Bharat Puri as the Managing Director of
the Company for a period of 5 years with effect from 10th April, 2015.
Shri N K Parekh has ceased to be the Joint Managing Director of the
Company and has been appointed as the Non Executive Vice Chairman of
the Company with effect from 1st April, 2015.
The term of Shri A N Parekh as a Whole Time Director will expire on 1st
July, 2015. The Board of Directors at their meeting held on 19th May,
2015 have re-appointed him for a further period of 5 years.
Shri R Sreeram, Director (Factories Operations) of the Company resigned
with effect from 7th November, 2014 on account of taking up an
entrepreneurship role.
Shri J L Shah was appointed as Director (Factories Operations) with
effect from 4th November, 2014.
He resigned with effect from 19th May, 2015 as he was planning to
re-start his consultancy activity.
Shri Yash Mahajan, Independent Director of the Company resigned with
effect from 4th November, 2014 on account of personal reasons.
The Directors place on record their sincere appreciation of the
valuable services rendered by Shri R Sreeram, Shri J L Shah and Shri
Yash Mahajan during their tenure as Directors of the Company.
In terms of Section 203 of Companies Act, 2013, Shri Sandeep Batra is
the Chief Financial Officer of the Company (who was already functioning
as Chief Financial Officer designated as Director - Finance).
Shri Sabyaschi Patnaik has been appointed as an Additional Director by
the Board of Directors with effect from 19th May, 2015. In terms of
Section 161 of the Companies Act, 2013, he holds office upto the date
of ensuing Annual General Meeting. Notice in writing with requisite
deposit has been received from a member proposing his candidature for
the office of Whole Time Director. The Board has also appointed him as
Director - Operations, with effect from 19th May, 2015, subject to
approval of members.
In accordance with the Articles of Association of the Company, Shri N K
Parekh and Shri A N Parekh, Directors of the Company, retire by
rotation and being eligible, offer themselves for re-appointment.
Shri Sanjeev Aga is Non-Executive Independent Director of the Company,
liable to retire by rotation. In terms of Sections 149, 152 read with
Schedule IV and other applicable provisions, if any, of the Companies
Act, 2013, he is proposed to be re-appointed as a Director who will be
an Independent Director for a term of 5 years from the date of this
Annual General Meeting upto the conclusion of the Fifty First Annual
General Meeting of the Company to be held in respect of financial year
ending 31st March, 2020.
The Company has received requisite notice in writing from a member,
proposing Shri Sanjeev Aga for appointment as an Independent Director.
Shri Sanjeev Aga shall not be liable to retire by rotation.
He has given the declaration of independence as per Section 149 (6) of
the Companies Act, 2013.
The members' approval is being sought at the ensuing Annual General
Meeting for the above appointments.
Directors' Responsibility Statement
Your Directors confirm that:
- in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
- 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
at the end of the financial year ended 31st March, 2015 and of the
profit of the company for that period;
- the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
- the directors have prepared the annual accounts on a going concern
basis; and
- the Board has laid down internal financial controls to be followed
by the Company and that such internal financial controls are adequate
and are operating effectively;
- 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.
Annual Evaluation by the Board of its Own Performance, its Committees
and individual Directors
The Board of Directors of the Company has initiated and put in place
evaluation of its own performance, its committees and individual
directors. The result of the evaluation is satisfactory and adequate
and meets the requirement of the Company.
Familiarisation Programme
Your Company has put in place an induction and familiarisation
programme for all its Directors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of
provisions of Clause 49 of the Listing Agreement is uploaded on the
website of the Company and can be accessed through the following link:
https://www.pidilite.com/
Number of Meetings of Board of Directors Nine meetings of the Board of
Directors of the Company were held during the year. For further
details, please refer to Corporate Governance section of this Annual
Report.
Statement of Declaration on Independence given by Independent Directors
Shri B S Mehta, Shri Ranjan Kapur, Shri Uday Khanna and Smt. Meera
Shankar, Independent Directors of the Company have given declarations
that they meet the criteria of independence as laid down under section
149(6) of the Companies Act, 2013 and Clause 49 of the Listing
Agreement.
Shri Sanjeev Aga has also given a declaration that he meets the
criteria of independence as laid down under section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreements with Stock
Exchanges, along with a certificate from M/s M M Sheth & Co.,
Practising Company Secretaries, are given separately in this Annual
Report.
Statutory Auditors
In accordance with the provisions of Companies Act, 2013, at the Annual
General Meeting held on 25th September,
2014, the shareholders had appointed M/s Deloitte Haskins & Sells,
Chartered Accountants as Statutory Auditors of the Company, for a
period of 4 years i.e. upto the conclusion of 49th Annual General
Meeting to be held for the adoption of accounts for the financial year
ending 31st March, 2018. M/s Deloitte Haskins & Sells, Chartered
Accountants, have consented to be the Auditors of the Company, if their
appointment is ratified by the members at the Annual General Meeting
and have also confirmed that their appointment is as per the provisions
of Section 141 of the Companies Act, 2013 and Rule 4 of Companies
(Audit and Auditors) Rules, 2014.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee (CSR Committee) comprises
of directors namely Shri N K Parekh, Shri Sanjeev Aga and Shri A B
Parekh as members.
The report as per Section 135 of the Companies Act, 2013 read with
Companies (CSR Policy) Rules, 2014 is attached as Annexure 1.
Audit Committee
The Audit Committee comprises of Directors namely Shri B S Mehta
(Chairman), Shri N J Jhaveri, Shri Ranjan Kapur and Shri M B Parekh as
other members. All the recommendations made by the Audit Committee were
accepted by the Board.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil mechanism for Directors & employees
and the same has been communicated to the Directors & employees of the
Company and the same is also posted on the website of the Company.
Policy relating to Sexual Harassment
The Company has formulated a Sexual Harassment Policy and has formed an
Internal Complaints Committee.
Cost Auditor and Cost Audit Report
Pursuant to Section 148 of the Companies Act, 2013 read with the
Companies (Cost Records and Audit) Amendment Rules, 2014, cost audit
records are maintained by the Company. As required under the Companies
Act, 2013, a resolution seeking approval of the members in this regard
is included in the Notice convening the Annual General Meeting.
Cost Audit Report for the year ended 31st March, 2015 will be submitted
in due course.
The Company has filed the Cost Audit Report for the year ended March,
2014 with the Central Government.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed M/s M M Sheth & Co.,
Practising Company Secretaries to undertake the Secretarial Audit of
the Company. The Report of the Secretarial Auditor is attached as
Annexure 2.
Conservation of Energy, Technology, Absorption and Foreign Exchange
Earnings and Outgo
The particulars under Section 134 of the Companies Act, 2013, read with
the Companies (Accounts) Rules, 2014 are attached to this Report as
Annexure 3.
Risk Management
During the year your Directors constituted a Risk Management Committee
which has been entrusted with roles and powers which include a) Review
and approval of risk management plan b) Review progress on the risk
management plan c) Propose methodology on risk classification and
measurement.
A Risk Management Policy was reviewed and approved by the Committee.
Contracts and arrangements with Related Parties
All Contracts/arrangements 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. During the year, the Company did not enter
into any contract/ arrangement/transaction with related parties which
could be considered material.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed through the following link:
http://www.pidilite.com/financials-policies.html
Your Directors draw attention of the members to Note no. 42 to the
financial statement which sets out related party disclosures.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees and investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
Employees Stock Option Scheme
During the financial year 2013-2014, 49,000 options were granted in one
tranche to the eligible employees of the Company in terms of Employees
Stock Option Scheme - 2012 (ESOS- 2012). During the current financial
year, 20,500 options were exercised by the employees. Accordingly, the
Company made an allotment of 20,500 equity shares on 15th November,
2014.
The applicable disclosure as stipulated under the SEBI Guidelines as on
31st March, 2015 with regard to Employee Stock Option Scheme is
provided in Annexure 4 to this report.
Extract of Annual Return
Extract of Annual Return of the Company is attached as Annexure 5 to
this Report.
Particulars of Employees and related disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the
Companies Act, 2013 read with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules 2014 is attached as
Annexure 6 to this Report.
Details of employee remuneration as required under provisions of
Section 197 of the Companies Act, 2013 and Rule 5(2) of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
available at the Registered Office of the Company during working hours
and shall be made available to any shareholder on request.
Industry Structure and Development
There is no material change in the industry structure as was reported
in the last year.
The Company operates under two major business segments i.e. Branded
Consumer & Bazaar Products and Industrial Products.
Products such as Adhesives, Sealants, Art Material, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment.
These products are widely used by carpenters, painters, plumbers,
mechanics, households, students, offices etc.
Industrial Products segment covers products such as industrial
adhesives, synthetic resins, organic pigments, pigment preparations,
surfactants etc and caters to various industries like packaging,
textiles, paints, printing inks, paper, leather etc.
In both the above business segments, there are a few medium to large
companies with national presence and a large number of small companies
which are active regionally. There is a growing presence of
multinationals in many of the product categories in which the Company
operates. The share of imports is less than 10% of domestic volumes in
most of the product categories.
The "Others" segment, largely comprises manufacture and sale of
Speciality Acetates. As mentioned in last year's report, the VAM
plant has been modified to make a range of Speciality Acetates as
import of VAM continues to remain more viable as opposed to in-house
manufacture.
The technology for these Speciality Acetates has been indigenously
developed and these products are gaining acceptance with customers.
Current Year Outlook
Recent trends suggest a weak economic scenario in the current year.
This will have an impact on the demand for the Company's products. It
is expected that the economic scenario may improve only by the end of
the year.
Prices of VAM, a key input for the Company's products, had sharply
increased towards end of last year and peaked in July / August 2014.
Prices in $ terms have since corrected and together with price
increases, taken in last year, would have a positive impact on margins,
in the short term.
The Company has 7 manufacturing units in Himachal Pradesh which enjoy
exemption from excise duty and income tax. Three of these units will be
completing their tax holiday period in 2015-16. While the excise
benefit will cease on the 10th anniversary of the setting up of these
units, no income tax exemption will be eligible on the profits from
these three units for the financial year 2015-16.
The Company's major subsidiaries are in USA, Brazil, Thailand, Egypt,
Dubai and Bangladesh.
The economic situation in Brazil is challenging with several key
sectors like construction and real estate showing contraction. This is
likely to have a negative effect on the performance of Brazilian
subsidiary. Other overseas subsidiaries, in aggregate, are working
towards an improved performance, subject to no significant adverse
impact on current business environment.
Outlook on Opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to
market its differentiated products. Higher growth in select global
economies could provide a boost to exports. Slower growth of the
Indian economy could impact the performance of the Company.
Overseas subsidiaries by virtue of their relatively smaller size remain
vulnerable to the political and economic uncertainties of their
respective countries.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures
commensurate with its size and nature of business.
The Company has appointed Internal Auditors who periodically audit the
adequacy and effectiveness of the internal controls laid down by the
management and suggest improvements.
The Audit Committee of the Board of Directors periodically reviews the
audit plans, internal audit reports, adequacy of internal controls and
risks management plan.
Significant/Material orders passed by the Regulators
There are no significant/material orders passed by the Regulators or
Courts or Tribunals impacting the going concern status of the Company
and its operations in future.
Human Resources
The company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
The 'Talent Management Process', initiated in the previous year has
now been strengthened.
The total number of employees as on 31st March, 2015 was 4,904.
Appreciation
Your Directors wish to place on record their appreciation of the
contribution made by employees at all levels to the continued growth
and prosperity of your Company. Your Directors also wish to place on
record their appreciation to the shareholders, dealers, distributors,
consumers, banks and other financial institutions for their continued
support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 19th May, 2015 Executive Chairman
Mar 31, 2014
The Members
The Directors take pleasure in presenting the Forty Fifth Annual
Report together with Audited Statements of Accounts for the year ended
31st March, 2014.
Financial Results
(Rs. in million)
2013-14 2012-13
Gross Turnover 41037 35287
Turnover, Net of Excise 38561 33118
Profit Before Tax 6310 6196
Current Year''s Tax 1599 1559
Profit After Current Year''s Tax 4711 4637
Deferred Tax 25 29
Profit After Tax 4686 4608
Profit Brought Forward 1792 1303
Profit available for appropriation 6478 5911
Appropriations
Proposed Dividend on Equity Shares 1384 1333
Tax on Dividend 235 226
Transfer to Debenture Redemption Reserve 41 60
Transfer to General Reserve 2500 2500
Total 4160 4119
Balance Carried to Balance Sheet 2318 1792
6478 5911
Financial Performance
The Operating Profit for the year at Rs. 7209 million increased by 6.8%
and Net Profit at Rs. 4686 million increased by 1.7%. Income tax for the
current year at Rs. 1599 million is higher by 2.6% due to increase in the
surcharge on income tax from 5% to 10%.
GDP growth and in particular industrial growth in India declined over
last year and was the lowest in comparison to the growth in the last 5
years. This affected sales of Company''s products.
Sales of Consumer & Bazaar products grew by 16.3%, below the historical
trends.
Sales of Industrial products grew by 15.2%, on account of higher
exports, faster than the 10.6% growth recorded in the previous year.
The Indian Rupee was at Rs. 60.05 to a US $ as on 31st March, 2014 as
compared to Rs. 54.28 to a US $ as on 31st March, 2013. However the
exchange rate was very volatile with the Rs. toucing 68.75 to a dollar
during the year. This impacted margins especially in the fourth
quarter.
Dividend
The Directors recommend a dividend of Rs. 2.70 per equity share of Rs. 1
each, out of the current year''s profit, on 512.64 million equity shares
of Rs. 1 each (previous year Rs. 2.60 per equity share) amounting to Rs. 1384
million (previous year Rs. 1333 million). Dividend for the current year
will be free of tax in the hands of shareholders. The dividend payout
amount has grown at a CAGR of 16.3% during the last 5 years.
Term Finance
The Company has no outstanding term loans.
Capital Expenditure
The total expenditure during the year was Rs. 1686 million, of which
approximately Rs. 1608.7 million was spent on fixed assets for various
manufacturing units, offices, laboratories, warehouses and on
information technology. This also includes the amount spent for
acquiring the business of Suparshva Adhesives Limited.
Synthetic Elastomer Project
As mentioned in last year''s report, the Company has decided to explore
induction of a strategic partner in the project. While discussions were
held with several interested parties, the Company is yet to finalize a
partner for the project.
The total amount spent on the project during the year is Rs. 70.6 million
and the total investment in the project stands at Rs. 3696.5 million.
Manufacturing Plants
Environment Management System( EMS ) / Occupational Health & Safety
Assessment System (OHSAS) certification process is being extended to
the manufacturing units at Secundrabad and Mahad. This is in
continuation of the implementation done last year at 17 manufacturing
units and the Research & Development facility at Kondivita, Mumbai.
Pidilite Safety, Health & Environment Excellence Model has been
deployed at all the manufacturing locations of the Company. This model
includes self audit by the units on defined parameters and is followed
up by periodical peer audits. This has enabled benchmarking of
performance amongst manufacturing units.
Installation of process waste heat recovery system and solar thermal
system helped reduce fuel consumption. This together with utilization
of power generated from wind farms reduced carbon footprint and
manufacturing cost.
Implementation of water conservation initiatives across plants resulted
in reduction of water consumption by 3500 kl/month
Non - Convertible Debentures
During the year, the Company redeemed the outstanding 600
Non-Convertible Debentures aggregating to Rs. 600 million.
Fixed Deposits
The Company has not accepted any fixed deposits during the year
2013-14.
Subsidiaries
Investment in Subsidiaries
During the year, investment of Rs. 623.8 million was made in
subsidiaries, of which Rs. 549.8 million was in overseas subsidiaries.
Domestic
As on 31st March, 2014, the Company has invested Rs. 24 million in
Building Envelope Systems India Limited (BESI), a company engaged in
manufacturing of construction chemicals in which the Company holds 60%
of the share capital.
During the year, Percept Waterproofing Services Limited (PWSL), was
incorporated, as a 100% subsidiary of the Company, for the purpose of
carrying on business of services relating to waterproofing including
consultancy and project based services. The Company has invested Rs. 48
million in PWSL (as on 31st March, 2014). The present shareholding of
the Company in PWSL is 80%.
Overseas Subsidiaries
Total revenue grew by 11.7% in constant currency terms. However, due
to a favourable translation impact, the reported growth is 16.8%.
The subsidiary in US reported sales growth of 2.5%. EBITDA for the
year improved by 195% mainly due to improvement in margins by 200 bps.
It may be recalled that last year an exceptional provision of Rs. 25
million had been made on account of receivables from a customer who had
filed for bankruptcy. Excluding this one time provision the growth in
EBITDA is 58.7%.
The subsidiary in Brazil reported improvement in performance. Sales
grew by 18.4% and margins improved by 790 bps over last year. Despite
healthy growth in sales and improvement in margin, the decline in
losses at EBITDA level was only 7.3% due to cost related to
restructuring of manufacturing operations and higher legal and tax
provisions.
The subsidiary in Bangladesh reported sales growth of 36.4% inspite of
political unrest and market disturbance for 5 months (September,
2013-January, 2014). Business reported a 68.6% growth in EBITDA. During
the year, the subsidiary declared an interim dividend of Rs. 35 million.
The subsidiary in Egypt reported sales growth of 19.6% despite
political disturbances in the country. The business improved margins
and controlled costs resulting in a positive EBITDA as compared to
marginal loss last year.
Sales of the subsidiaries in Thailand grew by 14.2%. EBITDA grew by
38.2%.
The subsidiary in Dubai reported sales de-growth of 7.1%. Losses
increased over last year due to lower sales and higher staff cost.
Sales of the subsidiary in Singapore more than doubled due to higher
sales from traded products. Losses however, were marginally higher than
last year due to provision for slow moving inventory.
Full year losses (PBT) incurred by overseas subsidiaries were Rs. 180.1
million as compared to losses of Rs. 441.7 million last year.
Consolidated Accounts
In accordance with the requirements of Accounting Standards AS 21 (read
with AS 23), issued by the Institute of Chartered Accountants of India,
the Consolidated Accounts of the Company and its subsidiaries are
annexed to this Annual Report. Additionally, a statement giving
prescribed particulars of information, in aggregate for each
subsidiary, is attached.
In terms of the General Circular No. 2/2011 dated 8th February, 2011,
issued by the Government of India, Ministry of Corporate Affairs, the
Annual Reports of the subsidiary companies are not annexed to this
Report. Members desiring to have a copy of audited Annual Accounts and
the related detailed information of the above subsidiaries may write to
the Company Secretary at the Registered Office of the Company and they
will be provided with the same upon request. Annual Accounts of these
subsidiary companies will also be kept for inspection of the members at
the Registered Office of the Company as well as at the Registered
Office of the subsidiary companies.
Directors
Shri S K Parekh had been associated with the Group for the last 5
decades and was the Vice Chairman and member of the Board of Directors
of the Company. He resigned with effect from 3rd April, 2014 on health
grounds.
The Directors place on record their sincere appreciation of the
valuable services rendered by him to the Company during his long tenure
as a Promoter / Director of the Company.
Shri D Bhattacharya, Director of the Company resigned with effect from
20th May 2014 on account of his inability to devote quality time to the
Board owing to increased work load in his current engagements. The
Directors place on record their sincere appreciation of the valuable
services rendered by him during his tenure as a Director of the
Company.
The tenure of Shri R Sreeram, Director (Factories Operations) will
expire on 7th November, 2014. The Directors at their meeting held on
28th May 2014 have re-appointed him for a further period of 3 years.
Shri Uday Khanna and Smt. Meera Shankar have been appointed as
Additional Directors by the Board of Directors with effect from 3rd
April, 2014 and 30th July, 2014, respectively. In terms of Section 161
of the Companies Act, 2013, they hold office only upto the date of the
ensuing Annual General Meeting. Notice in writing with requisite
deposit has been received from members proposing their candidature for
the office of Independent Director.
In accordance with the Articles of Association of the Company, Shri A B
Parekh, a Director of the Company, retires by rotation and being
eligible, offers himself for re-appointment.
Shri B S Mehta, Shri Ranjan Kapur and Shri Bharat Puri are
Non-Executive Independent Directors of the Company, who are liable to
retire by rotation. In terms of Sections 149, 152 read with Schedule IV
and other applicable provisions, if any, of the Companies Act, 2013,
they are proposed to be appointed as Independent Directors for a term
of 5 years from the date of this Annual General Meeting upto the
conclusion of the Fiftieth Annual General Meeting of the Company to be
held in respect of financial year ending 31st March, 2019.
The Company has received requisite notices in writing from members,
proposing Shri B S Mehta, Shri Ranjan Kapur and Shri Bharat Puri for
appointment as Independent Directors.
These Independent Directors shall not be liable to retire by rotation.
All the Independent Directors have given the declaration of
independence as per Section 149 (6) of the Companies Act, 2013.
The members'' approval is being sought at the ensuing Annual General
Meeting for the above appointments.
Directors'' Responsibility Statement
Your Directors confirm that:
in the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
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 at the end of the financial year ended 31st March, 2014 and
of the profit of the Company for the year ended on that date;
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; and
The Directors have prepared the Annual Accounts on a going concern
basis.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreement with Stock
Exchanges, along with a certificate from M/s M M Sheth & Co.,
Practising Company Secretaries, are given separately in this Annual
Report.
Auditors
In accordance with the provisions of Companies Act, 2013 it is proposed
to appoint M/s Deloitte Haskins & Sells, Chartered Accountants,
Statutory Auditors of the Company, for a period of 4 years i.e. upto
the conclusion of Annual General Meeting to be held for the adoption of
accounts for the year ending 31st March, 2018. M/s Deloitte Haskins &
Sells, Chartered Accountants, have consented to be the Auditors of the
Company, if appointed by the members at the Annual General Meeting and
have also confirmed that their appointment is as per the provisions of
Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit
and Auditors) Rule, 2014.
Corporate Social Resposibility Committee
During the year, Directors have constituted the Corporate Social
Resposibility Committee (CSR Committee) comprising Shri N K Parekh,
Shri Sanjeev Aga and Shri A B Parekh as members.
The said committee has been entrusted with the responsibility of
formulating and recommending to the Board, a Corporate Social
Resposibility Policy (CSR Policy) indicating the activities to be
undertaken by the Company, monitoring the implementation of the CSR
policy and recommending the amount to be spent on CSR activities. The
Board has approved the CSR Policy in its meeting held on 28th May,
2014.
Cost Auditor
As per the Companies (Cost Records and Audit) Rules, 2014, the Company
is not required to conduct cost audit for the financial year 2014-15.
The Cost Audit Report for the year ended March 2014 will be submitted
in due course.
The Company has filed the Cost Audit Report for the year ended March
2013 with the Central Government.
Conservation of Energy, Technology Absorption, etc.
The particulars under Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 are attached to this Report as Annexure
I.
Employees Stock Option Scheme
Nomination and Remuneration Committee of the Board of Directors of the
Company inter alia administers and monitors the Employees Stock Option
Scheme of the Company, in accordance with the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 (SEBI Guidelines).
The applicable disclosures as stipulated under the SEBI Guidelines as
on 31st March, 2014 with regard to Employee Stock Option Scheme are
provided in Annexure II to this report.
The Company has received a certificate from the auditors of the Company
as required under the SEBI guidelines and it would be placed at the
Annual General Meeting of the Company for inspection by the members.
Particulars of Employees
A statement of particulars pursuant to Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, forms part of this Report as Annexure III. As per the provisions
of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report,
together with Accounts, is being sent to the Shareholders of the
Company, excluding the statement of particulars of employees under
Section 217(2A) of the Companies Act, 1956. Members desiring to have a
copy of the same may write to the Company Secretary at the Registered
Office of the Company and they will be provided with the same upon
request.
Industry Structure and Development
There is no material change in the industry structure as was reported
in the last year.
The Company operates under two major business segments i.e. Branded
Consumer & Bazaar Products and Industrial Products.
Products such as Adhesives, Sealants, Art Materials, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment. These products are widely used by carpenters, painters,
plumbers, mechanics, households, students, offices, etc.
Industrial Products segment covers products such as Industrial
Adhesives, Synthetic Resins, Organic Pigments, Pigment Preparations,
Surfactants, etc. and caters to various industries like packaging,
textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large
companies with national presence and a large number of small size
companies that are active regionally. There is growing presence of
multinationals in many of the product categories in which the Company
operates. The share of imports is less than 10% of domestic volumes in
most of the product categories.
The "Other" segment largely consists of the VA M manufacturing unit.
VAM
As mentioned earlier, due to the global demand supply situation it was
viable to import VA M rather than manufacture in-house. Going forward,
import of VA M is likely to remain more viable. Manufacture of
speciality acetates in this plant is continuing and is likely to be
scaled up based on the response from customers.
Current Year Outlook
The demand for the Company''s products is linked to the market demand
both in India and worldwide. The current year''s outlook is uncertain.
However, economic scenario is likely to improve towards the year end.
Prices of VAM, a key input for the Company''s products have sharply
increased in the last few months owing to demand supply imbalance in
the global market. The Company is taking suitable steps for price
increases to offset the cost increase but due to a time lag between
increase in costs and pricing action, margins could be impacted in the
short term.
The Company''s major subsidiaries are in USA, Brazil, Thailand, Egypt
and Bangladesh.
The overseas subsidiaries in aggregate, are expected to show improved
performance. However, the economic environment in Brazil and Egypt is
uncertain and may have an adverse impact on the performance of
subsidiaries in these countries.
Outlook on Opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to
market its differentiated products. Higher growth in select global
economies could provide a boost to exports.
Slower growth of the Indian economy could impact the performance of the
Company.
Overseas subsidiaries by virtue of their relatively smaller size remain
vulnerable to the political and economic uncertainties of their
respective countries.
Internal Control Systems and their Adequacy
The Company has adequate internal control procedures commensurate with
its size and nature of business.
The Company has appointed Internal Auditors who audit the adequacy and
effectiveness of the internal controls laid down by the management and
suggest improvements.
The Audit Committee of the Board of Directors periodically review the
audit plans, internal audit reports and adequacy of internal controls
and risk management.
Human Resources
The Company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
The ''Young Talent Management (YTM)'' program instituted a few years back
has been made more robust. A structured ''Talent Management process''
has been initiated across the Company to provide a talent pipeline to
fulfill the future managerial needs.
The Company also enhanced the Capability Building process at all levels
through various learning initiatives.
The total number of employees as on 31st March, 2014 was 4,651.
Appreciation
Your Directors wish to place on record their appreciation of the
contribution made by employees at all levels to the continued growth
and prosperity of your Company. Your Directors also wish to place on
record their appreciation to the shareholders, dealers, distributors,
consumers, banks and other financial institutions for their continued
support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 30th July, 2014 Chairman & Managing Director
Mar 31, 2013
To The Members
The Directors take pleasure in presenting the Forty Fourth Annual
Report together with Audited Statements of Accounts for the year ended
31st March 2013.
Financial Results
(Rupees in million)
2012-13 2011-12
Gross Turnover 35287 29579
Turnover, Net of Excise 33118 27995
Profit Before Tax 6196 4441
Current Year''s Tax 1559 1051
Profit After Current Year''s Tax 4637 3390
Deferred Tax 29 45
Profit After Tax 4608 3345
Profit Brought forward 1303 1073
Profit available for appropriation 5911 4418
Appropriations
Proposed Dividend on Equity Shares 1333 965*
Tax on Dividend 226 157
Transfer to Debenture Redemption Reserve 60 243
Transfer to General Reserve 2500 1750
Total 4119 3115
Balance Carried to Balance Sheet 1792 1303
5911 4418
*Includes dividend for the prior year paid on 3,49,388 equity shares
issued on conversion of FCCBs after the balance sheet date but prior to
the book closure.
Financial Performance
The Operating Profit and Net Profit for the year at Rs. 6752 million
and Rs. 4608 million increased by 26% and 38% respectively. Income Tax
for the current year at Rs. 1559 million is higher by 48%, due to
completion of the first five year tax holiday period for one
manufacturing unit located in Himachal Pradesh. With this all units
have completed their first five year tax holiday period.
Slow down in industrial growth in India combined with a weak global
economy, impacted sales of industrial products. As a result, sales of
industrial products grew by 10.6%, below the historical trends.
Sales of Consumer & Bazaar products grew by 20.7%. Volume growth,
however, was lower than past trends.
The Indian Rupee was at Rs. 54.28 to a US $ as on 31st March 2013 as
compared to Rs. 50.87 to a US as on 31st March 2012. Moreover the Rupee
saw high volatility during the year and at times quoted above Rs. 57 to
a US $. This made imports costlier and impacted margins. This movement
adversely impacted the liability on account of outstanding Foreign
Currency Convertible Bonds (FCCBs). However, this impact was partly
offset by conversion of 128 FCCBs which resulted in write back of the
earlier exchange fluctuations. Consequently, exchange loss for the year
was only Rs. 5 million as compared to Rs. 85 million in the previous
year.
Dividend
The Directors recommend a dividend of Rs. 2.60 per equity share of Rs.
1 each, out of the current year''s profit, on 512.64 million equity
shares of Rs. 1 each (previous year @ Rs. 1.90 per equity share)
amounting to Rs. 1333 million (previous year Rs. 965 million). Dividend
for the current year will be free of tax in the hands of shareholders.
The dividend payout amount has grown at a CAGR of 32% during the last 5
years.
Term Finance
The Company has no outstanding term loans.
Capital Expenditure
The total expenditure during the year was Rs. 1284 million, of which
approximately Rs. 1209.5 million was spent on fixed assets for various
manufacturing units, offices, laboratories, warehouses and on
information technology. The expenditure on the Synthetic Elastomer
Project was approximately Rs. 74.5 million.
Investment in Subsidiaries
During the year, investment of Rs. 265.3 million was made in
subsidiaries, of which Rs. 265 million was in overseas subsidiaries.
Synthetic Elastomer Project
As mentioned in last year''s report, construction work on the
Synthetic Elastomer Project remained suspended as the Company was
evaluating various alternatives regarding the future of the project.
With due consideration to techno-commercial factors and completion of a
strategic review, the Company has decided to explore induction of a
strategic partner for the project.
The total amount spent on this project is Rs. 3625.9 million.
Manufacturing Plants
EMS (Environment Management System)/OHSAS (Occupational Health & Safety
Assessment System) Certification has been obtained for 17 manufacturing
locations and the Research & Development facility at Kondivita, Mumbai.
Implementation of these systems enables better control on safety
management systems at the units and is one of the indicators of good
manufacturing practices.
During the year, the Company commissioned a manufacturing unit at Mahad
for producing PVC film.
The Company made an investment of Rs. 352.9 million and expanded
capacity of various products to meet market demand.
Implementation of water conservation initiatives across plants resulted
in reduction of water consumption by 275kL/month.
Foreign Currency Convertible Bonds Of the US $ 40 million raised
through issue of 400 zero coupon Foreign Currency Convertible Bonds
(Bonds) in 2007-2008, 333 Bonds aggregating US $ 33.3 million were
outstanding as on 31st March 2012. 128 Bonds worth US $ 12.8 million
were converted during the year and 4,993,704 Equity shares issued. The
remaining 205 Bonds were redeemed on due date.
Fixed Deposits
The Company has not accepted any fixed deposit during the year 2012-13.
Subsidiaries
Domestic
During the year, a Joint Venture Company, Building Envelope Systems
India Limited was incorporated for manufacture of a select range of
construction chemicals for application in waterproofing and thermal
insulation. All these products will be sold through the Company.
These products will address demand for high end waterproofing
solutions. The Company holds 60% of the capital in the Joint Venture
Company.
Overseas Subsidiaries
Total revenue grew by 6.6% in constant currency terms.
The business in US reported sales growth of 10.2%. EBIDTA for the year
declined by 21.6% due to higher material costs and item as detailed
later.
The subsidiary in Brazil continued to perform below expectations. Sales
declined by 0.9%. However due to actions taken to improve performance,
sales growth in the second half was 6.7% as compared to a decline of
7.9% in the first half. Actions taken to improve performance include
strengthening the management as well as to reduce cost and improve
margin.
The subsidiary in Bangladesh reported sales growth of 34%. The business
scope was extended to include trading operations which started in
December 2012.
Sales growth after including the revenue from trading operations was
42%. The manufacturing facility was expanded to produce a wider range
of adhesives.
Full benefit of these initiatives will be reflected in the current
year.
The subsidiaries in Thailand reported sales growth of 22%. The
manufacturing operations in Thailand were rationalised by shutting down
one manufacturing facility to reduce operating costs.
The subsidiary in Egypt had a sales growth of 25%.
Losses were significantly reduced.
The subsidiary in Dubai reported sales decline of 42%. With measures
taken to reduce costs, losses were lower than last year.
Due to the reasons mentioned above, the overseas operations continue to
report losses.
Full year losses incurred by overseas subsidiaries were Rs. 440 million
as compared to a loss of Rs. 254 million last year. This was mainly due
to the following items:
i. Provision for receivables due from a Rs. 25 million
customer who has filed for bankruptcy in US
ii. Provision for goodwill impairment Rs. 94 million
in Brazil
iii. Provision for disputed tax liabilities of Rs. 46 million
previous years & other disputed items
in Brazil
iv. One off expenses for closure of factory Rs. 12 million
in Thailand
Total Rs. 177 million
The total investment in overseas subsidiaries as on 31st March 2013
stands at Rs. 3032.34 million.
Consolidated Accounts
In accordance with the requirements of Accounting Standards AS 21 (read
with AS 23), issued by the Institute of Chartered Accountants of India,
the Consolidated Accounts of the Company and its subsidiaries are
annexed to this Annual Report. Additionally, a statement giving
prescribed particulars of information, in aggregate for each
subsidiary, is attached.
In terms of the General Circular No. 2/2011 dated 8th February 2011,
issued by the Government of India, Ministry of Corporate Affairs, the
Annual Reports of the subsidiary Companies are not annexed to this
Report. Members desiring to have a copy of audited Annual Accounts and
the related detailed information of the above subsidiaries may write to
the Company Secretary at the Registered Office of the Company and they
will be provided with the same upon such a request. Annual Accounts of
these subsidiary Companies will also be kept for inspection of the
Members at the Registered Office of the Company as well as at the
Registered Office of the subsidiary Companies.
Directors
Shri B K Parekh, Founder Chairman of the Company passed away on 25th
January 2013. Shri B K Parekh was a visionary of unassuming quality and
was a warm, loving and caring leader with strong business acumen.
The tenure of Shri M B Parekh as Managing Director, Shri N K Parekh as
Joint Managing Director and Shri A B Parekh as Whole-time Director will
expire on 31st July 2013. The Directors at their meeting held on 10th
June 2013 have re-appointed them for a period of 5 years.
The Members'' approval is being sought at the ensuing Annual General
Meeting for above re-appointments.
In accordance with the Articles of Association of the Company, the
tenure of Shri R M Gandhi as a Director expires at the ensuing Annual
General Meeting.
Shri R M Gandhi has expressed his unwillingness to be re-appointed as a
Director. The Directors place on record their sincere appreciaton of
the valuable contribution made by him during his tenure on the Board.
In accordance with the Articles of Association of the Company, Shri
Yash Mahajan, Shri N J Jhaveri,
Shri S K Parekh and Shri A N Parekh, Directors of the Company, retire
by rotation and being eligible, offer themselves for re-appointment.
At the Board meeting held on 28th May 2013,
Shri M B Parekh was appointed as the Chairman & Managing Director of
the Company.
Directors'' Responsibility Statement
Your Directors confirm that:
- in the preparation of the Annual Accounts, the applicable
accounting standards have been followed;
- 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 at the end of the financial year ended 31st March 2013
and of the profit of the Company for the year ended on that date;
- 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; and
- The Directors have prepared the Annual Accounts on a going concern
basis.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreements with Stock
Exchanges, along with a certificate from M/s M M Sheth & Co. Practising
Company Secretaries, are given separately in this Annual Report.
Auditors
M/s Haribhakti & Co. the Company''s Auditors are not seeking
re-appointment at the forthcoming Annual General Meeting. The Directors
place on record their appreciation of the valuable services rendered by
them during their tenure as the Auditors of the Company.
It is proposed to appoint M/s Deloitte Haskins & Sells, Chartered
Accountants as the Statutory Auditors to hold office from the
conclusion of this Annual General Meeting till the conclusion of the
next Annual General Meeting. M/s Deloitte Haskins & Sells, Chartered
Accountants, have consented to be the Auditors of the Company, if
appointed by the members at the Annual General Meeting and have also
confirmed that their appointment would be within the limits specified
under Section 224(1B) of the Companies Act, 1956.
Cost Auditor
The Company has appointed M/s V J Talati & Co. as Cost Auditor to
conduct cost audit for the financial year 2013-14, subject to the
approval of the Central Government.
The Cost Audit Report for the year ended March 2013 will be submitted
in due course.
The Company duly filed the Cost Audit Report for the year ended March
2012 with the Central Government on 30th January 2013.
Conservation of Energy, Technology Absorption, etc.
The particulars under Section 217(1)(e) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 are attached to this Report as
AnnexureI.
Particulars of Employees
A statement of particulars pursuant to Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975 forms part of this Report as Annexure II. As per the provisions of
Section 219(1)(b)(iv) of the Companies Act, 1956, the Report, together
with Accounts, is being sent to the Shareholders of the Company,
excluding the statement of particulars of employees under Section
217(2A) of the Act. Members desiring to have a copy of the same may
write to the Company Secretary at the Registered Office of the Company
and they will be provided with the same upon such a request.
Industry Structure and Development
There is no material change in the industry structure as was reported
last year.
The Company operates under two major business segments i.e. Branded
Consumer & Bazaar Products and Industrial Products.
Products such as Adhesives, Sealants, Art Materials, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment.
These products are widely used by carpenters, painters, plumbers,
mechanics, households, students, offices, etc.
Industrial Products segment covers products such as Industrial
Adhesives, Synthetic Resins, Organic Pigments, Pigment Preparations,
Surfactants, etc. and caters to various industries like packaging,
textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large
companies with national presence and a large number of small size
companies that are active regionally. There is growing presence of
multinationals in many of the segments in which the Company operates.
The share of imports is less than 10% of domestic volumes in most of
the product segments.
The "Other" segment largely covers manufacture and sale of VAM. As
mentioned earlier, due to global demand supply situation it was viable
to import VAM rather than manufacture in-house and accordingly the
plant remained shut last year. Going forward, import of VAM is likely
to remain more viable. As mentioned earlier, the Company has started
manufacturing few speciality acetates at the plant. Market feedback,
from the products manufactured and sold in the current year, has been
positive.
Current Year Outlook
The demand for the Company''s products is linked to the market demand
both in India and globally. The current year''s outlook is uncertain
due to the present weakness in the underlying economic scenario.
With the Indian Rupee likely to remain weak versus the US $ due to the
high fiscal deficit, margins are not likely to improve as higher cost
of imports could offset gains from lower commodity prices.
The Company''s major subsidiaries are in USA, Brazil, Thailand, Egypt
and Bangladesh.
All these units are making efforts to improve performance through
demand generation and cost reduction initiatives.
Outlook on Opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to
market its differentiated products. Recovery in select global economies
could provide a boost to exports.
However, slower growth of the Indian economy could impact the
performance of the Company. A weak Indian currency could make imports
costlier thereby putting pressure on margins.
Overseas subsidiaries by virtue of their relatively smaller size remain
vulnerable to the political and economic uncertainties of their
respective countries.
Internal Control Systems and their Adequacy
The Company has adequate internal control procedures commensurate with
its size and nature of business.
The Company has appointed Internal Auditors who audit the adequacy and
effectiveness of internal controls laid down by the management and
suggest improvements.
The Audit Committee of the Board of Directors periodically reviews the
audit plans, internal audit reports and adequacy of internal controls
and risk management.
The internal audit process of the Company detected a fraud whereby
goods, described as samples were misappropriated. The total amount of
misappropriation is Rs. 170.1 million. The Company had intimated the
Stock Exchanges and initiated legal proceedings. This led to recovery
of part of the amount. The nature of the misappropriation was such that
its impact had already been reflected in the Company''s financial
results for the earlier years. The Company has taken adequate steps to
strengthen the internal control procedures to prevent such instances in
future.
Human Resources
The Company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
The Performance Management System has undergone considerable
improvement and has enabled sharpening of the process of setting Goals
& Major Initiatives.
During the year, the organisation structures of all key functions have
been reviewed and strengthened so as to facilitate delivery of business
goals.
The total number of employees as on 31st March 2013 was 4358.
SAP Implementation
The Company has implemented SAP across all its plants, depots and Head
Office effective May 2013. This will improve productivity and provide
accurate real time information for improved analysis and decision
support.
Appreciation
Your Directors wish to place on record their appreciation of the
contribution made by employees at all level to the continued growth and
prosperity of your Company. Your Directors also wish to place on
record their appreciation to the shareholders, dealers, distributors,
consumers, banks and other financial institutions for their continued
support.
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 10th June 2013 Chairman & Managing Director
Mar 31, 2012
To
The Members
The Directors take pleasure in presenting the Forty Third Annual
Report together with Audited Statements of Accounts for the year ended
31st March 2012.
Financial Results
(Rupees in million)
2011-12 2010-11
Gross Turnover 29579 24883
Turnover, Net of Excise 27995 23538
Profit Before Tax 4441 3974
Current Year's Tax 1051 941
Profit After Current Year's Tax 3390 3033
Deferred Tax 45 (6)
Profit After Tax 3345 3039
Profit Brought forward 1073 1006
Profit available for appropriation 4418 4045
Appropriations
Proposed Dividend on Equity Shares
965* 886
(@ T 1.75 per share for the FY
2010-11)
Tax on Dividend 157 144
Transfer to Debenture Redemption Reserve 243 42
Transfer to General Reserve 1750 1900
Total 3115 2972
Balance Carried to Balance Sheet 1303 1073
4418 4045
*Includes dividend for the prior year paid on 3,49,388 equity shares
issued on conversion of FCCBs after the balance sheet date but prior to
the book closure.
Financial Performance
The Operating Profit and Net Profit, for the year at Rs. 5343 million and
Rs. 3345 million increased by 8% and 10% respectively Income Tax for the
current year at Rs. 1051 million is higher by 11.7%, due to completion of
the first five year tax holiday period for one manufacturing unit
located in Himachal Pradesh This is the fourth unit, out of six, which
has completed the first 5 year tax holiday period
Business performance in the first half of the current year was better
than in second half. The global economic situation affected exports,
particularly of ndustrial products where the growth rates in the second
half of the year were much below the past trends and significantly
lower than what was recorded in the first half of the year. However,
the Consumer & Bazaar segment maintained its growth in line with past
trends. In addition, input prices increased steeply which, coupled with
the weakening of the Rupee vis a vis US dollar, mpacted margins.
The Indian Rupee was at Rs. 50.87 to a USD as on 31st March 2012 as
compared to Rs. 44.40 to a USD as on 31st March 2011. As a result, the
exchange loss in the year was Rs. 85 million as compared to a loss of Rs.
8.4 million last year. The Company has opted to amortize the exchange
rate difference on Foreign Currency Convertible Bonds over the
remaining period of the Bonds and accordingly Rs. 55.5 million is carried
forward in the balance sheet to be amortized between April 2012 and
November 2012.
* After deferred tax of Rs. 140 million and prior year's tax provision
written back of Rs. 4 million
** After deferred tax of Rs. 18 million and prior year's tax provision
written back of Rs. nil.
*** After deferred tax reversal of Rs. 25 million and prior year's tax
provision written back of Rs. 44 million.
# After deferred tax reversal of Rs. 6 million and before exceptional
item of Rs. 250 million. ## Excludes exceptional item.
Dividend
The Directors recommend a dividend of Rs. 1.90 per equity share of Rs. 1
each out of the current year's profit, on Rs. 507.65 million equity
shares of Rs. 1 each (previous year @ Rs. 1.75 per equity share) amounting
to Rs. 965 million which includes dividend for the prior year paid on
3,49,388 equity shares issued on conversion of Foreign Currency
Convertible Bonds (FCCBs) after the balance sheet date but prior to the
book closure (previous year Rs. 886 million). In accordance with the
terms of issue of FCCBs, shares allotted on conversion of FCCBs will
also be entitled to Dividend for the year ended 2011-12, where request
for conversion is received before the book closure. The dividend for
the current year will be free of tax in the hands of shareholders. The
dividend payout amount has grown at a CAGR of 21.3% during the last 5
years.
Term Finance
The Company had borrowed USD 17 million through an ECB Term loan
amounting to Rs. 796.2 million, repayable in 3 annual installments.
During the year the Company repaid the final installment amounting to
USD 5.67 million equivalent to Rs. 231.7 million.
Capital Expenditure
The total expenditure during the year was Rs. 1474 million, of which
approximately Rs. 1005 million was spent on fixed assets for various
manufacturing units, offices, laboratories, warehouses and information
technology. The expenditure on the Synthetic Elastomer Project was
approximately Rs. 469 million.
Investment in Subsidiaries
During the year, investment of Rs. 189.2 million was made in
overseas subsidiaries.
Synthetic Elastomer Project
Work on the construction of the Synthetic Elastomer Plant has been kept
on hold, as a detailed techno commercial review of the project is
underway.
During the year Rs. 469 million was spent on the project, which includes
interest on loans of Rs. 65.7 million and foreign exchange fluctuation of
Rs. 74.0 million.
The total amount spent on this project is Rs. 3551.4 million.
Manufacturing Plants
EMS (Environment Management System)/OHSAS (Occupational Health & Safety
Assessment System) Certification has been obtained for 18 manufacturing
locations.
Implementation of these systems enables better control on safety
management systems at the units and is one of the indicators of good
manufacturing practices.
During the year the Company commissioned a manufacturing unit at
Secunderabad for manufacture of construction chemicals.
Manufacturing capacity of emulsion polymers, Fevikwik, Steelgrip,
stainers, white glues and construction chemicals were enhanced.
Foreign Currency Convertible Bonds (FCCBs) Of the USD 40 million raised
through issue of zero coupon Foreign Currency Convertible Bonds in
2007-2008, Bonds aggregating USD 33.3 million were outstanding as on
March 2012. Bonds worth USD 3.9 million were converted during the year
and 15,14,014 equity shares issued. The bond holders remain entitled to
convert their holdings into Equity shares anytime upto 1st December,
2012. These Bonds are redeemable on 7th December, 2012.
Fixed Deposits
Your Company has not accepted any fixed deposits during the year
2011-12.
Subsidiaries - Overseas Subsidiaries
Total revenue grew by 1.8% in constant currency terms.
The business in USA reported a 2.5% decline in sales (in constant
currency terms). However, due to actions taken to improve margin and
control costs, EBIDTA for the year was higher by 10%.
The subsidiary in Brazil performed below expectations. Sales declined
by 4.3% due to competitive pressures. Due to inability to fully pass
on cost increases, the business reported significantly higher losses
than last year.
The subsidiary in Bangladesh strengthened its market position with
sales growing by 20.2%. Profitability was impacted by increase in
commodity cost and sharp depreciation of the currency. The company is
expanding its manufacturing facility to produce an additional range of
adhesives which are currently being imported from India.
The subsidiaries in Thailand reported a 12.4% growth in sales despite
weak economic situation and floods in the country. Profitability
improved during the year due to actions taken to improve margins and
reduce costs.
The subsidiary in Dubai reported a 24.7% growth in sales, although on a
lower base. While losses were significantly reduced, the business still
reported a cash loss in the year.
The operations in Egypt showed signs of recovery with sales growth of
63.3%. However, margins were impacted due to steep increase in input
costs.
Due to the reasons mentioned above, the overseas subsidiaries, in
aggregate, reported losses higher than last year by 20%.
The total investment in overseas subsidiaries as on 31st March 2012
stands at Rs. 2767.37 million
Consolidated Accounts In accordance with the requirements of Accounting
Standards AS 21 (read with AS 23), issued by the Institute of Chartered
Accountants of India, the Consolidated Accounts of the Company and its
subsidiaries are annexed to this Annual Report. Additionally, a
statement giving prescribed particulars of information, in aggregate
for each subsidiary, is attached.
In terms of the General Circular No. 2/2011 dated 08.02.2011, issued by
the Government of India, Ministry of Corporate Affairs, the Annual
Reports of the Subsidiary Companies are not annexed to this Report.
Members desiring to have a copy of audited Annual Accounts and the
related detailed information of the above subsidiaries may write to the
Company Secretary at the Registered Office of the Company and they will
be provided with the same upon such a request. Annual Accounts of these
subsidiary companies will also be kept for inspection of the Members at
the Registered Office of the Company as well as at the Registered
Office of the subsidiary companies.
Directors
In accordance with the Articles of Association of the Company, Shri
Bansi S. Mehta, Shri Ranjan Kapur Shri D. Bhattacharya and Shri A B
Parekh, Directors of the Company, retire by rotation and being
eligible, offer themselves for re-appointment.
Shri J L Shah was a Whole-time Director of the Company upto 20th
October, 2011. He resigned from directorship with effect from 8th
November, 2011. Directors place on record their sincere appreciation of
the valuable contribution made by him during his tenure on the Board
Shri Sanjeev Aga and Shri R Sreeram have been appointed as Additional
Directors by the Board of Directors and they hold office upto the date
of the ensuing Annual Genera Meeting. Subject to approval of members,
Shri R Sreeram has also been appointed by the Board of Directors as
Whole-time Director, designated as Director (Factories Operations),
with effect from 8th November, 2011. Notices in writing with requisite
deposit have been received from members proposing Shri Sanjeev Aga and
Shri R Sreeram as candidates for the office of Director.
Directors' Responsibility Statement
Your Directors confirm that:
In the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
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 at the end of the financia year ended 31st March 2012 and
of the profit of the Company for the year ended on that date;
The Directors have taken proper and sufficient care for the
maintenanceof 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; and
The Directors have prepared the Annual Accounts on a going concern
basis.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreements with Stock
Exchanges, along with a certificate from M/s M M Sheth & Co, Practising
Company Secretaries, are given separately in this Annual Report.
Auditors
Members are requested to re-appoint M/s Haribhakti & Co., Chartered
Accountants, as Auditors of the Company and also for its branches/C & F
depots/depots, for the current financial year and to fix their
remuneration
Cost Auditor
The Company has appointed M/s. V. J. Talati & Co., as Cost Auditor to
conduct cost audit for the financial year 2012-13, subject to the
approval of the Central Government.
The Cost Audit Report for the year ended March, 2012 will be submitted
in due course.
The Company has filed the Cost Audit Report for the year ended March,
2011 with the Central Government on 23rd August, 2011. The due date for
the same was 27th September, 2011
Conservation of Energy, Technology Absorption, etc.
The particulars under Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 are attached to this Report as Annexure
I
Particulars of Employees
A statement of particulars pursuant to Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, forms part of this Report as Annexure II. As per the provisions
of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report,
together with Accounts, is being sent to the Shareholders of the
Company, excluding the statement of particulars of employees under
Section 217(2A) of the Act. Members desiring to have a copy of the same
may write to the
Company Secretary at the Registered Office of the Company and they will
be provided with the same upon such a request.
Industry Structure and Development
There is no material change in the industry structure as was reported
in the last year.
The Company operates under two major business segments i.e. Branded
Consumer & Bazaar Products and Specialty Industrial Chemicals.
Products such as Adhesives, Sealants, Art Materials, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment. These products are widely used by carpenters, painters,
plumbers, mechanics, households, students, offices, etc.
Specialty Industrial Chemicals segment covers products such as
Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment
Preparations, Surfactants, etc. and caters to various industries like
packaging, textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large
companies with national presence and a large number of small size
companies that are active regionally. There is growing presence of
multinationals in many of the segments in which the Company operates.
The share of imports is less than 10% of domestic volumes in most of
the product segments.
The "Other" segment largely covers manufacture and sale of VAM. As
mentioned earlier, due to the global demand supply situation it was
viable to import VAM rather than manufacture in-house and accordingly
the plant remained shut last year. Going forward, import of VAM is
likely to remain more viable. The Company is exploring alternate
products which can be manufactured in the same plant.
Current Year Outlook
The current year's outlook is somewhat uncertain due to various factors
like weakening demand, high interest rates and high inflation.
In addition, the volatility in currency rates impact input costs and
due to a lag between the cost inflation and price increase, margins
could get impacted in the short term.
The Company's major subsidiaries are in USA, Brazil, Thailand, Egypt
and Bangladesh. Although initiatives are underway to improve
performance of the subsidiaries, they are likely to face difficulties
due to weak economic outlook in their respective markets. The business
in Brazil remains susceptible to competitive pressures and high
inflation.
Outlook on Opportunities, Threats, Risks and Concerns
The larger size of the Indian economy continues to provide an
opportunity to the Company to bring in differentiated and value added
products for addressing customer requirements. Recovery in the global
economy could revive growth of exports.
Input cost increases, led by high crude oil prices and a weak rupee,
could put pressure on margins in the short term.
The relative small size of overseas subsidiaries renders them
vulnerable to local political/economic uncertainties, competitive and
inflationary pressures.
Internal Control Systems and their Adequacy The Company has adequate
internal control procedures commensurate with its size and nature of
business.
The Company has appointed Internal Auditors who audit the adequacy and
effectiveness of internal controls laid down by the management and
suggest improvements.
For overseas subsidiaries, this is being done by their Statutory
Auditors.
The Audit Committee of the Board of Directors periodically reviews the
audit plans, internal audit reports and adequacy of internal controls
and risks management.
Human Resources
The Company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
During the year, the Talent Management process has further evolved and
the Learning & Development cell has been strengthened, with the
objective of providing adequate support and resources to develop a
talent pipeline.
As part of capability building across the organization, certain key
support functions have been restructured and strengthened.
The total number of employees as on 31st March 2012 was 4223.
Appreciation
Your Directors wish to place on record their appreciation of the
contribution made by employees at all level to the continued growth and
prosperity of your Company. Your Directors also wish to place on record
their appreciation for the shareholders, dealers, distributors,
consumers, banks and other financial institutions for their continued
support.
FOR AND ON BEHALF OF THE BOARD
Mumbai S K Parekh M B Parekh
Date : 24th May 2012 Vice Chairman Managing Director
Mar 31, 2011
The Directors take pleasure in presenting the Forty Second Annual
Report together with Audited Statements of Accounts for the year ended
31st March 2011.
Financial Results
(Rupees in million)
2010-11 2009-10
Gross Turnover 24883 20240
Turnover, Net of Excise 23538 19322
Profit Before Tax 3975 3289
Current Years Tax 942 423
Profit After Current Years Tax 3033 2866
Deferred Tax (6) (25)
Profit After Current and Deferred Tax 3039 2891
Add: Prior Year Tax Provision
written back - 44
Profit After Tax 3039 2935
Profit Brought Forward 1006 779
Profit available for appropriation 4045 3714
Appropriations
Proposed Dividend on Equity Shares 886 759
Tax on Dividend 143 126
Transfer to Debenture Redemption Reserve 42 323
Transfer to General Reserve 1900 1500
Total 2971 2708
Balance Carried to Balance Sheet 1074 1006
4045 3714
Financial Performance
The Operating Profit and Net Profit, for the year at Rs 4945 million
and Rs 3039 million increased by 20% and 5% respectively. Income Tax
for the current year at Rs 942 million is higher than Rs 423 million in
the last year, due to completion of the first five year tax holiday
period for 3 manufacturing units located in Himachal Pradesh.
Due to the improvement in the economic conditions in India, as
evidenced by the strong GDP growth, sales growth was higher than last
few years trend. The economic revival in the developed markets in the
world also resulted in growth in exports, particularly in the second
half of the year.
However, there has been an increase in the input costs, largely in the
last quarter, due to firming up of commodity prices and that has put
pressure on margins particularly of Industrial Products.
The stable Indian Rupee and cost control measures taken by the Company
have helped to maintain the profitability at levels similar to that of
the previous year.
The exchange rate of Indian Rupee was at Rs 44.40 to a USD in March
2011 as compared to Rs 44.97 to a USD in March 2010. Accordingly there
was a nominal credit of Rs 1.99 million to carrying cost of depreciable
assets and Rs 8.05 million was credited to the Foreign Exchange
Monetary Item Translation Account. Out of the said Foreign Currency
Monetary Item Translation Account, Rs 1.07 Million has been amortised
in the current year.
After deferred tax of Rs 34 million and prior years tax provision
written back of Rs 2 million
After deferred tax of Rs 140 million and prior years tax provision
written back of Rs 4 million
After deferred tax of Rs 18 million and prior years tax provision
written back of Rs nil.
After deferred tax reversal of Rs 25 million and prior years tax
provision written back of Rs 44 million.
After deferred tax reversal of Rs 6 million and before exceptional item
of Rs 250 million. $ Excludes exceptional item of Rs 250 million
Dividend
The Directors recommend a dividend of Rs 1.75 per equity share of Rs 1
each out of the current years profit, on 506.1 million equity shares
of Rs 1 each (previous year @ Rs 1.50 per equity share including Rs
0.50 per equity share as "Golden Jubilee Special Dividend"), amounting
to Rs 886 million (previous year Rs 759.2 million). In accordance with
the terms of issue of Foreign Currency Convertible Bonds (FCCBs),
shares alloted on conversion of FCCBs will also be entitled to
Dividend, where request for conversion is received before the book
closure for payment of dividend for the financial year 2010-11. The
dividend for the current year will be free of tax in the hands of
shareholders. The dividend payout amount has grown at a CAGR of 23.68 %
during the last 5 years.
Term Finance
The Company had borrowed USD 17 million through an ECB Term loan
amounting to Rs 796.2 million, repayable in 3 annual installments.
During the year the Company has repaid the 2nd of the 3 annual
installments amounting to USD 5.67 million equivalent to Rs 241.18
million.
Capital Expenditure
The overall expenditure during the year was Rs 1235.68 million. Out of
this approximately Rs 711.72 million was spent on fixed assets for
various manufacturing units, offices, laboratories and warehouses and
on information technology. The expenditure on the Synthetic Elastomer
Project was approximately Rs 458.59 million.
Investment in Subsidiaries
During the year, Investment of Rs 131.73 million was made in overseas
subsidiaries.
Synthetic Elastomer Project
The Company has started the construction of the Synthetic Elastomer
Plant. Civil work at site has commenced and Company is targeting
completion in the first half of the next financial year.
The total amount spent on this project is Rs 3106.61 million.
Manufacturing Plants
Health, Safety and Environment activities continued during the year
bringing greater focus on safety and environment at all manufacturing
units.
Continuous improvement plans in the manufacturing units resulted in 400
plus Kaizens leading to productivity and process improvement.
Manufacturing capacity of insulation tapes, Fevikwik and Fevicol were
enhanced.
Technology and automation projects initiated and completed on various
lines like Fevigum, Fevicol, M-seal, insulation tapes, Fevikwik and
various industrial products.
Foreign Currency Convertible Bonds (FCCB)
Of the USD 40 million raised through issue of zero coupon Foreign
Currency Convertible Bonds in 2007-2008, bonds aggregating USD 37.2
million were outstanding as on March 2011. The bond holders are
entitled to convert their holdings into Equity shares anytime on or
after 16th January 2008 upto 1st December 2012.
Fixed Deposits
Your Company has not accepted any fixed deposits during the year
2010-11.
Subsidiaries - Overseas Subsidiaries
During the year, Pidilite Industries Trading (Shanghai) Company Limited
was incorporated in China as a wholly owned subsidiary of Pidilite
International Pte. Ltd., Singapore (which is a wholly owned subsidiary
of the Company).
The business in USA reported a 11.4% growth in sales. This growth
together with improvement in operating margins helped the subsidiary to
post cash profits as compared to cash losses last year.
While the subsidiary in Brazil, reported a 10.5% growth in sales, due
to increase in input costs, the unit incurred losses from operations.
The operations in Bangladesh continued to gain strength with increased
market penetration. The unit reported a profit after tax in its first
full year of operations. Though the operations in Thailand reported
higher cash profits than in the previous year, sales growth was lower
than expected. Post tax losses were at levels similar to last year.
Performance of the subsidiary in Dubai was impacted by adverse
conditions in the markets serviced by the subsidiary.
Operations and performance of the subsidiaries in Egypt were disturbed
due to political developments in the country and neighboring areas.
Due to the reasons mentioned above the overseas operations made a
nominal cash loss. The net loss before tax was higher than the previous
year. Total revenue from overseas subsidiaries for the year stood at
Rs 3021 million, up by 11.4% over the previous year. The total
investment in overseas subsidiaries as on 31st March 2011 stands at Rs
2578 million
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to subsidiaries in India and abroad, is attached hereto.
Consolidated Accounts
In accordance with the requirements of Accounting Standards AS 21 (read
with AS 23) issued by the Institute of Chartered Accountants of India,
the Consolidated Accounts of the Company and its subsidiaries are
annexed to this Annual Report. Additionally, a statement giving
prescribed particulars of information, in aggregate for each
subsidiary, is attached.
In terms of the General Circular No. 2/2011 dated 08.02.2011, issued by
the Government of India, Ministry of Corporate Affairs, the Annual
Reports of the Subsidiary Companies are not annexed to this Report.
Members desiring to have a copy of audited Annual Accounts and the
related detailed information of the above subsidiaries may write to the
Company Secretary at the Registered Office of the Company and they will
be provided with the same upon such a request. Annual Accounts of these
subsidiary Companies will also be kept for inspection of the Members at
the Registered Office of the Company as well as at the Registered
Office of the subsidiary companies.
Directors
In accordance with the Articles of Association of the Company, Shri B K
Parekh, Shri S K Parekh, Shri A N Parekh and Shri Bharat Puri,
Directors of the Company, retire by rotation and being eligible, offer
themselves for re-appointment.
Directors Responsibility Statement
Your Directors confirm that:
In the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
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 at the end of the financial year ended 31st March 2011 and
of the profit of the Company for the year ended on that date;
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; and
The Directors have prepared the Annual Accounts on a going concern
basis.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreements with Stock
Exchanges, along with a certificate from M/s. M M Sheth & Co,
Practising Company Secretaries, are given separately in this Annual
Report.
Auditors
Members are requested to re-appoint M/s. Haribhakti & Co, Chartered
Accountants, as Auditors of the Company and also for its branches/C & F
depots/depots, for the current financial year and to fix their
remuneration.
Cost Auditor
The Company has received the approval of the Central Government for the
appointment of M/s. V J Talati & Co. as Cost Auditor to conduct cost
audit for the financial year 2011-12.
Conservation of Energy, Technology Absorption, etc.
The particulars under Section 217(1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988, are attached to this Report as
Annexure I .
Industry Structure and Development
There is no material change in the industry structure as was reported
last year
The Company operates under two major business segments i.e. Branded
Consumer & Bazaar Products and Speciality Industrial Chemicals.
Products such as Adhesives, Sealants, Art Materials, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment. These products are widely used by carpenters, painters,
plumbers, mechanics, households, students, offices, etc.
Speciality Industrial Chemicals segment covers products such as
Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment
Preparations, Surfactants, etc. and caters to various industries like
packaging, textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large
companies with national presence, and a large number of small size
companies that are active regionally. There is growing presence of
multinationals in many of the segments in which the Company operates.
The share of imports is less than 10 % of domestic volumes in most of
the product segments.
The "Other" segment largely covers manufacture and sale of VAM. As
mentioned earlier, due to global demand supply situation it was viable
to import VAM rather than manufacture in-house and accordingly the
plant remained shut last year. Going forward, in the near future,
import of VAM is likely to remain more viable. The Company is exploring
alternate products which can be manufactured in the same plant.
Current Year Outlook
During the current year, due to the inflationary pressures, the Reserve
Bank of India has been steadily increasing interest rates. This is
expected to adversely impact overall economic growth and therefore
could impact the demand for the Companys products, thereby impacting
the sales growth.
Due to the steep increase in commodity prices, input costs have gone up
sharply. Though the Company does pass on these increases by way of
price increases, this could impact margins as there is a lag between
the cost increase and the price increase.
The Companys major subsidiaries are in USA, Brazil, UAE, Thailand,
Egypt and Bangladesh. While all the units are expected to show improved
performance, the business in Brazil is vulnerable to high inflation and
slow down in growth rate. The operations in Egypt and U.A.E. could be
impacted by the local political situation.
Outlook on Opportunities, Threats, Risks and Concerns
Stable economic growth in India will provide an opportunity to the
Company to grow its business and introduce differentiated products for
meeting customer expectations. The improving global economy will
facilitate growth of export oriented products.
Increasing interest rates could slow down economic demand thereby
impacting Companys sales in the current year. In addition input costs
increases are likely to put pressure on margins in the short term.
Though the Company has strengthened its management structure in the
overseas subsidiaries, due to the political uncertainties in some
countries and the small size of the overseas operations, the
performance in these units could be impacted by local events.
Internal Control Systems and their adequacy
The Company has adequate internal control procedures commensurate with
its size and nature of business.
The Company has appointed Internal Auditors who audit the adequacy and
effectiveness of internal controls laid down by the management and
suggest improvements.
For overseas subsidiaries, this is being done by their Statutory
Auditors.
The Audit Committee of the Board of Directors periodically reviews the
audit plans, internal audit reports, and adequacy of internal controls
and risks management.
Human Resources
The Company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
A New Performance & Potential Management System, branded as PILglobin
has been launched. This process is likely to provide a steady stream of
talent across the Company with clear career plans to occupy key jobs.
Further to improve the operational efficiency, the Company has also
initiated automation of all its HR processes.
The total number of employees as on 31st March 2011 was 4130.
A statement of particulars pursuant to Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, forms part of this Report as Annexure II. As per the provisions
of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report,
together with Accounts, is being sent to the Shareholders of the
Company, excluding the statement of particulars of employees under
Section 217(2A) of the Act. Members desiring to have a copy of the same
may write to the Company Secretary at the Registered Office of the
Company and they will be provided with the same upon such a request.
Appreciation
Your Directors wish to place on record their appreciation of the
contribution made by employees at all levels to the continued growth
and prosperity of your Company. Your Directors also wish to place on
record their appreciation for the shareholders, dealers, distributors,
consumers, banks and other financial institutions for their continued
support.
FOR AND ON BEHALF OF THE BOARD
Mumbai
Date: 19th May 2011 B K PAREKH
CHAIRMAN
Mar 31, 2010
The Directors take pleasure in presenting the Forty First Annual
Report together with Audited Statements of Accounts for the year ended
31st March 2010.
Financial Results
(Rupees in million)
2009-10 2008-09
Gross Turnover 20215 19074
Turnover, Net of Excise 19297 17611
Profit Before Tax 3289 1632
Less: Current YearÃs Tax 423 150
Profit After Current YearÃs Tax 2866 1482
(Add)/Less: Deferred Tax (25) 18
Profit After Current and Deferred Tax 2891 1464
Add: Prior Year Tax Provision
written back 44 -
Profit After Tax 2935 1464
Profit Brought Forward 779 720
Profit available for appropriation 3714 2184
Appropriations
Proposed Dividend on Equity Shares 759 443
Dividend on Preference Shares - 1
Tax on Dividend 126 75
Transfer to Capital Redemption
Reserve - 29
Transfer to Debenture Redemption
Reserve 323 257
Transfer to General Reserve 1500 600
Total 2708 1405
Balance Carried to Balance Sheet 1006 779
3714 2184
Financial Performance
The Operating Profit and Net Profit, for the year at Rs 4132 million
and Rs 2891 million increased by 60% and 97% respectively. Income Tax
for the current year at Rs 423 million is higher than Rs 150 million
(including Rs 28 million for Fringe Benefit Tax) in the previous year.
In the last yearÃs report, the Company had highlighted the impact of
the economic slowdown in India and abroad and its impact on the overall
economic growth rate and on particular segments in which the Company
operates.
The difficult economic conditions continued in the first six months of
current year and improvement in growth rates was witnessed in the
second half of the year.
However, there was substantial reduction in the input costs due to
softening of prices of commodity chemicals and this together with the
strengthening of the Indian Rupee, lower duties and cost control
measures taken by the Company have helped in improving the yearÃs
performance.
During the year, foreign exchange gain attributable to loans taken for
depreciable assets was Rs 123.6 million and the same has been credited
to the value of fixed assets. Out of total unamortized foreign exchange
loss of Rs 164 million as on 31st March 2009, an amount of Rs 145
million has been reversed during the year due to foreign exchange
gains. Further an amount of Rs 10 million has been amortized in the
current year. The balance unamortized foreign exchange loss as on 31st
March 2010 is Rs 9 million.
# After deferred tax of Rs 17 million and prior yearÃs tax provision
written back of Rs 20 million
à After deferred tax of Rs 34 million and prior yearÃs tax provision
written back of Rs 2 million
* After deferred tax of Rs 140 million and prior yearÃs tax provision
written back of Rs 4 million
** After deferred tax of Rs 18 million and prior yearÃs tax provision
written back of Rs nil.
*** After deferred tax of Rs 25 million and prior yearÃs tax provision
written back of Rs 44 million.
Golden Jubilee Year
The year 2009-10 is the Golden Jubilee year of the Company and
recognizing its significance, the Company has issued bonus equity
shares in the ratio of 1:1 in March 2010. The Board has also
recommended a Golden Jubilee Special Dividend of Re 0.50 per equity
share on the enhanced share capital after bonus Issue.
The Company has reached its present position with the support of its
valued customers and all stakeholders. The Company places on record
its deep appreciation for their support.
Dividend
The Directors recommend a dividend of Rs 1.50 per equity share of Re 1
each including Golden Jubilee Special Dividend of Re 0.50 per share,
out of the current yearÃs profit, on 506.1 million equity shares of Re
1 each (enhanced on account of bonus equity shares issued during the
year) (previous year @ Rs 1.75 per equity share on 253.1 million equity
shares of Re 1 each), amounting to Rs 759.2 million (previous year Rs
442.9 million). The dividend for the current year will be free of tax
in the hands of shareholders. The dividend payout amount has grown at
a CAGR of 24.7% during the last 5 years.
Term Finances
The Company had borrowed US $ 17 million through an ECB Term loan
amounting to Rs 796.2 million, repayable in 3 annual installments.
During the year the Company has repaid the 1st of the 3 annual
installments amounting to US $ 5.67 million equivalent to Rs 262.9
million.
Capital Expenditure
The overall expenditure during the year was Rs 680 million. Out of
this approximately Rs 187 million was spent on fixed assets for various
manufacturing units, offices, laboratories and warehouses and on
information technology. The expenditure on the Synthetic Elastomer
Project was approximately Rs 472 million.
Investment in Subsidiaries
During the year, investment of Rs 251 million was made in
overseas subsidiaries.
Synthetic Elastomer Project
As mentioned last year, all equipments have arrived at the project site
at Dahej (SEZ). Detailed engineering design of the Monomer and Polymer
plant has been completed. Using this facility, small quantity of
finished products have been manufactured.
Currently work is under way to set up a pilot plant which will enable
the Company to streamline key process parameters and to make trial
quantities of various grades of elastomers. The total amount spent till
31st March 2010 on this project is Rs 2648 million.
Manufacturing Plants
The adhesives manufacturing capacities at Kalamb in Himachal Pradesh
and Daman were expanded during the year.
A drive for TPM, aimed at improving performance through greater
involvement and participation of employees, was initiated during the
year at the manufacturing units.
80% of the manufacturing units are now certified under ISO 14000/OHSAS
18000 and the balance units are likely to undergo the certification
process during the next year.
Foreign Currency Convertible Bonds (FCCB) During the financial year
2007-2008, the Company had raised US $ 40 million through issue of zero
coupon Foreign Currency Convertible Bonds.
As mentioned in last yearÃs report, the Company has repurchased bonds
of face value of US $ 2.8 million which were cancelled and
extinguished.
The FCCB holders are entitled to a right to convert their holdings into
equity shares of the Company on or after 16th January 2008. Those FCCB
holders who exercised this right till the Record Date i.e. 17th March
2010 were eligible to receive the bonus shares on par with the other
shareholders. Furthermore, those FCCB holders who opt for conversion
after the Record Date are, under the terms on which the FCCBs were
offered, entitled to a proportionately higher number of equity shares
as if the conversion had taken place prior to the Record Date.
Subsidiaries - Overseas Subsidiaries The Company has 13 overseas
subsidiaries (4 direct and 9 step-down) including those having
significant manufacturing and selling operations in USA, Brazil,
Thailand, Singapore, Dubai, Egypt and Bangladesh.
Pulvitec, the Brazilian subsidiary reported impressive results with 28%
growth in sales. This, together with lower material costs and control
on costs helped the Company post cash profits for the year.
Operations in USA significantly reduced costs and improved margins.
While overall sales remained flat, losses reduced by 38%.
The operations in Thailand posted cash profits on the back of 26%
growth in sales.
Pidilite International Pte. Ltd. (PIPL), a wholly owned subsidiary of
the Company acquired the remaining 25% equity shares of Pidilite Bamco
Ltd. (PBL) from other shareholders at a cost of US $ 526,675. With this
acquisition, all the shares (except 2 shares) of PBL are held by PIPL.
During the year, Pidilite Industries Egypt, SAE and Pidilite Specialty
Chemicals Bangladesh Pvt Ltd commenced manufacturing operations in
Egypt and Bangladesh, respectively.
PIL Trading Egypt (LLC), a subsidiary of the CompanyÃs step down
subsidiary (namely Pidilite Industries Egypt SAE), was incorporated
during the year for the purpose of carrying on trading activities in
Egypt, North Africa and COMESA countries.
The subsidiary in Bangladesh recorded profits in its first year of
operations on the back of robust sales and good margins.
Performance of the subsidiary in Dubai was impacted by poor trading
conditions, resulting in losses.
In February 2010, Chemson Asia Pte Ltd merged with Pidilite Innovation
Centre Pte. Ltd. (both wholly owned subsidiaries of PIPL).
Overall there was significant improvement in the performance of the
overseas subsidiaries with substantial reduction in losses due to
measures taken to improve sales and reduce costs.
Total revenue from overseas subsidiaries for the year was Rs 2695
million, up by 16% over the previous year.
The total investment in overseas subsidiaries as on 31st March 2010
stands at Rs 2448 million.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to subsidiaries in India and abroad, is attached hereto.
Consolidated Accounts In accordance with the requirements of Accounting
Standards AS 21 (read with AS 23) issued by the Institute of Chartered
Accountants of India, the Consolidated Accounts of the Company and its
subsidiaries are annexed to this Annual Report. Additionally, a
statement giving prescribed particulars of information, in aggregate
for each subsidiary, is attached.
By letter No. 47/244/2010-CL-III, of 2010, the Company has obtained
from the Government of India, Ministry of Corporate Affairs, New Delhi,
under Section 212 of the Companies Act, 1956, an exemption from
annexing to this Report, the Annual Reports of subsidiary Companies for
the year ended on 31st March 2010. Accordingly, the Annual Reports of
the Subsidiary Companies are not annexed to this Report. Members
desiring to have a copy of audited Annual Accounts of the above
subsidiaries may write to the Company Secretary at the Registered
Office of the Company and they will be provided with the same upon such
a request. Annual Accounts of these subsidiary Companies will also be
kept for inspection of the Members at the Registered Office of the
Company as well as at the Registered Office of the subsidiary
Companies. The Annual Reports of the subsidiary companies are available
on the website of the Company.
Directors
The terms of appointment of Shri A N Parekh as a Whole- time Director
will expire on 30th June 2010. Subject to the approval of members, your
Directors at their Meeting held on 16th June 2010 have re-appointed him
for a further period of 5 years.
Effective from 21st October 2009, Shri V S Vasan, a Whole- time
Director resigned from the Board of Directors. Your Directors place on
record their sincere appreciation of the valuable contribution made by
him during his tenure on the Board.
In accordance with the Articles of Association of the Company, Shri A B
Parekh, Shri R M Gandhi, Shri Yash Mahajan and Shri N J Jhaveri,
Directors of the Company, retire by rotation and being eligible, offer
themselves for re-appointment.
Subject to approval of members, Shri J L Shah has been appointed as an
Additional Director and also Whole-time Director designated as Director
(Factories Operations) of the Company with effect from 21st October
2009 and he holds office up to the conclusion of the ensuing Annual
General Meeting. A notice in writing, with requisite deposit has been
received from a member proposing Shri J L Shah as a candidate for the
office of Director.
Directorsà Responsibility Statement
Your Directors confirm that: in the preparation of the Annual Accounts,
the applicable accounting standards have been followed;
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 at 31st March 2010 and of the profit of the Company for
the year ended on that date;
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; and
The Directors have prepared the Annual Accounts on a going concern
basis.
Corporate Governance
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Clause 49 of the Listing Agreements with Stock
Exchanges, along with a certificate from M/s M M Sheth & Co, Practising
Company Secretaries, are given separately in this Annual Report.
Auditors
Members are requested to re-appoint M/s Haribhakti & Co, Chartered
Accountants, as Auditors of the Company and also for its branches/C & F
depots/depots, for the current year and to fix their remuneration.
Cost Auditor
The Company has received the approval of the Central Government for the
appointment of M/s. V. J. Talati & Co. as Cost Auditor to conduct cost
audit for the financial year 2010Ã11.
Conservation of Energy, Technology Absorption, etc.
The particulars under Section 217(1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988, are attached to this Report as
Annexure I.
Industry Structure and Development
There is no material change in the industry structure as was reported
last year.
The Company operates under two major business segments i.e. branded
Consumer & Bazaar Products and Speciality Industrial Chemicals.
Products such as Adhesives, Sealants, Art Materials, Construction and
Paint Chemicals are covered under branded Consumer & Bazaar Products
segment. These products are widely used by carpenters, painters,
plumbers, mechanics, households, students, offices, etc.
Speciality Industrial Chemicals segment covers products such as
Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment
Preparations, Surfactants, etc. and caters to various industries like
packaging, textiles, paints, printing inks, paper, leather, etc.
In both the above business segments, there are a few medium to large
companies with national presence and a large number of small sized
companies that are active regionally. There is a growing presence of
multinationals in many of the segments in which the Company operates.
The share of imports is less than 10% of domestic volumes in most of
the product segments.
The ÃOtherà segment covers manufacture and sale of VAM. The Company is
the only manufacturer of VAM in the country with an installed capacity
of 30,000 MT per annum. As mentioned earlier, due to global demand
supply situation it was viable to import VAM rather than manufacture
in- house and accordingly the plant remained shut last year. Going
forward, in the near future, import of VAM is likely to remain more
viable. The Company is exploring alternative products which can be
manufactured in the same plant.
Current Year Outlook
During the current year sales growth is expected to improve. However,
margins will be under pressure due to significant increase in input
costs.
The CompanyÃs major subsidiaries are in USA, Brazil, UAE, Thailand,
Egypt and Bangladesh. The units in Brazil, Thailand, Bangladesh and
Egypt are expected to show improved performance. However, the economic
scenario in USA & UAE remains uncertain.
Outlook on Opportunities, Threats, Risks and Concerns
Improvement in economic conditions, in India and abroad, is likely to
have positive impact on CompanyÃs sales for the current year. However,
significant increase in input cost is likely to put pressure on margins
in the near term.
The CompanyÃs overseas business is improving but there is a need to
strengthen the management structure to support these businesses.
Internal Control Systems and their adequacy The Company has adequate
internal control procedures commensurate with its size and nature of
business.
The Company has appointed Internal Auditors who audit the adequacy and
effectiveness of internal controls laid down by the management and
suggest improvements.
For overseas subsidiaries, this is being done by their statutory
auditors.
The Audit Committee of the Board of Directors periodically reviews the
audit plans, internal audit reports, adequacy of internal controls and
risk management.
Human Resources
In order to foster collaborative working in addressing Company wide
opportunities and issues, task forces titled Corporate Initiative Teams
(CITs) were formed. These CITs have successfully completed several
projects in the areas of customer service and employee engagement.
Competency and capability frameworks, aligned to the values of the
Company have been developed.
The organizational capability of Business Divisions and Functions has
been strengthened and non-family professionals now occupy many key
senior positions in the Company.
The total number of employees as on 31st March 2010 was 4121.
A statement of particulars pursuant to Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, forms part of this report as Annexure II.
As per the provisions of Section 219 (1)(b)(iv) of the Companies Act,
1956, the Report, together with Accounts, is being sent to the Members
of the Company, excluding statement of particulars of employees under
Section 217(2A) of the Act. Members desiring to have a copy of the same
may write to the Company Secretary at the Registered Office of the
Company and they will be provided with the same upon such a request.
Appreciation
Your Directors place on record their appreciation of the efficient
services rendered by the employees of the Company at all levels.
FOR AND ON BEHALF OF THE BOARD
Mumbai B K PAREKH
Date: 16th June, 2010 CHAIRMAN
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article