Directors Report of 3M India Ltd.
Mar 31, 2023
Your Directors are pleased to present the Thirty Sixth (36th) Annual Report of the Company. The Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2023 are prepared in compliance with the applicable provisions of the Companies Act, 2013 including Indian Accounting Standards. The audited Standalone and Consolidated financial statements together with the Auditorsâ Report thereon form a part of the Annual Report.
FINANCIAL HIGHLIGHTS - STANDALONE AND CONSOLIDATED
|
('' in lakhs) |
||||||
|
Standalone |
Consolidated |
|||||
|
Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
% increase / decrease (-) |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
% increase / decrease (-) |
|
Revenue from Operations |
373,344.21 |
307,830 .08 |
21.28 |
395,936.77 |
333,584.17 |
18.69 |
|
Of which -Export Sales |
2,188.81 |
2,385.65 |
(8.25) |
2,207.81 |
2,494.72 |
(11.50) |
|
Other Income, net |
6,422.12 |
3,471.84 |
84.98 |
6,809.59 |
3,711.51 |
83.47 |
|
Total Income |
379,766.33 |
311,301.92 |
21.99 |
402,746.36 |
337,295.68 |
19.40 |
|
Less: Expenditure |
317,365.04 |
269,641.14 |
17.70 |
335,507.61 |
294,660.11 |
13.86 |
|
Profit before Interest and Depreciation |
62,401.29 |
41,660.78 |
49.78 |
67,238.75 |
42,635.57 |
57.71 |
|
Less: Finance costs |
709.96 |
363.56 |
95.28 |
727.03 |
372.04 |
95.42 |
|
Less: Depreciation and amortisation expense |
5,611.72 |
5,327.62 |
5.33 |
5,767.91 |
5,511.72 |
4.65 |
|
Profit before Taxation |
56,079.61 |
35,969.60 |
55.91 |
60,743.81 |
36,751.81 |
65.28 |
|
Less: Tax expense |
14,465.22 |
9,352.09 |
54.67 |
15,641.89 |
9,554.70 |
63.71 |
|
Profit for the year |
41,614.39 |
26,617.51 |
56.34 |
45,101.92 |
27,197.11 |
65.83 |
|
Items that will not be reclassified subsequently to profit or loss |
44.41 |
109.87 |
(59.58) |
40.95 |
127.26 |
(67.82) |
|
Total Comprehensive income for the year |
41,658.80 |
26,727.38 |
55.87 |
45,142.87 |
27,324.37 |
65.21 |
During the year, the Board of Directors declared an interim dividend of '' 850/- per equity share which was paid out during the year. The Board is pleased to recommend a final dividend of '' 100/- per equity share of face value '' 10/-each, which if approved at the Annual General Meeting, will be paid to all those equity shareholders of the Company whose names appear in the Register of Members and whose names appear as beneficial owners as per the beneficiary list furnished for the purpose by National Securities Depository Limited and Central Depository Services (India) Limited as on record date fixed for this purpose. The total dividend for the financial year would be '' 950/- per equity share of face value '' 10/- each.
Your Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy was amended on November 9, 2022. The Policy is available at https://www.3mindia.in/3M/ en_IN/company-in/about-3m/financial-facts-local/ and the same is annexed as âAnnexure Jâ, which forms part of this report.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA
Your Company does not propose to transfer any amounts to general reserves.
Indiaâs economy remained stable and showed robust recovery across all sectors, even as the global macroeconomic conditions posed challenges. Amidst global headwinds of supply chain constraints, rising inflation and energy costs among other factors, your Company continued to create value for all stakeholders with a strong performance, growing both topline and bottomline. The performance was the result of several enabling external factors combined with sharp focus on addressing customer problems, managing cost and prioritisation.
Strong growth in automobile and industrial market segments
Indiaâs automotive industry is a key contributor to the countryâs GDP and manufacturing sector. In addition,
the growing adoption of electric vehicles has opened up opportunities for your Company to accelerate new products and solutions. Other solutions for the automative value chain included adhesives, abrasives and solutions for the automotive aftermarket segments. Your Company continued to increase penetration in various segments of the broader industrial market.
Increased Government spending on infrastructure projects
Enhanced capex outlays in the Governmentâs budget towards modernisation of roads, railways, development of regional airports and key infrastructure projects offered growth opportunities for your Companyâs transportation safety solutions, commercial and industrial solutions.
Attractive policy initiatives for emerging sectors
The policy initiatives of the Government around investing under the Product Linked Incentive Scheme (PLI) schemes for growing sectors such as mobile phones, electronics manufacturing, defence etc. have had a positive impact on the manufacturing ecosystem. Your Company aligned with key manufacturing companies as a supplier of material to promote manufacturing.
Growth in modern trade and ecommerce channels
During the year, domestic consumption improved and contributed to the growth in modern trade and ecommerce channels. This helped enhance penetration of several consumer products from your Companyâs home improvement and cleaning portfolio while driving market share.
Discipline in operational execution
Your Company maintained a stable cash position and managed cost across all aspects of the business. We addressed inflation through price actions and proactively reduced costs to overcome other constraints throughout the year.
Managing supply chain and raw material
During FY 22-23, your Companyâs sourcing operations leveraged softening markets and secured cost reduction across major raw materials, packaging materials and logistics.
On a standalone basis, your Companyâs revenue from operations increased by 21.28% at '' 373,344.21 lakhs for the financial year ended March 31, 2023 compared to '' 307,830.08 lakhs in the previous financial year. The Profit before Interest and Depreciation is '' 62,401.29 lakhs compared to '' 41,660.78 lakhs for the previous financial year. Profit before Tax is '' 56,079.61 lakhs compared to '' 35,969.60 lakhs for the previous financial year. The operating margin for the current year is 16.43% compared to 13.38% for the previous financial year. Total Comprehensive Income is '' 41,658.80 lakhs compared to '' 26,727.38 lakhs for the previous financial year. Export Sales is '' 2,188.81 lakhs for the financial year ended March 31, 2023 compared to '' 2,385.65 lakhs in the previous
financial year, a decrease of 8.25% due to lower demand in the global market.
On a standalone basis, the Safety and Industrial business increased by 17.17%; Transportation business increased by 33.79%; Health Care business increased by 14.14%; and Consumer business increased by 5.73%.
The Earnings Per Share (Basic and Diluted) of the Company for FY 22-23 was '' 369.41 per share as compared to '' 236.28 per share in the previous financial year, with an increase of 56.34%. Detailed analysis of the performance has been discussed in the Managementâs Discussion and Analysis Section of the Annual Report.
Portfolio Management
On July 26, 2022, 3M Company, USA (Promoter of the Company) had announced its plans to Spin-Off Health Care Business. The Board of Directors at the meeting held on May 30, 2023, discussed the implication on the business of 3M India Limited (âthe Companyâ) in relation to the decision of 3M Company, USA to spin-off its global healthcare business into a stand-alone public company, Accordingly, the Board of Directors noted the proposal from 3M Company, USA for healthcare business of the Company to continue to be operated by the Company. In this regard, a contract manufacturing and distributorship arrangement is to be entered into between the new Health Care Company (and/ or one or more of its affiliates) and the Company for certain 3M Health Care products. Pursuant thereto and after having reviewed various possible options, the Board of Directors of your Company have granted approval for commencing discussion and negotiations with 3M Company, USA (and other relevant entities) in respect of the aforesaid manufacturing and distributorship arrangement.
Further on December 20, 2022, 3M Company, USA had announced exiting per-and polyfluoroalkyl substance (PFAS) Manufacturing by the end of 2025.
Scheme of Arrangement between the Company and 3M Electro & Communication India Private Limited
The Boards of Directors of the Company and of 3M Electro & Communication India Private Limited (3M E&C), wholly owned subsidiary of the Company at their Meetings held on September 17, 2021 had approved the Scheme of Amalgamation of 3M E&C with the Company under Sections 230 to 232 of the Companies Act. 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Appointed Date fixed under the Scheme was April 01, 2021. The Scheme of Amalgamation of 3M E&C with the Company has been filed with National Company Law Tribunal (NCLT) to amalgamate the wholly owned subsidiary. As on date of approval of financial statements, the matter is pending with NCLT.
Your Company operates an Information Security Management System (ISMS), centered at the Head Office, St. Paul, USA which is certified to the requirements of ISO/
IEC 27001:2013 and has continued to meet the certification requirements since 2014. In 2022, we added ISO/IEC 27017:2015 requirements for cloud services. Enhancing and optimising cybersecurity protection continues to remain one of the top priorities. Your Company provides regular security awareness sessions to employees to understand the maturity level towards new age phishing attacks. Awareness communications include monthly phishing campaigns to all users as well as communications on security awareness and training features which promote a security culture within the Company. Other frameworks include, NIST CSF (The National Institute of Standards and Technologies, Cybersecurity Framework) which is a crossindustry standardised framework that several organisations use to manage their cybersecurity programmes. NIST CSF provides a common language and lifecycle approach to understand, manage and express cybersecurity risks. It helps identify and prioritise actions to reduce risk and aligns policy, business and technology approaches to manage that risk. The cybersecurity landscape is constantly evolving and new threats and challenges emerge. Your Company consistently reviews and re-evaluates its capabilities to identify and respond to these threats.
Supply Chain
Global transportation has improved considerably vis-a-vis the previous year, stabilising to pre-pandemic levels due to the de-congestion of various ocean / air lanes, improved container availability and shipping lines operating at full capacity. This has resulted in better lead times, in turn delivering goods to customers.
Contribution to Exchequer
During FY 22-23, the Company paid various taxes on account of its business/operation viz., CGST, IGST, Direct Taxes and Customs Duty amounting to '' 132,553 lakhs in aggregate.
Investments
Capital Investments during FY 22-23 was '' 6,009.47 lakhs (Net of capital work-in-progress and capital advances) (PY 21-22: '' 6,999.06 lakhs).
INFORMATION ON THE FINANCIAL PERFORMANCE/ FINANCIAL POSITION OF THE SUBSIDIARIES/ ASSOCIATES/JOINT VENTURE
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statement of the Subsidiary Company in Form AOC-1 is provided as âAnnexure Kâ, which forms part of this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review, the revenue from operations of 3M E&C increased to '' 28,525.29 lakhs compared to '' 26,313.50 lakhs in FY 21-22. The Profit before tax for FY 22-23 was '' 4,682.33 lakhs as against '' 782.21 lakhs in FY 21-22. The Profit after tax for FY 22-23 was '' 3,505.66 lakhs as against '' 579.60 lakhs in FY 21-22.
The Total Comprehensive Income was '' 3,502.20 lakhs for FY 22-23 as against '' 596.99 lakhs in FY 21-22.
Highlights of 3M E&C
⢠The Electronics sector continues to get policy & Government support. Policymakers have laid emphasis to encourage sustainable manufacturing and export of electronics from India. Government has taken several measures for the growth of the exports of electronics hardware sector. The Semicon India Programme with an incentive outlay of ~$10 billion was launched with a vision to develop a sustainable semiconductor and display ecosystem in the country. This programme will establish India as global hub for semi conductor manufacturing, promote self-reliance, strengthen resilience in global supply chains and pave the way for Indiaâs technological leadership in the industry.
⢠Union budget 2023 has earmarked '' 808,300 lakhs for Production Linked Incentive schemes (PLI) with significant outlay for large- scale electronics manufacturing.
⢠While domestic consumption is driving the increase in manufacturing of mobile handsets, exports have surged ~56% Y-O-Y and is expected to touch '' 1 to 1.2 trillion by financial year 2024.
⢠Your Company has been a material supplier to this segment globally and will continue to facilitate supply chain movement to the tier suppliers to enable more local content.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Audited Financial Statements of the Subsidiary Company for FY 22-23 have been placed on the website of the Company https://www.3mindia. in/3M/ en_IN/company-in/about-3m/financial-facts-local/.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as âAnnexure Aâ, which forms part of this report.
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as âListing Regulationsâ) along with a Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is provided as âAnnexure Bâ, which forms part of this report.
BUSINESSRESPONSIBILITYANDSUSTAIN ABILITY REPORT
A separate Section on Business Responsibility and Sustainability Report (BRSR) is annexed as âAnnexure Câ and forms a part of this Annual Report as required under Regulation 34(2)(f) of the Listing Regulations.
SHARE CAPITAL EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of '' 10/- each. The Authorised/Issued/ Subscribed and fully Paid-up Share Capital as at March 31, 2023 is '' 112,650,700 (divided into 1,12,65,070 Equity Shares of '' 10/- each).
During the year under review, the Company has not issued Equity Shares nor Shares with differential voting rights nor granted Stock Options nor Sweat Equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for FY 23-24 to National Stock Exchange of India Limited and BSE Limited where the Companyâs Equity Shares are listed.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment and Re-appointment:
The following Appointment and Re-appointment were made during the financial year till the date of the report:
⢠Based on the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on May 27, 2022 appointed Ms. Vidya Sarathy (DIN: 01689378) as an Additional Director and Wholetime Director (designated as âWhole-time Director and Chief Financial Officerâ) of the Company for the period from June 1, 2022 to February 21, 2026 (till the date of her superannuation), categorised as Executive, NonIndependent Director. The Members of the Company have approved her appointment by way of an Ordinary Resolution at the 35th Annual General Meeting held on August 25, 2022.
⢠Ms. Yun Jin (DIN: 09474323) will retire by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. The details of Ms. Yun Jin are provided in the Notice of the Annual General Meeting. The Board of Directors recommends her re-appointment.
⢠At the Board meeting held on August 10, 2022 Mr. Pratap Rudra Bhuvanagiri was appointed as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company with effect from August 17, 2022. Ms. Vidya Sarathy was Compliance Officer of the Company for the period from May 11, 2022 till August 16, 2022.
Resignations:
The following resignations were accepted during the financial year and till the date of the report:
⢠Mr. James Ernest Falteisek (DIN: 08792857) resigned as a Director of the Company from the close of India business hours of May 30, 2023 consequent upon his retirement from the 3M Group. The Board places on record its appreciation for the contributions made by him to the progress of the Company during his tenure as Director of the Company.
⢠Ms. Mamta Janak Gore (DIN: 08792863), resigned as a Director of the Company from the closing hours of May 27, 2022 consequent upon taking up higher role within the 3M Group. She was the Non-Executive Director of the Company with effect from June 1, 2021 till May 27, 2022. The Board places on record its appreciation for the contributions made by her to the progress of the Company during her tenure as Director of the Company.
⢠Mr. V. Srinivasan, Company Secretary and Compliance Officer, (Key Managerial Personnel) resigned as Company Secretary and Compliance Officer from the closing hours of May 10, 2022, to pursue his career outside of the Company. The Board places on record its appreciation for the contributions made by him during his tenure as Company Secretary and Compliance Officer of the Company.
As at the financial year ended March 31, 2023, Mr. Ramesh Ramadurai, Managing Director, Ms. Vidya Sarathy, Whole-time Director and Chief Financial Officer and Mr. Pratap Rudra Bhuvanagiri, Company Secretary and Compliance Officer, were the Key Managerial Personnel of the Company.
DECLARATIONS FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations. All the Independent Directors have also confirmed under Regulation 16(b) of SEBI (LODR) Regulations, 2015 that they are not NonIndependent Director of another Company on the Board of which any Non-Independent Director of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE FINANCIAL YEAR
During FY 22-23, Five (5) Meetings of the Board were held. The Company has Five (5) Board Committees. The composition and number of Meetings attended by each Director/Committee Member along with other Committee Meetings details are furnished in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31, 2023, the Audit Committee of the Company consisted of Three (3) Non-Executive Independent Directors and One (1) NonExecutive Director and all of them have financial and accounting knowledge. The Members of the Committee as on March 31, 2023, are Mr. Biren Gabhawala (Chairman), Mr. Bharat D. Shah, Ms. Radhika Rajan and Ms. Yun Jin. The Committee comprises majority of Independent Directors. The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for the selection and appointment of Directors, Senior Management and other employees and their remuneration. The Policy is available at https://www.3mindia.in/3M/en_IN/company-in/about-3m/financial-facts-local/.
The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI. Further, the Independent Directors, at their separate meeting held during the year, reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as âAnnexure Dâ, which forms part of this report.
REMUNERATION RECEIVED BY MANAGING/ WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding/ Subsidiary Companies.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors state in terms of Section 134 (5) of the Companies Act, 2013 (the Act):
(a) that in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed
along with proper explanation relating to material departures, if any.
(b) that they had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date.
(c) that they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
(d) that they had prepared the annual financial statements on a going concern basis.
(e) that they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Companyâs Internal controls is aligned to Global 3Mâs internal control over financial reporting which is based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Controls â Integrated Framework (2013). The internal controls framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Company and such policies and procedures are adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the
offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal controls procedures. The Internal Auditor functionally reports to the Audit Committee and administratively to the Managing Director. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board.
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013.
All Related Party Transactions (RPTs) which were entered into during the financial year were on an armâs length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement exhibiting details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. A Policy on RPTs as approved by the Board is available at https:// www.3mindia .in/3M/en_IN/company-in/about-3m/ financial-facts-local/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to the Groupâs synergies, state of the art products and technologies, competencies and â3Mâ brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalised and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at armâs length basis. None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
The RPTs are necessary, normal to business and play a significant role in the Companyâs business operations and
also form an integral part of the Companyâs business. An analysis of all the RPTs entered into & by the Company and the basis of charge was undertaken through a third-party professional firm.
The Company had taken approval of the Members for all material RPTs for the estimated transactions for Three (3) financial years starting from April 1, 2020 to March 31, 2023 at the Annual General Meeting held on August 26, 2020.
Further the Company had taken the approval of Members of the Company through Postal Ballot notice dated November 9, 2022 for the material related party transactions to be entered by the Company with 3M Company, USA and 3M Innovation Singapore Pte Ltd., from December 21, 2022 to December 20, 2023 (1 Year).
The Company proposes to seek the approval of the Members for material related party transactions to be entered by the Company with 3M Company, USA and 3M Innovation Singapore Pte Ltd., from the 36th Annual General Meeting to upto the 37th Annual General Meeting. The estimated/ proposed RPTs are in the Ordinary and normal course of business and on Armsâ Length basis and accordingly the Board recommends the Ordinary Resolution set forth in the Notice for the approval of the Members.
Details of the related party transactions as required under Section 134(3)(h) read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as âAnnexure Eâ, which forms part of this Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
3M improves lives and builds sustainable communities through impactful social investments and employee engagement. The Companyâs CSR initiative is anchored on three pillars of impact - Education, Community and Environment. During FY 22-23, your Company deepened its impact with a combination of multi-year programmes and new initiatives to meet its goals under Education and Community. These projects addressed the needs of underserved sections of communities around the Companyâs areas of operation and have been implemented in accordance with the activities listed under Schedule VII of the Companies Act, 2013.
During FY 22-23, the Company supported education initiatives through partnerships with non profit organisations to advance equitable STEM (Science, Technology, Engineering, Maths) outcomes.
1. Project Nanhi Kali: Educating the Girl Child:
Investing in girl child education transforms communities. Your Company continued to support the Project Nanhi Kali programme in its fifth year of implementation reaffirming 3Mâs global commitment to improve academic outcomes and provide transformational opportunities for the next generation.
This after school programme implemented in partnership with the K. C. Mahindra Education Trust sponsors 2,861 underprivileged girl students from primary and secondary classes across 178 Academic Support Centers in the rural district of Ambegaon in Pune, Maharashtra. The Academic Support Centers were fully functional throughout the financial year after disruptions during the COVID years. Key outcomes during the year broadly cover learning proficiency, retention, holistic development and engagement.
⢠Project Nanhi Kali provided approximately 450 hours of training to every girl in the project and 30 hours of training to every Community Associate.
⢠During FY 22-23, 143 girls appeared for the 10th standard examination in March 2023, with a 99% pass percentage and 37 students passed with distinction. Three assessments were conducted during the year. The average score in the three subjects being measured are 60% in Maths, 60% in English and 65% in the local language, Marathi. Of the Nanhi Kalis who attempted all three assessments, 85% showed an improvement in learning levels in at least one subject.
⢠The retention rate for the year was 90%. A total of 289 Nanhi Kalis dropped out of the project, mainly due to migration of parents to other areas where Project Nanhi Kali is non-operational. Community Associates and Programme Officers encourage the parents of any Nanhi Kali who drops out of the programme to continue their education in another school. A positive outcome is that while these girls have joined either private or other government schools, they have not dropped out of the education system.
⢠To encourage extra-curricular activities, Project Nanhi Kali conducts the annual Toofaan Games at the village, district and National levels across all the Academic Support Centers in India. Two Nanhi Kalis supported by the Companyâs CSR programme were selected to participate at the National level of the Toofaan Games with one of the girls bagging the gold medal in the 50m race.
⢠On the occasion of International Day of the Girl Child in October 2022, the Company felicitated 55 graduates out of the 87 students who completed Class 10. Most of graduates passed with distinction. The top scoring student (94.60%) was selected for the Mahindra All India Talent Scholarship.
⢠In March 2023, the Company hosted 25 Nanhi Kali students at 3Mâs manufacturing site in Ranjangaon, Pune, for an industrial exposure visit. The Nanhi Kalis, many of whom were travelling out of their village for the first time, got to experience first-hand how a factory works and interact with 3M women employees on the shop
floor. 3M Manufacturing Womenâs Leadership Forum led this visit to enhance the learning and exposure of the students to potential careers in manufacturing.
This programme remains committed to helping the girls stay in school through various interventions to enhance their learning and overall development, enabling them to grow into empowered young women.
2. 3M Wonder Tinkering Labs Programme to encourage and promote Science:
3M is committed to ensuring that underrepresented and under-resourced students and teachers have high-quality tools, resources and knowledge to succeed in STEM and pursue a love for science. During FY 22-23, the Company laid the foundation for a multi-year STEM experiences programme called 3M Wonder Tinkering Labs in partnership with Learning Links Foundation to empower Government school children (Shirur taluk) with 21st century skills (communication, critical thinking, creativity and collaboration).
The programme provides students from Grade 5-10 with a rich STEM learning experience including Design through the use of technology and pedagogy to spark critical thinking and problem-solving skills. In each school, the learning is imparted through a STEM studio. These studios are equipped with Do-It-Yourself Tinkering kits containing tools to work with technologies such as sensors, electronics, electrical circuits, 3D printing etc. Innovation coaches act as mentors guiding the students to apply learning through practical problem solving.
During FY 22-23, the project activities included conducting situational analysis at Government schools to identify the 10 schools for the pilot programme, recruitment of teams and innovation coaches for each of the schools, procurement of the tinkering kits, laptops and other devices, physical infrastructure to set up the STEM studios and orientation sessions for school leadership and programme teams.
The labs will be operational from the academic year in FY 23-24.
During FY 22-23, healthcare continued to be an important theme for community interventions. Initiatives included providing access to primary healthcare services in rural communities, strengthening healthcare infrastructure through sustainable models and supporting Government of Indiaâs COVID vaccination programme.
1. Solar powered Healthcare infrastructure programme:
3M is committed to support the transition to renewable energy to create a more sustainable world. The Company partnered with Selco India & Selco Foundation to install rooftop solar panel units at 8 Primary Health Centers (PHCs) catering to 7
villages in Shirur Taluk including Ranjangaon where 3M Indiaâs plant is located. The project received further investment during the financial year to expand the solar unit installations to cover 39 sub centers within the Taluk to ensure last mile access. With this off the grid solar power system, the PHCs and sub centers are ensured reliable power and can serve their communities with timely healthcare services despite frequent power fluctuations and outages. The solar power system has been designed to meet critical needs of the centers including maintaining the vaccine cold chain, labour rooms and strengthening other aspects of service delivery, especially attending to emergencies. By addressing the fundamental requirement of power, this model will ensure that all the health centers in the district are self-sufficient and able to cater to the needs of a population of close to 350,000 people residing within the Taluk. Being solar systems, the initiative also contributes to significant environmental impact in the longer term, reducing carbon emissions of up to 120 metric tonnes.
2. Smile on Wheels: Providing diagnostic and preventive healthcare access to rural communities:
During FY 22-23, the Company continued to support the Mobile Primary Healthcare programme in partnership with Smile Foundation in some of the aspirational districts. This multi-year programme has completed two years of operations at four locations, Siddharthnagar in Uttar Pradesh, Balangir in Odisha, Goalpara in Assam and Ranjangaon in Maharashtra. The vans provide preventive, promotive and curative healthcare facilities to underserved communities in the villages in these districts.
During the flood situation in Assam in May 2022, the mobile van played a critical role in providing access to healthcare and relief materials to affected communities. The van and the medical team were able to reach two flood-affected villages where they catered to the needs of 256 beneficiaries.
The vans average over 6,000 patient consultations every month and have covered about 107,826 beneficiaries since operations began in September 2021. During FY 22-23, a total of 75,252 beneficiaries benefitted from the programme at all four locations.
3. Community Vaccination programmes in underserved communities in Urban areas (Bangalore & Pune):
The Company continued to support Government of Indiaâs COVID vaccination initiative during FY 22-23. The last phase of the Companyâs COVID vaccination community programme, initiated in 2021, was implemented over April-May 2022. The programmes met their respective milestones of 50,000 vaccinations at PCMC (Pimpri Chinchwad Municipal Corporation), Pune and 25,000 vaccinations in Bangalore. Both drives were successful in mitigating the risk of covid infection within identified urban communities. Vaccine
on Wheels and their innovative model of bringing vaccinations closer to the slum communities along with community mobilisation efforts led by United Way of Bengaluru, working alongside local municipal authorities helped ensure the coverage of hard-to-reach areas and underserved populations.
The Annual Report on CSR activities is annexed herewith as âAnnexure Fâ, which forms part of this report.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top Ten (10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of '' 1.02 crores or more per annum and '' 8.50 lakhs or more per month respectively is annexed herewith as âAnnexure Gâ, which forms part of this report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as âAnnexure Hâ, which forms part of this report.
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of the Risk Management Committee and its terms of reference are set out in the Corporate Governance Report forming a part of the Boardâs Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during FY 22-23 by the Regulators/Courts which would impact the going concern status of the Company and its future operations.
INSOLVENCY AND BANKRUPTCY CODE, 2016
There was no application made nor did the Company receive notice of any proceedings against it as pending under the Insolvency and Bankruptcy Code, 2016 during FY 22-23.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of the Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Mâs Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available at https://www.3mindia.in/3M/ en_IN/company-in/about-3m/financial-facts-local/.
During the year, the Company reached out to employees through e-learning modules to create greater awareness with respect to its Fair Competition and Anti-Bribery and Corruption. This has helped in achieving a high level of engagement and compliance among the employees.
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were re-appointed as the Statutory Auditor of the Company at the 34th Annual General Meeting held on August 26, 2021 to hold office for a second term of five (5) years i.e. from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting to be held in the year 2026. The requirement of seeking ratification of the Members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Hence, the Resolution seeking ratification of the Members for their appointment is not being placed at the ensuing 36th Annual General Meeting.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 30, 2023 on the recommendation of the Audit Committee, approved the re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (Firm Registration No. 000065), to conduct the audit of the cost records of the Company for FY 23-24 at a remuneration of '' 475,000/- (Rupees Four lakhs Seventy-Five Thousand only) plus taxes as applicable and out of pocket expenses at actuals.
The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
For the financial year ended March 31, 2022, the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was filed with the Ministry of Corporate Affairs, well within the due/extended date. Messrs. Rao, Murthy & Associates, has confirmed the cost records for the financial year ended March 31, 2022 are free from any disqualifications as specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act.
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 had appointed Mr. Parameshwar G. Bhat, Company Secretary in practice (FCS:8860, CP:11004) to undertake the Secretarial Audit of the Company for FY 22-23. The Report of the Secretarial Audit Report is annexed herewith as âAnnexure Iâ, which forms part of this report.
The Company had undertaken an audit for FY 22-23 for all applicable compliances as per SEBI Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report has been submitted to the stock exchanges within 60 days of the end of the financial year-.
EXPLANATIONS IN RESPONSE TO AUDITORSâ QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During FY 22-23, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the draft of the Annual Return in Form MGT 7 of the Company for the financial year ended March 31, 2023 is uploaded on the website of the Company and can be accessed at https:// www.3mindia .in/3M/en_IN/company-in/about-3m/ financial-facts-local/.
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has a Prevention of Sexual Harrasment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company https://www.3mindia.in/3M/en_IN/ company-in/about-3m/financial-facts-local/. Internal Complaints Committees (ICC) have been set up to redress complaints received regarding sexual harassment.
Status of Complaints during FY 22-23:
1. Number of complaints of sexual harassment received During FY 22-23: Nil
2. Number of complaints disposed off during FY 22-23: NA
3. Number of cases pending for more than 90 days: Nil
4. Number of workshops or awareness programmes carried out: 3 (Three)
5. Remedial measures taken by the Company:
⢠A mandatory interactive virtual training session was conducted for all 3M India employees on âSexual Harassment at the Workplaceâ. This session reinforced the understanding of what constitutes sexual harassment, complaint process and behavioral doâs and donâts at the workplace.
⢠In-depth capacity building training was conducted for all Internal Committee members.
⢠Train the Trainer session was conducted for all Internal Committee members and HR representatives. This session equipped participants with the knowledge & resources to conduct general awareness sessions at their respective 3M locations.
HUMAN RESOURCES
During the financial year, the Company undertook many initiatives to increase organisational capability and productivity to be value driven and future ready. As on March 31, 2023, the Company had an employee strength of 1,108 personnel.
OTHER DISCLOSURES
During the financial year under review, the Company:
1. has not bought its own Shares nor has it given any loan to the employees (including KMPs) of the Company for purchase of the Companyâs Shares.
2. has not issued any Shares to trustees for the benefit of employees.
3. there was no revision in the Financial Statements.
ENVIRONMENT, HEALTH AND SAFETY
Your Company is committed to environment, health and safety improvements throughout our operations and products. Our highest priority is the safety of our employees and the public. Our responsibility extends to the environment in and around our operations through robust environmental management systems, conservation and efficient use of resources and ensuring that pollution is prevented at source.
ENVIRONMENT
Your Company has three (3) manufacturing plants operating in India. All three plants have Environmental Management Systems (EMS) certified to the ISO 14001: 2015 environmental management systems standard. We continue to be guided by our global 3M EMS framework, which provides consistency and structure for implementing programmes and helps us be proactive in our environmental focus.
The parent companyâs Global Strategic Sustainability Framework directs local efforts to create impact:
⢠Science for Circular: Design solutions that do more with less material, advancing a global circular economy.
⢠Science for Climate: Innovate to decarbonise industry, accelerate global climate solutions and improve our environmental footprint.
⢠Science for Community: Create a more positive world through science and inspire people to join us.
Raw Materials: We believe itâs our responsibility to design circularity into 3M products and packaging while also enhancing the circularity of water, packaging and waste in our own operations. Our Sustainability Value Commitment (SVC) helps us embed circular economy principles so we design products for durability, leveraging renewable content, recycled content and using less raw material.
Waste: Your Company is aligned to the global sustainability goal of reducing dependence on virgin fossil-based plastic use in our products by 125 million pounds by the end of 2025 and the Ministry of Environment, Forest and Climate Change mandated Extended Producer Responsibility for effective management of plastic packaging waste.
End-of-life management of your Companyâs post-consumer plastic packaging waste is executed by Central Pollution Control Board authorised plastic waste processors in designated states through tie-ups with urban local bodies, collection centres, materials recovery facilities, logistic partners for collecting and transporting plastic waste to plastic waste processorâs unit. Technologies and equipments for material recovery of plastic packaging waste encompasses mechanical recycling methods and conversion to recycled plastic granules which are further used for manufacturing plastic products, thus promoting circular economy.
During FY 22-23, your Company has partnered with registered plastic waste processors to collect and recycle 1,004.536 metric tonnes of plastic waste, fulfilling the Extended Producer Responsibility obligations under Plastic Waste Management (Amendment) Rules, 2022. This has been achieved in accordance with the Brand Owner registration granted by the Central Pollution Control Board and action plan on the Centralized Extended Producers Responsibility Portal for Plastic Packaging.
The non-recyclable plastic waste material is redirected to coprocessing activities in cement kilns. During FY 22-23, the total waste from our manufacturing sites converted to energy was 2,580 metric tonnes, leading to a reduction of CO2 equivalent emissions by 7456 MT-CO2 in FY 22-23.
We drive âzero wasteâ thinking with our product designs, process technologies and material reduction work within our manufacturing operations. During FY 22-23, we achieved a waste reduction of 205 Kgs of Waste / MT of tonnes of production.
Energy & Climate: 3M Company has committed to achieving carbon neutrality by 2050, through the reduction of greenhouse gas emissions and increasing share of renewable energy, moving to 100% renewable sources of power by 2050. In India, the Company has invested in an on-site solar installation with a total capacity of 1,250kwp at our biggest manufacturing site in Pune. We converted
the unused rooftop of the facility into a solar power plant and generating annual power of 6,25,000 kw currently contributing to reducing carbon emissions annually by 500 metric tonnes. At the Companyâs Bangalore manufacturing site, we have partnerships with the local utilities to purchase solar power from the grid through solar wheeling. The share of renewable energy is growing with these initiatives which is at 21.3 % of total energy consumption.
Water- Reducing Water Use in Manufacturing Operations:
3M Company is committed to reducing water use at its worldwide manufacturing facilities by taking immediate steps to drive reductions in current water use and over the longer-term; aiming for a 10% reduction in water use by 2022, 20% reduction by 2025 and 25% reduction by 2030. Our Water Stewardship Standard demonstrates our commitment to maintaining sustainable water resources to secure social equity, economic growth and environmental protection.
At the Companyâs manufacturing sites, several initiatives are underway to conserve water. Advances in data analytics capabilities are expanding visibility, accuracy and opportunity for innovation in our monitoring and measurement efforts.
Manufacturing sites practice Zero Water Discharge through numerous water conversation initiatives.
⢠A full-capacity rainwater harvesting system at Ranjangoan facility collects rainwater from the rooftops and roads into a rainwater recharge borewell.
⢠Ongoing water monitoring, measurement and data analysis help identify and quickly address leaks at all plants.
⢠All new manufacturing processes align with the principle of zero water discharge.
⢠Treated water from effluent treatment plants are taken into the scrubber operations further reducing water consumption.
⢠Treated water from the sewage treatment plant is used for gardening and in restroom flushing.
⢠After reviewing the underground hydrant network, corroded pipes were brought above the ground at all plants to eliminate the root cause and correct leakages.
⢠Engagement drives were conducted at factories to identify and arrest the leakages.
⢠An online ozonator was installed for water disinfection and safe handling by gardeners.
⢠New drip irrigation lines were added in the garden area which eliminated the conventional flooding & better utilised available water.
⢠Leakage Survey was conducted across sites to rectify and arrest leakages.
During the year, total water consumption stood at 77,580 kiloliters.
During the year, the Company continued to identify potential risks to the health and safety of our employees and communities and took steps to update processes, product design and standards to address these risks, while driving an overall culture of excellence in EHS.
As the corporate initiative to drive more flexible working arrangements, âWork Your Wayâ was rolled out across the organisation, the Company supported employees who opted for remote work with necessary infrastructure considering ergonomics and better working environment at home.
Over the year, there were several initiatives that promoted various aspects of health at the factories:
1. Medical Surveillance was provided to certain employees based on the job work assigned like the Pulmonary function test, vision test, Audiogram, etc.,
2. Hepatitis B Vaccination has been imparted to all the emergency response team members at all the sites.
3. Shopfloor awareness sessions on important observance days like World Hearing Day, World Heart Day, Womenâs Day and World Diabetes Day included communications, live demonstrations and Zumba exercise sessions to bring attention to various health issues.
4. Certified First Aid Training was provided to the first responders team.
5. Chemical Health Hazard Awareness session was organised to create awareness on the health impact of chemical exposure and control measures to avoid such exposure.
6. Blood donation camps are organised periodically to motivate employees to donate blood to those in need. At the Ahmedabad manufacturing site, employeesâ families were invited to see and experience first hand the health & safety systems at the plant providing families reassurance on the safe working conditions on site. Special training on First aid was provided to the families including children and basic first aid kits for homes were distributed.
National Safety Month observed during March brought attention to several health related topics like first aid training, Bone density, Eye checkup, Body Mass Index, hearing conservation & women wellness for the contract workforce.
3M continually strives to maintain the highest standard of safety at all workplaces to ensure people, assets and our businesses are operating in the most efficient manner. All of Companyâs manufacturing facilities have been certified by ISO 45001, a standard for management systems of Occupational Health and Safety Standards reinforcing the Companyâs commitment to leadership in safety and health. We utilise the Compliance & Audit Management
& Metrics System (CAMMS) portal which is customised to 3M requirements to track and monitor all applicable EHS compliance and legal obligations.
All the three plants have successfully completed 3Mâs EHS Global Audit which involved both element specific and regulatory focus audits without any primary audit finding.
Initiatives like the âSee & Actâ programme enables the Company to strengthen the safety culture at 3M sites. The focus is not just the identification of Unsafe Acts and Conditions but to understand the root cause of their occurrence by having meaningful conversations with people on the shopfloor, engaging them in deriving solutions and making improvements. The Company has a resolution rate of 76% of problems identified through the âSee & Actâ programme.
Zero Lost Time Injury is a key metric to uphold the safety performance. All manufacturing sites were able to maintain Zero Lost time injuries during the year due to continuous focus on preventive actions, EHS Element ownership through leaders with representation from supervisors and technical associates alike.
The Companyâs EHS Cultural Excellence programme lays down the execution model and set of manufacturing excellence principles which ensure a safe and healthy workforce. This framework covers sections like Ergonomics, Industrial hygiene, Process hazard management (PHM), Ventilation programs, Static Management plan, Combustible dust management, Safety trainings, Health and Wellness Programs. Our progress against each of these is assessed through our Internal Audit framework giving us the confidence on our sustained & functional Health and Safety management systems.
Ergonomics :
⢠Ergonomic solutions on the shop floor help employees improve their health condition and productivity. Each site has an ergonomics score driven by projects to reduce risks and improve processes.
Industrial Hygiene:
⢠Industrial hygiene monitoring i.e. Noise & Air monitoring was conducted for most of the processes and it was observed that no exposure level was exceeded.
⢠Ventilation and heat stress survey was carried out with the help of a subject matter expert to check the performance level of the existing systems and it was found to have no abnormalities.
Other safety projects include:
⢠All the three manufacturing facilities were provided with 3M Fall protection devices to reduce the risk while working at heights
⢠Skill development sessions were conducted for engineering contractors. Engineering contract employees working at heights must pass the vertigo test.
During the year, the Company continued to identify potential risks to the health and safety of our employees and communities and took steps to update processes, product design and standards to address these risks, while driving an overall culture of excellence in EHS.
As the corporate initiative to drive more flexible working arrangements, âWork Your Wayâ was rolled out across the organisation, the Company supported employees who opted for remote work with necessary infrastructure considering ergonomics and better working environment at home.
Over the year, there were several initiatives that promoted various aspects of health at the factories:
1. Medical Surveillance was provided to certain employees based on the job work assigned like the Pulmonary function test, vision test, Audiogram, etc.,
2. Hepatitis B Vaccination has been imparted to all the emergency response team members at all the sites.
3. Shopfloor awareness sessions on important observance days like World Hearing Day, World Heart Day, Womenâs Day and World Diabetes Day included communications, live demonstrations and Zumba exercise sessions to bring attention to various health issues.
4. Certified First Aid Training was provided to the first responders team.
5. Chemical Health Hazard Awareness session was organised to create awareness on the health impact of chemical exposure and control measures to avoid such exposure.
6. Blood donation camps are organised periodically to motivate employees to donate blood to those in need.
7. At the Ahmedabad manufacturing site, employeesâ families were invited to see and experience first hand the health & safety systems at the plant providing families reassurance on the safe working conditions on site. Special training on First aid was provided to the families including children and basic first aid kits for homes were distributed.
8. National Safety Month observed during March brought attention to several health related topics like first aid training, Bone density, Eye checkup, Body Mass Index, hearing conservation & women wellness for the contract workforce.
⢠Global Recognition: The Ethisphere® Institute recognised 3M Company as one of the Worldâs Most Ethical Companies® for the 10th consecutive year. 3M is one of only nine industrial companies worldwide to receive this honour. This award showcases the Companyâs commitment to doing business the right
way through the collective effort of all 3M employees around the world.
⢠Customer Recognition: Your Company was awarded the Best Supplier of the Year award for FY 22-23 by one of Indiaâs largest stainless-steel manufacturers.
⢠Industry Recognition: Healthcare Business was recognised by The Economic Times as one of the Best Healthcare Brands of 2022, based on various parameters such as innovation, infrastructure, healthcare standards, patient satisfaction and brand loyalty.
⢠Manufacturing Excellence: Your Companyâs manufacturing sites at Ranjangaon, Pune and Electronics city, Bengaluru received recognition from National level Kaizen competitions organised by the Confederation of Indian Industry (CII). Projects from both plants driving continuous improvement, innovation and breakthrough solutions were recognised with Gold and Silver awards.
Both manufacturing sites were also recognised with 3M Companyâs Global Quality Achievement awards for projects delivering high quality standards and customer satisfaction.
The Department of Factories, Boilers, Industrial Safety and Health, Government of Karnataka awarded one of your Companyâs EHS employees, with the Best Worker Award (3rd position) in the large industries category. This state level recognition is the highest honour bestowed on manufacturing workers for their focus on safety at the workplace.
⢠Corporate Social Responsibility: The Ranjangaon Industrial Association recognised the Company for contributions to local communities through the implementation of multiple CSR programs including the solar powered health center infrastructure initiative in Shirur Taluk Ranjangaon, which is benefiting over 350,000 people.
⢠Over the course of the year, the Companyâs employees continued to receive numerous accolades for excellence in sales, marketing, technical and various support functions with several 3M Company, business and area level awards.
Your Directors thank and acknowledge with gratitude the co-operation, assistance and support received from the Central Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers, Vendors, Promoters of the Company and all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by every employee of the Company.
On behalf of the Board of Directors
Ramesh Ramadurai Vidya Sarathy
Managing Director Whole-time Director &
DIN: 07109252 Chief Financial Officer
DIN: 01689378
Place: Bengaluru Date: May 30, 2023
Mar 31, 2022
Your Directors have the pleasure in presenting the Thirty Fifth (35th) Annual Report of the Company. The Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31,2022 are prepared in compliance with the applicable provisions of the Companies Act, 2013 including Indian Accounting Standards. The audited Standalone and Consolidated financial statements together with the Auditorsâ Report thereon form part of the Annual Report.
|
FINANCIAL HIGHLIGHTS - Standalone and Consolidated (Rs. in Lakhs) |
||||||
|
Particulars |
Standalone |
Consolidated |
||||
|
Year ended March 31, 2022 |
Year ended March 31, 2021 |
% age increase / decrease (-) |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
% age increase / decrease (-) |
|
|
Revenue from Operations |
307,830 .08 |
242,036.39 |
27.18 |
333,584.17 |
260,483.14 |
28.06 |
|
Of which -Export Sales |
2,385.65 |
2,497.17 |
(4.47) |
2,494.71 |
2,660.42 |
(6.15) |
|
Other Income, net |
3,471.84 |
2,686.77 |
29.22 |
3,711.51 |
2,473.73 |
50.04 |
|
Total Income |
311,301.92 |
244,723.16 |
27.21 |
337,295.68 |
262,956.87 |
28.27 |
|
Less: Expenditure |
269,641.14 |
218,268.32 |
23.54 |
294,660.11 |
234,534.71 |
25.64 |
|
Profit before Interest and Depreciation |
41,660.78 |
26,454.84 |
57.48 |
42,635.57 |
28,422.16 |
50.01 |
|
Less: Finance costs |
363.56 |
243.22 |
49.48 |
372.04 |
245.41 |
51.60 |
|
Less: Depreciation and amortization expense |
5,327.62 |
5,967.54 |
(10.72) |
5,511.72 |
6,184.59 |
(10.88) |
|
Profit before Taxation |
35,969.60 |
20,244.08 |
77.68 |
36,751.81 |
21,992.16 |
67.11 |
|
Less: Tax expense |
9,352.09 |
5,313.99 |
75.99 |
9,554.70 |
5,754.51 |
66.04 |
|
Profit for the year |
26,617.51 |
14,930.09 |
78.28 |
27,197.11 |
16,237.65 |
67.49 |
|
Items that will not be re-classified subsequently to profit or loss |
109.87 |
(255.40) |
(143.02) |
127.26 |
(292.01) |
(143.58) |
|
Total Comprehensive income for the year |
26,727.38 |
14,674.69 |
82.13 |
27,324.37 |
15,945.64 |
71.36 |
Your Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy was uploaded at https://www.3mindia. in/3M/ en-IN/company-in/about-3m/financial-facts-local/and the same is also annexed herewith as âAnnexure Kâ
The Company remains invested in India and the areas of investment opportunities highlighted in prior years continue to hold good. The Company remains committed to maintaining a strong Balance Sheet and cash position as 3M India emerges from the impact of COVID and other disruptions caused due to external conditions. For these reasons, your Board thought it fit to conserve and retain the earnings and has not proposed Dividend.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, your Board does not propose to transfer any amounts to reserves.
In an uncertain environment, your Company demonstrated the resiliency and strength of the diversified 3M operating model. In another year marred by the pandemic, your Company stayed the course despite a deadly second wave of COVID and global supply chain disruptions, to deliver a strong recovery in topline and bottomline growth. All business segments delivered growth. The teams continued to execute multiple actions to mitigate the impact of cost headwinds and supply chain challenges. The external conditions remain uncertain, and the Company is diligently monitoring the situation by staying in close contact with customers and supply partners.
Managing supply chain disruptions and raw material inflation
In 2021, the pandemic caused imbalances within global supply markets. As the markets re-opened and demand increased, your Company experienced raw material price inflation and constrained supply. Multiple weather, logistics and other disruptive events worsened global supply chain imbalances and contributed to higher costs.
Your Company continued to deploy productivity projects to minimize the impact of raw material inflation and market supply challenges.
Discipline in operational execution
Your Company maintained a stable cash position and managed cost across all aspects of the business keeping employee costs low.
Momentum with attractive end markets and eCommerce
Your Companyâs business groups aligned to attractive end markets with a diverse portfolio of products to meet emerging market trends and ecommerce momentum.
Increased Government spending and attractive policy initiatives
The policy initiatives of the Government around investing under the PLI schemes for growing sectors such as mobile phones, electronics manufacturing, defence etc. have had a positive impact on the manufacturing ecosystem. Your Company aligned with key manufacturing companies as a supplier of material to promote manufacturing.
Enhanced manufacturing to meet demand
The demand for respirators and masks continued to grow with the severity of the pandemic. Your Company increased manufacturing to meet the demand and also executed manufacturing projects to locally manufacture hand-sanitizers and certain types of disinfectants.
Supporting our communities to fight the pandemic
At the onset of COVID second wave, the Company collaborated with other corporates to support the augmentation of ICU units in Government hospitals with medical equipment. In addition, your Company also supported Government of Indiaâs vaccination initiative through community vaccination programs with multiple partners.
A diverse product portfolio, an agile operating model and an engaged and committed workforce continue to strengthen your Companyâs performance for sustainable growth.
The Company has considered internal and external sources of information as of the date of approval of the financial results in determining the possible impact, if any, of the resurgence of the COVID-19 pandemic on the carrying amounts of its trade receivables, inventories, financial and non-financial assets. The Company has used the principle of prudence in applying judgements and making estimates. Based on this evaluation, the Company does not expect any material impact on its financial results. However, the eventual outcome of impact of Covid-19 pandemic may be different from those estimated as on the date of approval of these financial results.
On a standalone basis, your Companyâs revenue from operations increased by 27.18% at Rs. 307,830.08 Lakhs for the financial year ended March 31,2022 compared to Rs. 242,036.39 Lakhs in the previous financial year. The Profit before Interest and Depreciation is Rs. 41,660.78 Lakhs compared to Rs. 26,454.84 Lakhs for the previous financial year. Profit before Tax is Rs. 35,969.60 Lakhs compared to Rs. 20,244.08 Lakhs for the previous financial year. The operating margin for the current year is 13.38% compared to 10.81% for the previous financial year. Total Comprehensive Income is Rs. 26,727.38 Lakhs compared to Rs. 14,674.69 Lakhs for the previous financial year. Export Sales is Rs. 2,385.65 Lakhs for the financial year ended March 31, 2022 compared to Rs. 2,497.17 Lakhs in the previous financial year, a decrease of 4.47% due to lower demand in the global market.
On a standalone basis, the Safety and Industrial business increased by 16.48%; Transportation business increased by 32.30%; Health Care business increased by 49.39%; and Consumer business increased by 23.85%.
The EPS (Basic and Diluted) of the Company for the financial year 2021-22 was Rs. 236.28 per share as compared to Rs. 132.53 per share in the previous financial year, with an increase of 78.28%. Detailed analysis of the performance has been discussed in the Managementâs Discussion and Analysis Section of the Annual Report.
Portfolio Management: On December 24, 2021, 3M Company (Promoter of the Company) had announced that it has entered into definitive agreements to separate its Food Safety business globally and combine it with NEOGEN Corporation. NEOGEN and 3M will have enhanced geographic footprint, innovative product offerings, digitization capabilities, and financial flexibility to capitalize on robust growth trends in sustainability, food safety and supply chain integrity. The Food Safety business was a part of Health Care portfolio. This portfolio represented well below 5% of the Companyâs total sales in India and the aforesaid business is not material in nature. Accordingly, at the Board Meeting held on May 27, 2022, the Board has approved the sale of Indiaâs Food Safety Business based on the valuation reports submitted by the Independent Valuers.
Scheme of Arrangement between the Company and 3M Electro & Communication India Private Limited
The Boards of Directors of the Company and of 3M Electro & Communication India Private Limited (3M E&C), wholly owned subsidiary of the Company at their Meetings held on September 17, 2021 had approved the Scheme of Amalgamation of 3M E&C with the Company under Sections 230 to 232 of the Companies Act. 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Appointed Date fixed under the Scheme was April 01,2021. The Scheme of Amalgamation of 3M E&C with the Company has been filed with National Company Law Tribunal (NCLT) to amalgamate the wholly owned subsidiary. NCLT, Chennai vide its order dated May 25, 2022 has dispensed with convening of the meeting of Equity Shareholders and the Creditors of 3M E&C. 3M E&C has initiated next steps and filing necessary applications in accordance with the directions of the NCLT. As on date of approval of financial statements, the matter is pending with NCLT.
Your Company operates an Information Security Management System (ISMS), mainly centered in the Head Office, St. Paul, USA which is certified to the requirements of ISO/IEC 27001:2013 and has continued to meet the certification requirements since 2014. Enhancing and optimizing cybersecurity protection continue to be one of the top priorities. 3M continues to leverage SaaS security awareness tool with advanced features to educate and understand the maturity level of the user base towards new age phishing attacks. This includes monthly phishing campaigns to all users globally, and security awareness communication and training features. Yearly programme on renewing and testing the cybersecurity incident response process continued to ensure currency and adequacy. NIST CSF - The National Institute of Standards and Technologies, Cybersecurity Framework: provides a common language and lifecycle approach for understanding, managing, and expressing cybersecurity risks. It helps identify and prioritize actions for reducing risk, and helps align policy, business, and technology approaches to managing that risk. Your Company has also deployed Unified Threat Management, commonly abbreviated as UTM that provides multiple security features and services in a single device or service on the network, protecting users from security threats in a simplified way. UTM includes functions such as anti-virus, anti-spam, content filtering, and web filtering. 3M Information Technology support team continues to monitor the prevailing Covid-19 situation across the country and strives to provide the best of IT Support by enabling Work from Home solutions through Remote (VPN) Connectivity, End User support with a seamless IT Continuity Plan without affecting the business operations of the Company.
⢠Supply chain situation was severely impacted due to ocean transportation delays, recent China pandemic related restrictions, congestion in the ocean & air lines from the US and container shortage leading to the delay of incoming products.
⢠The global supply chain situation has impacted supplies, and this has now gone on for several quarters. The Company expects continued volatility for the coming months.
During the financial year 2021-22, the Company has paid various taxes on account of its business/operation viz., CGST, IGST, Direct Taxes and Customs Duty amounting to Rs. 930.47 crores in aggregate.
Capital Investments during the financial year 2021-22 is Rs. 6,999.06 Lakhs (Net of capital work-in-progress and capital advances) (PY 2020-21: Rs. 4,041.72 Lakhs).
INFORMATION ON THE FINANCIAL PERFORMANCE/FINANCIAL POSITION OF THE SUBSIDIARIES/ ASSOCIATES/JOINT VENTURE
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statement of the Subsidiary Company in Form AOC-1 is provided as âAnnexure Lâ to this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review, the revenue from operations of 3M E&C increased to Rs. 26,313.50 Lakhs in the financial year 2021-22 compared to Rs. 18,451.93 Lakhs in financial year 2020-21. The Profit before tax for the financial year 2021-22 is Rs. 782.21 Lakhs as against Rs. 1,748.08 Lakhs in the financial year 2020-21. The Profit after tax for the financial year 2021-22 is Rs. 579.60 Lakhs as against Rs. 1,307.56 Lakhs in the financial year 2020-21. The Total Comprehensive Income is Rs. 596.99 Lakhs for the financial year 2021-22 as against Rs. 1,270.95 Lakhs in the financial year 2020-21.
⢠The Electronics sector performed well amidst the COVID-19 pandemic. Policymakers have laid emphasis to encourage sustainable manufacturing and export of electronics from India. Prioritised product segments will cover mainly mobile phones, IT hardware, consumer electronics, wearables, hearables, LED lighting, electronic components in electric vehicles, etc.
⢠India is poised to become the second-largest smartphone manufacturer in the next five years. The policy initiatives of the Government around clearance of proposals from domestic and international companies investing under the PLI scheme to manufacture mobile phones have had a positive impact on the manufacturing ecosystem. The Company has been a material supplier to this segment globally, and will continue to facilitate supply chain movement to the tier suppliers to enable more local content.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and Financial Statements of the Subsidiary Company for the financial year 2021-22 have also been placed on the website of the Company https://www.3mindia. in/3M/en-IN/company-in/about-3m/financial-facts-local/.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as âAnnexure Aâ.
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as âListing Regulationsâ) along with Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is annexed as âAnnexure B â
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
A separate Section on Business Responsibility and Sustainability Report (BRSR) is annexed as âAnnexure Câ and forms a part of this Annual Report as required under Regulation 34(2)(f) of the Listing Regulations. The Company has been publishing its Business Responsibility Report (BRR) as per SEBIâs requirement for disclosure on key sustainability indicators and has voluntarily adopted the new BRSR format as best practice ahead of time for its non-financial performance disclosure from the current year onwards.
SHARE CAPITAL EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of Rs. 10/- each. The Authorized/Issued/ Subscribed and fully Paid-up Share Capital as at March 31,2022 is Rs. 11,26,50,700 (divided into 1,12,65,070 Equity Shares of Rs. 10/- each).
During the year under review, the Company has not issued Equity Shares nor Shares with differential voting rights nor granted Stock Options nor Sweat Equity.
The Company has paid the Annual Listing Fees for the financial year 2022-23 to National Stock Exchange of India
Limited (NSE) and BSE Limited (BSE) where the Companyâs Equity Shares are listed.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNELAppointment and Re-appointment:
The following Appointment and Re-appointment were made during the financial year till the date of the report:
⢠Based on the recommendation of the Nomination and Remuneration Committee, and performance evaluation carried out, the Board at its Meeting held on February 3, 2022 has approved the re-appointment of Mr. Ramesh Ramadurai (holding DIN: 07109252) as the Managing Director of the Company for a further period of two (2) years from February 13, 2022 to February 12, 2024 (categorized as Executive and Non- Independent Director). The Members of the Company have approved his re-appointment by way of an Ordinary Resolution through Postal Ballot Notice dated February 3, 2022. The results of the voting by Postal Ballot were announced on March 26, 2022.
⢠Based on the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on February 3, 2022 had appointed Ms. Yun Jin (holding DIN: 09474323) as an Additional Director (categorized as Non-Executive, Non- Independent Director) of the Company with effect from February 4, 2022. The Members of the Company have approved her appointment by way of an Ordinary Resolution through Postal Ballot Notice dated February 3, 2022. The results of the voting by Postal Ballot were announced on March 26, 2022.
⢠Based on the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on May 27, 2022 had appointed Ms. Vidya Sarathy (DIN: 01689378) as an Additional Director and Whole-time Director (designated as âWhole-time Director and Chief Financial Officerâ) of the Company for the period from June 1,2022 to February 21,2026 (till the date of her superannuation), categorized as Executive, Non- Independent Director. Accordingly, Ordinary Resolutions seeking appointment of Ms. Vidya Sarathy as a Director and also as Whole-time Director of the Company, as set out at Item Nos. 4 and 5 of Notice of Annual General Meeting are sought to be passed by the Members. The Board of Directors recommends her appointment.
⢠Mr. Amit Laroya (holding DIN: 00098933) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment. The details of Mr. Amit Laroya are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
⢠Based on the recommendations of the Nomination and Remuneration Committee and the Audit Committee, the Board at its Meeting held on May 28, 2021 has appointed Ms. Vidya Sarathy as Chief Financial Officer and also as Key Managerial Personal of the Company with effect from June 1,2021. Ms. Vidya Sarathy is the Compliance Officer with effect from May 11,2022.
The following resignations were accepted during the financial year and till the date of the report:
⢠Ms. Mamta Janak Gore (holding DIN: 08792863), Whole-time Director and Chief Financial Officer (CFO) of the Company resigned as Whole-time Director and CFO from the closing hours of May 31,2021, and as a Director of the Company from the closing hours of May 27, 2022 consequent upon taking up higher role within 3M Group. She was the Non- Executive Director of the Company with effect from June 1,2021 till May 27, 2022. The Board places on record its appreciation for the contributions made by her to the progress of the Company during her tenure as Whole-time Director and CFO and as Non- Executive Director of the Company.
⢠Mr. Jongho Lee (holding DIN:06720950), Non-Executive, Non-Independent Director resigned as Director of the Company from the closing hours of February 3, 2022, consequent upon taking up higher role within 3M Group. The Board places on record its appreciation for the contributions made by him to the progress of the Company during his tenure as a Director of the Company.
⢠Mr. V. Srinivasan, Company Secretary and Compliance Officer, (Key Managerial Personnel of the Company) resigned as Company Secretary and Compliance Officer from the closing hours of May 10, 2022, as he had decided to pursue his career outside of the 3M Group. The Board places on record its appreciation for the contributions made by him during his tenure as Company Secretary and Compliance Officer of the Company.
As at the financial year ended March 31,2022, Mr. Ramesh Ramadurai, Managing Director, Ms. Vidya Sarathy, Chief Financial Officer and Mr.V. Srinivasan, Company Secretary and Compliance Officer, were the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations. All the Independent Directors have also confirmed under Regulation 16(b) of SEBI (LODR) Regulations, 2015 that they are not Non-Independent Director of another Company on the Board of which any Non- Independent Director of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE FINANCIAL YEAR
During the financial year 2021-22, Six (6) Meetings of the Board were held. The Company has Six (6) Board Committees. The date, composition and number of Meetings attended by each Director/Committee Member along with other Committee Meetings details are furnished in the Corporate Governance Report. All the Board/ Committee meetings for the financial year 2021-22 were held through video conferencing/other audio visual means.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31, 2022, the Audit Committee of the Company consisted of Three (3) NonExecutive Independent Directors and One (1) Non-Executive Director and all of them have financial and accounting knowledge. The Members of the Committee as on March 31,2022, are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan, and Ms. Yun Jin. The Committee comprises of majority of Independent Directors. The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed on the website at https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/.
The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI. Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as âAnnexure Dâ.
REMUNERATION RECEIVED BY MANAGING/WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding/ Subsidiary Companies.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the financial year ended March 31,2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2022 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Companyâs Internal controls is aligned to Global 3Mâs internal control over financial reporting which are based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Controls â Integrated Framework (2013). The internal controls framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal controls procedures. The Internal Auditor functionally reports to the Audit Committee and administratively to the Managing Director. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board. DEPOSITS
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013, except for the investments made during the financial year 2018-19 for the acquisition of all the outstanding shares of 3M Electro & Communication India Private Limited for Rs. 58,470 Lakhs.
RELATED PARTY TRANSACTIONS (RPTs)
All RPTs which were entered into, during the financial year were on an armâs length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement exhibiting details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly
basis. A Policy on RPTs as approved by the Board is uploaded on the Companyâs website at https:// www.3mindia. in/3M/en-IN/company-in/about-3m/financial-facts-local/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to the Groupâs synergies, state of the art products and technologies, competencies and â3Mâ brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at armâs length basis. None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
The RPTs are necessary, normal to business, and play a significant role in the Companyâs business operations and also form an integral part of the Companyâs business. An analysis of all the RPTs entered into & by the Company and the basis of charge was undertaken through a third-party professional firm.
The Company has already taken approval of the Members for all material RPTs for the estimated transactions for Three (3) financial years starting from April 1,2020, to March 31,2023, at the Annual General Meeting held on August 26, 2020. Form No. AOC-2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure Eâ
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a part of its initiatives under Corporate Social Responsibility (CSR), your Company prioritised its CSR allocations of FY 21-22 towards COVID related initiatives to meet the emerging needs of communities impacted by the pandemic. The Company also continued to support some of its multi-year programmes under the verticals of Education and Community. These projects have been selected, initiated, and implemented in accordance with the activities under Schedule VII of the Companies Act, 2013.
In FY 21-22, your Company supported a variety of STEM and education initiatives to help children and young adults across age groups with learning support, digital learning aids and seed funding to promote innovation, as schools and educational institutions continued to be disrupted due to the pandemic.
1. School Readiness Programme (Anganwadi):
The Company continued to support the School Readiness (Born Learning) initiative in partnership with United Way of Bengaluru to transform anganwadis under the ICDS programmes of Government of India to ensure well rounded development of children under the age of 6. This is a national programme covering 130 centers and is improving the lives of over 13,000 children below the age of 6 years. Year 3 intervention to support 40 anganwadi center activities at S. R. Nagar and Jigani Bengaluru, Mumbai and Kolkata and covering 4000 children, included activities to maintain the centers as per COVID guidelines, support the anganwadi staff with virtual trainings, early child learning materials, community mobilization and training and capacity building activities. During the lockdown months, home-based learning involving parents was encouraged. Community engagement involving mothers was conducted around themes of breast feeding awareness, financial literacy, brain development, kitchen gardening and nutrition.
2. Project Nanhi Kali: Educating the Girl Child:
The Company continued to sponsor the education of 2861 girl students in partnership with K.C. Mahindra Trust under Project Nanhi Kali. During FY 21-22, the programme provided additional academic support to girl students from primary and secondary classes across 161 academic support centers in the rural district of Ambegaon in Pune, Maharastra.
During the second wave of COVID, schools were closed and activities at the after school academic support centers were discontinued owing to the lockdown. To ensure the girls stayed in touch with learning, digital tablets were introduced preloaded with AI powered, personalized adaptive learning software, Mindspark. In tandem, tutors kept in touch with students via home visits and virtual sessions. The digital curriculum covered English, Math and the local language for girls from Grade 1-10 and science from Grade 6-10. Community centers re-opened in September 2021 on a rotational basis adhering to stringent COVID-19 safety and hygiene protocols. A professionally designed sports curriculum was also integrated into the programme. The qualifying rounds of an initiative called Toofaan Games was held in Ambegaon in January 2022. A team from 3M India visited one of the community centers and distributed school supplies and hygiene kits to the girls in October 2021. As a result of these interventions, the programme witnessed 77% average attendance amongst the girl students in classes 1-5 and 83% amongst secondary students. The retention rate for the programme is at 95.4% with a low dropout rate of 4%. With the change in pedagogy and curriculum, the students continued to maintain an above average performance in foundational subjects i.e. 54% in Math, 72% in Marathi and 61% in English. In March 2022, a team of 33 students from the programme visited 3M Indiaâs manufacturing plant in Ranjangaon, Pune for an industry exposure visit.
3. 3M-CII Young Innovators Challenge Awards Programme:
During FY 21-22, the Company successfully completed the 8th edition of the Young Innovators Challenge programme in partnership with the Confederation of Indian Industry (CII). This programme annually recognizes young innovators under 30 years of age with grants, recognition, and access to networks for their innovative ideas that will have an impact on society. The theme for the year was ideas of hope for a resurgent India which received over 1500 applications. For the second year in a row, due to the pandemic, the end-to-end process from inviting applications, screening submissions, selecting and felicitating the winners was done virtually. 5 winners and 2 special awardees received grants of up to 18 lakhs. Virtual Q&A sessions, knowledge webinars and multiple coaching sessions served as catalysts to raise the quality of participation.
4. 3M Young Change Agents for Road Safety Virtual Programme:
3M Young Change Agents for Road Safety (YCARS) was launched in 2019 as an in-person road safety education workshop for students in middle school. During the pandemic, school closures and lockdown led to the development of a virtual experience of the existing Y-CARS workshop, which will enable school children learn the concepts of road safety and hazard perception from home.
The Y-CARS online module makes use of a learning management tool to bring alive the physical experience on screen. The lesson plan followed in the offline workshop was set as a foundation for the virtual programme, with virtual experience and content built in based on the end usersâ point of view, making evaluation and impact measurable by default. The programme was launched as a pilot in January 2022 and was conducted in 3 schools across Bengaluru, Pune and Delhi during FY 21-22.
While COVID exposed the gaps in Indiaâs healthcare infrastructure by impacting access to quality healthcare for the
poor, it also took attention away from other life-threatening diseases such as cancer. In FY 21-22, your Company
continued to support initiatives to strengthen healthcare infrastructure and access across urban, rural and aspirational
districts for the medium to long term.
1. Partnership with Sri Shankara Cancer Foundation Hospital, Bengaluru to support cancer research and treatment:
Your Companyâs focus on advancing science, along with its social justice goals of addressing healthcare inequities, inspired its commitment to the Sri Shankara Cancer Foundation Hospital in the treatment of cancer. Over FY 20-21,3M India had donated medical equipment to set up the research and treatment facility for Bone Marrow Transplantation. This facility was formally inaugurated in November of 2021. The hospital continues to build capacity with a vision to be one of the premier cancer research and treatment institutes in the country. In FY 21-22, your Company renewed its commitment to support the hospital by providing a high-resolution quantitative mass spectrometry equipment, which will be an invaluable addition to the cutting-edge research unit at the hospital. The equipment will aid in researching cancer prevention and also study cancer cells that resist treatment. With the addition of this equipment, the hospital joins the ranks of prestigious medical and pure sciences research institutes in the country in the field of medical research.
2. Providing diagnostic and preventive healthcare access to rural communities:
In FY20-21, your Company initiated a partnership with Smile Foundation to support the primary healthcare needs of the underprivileged communities by deploying four mobile healthcare units in aspirational districts. In FY 21-22, your Company continued to support this multi-year programme as the vans became operational after being formally launched in September 2021. The vans operate in Siddharthnagar in Uttar Pradesh, Balangir in Odisha, Goalpara in Assam and Shirur in Ranjangaon, Maharashtra, providing preventive, promotive, and curative healthcare facilities to underserved communities. The vans average over 6000 patient consultations each month and have covered close to 30,000 unique patients since operations began in September 2021.
3. Providing uninterrupted power supply to rural primary health care centers with solar powered installations: Healthcare services in rural areas cannot be delivered effectively unless the healthcare facilities are provided with uninterrupted power supply. Your Company initiated a programme to provide solar powered installations at 7 rural primary health care centers around its manufacturing plant in Ranjangaon. The centers are located at
Ranjangaon, Karde, Kavate, Nimone, Takle Haji, Talegaon Damre and Kendur. With the installations, the rural PHCs will be able to provide timely primary health care services impacting about 3.50 lakh people in the villages around these PHCs. The installations include customized renewable energy solutions (solar powered systems) and recommended energy efficient medical appliances for each of the 7 health centers.
Your Companyâs community response towards COVID-19 was directed at programmes that helped address the emerging needs of communities. In FY 21-22, Your Company contributed to critical efforts to support the Governmentâs fight against COVID, around augmenting ICU infrastructure and community vaccination drives.
1. Intensive care unit augmentation programmes during COVID second wave:
At the onset of COVID second wave, the Company responded with support towards initiatives to enhance ICU units in Government hospitals, namely one general ICU unit at CV Raman Nagar hospital and as preparation for future waves, a pediatric ICU unit at the Indira Gandhi Institute of Child Health, Bengaluru. Your Company participated in these initiatives under the aegis of Confederation of Indian Industry (CII) along with other corporate partners. The support was in the form of medical equipment like patient monitors and ventilators for ICUs.
2. Community Vaccination programmes in urban slums and rural communities:
Your Company initiated a community vaccination programme to support Government of Indiaâs COVID vaccination mission, partnering with Vaccine on Wheels and United Way of Bengaluru (UWBe) across cities like Pune (PCMC) and Bengaluru (BBMP) where 3M India has regional presence and in some rural districts of two states, Maharashtra and Tamil Nadu. Addressing the issue of vaccine inequity, this partnership reached out to underserved populations in hard-to-reach urban slums and, villages where hesitancy for vaccinations continued to exist. The programme has administered more than 175,000 vaccinations by deploying 18 mobile vaccination clinics from Vaccine on Wheels, with United Way of Bengaluru playing a crucial role in creating awareness and mobilizing beneficiaries to the micro-vaccination booths.
The Annual Report on CSR activities is annexed herewith as âAnnexure Fâ.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top Ten (10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 8.50 Lakhs or more per month respectively is annexed herewith as âAnnexure Gâ
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as âAnnexure Hâ.
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boardâs Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the financial year by the Regulators/Courts which would impact the going concern status of the Company and its future operations.
INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016)
There was no application made nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financialyear.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Mâs Code of Conduct. The details of the said Policy are stated in the Corporate Governance
Report and also available on the website of the Company https://www.3mindia.in/3M/en_IN/company-in/about-3m/financial-facts-local/. During the year, the Company reached out to employees through e-learning modules for creating greater awareness with respect to its Fair Competition Directive and Anti-Bribery and Corruption Directive. This has helped in achieving a high level of engagement and compliance among the employees.
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were re-appointed as the Statutory Auditor of the Company at the 34th Annual General Meeting held on August 26, 2021 to hold office for a second period of five (5) years from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting to be held in the year 2026. The requirement of seeking ratification of the Members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Hence, the Resolution seeking ratification of the Members for their appointment is not being placed at the ensuing Annual General Meeting.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 27, 2022 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (Firm Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year 2022-23 at a remuneration of Rs. 475,000/- (Rupees Four Lakhs Seventy Five Thousand only) plus taxes as applicable and out of pocket expenses at actuals.
The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
Disclosure on Cost Audit: For the financial year ended March 31, 2021, the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was filed with the Ministry of Corporate Affairs on September 8, 2021 vide SRN: T41309477, well within the due/extended date. Messrs. Rao, Murthy & Associates, has confirmed the cost records for the financial year ended March 31, 2021 are free from any disqualifications as specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act.
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 had appointed Mr. Parameshwar G. Bhat, Company Secretary in practice (FCS:8860, CP:11004) to undertake the Secretarial Audit of the Company for the financial year 2021 -22. The Report of the Secretarial Audit Report is annexed herewith as âAnnexure I â.â
SEBI vide its Circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019 has mandated all the Listed entities having its Equity Shares Listed on the Stock Exchange(s) to obtain the Annual Secretarial Compliance Report in the prescribed format from a Practising Company Secretary from the financial year ended March 31,2019 onwards and the Report should be submitted to the concerned Stock Exchanges within 60 days from the end of the financial year and be included in the Annual Report. The Annual Secretarial Compliance Report from Mr. Vijayakrishna K T is annexed herewith as âAnnexure J â which will be filed with the Stock exchanges within the prescribed time limit.
EXPLANATIONS IN RESPONSE TO AUDITORSâ QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors/Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year 2021-22, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the draft of the Annual Return in Form MGT 7 of the Company for the financial year March 31, 2022 is uploaded on the website of the Company and can be accessed at https:// www.3mindia.in/3M/en IN/company-in/about-3m/financial-facts-local/.
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/. Internal Complaints Committees (ICC) have been set up to redress complaints received regarding sexual harassment.
Status of Complaints during the FY2021-22:
1. Number of complaints of sexual harassment received in the financial year (April 1,2021 to March 31,2022): Nil
2. Number of complaints disposed off during the financial year: NA
3. Number of cases pending for more than 90 days: NA
4. Number of workshops or awareness programmes carried out in connection with sexual harassment: Three
5. Remedial measures taken by the Company:
⢠Revamped and released new 3M India POSH Standard & Procedure to include Gender neutral policy & introduced appeal process.
⢠Rolled out POSH communication campaign - series of Poster communication to spread more awareness & education around POSH policy, guidelines & expectations.
⢠Rolled out video call etiquettes, guidelines & expectations to all employees of the Company.
During the financial year, the Company took many initiatives to increase organizational capability and productivity to be value driven and future ready. As at March 31,2022, the Company had an employee strength of 1,132 personnel.
During the financial year under review, the Company:
a. has not bought its own Shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Companyâs Shares, and,
b. has not issued any Shares to trustees for benefit of employees.
c. there was no revision in the Financial Statements.
ENVIRONMENT, HEALTH AND SAFETY
Your Company is committed to making strides to further the health, safety and well-being of its employees. The Companyâs responsibility extends to the environment as it operates through robust environment management systems, conservation of resources and ensuring that pollution is prevented at source.
Your Company has three manufacturing plants operating in India. All three plants have Environmental Management Systems certified to the new ISO 14001: 2015 standard. The Company believes that environmental policy and regulations should be guided by science-based decision making. Beyond compliance, the Company continues to make significant investments to reduce the environmental impact of its operations; and in its products, with sustainable attributes that help customers reduce their own environmental footprint and meet their sustainability goals.
The parent companyâs Global Strategic Sustainability Framework directs local efforts to create impact:
⢠Science for Circular: Design solutions that do more with less material, advancing a global circular economy.
⢠Science for Climate: Innovate to decarbonize industry, accelerate global climate solutions and improve our environmental footprint.
⢠Science for Community: Create a more positive world through science and inspire people to join us.
Raw Materials: As more resources are consumed by an ever-growing population, it is imperative that product design and manufacturing processes consider the ecological impact during life and after end-of-life. Your Company is committed to ensuring improved raw material usage, recyclable and sustainable innovations for customers.
Waste: 3M Company is advancing its goal of reducing waste globally by targeting it at the sourceâworking to eliminate single-use plastics and converting more facilities to zero landfill status. The global target has been set to reduce manufacturing waste by an additional 10%, indexed to sales, by 2025. Waste emerging from Non-Working Inventory, quality rejections and production waste is collectively sent for co-processing to cement kilns. This has helped reduce the incineration process and carbon footprint at all the sites, leading to a reduction of CO2 by 359 MT in FY 2021-22. During the year, overall waste generation reduced by 5.4%.
Energy & Climate: 3M Company has committed to achieving carbon neutrality by 2050, through the reduction of greenhouse gas emissions and increasing share of renewable energy. The energy efficiency improved by 16%. Three of the manufacturing plants are utilising 22% share of energy consumption through renewable energy. Plants have also conducted various environmental awareness programs including tree planting at plant sites as well as in the local communities.
Water- Reducing Water Use in Manufacturing Operations: 3M Company is committed to reducing water use at its worldwide manufacturing facilities by taking immediate steps to drive reductions in current water use and over the longer-term; aiming for a 10% reduction in water use by 2022, 20% reduction by 2025, and 25% reduction by 2030.
Your Company embraces this commitment to water conservation for its own operations, following a Global Water Stewardship Standard. 3M operations worldwide manage their water resources through compliance with regulatory requirements, conservation and reuse, reporting water usage internally as well complying with the law of the land. Water resources include water intake, effluent water discharge and rainwater.
Water usage is being monitored with meters and pressure gauges. The drop in pressure gauge readings indicate leakages which are attended to on priority to prevent wastage. Manufacturing sites practice Zero Water Discharge through numerous water conversation initiatives. During the year under review, water consumption reduced by 36%.
⢠Treated water from the sewage treatment plant is used for gardening and in restroom flushing.
⢠Treated water from effluent treatment plants are also taken into scrubber operations which helps reduce raw water consumption.
⢠Underground hydrant network pipelines, which had corroded and were difficult to trace to correct leakage, were brought above ground at all plants to eliminate the root cause of the issue.
⢠Engagement drives and leakage surveys were conducted at factories to identify and arrest leakage and detect networks prone to leakages. Remote taps were plugged where frequent vigilance was not possible.
⢠At few plants, an online ozonator was installed for water disinfection to enable safe handling by gardeners
⢠New drip irrigation lines were added to fully utilise available water.
Your Company continually strives to maintain the highest standard of safety at all workplaces to ensure people, assets, and indirectly our businesses are operating in the most efficient manner. All three manufacturing facilities have been certified by ISO 45001, a standard for management systems of Occupational Health and Safety Standards reinforcing the Companyâs commitment to leadership in safety and health.
Your Companyâs manufacturing facilities were able to maintain Zero Lost time injuries during the year under review due to continuous focus on preventive actions, EHS Element ownership through leaders with representation from supervisors and technical associates alike.
3M Company, USA recognized your Companyâs manufacturing plants at Ahmedabad & Bengaluru with the CEO EHS award for safety excellence. 3M India Bengaluru plant was recognized as a runner up for the Karnataka State Level Safety Award under Large Category Industries instituted by the Department of Factories, Boilers, Industrial Safety & Health, Government of Karnataka.
Your Company is guided by the parent companyâs EHS Cultural Excellence programme which lays down the execution model and set of manufacturing excellence principles which ensure a safer, healthier, happier and more trusting workforce.
During COVID, the team worked tirelessly to meet the surging demand from front-line workers supplying masks, respirators, sanitizing and disinfecting solutions.
During the second wave, the Company adopted the Project Zero approach to ensure that there were no infected people within close distance at work. Several infrastructural and administrative actions were implemented which helped people maintain social distancing and enhanced workplace hygiene. Daily health surveillance and selfdeclaration by employees helped ensure timely isolation. Oxygen cylinder supplies were planned for in advance and health centers were equipped for adversity. Disease Prevention Coordinators implemented Business Resilience Plans and Disease Control Prevention plans to ascertain preparedness.
Your Company offered employees and their families resources and services to support their holistic health- physical, mental, and emotional.
1. Collaboration with a third party for COVID 19 health package to provide 24X7 telehealth services to all employees, including contingent workers, and their families. Initiatives included an at home quarantine programme of active surveillance, at home RTPCR sample collection, dispatching of home care kits during lockdowns, ambulance services to support medical emergencies, checks on availability of hospital beds and door delivery of medicines.
2. COVID Prevention Ambassadors were trained to make sure ideal behaviors continue to be implemented to ensure Zero Close Contact at the workplace.
3 Influenza (Flu) immunization drive was conducted for employees who opted for it, in collaboration with the HR Benefits team.
4. Hepatitis B Vaccination was introduced to all the ERT emergency response team members at 3M India manufacturing sites.
These collective efforts earned the company recognition by Great Place to Work® as one of the Top 10 organisations for supporting employees and their families through the COVID crisis. The parent company also recognised 3M India with the prestigious EHS | PS & Sustainability Achievement Awards 2021 for a holistic approach in managing the COVID-19 Pandemic Wave 2.
LEADERSHIP FOR COVID-19:As the pandemic situation continued to evolve across India and the world, it became absolutely essential to keep the Companyâs facilities safe from COVID.
3M Company had the foresight and devised a pandemic preparedness plan for implantation at all facilities. Project Zero was initiated as an effort to prevent the spread of COVID-19, with a goal of zero work colleagues identified as close contacts of confirmed COVID-19 cases. The EHS Culture excellence model of See and Act was used to drive ideal behaviors during the pandemic through the Project Zero GROW model.
3M Company developed an online platform where all the protocols pertaining to COVID-19 management were consolidated for all 3M subsidiaries to follow. This aided the company to put in place systems and processes to prepare facilities in line with globally prevalent control systems for mitigating the risk of COVID-19.
At the onset of the second wave in other parts of the world, your Company took up the implementation of an overall preventive pandemic plan to safeguard employees, employee families and contingent workforce to reduce the severity of the impact.
Your Company focused on strengthening the health infrastructure at our factories and the support systems to address emergencies during COVID-19.
1. Strengthening of Health Infrastructure on-site
⢠Onboarded Additional medical professionals to support factories
⢠Tele Health services were launched with 24 X 7 Toll Free Facility
⢠Frequent Mock drills were conducted to check COVID preparedness
⢠Silent Canteen Concept was introduced at all factories
⢠Health tips and awareness through communications
2. To address medical emergencies
⢠COVID-19 insurance cover was provided to all employees and eligible dependents
⢠Home quarantine and Hospitalization Support from Company
⢠Medical Emergency and Ambulance Service
⢠Emergency medical units procured well in advance
⢠Comprehensive Testing at employee doorstep
⢠Support for Departed family members
⢠EAP - Employee assistance program in vernacular languages
⢠Webinars and awareness sessions related to COVID, vaccinations were conducted.
The Companyâs manufacturing plant at Ranjangaon site was open throughout the first and second waves of the pandemic working through lockdowns to ensure the supplies of essential commodities for frontline health workers.
When other facilities were about to reopen, Return to Work Protocols were implemented using technology. Various Microsoft Teams broadcast sessions were held on weekends to ensure employeesâ families were trained on the protective measures needed during this period while at home and outside.
As populations became eligible for COVID vaccinations, your Company launched a company-wide vaccination programme to cover employees and their family members. Multiple vaccination camps were held at various locations throughout the year. A COVID Vaccination Taskforce with several volunteers led this initiative to ensure maximum coverage of employees with both the doses of the vaccine. The Companyâs proactive health and wellness initiatives helped send a consistent message of prioritising health and safety. 47 Camps were organised across the country achieving 100% COVID vaccination for all beneficiaries.
As a part of its community outreach, your Company extended its commitment to vaccinations reaching the underserved populations in both urban and rural areas. In addition, your Company collaborated with other companies to provide urgent support of medical equipment to enhance capacities in ICUs in Government medical facilities.
With customers, your Company catered to emerging trends promoting new solutions in areas such as automotive electrification, home improvement, personal safety and healthcare. Virtual platforms continued to take priority in fostering customer relationships and exploring new frontiers in service and delivery.
⢠Your Company received recognition as one of the Top 10 companies for COVID support, by Great Place To Work ® in recognition for COVID-19 employee wellness initiatives over 2020-2021.
⢠Working Mother & AVTAR Best Companies for Women in India study recognized your Company as one of the 100 Best Companies for Women in India (2021), for commitment to gender inclusive policies and initiatives.
⢠Your Companyâs Bengaluru Electronics City plant was awarded the State Level Safety award under Large Category Industries by the Department of Factories, Boilers, Industrial Safety and Health, Government of Karnataka.
⢠Your Company was recognized by local municipal corporations in Pune (Pune Chinchwad Municipal Corporation) and Bengaluru (Bruhat Bengaluru Mahanagara Palike) for supporting the Governmentâs fight against COVID through community vaccination programmes and other related initiatives.
⢠At the National HRD HR Showcase 2021, a 3M India sponsored CSR initiative, Born Learning in partnership with United Way of Bengaluru, received a Special Mention Award for supporting early child education and development. Your Company was also shortlisted amongst companies with the best Diversity Equity Inclusion (DEI) programmes.
⢠Three women scientists of your Company were included in Indiaâs 50 Women in STEM eBook compilation brought out by CII-TNTDPC.
⢠Your Companyâs manufacturing plants at Bengaluru Electronics City and Ahmedabad received 3M Companyâs top recognition for Safety and Health, the CEO Safety and Health Award.
⢠The manufacturing plant at Bengaluru Electronics city received 3M Companyâs Quality Achievement award for NVH (Noise, Vibration, Harshness) project, Muphony for achieving zero noise and zero defects. This was the 15th consecutive quality achievement award for your Company.
⢠Your Company received numerous accolades for excellence in marketing, technical and various support functions with several 3M Company global and area level awards.
Your Directors thank and acknowledge with gratitude the co-operation, assistance and support received from the
Central Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers,
Vendors, Promoters of the Company, and all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by
every employee of the Company.
On behalf of the Board of Directors
Place: Bengaluru Managing Director Director
Date : May 27, 2022 DIN: 07109252 DIN: 00098933
Mar 31, 2021
Your Directors have pleasure in presenting the Thirty Forth (34th) Annual Report of the Company. The Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2021 are prepared in compliance with the applicable provisions of the Companies Act, 2013 including Indian Accounting Standards. The audited Standalone and Consolidated financial statements together with the Auditorsâ Report thereon form part of the Annual Report.
FINANCIAL HIGHLIGHTS - Standalone and Consolidated (Rs. in Lakhs)
|
FINANCIAL HIGHLIGHTS - Standalone and Consolidated (Rs. in Lakhs) |
||||||
|
Particulars |
Standalone |
Consolidated |
||||
|
Year ended March 31, 2021 |
Year ended March 31, 2020 |
% age increase / decrease (-) |
Year ended March 31, 2021 |
Year ended March 31, 2020 |
% age increase / decrease (-) |
|
|
Revenue from Operations |
242,036.39 |
276,487.73 |
-12.46% |
260,483.14 |
298,655.09 |
-12.78% |
|
Of which -Export Sales |
2,497.17 |
2,210.14 |
12.99% |
2,658.32 |
2,409.49 |
10.33% |
|
Other Income, net |
2,686.77 |
4,158.32 |
-35.39% |
2,473.73 |
4,589.56 |
-46.10% |
|
Total Income |
244,723.16 |
280,646.05 |
-12.80% |
262,956.87 |
303,244.65 |
-13.29% |
|
Less: Expenditure |
218,268.32 |
242,506.93 |
-10.00% |
234,534.71 |
253,688.61 |
-7.55% |
|
Profit before Interest and Depreciation |
26,454.84 |
38,139.12 |
-30.64% |
28,422.16 |
49,556.04 |
-43.65% |
|
Less: Finance costs |
243.22 |
361.11 |
-32.65% |
245.41 |
366.21 |
-32.99% |
|
Less: Depreciation and amortization expense |
5,967.54 |
5,737.70 |
4.01% |
6,184.59 |
5,933.25 |
4.24% |
|
Profit before Taxation |
20,244.08 |
32,040.31 |
-36.82% |
21,992.16 |
43,256.58 |
-49.16% |
|
Less: Tax expense |
5,313.99 |
10,143.06 |
-47.61% |
5,754.51 |
11,039.66 |
-47.87% |
|
Profit for the year |
14,930.09 |
21,897.25 |
-31.82% |
16,237.65 |
32,216.92 |
-52.96% |
|
Items that will not be re-classified subsequently to profit or loss |
(255.40) |
(374.23) |
-31.75% |
(292.01) |
(413.22) |
-29.33% |
|
Total Comprehensive income for the year |
14,674.69 |
21,523.02 |
-31.82% |
15,945.64 |
31,803.70 |
-53.25% |
Your Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy was uploaded at https://www.3mindia. in/3M/en-IN/company-in/about-3m/financial-facts-local/and the same is also annexed herewith as âAnnexure Jâ.
The Company remains invested in India and the areas of investment opportunity highlighted in prior years continue to hold good. Just when the Indian economy slowly started to limp back to recovery after the impact of the recent COVID-19 pandemic during the last financial year 2020-21, resurgence of the COVID-19 pandemic second wave is slowing down our entire country and it remains to be seen how far it will affect Indian economy and the growth prospects. The Company remains responsible to our shareholders in the Company to maintain a strong Balance Sheet during these uncertain times. For these reasons, the Company has decided to conserve and retain the earnings and is not proposing a Dividend.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, your Board does not propose to transfer any amounts to reserves.
In an uncertain environment, your Company focused on fighting the pandemic from all angles, providing customers with innovative solutions, and improving operational execution. During the year under review, as the pandemic continued to evolve, the Industrial Production Index (IPI) and several end markets experienced sharp decline driven by COVID-19 related headwinds. At the same time, the demand from healthcare, personal protection, home improvement and cleaning remained strong. In an extremely challenging environment, your Company declined from FY 19-20 while maintaining stable cash position. Your Company was able to leverage its strengths in wide product portfolio and breadth of technology solutions to take advantage of the emerging trends in end markets.
Discipline in operational execution
Your Company maintained a stable cash position and managed cost across all aspects of the business keeping employee costs low.
Your Company captured the sharp momentum in eCommerce, with solutions and new SKUs for homes and commercial spaces, in line with attractive trends from end markets.
Enhanced manufacturing to meet demand
The demand for respirators and masks led to increased manufacturing capacity at your Companyâs manufacturing facilities in Pune. With increasing demand for disinfectants and cleaning products, your Company also executed new manufacturing projects to locally manufacture hand-sanitizers, certain types of disinfectants, and BS-VI compliant emission control materials.
Emerging opportunities in new market segments
New market trends in personal safety, vehicle safety, homecare and cleaning and automotive electrification have opened up new product solutions in the areas of vehicle interior cleaning for the aftermarket segment, road safety products, wound care, and bio pharma purification. Your Company also aligned with key Government construction and infrastructure projects as the countryâs economy opened up after lockdown.
Your Company leveraged the potential of virtual with focused learning and education initiatives for various customer segments to support new business opportunities.
Supporting our communities to fight the pandemic
During the pandemic, your Company effectively collaborated in a timely manner to provide much needed support to various migrant communities in the form of cooked food, dry rations, and others. During the peak of the first wave of COVID, your Company also supported several district hospitals across major cities with medical equipment to augment their capacity. In addition, partnerships with multiple agencies enabled the execution of a national food and essential kits distribution program amongst vulnerable communities.
The breadth of technologies and product portfolio and an engaged and committed workforce continues to remain essential to remain resilient during uncertain times. Your Company continues to leverage these strengths to position itself for sustainable growth.
The Company has considered internal and external sources of information as of the date of approval of the financial results in determining the possible impact, if any, of the resurgence of the COVID-19 pandemic on the carrying amounts of its trade receivables, inventories, financial and non-financial assets. The Company has used the principle of prudence in applying judgements and making estimates. Based on this evaluation, the Company does not expect any material impact on its financial results. However, the eventual outcome of impact of Covid-19 pandemic may be different from those estimated as on the date of approval of these financial results.
The Company on a standalone basis declined by 12.46% at Rs. 242,036.39 Lakhs for the financial year ended March 31, 2021 compared to Rs. 276,487.73 Lakhs in the previous financial year. The Profit before Interest and Depreciation is Rs. 26,454.84 Lakhs compared to Rs. 38,139.12 Lakhs for the previous financial year. Profit before Tax is Rs. 20,244.08 Lakhs compared to Rs. 32,040.31 Lakhs for the previous financial year. The operating margin for the current year is 10.81% compared to 13.59% for the previous financial year. Total Comprehensive Income is Rs. 14,674.69 Lakhs compared to Rs. 21,523.02 Lakhs for the previous financial year. Economic slowdown due to Covid-19 affected the topline growth and bottom-line. Export Sales is Rs. 2,497.17 Lakhs for the financial year ended March 31,2021 compared to Rs. 2,210.14 Lakhs in the previous financial year, an increase of 12.99%, due to demand in the global market.
The Company delivered broad-based growth across most of our end markets in the Jan-Mar 2021 quarter, sustaining the sequential improvements since FY Q2 2020-21. Due to the strong demand rebound as well as supply chain interruptions, the Company experienced cost pressures in raw materials and logistics costs. Notwithstanding, our teams worked hard to ensure that we maintained our service levels to customers. During the Jan- Mar quarter, we also announced actions to consolidate our manufacturing footprint in Pune, which will improve our operational efficiencies and customer service.
On a standalone basis, the Safety and Industrial business declined by 6.86%; Transportation business declined by 14.05%; Health Care business declined by 30.24%; and Consumer business declined by 2.13%.
The EPS (Basic and Diluted) of the Company for the financial year 2020-21 was Rs. 132.53 per Share as compared to Rs. 194.38 per Share in the previous financial year, a decrease of 31.82%. Detailed analysis of the performance has been discussed in the Managementâs Discussion and Analysis Section of the Annual Report.
Portfolio Management: Last year, in June 2020, the Company had announced the intention to exit printed graphics (also called decals) business that used to sell to the 2W and 4W automotive OEMs. This was part of Transportation and Electronics portfolio. This portfolio represented well below 5% of our total company sales. The Company would like to inform that the business exit was completed with good transition support to our customers. The VRS scheme was also successfully implemented. We would like to thank our employees who were part of this business for several years for their contributions as well as our customers.
Scheme of Arrangement between the Company and 3M Electro & Communication India Private Limited
The Board of Directors of the Company and 3M Electro & Communication India Private Limited (3M E&C) at their Meetings held on 13 November 2019 had approved the Scheme of Amalgamation of 3M E&C with the Company under Section 233 of the Companies Act. 2013. The Appointed Date fixed under the Scheme was 1 April 2019. The Company sought approvals from Members and Creditors under Section 233(1)(b) of the Companies Act, 2013 by Special Resolutions through Postal Ballot notice dated January 21, 2020. The results of the voting by Postal Ballot were announced on February 28, 2020.
Based on the opinion from external Legal Counsel, the Company has made an application during the month of October 2020 with the jurisdictional Regional Director of the Ministry of Corporate Affairs seeking approval of the Scheme. Additional information sought by the Regional Director has been submitted and the Company is awaiting updates from the office of the Regional Director.
3M India corporate headquarters situated at UB City, Bangalore, was at the end of lease period, with legal requirement to provide six monthsâ notice to all the landlords. This office measured 102,088 sft. across 8 floors in Concorde Block. Due to the CoVID19 pandemic and subsequent to lock-down from March 2020, this office was largely vacant with only security and housekeeping staff present. Moving into a co-shared office space was proposed to the global Headquarters. The US Real Estate team, meanwhile, was searching for a âFuture of the Workspaceâ template in a post COVID world and were enthusiastic about the proposal and approval was attained in record time. A large multifunctional team was formed in November 2020 to address multiple aspects of exiting UB City in a smooth process. The Company is proud to report that from May 1,2021,3M India shifted its corporate office to the co-shared space at WeWork, in Bangalore.
Your Company operates an Information Security Management System (ISMS), mainly centered in the Head Office, St. Paul, USA, is certified to the requirements of ISO/IEC 27001:2013 and continue to meet the certification requirements since 2014. Enhancing and optimizing cybersecurity protection continue to be one of top priorities. A new SaaS security awareness tool with advanced features was deployed. This includes monthly phishing campaigns to all users globally, and monthly security awareness communication and training features. Yearly programme on renewing and testing the cybersecurity incident response process continued to ensure currency and adequacy. NIST CSF - The National Institute of Standards and Technologies, Cybersecurity Framework: provides a common language and lifecycle approach for understanding, managing, and expressing cybersecurity risks. It helps identify and prioritize actions for reducing risk, and helps align policy, business, and technology approaches to managing that risk. Your Company has also deployed Unified Threat Management, commonly abbreviated as UTM that provides multiple security features and services in a single device or service on the network, protecting users from security threats in a simplified way. UTM includes functions such as anti-virus, anti-spam, content filtering, and web filtering. 3M
Information Technology support team has been able to provide best of the IT Support during the second wave spread of COVID-19 across the Country by enabling Work from Home solution in terms of Connectivity, End User support and have a seam less IT Continuity Plan without affecting business operations of the Company.
⢠Year 2020 was challenging year with pandemic crippling the supply chain routes, your Company ensured that all the Customer orders are catered in the fastest manner while working around the logistics challenges;
⢠Market slow down impacted the working capital which rose to a high in June 2020 impacting the cash reserves, accordingly actions were initiated to stagger the purchases, collaborative planning, parameter management which led to working capital coming down by December 2020; and
⢠Re-alignment of Supply Chain Planning function with Asia Centre of Excellence(COE) wherein business group wise alignment was made with dedicated resources; India benefiting through best practices deployment and regional teamâs support.
During the financial year 2020-21, the Company has paid various taxes on account of its business/operation viz., CGST, IGST, Direct Taxes and Customs Duty amounting to Rs. 791.57 crores in aggregate.
Capital Investments during the financial year 2020-21 is Rs. 4,041.72 Lakhs (Net of capital work-in-progress and capital advances) (PY 2019-20: Rs. 1,983.52 Lakhs).
INFORMATION ON THE FINANCIAL PERFORMANCE/FINANCIAL POSITION OF THE SUBSIDIARIES/ ASSOCIATES/JOINT VENTURE
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statement of the Subsidiary Company in Form AOC-1 is provided as âAnnexure Lâ to this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review, the revenue from operations of 3M E&C decreased to Rs.18,451.93 Lakhs in the financial year 2020-21 compared to Rs. 22,221.45 Lakhs in financial year 2019-20. The Profit before tax for the financial year 2020-21 is Rs.1,748.08 Lakhs as against Rs. 3,226.27 Lakhs in the financial year 2019-20. The Profit after tax for the financial year 2020-21 is Rs. 1,307.56 Lakhs as against Rs. 2,329.67 Lakhs in the financial year 2019-20. The Total Comprehensive Income is Rs. 1,270.95 Lakhs for the financial year 2020-21 as against Rs. 2,290.68 Lakhs for the last financial year.
⢠Government focus and its clear intentions to drive Sustainability and Make in India provide us with clear mega trends which presented the Company with the opportunity in EV and MHH segments.
⢠In EV space the industry declined by 20% compared to FY20 and main reason being 2W and 3W EV drop. The Indian OEMs continues to be leader in PV EV. Auto Electrification remains a strong focus area for us and we are taking the Big 3M approach to introduce Value added solutions with OEMs in the area of Battery Thermal Management, Improvement of Life and safety of Batteries and Heads up Display solutions.
⢠In the year 2020, Indiaâs smartphone shipments reached over 150 million units and around a similar number for the feature phones. The government cleared 16 proposals from domestic and international companies entailing investment of11,000 crore under the PLI scheme to manufacture mobile phones worth 10.5 lakh crore over the next five years. This brought in investments from almost all large mobile OEMs and their contract manufacturers. However, due to travel restrictions, their tiers could not commence production as planned. The Company, which has long been in the forefront as a material supplier to this segment globally, with continued close engagement has been and will continue to facilitate supply chain movement to the tier suppliers to enable more local content.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and Financial Statements of the Subsidiary Company for the financial year 2020-21 have also been placed on the website of the Company https://www.3mindia. in/3M/en-IN/company-in/about-3m/financial-facts-local/.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as âAnnexure Aâ.
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as âListing Regulationsâ) along with Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is annexed as âAnnexure Bâ.
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as âAnnexure Câ and forms part of this Annual Report as required under Regulation 34(2)(f) of the Listing Regulations.
SHARE CAPITAL EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of Rs. 10/- each. The Authorized/Issued/ Subscribed and fully Paid-up Share Capital as at March 31,2021 is Rs. 11,26,50,700 (divided into 1,12,65,070 Equity Shares of Rs. 10/- each).
During the year under review, the Company has not issued Equity Shares nor Shares with differential voting rights nor granted Stock Options nor Sweat Equity.
The Company has paid the Annual Listing Fees for the financial year 2021-22 to National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Companyâs Equity Shares are listed.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment and Re-appointment:
The following Appointment and Re-appointment were made during the financial year till the date of the report:
⢠Based on the recommendations of the Nomination and Remuneration Committee and performance evaluation carried out, the Board at its Meeting held on February 10, 2021 approved the re-appointment of Ms. Radhika Govind Rajan (holding DIN: 00499485) as a Non-Executive Independent Director for a second term of Five (5) years with effect from May 27, 2021. The Members of the Company have approved her re-appointment by way of a Special Resolution through Postal Ballot Notice dated February 10, 2021. The results of the voting by Postal Ballot were announced on March 26, 2021.
⢠Based on the recommendations of the Nomination and Remuneration Committee, the Board at its Meeting held on August 13, 2020 had appointed Ms. Mamta Janak Gore (holding DIN: 08792863) as an Additional Director and Whole-time Director (designated as Whole-time Director and Chief Financial Officer) of the Company for a period of Three (3) years with effect from September 01, 2020 to August 31, 2023 (categorized as Executive Non- Independent Director). The Members of the Company have approved her appointment by way of an Ordinary Resolutions through Postal Ballot Notice dated February 10, 2021. The results of the voting by Postal Ballot were announced on March 26, 2021.
⢠Based on the recommendations of the Nomination and Remuneration Committee, the Board at its Meeting held on August 13, 2020 had appointed Mr. James Ernest Falteisek (holding DIN: 08792857) as an Additional Director (categorized as Non-Executive Non- Independent Director) of the Company with effect from September 01,2020. The Members of the Company have approved his appointment by way of an Ordinary Resolution through Postal Ballot Notice dated February 10, 2021. The results of the voting by Postal Ballot were announced on March 26, 2021.
⢠Mr. Jongho Lee (holding DIN: 06720950) will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re- appointment. The details of Mr. Jongho Lee are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
⢠Based on the recommendations of the Nomination and Remuneration Committee and the Audit Committee, the Board at its Meeting held on May 28, 2021 has appointed Ms. Vidya Sarathy as Chief Financial Officer and also as Key Managerial Personal of the Company with effect from June 1,2021.
The following mentioned details are resignation and retirement were received during the financial year end until the date of the report:
⢠Ms. Sadhana Kaul (holding DIN: 02589934), Non-Executive Non-Independent Director resigned as Director of the Company from the closing hours of May 05, 2020, as she had decided to pursue her career outside of 3M Group. The Board places on record its appreciation for the contributions made by her to the progress of the Company during her tenure as Director.
⢠Mr. B.V. Shankaranarayana Rao (holding DIN:00044840), Whole-time Director of the Company superannuated from the Company from the closing hours of May 13, 2020 after a long association of 30 years of service with the Company. The Board places on record its appreciation for the contributions made by him to the progress of the Company during his tenure as Chief Financial Officer and as a Director.
⢠Ms. Mamta Janak Gore (holding DIN: 0008792863), Whole-time Director and Chief Financial Officer (CFO) of the Company resigned as Whole-time Director and CFO from the closing hours of May 31, 2021 consequent upon taking up higher role within 3M Group with effect from June 1,2021. However, she continues to be a NonExecutive Director of the Company with effect from June 1,2021. The Board places on record its appreciation for the contributions made by her to the progress of the Company during her tenure as Chief Financial Officer and as Whole-time Director of the Company.
As at the financial year ended March 31,2021, Mr. Ramesh Ramadurai, Managing Director, Ms. Mamta Janak Gore, Whole- time Director and Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations. All the Independent Directors have also confirmed under Regulation 16(b) of SEBI (LODR) Regulations, 2015 that they are not NonIndependent Director of another Company on the Board of which any Non- Independent Director of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE FINANCIAL YEAR
During the financial year ended March 31,2021, Four (4) Meetings of the Board were held. The Company has Five (5) Board Committees. The date, composition and number of Meetings attended by each Director/Committee Member along with other Committee Meetings details are furnished in the Corporate Governance Report. All the Board/ Committee meetings for the FY 2020-21 were held through video conferencing/other audio visual means.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31,2021, the Audit Committee of the Company consisted of Three (3) NonExecutive Independent Directors and One (1) Non-Executive Director and all of them have financial and accounting knowledge. The Members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan, and Mr. Jongho Lee. The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed on the website at https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/.
The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI. Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as âAnnexure Dâ.
REMUNERATION RECEIVED BY MANAGING/WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding/ Subsidiary Companies.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2021, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2021 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Companyâs Internal controls is aligned to Global 3Mâs internal control over financial reporting which are based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Controls â Integrated Framework (2013). The internal controls framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal controls procedures. The Internal Auditor functionally reports to the Audit Committee and administratively to the Managing Director. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board. DEPOSITS
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013. except for the investments made during the financial year 2018-19 for the acquisition of all the outstanding shares of 3M Electro & Communication India Private Limited for Rs. 58,470 Lakhs.
RELATED PARTY TRANSACTIONS (RPTs)
All RPTs which were entered in to, during the financial year were on an armâs length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement exhibiting details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. A Policy on RPTs as approved by the Board is uploaded on the Companyâs website at https:// www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Groupâs synergies, state of the art products and technologies, competencies and â3Mâ brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at armâs length basis. None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
The RPTs are necessary, normal to business, play a significant role in the Companyâs business operations and also form integral part of the Companyâs business. An analysis of all the RPTs entered into/by the Company and the basis of charge was undertaken through a third-party professional firm.
The Company has already taken approval of the Members for all material RPTs for the estimated transactions for Three (3) financial years starting from April 1, 2020 to March 31, 2023 at the Annual General Meeting held on August 26, 2020. Form No. AOC-2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure Eâ.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects under the focus areas of Education and Community. The Company prioritized its CSR allocations for FY 20-21 with greater focus on COVID related relief and support initiatives to meet the emerging and medium-long term impact of COVID-19. These projects have been selected, initiated, and implemented in accordance with the activities under Schedule VII of the Companies Act, 2013.
In FY 20-21, the Company supported a variety of education initiatives to help children across age groups with
learning support, digital learning aids and opportunities to continue their learning as schools were disrupted due to
the pandemic.
1. School Readiness Program (Anganwadi):
The Company continued to support the School Readiness (Born Learning) initiative in partnership with United Way of Bengaluru to transform Anganwadis under the ICDS program of Government of India to ensure well rounded development of children under the age of 6. This is a national program covering 130 centers and is improving the lives of over 15,000 children below the age of 6 years. Year 2 intervention to support 40 Anganwadi center activities at S. R. Nagar and Jigani Bangalore, Mumbai and Kolkata included activities to maintain the centers as per COVID guidelines, support the Anganwadi staff with virtual trainings, early child learning materials, community mobilization and training and capacity building activities. This program is working towards achieving the Sustainable Development Goal (SDGs) 4 to ensure inclusive and equitable quality education and promotion of lifelong learning opportunities for all.
2. Project Nanhi Kali: Educating the Girl Child:
The Company continued to sponsor the education of 2861 girl students in partnership with K.C. Mahindra Trust under Project Nanhi Kali. During FY 20-21, the program provided additional academic support to girl students from primary and secondary schools in the rural district of Ambegaon in Pune. Due to the pandemic, schools were shut and the after school academic support centers had to be discontinued during the lockdown. To ensure the girls stayed in touch with learning, tutors continued to keep in touch with the girl students via home visits and virtual sessions. Community centers re-opened in September 2020 on a rotational basis where stringent COVID-19 safety and hygiene protocols were followed. A personalized adaptive learning software called Mindspark was introduced via digital tablets and browser versions to help the students continue their learning digitally. The digital curriculum covered English, Math and the local language for girls from Grade 1-10 and science from Grade 6-10. Tutors were trained on the new software to facilitate learning and conduct assessments. A professionally designed sports curriculum was also integrated into the programme. All the girl students received new school bags with stationery items, pullover, raincoat and feminine hygiene material. As a result of these interventions, the program was able to ensure at least 81-83% average attendance amongst the girl students and maintain a high level of performance in foundational subjects i.e. 76% average marks in both English and the local language and 70% average marks in Math.
3. 3M-CII Young Innovators Challenge Awards Program:
During FY 20-21, the Company successfully completed the 7th edition of the Young Innovators Challenge in partnership with the Confederation of Indian Industry (CII). This program annually recognizes young innovators under 30 years of age with grants, recognition, and access to networks for their innovative ideas to impact society. The theme for the year was inclusive ideas for a resilient India which received over 2500 applications compared to 800 last year. Due to the pandemic, the end-to-end process from inviting applications, screening submissions to selecting the winners was done virtually. Virtual events, webinars and multiple coaching sessions served as a catalyst to raise the quality of participation. The felicitation of the winners was done virtually at the CII India Innovation Summit which was held virtually last year. The winning ideas demonstrated young peoplesâ ability to design innovative models and addressed many of the UN Sustainable Development Goals (SDGs) like Good Health and Well Being, Decent Work and Economic Growth, Zero Hunger and Reduced Inequalities.
4. District Library Program:
The Company initiated the district library program in partnership with United Way of Bengaluru as a part of its post COVID initiatives to build resilience in our communities. The program supports the Govt. of Karnatakaâs initiative to set up informal learning spaces in gram panchayat libraries. Due the pandemic, rural children have not had access to schools and learning has been disrupted. The objective of this initiative is to help build a reading habit amongst rural children by using both books and digital reading options. The program supports the setting up of 992 gram panchayat libraries across 5 districts in the state (Bangalore Rural, Mandya, Tumkur, Chikkaballapura and Ramanagara) Safe and hygienic spaces such as community halls, anganwadi centres, school rooms, arali-kattes etc. will be equipped with physical books and digital infrastructure including computers/laptop, Wi-Fi hotspots LCD projector and screens. The program is expected to impact over 6 lakh children in the age group of 6-14 years, including children with special needs.
In FY 20-21, the Company focused on community initiatives to strengthen healthcare infrastructure in the communities and also skill community health workers on health and hygiene practices.
1. Project Pahal: Skill Development of Community Healthcare Workers:
In line with the Governmentâs priorities towards preventive and promotive health, in 2018, the Company joined a consortium of various organizations including GE Healthcare, USAID, Hindustan Latex Family Planning Promotion Trust (HLFPPT) to participate in a skilling initiative to empower women community health workers. In FY 2020-21, the Company continued to support the last phase of the skilling program which helped to successfully meet the milestone of training 4400 women Community Health Workers across Uttar Pradesh and Rajasthan in health and hygiene practices focused on material and childcare. When the pandemic broke out last year, Govt. of India relied on the efforts of Community Health Workers, largely women to support Govt. healthcare initiatives especially around on how to curb the spread of infection in communities. The last leg of community health workers was trained virtually last year with a special COVID module. In December, a virtual closing event was organized with all partners of the program. As a knowledge partner, 3M brought in expertise in infection control and hygiene. The end line findings showed an increase in overall awareness of health and hygiene practices and health seeking behaviour amongst the communities.
2. Partnership with Sri Shankara Cancer Foundation Hospital to support Bone marrow transplant lab:
In FY 20-21, the Company, made a grant to the Sri Shankara Cancer Foundation Hospital, Bangalore towards a range of medical equipment to support the new Bone Marrow Transplant lab at the hospital. The Bone Marrow Transplant lab will be able to provide this essential life-saving treatment at a much lower cost than normal operations and provide international standard treatment to patients in India, especially amongst the poorer sections of society. The Sri Shankara Cancer Foundationâs work includes research and development to reduce the number of cancer patients in urban and rural areas through prevention, early detection and awareness.
3. Providing diagnostic and preventive healthcare access to remote communities:
The Company committed to fund the Smile on Wheels Mobile Healthcare Vans initiative implemented by Smile Foundation to provide access to diagnostic and preventive healthcare to underprivileged populations in 4 aspirational districts Siddharthnagar in Uttar Pradesh, Gaya in Bihar, Goalpara in Assam, and Balangir in Odisha. These districts were identified for their limited accessibility to Primary Health Care Services. Due to COVID-19, the existing Government healthcare delivery system has been overburdened. Each van will travel to the communities to provide preventive, promotive & curative services at their doorsteps. The vans will provide free OPD services medicines, identify, and refer symptomatic COVID-19 patients to govt. facilities, capacity building of Project Staff, create awareness on preventive practices and promote important Govt. healthcare initiatives. The vans will collectively provide approximately 156,000 treatments to the target group population over a span of 39 Months.
During the pandemic, the Companyâs community response towards COVID-19 was directed at programs that helped address the emerging needs of the communities. The Company deployed a number of programs to address the various challenges that arose as the pandemic evolved. During the lockdown, the Company deployed a cooked food and dry rations program to support stranded migrant workers near its manufacturing sites in Pune. As the impact of the lockdown worsened with several migrant populations losing their livelihood, the Company worked with multiple NGOs - Smile Foundation, Barefoot College and Bal Utsav to implement a national food security program to support vulnerable communities with a food and essentials kit across Bihar, Rajasthan, Karnataka, Assam, Tripura, Telangana and Gujarat. The Company also facilitated the implementation of a grant of USD 300,000 from 3Mgives with United Way India to support Govt. COVID hospitals and health departments in hotspot cities with critical medical equipment as the cases peaked during September-October last year.
The Annual Report on CSR activities is annexed herewith as âAnnexure Fâ.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top Ten (10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 8.50 Lakhs or more per month respectively is annexed herewith as âAnnexure G.â
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as âAnnexure Hâ.
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boardâs Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the financial year by the Regulators/Courts which would impact the going concern status of the Company and its future operations.
INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016)
There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financial year.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Mâs Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available on the website of the Company https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/. During the year, the Company reached out to employees through e-learning modules for creating greater awareness with respect to its Fair Competition Directive and Anti-Bribery and Corruption Directive. This has helped in achieving a high level of engagement and compliance among the employees.
The Company at its 29th Annual General Meeting (AGM) held on August 5, 2016 had appointed Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) as the Statutory Auditors for a term of Five (5) consecutive years from the conclusion of the 29th AGM to the conclusion of the 34th AGM subject to ratification of their appointment by the Members every year. The requirement of seeking ratification of the members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment) Act, 2017 with effect from May 7, 2018.
The first term of the appointment of Statutory Auditors expires at the conclusion of 34th AGM. Accordingly, in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the present Statutory Auditors of the Company, Messrs. BSR & Co. LLP would hold office until the conclusion of the ensuing AGM. They have expressed their willingness to be reappointed for a further term.
In terms of the provisions of Section 139(2)(b) of the Companies Act, 2013, an Audit Firm can be appointed for two terms of five consecutive years each. The Board of Directors at its meeting held on February 10, 2021, after considering the recommendations of the Audit Committee, had recommended the re-appointment of Messrs. BSR & Co. LLP., as the Statutory Auditors of the Company, for approval of the Members, to hold office for a period of Five (5) consecutive years, from the conclusion of the ensuing 34th AGM until the conclusion of 39th AGM to be held in the calendar year 2026. Messrs. BSR & Co. LLP., has submitted their confirmation to the effect that they continue to satisfy the criteria provided in Section 141 of the Companies Act, 2013 and that their appointment is within the limits prescribed under Section 141(3)(g) of the Act.
Members are requested to consider and approve the re-appointment of Messrs. BSR & Co LLP as the Statutory Auditors of the Company, to hold office for a period of Five (5) consecutive years, from the conclusion of the ensuing 34th AGM until the conclusion of 39th AGM and to fix their remuneration.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 28, 2021 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (ICAI Firm Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year 2021-22 at a remuneration of Rs. 475,000/- (Rupees Four Lakhs Seventy-Five Thousand only) plus taxes as applicable and out of pocket expenses at actuals.
The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the AGM.
Disclosure on Cost Audit: For the financial year ended March 31, 2020, the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was filed with the Ministry of Corporate Affairs on September 8, 2020 vide SRN: R54066907, well within the due/extended date. Messrs. Rao, Murthy & Associates, has confirmed the cost records for the financial year ended March 31, 2020 are free from any disqualifications as specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act.
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 appointed CS Parameshwar G. Bhat, Company Secretary in practice (FCS:8860, CP:11004) to undertake the Secretarial Audit of the Company for the financial year 2020-21. The Report of the Secretarial Audit Report is annexed herewith as âAnnexure I
SEBI vide its Circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019 has mandated all the Listed entities having its Equity Shares Listed on the Stock Exchange(s) to obtain the Annual Secretarial Compliance Report in the prescribed format from a Practising Company Secretary from the financial year ended March 31, 2019 onwards and the Report should be submitted to the concerned Stock Exchanges within 60 days from the end of the financial year and be included in the Annual Report. The Annual Secretarial Compliance Report from CS Vijayakrishna K T is annexed herewith as âAnnexure I-1 â which will be filed with the Stock exchanges within the prescribed time limit.
EXPLANATIONS IN RESPONSE TO AUDITORSâ QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors/Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year 2020-21, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed as âAnnexure Kâ. In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, the draft Annual Return in Form MGT 7 for the FY 2020-21 of the Company is available on the website of the Company at the link: https://www.3mindia.in/3M/en IN/company-in/about-3m/financial-facts-local/.
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/. Internal Complaints Committees (ICC) have been set up to redress complaints received regarding sexual harassment.
Status of Complaints during the FY2020-21:
1. Number of complaints of sexual harassment received in the financial year (April 1,2020 to March 31,2021): Two
2. Number of complaints disposed off during the financial year: Two
3. Number of cases pending for more than 90 days: NA
4. Number of workshops or awareness programmes carried out in connection with sexual harassment: Two
5. Remedial measures taken by the Company: Training & awareness, launching communication campaign in Q2 2021. These programs were specifically towards POSH regulations. Apart from this, we also cover POSH as a topic during new-employee onboarding programs
During the financial year, the Company took many initiatives to increase organizational capability and productivity to be value driven and future ready. As at March 31,2021, the Company had employee strength of 1,146 personnel.
During the financial year under review, the Company:
a. has not bought its own Shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Companyâs Shares, and,
b. has not issued any Shares to trustees for benefit of employees.
c. there was no revision in the Financial Statements.
ENVIRONMENT, HEALTH AND SAFETY
Global health and safety issues are prevalent in workplaces around the world. Creative innovation, technology, education, and collaboration are all critical if we are to tackle these human health and workplace safety concerns.
3M India Limited as a Company rooted in scientific exploration and the belief that every problem has a solution. Our success depends on interactions with many functions and at many levels, and a common understanding of the roles and responsibilities of all involved. We also embrace this commitment for our own operations, and to that end, will continue to take steps to protect our most important asset - 3M employees.
The Company has three (3) Manufacturing Plants in operation in India and all three plants have Environmental Management Systems certified to new ISO 14001: 2015 standard.
We at 3M are continuing to step up our leadership toward a more sustainable future - in our own operations, and in solutions for our customers. Sustainability is at the core of what we do at 3M. We are committed to improving our business, our planet, and every life.
3Mâs strategies for sustainable development encompass the pursuit of customer satisfaction and commercial success within a framework of environmental, social, and economic values. We are committed to complying with all applicable environmental requirements worldwide. Beyond compliance, the company continues to make significant investments to reduce the environmental footprint of our operations; and our products with sustainable attributes help customers reduce their environmental footprint and help to meet their Sustainability goals. Always, 3M believes environmental policy and regulations should be guided by science-based decision making.
3Mâs commitment
The challenges we must tackle for a sustainable future donât always follow clear rules or methods, but we know science can help tackle them. We are looking at ways to build purpose into leadership and talent development across the company, to recognize business opportunities that help the Company to grow while addressing societal issues. We cut across industries and silos to collaborate with suppliers, customers, and communities by working together toward building a more resilient world.
Raw materials: As more resources are consumed by an ever-growing population, it is imperative that product design and manufacturing processes consider the ecological impact during life and after end-of-life. 3Mâs edge begins with our well established safe ecological practices. Today, this is manifest in improved raw material usage, recyclable and sustainable innovations that we are empowering lives with.
Sustainability target for the Manufacturing plants were to reduce the Waste, Water and Energy w.r.t to 2015 Baseline numbers,
Waste generated at Plants is majorly sent for co processing in cement kilns thereby reducing the carbon footprint of the sites.
> Waste: Global target for waste has been Reduce manufacturing waste by an additional 10%, indexed to sales by 2025 compared to 2015 baseline. Efforts are made to reduce the waste generation at source. 3M Waste (NWI/ Quality Rejections/Production Waste) being used as alternate fuel in cement Industry This has helped 3M minimize the incineration process and maximize the co processing. This has enabled 3M to reduce the carbon footprint by 400MT of CO2 so far year. Waste is co-processed; it does not exist in the environment anymore and becomes part of Cement.
Waste generation reduction by 13.2%
> Water: Water usage is being monitored with meters and pressure gauges, the drop in pressure gauges readings indicate water leakage which are attended immediately to prevent wastages. The treated wastewater is reused in the restrooms and in gardening. Reduced flowrate nozzles are put for taps in rest rooms to ensure prudent usage of precious resource.
Water consumption reduced by 48.1%.
> Energy & climate: Climate change is here to stay unless we drastically alter consumption and adopt renewable alternate sources to power our needs and answer those of our customers. 3M is proactively partnering with customers to understand needs and answering them by employing 3M technology that promotes energy conservation, are greener and contribute to lower emissions.
Energy Consumption reduced by 26.1%
> Renewable Energy: Also 2 of the manufacturing plants are utilizing 26% share of its energy consumption through renewable energy.
As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public location. All plants have sewage/wastewater treatment plants and the treated water is recycled for cooling tower make and horticulture within the facilities.
The Company also embraces this commitment for its own operations, and to that end, 3M has a Water Stewardship Standard. 3M operations manage their water resources through compliance with regulatory requirements, conservation, and reuse, and reporting of water usage internally as well complying with law of the land requirement. Water resources include water intake, effluent water discharge and rainwater. All 3M locations have an effective Environmental management System (EMS) which includes the following elements like evaluating internal and external factors (e.g. new processes, regulatory changes, community water issues) that may impact the facilityâs current or future water management requirements and consideration of water conservation projects and practices as part of environmental footprint minimization efforts. Our responsibility begins at our manufacturing plants - from the way we save this scarce resource, to stringent manufacturing processes that strive to reduce consumption. If any facility falls under water stressed location (with an annual water use equal to or greater than 1,000 cubic meters) is required to understand its water use pattern, associated business risks and impact - and to work with local water resources to understand potential impacts on the surrounding area. Identified sites are also required to do water conservation planning, outlining current and future water conservation efforts.
The Company has undertaken various measures to ensure this precious resource is utilized with utmost care. All these efforts have helped the Company reduce the water consumption by 53% (KL/MT of production) compared to baseline of 2015 water sustainability goals.
> Raw water use reduction by replacing old pipelines. This is done by identifying the pressure difference though the gauges.
> Underground hydrant network of pipelines which had corroded and was difficult to trace to correct leakages have been brought above ground at all plants to eliminate the root cause.
> Increased Water meters monitoring at each source on a daily basis
> Effluent Treatment Plant is separated from the sewage treatment plant and treated sewage water has been used for gardening and replacing fresh water
> Drive conducted to identify and arrest leakages and leakage prone network. Remote taps plugged where frequent vigilance is not available.
> At few plants we have installed an online Ozonator for water disinfection for safe handling by gardeners
> We practice âZero water Dischargeâ, where treated water is utilized for inhouse garden and for other utilities.
> Drip irrigation lines added in the garden area which eliminate conventional flooding & better utilize available water quantity
> Water usage is monitored with meters and pressure gauges. Drop in pressure gauge readings indicate water leakage which are addressed to prevent wastage.
> Reduced flowrate nozzles are put for taps in rest rooms to ensure prudent usage of water.
Your Company continues to reinforce our commitment to leadership in safety and health. All three manufacturing plants have migrated to ISO 45001, a standard for management systems of occupational health and Safety with a goal to reduce the occupational injuries and diseases, including promoting and protecting physical and mental health. 3M India continues to forge ahead with our commitment to leadership in safety and health. Like in the prior year, 3M Corporation recognized CEO EHS award for Pimpri manufacturing facility, Bangalore plant received the prestigious Certificate of Commitment from Confederation of India Industries CII 2020, Four Star Rating.
At 3M India We strongly believe that, Safety Starts with every individual, while the behavior of every individual defines the culture of the organization.
All accidents and injuries are preventable
Everyone in organization is accountable for the safety performance
Safety and Health metrics are driven rigorously through tier level meetings which starts with Safety observations. Each plant has qualified Safety Officer and the representation of Employees at Plant safety committees includes both management and shop-floor employees and the meetings are chaired by the Plant manager. The High hazard activities (HHA) that are carried out at sites are driven through Risk and Prioritization (RAP) review approach. Hierarchy of controls focus firstly on elimination of the hazard followed by substitution, engineering controls and finally PPE with management along with management oversight and STOP work initiates ensures our employees perform the job in the safest possible manner. In addition to EHS risk analysis, we have a crisis plan for every single 3M plant. Although we hope to never use our Crisis Management Plans, itâs critically important that we have them in place, keep them up to date, and drill often to make sure everyone understands what to do should an emergency occur. We care about the safety of our people and communities around the world.
Your Company also deployed the EHS Cultural Excellence program rolled out by 3M Corporate. Leadership interaction and engagement with workers is a critical aspect of enhancing the culture of an organization. Through applying the 3M Execution Model and Manufacturing Excellence Principles in routine interactions with our workers, the intended outcome is a safer, healthier, happier, more trusting workforce. It is strongly believed that listening to our workers, focusing conversations towards high hazard activities and situations, and ensuring appropriate follow-up to concerns raised will ultimately result in reduced significant injuries and events. Safety in 3M is in the DNA.
The year 2020 also made a mark for new EHS Self-Assessment roll out at all manufacturing units which is required to be implemented by global 3M locations.
The 3M Environment, Health and Safety (EHS) Management Standard (EHS-MS) provides the basis to address EHS risks and compliance obligations applicable to all workers and their 3M operations. All 3M locations and workers must understand, manage, and mitigate their EHS risks and comply with all applicable 3M and government requirements. This approach utilizes a well-developed self-assessment process that is categorized into multiple elements addressing various areas and standards related to safety and health. 3M utilizes a variety of tools to manage risks from hazards in the workplace. Weâve used specialized tools successfully for a number of years in the areas of process safety, industrial hygiene, and ergonomics. Each of these disciplines uses a risk management approach to categorize hazard levels and define appropriate levels of control.
The other EHS framework programs which 3M follows are Ergonomics, Industrial hygiene, Process hazard management (PHM), Ventilation programs, Static Management plan, Combustible dust management, Safety trainings, Health and Wellness Programs which enables us to ensure better and safe work environment to all our employees.
All manufacturing units in India also embraced the Compliance & Audit Management & Metrics System (CAMMS) to comply with the regulatory requirements of the states and also of the EHS Management System of 3M.
All these efforts translate into the EHS metrics being achieved and notably there has been ZERO Lost Time injuries at any of the three manufacturing sites during this period under consideration.
Your Company believes in the philosophy that âyour health matters as much as your workâ. 3M is about collaboration as well as innovation, especially when it comes to employeeâs health. Thatâs why we offer employees and their family with resources and services to support your holistic health: physical, mental, and emotional.
1. Your Company committed to support its employees throughout the pandemic, we made collaboration with a third party for COVID 19 health package to support employees with 24 X 7 telehealth services to all employees and their families and also for Contingent workers. Home quarantine program of active surveillance, at home RTPCR sample collection, Home Care Kit dispatch during Lockdowns, Ambulance to support medical emergencies, hospital bed availability check, door delivery of medicines.
2. COVID Prevention Ambassadors were trained to ensure ideal behaviors are implement and ensure Zero Close Contact at Workplace.
3. Influenza flu Immunization drive was conducted throughout the organization in collaboration with HR Benefits team.
4. Hepatitis B Vaccination has been imparted to all the ERT emergency response team members in 3M India Sites.
5. Respiratory Program was implemented throughout the organization for employees with detailed Electronic Respiratory Medical Evaluation (ere), Respiratory Fit Test (RFT) and online training to ensure they understand the use and care of respirators during pandemic. Fit testing activity was done across 42 cities during pandemic through a third-party service provider.
Customer expectation shifted since COVID-19, the Company relies on scientific analysis and recommendations on how to prevent COVID-19 spread in your plant when making team-based decisions on the health and safety of its employees. The promotion of ZERO CLOSE CONTACT Concepts through leadership was crucial and was carried out in letter and spirit throughout the organization. 3M India adopted the leadership top down approach which motivated and strengthened a positive culture during this pandemic journey through foresight and proper planning. Like personal adversity builds character, a crisis enhances the bonding of team and culture within the company when leaders do the right thing. This type of leadership shows ârespect for every individual,â which is the first guiding principle for Operational Excellence that yields a high performing culture with long-term profits.
In the 2020, As the pandemic situation continued to evolve across India and the world, it became all the more important to keep its facilities safe from COVID. While we care for others, protecting our key asset is main, the 3M employee. 3M Corporate had foresight and devised a pandemic preparedness plan for implantation at all facilities. Project Zero was initiated as an effort to prevent the spread of COVID-19, with a goal of Zero work colleagues identified as close contacts of confirmed COVID-19 cases. Winning Behaviors with GROW Inside Out Coaching was extensively used for Breakthrough Performance in our EHS Culture. The EHS Culture excellence model of See and Act was used to drive the ideal behaviors during Pandemic through Project Zero GROW model. Technology is important in achieving excellence and EHS is no exception to this.
3M Corporate developed an online platforms where all the protocols pertaining to COVID-19 management were put in one place for all the 3M subsidiaries to follow, this gave 3M India an upper hand in preparing the facilities in line with global prevailing control systems for mitigating the risk of COVID-19.
3M believes in the hierarchy of controls which we always follow when it comes to safety and Pandemic was no different:
⢠At 3M India for conducting high quality EHS Leadership interactions with workers, capturing these discussions in the See & Act tool in EHS 360.
⢠Power BI is extensively used for Trend charts of EHS, giving more time for EHS engineers to be on shopfloor.
⢠A virtual platform was created to learn from best practices in other 3M subsidiaries.
⢠When the facilities were about to reopen we ensured Return to Work Protocols were implement through use of technology, Various Skype and Microsoft team broadcasts sessions were held on weekends to ensure employeeâs families trained on the protective measures one needs to take during covid-19 while at home and outside. It was important this message has to reach people who do not use laptopâs, so, links were created, and employees were reached through every available social media platform.
⢠An Online mobile application was developed to perform the daily self-assessment by the employees with all controls of data privacy in place, we call it 3M SPANDAN. Where employees, who come to any 3M India facilities take the Self-assessment check on a daily basis and obtain a Visual Health Code. Health code shall indicate to the 3M management the list of employees who will be arriving to work on that day. It will also indicate the employees who will be working from home based on the self-assessment results. This helps us in identifying any high-risk employee and appropriate control measures are initiated.
⢠Your Company was featured in Forbes India publicationâs âUltimate 120â list which honoured companies and individuals who took the lead and performed under challenging conditions due to COVID-19.
⢠3M Indiaâs coating technology (3M⢠Scotchkote⢠Poly-Tech Exp-RG 700 Solar Heat Reflective Coating) was honoured as amongst Fast Companyâs World Changing Ideas of 2020.
⢠Two women leaders from your Company were recognized by external bodies for their professional achievements. The Companyâs CFO was recognized as the Best Woman CFO 2020 at the 4th edition of Businessworld Best CFO Summit & Awards for outstanding performance and leadership. The Companyâs General Counsel, was awarded the Women in Law excellence award 2021, instituted by the Legal Era, Legal Media Group which recognizes leadership, innovation, and achievements of women lawyers.
⢠The Companyâs local product packaging designs for 3M⢠Conspicuity tape, Command Hook promotional pack & Scotch-Brite® broom were recognized for the Indiastar Packaging Awards, a national award for excellence in packaging, instituted by the Indian Institute of Packaging.
⢠Your Companyâs Bangalore Electronics City plant was recognized by CII (Confederation of Indian Industry) with a 4 Star Rating for its commitment to EHS Practices and was awarded with the âCertificate of Commitmentâ for the year 2020. This award category considered industries that excel in EHS practices and its implementation.
⢠The Companyâs Ranjangaon Plant received the CEO EHS Award, the highest honour across 3M for manufacturing sites that demonstrate performance excellence in environment, health, and safety.
⢠The Company has been recognized by key automotive customers for quality excellence through FY 20-21.
Your Directors thank and acknowledge with gratitude the co-operation, assistance and support received from the
Central Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers,
Vendors, Promoters of the Company, and all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by
every employee of the Company.
On behalf of the Board of Directors
Ramesh Ramadurai Mamta Janak Gore
Managing Director Whole-time Director &
Place : Bengaluru DIN: 07109252 Place : Dubai Chief Financial Officer
Date : May 28, 2021 Date : May 28, 2021 DIN: 08792863
Mar 31, 2019
To the Members of 3M India Limited,
The Directors have pleasure in presenting the Thirty Second (32nd) Annual Report of the Company. The Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2019 are prepared in compliance with the applicable provisions of the Companies Act, 2013 including Indian Accounting Standards. The audited standalone and consolidated financial statements together with the Auditorsâ Report thereon form part of the Annual Report.
FINANCIAL HIGHLIGHTS - Standalone and Consolidated (Rs. in Lakhs)
|
Particulars |
Standalone |
Consolidated |
||||
|
Year ended March 31, 2019 |
Year Ended March 31, 2018 |
% age increase / decrease (-) |
Year ended March 31, 2019 |
Year Ended March 31, 2018 |
% age increase / decrease (-) |
|
|
Revenue from Operations |
280,875.97 |
258,039.60 |
8.85% |
301,682.24 |
273,418.82 |
10.34% |
|
Of which -Export Sales |
2,696.81 |
1,627.92 |
65.66% |
3,046.68 |
2,382.43 |
27.88% |
|
Other Income, net |
3,283.16 |
4,361.54 |
-24.72% |
3,683.12 |
4,478.82 |
-17.77% |
|
Total Income |
284,159.13 |
262,401.14 |
8.29% |
305,365.36 |
277,897.64 |
9.88% |
|
Less: Expenditure |
230,116.35 |
210,058.45 |
9.55% |
248,123.58 |
223,557.68 |
10.99% |
|
Profit before Interest and Depreciation |
54,042.78 |
52,342.69 |
3.25% |
57,241.78 |
54,339.96 |
5.34% |
|
Less: Finance costs |
109.18 |
194.07 |
-43.74% |
112.26 |
202.92 |
-44.68% |
|
Less: Depreciation and amortization expense |
4,187.67 |
4,180.32 |
0.18% |
4,375.63 |
4,350.60 |
0.58% |
|
Profit before Taxation |
49,745.93 |
47,968.30 |
3.71% |
52,753.89 |
49,786.44 |
5.96% |
|
Less: Tax expense |
17,446.85 |
16,914.74 |
3.15% |
18,439.39 |
17,456.34 |
5.63% |
|
Profit for the year |
32,299.08 |
31,053.56 |
4.01% |
36,617.99 |
33,335.08 |
9.85% |
|
Less: |
||||||
|
Profit from discontinued operations |
- |
- |
- |
91.07 |
754.38 |
-87.93% |
|
Gain on disposal of discontinued operations |
- |
- |
- |
3,171.66 |
905.00 |
250.46% |
|
Tax expense of discontinued operations |
- |
- |
- |
959.24 |
654.40 |
46.58% |
|
Items that will not be re-classified subsequently to profit or loss |
(12.77) |
(26.25) |
-51.35% |
(6.37) |
(20.38) |
-68.74% |
|
Total Comprehensive income for the year |
32,286.31 |
31,027.31 |
4.06% |
36,611.62 |
33,314.70 |
9.90% |
DIVIDEND
Your Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy was uploaded at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/ and the same is also annexed herewith as âAnnexure Jâ.
The Company remains invested in India and sees significant tailwinds from policy and demand in several sectors including electronics where the Company has made its most recent investment through the acquisition of 3M Electro & Communication India Private Limited. The Company remains bullish on investments and growth expectations in India in near term as well as medium term helped by strong fundamentals in the economy and the Company sees itself implementing several initiatives and projects to leverage the same including CAPEX, manpower and related infrastructure. The Company therefore has decided to conserve and retain the earnings and is not proposing a dividend or transfer of any amounts to reserves.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA
TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, therefore, your Board does not propose to transfer any amounts to reserves.
INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURE
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statement of the Subsidiary Company in Form AOC-1 is provided as âAnnexure Lâ to this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review, the revenue from operations of 3M E&C increased to Rs. 20,913.04 Lakhs in the financial year 2018-19 compared to Rs.15,450.03 Lakhs in financial year 2017-18. The Profit before tax for the year financial year 2018-19 is Rs. 3,007.96 Lakhs as against Rs. 1,818.14 Lakhs in the financial year 2017-18. The Profit after tax for the financial year 2018-19 is Rs. 4,325.33 Lakhs as against Rs. 2,287.41 Lakhs in the financial year 2017-18.
Brief highlights of 3M E&C:
- The Electrical Business ventured in the extra high voltage segment by localizing the portfolio and leveraging technical and sales competencies. Your Company bagged several wins from utilities and industrial projects.
- Governmentâs approach to Mobility Transformation has paved the way for Automotive Electrification (AE). 3M is contributing to this by working with stakeholders engaged in AE, including automobile OEMs. A fully dedicated team has been set up which is working in collaboration with Auto OEMs, Design houses, Regulatory Bodies, Battery Manufacturers, EV charger manufacturer to bring about technical advancement in this space.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and Financial Statements of the Subsidiary Company for the financial year 2018-19 have also been placed on the website of the Company. http://solutions.3mindia. co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/.
STATE OF COMPANYâS AFFAIRS
The Indian economy continues to be a bright spot in the world with strong growth momentum and favorable indicators. The year 2018 saw several short-term headwinds in the macro economy - dipping inflation, farm distress, liquidity issues, Banking NPAs, etc. Tailwinds were seen in infrastructure, retail, ecommerce markets. India will continue to push the infrastructure agenda for the next several years to bridge the gap of rapid urbanization and quality of life in cities.
Your Company has continued its strong growth trajectory with consistent performance even in the face of short-term headwinds. The Company was able to do so because of its sharp focus on quality of business, portfolio prioritization, operational discipline and continued commitment to ethics and compliance. âCustomer firstâ continues to be at the core of everything that the Company does. Much like the financial year 2017-18, the efforts continue to focus around, and the Board is pleased to highlight that your Company:
- Geographical penetration: Has expanded presence with deeper penetration in Tier B & C cities which is the real driver of demand in India.
- Government and Infrastructure initiatives: Your Company has aligned with several national infrastructure initiatives through focused work on regulatory, helping in many cases to set national standards in areas such as safety.
- Channel Transformation: Has introduced several steps to improve channel health through simplified processes, professional management and rationalization.
- Market & Segment Growth: Has gained from strong performances in key growth market segments such as infrastructure, energy and consumer reflecting positive market trends.
- Winning through localization: Continues to participate and drive local manufacturing bolstered by robust new product introduction process and value addition.
The year 2018 saw the Company win several prestigious awards and garner industry recognitions in acknowledgment to performance. Your Company continues to go after bigger and bolder opportunities and strives to be a highly valued partner for customers.
The Board of Directors at its meeting held on May 30, 2018 and shareholders through postal ballot on July 26, 2018 approved the investment in the entire equity share capital of 3M Electro & Communication India Private Limited. The investment was completed on December 27, 2018 for a value of Rs. 58,470 Lakhs. The above business combination is a common control transaction and accordingly has been accounted for using the pooling of interest method with effect from April 1, 2017. 3M India Limited acquired net assets of Rs. 9,188 Lakhs resulting in an adjustment of Rs. 49,282 Lakhs in consolidated total reserves. 3M Electro & Communication India Private Limited became a 100 % Subsidiary of the Company with effect from December 27, 2018.
The Company on a standalone basis registered an overall turnover growth of 8.85% at Rs. 280,875.97 Lakhs for the financial year ended March 31, 2019 compared to Rs. 258,039.60 Lakhs in the previous financial year. The Profit before Interest and Depreciation is Rs. 54,042.78 Lakhs compared to Rs. 52,342.69 for the previous financial year. Profit before Tax is Rs. 49,745.93 Lakhs compared to Rs. 47,968.30 Lakhs for the previous financial year. The operating margin for the current year is 19.02% compared to 19.95% for the previous financial year. Total Comprehensive Income is Rs. 32,286.31 Lakhs compared to Rs. 31,027.31 Lakhs for the previous financial year. Portfolio prioritization, operational productivity and lower material costs increased the profitability at all levels for the financial year under review. Export Sales is Rs. 2,696.81 Lakhs for the financial year ended March 31, 2019 compared to Rs. 1,627.92 Lakhs in the previous financial year, an increase of 65.66%, due to increase in demand in global market.
The Industrial business grew by 4.90%; Health Care business grew by 6.60%: Safety and Graphics business grew by 7.91%; Consumer business grew by 11.22% and Energy business grew by 36.01%.
The EPS (Basic and Diluted) of the Company for the financial year 2018-19 was Rs. 286.72 per Share as compared to Rs. 275.66 per Share in the previous financial year, a growth of 4.01%. Detailed analysis of the performance has been discussed in the Managementâs Discussion and Analysis Section of the Annual Report.
Segment Change from April 1, 2019:
3Mâs new Business group re-alignment was announced re-aligning from 5 (five) business groups to 4 (four). The new Business Groups are Safety and Industrial Business, Transportation and Electronics Business, Health Care Business and Consumer Business. This was a key first step for the Company in advancing 3M into the future and strengthen our ability to meet the fast-moving needs of the global customers and markets. The new alignment is designed to leverage the Companyâs business transformation progress, accelerate growth and deliver greater operational efficiencies.
Your Company has also aligned the organization to the new Business Groups and position the organization for the future leading the local execution of go-to-market plans, building on strong relationships with customers and channel partners and representing the voice of customer for our markets.
CONTRIBUTION TO EXCHEQUER:
During the financial year 2018-19, the Company has paid various taxes on account of its business/operation viz., VAT & CST, SGST, CGST, IGST, Direct Taxes and Customs Duty amounting to Rs. 72,938 Lakhs in aggregate.
INVESTMENTS:
Capital Investments during the financial year 2018-19 is Rs. 3,084.21 Lakhs (Net of capital work-in-progress and capital advances) (201718: Rs. 1,641.10 Lakhs).
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as âAnnexure Aâ.
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as âListing Regulationsâ) along with Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is annexed as âAnnexure Bâ.
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as âAnnexure Câ and forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015.
EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of Rs. 10/- each. The Authorized/Issued/Subscribed and fully paid-up Share Capital as at March 31, 2019 is Rs. 11,26,50,700 (divided into 1,12,65,070 Equity Shares of Rs. 10/- each).
During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the financial year 2019-20 to National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Companyâs Equity Shares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Based on the recommendations of the Nomination and Remuneration Committee, the Board at its Meeting held on October 30, 2018 appointed Ms. Sadhana Kaul (DIN: 02589934) as Additional Director of the Company categorized as Non-Executive Non-Independent Director with effect from October 31, 2018 and she will hold office till the Annual General Meeting to be held on August 14, 2019. Accordingly, a resolution seeking appointment of Ms. Sadhana as a Director of the Company is included in the Notice convening the Annual General Meeting. Details of Ms. Sadhana are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends her appointment as Director of the Company. The Board once again welcomes Ms. Sadhana Kaul as a Director of the Company.
Mr. Albert C Wang (DIN: 05234667), Non-Executive Non-Independent Director resigned as Director of the Company from the closing hours of August 21, 2018 due to the change in global position and his appointment as General Counsel for Greater China. The Board places on record its appreciation for the contributions made by Mr. Albert Wang to the progress of the Company during his tenure as Director.
Based on the recommendations of the Nomination and Remuneration Committee and performance evaluation carried out on February 12, 2019, the Board at its Meeting held on May 28, 2019 has appointed Mr. Biren Gabhawala (DIN: 03091772) as an Additional Director from August 5, 2019 categorized as Non-Executive Director and will hold office till the Annual General Meeting to be held on August 14, 2019.
Further, Mr. Biren Gabhawala (DIN: 03091772) has also been proposed to be appointed as an Independent Director with effect from August 14, 2019 for second term since his first term ends on August 4, 2019. Accordingly, a Special Resolution seeking re-appointment of Mr. Biren Gabhawala as Independent Director of the Company is included in the Notice convening the Annual General Meeting. Details of Mr. Biren Gabhawala are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his appointment as Director and appointment as an Independent Director of the Company for the second term.
Mr. Jongho Lee (DIN: 06720950) will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. The details of Mr. Jongho Lee are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
Based on the recommendations of the Nomination and Remuneration Committee, subject to the requisite approvals from the Members and the Central Government, the Board at its Meeting held on May 28, 2019 has appointed Mr. Ramesh Ramadurai (DIN: 07109252), Director of the Company, as Managing Director of the Company for a period from June 1, 2019 to February 12, 2022 (till the date of his superannuation) in place of Ms. Debarati Sen. The Board of Directors welcomes Mr. Ramesh Ramadurai as Managing Director to the Board. The details of Mr. Ramesh Ramadurai are furnished in the Explanatory Statement to the Notice convening the Annual General Meeting. The Board recommends his appointment. He will be a Key Managerial Personnel of the Company from June 1, 2019.
Ms. Debarati Sen (DIN:07521172) shall cease to be the Managing Director of the Company from the closing hours of May 31, 2019 consequent upon her appointment as Vice President and General Manager in Abrasives Systems Division, Safety and Industrial Business Group and will be based out of St. Paul, USA. The Board expresses its deep appreciation of the valuable contributions made by Ms. Sen during her tenure as Managing Director of the Company to the progress of the Company. Ms. Debarati Sen will continue as Non-Executive Director of the Company from June 1, 2019.
As at the financial year ended March 31, 2019, Ms. Debarati Sen, Managing Director, Mr. B.V. Shankaranarayana Rao, Whole-time Director, Ms. Mamta Janak Gore, Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations. All the Independent Directors have also confirmed under Regulation 16(b) of SEBI (LODR) Regulations, 2015 that they are not Non-Independent Director of another Company on the Board of which any Non-Independent Director of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE YEAR
During the financial year ended March 31, 2019, four (4) Meetings of the Board were held. The date and number of Meetings attended by each Director / Committee Member along with other Committee Meetings details are furnished in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31, 2019, the Audit Committee of the Company consisted of three (3) Non-Executive Independent Directors and one (1) Non-Executive Director and all of them have financial and accounting knowledge. The Members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan, and Mr. Jongho Lee. The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed on the website at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/. The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI. Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as âAnnexure Dâ
REMUNERATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding / Subsidiary Companies.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Companyâs Internal controls is aligned to Global 3Mâs internal control over financial reporting which are based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Controls â Integrated Framework (2013). The internal controls framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal controls procedures. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
DISCLOSURE REGARDING FRAUDS
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board.
DEPOSITS
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013.
RELATED PARTY TRANSACTIONS (RPTs)
All Related Party Transactions (RPTs) which were entered in to, during the financial year were on an armâs length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement exhibiting details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. A Policy on RPTs as approved by the Board is uploaded on the Companyâs website at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/ information/corporate/financial-facts/summary/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Groupâs synergies, state of the art products and technologies, competencies and â3Mâ brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at armâs length basis.
The RPTs are necessary, normal to business, play a significant role in the Companyâs business operations and also form integral part of the Companyâs business. An analysis of all the RPTs entered into / by the Company and the basis of charge was undertaken through a third-party professional firm.
The Company has already taken approval from the Shareholders for all material RPTs for the estimated/proposed transactions for three (3) financial years starting from April 1, 2017 to March 31, 2020 at the Annual General Meeting held on August 10, 2017. Form No. AOC- 2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure Eâ.
CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Community and Environment. These projects are in accordance with Schedule VII to the Companies Act, 2013.
Education:
- School Readiness Program (Anganwadi)
The Company continued to support the School Readiness initiative in partnership with United Way of Bengaluru to transform Anganwadis under the ICDS program of Government of India to ensure well rounded development of children under the age of 6, to be ready for school. This is a national program covering 130 centers and is improving the lives of over 11,000 children below the age of 6 years. In its second year of intervention, during FY 2018-19, the program expanded its activities in Anganwadi centers in 7 cities - Bangalore, Pune, Chennai, Delhi, Kolkata and Ahmedabad and Mumbai. The second year focused on stabilizing the program at all locations with uniform interventions and project achievements including the development of qualitative aspects such as learning outcomes and school readiness among children and community mobilization with the mothersâ groupsâ active engagement at Anganwadi centers. This program is working towards achieving the Sustainable Development Goal (SDGs) 4 which is to ensure inclusive and equitable quality education and promotion of lifelong learning opportunities for all.
- Project NanhiKali: Educating the Girl Child
The Company partnered with K.C. Mahindra Trust to sponsor the education of 2861 girl students from grades 1st to 5th in the rural district of Ambegaon in Pune, Kolkata and Gurgaon and secondary school students in Noida, Uttar Pradesh. The program targets first generation learners who attend Academic Support Centers at Government schools where the students improve their proficiency in English, Maths and the local language. NanhiKalis in secondary school are provided with tablets pre-loaded with audio-visual educational content to enhance their learning of concepts in Math and English. The program works to ensure that the NanhiKalis stay in school and improve their learning levels as they continue their education.
- 3M-CII Young Innovators Challenge Awards Program
The Company is committed to building a community of young innovators who are at the early stage of launching their next generation of sustainable solutions to solve key socio-economic problems. The 5th edition of the Young Innovators Challenge in partnership with the Confederation of Indian Industry (CII) was completed with an all-time high of 500 idea submissions. The four-stage selection process shortlisted 51 semi-finalists, 19 finalists and 7 winning ideas received grants from the Company to further their prototypes. The winners were felicitated at the 13th CII India Innovation Summit.
Community:
- Project Pahal: Skill Development of Community Healthcare Workers
In line with the Governmentâs priorities towards preventive and promotive health, the Company partnered with various organizations including GE Healthcare and IPE Global to participate in a skilling initiative to empower women community health workers. 400 women Community Health Workers from the Merry Gold Network were mobilized to participate in a 4-day training program with curriculum and teaching aids developed by Wipro GE and 3M India. The training batches were conducted in 14 cities and towns across 2 northern states in India - Rajasthan and Uttar Pradesh, over 6 months. The health care workers were on topics like Hand Hygiene, Wound Management and Cleaning/ Disinfection which were interwoven into the course curriculum. Members of the Professional Services & sales teams volunteered their time to conduct trainings to 15 batches of 400 community health workers (including trainers). The Company continued to support Phase 2 of the skilling program which is scaling up to train up to 6000 Community Health Workers across states such as Orissa, Uttar Pradesh, Rajasthan and Assam.
- 3M Young Change Agents for Road Safety Pilot Program
To harness the learning of children at a young age on road safety awareness, the Company embarked on a unique and innovative initiative to educate children with essential skills to become sensitive, safer road users, by-standers and safe drivers in the future. Moving away from classroom based, non-interactive program, the 3M Young Change Agents in Road Safety (Y-CARS) was launched as a pilot program in three schools in Pune. The program was introduced in partnership with the school management through a combination of workshops, road & road behavior observation and online modules. Through the program, children became observers of the road safety elements around their school and provided an audit of how safe the school is, through a guided process. The observations from the children were collated into a School Safe Zone Design which will be implemented through road safety improvements by the Company. At the end of this program, children received a certificate while taking a pledge as Young Change Agents for Road Safety committed to spread the learnings to their families and friends.
- Kerala & Kodagu Flood Rehabilitation Program
During the unprecedented floods that affected several parts of Kerala and Kodagu, the Company responded to the natural disaster with a rehabilitation program to support the families, especially children who suffered great losses due to the floods. Needs assessment was carried out at 10 Anganwadi centers in Aluva block, Ernakulam. Scope of work to refurbish these centers and bring them back to operation for children and families included interiors and exterior improvements, repair works, plumbing & electrical works, learning materials and mural artwork on the walls.
Sustainability:
- Water Conservation Project at Latur
Water conservation continued to be a strong theme for the Companyâs CSR efforts. The Company partnered with FIAT India Automobiles Private Limited to undertake Water Conservation program âJalyukt Shivar Abhiyanâ in drought-hit villages of Latur District (Nilanga Tahsil). In this 2nd year of implementation of the project, the Company initiated rainwater harvesting activities namely - desilting and widening of river tributaries and construction of cement nalla bunds at 7 sites covering 4 villages in Deoni, Tahsil, Milanga. The entire project involved the development of 25 sites impacting 17 villages.
- Rejuvenation of Lake Singasandra
To address the issue of rapid depletion of water bodies in the city of Bangalore, the Company supported the rejuvenation of one of the many lakes in the city - Singasandra Lake, situated in Bommanahalli Zone, in Singasandra, Bengaluru and spread over 11 acres. The state of the lake, before the intervention was left wanting in many ways. Lake restoration activities were taken up in partnership with United Way of Bengaluru and BBPM. The rejuvenation activities included ensuring that the lake was free from garbage, effluents and other pollutants, thereby restoring water quality and the aquatic species. Solar lamps, benches, waste bins including e-waste bins have been installed around the lake. Over 5000 bio-diverse saplings (A mix of medicinal species and herbs such as Vasaka, Nirgundi, Turmeric, Ginger, Lucky, Aloe Vera, Mehandi, etc.) were planted to increase the flora around the lake. Five full-time gardeners were deployed and are working to maintain the lake environment. Increase in the birdlife visiting the lake has been observed. To increase community ownership, a lake committee consisting of community members was formed with engagement activities including a Plog Run (picking up plastic waste as one runs/ jogs), Kannada Rajyotsava, Kere Deepotsava and tree planting.
The Annual Report on CSR activities is annexed herewith as âAnnexure Fâ.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top ten(10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 80 Lakhs or more per month respectively is annexed herewith as âAnnexure G.â
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as âAnnexure Hâ.
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boardâs Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the year by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Mâs Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available on the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/ summary/
STATUTORY AUDITOR
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were appointed as the Statutory Auditor of the Company at the 29th Annual General Meeting held on August 5,2016 to hold office for a period of five (5) years from the conclusion of the 29th Annual General Meeting till the conclusion of the 34th Annual General Meeting to be held in 2021, subject to ratification of their appointment by the members at every intervening Annual General Meeting held thereafter.
The requirement of seeking ratification of the members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment)Act, 2017 with effect from May 7, 2018. Hence the resolution seeking ratification of the members for their appointment is not being placed at the ensuing Annual General Meeting.
SECRETARIAL AUDIT
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 appointed Mr. Vijayakrishna K.T, Company Secretary in practice to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Report of the Secretarial Audit Report is annexed herewith as âAnnexure Iâ.
SEBI vide its Circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019 has mandated all the Listed entities having its Equity Shares Listed on the Stock Exchange(s) to obtain the Annual Secretarial Compliance Report in the prescribed format from a Practising Company Secretary (PCS) from the financial year ended March 31, 2019 onwards and the Report should be submitted to the concerned Stock Exchanges within 60 days of the end of the financial year and be included in the Annual Report. The Annual Secretarial Compliance Report from Mr. Vijayakrishna K.T is annexed herewith as âAnnexure I-1â which was filed with the Stock exchanges within the prescribed time limit.
EXPLANATIONS IN RESPONSE TO AUDITORSâ QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year 2018-19, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form MGT 9 is annexed as âAnnexure Kâ
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
1. Number of complaints of sexual harassment received in the financial year (April 1, 2018 to March 31, 2019) : 2
2. Number of complaints disposed off during the financial year: 2
3. Number of cases pending for more than 90 days: None
4. Number of workshops or awareness programmes carried out in connection with sexual harassment: 3
5. Remedial measures taken by the Company:
- Counselling by Internal Committee to both the parties on professional code of conduct. Warning letter given to respondent.
- Leadership behavior implication for respondent and roles change for respondent to prevent interaction with each other.
- Respondent (contingent worker) was not deputed on 3M premises and the contract agency was briefed on the same. Counselling given to the complainant.
HUMAN RESOURCES
During the financial year, the Company took many initiatives to increase organizational capability and productivity to be value driven and future-ready. As at March 31, 2019, the Company had employee strength of 1377 personnel.
COST AUDIT
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 28, 2019 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2020 on a remuneration of Rs. 475,000/- plus taxes as applicable and out of pocket expenses at actuals. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
Disclosure on Cost Audit: For the financial year ending March 31, 2018, the due date of filing the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was September 27, 2018 and the same was filed with the Ministry of Corporate Affairs on August 23, 2018 vide SRN H03455847.
OTHER DISCLOSURES
During the year under review, the Company:
a. has not bought its own shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Company shares, and,
b. has not issued any shares to trustees for benefit of employees.
ENVIRONMENT, HEALTH AND SAFETY
Global health and safety issues are prevalent in workplaces around the world. Creative innovation, technology, education, and collaboration are all critical if we are to tackle these human health and workplace safety concerns.
For decades, 3M has had entire business divisions focused on creating products and services for human health, protection, security, and safety. The Company is committed to helping improve the health and safety of people world-wide.
The Company also embraces this commitment for its own operations, and to that end, will continue to take steps to protect the most important asset - 3M employees.
Environment:
The Company has three (3) Manufacturing Plants in operation in India and all three plants have Environmental Management Systems certified to new ISO 14001: 2015 standard.
Your Companyâs Management is continuing to step up the leadership towards a more sustainable in its own operations, and in solutions for the customers. Sustainability is at the core of what the Management does at 3M and is committed to improving the business, the planet and every life.
3Mâs strategies for sustainable development encompass the pursuit of customer satisfaction and commercial success within a framework of environmental, social, and economic values. The Company is committed to complying with all applicable environmental requirements worldwide. Beyond compliance, the Company continues to make significant investments to reduce the environmental footprint of our operations; and the products with sustainable attributes help customers reduce their environmental footprint and help to meet their Sustainability goals. Always, 3M believes environmental policy and regulations should be guided by science-based decision making.
Sustainability Goals which the Company is now pursuing reflect a heightened commitment to going beyond compliance and thinking holistically about how the operations and products affect the world and every life in it. For the 18th consecutive year, 3M was selected as a member of the Dow Jones Sustainability Index, a global stock index that recognizes and tracks the performance of leading Sustainability-driven companies worldwide. And 3M India Plants are contributing and meeting the targets of this global goals.
Sustainability target for the Manufacturing plants were to reduce the Waste, Water and Energy with respect to 2015 Baseline numbers:
- Waste generation reduction by 20.91%
- Water consumption reduced by 57.01%
- Energy Consumption reduced by 28.11%
- Also 2 of the manufacturing plants are utilizing 24% share of its energy consumption through renewable energy.
- Waste generated at Plants is majorly sent for co processing in cement kilns thereby reducing the carbon footprint of the sites.
All plants have sewage / waste water treatment plants and the treated water is recycled for cooling tower make and horticulture with in the facilities. The plants have also installed rain water harvesting systems to divert the rain water for ground water recharging. With the approval from local Pollution Control Boards, plants continued sending non-hazardous waste to cement companies to generate energy. As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public location.
Health and Safety:
The Company continues to reinforce our commitment to leadership in safety and health. All three manufacturing plants have health and safety management systems certified to OHSAS 18001: 2007. Your Company continues to forge ahead with our commitment to leadership in safety and health. Like in the prior year, 3M Corporation recognized two of our manufacturing facilities - Ranjangaon and Electronics city plants, with the highest award for safety excellence - The CEO Award, for consistently upholding safety standards.
Your Company strongly believe that, Safety starts with every individual, while the behavior of every individual defines the culture of the organization.
- All accidents and injuries are preventable
- Everyone in organization is accountable for the safety performance
Safety and Health metrics are driven rigorously through tier level meetings which starts with Safety observations. Each plant has qualified Safety Officer and the representation of Employees at Plant safety committees includes both management and shop-floor employees and the meetings are chaired by the Plant manager. The High hazard activities (HHA) which are carried out at sites are driven through Risk and Prioritization (RAP) review approach. Hierarchy of controls focus firstly on elimination of the hazard followed by substitution, engineering controls and finally PPE with management along with management oversight and STOP work initiates ensures the employees perform the job in the safest possible manner. In addition to EHS risk analysis, the Company has a crisis plan for every single 3M plant. Although the Company never hopes to use the Crisis Management Plans, it is critically important that the Company has them in place, keep them up to date, and drill often to make sure everyone understands what to do should an emergency occur. The Company cares utmost about the safety of our people and communities around the world
The 3M Global Safety and Health Plan (GSHP), which is part of 3Mâs Environmental, Health, and Safety (EHS) management system, is required to be implemented by global 3M locations. This approach utilizes a well-developed self-assessment process that is categorized into multiple elements addressing various areas and standards related to safety and health. 3M utilizes a variety of tools to manage risks from hazards in the workplace. The Company used specialized tools successfully for several years in the areas of process safety, industrial hygiene, and ergonomics. Each of these disciplines uses a risk management approach to categorize hazard levels and define appropriate levels of control.
The other EHS framework programs which 3M follows are Ergonomics, Industrial hygiene, Process hazard management (PHM), Ventilation programs, Static Management plan, Safety trainings, Health and Wellness Programs which enables us to ensure better and safe work environment to all the employees.
All these efforts translate into the EHS metrics being achieved and notably there has been no Lost Time injuries at any of the three manufacturing sites during this period under consideration.
The Company has led with passion and shared its expertise with the communities, through school outreach, activities with its employeesâ children and several awareness programs with the customers.
Supported by 3Mâs highly credentialed Technical trainers, the Company has partnered with industrial facilities across India to drive safety and build confidence amongst the end users through âSafety on Wheelsâ trucks. This program also offers various training sessions that would include a various Personal Protection Equipment (PPE) demonstrations (through hands on and Videos) on a variety of safety topics.
The Safety on Wheels which also known as Audhyogik Suraksha Rath targets to train over 1 million workers over next 3 years to build awareness and training about safety practices and personal protective equipment and to spread the word about the importance of worker safety across the nation. The Audhyogik Suraksha Rath have travelled across industrial clusters in the country educating more than 95,000 workers on the importance of workplace safety.
AWARDS AND RECOGNITION
- The Company was recognized by Outlook Business Outperformers, a listing by Outlook Business publication, of companies that have consistently delivered high performance. 3M India Limited was recognized for the 2nd consecutive year for stock return over Sensex over the last 5 years.
- The Company was amongst the Top 10 Companies in India by Earnings Per Share (EPS) trailing 12 months as per a compilation by MoneyControl.com.
- Your Company was recognized as amongst Forbes Indiaâs Super 50 Companies of 2017 for overall performance.
- The Companyâs Managing Director, Ms. Debarati Sen featured in Fortune Indiaâs annual list of Top 50 Powerful Women in Business for her leadership in strengthening 3Mâs position and brand in India.
- 3M Car Care was awarded Franchisor of the Year Award - Consumer Services for 2018 by Franchise Awards.
- The Companyâs manufacturing facility at Ranjangaon was awarded the Gold Award for Manufacturing Excellence by Frost & Sullivan
- The Company was recognized for Lean Six Sigma excellence at the CII 12th National Six Sigma Competition. Two projects presented under Transaction process and Discrete process categories respectively received special recognition.
- The Companyâs senior women leaders were recognized for Business Leadership among Women at the Future Woman Leader Summit & Awards 2018.
- The Company was recognized for overall performance in the areas of quality, cost, delivery, innovation by top customers in the automotive, utilities and construction sectors.
- The Companyâs manufacturing facility at Electronics city received 3M Corporate recognition for Quality achievement. This was the Companyâs 7th consecutive Corporate 3M recognition for Quality.
- The Company also received several accolades for excellence in lean six sigma, marketing, innovation and various support functions with several 3M Corporate and regional level awards.
ACKNOWLEDGEMENT
Your Directors thank and acknowledge with gratitude the co-operation, assistance and support received from the Central Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers, Vendors, Promoters of the Company and all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by every employee of the Company.
On behalf of the Board of Directors
Debarati Sen B.V. Shankaranarayana Rao
Place : Bengaluru Managing Director Whole-time Director
Date : May 28, 2019 DIN: 07521172 DIN: 00044840
Mar 31, 2018
To the Members of 3M India Limited,
The Directors have pleasure in presenting the Thirty First (31st) Annual Report of the Company together with the Audited Financial Statements for the financial year ended March 31, 2018.
FINANCIAL HIGHLIGHTS (Rs. in Lakhs)
|
Particulars |
Year ended March 31, 2018 (Audited) |
Year ended March 31, 2017 (Audited) |
%age Increase( )/ Decrease(-) |
|
Revenue from Operations |
258,039.60 |
245,784.93 |
4.99 |
|
Of which - Export Sales |
1,627.93 |
2,863.02 |
(43.14) |
|
Other Income, net |
4,361.54 |
4,946.63 |
(11.83) |
|
Total Income |
262,401.14 |
250,731.56 |
4.65 |
|
Less : Expenditure |
210,058.45 |
208,907.67 |
0.55 |
|
Profit before Interest and Depreciation |
52,342.69 |
41,823.89 |
25.15 |
|
Less : Finance costs |
194.07 |
227.19 |
(14.58) |
|
Less : Depreciation and amortization expense |
4,180.32 |
4,674.74 |
(10.58) |
|
Profit before Taxation |
47,968.30 |
36,921.96 |
29.92 |
|
Less: Tax expense |
16,914.74 |
12,846.22 |
31.67 |
|
Profit for the year |
31,053.56 |
24,075.74 |
28.98 |
|
Items that will not be re-classified subsequently to profit or loss |
(26.25) |
(244.23) |
(89.26) |
|
Total Comprehensive income for the year |
31,027.31 |
23,831.51 |
30.19 |
DIVIDEND
The Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy is uploaded at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/summary/ and the same is also annexed herewith as âAnnexure Jâ.
The Company continues to invest in and perform in sectors with tailwinds while protecting and building its core businesses. The Company remains bullish on investments and growth expectations in India, and anticipates substantial manpower, CAPEX and promotional investments required to support growth aspirations. The Company is focused on its growth plan with a long term objective and is in the process of implementing a number of initiatives and projects including acquisitions as appropriate. As a result, it has been decided to conserve and retain the earnings and, therefore, not propose dividend or transfer any amounts to reserves.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA
TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, therefore, your Board does not propose to transfer any amounts to reserves.
STATE OF COMPANYâS AFFAIRS
The Indian economy has sustained a consistent macro-economic environment of lower inflation, fiscal discipline and improved current account balance. Stable economic growth continued with good momentum of reforms notably the introduction of GST and steps undertaken towards non-performing assets of banks and further liberalization of Foreign Direct Investment (FDI).
Your Company has maintained a strong and consistent performance, driving profitable growth in financial year 2017-18. Your Company leveraged portfolio diversity and operational discipline to deliver a market differentiated performance. Customer first and a growth mindset with razor-sharp focus on quality of business metrics defined your Companyâs performance. Business agility continued to align all our key initiatives which contributed to our growth and performance in this financial year.
- Geographical penetration: Your Company has expanded presence and reached the Western and Eastern regions of the country with focused business execution plans for deeper penetration and grew through access into Tier II and III cities.
- Government and Infrastructure initiatives: Your Company has aligned with several national initiatives around development of infrastructure, enhanced our participation with Government departments and bodies and closely collaborated with key ministries in areas such as safety, healthcare and entrepreneurship.
- Channel Transformation: Your Company has introduced several steps to improve channel health through simplified processes, professional management and rationalization.
- Market & Segment Growth: Your Company has gained from strong performances in key growth market segments such as infrastructure, energy and consumer reflecting positive market trends.
- Winning through localization: Your Company has drove value and expanded our participation through local manufacturing, robust new product introduction process and value addition
Several industry level awards and recognition from the companyâs customers provided further acknowledgement of performance. Your Company continues to go after bigger and bolder opportunities and be a valued partner for customers.
The Company registered an overall turnover growth of 4.99% at Rs. 2,58,039.60 Lakhs for the financial year ended March 31, 2018 compared to Rs.2,45,784.93 Lakhs in the previous financial year. The Profit before Interest and Depreciation is at Rs.52,342.69 Lakhs compared to Rs. 41,823.89 for the previous year. Profit before Tax is at Rs. 47,968.30 Lakhs compared to Rs. 36,921.96 Lakhs for the previous year. The operating margin for the current year is at 19.95% compared to 16.68% for the previous year. Total Comprehensive Income was at Rs.31,027.31 Lakhs compared to Rs.23,831.51 Lakhs for the previous year. Portfolio prioritization, operational productivity and lower material costs increased the profitability at all levels for the financial year under review. Export Sales was at Rs. 1,627.93 Lakhs for the financial year ended March 31, 2018 compared to Rs. 2,863.02 Lakhs in the previous year, a decrease of 43.14%,due to weakness in global oil and gas scenario which lead to project delays.
The Industrial business grew by 1.52%; Health Care business grew by 7.52%: Safety and Graphics business grew by 7.40%; Consumer business grew by 9.72% and Energy business grew by 15.73%.
The EPS (Basic and Diluted) of the Company for the financial year 2017-18 was Rs. 275.66 per Share as compared to Rs. 213.72per Share in the previous financial year, a growth of 28.98%. Detailed analysis of the performance has been discussed in the Managementâs Discussion and Analysis Section of the Annual Report.
GST:
The Government of India has announced the introduction of GST in the country with effect from July 1, 2017.The Company has taken all efforts and completed smooth migration into GST regime with no business interruptions.
CONTRIBUTION TO EXCHEQUER:
During the financial year 2017-18, the Company has paid various taxes on account of its business/operation viz., VAT, TDS, Sales Tax, State Excise, Excise, CENVAT, Customs and GST amounting to Rs. 62,425 Lakhs in aggregate.
INVESTMENTS:
Capital Investments during the financial year 2017-18 is Rs. 1,641.10 Lakhs (Net of capital work-in-progress and capital advances) (2016-17: Rs. 1,412.02 Lakhs).
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review .
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as âAnnexure Aâ.
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations, 2015 (hereinafter referred as âListing Regulationsâ) along with Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is annexed as âAnnexure Bâ.
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as âAnnexure Câ and forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI ( Listing Obligations and Disclosure Requirements), Regulations 2015.
EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of Rs. 10/- each. The Authorized/Issued/Subscribed and fully paid-up Share Capital as at March 31, 2018 is Rs. 11,26,50,700 (divided into 1,12,65,070 Equity Shares of Rs. 10/- each).
During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the financial year 2018-19 to National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Companyâs Equity Shares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board at its Meeting held on May 26, 2017 appointed Mr. Jongho Lee (DIN: 06720950), as Additional Director of the Company categorized as Non-Executive Director with effect from May 26, 2017 and the shareholders at the Annual General Meeting held on August 10, 2017 have also confirmed his appointment .
Mr. Albert C Wang(DIN: 05234667), Non-Executive Non-Independent Director will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The details of Mr. Albert Wang are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
The Board at its Meeting held on February 2, 2018 appointed Ms. Mamta Janak Gore as the Chief Financial Officer with effect from March 1, 2018 in place of Mr. Panagiotis Goulakos, who was transferred to 3M South East Europe Region as Finance Manager with effect from January 1, 2018.
As at the financial year ended March 31, 2018, Ms. Debarati Sen, Managing Director, Mr. B.V. Shankaranarayana Rao, Whole-time Director, Ms. Mamta Janak Gore, Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE YEAR
During the financial year ended March 31, 2018, four (4) Meetings of the Board were held. The date and number of Meetings attended by each Director / Committee Member along with other Committee Meetings details are given in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ending March 31, 2018, the Audit Committee of the Company consisted of three (3) Non-Executive Independent Directors and one (1) Non-Executive Director and all of them have financial and accounting knowledge. The members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan, Mr. Manuel B Pardo ( up to May 26, 2017)and Mr. Jong Ho Lee (from May 26, 2017). The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed on the website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/summary/. The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI, the Board has carried out an annual performance evaluation of its own performance, its Committee and the Directors individually. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as âAnnexure Dâ.
REMUNERATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding / Subsidiary Companies.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
3M globally is aligned to Companyâs internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control â Integrated Framework (2013). The internal control framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal control procedures. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
DISCLOSURE REGARDING FRAUDS
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board.
INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURE
The Company does not have any Subsidiaries/Associates/Joint Venture.
DEPOSITS
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013.
RELATED PARTY TRANSACTIONS (RPTs)
All Related Party Transactions (RPTs) that were entered into during the financial year were on an armâs length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement giving details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. A Policy on RPTs as approved by the Board is uploaded on the Companyâs website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/ information/corporate/financial-facts/summary/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Groupâs synergies, state of the art products and technologies, competencies and â3Mâ brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at armâs length basis.
The RPTs are necessary, normal to business, play a significant role in the Companyâs business operations and also form integral part of the Companyâs business. An analysis of all the RPTs entered into / by the Company and the basis of charge was undertaken through a third party professional firm.
The Company has already taken approval from the Shareholders for all material RPTs for the estimated/proposed transactions for three (3) financial years starting from April 1, 2017 to March 31, 2020 at the Annual General Meeting held on August 10, 2017.Form No. AOC-2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as âAnnexure Eâ.
CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education & Skills, Community and Sustainability. These projects are in accordance with Schedule VII to the Companies Act, 2013.
Education and Skills:
- The Company worked with NGO partners to inculcate the spirit of inquiry and innovative thinking among underprivileged children. The Company continued its 3-year partnership with the Agastya Foundation on the Mobile Science Lab initiative which helps disseminate scientific practical knowledge to 100 Government schools in 2 states in India (Karnataka and Maharashtra), sparking curiosity among 8500 children.
- The Company also made significant investments to support the Governmentâs Anganwadi initiative to enable children under the age of 6 to be ready for school. This program was expanded to 6 cities in India (Pune, Chennai, Delhi, Gurgaon, Ahmedabad, Mumbai) supporting the rejuvenation of close to 60 Anganwadi centers touching the lives of 6000 children. The program addresses the comprehensive growth and development, including the health, nutrition and learning development of the children, upgrading the infrastructure of the Anganwadiâs and the capacity building of Anganwadi staff as well as engagement with the mothers of the children.
- The Company is committed to building a community of young innovators with ideas to build a better nation capable of global leadership. The 4th edition of the Young Innovators Challenge in partnership with the Confederation of Indian Industry (CII) was completed to discover outstanding ideas from young innovator communities that either have a tech-edge (be it a product or application) or an inclusive process or a disruptive service. About 18 young innovators under the age of 30 were awarded grants from the Company to further their ideas to the next stage.
- In line with the governmentâs priorities towards preventive and promotive health, the Company partnered with various organizations including GE Healthcare and IPE Global to participate in a skilling initiative to strengthen community based health cadre by providing enhanced skilling and training to its women community health workers. This will enable strengthening outreach in communities and lead to the social and economic empowerment of women community health workers. The 3-month pilot program was initiated to train close to 600 community health workers across cities in Rajasthan. The Companyâs team of scientific advisors and key opinion leaders from the medical profession offer training sessions on the topic of infection control and hygiene as part of a 3-day training program focused on excellence in patient care practices.
Community:
- The Company continued its investment in the promotion of sustainable livelihood among 1500 rural women in Kanakapura taluk. The project helps enhance livelihoods of rural women by creating sustainable livelihoods opportunities amongst women through promotion of micro-entrepreneurial activities, capacity building and enhancing market linkages. The project has helped organize these women farmers into strong producer groups who are now working to become entrepreneurs manufacturing various kinds of millets, oils etc. which make their way into organic stores in the cities. This is a 3-year funding commitment with the first year investment towards machinery and infrastructure to support the agricultural activities. Year 2 funding was towards seed conservation and capacity building of sustainable agricultural practices and program operational expenses.
- To address water scarcity in water stressed areas in and around our manufacturing facility at Ranjangaon, the Company undertook a project to install close to 150 rooftop rainwater harvesting units in 2 villages - Bhabulsar Khurd and Bombarde. The rainwater collection units have been completed in all 150 households and will be ready to receive rains during the monsoon season in the FY2018-19. The system is a simple rain water collection unit which not only collects the water and stores for future use but is also purified by a filter to ensure clean water is collected which is then made accessible through a hand pump for the home. The filtered water can be used for drinking water and cooking purposes empowering the home owner with direct access to water.
Sustainability:
- Water conservation continued to be a strong theme for the Companyâs CSR efforts. The Company partnered with FIAT India Automobiles Private Limited to undertake Water Conservation program âJalyukt Shivar Abhiyanâ in drought-hit villages of Latur District (Nilanga Tahsil). In this project, the Company initiated rainwater harvesting activities namely - desilting and widening of river tributaries and construction of cement nalla bunds at 7 sites covering 4 villages in Deoni, Tahsil, Milanga. The entire project involves the development of 25 sites impacting 17 villages. The sites will be ready before the monsoon in financial year 2018-19.
To address the issue of rapid depletion of water bodies in the city of Bangalore, the Company invested in the rejuvenation of one of the many lakes in the city - Singasandra Kere, situated in Bommanahalli Zone, in Singasandra, Bengaluru. Spread over 12 acres, key activities to rejuvenate the lake include restoration of quality of water in the lake; free from garbage, effluents and other pollutants, revival of the eco-system in and around the lake by creating a micro climate for aquatic flora and fauna and improving the overall quality of air and bringing about community ownership through active volunteerism.
The Annual Report on CSR activities is annexed herewith as âAnnexure Fâ.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2)& (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top ten(10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 80 Lakhs or more per month respectively is annexed herewith as âAnnexure G.â
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as âAnnexure Hâ.
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boardâs Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the year by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Mâs Code of Conduct.T he details of the said Policy are stated in the Corporate Governance Report and also available on the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/ summary/.
STATUTORY AUDITORS
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were appointed as the Statutory Auditors of the Company, to hold office for a period of five (5) years from the conclusion of the 29th Annual General Meeting, subject to ratification of the appointment by the members at every subsequent Annual General Meeting. The Company is in receipt of a confirmation from the Auditors that, inter-alia, they are not disqualified for appointment under Section 141 and other provisions of the Act, Chartered Accountants Act, 1949 or the Rules and Regulations made thereunder.
As per the Companies (Amendment) Act, 2017 and rules made thereunder, with effect from May 7, 2018, the Central Government has notified the omission of the requirement related to ratification of appointment of auditors by members at every Annual General Meeting. Accordingly the resolution for ratification has not been placed before the Members.
SECRETARIAL AUDIT
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 appointed Mr. Vijayakrishna K.T, Company Secretary in practice to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Report of the Secretarial Audit Report is annexed herewith as âAnnexure Iâ.
EXPLANATIONS IN RESPONSE TO AUDITORSâ QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI).
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form MGT 9 is annexed as âAnnexure Kâ.
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
1. Number of complaints of sexual harassment received in the financial year(April 1, 2017 to March 31, 2018) : None
2. Number of complaints disposed off during the financial year : No complaints came in last year
3. Number of cases pending for more than 90 days : None
4. Number of workshops or awareness programmes carried out in connection with sexual harassment:
a. One classroom workshop conducted. (Electronic City Plant, December 1, 2017)
b. Online e-module training for all employees
5. Remedial measures taken by the Company - NA.
HUMAN RESOURCES
During the financial year, the Company took many initiatives to increase organizational capability and productivity so as to be value driven and future-ready. As at March 31, 2018, the Company had employee strength of 1,363 personnel..
COST AUDIT
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 30, 2018 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2019 on an remuneration of Rs. 430,000/- plus taxes as applicable and out of pocket expenses at actuals. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
Disclosure on Cost Audit: For the financial year ending March 31, 2017, the due date of filing the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was September 27, 2017 and the same was filed with the Ministry of Corporate Affairs on August 29, 2017 vide SRN G51587467.
OTHER DISCLOSURES
During the year under review, the Company:
a. has not bought its own shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Company shares, and,
b. has not issued any shares to trustees for benefit of employees.
ENVIRONMENT, HEALTH AND SAFETY
Environment: The Company has three (3) Manufacturing Plants in operation in India. All three (3) plants have Environmental Management Systems certified to new ISO 14001: 2015 standard. All plants have sewage / waste water treatment plants and the treated water is recycled for cooling tower make and horticulture with in the facilities. The plants have set up various measures to reduce, reuse and recycle the water where ever possible and there by bringing down the specific water consumption. Various energy conservation measures have also helped in reducing the specific energy consumption and thereby reducing the carbon foot prints. The plants have also installed rain water harvesting systems to divert the rain water for ground water recharging. With the approval from local Pollution Control Boards, plants continued sending non-hazardous waste to cement companies to generate energy. As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public location.
Health and Safety: All three (3) manufacturing plants have health and safety management systems certified to OHSAS 18001: 2007. All plants have dedicated safety officers supported by Corporate EHS team. Plant Safety Committees, which include shop floor employees and chaired by Plant managers, are in place and meet regularly to review issues impacting plant safety and employees health. High risk operations are controlled through the hierarchy of controls identified through 3Mâs risk prioritization matrix initiative. Key measures like conducting training programs on various health and safety issues including dealing with epidemics, ergonomics, industrial hygiene, process safety management, machine guarding, work safety, road safety, first-aid, manual handling etc. have been implemented. Regular health checkup of the plant employees is carried out. Every year plants celebrate safety month in March and conduct various safety awareness programs like safety quiz, drawing competition, slogan and hazard identification competition involving local industries, local schools and employee families. This year we conducted training for all the employees of Ranjangaon plant, as part of the Safety month Celebrations, on Selection, Usage and Maintenance of various Personal Protective Equipmentâs with a specific emphasis on the topics of Respiratory Protection, Hearing Conservation and the importance of Fit Testing as part of selection and training modules. Plants have full-fledged emergency communication and management systems including fire alarms, fire hydrants and fire sprinklers. Regular mock drills are conducted to check the adequacy and preparedness of these systems. The plants have a well-equipped first aid rooms to attend to immediate medical needs. During this period under consideration, there were no lost time accidents across three plants.
3M Indiaâs Team signed 3Mâs first ever âMemorandum of Understandingâ (MoU) with the Government of India. The agreement was signed on 12th September 2017 in New Delhi between 3M India and the DGFASLI (Directorate General of Factories Advisory Services and Labor Institute) in presence of the Union Minister for Labor & Employment (MOL), Mr. Suresh Gangwar. The MoU includes plans for two âSafety on Wheelsâ trucks to tour the northern and western part of the country covering 20 Indian states. The Safety on Wheels targets to train over 1 million workers over next 3 years in order to build awareness and training about safety practices and personal protective equipment and to spread the word about the importance of worker safety across the nation. The âSafety on Wheelsâ is a self-contained 40 feet, fully equipped, mobile training Truck to showcase and train the users on correct usage of Personal Protective Equipment. Supported by 3Mâs highly credentialed Technical trainers, the âSafety on Wheelsâ will partner with industrial facilities across India to drive safety and build confidence amongst the end users. The âSafety on Wheelsâ will offer various training sessions that would include a various PPE demonstrations (through hands on and Videos) on a variety of safety topics. The engagement and sponsorship of the Ministry of Labor and the Factories Inspectorate (DGFASLI) supports attendance on-ground in the industrial centers, as well as collaboration and cooperation with the local factories inspectors and the regional labor institutes.
AWARDS AND RECOGNITION
- The Business Standard conferred on 3M India, the Star MNC Award for Corporate Excellence at the Annual Business Standard Awards held in March 2018. The Company was recognized for its steady performance year on year and for having built its market position in India.
- The Company was recognized for overall performance in the areas of quality, cost, delivery, innovation and management by top automotive customers in India.
- The Companyâs Manufacturing facility at Ranjangaon was awarded the Gold Certificate for Manufacturing Excellence by Frost & Sullivan
- The Company received a National Level Appreciation award from the Confederation of Indian Industry (CII) as one of the âBest Energy Efficient Organizationsâ in India for driving several energy efficiency initiatives.
- 3M Car Care was awarded the India Car Care Solutions Aftermarket Leadership Award by Frost & Sullivan. 3M Car Care was awarded for successful penetration into the market especially in smaller towns with competitive strategy and product innovation leadership with a focus on sustainability and green solutions to reduce emission and water consumption.
- The Company received a Special Recognition Award for its new product introduction process in the category of new product development at the National Six Sigma Competition organized by the Confederation of Indian Industry (CII).
- The Companyâs Electronics City Plant was recognized by the Confederation of Indian Industry (CII) in their Kaizen and Lean competitions. Technical associates from the plant won the 1st Prize in the category: Competition for Operators at the CII Southern Region Kaizen Competition and the 2nd Prize at the National Lean Competition in the category - Deployment of Lean.
- Five entries from 3M India were awarded the India Star Award 2017 for Packaging Excellence by the Indian Institute of Packaging for excellence in package design, graphics and innovation in packaging.
- The Companyâs senior women leaders were recognized for Business & Science & Technology Leadership among Women at the Future Woman Leader Summit & Awards 2017.
- The Electronics City plant received 3M Corporate recognition for quality and manufacturing excellence with global awards for two projects - One for quality achievement and one for process technology excellence. This was the Companyâs 6th consecutive Corporate 3M recognition for Quality.
- The Company also received several accolades for excellence in lean six sigma, ethical code of conduct, marketing, innovation and various support functions with several 3M Corporate and International awards.
ACKNOWLEDGEMENT
Your Directors wish to thank and acknowledge with gratitude the co-operation, assistance and support received from the Central Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers, Vendors, Promoters of the Company and all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by every employee of the Company.
On behalf of the Board of Directors
Debarati Sen B.V. Shankaranarayana Rao
Place : Bengaluru Managing Director Whole-time Director
Date : May 30, 2018 DIN: 07521172 DIN: 00044840
Mar 31, 2017
REPORT OF THE BOARD OF DIRECTORS
To the Members of 3M India Limited,
The Directors have pleasure in presenting the Thirtieth (30th) Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended March 31, 2017.
FINANCIAL HIGHLIGHTS
Indian Accounting Standards (Ind AS):
The Company''s Financial Statements for the year ended March 31, 2017 are prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 1, 2015 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are effective for the interim Ind AS consolidated financial statements for the year ended March 31, 2017, be applied consistently and retrospectively for all fiscal years presented. All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the consolidated financial statements under both Ind AS and Indian GAAP as of the transition date have been recognized directly in equity at the transition date. Following are the working results as per Ind AS:
(Rs. in Lakhs)
|
Particulars |
Year ended March 31,2017 (Audited) |
Year ended March 31,2016 (Audited) |
%age Increase( )/ Decrease(-) |
|
Revenue from Operations |
2,45,784.93 |
2,22,375.81 |
10.53% |
|
Of which - Export Sales |
2,863.03 |
4,715.80 |
-39.29% |
|
Other Income, net |
4,946.63 |
1,783.31 |
177.38% |
|
Total Income |
2,50,731.56 |
2,24,159.12 |
11.85% |
|
Less: Expenditure |
2,08,907.67 |
1,88,731.21 |
10.69% |
|
Profit before Interest and Depreciation |
41,823.89 |
35,427.91 |
18.05% |
|
Less: Finance costs |
227.19 |
224.86 |
1.04% |
|
Less: Depreciation and amortization expense |
4,674.74 |
4,892.83 |
-4.46% |
|
Profit before Taxation |
36,921.96 |
30,310.21 |
21.81% |
|
Less: Tax expense |
12,846.22 |
10,834.05 |
18.57% |
|
Profit for the year |
24,075.74 |
19,476.16 |
23.62% |
|
Items that will not be re-classified subsequently to profit or loss |
(244.23) |
(59.59) |
309.85% |
|
Total Comprehensive income for the year |
23,831.51 |
19,416.57 |
22.74% |
DIVIDEND
The Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy is uploaded http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/ information/corporate/financial-facts/summary/ and the same is also annexed herewith as "Annexure L".
A healthy cash position in a high interest economy is seen as prudent and necessary to fund growth. The Company remains bullish on investments and growth expectations in India, and anticipates substantial manpower, CAPEX and promotional investments required to support growth aspirations. The Company is focused on its growth plan with a long term objective and is in the process of implementing a number of initiatives and projects. As a result, it has been decided to conserve and retain the earnings and, therefore, not propose dividend or transfer any amounts to reserves.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA
TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, therefore, your Board does not propose to transfer any amounts to reserves.
STATE OF COMPANY''S AFFAIRS
Your Company maintained a strong and consistent performance, both top line and bottom line in the FY 2016-17 while mitigating the impact in the marketplace from the recent demonetization drive. Your Company continued to focus on improving productivity while driving growth and competitive share. The main theme of our performance in this financial year was strengthening the agility in our business whether it was within our processes in the way we responded to our customers or in the way we pursued emerging growth opportunities. Business agility was reflected across our key initiatives which contributed to our growth and performance in this financial year.
- Stepping up our play in nation-building initiatives: We aligned with many of the national initiatives around development of infrastructure such as urban development, airports, roadways, mass rapid transportation, railways, municipal corporations and defense.
- Market & Segment Growth: We gained from strong performances in key growth market segments such as automotive & automotive aftermarket, safety, healthcare and small & medium enterprises reflecting positive market trends.
- Leveraging our diverse portfolio with customer-facing models: We developed newer business models driven by larger play in industrial, healthcare and consumer markets while expanding our consumer base through ecommerce.
- Managing our health of business and cash flow: We brought in razor sharp focus on driving our performance around key enterprise critical parameters (profitability, sales productivity and cash flow) aligned with the priorities of our Corporation''s drive towards efficient growth.
- Entering new geographies to expand our relevance: We expanded our presence and reach into Eastern and North Eastern States with focused business execution plans for deeper penetration.
Building a growth mindset was integral to executing the above five steps, while keeping our employees engaged and energized. This guided us to go after bigger, bolder and smarter opportunities in India.
The Company registered an overall turnover growth of 10.53% at Rs. 2,45,784.93 Lakhs for the financial year ended March 31, 2017 compared to Rs. 2,22,375.81 Lakhs in the previous year. The Profit before Interest and Depreciation was at Rs. 41,823.89 Lakhs compared to Rs. 35,427.91 for the previous year. Profit before Tax was at Rs. 36,921.96 Lakhs compared to Rs. 30,310.21 Lakhs for the last year. The operating margin for the current year was at 16.68% compared to 15.80% for the previous year. Total Comprehensive Income was at Rs. 23,831.51 Lakhs compared to Rs. 19,416.57 Lakhs for the previous year. Portfolio prioritization, operational productivity and lower material costs increased the profitability at all levels for the year under review. Export Sales was at Rs.2,863.03 Lakhs for the year ended March 31, 2017 compared to Rs. 4,715.80 Lakhs in the previous year, a decrease of 39.29%, due to weakness in global oil and gas scenario which lead to project delays.
The Industrial business grew by 9.91%; Health Care business grew by 15.37%: Safety and Graphics business grew by 14.46%; Consumer business grew by 10.56% and Energy business grew by 4.68%.
The EPS (Basic and Diluted) of the Company for the year 2016-17 was Rs. 213.72 per share as compared to Rs. 172.89 per share in the previous year, a growth of 23.62%. Detailed analysis of the performance has been discussed in the Management''s Discussion and Analysis Section of the Annual Report.
GST:
The Government of India has announced the introduction of GST in the country, most likely with effect from July 1, 2017. The Company has taken necessary steps to ensure smooth transition to GST regime. The Company has internally formed GST core committee & various sub committees representing all the stakeholders in this tax reform. The GST implementation preparedness actions are initiated and monitored on regular intervals. Your Company is taking all the efforts to ensure smooth migration into GST regime with no business interruptions.
CONTRIBUTION TO EXCHEQUER:
During the financial year 2016-17, the Company through its business contributed to various taxes viz., VAT, TDS, Sales Tax, State Excise, Excise, CENVAT and Customs close to Rs. 50,222 Lakhs in aggregate.
INVESTMENTS:
Capital Investments during the year 2016-17 were at Rs. 1,386.61 Lakhs (Net of capital work-in-progress and capital advances) (2015-16: Rs. 1,060.38 Lakhs).
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review .
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as "Annexure A".
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as "Listing Regulations") along with Certificate from Practicing Company Secretary regarding compliance to the Conditions stipulated under Chapter IV of the Listing Regulations is annexed as "Annexure B".
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as "Annexure C" and forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI ( Listing Obligations and Disclosure Requirements), Regulations 2015 .
EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of share, i.e. equity share with a face value of Rs. 10/- each. The Authorized/Issued/Subscribed and fully paid-up Capital as at March 31, 2017 was Rs. 11,26,50,700 (divided into 1,12,65,070 equity shares of Rs. 10/- each).
During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year 2017-2018 to National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Company''s equity shares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
At the Meeting of the Board held on February 9, 2017, based on the recommendation of the Nomination and Remuneration Committee, Mr. B.V. Shankaranarayana Rao(DIN: 00044840) has been re-appointed for a further period from April 1, 2017 to May 13, 2020 (till the date of his superannuation''s Whole-time Director of the Company. The details of Mr. Rao are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
Mr. Manuel B Pardo(DIN: 07125832) resigned as Director of the Company with effect from May 26, 2017 due to his appointment as Director -International Finance for Industrial Business in St. Paul, USA. The Board expresses its appreciation of the contributions made by Mr. Pardo during his tenure as Director of the Company.
The Board at their meeting held on May 26, 2017 appointed Mr. Jong Ho Lee (DIN: 06720950), as Additional Director of the Company categorized as Non-Executive Director from May 26, 2017. The details of Mr. Jong Ho Lee are furnished in the Explanatory Statement to the Notice of the Annual General Meeting pursuant to Section 102 of the Companies Act, 2013. The Board recommends his appointment.
Mr. Amit Laroya(DIN: 00098933), Non-Executive Non-Independent Director will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The details of Mr. Laroya are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
As at the financial year ended March 31, 2017, Ms. Debarati Sen, Managing Director, Mr. B.V. Shankaranarayana Rao, Whole-time Director, Mr. Panagiotis Goulakos (Panos), Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors of the Company under Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013 read with Listing Regulations. The same is annexed herewith as "Annexure D".
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE YEAR
During the financial year ended March 31, 2017, four (4) Meetings of the Board were held. The date and number of Meetings attended by each Director / Committee Member along with other Committee Meetings details are given in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As at the financial year ending March 31, 2017, the Audit Committee of the Company consisted of three (3) Non-Executive Independent Directors and one (1) Non-Executive Director and all of them have financial and accounting knowledge. The members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan (from May 27, 2016) and Mr. Manuel B Pardo. The Board has accepted all the recommendations of the Audit Committee during the year under review.
Mr. Jongho Lee has been appointed as a member of the Audit Committee in place of Mr. Manuel B Pardo with effect from May 26, 2017. NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed in the website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/summary/. The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI in January 2017, the Board has carried out an annual performance evaluation of its own performance, its Committee and the Directors individually. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as "Annexure E".
REMUNERATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding / Subsidiary Companies.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
3M globally is aligned to Company''s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Tread way Commission(COSO) in Internal Control â Integrated Framework (2013). The internal control framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal control procedures. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
DISCLOSURE REGARDING FRAUDS
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board.
INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURE
The Company does not have any Subsidiaries/Associates/Joint Venture.
DEPOSITS
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loan, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013.
RELATED PARTY TRANSACTIONS (RPTs)
All Related Party Transactions (RPTs) that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement giving details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. The policy on RPTs as approved by the Board is uploaded on the Company''s website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/ information/corporate/financial-facts/summary/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Group''s synergies, state of the art products and technologies, competencies and "3M" brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and / or its group companies at arm''s length basis.
As per the provisions of the Companies Act, 2013 and Listing Regulations, all RPTs require approval of the members by an ordinary resolution. Based on past trend, the transactions are likely to exceed 10% of the annual turnover of the Company as per the last Audited Financial Statements of the Company and may exceed the materiality threshold as prescribed under the provisions of Listing Regulations. Thus, in terms of Listing Regulations, these transactions would require approval of the members.
The RPTs are necessary, normal to business, play a significant role in the Company''s business operations and also form integral part of the Company''s business. An analysis of all the RPTs entered into / by the Company and the basis of charge was undertaken through a third party professional firm. Accordingly, the Board recommends for the approval of the members in terms of the provisions of Listing Regulations.
The Company proposes to seek the approval of the Shareholders for all material RPTs for the estimated/proposed transactions for three financial years from April 1, 2017 to March 31, 2020 and for the excess of the limits approved by the shareholders at the Annual General Meeting held on 5th August, 2016 of the transactions for the financial year 2016-17.The excess value of the RPTs are in the ordinary and normal course of business and on Arms'' Length basis and accordingly the Board recommends the Ordinary Resolution set forth in the Notice for the ratification / approval of the Members. Form No. AOC-2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of The Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure F".
CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Social Innovation, Women Empowerment and Sustainability. These projects are in accordance with Schedule VII to the Companies Act, 2013.
- Education: The Company worked with NGO partners to inculcate the spirit of inquiry and innovative thinking among underprivileged children. Your Company works with the Agastya Foundation on the Mobile Science Lab initiative which helps disseminate scientific practical knowledge to 100 Government schools in 2 states in India (Karnataka and Maharashtra), sparking curiosity among 20,000 children.
- Social Innovation: As a way to contribute to the innovation eco-system in the country, the Company supports young innovators in the age group of 18 to 30 years with an Incubation Fund and Awards Program, jointly with the Confederation of Indian Industries (CII). The program identifies unique innovations that can help solve social challenges in India. The award winners are offered grants by the Company to pursue their projects and develop prototypes for further development.
- Women Empowerment: The Company''s vision is to help develop leadership skills to empower underprivileged women though entrepreneurship and local governance. The Company works with two reputed NGOs in Bangalore to deliver a skills development program which is equipping more than 150 young women with the necessary skills to make them employable.
- Sustainability: In line with the overall objective of 3M India''s CSR initiative which is to engage in outcome-based corporate social responsibility programs that will impact and enrich the communities around the Company''s areas of operation, and to implement the parent Corporation, 3M Company''s global sustainable strategy, 3M India will support self -sustaining models to address the environmental & social sustainability needs of local communities.
The Annual Report on CSR activities is annexed herewith as "Annexure G" including the reasons for not spending the full amount for the year 2016-17.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top ten employees in terms of remuneration drawn during the year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 80 Lakhs or more per month respectively is annexed herewith as "Annexure H."
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as "Annexure I".
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the year by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistleblower Policy) for upholding 3M''s Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available on the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/ summary/.
STATUTORY AUDITORS
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were appointed as the Statutory Auditors of the Company, to hold office for a period of five (5) years from the conclusion of the 29th Annual General Meeting, subject to ratification of the appointment by the members at every subsequent Annual General Meeting. The Company is in receipt of a confirmation from the Auditors that, inter-alia, they are not disqualified for appointment under Section 141 and other provisions of the Act, Chartered Accountants Act, 1949 or the Rules and Regulations made there under. Accordingly, proposal for ratification of appointment of Statutory Auditors has been included in the Notice convening the Annual General Meeting.
SECRETARIAL AUDIT
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 appointed Mr. Vijayakrishna K.T, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2016-17. The Report of the Secretarial Audit Report is annexed herewith as "Annexure J".
EXPLANATIONS IN RESPONSE TO AUDITORS'' QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditor / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI).
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure K".
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
1. Number of complaints of sexual harassment received in the year(April 1, 2016 to march 31, 2017): 1
2. Number of complaints disposed off during the year: 1
3. Number of cases pending for more than 90 days: Nil
4. Number of workshops or awareness programmes carried out in connection with sexual harassment:
Three (3), in addition online modules are being assigned to new joinees.
5. Remedial measures taken by the Company: Respondent left the Company after investigation, counseling was done for both the parties.
HUMAN RESOURCES
During the year, the Company took many initiatives to increase organizational capability and productivity so as to be value driven and future-ready. As at March 31, 2017, the Company had employee strength of 1,373 personnel.
COST AUDIT
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its meeting held on May 26, 2017 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2018 on an remuneration of Rs. 430,000/- plus taxes as applicable and out of pocket expenses at actuals. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
Disclosure on Cost Audit: For the financial year ending March 31, 2016, the due date of filing the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was September 27, 2016 and the same was filed with the Ministry of Corporate Affairs on August 31, 2016 vide SRN G10337053.
OTHER DISCLOSURES
During the year under review, the Company:
a. has not bought its own shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Company shares, and,
b. has not issued any shares to trustees for benefit of employees.
ENVIRONMENT, HEALTH AND SAFETY
Compliance with relevant regulations and 3M Global Environmental, Health and Safety policies is an integral part of the Company''s operating philosophy and the Company stands committed to continually improve on these objectives. There was a considerable focus on improving Environment, Health and Safety during the period under review by the Company.
Environment: The Company has three (3) Manufacturing Plants in operation in India. All three (3) plants have Environmental Management Systems certified to ISO 14001: 2004. The Company is presently pursuing the implementation of new ISO 14001: 2015 standards. All plants have sewage / waste water treatment plants and the treated water is recycled for horticulture within the facilities. The plants have set up various measures to reduce, reuse and recycle the water where ever possible and there by bringing down the specific water consumption. Various energy conservation measures have also helped in reducing the specific energy consumption and thereby reducing the carbon foot prints. The Company''s Ranjangaon plant facility has installed 500KWp roof top solar power plant in a bid to increase the share of renewable energy usage and thereby reducing carbon foot prints. The plants have also installed rain water harvesting systems to divert the rain water for ground water recharging. With the approval from local Pollution Control Boards, plants have now started sending non-hazardous waste to cement companies to generate energy instead of in-house incineration and thereby reducing overall carbon foot prints by saving the part of the coal consumption of cement plants as well reducing fuel used to incinerate the material in house. As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public location.
Health and Safety: All three (3) manufacturing plants have health and safety management systems certified to OHSAS 18001: 2007. All plants have dedicated safety officers supported by Corporate EHS. Plant Safety Committees, which include shop floor employees and chaired by Plant managers, are in place and meet regularly to review issues impacting plant safety and employees health. High risk operations are controlled through the hierarchy of controls identified through 3M''s risk prioritization matrix initiative. Key measures like conducting training programs on various health and safety issues including dealing with epidemics, ergonomics, industrial hygiene, process safety management, machine guarding, work safety, road safety, first-aid, manual handling etc. have been implemented. Regular health checkup of the plant employees is carried out. Every year plants celebrate safety month in March and conduct various safety awareness programs like safety quiz, drawing competition, slogan and hazard identification competition. All plants have full-fledged emergency communication and management systems including fire alarms, fire hydrants and fire sprinklers. Regular mock drills are conducted to check the adequacy and preparedness of these systems. The plants have a well-equipped first aid rooms to attend to immediate medical needs. During this period under consideration, there were no lost time accidents across three plants. All three plants have received 3M CEO Safety Awards for completing two years without any lost time accident.
AWARDS AND RECOGNITION
- The Company was recognized as one of the Best Healthcare Brands in 2016 by the Economic Times (ET) publication. It was recognized for its contribution to the healthcare industry and strong brand presence in the Medical Device & Equipment segment. Best Healthcare Brands is an initiative from the Economic Times (ET) Best Brands Initiative to exclusively recognize the contributions made by healthcare brands in India.
- 3M Car Care was awarded the Franchisor of the Year 2016 by Franchise India, Asia''s largest franchise solutions Company. The award recognized Car Detailing as a unique category which is representative of the growing interest and penetration of a category that 3M Car Care has successfully created over the years in India.
- The Scotch-Brite® Twister Mop, an innovation in the home cleaning category developed in 3M India research lab, was awarded the global Red Dot Product Design Award, for its innovative wringing mechanism, durable materials used, and the comfort it guarantees. The Red Dot award is one of the most coveted design awards in the world.
- The Company was recognized by Honda Motorcycles & Scooters India for the New Part Development Award (2016-17), recognizing the Company''s deep customer engagement through innovation.
- The Company''s Electronics City Plant was recognized by the Confederation of Indian Industry (CII) in their Kaizen competition for the South Region. Two projects from the Electronics City plant won the 3rd place in the Associate category and the "Double Star Award" in the Supervisors Category respectively.
- The Electronics City plant received 3M Corporate recognition for quality and manufacturing excellence with global awards for two projects - One for quality achievement and one for process technology excellence.
- The Company''s plants at Electronics City, Ranjangaon and Ahmadabad received 3M Corporation''s CEO Health & Safety award for completing 2 years without any lost time injury.
- The Company also received accolades for excellence in marketing, innovation and support functions with several regional awards.
ACKNOWLEDGEMENT
Your Directors wish to thank and acknowledge with gratitude the co-operation, assistance and support received from the Central
Government, State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers, Vendors, Promoters of the Company and all other stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by every employee of the Company.
On behalf of the Board of Directors
Debarati Sen B.V. Shankaranarayana Rao
Place : Bengaluru Managing Director Whole-time Director
Date : May 26, 2017 DIN: 07521172 DIN: 00044840
Mar 31, 2014
To the Members of
3M India Limited
The Directors have pleasure in presenting to you their 27th Annual
Report of the Company with the Audited Accounts for the year ended
March 31, 2014. As notified by Ministry of Corporate Affairs (MCA)
Circular No. 1/19/2013-CL-V dated April 4, 2014, the Company has
followed the Companies Act, 1956, in respect of the report.
FINANCIAL RESULTS
The following are the working results:
(Rs. in Lakhs)
Particulars For the year ended For the year ended
March 31, 2014 March 31, 2013
(12 Months) (12 Months)
(Audited) (Audited)
Total Income (excluding
excise duty) 176,228.57 158,463.46
Of which - Export Sales 2,902.31 2,257.80
- Other Income 1,994.29 1,050.34
Less : Expenditure 163,144.31 146,362.30
Profit before Interest
and Depreciation 13,084.26 12,101.16
Less : Interest 1,417.17 951.35
Less : Depreciation 4,760.40 3,630.00
Profit before Taxation 6,906.69 7,519.81
Less : Provision for Taxation 2,607.67 2,293.28
Profit after Taxation 4,299.02 5,226.53
COMPANY PERFORMANCE
The Company started the year under review with caution as it expected
the volatility to continue through 2013-14. The environment continued
to remain challenging during the year. Despite a good monsoon, the
manufacturing indices went down; commodity prices were at the peak
resulting in high inflation, rupee depreciated significantly before
reviving a little. The Government and the Central Bank managed to
control to some extent appropriate monetary and fiscal policies. The
Management believes that this is going to be a temporary phase though
there is a possibility that acceleration in growth may take longer than
anticipated earlier. The new Government likely to be in power shortly
is expected to address many of the corporate challenges and to infuse
significant amount of efforts to revive the economy.
Your Directors are satisfied that in the current economic environment
which continues to be weak and uncertain, your Company has kept its
sight on strategy to deliver long term sustainable productivity led
profitable growth. Your Company has a strong leadership team which will
continue to focus on reinforcing the growth drivers and further
improving operational efficiencies.
Your Company achieved the following impactful business wins during the
year under reference:
INDUSTRIAL- Automotive After-Market Division increased its presence to
1400 body shops in India, Wash products of the AAD being approved by
leading Automobile Companies for their service centers,
HEALTHCARE Â Launched first of its kind online portal for dental
clinics, Food Safety solutions helped FMCG Companies to enhance their
food safety standards,
CONSUMER Â Home care division launched India''s first foot lock
products, entered consumer health market with Nexcare products,
SAFETY & GRAPHICS Â The Radio Frequency Identification tags on vehicles
to aid nationwide electronic tolling, introduced products for Indian
Navy and car personalisation wrap films, and
ENERGY Â For the first time Indian nuclear & thermal power sector used
our Scotchkote products.
Despite high volatility and uncertainty, the Supply Chain team of your
Company has ensured supply of quality materials and services at
competitive prices. The process to localise raw materials has continued
successfully delivering savings and shorter procurement lead times.
Your Company continues to benefit from its access to the 3M Group
research and development, and technical expertise, as well as the best
practices available from the global network.
REPORT OF THE DIRECTORS
The Company registered an overall turnover growth of 11.21% at Rs.
176,228.57 Lakhs for the financial year ended March 31, 2014 compared
to Rs.158,463.46 Lakhs in the previous year. The Profit before Interest
and Depreciation was at Rs. 13,084.26 Lakhs compared to Rs. 12,101.16
Lakhs for the previous year. The operating margin for the current year
was at 7.42% compared to 7.64% for the last year. Profit before Tax was
at Rs.6,906.69 Lakhs compared to Rs. 7,519.81 Lakhs for the previous
year. Profit after taxation was at Rs.4,299.02 Lakhs compared to
Rs.5,226.53 Lakhs for the previous year. Higher input costs combined
with higher depreciation, interest, depreciation of the rupee against
all currencies impacted our profit after tax.
Export Sales was at Rs.2,902.31 Lakhs for the year ended March 31, 2014
compared to Rs. 2,257.80 Lakhs in the previous year.
The Industrial business grew by 0.35%; Health Care business grew by
5.29%; Safety and Graphics business grew by 29.14%; Consumer business
grew by 15.29% and Energy business grew by 27.77%.
The EPS (Basic and Diluted) of the Company for the year 2013-14 was Rs.
38.16 per share as compared to Rs. 46.40 per share in the previous year
2012-13. Detailed analysis of the performance has been discussed in the
Management''s Discussion and Analysis Section of the Annual Report.
CAPITAL INVESTMENTS
Capital Investments during the year 2013-14 was at Rs. 4,758.98 Lakhs
(Net of capital work-in-progress and capital advances) (2012- 13: Rs.
12,898.84 Lakhs).
DIVIDEND
Significant investments have been made in driving our manufacturing and
localisation initiatives such as non-woven maker, tape coater and on
medical plant. These Investments are yet to be productive in this slow
economic downtrend. As a result it has been decided to conserve and
retain our earnings.
DIRECTORS
- Mr. Ajay Nanavati relinquished his office as Managing Director of the
Company with effect from September 30, 2013 consequent upon completion
of his term and appointed as Director-Business Development-Asia Pacific
and Greater China based out of Singapore.
- Your Directors through a circular resolution dated October 4, 2013
appointed Mr. Amit Laroya as the Managing Director of the Company with
effect from October 1, 2013 for a period of five years in place of Mr.
Ajay Nanavati subject to the approvals from members and from the
Central Government.
- Consequent upon her appointment as General Counsel for South East
Asia (SEA) Region, Singapore, Mrs. Sadhana Kaul ceased to be Whole-time
Director of the Company with effect from October 31, 2013.
- Mr. Frank R Little and Mr. John R Houle resigned with effect from
February 10, 2014 as Non- Executive Director''s consequent upon taking
up higher responsibilities within 3M in USA.
- The Board of Directors at its meeting held on February 10, 2014
appointed Mr. Ippocratis Vrohidis, Mr. Ashish Khandpur and Mrs. Sadhana
Kaul as Additional Directors and Non-Executive Directors of the Company
effective from February 10, 2014 and they hold office up to the date of
the ensuing Annual General Meeting of the Company and are eligible for
re-appointment.
The Board expresses its appreciation for the contributions and services
rendered by Mr. Ajay Nanavati, Mr. Frank R Little and Mr. John R Houle
during their tenure as Directors of the Company.
The Board of Directors welcomes Mr. Ippocratis Vrohidis, Mr. Ashish
Khandpur and Mrs. Sadhana Kaul to the Board.
With effect from April 01, 2014, inter-alia, provisions of section 149
of Companies Act, 2013, has been brought into force. In terms of the
said section read with section 152(6) of the Act, the provisions of
retirement by rotation are not applicable to Independent Directors.
Therefore, the directors to retire by rotation have been re-ascertained
on the date of this notice. Accordingly, Mr. Albert C Wang,
Non-Independent Non-Executive Director will retire at the ensuing
annual general meeting and being eligible offers himself for
re-appointment. The Board of Directors recommends his re-appointment.
The Companies Act, 2013 provides for appointment of Independent
Directors. Section 149 (10) of the Companies Act, 2013 provides that
Independent Directors shall hold office for a term of up to 5
consecutive years on the Board of Directors of a Company. In terms of
the said section read with section 152(6) of the Companies Act, 2013,
the provisions relating to retirement of Directors by rotation are not
applicable to Independent Directors. However, as our Non-Executive
Independent Directors, Mr. Balaji Rao, Mr. B.S. Iyer and Mr. B.C.
Prabhakar were appointed as Directors liable to retire by rotation
under the applicable provisions of the Companies Act, 1956, the Board
has been advised that the Non-Executive Independent Directors so
appointed would continue to serve the term for which they were
appointed in terms of the resolution by which they were appointed.
Therefore, only those Non-Executive Independent
REPORT OF THE DIRECTORS
Directors who will complete their present term at the ensuing Annual
General Meeting of the Company, and who, being eligible for
re-appointment, have consented to be re-appointed, can be considered by
the members for re-appointment for a term of up to 5 consecutive years.
The other Non-Executive Independent Directors (Mr. B.S. Iyer and Mr.
B.C. Prabhakar) who are not liable by rotation at the ensuing Annual
General Meeting will continue to hold office till the expiry of their
term based on the calculation of their retirement period in terms of
the resolution by which they were appointed, and thereafter would be
eligible for re-appointment in accordance with the Companies Act, 2013.
Mr. D.J. Balaji Rao is a Non-Executive, Independent Director of the
Company. He joined the Board of Directors of the Company in December
26, 2001 and was appointed as Chairman of the Board from September 10,
2008. He retires by rotation at the ensuing AGM under the applicable
provisions of the Companies Act, 1956, and he has conveyed his
intention not to seek re-appointment owing to his other commitments.
Accordingly, and the Board has decided not to fill, for the time being,
the vacancy caused due to his retirement.
The Board expresses its deep appreciation for the valuable
contributions and services made by Mr. Balaji Rao during his tenure as
Director from December 2001 and as Chairman of the Company from
September 2008 to the progress of the Company.
The Board at its meeting held on May 29, 2014 elected Mr. B.S. Iyer,
Non-Executive Independent Director as Chairman of the Board with effect
from the conclusion of the ensuing Annual General Meeting of the
Company to be held on August 4, 2014.
The Board of Directors welcomes Mr. Iyer as new Chairman of the Board.
CHANGE IN BUSINESS SEGMENTS
Consistent with 3M''s global strategy of building relevance and presence
in the marketplace, the Company aligned resources and management
towards a new revised structure comprised of five business groups:
Consumer; Industrial; Health Care; Safety and Graphics; and Energy from
April 1, 2013.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis Report accompany this report.
CORPORATE GOVERNANCE
A separate report on Corporate Governance along with a Certificate from
a Practising Company Secretary regarding compliance to the Conditions
stipulated under Clause 49 of the Listing Agreement is set out in the
Annexure to the Directors'' Report.
PARTICULARS OF EMPLOYEES
The Company had 1,623 employees as of March 31, 2014. During the year,
31 employees employed throughout the year and 4 employees employed for
part of the year were in receipt of remuneration of Rs. 60 Lakhs or
more per annum / Rs. 5 Lakhs or more per month.
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees), Rules, 1975, the names and other
particulars of employees are set out in the Annexure to the Directors''
Report. However, as per the provisions of Section 219(1) (b) (iv) of
the Companies Act, 1956, the Directors'' Report is being sent to all
members of the Company excluding the aforesaid information about the
employees. Any Member interested in obtaining such particulars may
write to the Company Secretary at the Registered / Corporate Office of
the Company and the same shall be provided by the Company.
There was no complaint lodged by any woman employee under Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013, with the Company during the period under report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1) (e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is set out in the Annexure to the
Directors'' Report.
SAFETY, HEALTH AND ENVIRONMENT
The Company accords high priority to health, safety and environment.
The Company has three Manufacturing Plants in operation in India. All
these plants are certified ISO 14001: 2004 for their Environmental
Management Systems. The initiative of obtaining this certification is
in strict adherence to 3M''s Environmental Policy. The Company
emphasizes maintaining a healthy and safe environment in and around its
facilities as well as contract sites where ongoing projects are under
execution. Safety awareness is inculcated through regular Safety
awareness programs; basic fire safety training, mock drills etc. There
has been no incidence of any accidents reported during the year under
review.
REPORT OF THE DIRECTORS
AWARDS AND RECOGNITION
- The Company was recognised by Honda Cars India Ltd. (HCIL) for
Outstanding Performance in the category of "Best Cost Cooperation".
Staying true to our promise of helping our customers succeed, the
Automotive Division team''s efforts contributed to Honda''s achievement
as the best performing car manufacturer in India in 2013.
- 3M India''s journey in sustainability has followed a 360 degree
approach from green practices in manufacturing to innovating green
products that are helping our customers reduce their carbon footprint.
The Company was recognised for its sustainability practices by FICCI
and our sustainable products were also recognised and showcased at the
prestigious GreenCo Summit 2013 in Pune which had India''s former
President, His Excellency Dr. APJ Kalam in attendance.
- The Health Care division in collaboration with NABH was honoured with
the eINDIA Award for promoting Best Practices in Health Care in
association with the government. This is the third national award in
succession for the business which has previously won the prestigious
Wound Management Company of the Year Award (Frost & Sullivan) & QCI Â
DL Shah National Award for excellence in Health Care Services.
- The Company''s sustainability efforts got national recognition with
the first runner up award from FICCI in the Best Corporate
Sustainability Endeavour (2013) - Large Corporates category. Selected
from over 100 hundred companies, 3M India is among the top three
Corporates to receive what is also India''s highest recognition in the
area of sustainability. This is also valued recognition for our
life-cycle management process that incorporates green into product
development right from the idea stage.
- The Company continued to get recognised for Quality Excellence
initiatives. FICCI Quality Systems Excellence Awards have been
instituted to recognise the robustness of quality systems in
organisations across India. Companies that display high performance
quality systems contributing to systematic improvement in performance
are felicitated. 3M India''s entry was evaluated at multiple levels
which included joint scrutiny by FICCI and QCI followed by a visit to
the Electronics City plant by auditors from Quality Council of India
and Maruti Suzuki (representing Industry) to interact with our
corporate quality leadership teams as well as plant teams. This
recognition comes in the wake of the six Corporate Quality Achievement
awards and another National Quality Award by the Quality Council of
India for our manufacturing facilities in last two years.
- 3M Corporation awarded 3M India''s Ranjangaon facility with the CEO
Safety and Health Award. This award recognises facilities, groups or
business units for achieving sustained periods of zero lost time injury
and/or illness cases. The Ranjangaon plant qualified for the CEO Safety
and Health Award for achieving 731 days consecutively without a lost
time injury or illness incident.
- 3M India''s Ranjangaon facility was awarded the 3M Manufacturing and
Process Technology Excellence Award by 3M Corporation in recognition of
the successful start-up of the first non-woven maker at the facility.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred affecting
the financial position of the Company between March 31, 2014 and the
date on which this report has been signed.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to the Directors Responsibility Statement, the
Directors state that:
i) in the preparation of the annual accounts for the year ended March
31, 2014, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
ii) 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 and of its profits for the year ended March 31,2014;
iii) they have taken proper and sufficient care towards the maintenance
of adequate accounting records in accordance with the provisions of
this Act, to safeguard the Assets of the Company and to prevent and
detect fraud and other irregularities;
iv) they have prepared the financial statements for the year ended
March 31,2014 on a going concern basis.
COST AUDIT
The Cost Audit Branch, Ministry of Corporate Affairs, Government of
India has issued order No. F. No. 52/26/CAB-2010 dated November 6, 2012
to have the cost accounting records audited by a Cost Accountant or a
firm of Cost Accountants effective April 1, 2013 for the Companies:
a. which are engaged in the production, processing, manufacturing or
mining of the products/activities included in the product/ activity
groups,
REPORT OF THE DIRECTORS
b. wherein the aggregate value of the turnover made by the company
from sale or supply of all its products/activities during the
immediately preceding financial year exceeds Rs. 100 crores,
c. wherein the company''s equity or debt securities are listed or are
in the process of listing on any stock exchange, whether in India or
outside India.
The following Company product/s mentioned as per Table-II of the above
order (i.e., based on central excise tariff Act chapter headings
covered in the product or activity group) are covered under the
compulsory cost audit, viz.,
Product
or activity Name of the product or
activity group Central Excise Tariff
Act chapter headings
group code covered in the product
or activity group
2013 Albuminoidal substances, starches,
glues and enzymes 3506
2014 Miscellaneous chemical products 3811, 3814, 3824
2023 paints and varnishes 3208
2025 plasters and fillers 3214
2028 soaps, detergents and
cleaning agents 3402
2029 lubricating preparations 3403
2030 waxes and wax products 3405
2035 chemicals-plastics and polymers 3901, 3904, 3907, 3910
2036 articles of plastics and polymers 3919, 3920, 3926
3009 paper and paperboard 4811
3010 articles of paper and paperboard 4820, 4821, 4823
3024 synthetic yearns or fibers 5601, 5602,5603
3027 other textile fabrics or products 6307
3036 articles of stones, plaster,
cement, asbestos and mica 6805
4008 aluminum and aluminum products 7607
4017 machinery and mechanical appliances 8466
4020 electrical and electronic equipments
or appliances 8528
4048 miscellaneous manufactured articles 9603
Accordingly, the Board of Directors at its meeting held on May 29, 2014
had on the recommendation of the Audit Committee of Directors appointed
Messrs. Rao, Murthy & Associates, Cost Accountants, Bangalore (holding
Registration No. 000065) being eligible and having sought
re-appointment, as Cost Auditors to conduct audit of cost accounting
records maintained by the Company for the above products covered under
MCA cost Audit Order ref. no. 52/26/CAB-2010 dated 06.11.2012, for the
financial year ending March 31, 2015.
For the financial year ending March 31, 2014, the due date for filing
the Cost Audit Report is September 27, 2014.
AUDITORS
Messrs. Lovelock & Lewes, Chartered Accountants, Auditors of the
Company, Bangalore having Registration No. 301056E retire at the
ensuing Annual General Meeting and are eligible for re-appointment. The
Company has received a certificate from the Auditors to the effect that
their re-appointment, if made, would be within the limits prescribed.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
The Board at its meeting held on April 18, 2014 constituted a CSR
Committee with Mr. B.C. Prabhakar, Independent Director, Mr. Amit
Laroya, Managing Director and Mr. B.V. Shankaranarayana Rao, Whole-time
Director as members of the Committee. In line with the Company''s core
values, CSR strategy will focus on three areas: Education, Innovation
and Women Empowerment.
VOLUNTARY DELISTING FROM THE CALCUTTA STOCK EXCHANGE LIMITED
The Company has received approval from The Calcutta Stock Exchange
Limited regarding voluntary de-listing of the Company''s equity shares
from their stock exchange with effect from April 25, 2014.
FIXED DEPOSITS
During the year under review, the Company has neither accepted nor
renewed any deposits from public within the meaning of Sections 58A and
58AA of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation to all employees
in the Company, for their sustained efforts and immense contributions
to the good levels of performance and growth that your Company has
achieved during the year. The Board also acknowledges the continued
support and co-operation received from 3M Company, USA.
The Directors express their gratitude to the Central Government and the
State Governments of Karnataka, Maharashtra and Gujarat for the support
given to the Company. The Directors also thank all customers, dealers,
suppliers, banks, members and others connected with the business of the
Company for their co-operation.
On behalf of the Board of Directors
Place : Bangalore Amit Laroya B.V. Shankaranarayana
Rao
Date : May 29, 2014 Managing Director Whole-time Director
Mar 31, 2013
The Directors have pleasure in presenting to you their 26th Annual
Report of the Company with the Audited Accounts for the year ended
March 31, 2013.
FINANCIAL RESULTS
The following are the working results:
(Rs. in Lakhs)
Particulars For the
year ended For the
year ended
March 31,
2013 March 31,
2012
(12 Months) (12 Months)
(Audited) (Audited)
Total Income 158,463.46 141,036.81
Of which - Export Sales 2,204.52 2,248.12
-Other Income 1,050.34 526.74
Less : Expenditure 146,362.30 128,404.57
Profit before Interest and Depreciation 12,101.16 12,632.24
Less . Interest 95135 318.05
Less: Depreciation 3,630.00 2,703.13
Profit before Taxation 7,519.81 9,611.06
Less : Provision for Taxation 2,293.28 3,133.89
Profit after Taxation 5,226.53 6,477.17
COMPANY PERFORMANCE
The Company registered an overall turnover growth of 12% at Rs. 158,463
Lakhs for the financial year ended March 31, 2013 compared to
Rs.141,037 Lakhs in the previous year. The operating margin for the
current year was at 7.64% compared to 8.96% for the last year. Net
Profit before Tax was at Rs.7,520 Lakhs compared to Rs. 9,611 Lakhs for
the previous year. Net profit after taxation was at Rs.5,227 Lakhs
compared to Rs.6,477 Lakhs for the previous year. Higher input costs
combined with interest, depreciation of the rupee against all
currencies and accelerated investments impacted our profit after tax.
Export Sales was at Rs.2,205 Lakhs for the year ended March 31, 2013
compared to Rs. 2,248 Lakhs in the previous year.
The Industrial and Transportation business grew by 11.66%; Health Care
business grew by 21.13%: Display and Graphics business grew by 18.66%;
Consumer and Office business grew by 17.71% and Safety, Security and
Protection Services business de-grew by 3.05%.
The EPS (Basic and Diluted) of the Company for the year 2012-13 was Rs.
46.40 per share as compared to Rs. 57.50 per share in the previous year
2011-12. Detailed analysis of the performance has been discussed in the
Management''s Discussion and Analysis Section of the Annual Report.
CAPITAL INVESTMENTS
Capital Investments during the year 2012-13 was at Rs. 12,899 Lakhs
(Net of capital work-in-progress and capital advances) (2011-12: Rs.
9,668 Lakhs).
RECOGNITION OF NEW R&D CENTER IN BANGALORE
Your Directors are pleased to inform you that on July 20,2012, The
Department of Scientific and Industrial Research (DSIR), Government of
India has recognized the Company''s in-House R&D Unit at Bangalore and
on February 7, 2013, approval under section 35(2AB) of the Income Tax
Act, 1961 was obtained from DSIR for availing the weighted deduction
under Income Tax Act.
DIVIDEND
In view of the significant investments made in driving our
manufacturing and localization initiatives such as non-woven maker,
tape coater and on medical plant, it has been decided to conserve and
retain our earnings.
DIRECTORS
Mr. R. Vijay Kumar ceased to be Whole-time Director of the Company with
effect from October 26, 2012. Mr. Frank R Little and Mr. John R Houle
were appointed as Additional Directors and Non-Executive Directors from
October 26, 2012.
The Board of Directors welcomes Mr. Frank R Little and Mr. John R Houle
to the Board.
Mr. B.S. Iyer and Mr. B.C. Prabhakar are liable to retire by rotation
and offer themselves for re-election.
REDUCTION IN PROMOTER''S SHAREHOLDING IN THE COMPANY
In order to comply with Minimum Public Shareholding of 25% as mandated
by Securities and Exchange Board of India (SEBI), 3M Company, USA,
promoter of the Company sold 113,198 shares through Offer for Sale(OFS)
method through Stock Exchanges on March 21, 2013 and brought down its
stake from 76% to 75%.
CHANGE IN BUSINESS SEGMENTS
Consistent with 3M''s global strategy of building relevance and presence
in the marketplace, the Company will also align resources and
management towards a new revised structure comprised of five business
groups: Consumer; Industrial; Health Care; Safety and Graphics; and
Energy which will align with 3M Global structures.
Presently the Company''s operating results were managed on the basis of
its existing segment structures viz., Industrial and Transportation,
Health Care, Display and Graphics, Consumer and Office and Safety,
Security and Protection Services through April 1, 2012 to March 31,
2013, with the intention that results be managed under the new
alignment once it is fully effective from April 1, 2013 onwards.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis Report accompany this report.
CORPORATE GOVERNANCE
A separate report on Corporate Governance along with a Certificate from
a Practising Company Secretary regarding compliance to the Conditions
stipulated under Clause 49 of the Listing agreement is set out in the
Annexure to the Directors'' Report.
PARTICULARS OF EMPLOYEES
The Company had 1,791 employees as of March 31, 2013. During the year,
25 employees employed throughout the year and 1 employee employed for
part of the year were in receipt of remuneration of Rs. 60 Lakhs or
more per annum / Rs. 5 Lakhs or more per month.
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees), Rules, 1975, the names and other
particulars of employees are set out in the Annexure to the Directors''
Report. However, as per the provisions of Section 219(1) (b) (iv) of
the Companies Act, 1956, the Directors'' Report is being sent to all
members of the Company excluding the aforesaid information about the
employees. Any Member interested in obtaining such particulars may
write to the Company Secretary at the Registered / Corporate Office of
the Company and the same shall be provided by the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1) (e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is set out in the Annexure to the
Directors'' Report.
SAFETY, HEALTH AND ENVIRONMENT
The Company accords high priority to health, safety and environment.
The Company has three Manufacturing Plants in operation in India. All
these plants are certified ISO 14001: 2004 for their Environmental
Management Systems. The initiative of obtaining this certification is
in strict adherence to 3M''s Environmental Policy. The Company
emphasizes maintaining a healthy and safe environment in and around its
facilities as well as contract sites where ongoing projects are under
execution. Safety awareness is inculcated through regular Safety
awareness programs; basic fire safety training, mock drills etc. There
has been no incidence of any accidents reported during the year under
review.
AWARDS AND RECOGNITION
- The Healthcare Division won the prestigious QCI-DL Shah National
Award for Healthcare Services, awarded by the Quality Council of India
(QCI) in the ''Quality Control in Hospital Sterilization'' category for
its significant contribution towards Infection prevention, enabling
speedy recovery and positive patient outcomes at reduced healthcare
costs.
- The Electronic City (EC) Plant won second place at the State Level
Safety awards announced at the National Safety Day celebrations,
organized by the Department of Factories, Boilers, Industrial Safety &
Health.
- The EC plant won second Prize for 5S Excellence from the
Confederation of Indian Industry (CM) in the Manufacturing Category
(Medium Scale).
- TESCO presented our Home Care Division with their ''Winning Together''
award for supply chain excellence which helped TESCO register a growth
of 49% (year-on-year) in Home Care products for the period Jan-Dee
2012.
- The Company won the MMOG Certification (Materials Management and
Operations Guideline) and the Ford Q1 Award, a Global Recognition from
Ford for World Class Quality Standards. The MMOG certification is given
by the US Automotive Industry Action Group and recognizes our
automotive best practices.
- The Company''s work towards establishing the highest quality stand was
recognized by General Motors India for Supplier Quality Excellence in
2012. The EC plant consistently supplied on time in full with "Zero
DPPM" (defective parts per million) to General Motors for 12
consecutive months.
- The Company''s products - CHG Hand Rub Bottle and Scotch-Brite Kitchen
Towels- won the Indiastar 2012 award for excellence in packaging
design. Both products have now received recognition at the Asia
Regional level by winning the Asia Star Awards for Packaging.
- The Healthcare division was declared ''The Wound Management Company of
the Year'' by renowned research company. Frost & Sullivan at their 4th
Annual India Healthcare Excellence Awards after being selected and
evaluated on the basis of various criteria ranging from revenue
generation and market share to technological innovation and clinical
excellence, among others. The efforts undertaken by the division in
training the nursing fraternity that has in turn considerably raised
the standards of care in wound management, has been instrumental in
helping the company earn this recognition.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred affecting
the financial position of the Company between March 31, 2013 and the
date on which this report has been signed.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to the Directors Responsibility Statement, the
whole-time management state that:
i) in the preparation of the annual accounts for the year ended March
31, 2013, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
ii) 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 and of its profits for the year ended March 31,2013;
iii) they have taken proper and sufficient care towards the maintenance
of adequate accounting records in accordance with the provisions of
this Act, to safeguard the Assets of the Company and to prevent and
detect fraud and other irregularities;
iv) they have prepared the financial statements for the year ended
March 31,2013 on a going concern basis;
COST AUDIT
The Cost Audit Branch, Ministry of Corporate Affairs, Government of
India has issued order No. F. No. 52/26/CAB-2010 dated November 6, 2012
to have the cost accounting records audited by a Cost Accountant or a
firm of Cost Accountants effective April 1, 2013 for the Companies:
a. which are engaged in the production, processing, manufacturing or
mining of the products/activities included in the product/ activity
groups,
b. wherein the aggregate value of the turnover made by the company
from sale or supply of all its products/activities during the
immediately preceding financial year exceeds Rs. 100 crores,
c wherein the company''s equity or debt securities are listed or are in
the process of listing on any stock exchange, whether in India or
outside India.
The following Company product/s mentioned as per Table-ll of the above
order (i.e., based on central excise tariff Act chapter headings
covered in the product or activity group) are covered under the
compulsory cost audit, viz.,
Product or
activity Name of the product or activity
group Central Excise Tariff
Act chapter headings
group code covered in the product
or activity group
2013 Albuminoidal substances, starches,
glues and enzymes 3506
2014 Miscellaneous chemical products 3811,3814,3824
2023 paints and varnishes 3208
2025 plasters and fillers 3214
2028 soaps, detergents and cleaning
agents 3402
2029 lubricating preparations 3403
2030 waxes and wax products 3405
2035 chemicals-plastics and polymers 3901,3904,3907,3910
2036 articles of plastics and polymers 3919,3920,3926
3009 paper and paperboard 4811
3010 articles of paper and paperboard 4820,4821,4823
3024 synthetic yearns or fibers 5601,5602,5603
3027 other textile fabrics or products 6307
3036 articles of stones, plaster,
cement, asbestos and mica 6805
4008 aluminum and aluminum products 7607
4017 machinery and mechanical appliances 8466
4020 electrical and electronic
equipments or appliances 8528
4048 miscellaneous manufactured articles 9603
Accordingly, the Board of Directors at its meeting on May 30, 2013 had
on the recommendation of the audit committee of Directors appointed
M/s. Rao, Murthy & Associates, Cost Accountants, Bangalore as Cost
Auditors to conduct audit of cost accounting records maintained by the
Company for the products covered under MCA cost Audit Order ref. no.
52/26/CAB-2010 dated 06.11.2012, for the financial year ending March
31, 2014.
AUDITORS
M/s. Lovelock & Lewes, Chartered Accountants, Auditors of the Company,
holding Firm Registration No. 301056E will retire at the conclusion of
the ensuing Annual General Meeting and being eligible, offer themselves
for re-appointment.
The Company has received a certificate from the Auditors to the effect
that their re-appointment, if made, would be in accordance with Section
224(1 B) of the Companies Act, 1956.
FIXED DEPOSITS
During the year under review, the Company has neither accepted nor
renewed any deposits from public within the meaning of Sections 58A and
58AA of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation to all employees
in the Company, for their sustained efforts and immense contributions
to the good levels of performance and growth that your Company has
achieved during the year. The Board also acknowledges the continued
support and co-operation received from 3M Company, USA.
The Directors express their gratitude to the Central Government and the
State Governments of Karnataka, Maharashtra and Gujarat for the support
given to the Company. The Directors also thank all customers, dealers,
suppliers, banks, members and others connected with the business of the
Company for their co-operation.
On behalf of the Board of Directors
Place : Bangalore Ajay Nanavati Sadhana Kaul
Date : May 30, 2013 Managing Director Whole-time Director
Mar 31, 2012
The Directors have pleasure in presenting to you their 25th Annual
Report of the Company with the Audited Accounts for the year ended
March 31, 2012.
FINANCIAL RESULTS
The following are the working results:
(Rs. in Lakhs)
Particulars For the year ended For the year ended
March 31, 2012 March 31, 2011
(12 Months) (12 Months)
(Audited) (Audited)
Total Income 141,036.81 120,240.89
Of which - Export Sales 2,248.12 2,821.94
- Other Income 526.74 1,099.96
Less : Expenditure 128,404.57 103,617.83
Profit before Interest and
Depreciation 12,632.24 16,623.06
Less : Interest 318.05 80.02
Less : Depreciation 2,703.13 1,736.57
Profit before Taxation 9,611.06 14,806.47
Less: Provision for Taxation 3,133.89 4,925.75
Profit after Taxation 6,477.17 9,880.72
COMPANY PERFORMANCE
The Company registered an overall turnover growth of 17.30% at Rs.
141,036.81 Lakhs for the financial year ended March 31, 2012 compared
to Rs. 120,240.89 Lakhs in the previous year. The operating margin for
the current year was at 8.96% compared to 13.82% for the last year,
down by 35.17%. Net Profit before Tax was lower by 35.09% at Rs.
9,611.06 Lakhs compared to Rs. 14,806.47 Lakhs for the previous year.
Net profit after taxation was also lower by 34.45% at Rs.6,477.17 Lakhs
compared to Rs.9,880.72 Lakhs for the previous year mainly on account
of: higher input costs, adverse impact of depreciation of the rupee
against all currencies at Rs. 4,333.49 Lakhs, interest costs at Rs.
318.05 Lakhs and increase in Corporate Management fee paid to the
parent company.
Export Sales de-grew by 20.33% at Rs. 2,248.12 Lakhs for the year ended
March 31, 2012 compared to Rs. 2,821.94 Lakhs in the previous year.
The Industrial and Transportation business grew by 24.56%; Health Care
business grew by 13.61%: Display and Graphics business grew by 5.67%;
Consumer and Office business grew by 24.78% and Safety, Security and
Protection Services business grew by 15.55%.
The EPS (Basic and Diluted) of the Company for the year 2011-12 de-grew
by 34.44% to Rs. 57.50 per share from Rs. 87.71 per share in the
previous year 2010-11. Detailed analysis of the performance has been
discussed in the Management's Discussion and Analysis Section of the
Annual Report.
CAPITAL INVESTMENTS
Capital Investments during the year 2011-12 was at Rs. 9,668.43 Lakhs
(Net of capital work-in-progress) (2010-11: Rs. 10,292.85 Lakhs).
PRESENTATION OF COMPANY'S FINANCIAL STATEMENTS IN REVISED SCHEDULE VI
Government of India vide notification dated March 30, 2011 had
prescribed new Revised Schedule VI applicable for the Balance Sheet and
Profit and Loss Account to be prepared from the financial year
commencing on or after April 01, 2011. Accordingly, the Company's
Financial Statements for the financial year 2011-12 has been prepared
as per the revised Schedule VI form issued by the Ministry of Corporate
Affairs. Accordingly, the previous year figures have also been
re-classified to conform to this year's classification. Further,
previous year figures have been re-grouped/re-arranged wherever
necessary.
NEW R&D CENTER IN BANGALORE
Your Company launched its new, state-of-the-art R&D facility in
Electronics City, Bangalore to cater to product and technology
development for India, accelerating it localization initiatives in the
country on September 13, 2011 with an initial investment of Rs. 100
crores. The R&D center will initially focus on developing products for
key industry segments such as Infrastructure, Automotive, Healthcare,
Construction, Oil & Gas, Safety and Retail. The Center will also focus
on developing subject matter expertise in technologies like adhesives,
non-wovens, acoustics, polymer processing, software & integrated
systems and design, predictive engineering and modeling, protective
coatings and accelerated weathering. Your Company has applied to the
Department of Scientific and Industrial Research (DSIR) for in-house
recognition of the R&D Programme.
DIVIDEND
In view of the ongoing Investment plans as well as future investments
plans which will be executed towards expansion of manufacturing
facilities, it has been decided to conserve and retain our earnings.
DIRECTORS
Mr. Jose R Varela ceased to be Director of the Company from October 31,
2011 consequent upon his appointment as Managing Director of 3M Brazil.
The Board places on record their sincere appreciation for the valuable
contributions made by Mr. Jose R Varela to the deliberations of the
Board and Sub-Committees of the Board during his tenure as Director.
Mr. R. Vijay Kumar was appointed as a Director and as Whole-time
Director of the Company responsible for Strategic Planning,
Acquisitions, Business Development and IT from October 31, 2011 in
accordance with Section 262 of the Companies Act 1956, in the vacancy
arising from the resignation of Mr. Jose R Varela.
The present term of office of Mr. B.V. Shankaranarayana Rao, Whole-time
Director of the Company, as approved by the members at their meeting
held on April 27, 2007, is up to March 31, 2012. The Board of Directors
at their meeting held on January 30, 2012 have re- appointed Mr. B.V.
Shankaranarayana Rao as Whole-time Director of the Company, subject to
the approval of members, for a further period of Five (5) years from
April 01, 2012 up to March 31, 2017.
Mr. Albert C Wang was appointed as an Additional Director and
Non-Executive Director of the Company with effect from March 12, 2012
through a Circular Resolution.
The Board of Directors welcomes Mr. R. Vijay Kumar and Mr. Albert C
Wang to the Board.
Mr. D.J. Balaji Rao and Mrs. Sadhana Kaul are liable to retire by
rotation and offer themselves for re-election.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis Report accompany this report.
CORPORATE GOVERNANCE
A separate report on Corporate Governance along with a Certificate from
a Practising Company Secretary regarding compliance to the Conditions
stipulated under Clause 49 of the Listing agreement is set out in the
Annexure to the Directors' Report.
PARTICULARS OF EMPLOYEES
The Company had 1662 employees as of March 31, 2012. During the year,
20 employees employed throughout the year and 5 employees employed for
part of the year were in receipt of remuneration of Rs. 60 Lakhs or
more per annum / Rs. 5 Lakhs or more per month.
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees), Rules, 1975, the names and other
particulars of employees are set out in the Annexure to the Director's
Report. However, as per the provisions of Section 219(1) (b) (iv) of
the Companies Act, 1956, the Director's Report is being sent to all
members of the Company excluding the aforesaid information about the
employees. Any Member interested in obtaining such particulars may
write to the Company Secretary at the Registered / Corporate Office of
the Company and the same shall be provided by the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1) (e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is set out in the Annexure to the
Directors' Report.
SAFETY, HEALTH AND ENVIRONMENT
The Company accords high priority to health, safety and environment.
The Company has three Manufacturing Plants in operation in India. All
these plants are certified ISO 14001: 2004 for their Environmental
Management Systems. The initiative of obtaining this certification is
in strict adherence to 3M's Environmental Policy. The Company
emphasizes maintaining a healthy and safe environment in and around its
facilities as well as contract sites where ongoing projects are under
execution. Safety awareness is inculcated through regular Safety
awareness programs; basic fire safety training, mock drills etc. There
has been no incidence of any accidents reported during the year under
review.
AWARDS AND RECOGNITION
- The Company's Electronic City (EC) plant has won the First Prize for
Lean Manufacturing at the National level Lean Six Sigma competition
organized by CII (Confederation of Indian Industry). The 3M India team
made it to the final 24 organizations despite a tough pan India
competition. The EC plant had entered its lean project on the Sakurai
line which won the first prize in the Lean Manufacturing category,
beating companies like Caterpillar.
- Customer recognition is the best way to gain credibility for the
brand. 3M India recently received two awards from one of its biggest
customers, Maruti Suzuki. These awards were handed out as a way to
recognize Maruti's vendors. The awards were namely -
- Overall Star performance Award 2010 -11
- Certificate award for sincere and superior performance in the field
of VAVE in the year 2010-11.
- The Company's Ranjangaon plant has been recognized as the winner of
the Quality Council of India (QCI) - D.L. Shah National Award on
Economics of Quality in the Large Scale Manufacturing Sector category.
QCI is the apex body set up by the Govt. of India along with the three
apex chambers representing industry i.e. ASSOCHAM, FICCI and CII. This
award is the result of the efforts of the team in the Occupational
Health and Environmental Safety (OH&ES) Division.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred affecting
the financial position of the Company between March 31, 2012 and the
date on which this report has been signed.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to the Directors Responsibility Statement, the
whole-time management state that:
i) in the preparation of the annual accounts for the year ended March
31, 2012, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
ii) 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 and of its profits for the year ended March 31,2012;
iii) they have taken proper and sufficient care towards the maintenance
of adequate accounting records in accordance with the provisions of
this Act, to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities;
iv) they have prepared the financial statements for the year ended
March 31,2012 on a going concern basis;
FIXED DEPOSITS
During the year under review, the Company has neither accepted nor
renewed any deposits from public within the meaning of Sections 58A and
58AA of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
AUDITORS
M/s. Lovelock & Lewes, Chartered Accountants, Bangalore, Auditors of
the Company will retire at the conclusion of the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment.
The Company has received a certificate from the Auditors to the effect
that their re-appointment, if made, would be in accordance with Section
224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation to all employees
in the Company, for their sustained efforts and immense contributions
to the good levels of performance and growth that your Company has
achieved during the year.
The Directors express their gratitude to the Central Government and the
State Governments of Karnataka, Maharashtra and Gujarat for the support
given to the Company. The Directors also thank all customers, dealers,
suppliers, banks, members and others connected with the business of the
Company for their co-operation.
On behalf of the Board of Directors
Place : Bangalore Ajay Nanavati B.V. Shankaranarayana Rao
Date : May 28, 2012 Managing Director Whole-time Director
Mar 31, 2011
The Directors have pleasure in presenting to you their 24th Annual
Report of the Company with the Audited Accounts for the year
ended March 31, 2011.
FINANCIAL RESULTS
The following are the working results:
(Rs. in Lakhs)
Particulars For the year ended For the year ended For the year
ended
March 31, 2011 March 31, 2010 March 31, 2010
(12 Months) (12 Months) (15 Months)
(Audited) (Un-audited) (Audited)
Total Income
(excluding Excise
Duty) 1202,40.89 917,81.98 1106,78.85
Of which export of
goods & services 42,33.88 26,65.03 27,36.07
Less: Total
Expenditure 1054,34.43 796,88.95 965,91.83
Profit before
Taxation 148,06.47 120,93.02 140,87.02
Less: Provision for
Taxation 49,25.75 40,77.49 48,03.35
Profit after Taxation 98,80.72 80,15.53 92,83.67
COMPANY PERFORMANCE
On a like to like basis i.e. comparing the results for the financial
year ended March 31, 2011 with the un-audited results for the 12 months
ended March 31, 2010, your Company registered an overall turnover
growth of 31% and improved the operating margins by 22%. Net profit
after taxation grew by 23%. The Industrial and Transportation business
grew by 36%; Health Care business grew by 15%: Display and Graphics
business grew by 52%; Consumer and Office business grew by 22% and
Safety, Security and Protection Services business grew by 14%. Exports
grew by 97%. Earnings per share for the period 2010-11 were Rs.87.71, a
growth of 23%.
CAPITAL INVESTMENTS
Capital Investments during the year 2010-11 was at Rs. 102,92.85 Lakhs
(2009-10: Rs. 54,72.80 Lakhs).
DIVIDEND
In view of the ongoing investment plans as well as future investments
plans which will be executed towards expansion of Manufacturing
facilities and setting up of Research and Development facilities, it
has been decided to conserve and retain our earnings.
DIRECTORS
Mr. Richard Lee Becker ceased to be Director of the Company from April
01, 2011 consequent upon his appointment as Director - Finance,
Industrial and Transportation Business in US effective April 1, 2011.
The Board places on record their sincere appreciation for the valuable
contributions made by Mr. Richard Lee Becker to the deliberations of
the Board and Sub-Committees of the Board during his tenure as
Director.
Mr. Jose R Varela was appointed a Director of the Company from April
01, 2011 in accordance with Section 262 of the Companies Act 1956, in
the vacancy arising from the resignation of Mr. Richard Lee Becker. The
Board of Directors welcomes Mr. Jose R Varela to the Board.
Mr. B.C. Prabhakar and Mr. Jose R Varela are liable to retire by
rotation and offer themselves for re-election.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis Report accompany this report.
CORPORATE GOVERNANCE
A separate report on Corporate Governance along with a Certificate from
a Practising Company Secretary regarding compliance to the Conditions
stipulated under Clause 49 of the Listing Agreement is set out in the
Annexure to the Directors Report.
PARTICULARS OF EMPLOYEES
The Company had 1597 employees as of March 31, 2011. During the year,
20 employees employed throughout the year and 1 employee employed for
part of the year were in receipt of remuneration of Rs. 60 Lakhs or
more per annum / Rs. 5 Lakhs or more per month.
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees), Rules, 1975, the names and other
particulars of employees are set out in the Annexure to the Directors
Report. However, as per the provisions of Section 219(1) (b) (iv) of
the Companies Act, 1956, the Directors Report is being sent to all
members of the Company excluding the aforesaid information about the
employees. Any Member interested in obtaining such particulars may
write to the Company Secretary at the Registered / Corporate Office of
the Company and the same shall be provided by the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1) (e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is set out in the Annexure to the
Directors Report.
SAFETY, HEALTH AND ENVIRONMENT
The Company accords high priority to health, safety and environment.
The Company has three Manufacturing Plants in operation in India. All
these plants are certified ISO 14001: 2004 for their Environmental
Management Systems. The initiative of obtaining this certification is
in strict adherence to 3Ms Environmental Policy. The Company
emphasises maintaining a healthy and safe environment in and around its
facilities as well as contract sites where ongoing projects are under
execution. Safety awareness is inculcated through regular Safety
awareness programs; basic fire safety training, mock drills etc. There
has been no incidence of any accidents reported during the year under
review.
AWARDS AND RECOGNITION
The Company received following awards and recognitions for its
achievements:
. 3M Car Care, a division of the Company, was recognised for Best
Performance at the Hyundai Customer Care Service Vendors Convention in
Delhi.
. Honda Seil Car India, one of our top customers ranked the Company as
No.1 out of 103 suppliers.
. Honda Motorcycle & Scooter India (HMSI) recognised the Company as
their top supplier for 2010-11 for QCDDM which covers parameters like
quality, cost, delivery, development and management.
. The Electronic City plant won the 3rd prize for 5S Excellence
organised by the Confederation of Indian Industry (CII) for the
Manufacturing Sector (Medium Scale).
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred affecting
the financial position of the Company between March 31, 2011 and the
date on which this report has been signed.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to the Directors Responsibility Statement, the
Whole-time Management state that:
i) in the preparation of the annual accounts for the year ended March
31, 2011, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
ii) 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 and of its profits for the year ended March 31,2011;
iii) they have taken proper and sufficient care towards the maintenance
of adequate accounting records in accordance with the provisions of
this Act, to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities;
iv) they have prepared the financial statements for the year ended
March 31,2011 on a going concern basis.
FIXED DEPOSITS
During the year under review, the Company has neither accepted nor
renewed any deposits from public within the meaning of Sections 58A and
58AA of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
AUDITORS
Messrs. Lovelock & Lewes, Chartered Accountants, Bangalore, Auditors of
the Company will retire at the conclusion of the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment. The
Company has received a certificate from the Auditors to the effect that
their re-appointment, if made, would be in accordance with Section
224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation to all employees
in the Company, for their sustained efforts and immense contributions
to the good levels of performance and growth that your Company has
achieved during the year.
The Directors express their gratitude to the Central Government and the
State Governments of Karnataka, Maharashtra and Gujarat for the support
given to the Company. The Directors also thank all customers, dealers,
suppliers, banks, members and others connected with the business of the
Company for their co-operation.
On behalf of the Board of Directors
Place : Bangalore Ajay Nanavati B.V. Shankaranarayana Rao
Date : May 28, 2011 Managing Director Whole-time Director
Mar 31, 2010
The Directors have pleasure in presenting to you their 23rd Annual
Report and Audited Accounts for the fifteen months period ended March
31,2010.
Accounting year of the Company was changed from Calendar year
(January-December) to Financial year (April-March). Consequently, the
current annual accounts and report of the Company are for a period
fifteen months, from January 1,2009 to March 31,2010, these figures,
therefore, are not comparable with those of previous year ended
December 31,2008.
FINANCIAL RESULTS
(Rs. in lakhs)
Particulars 15 Months ended 12 Months ended
March 31, 2010 December 31, 2008
Total Income* 1106,78.85 753,06.72
Less : Total Expenditure 965,91.83 662,04.44
Profit before Depreciation 140,87.02 91,02.28
Less : Provision for Taxation 48,03.34 33,56.79
Profit after Taxation 92,83.68 57,45.49
* Includes export of products
and services 26,89.77 4,22.84
COMPANY PERFORMANCE
The Company registered an overall income growth of 46.97% and profit
after taxation growth of 61.58% for the fifteen months period ended
March 31,2010. Good top line and bottom line performance were recorded
across all the business segments.
During the period January 1, 2009 to March 31, 2010, Rs.54,72.80 lakhs
were incurred towards capital expenditure on account of various capital
projects. Expansion of manufacturing facilities at Ahmedabad for
corrosion protection products completed. Commercial production for many
of the products under industrial and transportation business, health
care business and safety, security and protection services business
segments at Ranjangaon manufacturing facilities commenced.
DIVIDEND
In view of the on going execution of our investment plans towards the
expansion of manufacturing facilities and setting up of research and
development facilities, it has been decided to conserve and retain our
earnings.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred affecting
the financial position of the Company between March 31, 2010 and the
date on which this report has been signed.
DIRECTORS
Mr.Thomas P.Spencer resigned as Director and to fill up the vacancy
caused, Mrs.Sadhana Kaul has been appointed as Additional Director of
the Company.
The Board places on record its sincere appreciation of the valuable
services rendered by Mr.Thomas P.Spencer during his long tenure as
member of the Board.
Notice been received from member pursuant to Section 257 of the
Companies Act, 1956 together with necessary deposit proposing the
appointment of Mrs.Sadhana Kaul as Whole-time Director of the Company.
Mr.D.J.Balaji Rao and Mr. B.S.Iyer are retiring by rotation at the
ensuing Annual General Meeting and being eligible, they have offered
themselves for re-appointment.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to the Directors Responsibility Statement, your
Directors state:
i) That in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
ii) That 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 and of its profits for fifteen months period ended March
31, 2010;
iii) That they have taken proper and sufficient care towards the
maintenance of adequate accounting records in accordance with the
provisions of this Act, to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities;
iv) That they have prepared the financial statements for fifteen months
period ended March 31, 2010 on a going concern basis;
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreements with stock exchanges, a
separate section titled ÃCorporate Governanceà has been included in the
annual report, along with the report of Management Discussion and
Analysis and additional shareholder information.
FIXED DEPOSITS
During the period under review, the Company has not accepted any
deposits under Section 58A and 58AA of the Companies Act, 1956 read
with the Companies (Acceptance of Deposits) Rules, 1975.
AUDITORS
M/s. Lovelock & Lewes, Chartered Accountants, Bangalore, Auditors of
the Company will retire at the conclusion of the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment. The
Company has received a certificate from the Auditors to the effect that
their re-appointment, if made, would be in accordance with Section
224(1B) of the Companies Act,1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1)(e) of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 has been enclosed as Additional
Information and forms an integral part of this Report.
LISTING
The shares of your Company are presently listed on the Bombay Stock
Exchange Limited (BSE) and National Stock Exchange of India Limited
(NSE). The delisting application has been filed with the Calcutta Stock
Exchange Association Limited and the formal approval is awaited.
PERSONNEL
The Board wishes to place on record its appreciation to all employees
of the Company, for their sustained effort and immense contribution to
the good levels of performance and growth that your Company has
achieved.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees), Rules,1975, the names and other
particulars of employees are to be set out in the DirectorÃs Report.
However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the report and accounts as set out therein, are
being sent to all members of the Company excluding the aforesaid
information about the employees. Members who are interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company and the same shall be provided by the
Company.
ACKNOWLEDGEMENT
Your Directors wish take this opportunity for the continued support and
valuable co-operation extended by all the stakeholders of 3M India
Limited. The Directors also wish to express their gratitude to all the
shareholders for the faith that they continue to repose in the Company.
On behalf of the Board of Directors
Place: Bangalore Ajay Nanavati B.V. Shankaranarayana Rao
Date : May 28, 2010 Managing Director Whole-time Director
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