Directors Report of EPL Ltd.
Mar 31, 2023
Your Directors are pleased to present their report on your Company''s business operations along with the audited financial statements for the financial year ended on 31 March 2023.
The highlights of the financial results are set out below.
CONSOLIDATED GLOBAL RESULTS
The summary results are set out below.
|
(Rs. in million) |
||
|
Particulars |
Year ended |
Year ended 31 |
|
31 Mar 2023 |
Mar 2022 |
|
|
Total Income |
37362 |
34448 |
|
Profit Before Depreciation, Finance Cost and Tax (PBDIT) inclusive of other income |
6199 |
5881 |
|
Finance Cost |
674 |
403 |
|
Depreciation |
2805 |
2514 |
|
Profit before share of Profit/ (Loss) from Associate and exceptional items |
2720 |
2964 |
|
Share of Profit /(Loss) from Associate |
(29) |
(76) |
|
Profit before exceptional items and tax |
2691 |
2888 |
|
Exceptional items net (Loss)/Gain |
(11) |
-- |
|
Tax expense |
373 |
675 |
|
Net Profit for the year attributable to owners of the parent |
2267 |
2144 |
The Consolidated Total Income grew year over year by 8.5%, with the Sales and Operating income growing by 7.6%.
All regions registered double digit revenue growth, except EAP which was impacted by Covid lockdowns. AMESA, AMERICAS and EUROPE delivered revenue growth of 11.7%, 19.0% and 12.7% respectively and EAP declined by 1.5%. The revenue growth excluding EAP was 12.2%. Strong growth in both categories - Oral Care grew by 9.5%, and Personal Care by 11.6%.
Continued increase in raw material and freight costs during first half of the year, increase in energy costs and lag effect of price recovery resulted in decline in consolidated operating profit margin (excluding Brazil) by 73 bps to 8.8%. Consolidated operating margin including Brazil stood at 8.6%. The year remained challenging with respect to finance cost due to continuous increase in the benchmark interest rates despite reduction in the net debt (excluding borrowings for Brazil greenfield project), finance cost increased by ?262 mn. The net profit attributable to the equity holders excluding exceptional items of ?2278 mn for the year, increased by 6.3%.
INDIA STANDALONE RESULTS
The summary results are set out below.
|
(? in million) |
||
|
Particulars |
Year ended 31 Mar 2023 |
Year ended 31 Mar 2022* |
|
Total Income |
13311 |
12086 |
|
Profit Before Depreciation, Finance cost and Tax (PBDIT) inclusive of other income |
3316 |
3118 |
|
Finance Cost |
222 |
160 |
|
Depreciation |
1092 |
986 |
|
Profit before tax |
2002 |
1972 |
|
Tax Expense/(Credit) |
(57) |
208 |
|
Net Profit for the year |
2059 |
1764 |
*The financial performance for FY22 reflect restated numbers post accounting of amalgamation scheme of Creative Stylo Packs Private Limited (CSPL), with the Company.
The total income for the year has grown by 10.1% over the previous year, with the Sales and Operating income growing by 11.4%. India standalone net profit is higher by 16.7% at ?2059 mn, compared to ?1764 mn in the previous year. The Company has received dividend amounting to ?879 mn from foreign subsidiaries.
REVIEW OF MARKET, BUSINESS AND OPERATIONS
Your Company is the world leader in manufacturing of laminated plastic tubes. Its operations are spread across the globe, in 12 countries and 21 manufacturing units. Our offerings in laminated and plastic tubes cater to Oral Care, Beauty & Cosmetics, Pharma & Health, Food and Industrials categories.
FY 2023 witnessed Covid lockdowns in China, energy crisis in Europe due to Russia Ukraine war, volatile commodity and freight prices, inflation, rising interest rates and volatile forex. However, the second half of the year witnessed a little respite in commodity prices and freight. During the year, China''s economy was severely impacted by Covid lockdowns and impacting demand for our products and consequently our business. China lifted the lockdown at the end of the year and we are hopeful that the economy will revive in the coming year.
Despite these challenges, your company delivered revenue growth of 7.6%. The revenues would have been higher but for the lockdowns in China. The revenue growth excluding EAP was 12.2%. However, continuous increase in raw material and freight costs, increase in energy costs and lag effect of price recovery resulted in decline in margin for the current year. The margin started improving due to material and inflation related price recovery starting second half of the year and increased to 16.9% (excluding Brazil 17.2%) in last quarter of the year.
Continued efforts on business development pipeline to grow the Personal Care category business resulted in the category growing higher than oral care. Personal Care now accounts for 47% of tube revenue and this reflects an improvement of 48 basis points in the share of total tube revenue. We continue to sustain & strengthen our leadership position in Oral Care.
All regions continue to build a robust business pipeline across all key categories and specific segments.
EPL has partnered with Colgate Palmolive India, one of the largest oral care brands to produce Recyclable Platina Toothpaste Tubes in India. During the year Colgate Palmolive successfully transitioned Colgate Active Salt and Colgate Vedshakti to 100% recyclable Platina laminated tubes. EPL''s new Platina Pro - 2nd generation of recyclable tubes with superior barrier properties, chemical resistance and better haptics is helping in further optimising the tube structures and enabling faster conversions of other brands of Colgate Palmolive to sustainable tube formats. Platina Pro delivers superior barrier to flavour migration which makes its ideal for oral care packaging and is also recognised by Association of Plastic Recyclers (APR) for its recyclability in code 2 HDPE recycling stream. EPL''s Platina Pro is also available in transparent and metallised versions to deliver aesthetics and recyclability without loss of any functionality. Platina and Platina Pro Laminated tubes are certified as 100 percent recyclable by The Association of Plastic Recyclers (APR) and RecyClass.
Also this year, Himalaya and EPL have jointly worked in redesigning its facewash range to improve packaging aesthetics focusing on source reduction, yet keeping it 100% recyclable in code 4 polyethylene recycling stream.
During the year, the company continued engagement with various customers on sustainability and more than doubled sustainable tube supplies.
We faced challenges over the last couple of years and are clearly coming out of this stronger. We remain committed to continuous improvement so as to deliver sustained and profitable growth. Our focus is to deliver a double-digit revenue growth as China recovers. We will continue to focus on margin improvement through product optimisation and cost efficiency.
India Standalone
India accounts for around 32.7% of your Company''s Consolidated revenue. In this challenging and volatile environment, the revenue from operations grew by 11.4%. India witnessed good demand in the year with both Oral and Non-Oral Care revenue growing by 16.7% and 25.2% respectively.
Subsidiaries and Associate
Your Company operates out of 11 other countries, besides India, through direct and step-down subsidiaries and one associate. They are divided into 4 regions - AMESA, EAP, EUROPE and AMERICAS. In the context of volatility and inflationary environment across the world, AMESA, AMERICAS and EUROPE delivered a double digit growth of 11.7%, 19.0% and 12.7% respectively and EAP declined by 1.5%. Margins of regions are impacted due to increase in raw material and freight costs, energy costs and lag effect of price recovery. However, the margins (excluding
Brazil) improved sequentially quarter over quarter in the year from 15.1% in Q1 to 17.2% in Q4.
Business Development Pipeline across regions is very strong with a focus on sub-categories of personal care by applications.
The development at these subsidiaries and the markets they operate in are further discussed in the Management Discussion and Analysis (MDA) which forms a part of this report. The salient features of the financial statements of these subsidiaries and the associate in the prescribed format are attached as a part of the audited financial statements.
During the financial year, your Company has incorporated a wholly owned subsidiary in Brazil. Greenfield project execution was in progress during the year with volumes expected to ramp up from the first quarter of FY24. One step down subsidiary in Colombia ceased to be a subsidiary of the Company due to its voluntary winding up. The operations in Colombia are being continued through the existing subsidiary in the country.
Details about the subsidiaries, associate etc. are given in the MGT 7 / annual return which is available on the Company''s website at
https://www.eplglobal.com/wp-content/uploads/2023/06/Annual-
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the Companies Act 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), consolidated financial statements of the Company and all of its subsidiaries and associate, have been prepared for the year under report. The audited consolidated financial statements along with the auditors'' report thereon forms part of this Annual report. The consolidated financial statements presented by the company include the financial results of all its subsidiaries and associate company. The audited standalone financial statements of these entities have been reviewed by the Audit Committee and the Board.
The Paid-up Equity Share Capital of the Company as on 31 March 2023 was ?636.4 million comprising of 31,82,09,865 equity shares of face value ?2 each. During the year under review, your Company has issued 23,39,186 equity shares in pursuant to Scheme of Amalgamation sanctioned by the Hon''ble National Company Law Tribunal.
Two categories of EPL tubes have won the SIES Star Awards 2023. This is a great recognition of our efforts towards innovation and design in packaging.
EPL was awarded second prize for the "Commitment to Environmental Excellence Awardâ at the esteemed 6th Annual HSE Strategy Summit & Awards 2023. This is yet another milestone towards our mission to becoming the most sustainable packaging company in the world.
EPL has been acknowledged as the "Best Company To Work Forâ in the Manufacturing sector at The Iconic Platinum Awards by Feather Touch and "National Best Employer Brands of 2022â by Times Ascent.
AMALGAMATION OF CREATIVE STYLO PACKS PRIVATE LIMITED WITH THE COMPANY
During the year, the Scheme of Amalgamation of Creative Stylo Packs Private Limited (CSPL) with the Company was approved by the Hon''ble National Company Law Tribunal, Mumbai Bench (NCLT) on 16 September 2022 and accordingly the order of NCLT had been filed with Registrar of Companies and the scheme became effective as per applicable provisions of Companies Act 2013. In pursuant to the Scheme of Amalgamation, the equity shares of the Company have been issued and allotted to specified shareholders holding equity shares in CSPL.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis (MDA) report for the year under review which analyzes the operations and state of the affairs of your company and all of its subsidiaries and associate, is given in a separate section of this Annual Report and forms part of this Annual Report.
The Company is committed to maintain the highest standards of corporate governance aligned with the best practices. Pursuant to applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance forms part of this Report. The Company is in compliance with various requirements and disclosures that have to be made in this regard. A certificate from the Secretarial Auditor confirming compliance with the Corporate Governance requirements as stipulated under the Listing Regulations forms part of the Annual Report.
Your Company continues to be on the path of profitable growth. The Company''s cash flows and financial position continue to be strong.
Considering the business growth and debt servicing, the Board believes that appropriate progressive dividend will best serve the interests of the Company and the shareholders. During the year under review, the Board of Directors of the Company in its meeting held on 5 November 2022 declared an interim dividend of ?2.15 per equity share of face value of ?2 each which was paid to the shareholders whose names appeared on the register of members as on 15 November 2022.
In addition, your Directors recommended a final dividend of ?2.15 per equity share of the face value of ?2 each, for the financial year ending on 31 March 2023. If approved, the total dividend (Interim and Final) for the financial year will be ?4.30 per equity share of face value of ?2 each. The combined dividend of ?4.30 on a face value of ?2 represents a dividend rate per share of 215% on such face value. In the previous financial year total dividend declared was ?4.30 per equity share of face value of ?2 each.
The Dividend Distribution Policy is posted in the investors section on the Company''s website at https://www.eplglobal.com/wp-content/ uploads/2021/04/Dividend_Policy_EPL_web.pdf
There is no specific statutory requirement to transfer any sum to General reserve in relation to the payment of dividend. Your Directors therefore, have not proposed any sum for transfer to Reserves during this year.
Finance cost for the year increased by ?271 mn due to increase in benchmark rates across geographies.
The consolidated net debt at end of FY23 was ?5,064 mn, including ?1,545 mn for setting up greenfield project in Brazil. Adjusted for Brazil greenfield project loan, the net debt reduced by ?1,007 mn as compared to FY22 due to focus on capital allocation and reduction in working capital. We continue to have a healthy debt to equity ratio of 0.39 (0.36 PY) and a Debt Service Coverage Ratio (DSCR) of 3.00 (4.64 PY). The consolidated ROE and ROCE are at 11.9% and 13.2% respectively as compared to 12.2% and 15% in March 2022. Financial parameters such as DSCR, Interest Coverage Ratio and Debt Equity Ratio are all at healthy levels both on Standalone and Consolidated basis.
Your Directors are pleased to share that CARE Ratings has upgraded your Company''s rating from CARE AA to CARE AA ; Stable (Double A Plus; Outlook: Stable) for NCDs and long-term bank facilities/ short term bank facilities. The Company continues to enjoy CARE A1 rating for its short-term bank facilities. The Company is also rated by the rating agency India Ratings and Research (FITCH Group) which has reaffirmed the Company''s long-term issuer rating as "IND AA â with a stable outlook. The rating agency India Ratings and Research reaffirmed the credit rating for its Commercial Paper as "IND A1 â
Forex loss of ?213 mn was incurred during the year, mainly due to 36% depreciation of Egyptian pound.
M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm registration no. 001076N/N500013) were appointed as Statutory Auditor of the Company for a term of five years in the AGM held on 6 August 2020.
The Report given by the Auditors on the Financial Statements of your Company is part of this Annual Report. There is no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.
Pursuant to the provisions of section 204 of the Companies Act, 2013, M/s. D M Zaveri & Co., Practicing Company Secretary (CP No. 4363), had been appointed to undertake the secretarial audit of the Company for the year ended on 31 March 2023. The secretarial audit report forms a part of this Report and is annexed as Annexure 1. The said report does not contain any qualification, adverse remarks or disclaimer.
The Company has complied with the Secretarial Standards as applicable to the Company pursuant to the provisions of the Companies Act 2013.
Pursuant to section 148 and applicable provisions of the Companies Act 2013 and the Companies (Cost Records and Audit) Rules 2014, the Company is required to appoint cost auditor for the audit of cost records maintained by the Company in respect of the financial year ending 31 March 2024. Your Directors based on the recommendation of the Audit committee, have re-appointed M/s. Jitendrakumar & Associates, Cost and Management Accountants, as the Cost Auditor to audit the cost
records for the financial year ending 31 March 2024. Remuneration payable to the Cost Auditor is subject to ratification by the members of the Company. Accordingly, a resolution seeking members'' ratification for the remuneration payable to M/s. Jitendrakumar & Associates, Cost and Management Accountants, is included in the Notice convening the Annual General Meeting, along with relevant details, including the proposed remuneration. The Company has maintained cost accounts and records as per applicable provisions of section 148 of the Act.
In accordance with the provisions of section 152(6) of the Companies Act and the Articles of Association of the Company, Mr. Aniket Damle, Non-executive Non-Independent Director is retiring by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers himself for re-appointment. The Board recommends his reappointment. A detailed profile of Mr. Aniket Damle with additional information required under Regulation 36(3) of the Listing Regulations and Secretarial standards on General Meetings is provided in the Notice of AGM.
All the Independent Directors have given the declaration that they meet the criteria of independence laid down under Section 149 of the Companies Act 2013 and the Listing Regulations. Every Independent Director of the Company has affirmed that they have either registered themselves under Independent Director Database and they have passed online proficiency test as required or have been exempted therefrom due to their seniority and experience.
The Company has received the declaration from all the Independent Directors confirming that in terms of Regulation 25(8) of the Listing Regulations, they are not aware of any circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. In terms of Regulation 25(9) of the Listing Regulations, the Board of Directors have taken on record such declarations after undertaking due assessment of the veracity of the same.
Further, details of Directors including remuneration, remuneration policy, criteria for determining qualification, positive attributes and independence, performance evaluation of the Board, Committees and Directors, meetings, committees and other details are given in the Corporate Governance Report, which is an integral part of this Annual and the Board''s Report. Remuneration policy is posted in investors, corporate governance section on the Company''s website at https:// www.eplglobal.com/wp-content/uploads/2021/04/Remuneration-policy-2019.pdf and salient features of the same are mentioned in the Corporate Governance Report.
Five meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance included in this Annual Report.
Mr. Amit Jain, was appointed as a Chief Financial Officer of the Company with effect from 1 April 2022.
Mr. Keyur Doshi, was appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 13 April 2023. Mr. Suresh
Savaliya, resigned from the post of the Company Secretary and Compliance officer w.e.f. 12 April 2023.
Pursuant to the provisions of Section 203 of the Companies Act 2013, as on the date of this report, the Key Managerial Personnel of the Company are Mr. Anand Kripalu, Managing Director and CEO, Mr. Amit Jain, Chief Financial Officer and Mr. Keyur Doshi, Company Secretary and Compliance Officer.
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) read with Section 134(5) of the Companies Act, 2013:
a) that in the preparation of the annual financial statements for the year ended 31 March 2023, 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 note 2 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 31 March 2023 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 were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
The Audit Committee of the Board has been constituted as per the Listing Regulations and section 177 of the Companies Act 2013. Constitution, meetings, attendance and other details of the Audit Committee are given in the Corporate Governance Report which is part of this Report.
Nomination and Remuneration Committee and the Board have adopted a performance evaluation policy for Board, Committees and Directors with the intent to set out criteria, mechanism and process for the performance evaluation. The policy provides manners to evaluate the performance of the Board, committees, independent directors, nonindependent directors and chairman. Criteria in this respect includes; Board composition, a mix of skill, experience, members'' participation and role, attendance, suggestions for effective functioning, board processes, policies and other contribution to Board effectiveness. The evaluation process includes review, discussion and feedback from directors and rating on the questionnaires through an online software based system.
Evaluation of Performance of the Board, its Committees, every Director and Chairperson, for the financial year 2022-23 has been done following the process as per the policy. The manner in which the evaluation has been carried out has also been explained in the Corporate Governance Report, which forms part of this Annual Report.
The Company''s policy on programmes and measures to familiarize Independent Directors about the Company, its business, updates and development includes various measures viz. issue of appointment letters containing terms, duties etc., management information reports, presentations and other programmes as may be appropriate from time to time. The Policy and programme aims to provide insights into the Company to enable independent directors to understand the business, functionaries, business model and other matters. The said Policy and details in this respect are displayed on the Company''s website at https:// www.eplglobal.com/wp-content/uploads/2023/04/Familiarisation-Program-31-March-2023.pdf.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its Corporate Social Responsibility (CSR) initiative, the Company has undertaken CSR projects and programs. Thrust areas for CSR include care and empowerment of the underprivileged, education, drinking water project, rural area development and skill development. These activities are in accordance with CSR activities as defined under the Act. The Company has a CSR Committee of Directors. Details about the Committee, CSR activities and the amount spent during the year, as required under section 135 of the Act and the related Rules and other details are given in the CSR Report as Annexure 2 forming part of this Report.
The Company has framed a CSR Policy in compliance with the provisions of the Act and the same is placed on the Company''s website at https:// www.eplglobal.com/wp-content/uploads/2021/04/Corporate-Social-Responsibility-Policy.pdf. The CSR Policy lays down areas of activities, thrust areas, types of projects, programs, modes of undertaking projects/ programs, resources etc.
Your Directors are pleased to report that the Company''s subsidiaries overseas also give back to the society in their respective geographies through various initiatives on the health, education and other fronts.
The Company is successfully implementing skill development programme. The Company has initiated and completed Rural Development project in areas around the vicinity of its factories such as drinking water project, construction of school library, construction of school classrooms and installation of street lights.
LOANS, GUARANTEES AND INVESTMENTS
The Company mainly gives guarantee for its subsidiaries to meet their business needs. Details of loans, guarantees and investments covered under applicable provisions of section 186 of the Act and as per para A of Schedule V of the Listing Regulations are given in note 52 to the standalone financial statements.
Arrangements or transactions entered by the Company during the financial year with related parties were at an arm''s length basis and in the ordinary course of business. All related party transactions are
placed for approval before the Audit Committee and also before the Board wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/ arrangements/ transactions with related parties which could be considered material in accordance with the policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no transactions to report in Form AOC-2.
Details of the related party transactions during the year as required under Listing Regulations and Indian accounting standards are given in note 54 to the standalone financial statements.
The policy on dealing with the Related Party Transactions including determining material subsidiaries is posted in investors, corporate governance section on the Company''s website at https://www.eplglobal. com/wp-content/uploads/2021/04/Related-Party-Transaction-Policy.pdf and https://www.eplglobal.com/wp-content/uploads/2021/04/Policy-for-determining-material-subsidiary.pdf.
Relations with employees across all the offices and units continued to be cordial. HR policies of the Company are focused on developing the potential of each employee. With this premise, a comprehensive set of HR policies are in place, aimed at attracting, retaining and motivating employees at all levels. Your Company had 1358 permanent employees as on 31 March 2023.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 3 (a) and forms part of this Report.
Other details in terms of Section 197(12) of the Companies Act 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 3 (b) and forms part of this Report.
The Employee Stock Option Scheme 2020 (the Scheme or ESOS2020) was approved by the Board of Directors on 22 May, 2020 and by the Shareholders by Postal Ballot on 1 July 2020 for the employees of the Company and its subsidiaries. There was no modification in the Scheme during the year. The Scheme is in compliance with applicable laws.
The Nomination and Remuneration Committee of the Board of Directors (NRC) of the Company, inter alia administers and monitors the Scheme of the Company in accordance with applicable SEBI regulations.
On 10 May 2022, the Nomination and Remuneration Committee of the Company has approved the grant of 1,08,226 Options to the eligible employee of the Company with a right to exercise into an equal number of equity shares of the face value of ?2 each.
The disclosure relating to the Scheme and other relevant details are posted in the investors, corporate governance section on the Company''s website at https://www.eplglobal.com/wp-content/uploads/2023/06/ Disclosure-regarding-ESOS-2023.pdf.
The Scheme shall not extend to any Promoter or those belonging to the Promoters Group or to any Director, who either by himself or through his relatives or through any body corporate, directly or indirectly holds more than 10% of the outstanding equity shares.
The relevant details on the options granted and the accounting of their costs are set out in the Notes to the Standalone accounts.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rulesâ), all unpaid or unclaimed dividends, after the completion of seven years are required to be transferred by the Company to the IEPF, established by the Government of India. Further, according to the IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of ?13,06,080/-. Further, 50,304 corresponding shares on which dividends were unclaimed for seven consecutive years were also transferred to IEPF Authority as per the requirements of the IEPF Rules. Year-wise amounts of unpaid / unclaimed dividends lying in the unpaid account up to year ended 31 Marsh 2023 are provided in the Shareholder Information Section of Corporate Governance Report.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 4 and forms part of this Report.
ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)
EPL considers ESG as an integral aspect in the functioning of the organization and therefore we have incorporated sustainability in the dynamics of our business by focusing on the 3Ps of business i.e. Product, Process, and People. The 3Ps of business are aligned with global Sustainable Development Goals (SDGs) and United Nations Global Compact (UNGC) principles.
At EPL, we have a 360° approach to sustainability, our perspective towards sustainability encompasses social, environmental, health, and safety obligations. Our vision is not limited just to our products but we also strive to reduce waste, conserve our natural resources, make our products sustainable and create a safe and inclusive workplace environment.
EPL constantly endeavours to broaden its spectrum in sustainability and hence it has engaged with external organizations like EcoVadis, Ellen MacArthur Foundation, and UNGC etc. We also report our Environmental, Social and Governance performance initiatives and sustainability roadmap through our Annual Sustainability Report which is aligned in accordance with GRI reporting.
To ensure that our actions are both profitable and sustainable, we are developing a sustainability roadmap that is woven with these principles viz. Product, Process and People sustainability.
Product sustainability
Sustainability in terms of our Products is reflected through our Range of Platina tubes which is 100% recyclable. The spectrum of our product has an integration of the 3Rs (Reuse, Reduce and Recycle). We are on the path to achieving 100% recycle-ready products. EPL achieved Green (Aligned) rating on all the Global commitment toward Ellen MacArthur foundation plastic circular economy.
Process sustainability
EPL has made efforts towards integrating sustainability in its strategy, process and all operations by incorporating the Harmonised Manufacturing Policy into it''s operations. We have made a commitment to reducing environmental concerns like the elimination of waste, reduction of emissions and conserving natural resources. To enhance our Environmental Performance, all our manufacturing plants are certified with an Environmental management system (ISO14001:2015) & Energy Management System (ISO 50001:2018) from TUV Nord.
Moreover, to strengthen our commitment to environment, we have set a goal to achieve Net Zero emissions globally by 2050, as per the Science based targets.
EPL has continued to maintain its CDP rating "A" for supplier engagement Leadership for the second consecutive year. EPL also progressed towards climate change rating A- (Leadership band) for CDP 2022 rating.
People sustainability
EPL fosters a culture that values diversity, inclusion and supports our employees'' development. We acknowledge our responsibility towards driving the economic, social and governance value. Our policies are aligned with UNGC principles and incorporate people''s practices on ethics, labour and human rights.
We encourage our stakeholders, suppliers and vendors to follow the best practices outlined in our policies and code of conduct. Throughout the year several sensitization programmes are implemented to ensure that our supply chain is in full compliance with our sustainability philosophy. A significant portion of our social outreach efforts are directed towards members of the communities in which we live by, through our CSR initiatives. Our CSR initiatives are aligned and focused on promoting the Sustainability Development Goals (SDGs) through engaging in community development, skill development and plastic waste management. EPL maintains its standards at the workplace and has been certified with ISO 45000:2018 for all its plants across the globe to regulate and create safe workplace and to minimize workplace fatalities.
To achieve a diverse and gender-equal workplace, EPL aims to achieve 30% of women workforce globally, and till date, EPL has a total 24% of women workforce globally.
EPL has always intended to keep a harmonious environment to encourage and motivate employees. EPL has been recognized as one of the "National Brands of 2022â by World HRD Congress and has been bestowed with "Best Company to Work forâ award in the Manufacturing sector at the Iconic Platinum Awards by Feather Touch.
We place a strong emphasis on sustainable procurement practices in addition to high-quality products. We have acquired ISO 20400:2017 (Sustainable Procurement) accreditation for all the plants to align our procurement practices with sustainable goals.
At EPL, we constantly aim to surpass our previous accomplishments. We like setting an example for others and will keep doing so by making greater efforts in the areas of Environment, People and Profits.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
As per applicable provisions of the Listing Regulations, a Business Responsibility and Sustainability Report is annexed herewith and forms part of this Report as Annexure 5.
OTHER INFORMATION / DISCLOSURES
There are no significant material orders passed by the Regulator, Courts or Tribunal which would impact the going concern status of the Company and its future operations.
There have been no material changes and commitments affecting the financial position of the Company, that have occurred between end of financial year and date of this Report.
In accordance with section 134(3)(a) and section 92(3) of the Act an Annual Return as at 31 March 2023 in Form MGT-7 is posted on the website of the Company at https://www.eplglobal.com/wp-content/ uploads/2023/06/Annual-Return-MGT-7-as-on-2023.pdf.
Wherever applicable, refer the Company''s website https://www. eplglobal.com/. Relevant details will be provided to the members who seek those details with a written request to the Company Secretary.
The Company has a policy against sexual harassment at work place and has constituted an Internal Complaints Committee and complied with the provisions in this respect as applicable under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no complaint received from any employee during the year, nor any complaint remains outstanding for redressal as on 31 March 2023. There was no complaint pending to resolve as on 31 March 2022.
No application has been made by the Company and there are no proceedings pending against the Company, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the Financial Year 2022-23.
There were no transactions requiring disclosure or reporting in respect of matters relating to one-time settlement with any bank or financial institution.
The Company has a vigil mechanism to deal with instances of unethical behaviour, fraud or mismanagement. The whistle blower policy is available on the website of the Company at https://www.eplglobal. com/wp-content/uploads/2021/04/2-WBP-EPL-2021-web.pdf. Contact details in relation to whistle blower policy are posted on the Company''s website.
During the year under review, neither the statutory auditor nor the secretarial auditor has reported to the Audit Committee under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report under the said Section read with Section 134(3)(ca) of the Companies Act, 2013.
The Company has a proper and adequate Internal Financial Control System to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
The Internal Financial Control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of an internal audit conducted by in-house trained personnel and external firms of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee. Internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of persons.
During the year, as part of the control assurance process, the financial controls were reviewed by an independent agency in line with the guidelines issued by ICAI on internal financial controls and reported satisfactory in design and operational effectiveness.
A risk is an event or condition whose occurrence has an adverse impact on the achievement of the Company''s business objectives. Risk management is becoming even more relevant and important in today''s world where uncertainties are increasing by the day.
At EPL, we have framed a robust Risk Management Policy to identify, assess, monitor and mitigate actual or potential risk exposures in order to minimize any adverse impact on our strategic business objectives, protecting the interest of our stakeholders and meeting the regulatory requirements. We have a well laid down mechanism where all business functions follow a common language of risk and work on monitoring risks on a regular basis wherein the nature/quantum of material risks are assessed along with the adequacy of the mitigation measures. We leverage on the risk management process to drive better business decisions, protect our assets and support a sustainable business.
The Board through the Risk Management Committee reviews the risks and mitigation measures on a periodic basis. All aspects of risk such as strategic, regulatory and compliance, operational, financial and reputational risks, whether internal or external, are discussed in the Risk Management Committee meeting. Key risks to which the Company is exposed are detailed out in the Management Discussion and Analysis report with the mitigation plan.
Your Company has not accepted any deposits from the public and there are no outstanding deposits as on 31 March 2023.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion and Analysis may be forward looking within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Certain factors that could affect the Company''s operations include an increase in input raw materials price, availability of raw materials, changes in government regulations, tax laws, economic conditions and other factors.
Directors wish to place on record their sincere thanks and appreciation to all our customers, suppliers, banks, authorities, members and associates for their co-operation and support at all time and to all our employees for their unstinted contribution to the growth and profitability of Company''s business and look forward to continued support.
For and on behalf of the Board EPL Limited
19 May 2023 Anand Kripalu Sharmila A Karve
Mumbai Managing Director & CEO Director
Mar 31, 2022
The Consolidated Total Income grew year over year by 10.9%, with the Sales and Operating income growing by 11.0%.
All regions except EUROPE registered healthy growth. AMESA, EAP and AMERICAS delivered double digit growth of 23.4%, 10.3% and 12.9% respectively. Strong growth in both categories - Oral Care grew by 10.2%, and Personal Care by 11.2%. However, unprecedented volatility in input material prices, shortage of input material, inflationary environment, supply chain disruption and wage inflation & absenteeism along with continued global Covid19 pandemic situation impacted the margin of the Company.
The consolidated operating profit margin declined by 280 bps to 9.5%. Despite higher investment in working capital and capital expenditure, Finance costs declined by 6.1%, aided by lower interest costs and better negotiation. Finance costs hence reduced by Rs. 26 Mn. The net profit attributable to the equity holders excluding exceptional items of Rs. 2144 mn for the year, declined by 16.0%.
INDIA STANDALONE RESULTS
The summary results are set out below.
|
(Rs. in Million) |
||
|
Particulars |
Year ended |
Year ended |
|
31.03.2022 |
31.03.2021 |
|
|
Total Income |
11043 |
9552 |
|
Profit Before Depreciation, Interest and Tax (PBDIT) inclusive of other income |
2858 |
2786 |
|
Finance Cost |
(147) |
(148) |
|
Depreciation |
(776) |
(896) |
|
Profit before tax |
1935 |
1742 |
|
Tax Expense |
(198) |
(212) |
|
Net Profit for the year |
1737 |
1530 |
Your Directors are pleased to present their report on your Company''s business operations along with the audited financial statements for the financial year ended on 31 March 2022.
The highlights of the financial results are set out below.
CONSOLIDATED GLOBAL RESULTS
The summary results are set out below.
|
(Rs. in Million) |
||
|
Particulars |
Year ended |
Year ended |
|
31.03.2022 |
31.03.2021 |
|
|
Total Income |
34448 |
31061 |
|
Profit Before Depreciation, Finance Cost and Tax (PBDIT) inclusive of other income |
5881 |
6256 |
|
Finance Cost |
403 |
(429) |
|
Depreciation |
2514 |
(2346) |
|
Profit before share of Profit/ (Loss) from Associate and exceptional items |
2964 |
3481 |
|
Share of Profit /(Loss) from Associate |
(76) |
(9) |
|
Profit before exceptional items and tax |
2888 |
3472 |
|
Exceptional items net (Loss)/Gain |
-- |
(161) |
|
Tax expense |
675 |
868 |
|
Net Profit for the year attributable to owners of the parent |
2144 |
2391 |
The Total income for the year has grown by 15.6% over the previous year. India standalone Net profit is higher by 13.5% at Rs. 1737 Mn, compared to Rs.1530 Mn in the previous year. The Company has received a Dividend amounting to Rs. 1135 Mn from foreign subsidiaries.
REVIEW OF MARKET, BUSINESS AND OPERATIONS
Your Company is the world leader in manufacturing of laminated plastic tubes. Its operations are spread across the globe, in 11 countries and 20 manufacturing units. Our wide range of laminates, coupled with innovative decoration, closures, dispensers and innovative features are in great demand across both FMCG and Pharma companies the world over.
FY 2022 was another challenging year and disrupted the business due to unprecedented volatility in input material prices, shortage of input material, inflationary environment, supply chain disruption and wage inflation & absenteeism along with continued global Covid19 pandemic situation.
Despite these challenges, Company delivered strong revenue growth, even as we continue to navigate the mitigation plans and prioritized service to customers over the cost to have long term benefits to the business. However, continued increase in raw material and freight costs and increase in personnel costs due to absenteeism in western geographies led to a drop-in margins.
During the year, the pandemic continued to disrupt the supply chain across a range of industries. Your Company took timely and proactive measures to ensure the safety of its employees, operations and uninterrupted services to its customers.
Focused efforts on growing the Personal Care category business continue to pay good dividends. Personal Care now accounts for 46.1% of tube revenue and this reflects an improvement of 22 basis points in the share of total tube revenue despite the impact of the pandemic on Beauty & Cosmetic category in EUROPE. We continue to sustain & strengthen our leadership position in Oral Care.
All regions continue to build a robust business pipeline across all key categories and specific segments within the categories such as Oral Care, Beauty & Cosmetics, Pharma & Health, Food & Nutrition and Home Care.
EPL has partnered with Colgate Palmolive India, one of the largest oral care brands to produce Recyclable Platina Toothpaste Tubes in India. This first set of recyclable tubes is the starting point for converting to hundred percent recyclable tubes for Colgate Palmolive. This innovation was enabled via EPL''s Association of Plastic Recyclers, USA(APR) approved 100% recyclable and fully recyclable Platina Tubes to pack Colgate Active Salt and Colgate Vedshakti, with other brands in the portfolio to follow. EPL''s Platina, an eco-friendly laminated tube, is designed to deliver source reduction and recyclability without the loss of any barrier properties. This allows for sustained product stability and durable shelf life of the packed content. Platina tube is especially suited for oral and beauty & cosmetics products. Platina tubes and caps are certified as 100 per cent recyclable by The Association of Plastic Recyclers (APR) and RecyClass.
During the year, Vicco laboratories and EPL have also jointly worked to convert the turmeric range of products to 100% recyclable packaging by adapting APR, USA approved Platina tubes.
India accounts for around 29% of your Company''s Consolidated revenue. In this challenging and volatile environment, the revenue from operations grew by 16.7%. In addition to addressing and overcoming the challenges of the supply chain disruption, inflationary pressure and pandemic, your Company continues to build on the strong business development pipeline to secure the future.
Your Company operates out of 10 other countries, besides India, through direct and step-down subsidiaries and one associate. They are divided into 4 regions - AMESA, EAP, EUROPE and AMERICAS. Unprecedented volatility in input material prices, shortage of input material, inflationary environment, supply chain disruption and wage inflation & absenteeism along with continued global Covid19 pandemic situation impacted all regions and subsidiaries during the year. Despite this AMESA, EAP and AMERICAS delivered double digit growth of 23.4%, 10.3% and 12.9% respectively. Personal Care share for AMESA improved by 4.5% and EAP by 1.5%. Europe''s personal care category is impacted by the Covid situation due to lower demand in Beauty & Cosmetics segment. Margins of regions are impacted due to volatility.
Business Development Pipeline across regions is very strong with a focus on sub-categories of personal care by applications.
The development at these entities and the markets they operate in are further discussed in the Management Discussion and Analysis (MDA) which forms a part of this report. The salient features of the financial statements of these subsidiaries and the associate in the prescribed
format are attached as a part of the audited financial statements.
The Company is in process to incorporate a wholly owned subsidiary in Brazil. The objective of the formation of a subsidiary in Brazil is to set up a greenfield project for the packaging tube business, which will help to leverage the growth opportunities in the attractive, fast-growing market and will also help the Company to become more agile and customer focused.
Details about the subsidiaries, associates etc are given in the MGT 7 / annual return which is available on the Company''s website www. eplglobal.com.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), consolidated financial statements of the Company and all of its subsidiaries and associate, have been prepared for the year under report. The audited consolidated financial statements along with the auditors'' report thereon forms part of this Annual report. The consolidated financial statements presented by the Company include the financial results of all its subsidiaries and associate. The audited standalone financial statements of these entities have been reviewed by the Audit Committee and the Board.
We are pleased to share that the Company has achieved the Award of "Best Governed Companyâ in the 21st edition of the ICSI National Award for Excellence in Corporate Governance. This prestigious award has been conferred to EPL for observing and implementing the best practices in Corporate Governance. EPL was adjudged the winner by the Jury, comprising distinguished experts from various fields, headed by the Hon''ble Justice Shri P. Sathasivam, Former Chief Justice of India.
EPL has been awarded a rating of ''B'' (Management Band) by CDP for its 2021 Climate Change and Water Security disclosures surpassing the average ratings for the Global and the Asia region which stands for ''B-'' (climate change) and ''B''(water security). EPL Limited is proud to be recognized with the prestigious ''A'' Rating on the CDP 2021 Supplier Engagement Leader board. This score demonstrates EPL''s commitment towards mitigating GHG emissions throughout its operations and supply chain for achieving sustainability objectives.
One of the subsidiaries of the Company in Germany has received the Winner award at Worldstar 2022 organised by World Packaging Organisation. The award is received for a 100% recyclable PCR laminate tube for Health and Personal Care category.
EPL has also received ''Gomant Suraksha Puraskar 2020'' - for its factory located in Goa for Safety measures and performance in the area of occupational health, safety and environment. The Safety Awards are organized annually by the Green Triangle Society and Inspectorate of Factories and Boilers, Government of Goa.
The Company also achieved the ETMA Award 2020 in the category "Sustainabilityâ for its tubes SuperCoco and SuperGreen from happybrush®. The laminate used for this is a result of the "Go Greenâ initiative of the Company and tubes are made out of Post-Consumer Recycled Plastics (PCR). Producing these tubes is very demanding
and complex because PCR tubes must fulfill all the necessary barrier properties over their entire life cycle and return to their original shape after each use. With the happybrush® tube, EPL has taken an entirely new approach by opting for a PCR content of "justâ 30 percent. This saves around 30 percent in weight compared to a classic PE tube. For the final product, this actually translates into an overall saving in resources of around 60 percent.
AMALGAMATION OF CREATIVE STYLO PACKS PRIVATE LIMITED WITH THE COMPANY
The Company acquired 72.46% equity shares in Creative Stylo Packs Private Limited (CSPL) and accordingly CSPL became the subsidiary of your company wef 1 February 2021. Your Company has received no objection to the Scheme from National Stock Exchange of India Limited and BSE Limited pursuant to the provisions of Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Equity Shareholders of the Company have approved the Scheme, with the requisite majority in their meeting held on 05 January 2022, as per Directions of the National Company Law Tribunal, Mumbai Bench (NCLT). The Company has filed a Petition with NCLT in relation to the Merger, pursuant to applicable provisions of the Companies Act 2013. The Scheme is subject to requisite approvals of NCLT and regulatory authorities, as applicable. Post approval of the scheme, the Company will allot equity shares to the shareholders of Creative Stylo Packs Private Limited as per the scheme of amalgamation.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis (MDA) report for the year under review, which analyzes the operations and state of the affairs of your company and all of its subsidiaries and associate, is given in a separate section of this Annual Report, and forms part of this Annual Report.
The Company is committed to maintain the highest standards of corporate governance aligned with the best practices. Pursuant to applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance forms a part of this Report. The Company is in compliance with the various requirements and disclosures that have to be made in this regard. A certificate from the Secretarial Auditor confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations forms a part of the Annual Report.
Your Company continues to be on the path of profitable growth. The Company''s cash flows and financial position continue to be strong.
Considering the business growth and debt servicing, the Board believes that appropriate a progressive dividend will best serve the interests of the Company and the shareholders. During the year under review, the Board of Directors of the Company in its meeting held on 10 November 2021 declared an interim dividend of Rs. 2.15 per equity share of face value of Rs. 2 each which is paid to the shareholders whose names appeared on the register of members as on 19 November 2021.
In addition, your Directors recommend a final dividend of Rs. 2.15 per equity share of the face value of Rs. 2 each, for the financial year ending on 31 March 2022. If approved, the total dividend (Interim and Final) for the financial year will be Rs. 4.30 per equity share of face value of Rs. 2 each. The dividend payout ratio for Interim and Final Dividend is 215%. In
the previous financial year total dividend declared was Rs. 4.10 per equity share of face of Rs. 2 each.
The Dividend Distribution Policy is posted in the investors section on the Company''s website or link, https://www.eplglobal.com/investors/
There is also no specific statutory requirement to transfer any sum to General reserve in relation to the payment of dividend. Your Directors therefore have not proposed any sum for transfer to Reserves during this year.
Despite higher investment in working capital due to supply chain disruption and also higher investment in capital expenditure to create future capabilities, interest costs reduced by Rs. 26 mn on account of better negotiation and lower interest rates. The average rate of interest declined by 16 bps due to appropriate mix of various forms of debt, market conditions and better negotiations.
The consolidated net debt as at end of FY22 was Rs. 4645 Mn, which is higher by Rs. 1518 Mn compared to previous year end, representing a healthy debt to equity ratio of 0.36 (0.33 PY) and a DSCR of 4.64 (3.31 PY). The consolidated ROE and ROCE are at 12.2% and 15.0% respectively as compared to 15.8% and 19.7% in March 2021. Financial parameters such as Debt Service Coverage Ratio, Interest Coverage Ratio and Debt Equity Ratio are all at healthy levels both on Standalone and Consolidated basis.
Your Directors are pleased to inform that your Company continues to enjoy CARE AA rating for its NCDs and various long-term bank facilities and CARE A1 rating for its short-term bank facilities. The Company is also rated by the rating agency India Ratings and Research (FITCH Group) which have upgraded the Company''s long-term issuer rating from "IND AAâ to "IND AA â with a stable outlook. The rating agency India Ratings and Research reaffirmed the credit rating to its Commercial Paper at "IND A1 â
During the year, your Company continued to make successful issues of Commercial papers at competitive interest rates commensurate with its short-term top credit rating and also redeemed the Commercial Papers on the maturity date.
Prudent exchange risk management further helped contain exchange losses in the consolidated financial statement at Rs. 22 Mn.
The observation made in the Auditors Report on the Company''s financial statements for the financial year ended on 31 March 2022 are self-explanatory and therefore do not call for any further comments or information.
At the AGM held on 6 August 2020, M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm registration no. 001076N/N500013) was appointed as Statutory Auditor of the Company for a term of five years.
Pursuant to the provisions of section 204 of the Companies Act, 2013 M/s. D M Zaveri & Co., Practicing Company Secretary (CP No. 4363), has been appointed to undertake the secretarial audit of the Company for the year ended on 31 March 2022. The secretarial audit report forms a part of this
Report and is annexed as Annexure 1. The said report does not contain any qualification, adverse remarks or disclaimer.
The Company has complied with the Secretarial Standards as applicable to the Company pursuant to the provisions of the Companies Act 2013.
Pursuant to section 148 and applicable provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules 2014, the Company is required to appoint cost auditor for the audit of cost records maintained by the Company in respect of the financial year ending 31 March 2023. Your Directors have on the recommendation of the Audit committee, appointed Jitendrakumar & Associates, Cost and Management Accountants, as the Cost Auditor to audit the cost records for the financial year ending 31 March 2023. Remuneration payable to the Cost Auditor is subject to ratification by the members of the Company. Accordingly, a resolution seeking members'' ratification for the remuneration payable to Jitendrakumar & Associates, Cost and Management Accountants, is included in the Notice convening the Annual General Meeting, along with relevant details, including the proposed remuneration. The Company has maintained cost accounts and records as per applicable provisions of section 148 of the Act.
In accordance with the provisions of section 152(6) of the Companies Act and the Articles of Association of the Company, Mr. Animesh Agrawal, Non-executive Non-Independent Director is being retire by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. A detailed profile of Mr. Animesh Agrawal with additional information required under Regulation 36(3) of the Listing Regulations and Secretarial standards on General Meetings is provided in the Notice of AGM.
Mr. Anand Kripalu was appointed as an additional director effective from 18 August 2021. The members of the Company through the Postal Ballot Notice dated 18 August 2021, the result of which was declared on 1 October 2021 have approved the appointment of Mr. Anand Kripalu as a Director, Managing Director and CEO of the Company for period of five years with effect from 18 August 2021 and accordingly he is continuing as Key Managerial Personnel.
Mr. Sudhanshu Vats, has resigned from the post of Director, CEO and Managing Director of the Company with effect from 31 August 2021 due to personal reasons. The Board placed on record its appreciation for the valuable contributions and support made by Mr. Sudhanshu Vats.
All the Independent Directors have given the declaration that they meet the criteria of independence laid down under Section 149 of the Companies Act, 2013 and the Listing Regulations. Every Independent Director of the Company has affirmed that they have registered themselves under Independent Director Database and they have passed online proficiency test as may be required or exempted from such test considering their seniority and experience.
The Company has received the declaration from all the Independent Directors confirming that in terms of Regulation 25(8) of the Listing Regulations, they are not aware of any circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. In terms of Regulation 25(9) of the Listing Regulations, the Board of Directors has ensured the veracity of the
disclosures made under Regulation 25(8) of the Listing Regulations by the Independent Directors of the Company.
Further details of Directors including remuneration, remuneration policy, criteria for qualification, independence, performance evaluation of the Board, Committees and Directors, meetings, committees and other details are given in the Corporate Governance Report, which is an integral part of this Annual and the Board''s Report. Remuneration policy is posted in investors, corporate governance section on the Company''s website or link, https://www.eplglobal.com/investors/ and salient features of the same are mentioned in the Corporate Governance Report.
Seven meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance included in this Annual Report.
Mr. Amit Jain, was appointed as a Chief Financial Officer of the Company with effect from 1 April 2022. Mr. Parag Shah, Chief Financial Officer and KMP has resigned wef 31 March 2022 due to personal reason.
Pursuant to the provisions of Section 203 of the Companies Act 2013, as on the date of this report, the Key Managerial Personnel of the Company, are Mr. Anand Kripalu, Managing Director and CEO, Mr. Amit Jain, Chief Financial Officer and Mr. Suresh Savaliya, SVP - Legal, Company Secretary and Compliance Officer.
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 year ended 31 March 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 note 2 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 31 March 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 were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
The Audit Committee of the Board has been constituted as per the Listing Regulations and section 177 of the Companies Act, 2013. Constitution, meetings, attendance and other details of the Audit Committee are given in the Corporate Governance Report which is part of this Report.
Nomination and Remuneration Committee and the Board adopted a performance evaluation policy for Board, Committees and Directors with the intent to set out criteria, manners and process for the performance evaluation. The policy provides manners to evaluate the performance of the Board, committees, independent directors, non-independent directors and chairman. Criteria in this respect includes; Board composition, a mix of skill, experience, members'' participation and role, attendance, suggestions for effective functioning, board process, policies and others. The evaluation process includes review, discussion and feedback from directors and rating on questionnaires through online software based system.
Evaluation of Performance of the Board, its committees, every Director and Chairperson, for the financial year 2021-22 has been done following the manner and process as per the policy which includes discussion, feedback, assessment and rating on questionnaires. The manner in which the evaluation has been carried out has also been explained in the Corporate Governance Report, which forms part of this Annual Report.
The Company''s policy on programmes and measures to familiarize Independent Directors about the Company, its business, updates and development includes various measures viz. issue of appointment letters containing terms, duties etc., management information reports, presentations and other programmes as may be appropriate from time to time. The Policy and programme aims to provide insights into the Company to enable independent directors to understand the business, functionaries, business model and others matters. The said Policy and details in this respect are displayed on the Company''s website www. eplglobal.com.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its Corporate Social Responsibility (CSR) initiative, the Company has undertaken CSR projects and programs. Thrust areas for CSR include care and empowerment of the underprivileged, education, drinking water project, rural area development and healthcare, preventive health care, community welfare, and skill development. These activities are in accordance with CSR activities as defined under the Act. The Company has a CSR Committee of Directors. Details about the Committee, CSR activities and the amount spent during the year, as required under section 135 of the Act and the related Rules and other details are given in the CSR Report as Annexure 2 forming part of this Report.
The Company has framed a CSR Policy in compliance with the provisions of the Act and the same is placed on the Company''s website https://www. eplglobal.com/ The CSR Policy lays down areas of activities, thrust areas, types of projects, programs, modes of undertaking projects/ programs, resources etc.
Your Directors are pleased to report that the Company''s subsidiaries overseas also give back to the society in their respective geographies through various initiatives on the health, education and other fronts.
The Company has extended all possible support to the affected people during the Covid19 crisis. The Company has distributed around 1667 grocery kits during lockdown to needy individuals and families comprising of daily wage earners, homeless, migrant workers, unemployed and
dependents through NGO. The Company is successfully implementing skill development programme. The Company has initiated and completed Rural Development project in the vicinity area of its factories such as drinking water project, construction of school library, development of the common cultural area, renovation of primary health care centre, installation of the solar system, construction of school classrooms and distribution of health care equipments.
LOANS, GUARANTEES AND INVESTMENTS
The Company mainly gives guarantee for its subsidiaries to meet their business needs. Details of loans, guarantees and investments covered under applicable provisions of section 186 of the Act are given in the note 47 to the standalone financial statements.
Arrangements or transactions entered by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. All related party transactions are placed for approval before the Audit Committee and also before the Board wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/ arrangements/ transactions with related parties which could be considered material in accordance with the policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC2.
Details of the related party transactions during the year as required under Listing Regulations and Indian accounting standards are given in note 49 to the standalone financial statements.
The policy on dealing with the Related Party Transactions including determining material subsidiaries is posted in investors/corporate governance section on the Company''s website or link, https://www. eplglobal.com/investors/
Relations with employees across all the offices and units continued to be cordial. HR policies of the Company are focused on developing the potential of each employee. With this premise, a comprehensive set of HR policies are in place, aimed at attracting, retaining and motivating employees at all levels. Your Company had 1114 permanent employees as on 31 March 2022.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 3(a) and forms part of this Report.
Other details in terms of Section 197(12) of the Companies Act, 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 3(b) and forms part of this Report.
The Employee Stock Option Scheme 2020 (the Scheme or ESOS2020) was approved by the Board of Directors on 22 May 2020 and by the Shareholders by Postal Ballot on 1 July 2020 for the employees of the
Company and its subsidiaries. There was no modification in the Scheme during the year. The Scheme is in compliance with applicable laws.
The Nomination and Remuneration Committee of the Board of Directors (NRC) of the Company, inter alia administers and monitors the Scheme of the Company in accordance with applicable SEBI regulations.
On 10 November 2021, the Nomination and Remuneration Committee of the Company has approved the grant of 15,26,718 Options to the eligible employees of the Company convertible into an equal number of equity shares of the face value of Rs. 2 each.
The disclosure relating to the Scheme and other relevant details are posted in the investors>corporate governance section on the Company''s website or link: https://www.eplglobal.com/investors/
The Scheme shall not extend to any Promoter or those belonging to the Promoters Group or to any Director, who either by himself or through his relatives or through any body corporate, directly or indirectly holds more than 10% of the outstanding equity shares.
During the year, 305072 options were exercised and equal number of equity shares of face value of Rs. 2 each were allotted as fully paid up against payment of the stipulated exercise price as per the Scheme.
The relevant details on the options granted and the accounting of their costs are set out in the Notes to the Standalone accounts.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, established by the Government of India, after the completion of seven years. Further, according to the IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of Rs. 12,49,562/-. Further, 92,562 corresponding shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules. Year-wise amounts of unpaid / unclaimed dividends lying in the unpaid account upto the year and the corresponding shares, which are liable to be transferred are provided in the Shareholder Information Section of Corporate Governance Report and are also available on our website, at https://www.eplglobal.com/
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 4 and forms part of this Report.
ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)
EPL believes that ESG (Environment, Social & Governance) is extremely critical for building a resilient business. Therefore we have developed a holistic approach that focuses on Product, Process and People sustainability that seamlessly integrates into the Company''s core business strategy. Our Sustainability framework is closely aligned with
global Sustainable Development Goals and United Nations Global Compact (UNGC) principles. We are working meticulously to build a strong culture of sustainability within the Company and disclose our ESG performance transparently to all stakeholders. We participate in many programs like EcoVadis and CDP which assesses our actions and impacts on the environment and society. We also drive several customer-specific initiatives and impact measurement that are environmentally and socially significant. EPL has published its second Annual Sustainability Report 2021, wherein we have reported all our ESG initiatives, including performance and future plans. We intend to make our commitments public through widely accepted sustainability programs that are designed in line with the climate-change goals of the world.
EPL''s integrated sustainability approach includes Product, Process and People Sustainability.
⢠On Product Sustainability, our Platina range of tubes contributes significantly towards the circular economy, we also focus on our responsibility as extended producers through various initiatives like PCR and PIR. EPL is the first Indian packaging company to become a signatory to New Plastics Economy Global commitment for creating a circular economy for plastics. We are also a founding member of the India Plastic Pact which aims to bring together civil society, public and private organisations to transform the linear plastic system to a circular plastic economy in India.
⢠On Process Sustainability, we committed to reducing GHG emissions by aligning the business to the Paris Climate agreement goal of limiting global temperature rise to 1.5 degrees Celsius. Our Harmonised Manufacturing Policy drives company-wide initiatives on improving energy management, ensuring water security and wastage reduction in order to achieve carbon-neutrality within defined goals and timelines. 88% of EPL''s manufacturing factories across the globe have received Integrated Management System (IMS) certification for ISO standards 14001:2015 - Environment Management System, ISO 45001:2018 - Occupational Health and Safety (OH&S) and ISO 50001:2018 - Energy Management Systems by TUV Nord GmBH
⢠On People Sustainability, EPL focuses on creating a diverse, dynamic and safe ecosystem for employees that encourages learning and growth. We have devised people-practices on ethics, labour and human rights aligned with UNGC principles across our operations and supply chain. Our CSR initiative "Greening Livesâ focuses on driving positive change for stakeholders around our factories, with initiatives around waste management and skill development. Our Supplier''s Sustainability Code of Conduct ensures all our suppliers adhere to basic expectations of doing responsible business by ensuring compliance with environmental, social, governance and legal requirements.
Our Sustainability efforts are tracked and transparently disclosed through internationally accepted reporting frameworks like the GRI standard. EPL will continue to work with stakeholders across the spectrum and voluntarily disclose information on how it embeds sustainability into its operations and governance structure.
BUSINESS RESPONSIBILITY REPORTING
As per applicable provisions of the Listing Regulations, a business responsibility report is given herewith and forms part of this Report as Annexure 5.
OTHER INFORMATION / DISCLOSURES
There are no significant material orders passed by the Regulator, Courts or Tribunal which would impact the going concern status of the Company and its future operations.
There have been no material changes and commitments affecting the financial position of the Company, occurred between end of financial year and date of this Report.
In accordance with section 134(3)(a) and section 92(3) of the Act, an annual return as at 31 March 2022 in Form MGT7 is posted on the website of the Company.
Annual Return pursuant to applicable provisions of the Act is posted in section of investors, corporate governance on the Company''s website or link https://www.eplglobal.com/investors/
Wherever applicable, refer the Company''s website https://www.eplglobal. com/ or relevant details will be provided to the members on written request to the Company Secretary.
The Company has a policy against sexual harassment at work place and has constituted an Internal Complaints Committee and complied with the provisions in this respect as applicable under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. There was no complaint received from any employee during the year, nor any complaint remains outstanding for redressal as on 31 March 2022. There was no complaint pending to resolve as on 31 March 2021.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy laying down a vigil mechanism to deal with instances of unethical behaviour, fraud or mismanagement. The said policy has been explained in the corporate governance report and also displayed on the Company''s website https://www.eplglobal. com. Contact details in relation to whistle blower policy are posted on the Company''s website.
The Company has a proper and adequate Internal Financial Control System, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
The Internal Financial Control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of an internal audit conducted by in house trained personnel and external firms of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee. Internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of persons.
During the year as part of the control assurance process, the financial controls were reviewed by an independent agency in line with the guidelines issued by ICAI on internal financial controls and reported satisfactory in design and operational effectiveness.
RISK MANAGEMENT
A risk is an event or condition whose occurrence has an adverse impact on the achievement of the Company''s business objectives. Risk management is becoming even more relevant and important in today''s world where uncertainties are increasing by the day.
At EPL, we have framed a robust Risk Management Policy to identify, assess, monitor and mitigate actual or potential risk exposures in order to minimize any adverse impact on our strategic business objectives, protecting the interest of our stakeholders and meeting the regulatory requirements. We have a well laid down mechanism where all business functions follow a common language of risk and work on monitoring risks on a regular basis wherein the nature/quantum of material risks are assessed along with the adequacy of the mitigation measures. We leverage on the risk management process to drive better business decisions, protect our assets and support a sustainable business.
The Board through the Risk Management Committee reviews the risks and mitigation measures on a periodic basis. All aspects of risk such as strategic, regulatory and compliance, operational, financial and reputational risks, whether internal or external, are discussed in the Risk Management Committee meeting.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from the public and there are no outstanding deposits as on 31 March 2022.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion and Analysis may be forward looking within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Certain factors that could affect the Company''s operations include an increase in input raw materials price, availability of raw materials, changes in government regulations, tax laws, economic conditions and other factors including Covid-19.
APPRECIATION
Directors wish to place on record their sincere thanks and appreciation to all our customers, suppliers, banks, authorities, members and associates for their co-operation and support at all time and to all our employees for their unstinted contribution to the growth and profitability of your Company''s business and look forward to continued support.
For and on behalf of the Board EPL Limited
10 May 2022 Anand Kripalu Sharmila A Karve
Mumbai Managing Director & CEO Director
Mar 31, 2019
The Directors are pleased to present their Report on your Company''s business operations along with the audited financial statements for the financial year ended on 31 March 2019.
The highlights of the financial results are set out below.
CONSOLIDATED GLOBAL RESULTS
The summary results are set out below.
(Rs. in lakhs)
|
Particular |
Year ended 31.03.2019 |
Year ended 31.03.2018 |
|
Total Income |
2,73,544 |
2,47,279 |
|
Total Income excluding Excise duty |
2,73,544 |
2,45,025 |
|
Profit Before Depreciation, Finance and Tax (PBDIT) inclusive of other income |
52,763 |
49,123 |
|
Finance cost |
(6,131) |
(5,502) |
|
Depreciation |
(18,611) |
(16,707) |
|
Profit before share of profit/ (loss) from Associate/Joint venture and exceptional items |
28,021 |
26,914 |
|
Share of profit /(loss) from Associate/Joint venture |
532 |
(104) |
|
Profit before exceptional items and tax |
28,553 |
26,810 |
|
Exceptional items net (loss)/ gain |
305 |
(498) |
|
Tax expense |
9,319 |
(8,891) |
|
Net Profit for the year attributable to owners of the parent |
19,253 |
17,160 |
The Consolidated Total Income exclusive of Excise duty recovery grew year over year by 11.6%, with the Sales and Operating income growing by 11.7%. India sales was affected due to low off-take by a key Customer and changes in relation to packaging for the Pharma industry Weak sales in India on account of lower offtake from key customers and lower offtake from pharma customers due to changes in regulations for pharma category. Marginal increase in material costs and operating costs due to strategic capital investments for future growth impacted consolidated operating margin lower by 1.0 pp point at 11.6%. However, Profit before Exceptional items and tax improved by 6.5% over the previous year despite an increase in the depreciation charge on account of new capital investments for supporting the planned business growth. Net profit attributable to the equity holders for the year is Rs. 19253 lakhs after taking an exceptional gain of Rs. 305 lakhs.
INDIA STANDALONE RESULTS
The summary results are set out below.
(Rs. in lakhs)
|
Particular |
Year ended 31.03.2019 |
Year ended 31.03.2018 |
|
Total Income |
86,371 |
87,429 |
|
Total income exclusive of excise duty |
86,371 |
85,175 |
|
Profit Before Depreciation, Interest and Tax (PBDIT) inclusive of other income |
19,528 |
21,174 |
|
Finance cost |
(2,283) |
(2,140) |
|
Depreciation |
(7,510) |
(6,866) |
|
Profit before Tax and exceptional items |
9,735 |
12,168 |
|
Exceptional items net (loss)/ gain |
- |
- |
|
Tax Expense |
(3,331) |
(4,050) |
|
Net Profit for the year |
6,404 |
8,118 |
|
Appropriations |
- |
- |
|
Transfer to Debenture Redemption Reserve |
0 |
0 |
The Total income exclusive of excise duty recovery for the year has grown by 1.4 % over the previous year. Increase in material cost and higher operating costs on account of the commissioning and ramping up of the Assam Unit, impacted Standalone operating margin lower 2.4 pp to 12.3%. Consequently, in a challenging external environment, India standalone Net profit is lower by 21.1% at Rs. 6404 lakhs, compared to Rs. 8118 lakhs in the previous year.
REVIEW OF MARKET, BUSINESS AND OPERATIONS
Your Company is the world''s leader in manufacturer of Laminated Plastic tubes. Its operations are spread across the globe - in 11 countries and 20 units.
The wide range of laminates coupled with innovative decoration, closures, dispensers and innovative features are in great demand in the FMCG sector as well as in the Pharma sector the world over.
The Business Development teams in all the regions are working with the C&I division to build their business pipeline. The coordinated efforts on this front have resulted in every region having a strong business pipeline - for cosmetics and pharma products predominantly.
Business dynamics have however changed. Many small local brands have started launching themselves, directly on the e-commerce platform, which has upset the applecart for the established brands, who are now losing market share. They have also had to change strategy - plan for more frequent launches, thereby reducing the shelf life of the product and also require smaller quantities, with high end decoration being the differentiator.
In the pharma and food segments, laminated tube format of packaging is increasingly becoming the preferred form of packaging - especially gels, viscous products. The e-commerce platform has brought many new item into the packaging space.
Your Company has invested in technology aimed to facilitate high-end decoration, cater to smaller order quantities within the time frame available. Investments have been made in auto inspection systems to detect errors in printing, tubes with defective side seam, shoulder and orifice etc. Packing of tubes into boxes has been automated. The regions have also been equipped with high-end high precision click printers that enable quick turnaround time.
The units have geared themselves up to take up the challenge owing to new market dynamics. They also have formulated action plans to connect with and get share of the opportunity in the e-commerce space. In short, optimise man and machine and ensure that we deliver on our growth targets.
India Standalone
India accounts for around 31% of your Company''s Consolidated Sales. In addition to addressing and overcoming the challenges of the previous year, your Company continued new customer and new product development efforts targeting the pharma and cosmetics categories, as a result of which we have a strong business pipeline. With a view to participating in the opportunity thrown up by FMCG industry growth in the North Eastern States, your Company has set up a custom-built factory near Guwahati, Assam which is a strategic investment, in-line with our stated objective of ''go and grow'' with customers.
Your company also commissioned new laminator in Dec 2018 thereby more than doubling the capacity of the laminate.
Exports to markets in South Asia, Middle East and Africa continue to be pursued as a strategy to grow and gain share in the smaller markets which are not viable for a full-fledged manufacturing set up.
Your Board is of the view that India growth story remains intact, and your Company is well positioned to post healthy growth in the months and years to come.
Subsidiaries, Joint Ventures and Associates
Your Company operates out of 10 other countries, besides India, through direct and step-down subsidiaries and one associate. They are divided into 3 regions - EAP, Europe and the Americas. All the 3 regions are now poised to perform well. EAP region has good control over its operation costs and has been successful in getting a bigger share in the non-oral care category as well as premium oral care. They have also met some success in getting a share of the e-commerce business.
In Americas, the additional SHOT line given to them has equipped them to take up additional volumes from existing Customers and also cater too new Customers. Colombia is tracking well now after the initial hiccups post expansion and so is Mexico. We expect the Americas region to meet their growth and profit objectives.
In Europe, one of the Customers having low offtake for the first half of the year has resumed full volumes. Russia has been relocated in a more spacious premises, to help it take up huge volumes in the local market. This, together with the business pipeline developed by the region, including for Mystik - hair colourant tubes will help the region meet theirgrowth and profits.
All in all, should be a good year for the Company.
The development at these entities and the markets they operate in are further discussed in the Management Discussion and Analysis (MDA) forming part of this report. The salient features of the financial statements of these subsidiaries and the associate in the prescribed format is attached as a part of the audited financial statements.
Details about the subsidiaries, associate etc are given in the annexure / MGT 9.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the listing Regulations), consolidated financial statements of the Company and all of its subsidiaries and associate / joint venture, have been prepared for the year under report. The audited Consolidated financial statements along with the auditors'' report thereon forms part of this Annual report. The consolidated financial statements presented by the Company include the financial results of all its subsidiaries, joint venture and Associate. The audited standalone financial statements of these entities have been reviewed by the Audit Committee and the Board.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management discussion and analysis (MDA) report for the year under review, of the operations and state of the affairs of your Company and all of its subsidiaries, associate or joint venture is given in a separate section of this Annual Report and forms part of this Annual Report.
CORPORATE GOVERNANCE
The Company is committed to maintain highest standards of corporate governance aligned with the best practices. Pursuant to applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 20,15, a detailed report on Corporate Governance forms part of this Report. The Company is in compliance with the various requirements and disclosures that have to be made in this regard. A certificate from the Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report.
DIVIDEND
Your Company continues to be on the path of profitable growth. The Company''s cash flows and financial position continue to be strong.
Considering the cash requirement for business growth and debt servicing, the Board believe that a steady dividend payout will best serve the interests of the Company and of the shareholders especially those dependent on regular income. Accordingly, your Directors recommend a dividend of Rs. 1.25 per equity share of face value of Rs. 2 each, for the financial year ending on 31 March 2019 (previous financial year: Rs. 2.40 per share of face value of Rs. 2 each).
Dividend Distribution Policy of the Company is given as a part of this Report marked as Annexure 1 and also posted in investors section on the Company''s website or link, https://www.esselpropack.com/corporate-governance/
BONUS SHARES
During the year under review, the Board of Directors at its meeting held on 26 April 2018 recommended issue of bonus equity shares, in the ratio of one equity share of Rs. 2 each fully paid up for every one equity share of the Company held by the shareholders as on record date. The above issue of bonus shares has been approved by the shareholders in the annual general meeting held on 13 June 2018. Consequently, the company allotted 15,71,81,664 equity shares of Rs. 2 each fully paid up bonus shares by capitalization of reserves amounting to Rs. 3144 Lakhs and accordingly paidup equity share capital has been increased accordingly.
TRANSFER TO RESERVES
Your directors propose to transfer sum of Rs. 1000 lakhs out of opening balance standing to the credit of Debenture Redemption Reserve (DRR) to retained earnings thereby keeping balance of 25% of the value of listed debt securities issued and outstanding at the end of the year under report. Hence, no further transfer to DRR is required under the applicable guidelines. There is also no specific statutory requirement to transfer any sum to General reserve in relation to the payment of dividend. Your Directors therefore have not proposed any sum for transfer to Reserves during this year.
FINANCE AND ACCOUNTS
Your Company continued to reduce its financial leverage. The consolidated net debt as at end of FY19 was Rs. 49982 lakhs lower by Rs. 6376 lakhs compared to previous year end. Financial parameters such as Debt Service Coverage Ratio, Interest Coverage Ratio and Debt Equity Ratio are all at healthy levels both on Standalone and Consolidated basis.
Your Directors are pleased to inform that your Company continues to enjoy CARE AA rating for its NCDs and various long term bank facilities and CARE A1 rating for its short term bank facilities. The Company is also rated by India Ratings and Research (FITCH Group) who have re-affirmed the Company''s long term issuer rating at IND AA and its Commercial Paper rating at IND A1 .
During the year, your Company continued to make successful issues of Commercial papers at competitive interest rates commensurate with its short-term top credit rating. During the year, the Company also redeemed Rs. 40 crores of the Non Convertible Debentures (NCDs).
Forex exposures continued to be closely reviewed and appropriately hedged in order to minimize risk to the results.
STATUTORY AUDITORS
At the AGM held in the year 20,17, M/s. Ford Rhodes Parks & Co. LLP, Chartered Accountants, were appointed as Statutory Auditor of the Company for a period of five years. The Companies Amendment Act, 2017 has waive-off the requirement of annual ratification. The Company has received letter from them to the effect that their continuation is within the prescribed limits and confirming that they are not disqualified for such appointment pursuant to the Companies Act, 2013 and applicable statutory provisions.
The observation made in the Auditors Report on the Company''s financial statements for the financial year ended on 31 March 2019 are self-explanatory and therefore do not call for any further comments or information.
SECRETARIAL AUDIT
Pursuant to the provisions of section 204 of the Companies Act, 2013 M/s. D M Zaveri & Co., Practicing Company Secretary (CP No. 4363), have been appointed to undertake the secretarial audit of the Company for the year ended on 31 March 2019. The secretarial audit report forms a part of this Report and is annexed as Annexure 2. The said report does not contain any qualification, adverse remarks or disclaimer.
Company has complied with the Secretarial Standards as applicable to the Company pursuant to the provisions of the Companies Act 2013.
COST AUDITORS
Pursuant to section 148 and applicable provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules 20,14, the Company is required to appoint cost auditor for audit of cost records maintained by the Company in respect of the financial year ending 31 March 2020. Your Directors have on the recommendation of the Audit committee, appointed M/s. R Nanabhoy & Co., Cost Accountants, as the Cost Auditor to audit the cost records for the financial year ending 31 March 2020. Remuneration payable to the Cost Auditor is subject to ratification by the members of the Company. Accordingly, a resolution seeking members'' ratification for the remuneration payable to M/s. R Nanabhoy & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting, along with relevant details, including the proposed remuneration. The Company has maintained cost accounts and records as per applicable provisions of section 148 of the Act.
DIRECTORS AND KMP
In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Atul Goel, Director is being retire by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers himself for re-appointment. The Board recommends his reappointment.
The members of the Company at the AGM held on 13 June 20,18, have approved the appointment of Mr. Ashok Goel as Managing Director of the Company for the period of five years with effect from 21 October 2018 to 30 September 2023 and accordingly he is continuing as Key Managerial Personnel (KMP).
The Board has on the recommendation of Nomination and Remuneration Committee, appointed Mr. Ramesh Chander Gupta as Additional Director on the Board wef 14 March 2019 who shall hold office up to the date of ensuing Annual General Meeting. Accordingly, Directors recommend his appointment as a Director of the Company in the ensuing Annual General Meeting and recommend the members to pass resolution in this respect. Relevant details are given in the AGM Notice and in corporate governance report.
Mr. Boman Moradian, Mr. Mukund Chitale and Ms. Radhika Pereira who have been appointed as independent directors for the first term of five years effective from 9July 2014 to 8 July 2019. Accordingly the firstterm of all three independent directors of the Company is expiring on 8 July 2019. Keeping in view the valuable services and contributions by the above mentioned directors and requirement of the Company, the Board and Nomination and Remuneration Committee recommends to the Shareholders for reappointment of the said three independent directors for another term of five years i.e. from 9 July 2019 to 8 July 2024. Accordingly appropriate resolutions are proposed for approval and necessary details are given in the resolutions and explanatory statement in accompanying Notice of convening the ensuing annual general meeting (AGM Notice or Notice).
All the Independent Directors have given declaration that they meet the criteria of independence laid down under Section 149 of the Companies Act, 2013 and the Listing Regulations.
Further details of Directors including remuneration, remuneration policy, criteria for qualification, independence; performance evaluation of the Board, Committees and Directors; meetings, committees and other details are given in the Corporate Governance Report, which is integral part of this Annual and Board''s Report. Remuneration policy is posted in investors, corporate governance section on the Company''s website or link, www.esselpropack.com and salient features of the same are mentioned in the Corporate Governance Report.
Five meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance included in this Annual Report.
Pursuant to the provisions of Section 203 of the Companies Act 20,13, the Key Managerial Personnel of the Company as on 31 March 2019 are Mr. Ashok Goel, Chairman & Managing Director, Mr. Vinay Mokashi, Chief Financial Officer and Mr. Suresh Savaliya, Head - Legal, Company Secretary and Compliance Officer.
During the year, Mr. A.V. Ganapathy, Chief Financial Officer retired from the services of the Company with effect from 13July 2018. The Board of Directors expressed appreciation for the valuable contribution made by Mr. Ganapathy during his tenure with the Company. During the year, Mr. Nikhil Dujari, appointed as a Chief Financial Officer and KMP of the company with effect from 1 August 2018 and he ceased to be a Chief Financial Officer and KMP from 31 August 2018. Mr. Dujari resigned from service of the Company due to his family reason.
During the year, Mr. Vinay Mokashi has been promoted as Chief Financial Officer and KMP of the company with effect from 1 November 2018.
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 year ended 31 March 20,19, 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 note 3A 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 31 March 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 were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
AUDIT COMMITTEE
Audit Committee of the Board has been constituted as per the Listing Regulations and section 177 of the Companies Act, 2013. Constitution, meetings, attendance and other details of the Audit Committee are given in Corporate Governance Report which is part of this Report.
PERFORMANCE EVALUATION
Nomination and Remuneration Committee and the Board adopted performance evaluation policy for Board, Committees and Directors with intents to set out criteria, manners and process for the performance evaluation. The policy provides manners to evaluate performance of the Board, committees, independent directors and non-independent directors. Criteria in this respect includes; Board composition, mix of skill, experience, members'' participation and role, attendance, suggestions for effective functioning, board process, policies and others. The evaluation process includes review, discussion and feedback from directors.
Evaluation of Performance of the Board, its committees, every Director and Chairperson, for the financial year 2018-19 has been done following the manner and process as per the policy which includes discussion, feedback and assessment. The manner in which the evaluation has been carried out has also been explained in the Corporate Governance Report, which forms part of this Annual Report.
FAMILIARIZATION PROGRAMMES
The Company''s policy on programmes and measures to familiarize Independent Directors about the Company, its business, updates and development includes various measures viz. issue of appointment letters containing terms, duties etc., management information reports, presentation and other programmes as may be appropriate from time to time. The Policy and programme aims to provide insights into the Company to enable independent directors to understand the business, functionaries, business model and others matters. The said Policy and details in this respect is displayed on the Company''s website.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its Corporate Social Responsibility (CSR) initiative, the Company has undertaken CSR projects and programs. Thrust areas for CSR include care and empowerment of the underprivileged, education, drinking water project, health and sanitation. These activities are in accordance with CSR activities as defined under the Act. The Company has a CSR Committee of Directors. Details about the Committee, CSR activities and the amount spent during the year, as required under section 135 of the Act and the related Rules, reasons and other details are given in the CSR Report as Annexure 3 forming part of this Report.
The Company has framed a CSR Policy in compliance with the provisions of the Act and the same is placed on the Company''s website www.esselpropack.com. The CSR Policy lays down areas of activities, thrust area, types of projects, programs, modes of undertaking projects/ programs, resources etc.
Your Directors are pleased to report that the Company''s subsidiaries overseas also give back to the society in their respective geographies through various initiatives on the health, education and other fronts.
LOANS, GUARANTEES AND INVESTMENTS
The Company mainly gives guarantee for its subsidiaries to meet their business needs. Details of loans, guarantees and investments covered under applicable provisions of section 186 of the Act are given in the note 51 to the standalone financial statements.
RELATED PARTY TRANSACTIONS
Arrangements or transactions entered by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. All related party transactions are placed for approval before the Audit Committee and also before the Board wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/ arrangements/ transactions with related parties which could be considered material in accordance with the policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC2.
Details of the related party transactions during the year as required under Listing Regulations and Indian accounting standards are given in note 54 to the Standalone Financial Statements.
The policy on dealing with the Related Party Transactions including determining material subsidiaries is posted in investors/corporate governance section on the Company''s website or link, https://www.esselpropack.com/wp-content/ uploads/2015/03/Related-Party-Transaction-Policy.pdf
HUMAN CAPITAL
Relations with employees across all the offices and units continued to be cordial. HR policies of the Company are focused on developing the potential of each employee. With this premise, a comprehensive set of HR policies are in place, aimed at attracting, retaining and motivating employees at all levels. Your Company had 1237 permanent employees as on 31 March 2019.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 4 (a) and forms part of this Report.
Other details in terms of Section 197(12) of the Companies Act, 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 4(b) and forms part of this Report.
EMPLOYEE STOCK OPTIONS
The Nomination and Remuneration Committee of the Board of Directors (NRC) of the Company, inter alia administers and monitors the Employee Stock Option Scheme 2014 (ESOS 2014 or Scheme) of the Company in accordance with applicable SEBI regulations.
The disclosure relating to the Scheme and other relevant details are posted in investors>corporate governance section on the Company''s website or link, https://www.esselpropack.com/corporate-governance/. This Scheme does not extend to any of the Directors and Promoters of the Company.
No stock options were granted or vested during the year under report. Out of the stock options vested in the earlier years, 880292 options were exercised during the year and equal number of equity shares of face value Rs. 2 each was issued as fully paid up against payment of the stipulated exercise price as per the terms and conditions of the Scheme and the Grant letter.
The relevant details on the options granted and the accounting of their costs are set out in the Notes to the Standalone accounts
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 5 and forms part of this Report.
OTHER INFORMATION / DISCLOSURES
There are no significant material orders passed by the Regulator, Courts or Tribunal which would impact the going concern status of the Company and its future operations.
There have been no material changes and commitments affecting the financial position of the Company, occurred between end of financial year and date of this Report.
In accordance with section 134(3)(a) and section 92(3) of the Act, an extract of the annual return as at 31 March 2019 in Form MGT9 forms part of this Report as Annexure 6.
Annual Return pursuant to applicable provisions of the Act is posted in section of investors, corporate governance on the Company''s website or link https:// www.esselpropack. com.
As per applicable provisions of the Listing Regulations, business responsibility report is given herewith and forms part of this Report as Annexure 7.
Wherever applicable, refer the Company''s website www.esselpropack.com or relevant details will be provided to the members on written request to the Company Secretary.
The Company has a policy against sexual harassment at work place and constituted Internal Complaints Committee and complied with provisions in this respect as applicable under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. There was no complaint received from any employee during the year, nor any complaint remains outstanding for redressal as on 31 March 2019.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy laying down a vigil mechanism to deal with instances of unethical behavior, fraud or mismanagement. The said policy has been explained in the corporate governance report and also displayed on the Company''s website www.esselpropack.com.
INTERNAL FINANCIAL CONTROL
The Company has a proper and adequate Internal Financial Control System, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
The Internal Financial control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audit conducted by in house trained personnel and external firms of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee to internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of persons.
During the year as part of control assurance process, the financial controls were reviewed by an independent agency in line with the guidelines issued by ICAI on internal financial controls and reported satisfactory in design and operational effectiveness.
RISK MANAGEMENT
The Company has laid down a well-defined risk management mechanism covering the risk mapping and analysis, risk exposure, potential impact and risk mitigation measures. A detailed exercise is carried out every year to identify, evaluate, manage and monitor the principal risks that can impact the Company''s ability to achieve its strategic and financial objectives. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. Details on the risk elements which the Company is exposed to are covered in the Management Discussion and Analysis which forms part of this Annual Report. The Company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. The Risk management committee under the Chairmanship of an Independent Director oversees the risk management process.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from the public and there are no outstanding deposits as on 31 March 2019.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion and Analysis may be forward looking within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Certain factors that could affect the Company''s operations include increase in price of inputs, availability of raw materials, changes in government regulations, tax laws, economic conditions and other factors.
APPRECIATION
Directors wish to place on record their sincere thanks and appreciation to all our customers, suppliers, banks, authorities, members and associates for their co-operation and support at all time and to all our employees for their unstinted contribution to the growth and profitability of your Company''s business and look forward to continued support.
For and on behalf of the Board
Essel Propack Limited
Ashok Goel
Chairman & Managing Director
7 May 2019, Mumbai
Mar 31, 2018
To
Members
Essel Propack Limited
The Directors are pleased to present their Report on your Companyâs business operations along with the audited financial statements for the financial year ended on 31 March 2018.
Your Company has posted healthy financial results, both in India and in Global operations. The highlights of the financial results are set out below.
CONSOLIDATED GLOBAL RESULTS
The summary results are set out below.
(Rs.in lakhs)
|
Particular |
Year ended 31.03.2018 |
Year ended 31.03.2017 |
|
Total Income |
247279 |
242324 |
|
Total Income excluding Excise duty |
245025 |
233759 |
|
Profit Before Depreciation, Finance and Tax (PBDIT) inclusive of other income |
49112 |
45719 |
|
Finance cost |
(5491) |
(5812) |
|
Depreciation |
(16707) |
(14148) |
|
Profit before share of profit/ (loss) from Associate/Joint venture and exceptional items |
26914 |
25759 |
|
Share of profit /(loss) from Associate/ Joint venture |
(104) |
105 |
|
Profit before exceptional items and tax |
26810 |
25864 |
|
Exceptional items net (loss)/ gain |
(498) |
1565 |
|
Tax expense |
(8891) |
(7869) |
|
Net Profit for the year attributable to owners of the parent |
17160 |
19032 |
The Consolidated Total Income exclusive of Excise duty recovery grew year over year by 4.8%, with the Sales and Operating income growing by 5.3% helped by the acquisition of 100% stake in the German tubing joint venture with effect from 30 September 2016. Weak sales in India in the wake of transition to the GST regime effective 1 July 2017, and lower than forecast offtake by customers in Europe, majorly impacted the Sales growth this year. Improved material costs and efficiencies and operating cost control measures helped improve the Consolidated Operating margin by 30 bps to 12.6%. Consequently, Profit before Exceptional items and tax improved by 3.7% over the previous year despite an increase in the depreciation charge on account of new capital investment in the previous year for supporting the planned business growth. Net profit attributable to the equity holders for the year is Rs.17160 lakhs after taking an exceptional charge of Rs.498 lakhs on account of liquidation of an overseas subsidiary. It may be noted that in the previous year, there was a net exceptional gain of Rs.1565 lakhs. Exclusive of the exceptional items, the Net profit for the year under report was marginally higher compared to the previous year.
INDIA STANDALONE RESULTS
The summary results are set out below.
(Rs. in lakhs)
|
Particular |
Year ended 31.03.2018 |
Year ended 31.03.2017 |
|
Total Income |
87429 |
90068 |
|
Total income exclusive of excise duty |
85175 |
81503 |
|
Profit Before Depreciation, Interest and Tax (PBDIT) inclusive of other income |
21174 |
17770 |
|
Finance cost |
(2140) |
(2322) |
|
Depreciation |
(6866) |
(6021) |
|
Profit before Tax and exceptional items |
12168 |
9427 |
|
Exceptional items net (loss)/ gain |
- |
- |
|
Tax Expense |
(4050) |
(2916) |
|
Net Profit for the year |
8118 |
6511 |
|
Appropriations |
- |
- |
|
Transfer to Debenture Redemption Reserve |
0 |
750 |
GST regime kicked off in India effective 1 July 2017. Prior to this date the Sales and operating income included the excise duty recovery as mandated by the IND AS. Post this date, there is no excise duty having been subsumed by the GST, and the GST recovery is not to be included in the Sales and Operating income as per the IND AS. Consequently, the reported Total income for the year is seen lower than the previous year. The Total income exclusive of the excise duty recovery for the year however has grown by 4.5% over the previous year. Weak demand from the customers in the wake of transition to the GST regime is the key reason for the Sales growth to be subdued in India. On the other hand, improved material cost and efficiencies and lower operating costs as compared to the previous year, helped in improving the Standalone operating margin by 220 bps to 14.7%. Consequently, in a challenging external environment, your Companyâs standalone Net profit has grown strongly by 24.7% to Rs.8118 lakhs, compared to Rs.6511 lakhs in the previous year.
REVIEW OF MARKET, BUSINESS AND OPERATIONS
Your Company is a leading manufacturer globally of Laminated Plastic Tubes and Laminates. Its products are extensively used in the packaging of products across categories such as Beauty & Cosmetics, Pharma & Health, Foods, Home and Oral care. The FMCG and Pharma industry which your Company serves, continue to offer much growth opportunity for your Company. In the evolved markets of Europe, USA and Japan, the FMCG sector continues to innovate several new life-style products in the Beauty care and Wellness categories. Beauty care products such as Anti-Ageing creams, Beauty Balms, Complexion Correction creams, Hair colorants, cosmetic/ therapeutic toothpastes need vibrant and premium looking tube packaging to help them stand out in shop floor shelf and attract the increasingly discerning and demanding consumer in a competitive market. In the emerging markets such as India, China, Far East and Latin America, the per capita usage of FMCG products is fast expanding helped by fast increasing disposable income, growing youth population, rapid growth of modern retail/e-tail and the general aspiration of the consumer to look and feel good. The demand for pharma product too is buoyed by the increasing life expectancy, growth of generics and âhealth for allâ programmes promoted by Governments/NGOs.
Your Company as a global supplier of innovative tube packaging solutions for products in the paste/cream/ gel forms, continues to benefit from this growth in the FMCG/Pharma space by leveraging its scale, global manufacturing and marketing presence and proven innovation/ technology capability. Besides the sector growth of FMCG/Pharma brands, your Company is also driving to establish its new generation laminated tubes as a superior value packaging format as compared to extruded plastic and aluminium tubes, bottles and tottles used by many Cosmetics, Food and Pharma brands. This adjacent space opens up even larger value opportunity for your Company to grow and gain share. In a sense therefore, your Companyâs growth potential is not capped by just the underlying secular growth in the FMCG/Pharma space. Rather, there are multiple propellers for your Company to drive a healthy double digit top line and bottom line growth in the coming years.
India Standalone
India accounts for around 35% of your Companyâs Consolidated Sales. Your Company having pioneered laminated tube solutions in this country since the early 80âs, continues to enjoy a massive franchise in India among the FMCG/ Pharma brands. The Customer portfolio- spanning Indian and MNC players, mass and niche, established and new, continues to expand.
The year under report however was challenging in India. from Sales growth stand point. It will be recalled that during the previous year your Company had to contend with reduced customer demand following the Demonetisation announced in November 2016. With the GST regime kicking off from 1 July 2017, there were further uncertainties among your Companyâs customers and their Supply and Distribution partners. This led to contraction of demand and a shrinkage of the pipeline inventory all through the year under report. Consequently the Revenue growth in India remained muted. Your directors believe that GST is a welcome tax reform which will make for ease of doing business and promote economic growth over the long term. As the market constituents stabilize and align their processes, the India growth story should take over once more.
Nevertheless, new Customer development activity was sustained targeting the non oral care categories. Further, with a view to seizing market opportunities provided by the FMCG industry growth in the North Eastern States, your Company is setting up a new factory near Guwahati for manufacture and sale of tubes to nearby customers.
Operations in the newly commissioned factory at village Dhanoli (Vapi) in Gujarat have now been stabilised. During the year, the caps & closure manufacturing also got commissioned in-house at the Dhanoli (Vapi) site with an eye on material cost savings and faster response time to customer demand. With all this, the scale benefits from the consolidation of production sites in the Western India have started accruing to your Company.
Exports to markets in South Asia, Middle East and Africa continue to be pursued as a strategy to grow and gain share in the smaller markets which are not viable for a full-fledged manufacturing set up.
Your Board is of view that India growth story remains intact, and your Company is well positioned to post healthy growth in the months and years to come.
Subsidiaries, Joint Ventures and Associates
Being a global player in laminated tubes, your Company has manufacturing and marketing presence in eleven other countries through its direct and step down subsidiaries, and an associate.
All these subsidiaries / associate continue to work closely with customers to grow their business with product offerings relevant to their respective markets. During the year, the new factory in Colombia was stabilized and a number of measures taken to improve its performance. Consequently, the Colombian subsidiary significantly improved its Operating profit compared to the previous year. However, adverse currency movement caused the subsidiary to post loss for the year, albeit 26% lower than the previous year. With improved sales, the subsidiary should turn around in the next year. The Russian subsidiary posted a small loss during the year impacted by lower offtake. All other operating subsidiaries posted profit during the year. The Associate company in Indonesia posted a loss on account of cost increases and an exceptional charge.
Considering the prospects and huge size of the non oral care category market in the various countries your Company operates and the disruptive nature of the packaging solutions that your Company has been introducing, the Board expects the overseas subsidiaries to post sustained profitable growth.
The development at these entities and the markets they operate in are further discussed in the Management Discussion and Analysis (MDA) forming part of this report. The salient features of the financial statements of these subsidiaries and the associate in the prescribed format is attached as a part of the audited financial statements.
During the year, a subsidiary in Egypt having ceased operations was liquidated and the proceeds distributed amongst the shareholders. Consequently, an exceptional charge of Rs.498 lakhs has been considered in the Consolidated Financial statements as detailed in Note 44 to the Consolidated accounts. Lamitube Hongkong Ltd., another step down subsidiary was deregistered during the year having ceased to do business. Further details about the subsidiaries, associate etc. are given in MGT9.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), consolidated financial statements of the Company and all of its subsidiaries and associate / joint venture, have been prepared for the year under report. The audited Consolidated financial statements along with the auditorsâ report thereon forms part of this Annual report. The consolidated financial statements presented by the Company include the financial results of all its subsidiaries, joint venture and Associate. The audited standalone financial statements of these entities have been reviewed by the Audit Committee and the Board.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management discussion and analysis (MDA) report for the year under review, of the operations of your Company and all of its subsidiaries, associate / joint venture is given in a separate section of this Annual Report and forms part of this Annual Report.
CORPORATE GOVERNANCE
The Company is committed to maintain highest standards of corporate governance aligned with the best practices. Pursuant to applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance forms part of this Report. The Company is in compliance with the various requirements and disclosures that have to be made in this regard. A certificate from the Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report.
DIVIDEND AND ISSUE OF BONUS SHARES
Your Company continues to be on the path of profitable growth. The Companyâs cash flows and financial position continue to be strong.
Considering the cash requirement for business growth and debt servicing, the Board believe that a steady dividend payout will best serve the interests of the Company and of the shareholders especially those dependent on regular income. Accordingly, your Directors recommend a dividend of Rs.2.40 per equity share of face value of Rs.2 each, for the financial year ending on 31 March 2018 (previous financial year: Rs.2.40 per share of face value of Rs.2 each).
Further, your Directors are pleased to note that the sustained strong performance of your Company has created value to its shareholders as seen from its market capitalization. With a view to encouraging even more participation of small investors by making the share price affordable, your directors have approved an issue of bonus equity shares in the ratio of 1:1 i.e. one bonus equity share for every one equity share held by the shareholders, subject to approval by members at the forthcoming AGM.
Dividend Distribution Policy of the Company is given as a part of this Report marked as Annexure 1 and also posted in investors section on the Companyâs website or link, http:// www.esselpropack.com/corporate-governance/
TRANSFER TO RESERVES
A sum of Rs.2250 lakhs is already standing to the credit of Debenture Redemption Reserve (DRR), representing 25% of the value of listed debt securities issued and outstanding at the end of the year under report. Hence, no further transfer to DRR is required under the applicable guidelines. There is also no specific statutory requirement to transfer any sum to General reserve in relation to the payment of dividend. Your Directors therefore have not proposed any sum for transfer to Reserves during this year.
FINANCE AND ACCOUNTS
Your Company continued to reduce its financial leverage and the finance cost by enhancing capital productivity and improving cash generation. Financial parameters such as Debt service cover ratio, Interest cover ratio, Debt Equity ratio are all at healthy levels and show further improvement over the previous year, both on Standalone and Consolidated basis.
Your directors are pleased to inform that your Company continues to enjoy CARE AA rating for its NCDs and various long term bank facilities, and CARE A1 rating for its short term bank facilities. The Company is also rated by India Ratings and Research (FITCH Group) who have re-affirmed the Companyâs long term issuer rating at IND AA and its Commercial Paper rating at IND A1 .
During the year, your Company continued to make successful issues of Commercial papers at competitive interest rates commensurate with its short-term top credit rating. During the year, the Company also redeemed Rs.50 crores of the Non Convertible Debentures (NCDs) issued in the year 2015 by exercising the call option, and further exercised call option in respect of the balance Rs.40 crores of the 2015 issue for redemption in April 2018. A fresh issue of unsecured NCDs of value Rs.50 crores was made in December 2017, which are redeemable at the end of three years.
Forex exposures continued to be closely reviewed and appropriately hedged in order to minimize risk to the results.
STATUTORY AUDITORS
At the AGM held in the year 2017, M/s. Ford Rhodes Parks & Co. LLP, Chartered Accountants, were appointed as Statutory Auditor of the Company for a period of 5 years. As required by the Companies Act, provisions in force, their appointment has to be ratified at each AGM. The Company has received letter from them to the effect that their appointment is within the prescribed limits and confirming that they are not disqualified for such appointment pursuant to the Companies Act, 2013 and applicable statutory provisions.
Accordingly, the Audit Committee and Board of the Company have considered and recommend to the members the ratification of their appointment as Statutory auditor of the Company at the ensuing Annual General Meeting.
SECRETARIAL AUDIT
Pursuant to the provisions of section 204 of the Companies Act, 2013 M/s. D M Zaveri & Co., Practicing Company Secretary (CP No. 4363), have been appointed to undertake the secretarial audit of the Company for the year ended on 31 March 2018. The secretarial audit report forms a part of this Report and is annexed as Annexure 2. The said report does not contain any qualification, adverse remarks or disclaimer.
Company has complied with the Secretarial Standards as applicable to the Company pursuant to the provisions of the Companies Act, 2013.
COST AUDITORS
Pursuant to section 148 and applicable provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules 2014, the Company is required to appoint cost auditor for audit of cost records maintained by the Company in respect of the financial year ending 31 March 2019. Your Directors have on the recommendation of the Audit committee, appointed M/s. R Nanabhoy & Co., Cost Accountants, as the Cost Auditor to audit the cost records for the financial year ending 31 March 2019. Remuneration payable to the Cost Auditor is subject to ratification by the members of the Company. Accordingly, a resolution seeking membersâ ratification for the remuneration payable to M/s. R Nanabhoy & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting, along with relevant details, including the proposed remuneration.
DIRECTORS
In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Ashok Goel, Director is proposed to retire by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.
The members of the Company at the AGM held on 9 July 2013, have approved the appointment of Mr. Ashok Goel as Vice Chairman and Managing Director of the Company for the period of five years with effect from 21 October 2013 and also approved payment of his remuneration.
The Nomination and Remuneration Committee, Audit Committee and Board of Directors of the Company have recommended the reappointment of Mr. Ashok Goel as Managing Director of the Company upon expiry of the said five years period, for another term as mentioned in the Resolution seeking Membersâ approval at the ensuing AGM. Necessary information including the applicable terms and conditions and the proposed remuneration is given in the said Resolution and the explanatory statement included in the Notice convening the next AGM.
Details about the directors are given in the accompanying Notice of AGM and Corporate Governance Report.
All the Independent Directors have given declarations that they meet the criteria of independence laid down under Section 149 of the Companies Act, 2013 and the Listing Regulations.
Further details of Directors including remuneration, policy, criteria for qualification, independence; performance evaluation of the Board, Committees and Directors; meetings, committees and other details are given in the Corporate Governance Report, which is integral part of this Annual and Boardâs Report.
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 year ended 31 March 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 note 3A 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 31 March 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 were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
AUDIT COMMITTEE
Audit Committee of the Board has been constituted as per the Listing Regulations and section 177 of the Companies Act, 2013. Constitution, meetings, attendance and other details of the Audit Committee are given in Corporate Governance Report which is part of this Report.
PERFORMANCE EVALUATION
The Board has carried out the annual evaluation of its own performance, and of each of the directors individually including the Independent Directors and Chairman, as well of the working of its committees. The manner in which the evaluation has been carried out has been explained in detail in the Corporate Governance Report, which forms part of this Annual Report.
FAMILIARIZATION PROGRAMMES
The Companyâs policy on programmes and measures to familiarize Independent Directors about the Company, its business, updates and development includes various measures viz. issue of appointment letters containing terms, duties etc., management information reports, presentation and other programmes as may be appropriate from time to time. The Policy and programme aims to provide insights into the Company to enable independent directors to understand the business, functionaries, business model and others matters. The said Policy and details in this respect is displayed on the Companyâs website.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its Corporate Social Responsibility (CSR) initiative, the Company has undertaken CSR projects and programs. Thrust areas for CSR include care and empowerment of the underprivileged, education, health and environment and sanitation. These activities are in accordance with CSR activities as defined under the Act. The Company has a CSR Committee of Directors. Details about the Committee, CSR activities and the amount spent during the year, as required under section 135 of the Act and the related Rules, reasons and other details are given in the CSR Report as Annexure 3 forming part of this Report.
The Company has framed a CSR Policy in compliance with the provisions of the Act and the same is placed on the Companyâs website www.esselpropack.com. The CSR Policy lays down areas of activities, thrust area, types of projects, programs, modes of undertaking projects/ programs, resources etc.
Your directors are pleased to report that the Companyâs subsidiaries overseas also actively give back to the society in their respective geographies through various initiatives on the health, education and other fronts.
LOANS, GUARANTEES AND INVESTMENTS
Details of loans, guarantees and investments covered under applicable provisions of section 186 of the Act are given in the note 51 to the standalone financial statements.
RELATED PARTY TRANSACTIONS
Contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an armâs length basis and largely in the ordinary course of business. All related party transactions are placed for approval before the Audit Committee and also before the Board wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/ arrangements/ transactions with related parties which could be considered material in accordance with the policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC- 2.
Details of the related party transactions during the year as required under Listing Regulations and Indian accounting standards are given in note 54 to the Standalone Financial Statements.
The policy on dealing with the Related Party Transactions including determining material subsidiaries is posted in investors/corporate governance section on the Companyâs website or link, http://www.esselpropack.com/ wp-content/uploads/2015/03/Related-Party-Transaction-Policy.pdf
HUMAN CAPITAL
Relations with employees across all the offices and units continued to be cordial. HR policies of the Company are focused on developing the potential of each employee. With this premise, a comprehensive set of HR policies are in place, aimed at attracting, retaining and motivating employees at all levels. Your Company had 1163 permanent employees as of 31 March 2018.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 4 (a) and forms part of this Report.
Other details in terms of Section 197(12) of the Companies Act, 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure 4(b) and forms part of this Report.
EMPLOYEE STOCK OPTIONS
The Nomination and Remuneration Committee of the Board of Directors (NRC) of the Company, inter alia, administers and monitors the Employee Stock Option Scheme 2014 (âESOS 2014â or âSchemeâ) of the Company in accordance with applicable SEBI regulations.
The disclosure relating to the Scheme and other relevant details are posted in investors>corporate governance section on the Companyâs website or link, http://www. esselpropack.com/corporate-governance/. For the sake of clarity, this Scheme does not extend to any of the Directors and Promoters of the Company.
No stock options were granted or vested during the year under report. Out of the stock options vested in the earlier years, 80166 options were exercised during the year and equal number of equity shares of face value Rs.2 each were issued as fully paid up against payment of the stipulated exercise price as per the terms and conditions of the Scheme and the Grant letter.
The relevant details on the options granted and the accounting of their costs are set out in the Notes to the Standalone accounts.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 5 and forms part of this Report.
OTHER INFORMATION / DISCLOSURES
There are no significant material orders passed by the Regulator, Courts or Tribunal which would impact the going concern status of the Company and its future operations.
There have been no material changes and commitments affecting the financial position of the Company, occurred between end of financial year and date of this Report.
In accordance with section 134(3)(a) and section 92(3) of the Act, an extract of the annual return as at 31 March 2018 in Form MGT9 forms part of this Report as Annexure 6.
As per applicable provisions of the Listing Regulations, business responsibility report is given herewith and forms part of this Report as Annexure 7.
Wherever applicable, refer the Companyâs website www. esselpropack.com or relevant details will be provided to the members on written request to the Company Secretary.
The Company has in place a policy against sexual harassment at work place in line with the requirements of the concerned statute. Internal complaint committees are set up in this respect. There was no complaint received from any employee during the year, nor any complaint remains outstanding for redressal as on 31 March 2018.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy laying down a vigil mechanism to deal with instances of unethical behavior, fraud or mismanagement. The said policy has been explained in the corporate governance report and also displayed on the Companyâs website www.esselpropack.com.
INTERNAL FINANCIAL CONTROL
The Company has a proper and adequate Internal Financial Control System, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
The Internal Financial control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audit conducted by in house trained personnel and external firms of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee to ensure effectiveness of the Internal Financial Control System. The internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.
During the year as part of control assurance process, the financial controls were reviewed by an independent agency in line with the guidelines issue by ICAI on internal financial controls and reported satisfactory in design and operational effectiveness.
RISK MANAGEMENT
The Company has laid down a well-defined risk management mechanism covering the risk mapping and analysis, risk exposure, potential impact and risk mitigation measures. A detailed exercise is carried out every year to identify, evaluate, manage and monitor the principal risks that can impact the Companyâs ability to achieve its strategic and financial objectives. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. Details on the risk elements which the Company is exposed to are covered in the Management Discussion and Analysis which forms part of this Annual Report. The Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. The Risk management committee under the Chairmanship of an Independent Director oversees the risk management process.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from the public and there are no outstanding deposits as on 31 March 2018.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion and Analysis may be forward looking within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Certain factors that could affect the Companyâs operations include increase in price of inputs, availability of raw materials, changes in Government regulations, tax laws, economic conditions and other factors.
APPRECIATION
Directors wish to place on record their sincere thanks and appreciation to all our customers, suppliers, banks, authorities, members and associates for their co-operation and support at all time, and to all our employees for their unstinted contribution to the growth and profitability of your Companyâs business, and look forward to continued support.
For and on behalf of the Board
Essel Propack Limited
Ashok Goel
Chairman & Managing Director
26 April 2018, Mumbai
Mar 31, 2017
The Directors are pleased to present their Report on your Company''s business operations along with the Audited financial statements for the financial year ended on 31 March 2017.
Your Company has posted yet another year of good performance, both in India and in Global operations. The highlights of the financial results are set out below. It may be noted that pursuant to the notification dated February 16, 2015 of the Ministry of Corporate Affairs (MCA), your Company has adopted the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) in preparing and presenting the Financial statements beginning the financial year under report; the figures for the previous financial year ended on 31 March 2016 and the balances as on 1 April 2015 have been restated accordingly in order to make these comparable.
CONSOLIDATED GLOBAL RESULTS
The summary results are set out below.
(Rs. in lakhs)
|
Particular |
Year ended 31.03.2017 |
Year ended 31.03.2016 |
|
Total Income |
242324 |
222944 |
|
Profit Before Depreciation, Finance and Tax (PBDIT) inclusive of other income |
45660 |
42760 |
|
Finance cost |
(5753) |
(6091) |
|
Depreciation |
(14148) |
(12316) |
|
Profit before share of profit/ (loss) from Associate/Joint venture and exceptional items |
25759 |
24353 |
|
Share of profit /(loss) from Associate/ Joint venture |
105 |
484 |
|
Profit before exceptional items and tax |
25864 |
24837 |
|
Exceptional items net (loss)/gain |
1565 |
232 |
|
Tax expense |
(7869) |
(7757) |
|
Profit for the year attributable to equity holders of the parent |
19032 |
17010 |
The Consolidated Total Income has grown year over year by 8.7%. The previous year''s results include the revenue and profits for part year of the divested flexible packaging subsidiary Packaging India Pvt. Ltd. Adjusted for this, the total Income for continuing business has grown by 11.4% helped by the acquisition of 100% stake in the German tubing joint venture effect from 30 September 2016. The revenue growth was impacted by weaker sales in India post demonetization in November 2016, continued off take issues at large oral care customers in China and sales lost in Colombia due to extended ramp up of the new capacity. Operating cost during the year was impacted by one-off spend relating to rationalization of manufacturing sites in India and stabilization of the new manufacturing facility in Colombia. These together with higher depreciation charge on account of new capacity addition and the German acquisition, have caused 1.2 pp reduction in the Operating margin to 11.8%. Consequently, the Profit for the year and exceptional item has grown 4.1%. Profit for the year attributable to equity holders has increased by the 11.9%.
INDIA STANDALONE RESULTS
The summary results are set out below.
(Rs.in lakhs)
|
Particular |
Year ended 31.03.2017 |
Year ended 31.03.2016 |
|
Total Income |
90068 |
83917 |
|
Profit Before Depreciation, Interest and Tax (PBDIT) inclusive of other income |
17711 |
17546 |
|
Finance cost |
(2263) |
(2587) |
|
Depreciation |
(6021) |
(5063) |
|
Profit before Tax and exceptional items |
9427 |
9896 |
|
Exceptional items net (loss)/ gain |
- |
4529 |
|
Tax Expense |
(2916) |
(3175) |
|
Profit for the year |
6511 |
11250 |
|
Appropriations |
|
|
|
Transfer to Debenture Redemption Reserve |
750 |
750 |
Your Company''s India Standalone Total Income grew by 7.3% during the year, impacted by weaker sales following the demonetization in November 2016. Operating cost was impacted by significant one off spend incurred in consolidating the 3 manufacturing sites in the Western India into a new state of art custom-built factory in Dhanoli near Vapi. This together with lower than planned revenue growth and higher depreciation charge, caused the operating margin to reduce by 1.6 pp to 11.2%. Consequently, the Profit before tax and exceptional items is lower by 4.7% compared to the previous year. The previous year had the benefit of exceptional gain Rs.4529 lakhs on account of divestment of the subsidiary, Packaging India Pvt. Ltd. The Net profit after tax before exceptional items is Rs.6511 lakhs for the year compared to Rs.6721 lakhs in the previous year.
REVIEW OF MARKET, BUSINESS AND OPERATIONS
Your Company is a leading manufacturer globally of Laminated Plastic Tubes and Laminates. Its products are extensively used in the packaging of products across categories such as Beauty & Cosmetics, Pharma & Health, Foods, Home and Oral care. The FMCG and Pharma industry which consume the Company''s products continue to offer sustained growth opportunity for your Company. In the mature markets of Europe, USA and Japan, the FMCG sector is rife with several new life-style products in the Personal care and Wellness categories. Beauty care products such as Anti-Ageing creams, Beauty Balms, and Complexion Correction creams, Hair colorants, cosmetic and therapeutic toothpastes are seeking premium tubes as a key marketing mix. In the emerging markets such as India, China, Far East and Latin America, the FMCG usage is expanding helped by increasing disposable income, growing youth population, expansion of modern retail/e-tail and growing aspiration to look and feel good. The Pharma demand too is buoyed by increasing life expectancy, growth of generics and "health for all" policies pursued globally by governments and the NGOs. Your Company as a global supplier of innovative packaging solutions for products in the paste/cream/gel forms, continues to ride this tremendous opportunity in the FMCG/Pharma space by leveraging its scale, multi-national manufacturing and marketing set up and proven innovation/ technology capability. In addition to benefitting from growth in the FMCG/Pharma brands traditionally packed in tubes, your Company is also actively involved in seeking to replace packaging forms such as extruded plastic/aluminum tubes, bottles and tottles with its new generation laminated tubes offering a superior value proposition for a number of FMCG brands.
India Standalone
India accounted for 37% of your Company''s Consolidated Sales. As a pioneer and long established supplier of laminated tube solutions, your Company continues to enjoy a massive franchise in India among the FMCG/ Pharma players. The Customer portfolio encompassing reputed FMCG and Pharma brands - Indian and MNC, mass and niche, established and new, continues to expand. As expected, the year started strong with sales tracking 15.3% y-o-y growth by the second quarter. Exports to markets in South Asia, Middle East and Africa continue to be pursued as a strategy to gain presence in the smaller markets which are not viable for a full-fledged manufacturing set up.
As part of its strategy to stay competitive and grow, during the year your Company undertook consolidation of its manufacturing sites in the Western India. This led to a phased shut down of three small plants and the commissioning of a state of art factory at Dhanoli near Vapi. In ensuring an orderly transition without compromising on customer service, the Company had to incur significant one-off costs which impacted the profit for the year. Going forward, this restructure of the manufacturing sites is expected to yield operational and cost synergies, and facilitate seamless capacity expansion catering especially to the high value Non-oral care categories.
Just as the Company was gearing to step up its sales further by ramping up new contracts, it had to contend with customer off-take issues following the Demonetization announced in November 2016. In the four months following, the customer off-take dropped Further; the imminent implementation of GST from July 2017 caused the customers to keep their inventory pipeline lean and new product activities on low key. So, while these reforms long term will boost demand and growth, the Company had to absorb the impact in the short term. The subdued revenue growth coupled with capacity and operating costs already on ground including the one off costs relating to consolidation of units, impacted the profitability during the year.
Your Board is of view that India growth story remains intact, and your Company is well positioned to grow and gain market share in the months and years to come.
Subsidiaries, Joint Ventures and Associates
Being a global player in the laminated tubes, your Company has manufacturing and marketing presence in eleven other countries through its direct and step down subsidiaries, joint venture and associate.
All these subsidiaries / joint ventures / associate continue to work closely with the customers and grow their business with product offerings relevant to their respective markets. All the operating subsidiaries posted profit during the year, except the subsidiary in Colombia. The new manufacturing facility established during the year by the Colombian subsidiary has taken longer to stabilize. Consequently, sales did not realize as planned, whereas the operating costs were significantly higher on account of significant one-off expenditure incurred in stabilizing the operations and the plant productivity. This resulted in the subsidiary posting loss for the year. The operations are fast stabilizing now and the market potential, both local and exports, continues to be strong for the subsidiary to turn profitable again in the next financial year. The Associate company in Indonesia posted a small loss on account of cost increases.
During the year, Lamitube Technologies Ltd (LTL), a wholly owned subsidiary of the Company, acquired the balance 75.1% stake in its German Joint venture thus making the German entity a wholly owned subsidiary of your company effective 30 September 2016. This acquisition will help to unlock synergies such as enhanced cross selling opportunity in the European markets, sourcing flexibility and better capacity utilization at the Company''s Europe plants. It will further enhance your Company''s position in the non-oral care category.
Considering the huge size of the non oral care category market in these geographies and the disruptive nature of the packaging solutions that your Company has introduced, the Board expects these subsidiaries to post sustained profitable growth. The development at these entities and the markets they operate in are further discussed in the Management Discussion and Analysis (MDA) forming part of this report. The salient features of the financial statements of these subsidiaries, associate and joint venture in the prescribed form is attached as a part of audited financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), Consolidated financial statements of the Company and its subsidiaries, associate / joint venture, have been prepared for the year under report as per IndAS applicable to the Company beginning the financial year ending March 2017. The audited Consolidated financial statements along with the auditors'' report thereon form part of this Annual report. The consolidated financial statements presented by the Company include the financial results of all its subsidiaries, joint venture and Associate. The Audited financial statements of these entities have been reviewed by the Audit Committee and the Board.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management discussion and analysis (MDA) report for the year under review, of the operations of your Company and all of its subsidiaries, associate / joint venture is given in a separate section of this Annual Report and forms part of this Annual Report.
CORPORATE GOVERNANCE
The Company is committed to maintain highest standards of corporate governance aligned with the best practices. Pursuant to applicable provisions of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. a detailed report on Corporate Governance forms part of this Report. The Company is in compliance with the various requirements and disclosures that have to be made in this regard. A certificate from the Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report.
DIVIDEND
Your Directors are satisfied that with various initiatives undertaken over the last few years, your Company continues to be on the path of profitable growth. The Company''s cash flows and financial position continue to be strong.
Considering the cash requirement for business growth and debt servicing, the Board advocate a policy of steady dividend payout in a band of 20-25% of the consolidated net profit subject to statutory provisions, applicable dividend tax and unforeseen exigencies. The Board believes this will serve the interests of the shareholders especially those dependent on regular income. Accordingly, your Directors recommend a dividend of Rs.2.40 per equity share of face value of Rs.2 each, for the financial year ending on 31 March 2017 (previous financial year: Rs.2.20 per share of face value of Rs.2 each).
Dividend Distribution Policy of the Company is given as a part of this Report marked as Annexure 1 and also posted in investors section on the Company''s website or link, http:// www.esselpropack.com/corporate-governance/
TRANSFER TO RESERVES
Pursuant to the guidelines requiring creation of Debenture Redemption Reserve (DRR) to the extent of 25% of the value of listed debt securities issued, your Company has during the year under review transferred a sum of Rs.750 lakhs to DRR in relation to the listed debt securities issued and outstanding of Rs.9000 lakhs. There is no specific statutory requirement to transfer any sum to General reserve in relation to the payment of dividend.
FINANCE AND ACCOUNTS
Your Company continued to reduce financial leverage and the finance cost by enhancing capital productivity and improving cash generation. Working capital continued to be a focus area. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.
Your directors are pleased to inform that Credit Analysis & Research Limited (CARE) has revised upwards from CARE AA- (Double A minus) to CARE AA (Double A) the credit rating assigned to the Company''s NCDs as well as the rating assigned to the Company''s various long term bank facilities, and have further re-affirmed the CARE A1 rating assigned to the short term bank facilities. The Company is also rated by India Ratings and Research (FITCH Group) who have reaffirmed the Company''s long term issuer rating at IND AA and the Commercial Paper rating at IND A1 .
Forex exposures continued to be closely reviewed and appropriately hedged in order to minimize risk to the results during a year when the currency volatility was very high.
The merger of Whitehills Advisory Services Pvt. Ltd, and the acquisition of the balance stake in your Company''s German Joint ventures have been given effect in your Company''s Standalone and Consolidated Financial statements as per applicable Accounting Standards and Court approval, and as explained in the relevant notes to those financial statements. There is no material impact to accounts because of Whitehills merger. The German entity''s financials are now included 100% line by line in the consolidated financial statements, post the acquisition date of 30 September 2016. Prior to that and in the previous year your company''s 24.9% share in its profit after tax and equity only was included in the consolidated financial statements.
Both the Standalone and the Consolidated Financial statements set out the information and details prescribed by Ind AS in connection with the transition from the earlier GAAP to Ind AS for financial accounting and reporting.
STATUTORY AUDITORS
M/s. MGB & Co. LLP, Chartered Accountants were appointed as Statutory Auditors at the Annual General Meeting (AGM) of the Company held on 9 July 2014 for a term of three years, subject to ratification by the members annually. Accordingly, they will cease to hold office at the conclusion of the forthcoming AGM, and in view of section 139(2) of the Companies Act, 2013 will not be eligible for further re-appointment.
It is therefore proposed to appoint M/s. Ford Rhodes Parks & Co. LLP, Chartered Accountants as Statutory Auditor of the Company for a term as mentioned in AGM Notice. The Company has received letter from them to the effect that their appointment if made will be within the prescribed limits and confirming that they are not disqualified for such appointment pursuant to the Companies Act, 2013 and applicable statutory provisions.
Accordingly, the Audit Committee and Board of the Company have considered and recommends to the members for their appointment as a Statutory auditor of the Company at the ensuing Annual General Meeting.
SECRETARIAL AUDIT
Pursuant to the provisions of section 204 of the Companies Act, 2013, M/s. D M Zaveri & Co., Practicing Company Secretary (CP No. 4363), have been appointed to undertake the secretarial audit of the Company for the year ended on 31 March 2017. The secretarial audit report forms part of this Report and is annexed as Annexure 2. The said report does not contain any qualification, adverse remarks or disclaimer.
COST AUDITORS
Pursuant to section 148 and applicable provisions of the Companies Act 2013 and the Companies (Cost Records and Audit) Rules 2014, the Company is required to appoint cost auditor for audit of cost records maintained by the Company in respect of the financial year ending 31 March 2018. Your Directors have on the recommendation of the Audit committee, appointed M/s. R Nanabhoy & Co., Cost Accountants, as the Cost Auditor to audit the cost records for the financial year ending 31 March 2018. Remuneration payable to the Cost Auditor is subject to approval by the members of the Company. Accordingly, a resolution seeking members'' approval for the remuneration payable to M/s R Nanabhoy & Co, Cost Accountants, is included in the Notice convening the Annual General Meeting, along with relevant details, including the proposed remuneration.
DIRECTORS
Dr. Subhash Chandra, Director and Chairman resigned from the Board with effect from 5 August 2016 keeping in view his becoming member of Upper house of the Parliament of India (Rajya Sabha) and his wish to serve the nation. The Board expresses its immense appreciation and gratitude for the valuable advice and guidance rendered all these years by Dr. Chandra as Director ever since he founded this Company in the course of his long and distinguished career as an entrepreneur. In view of the resignation of Dr. Chandra, the Board has appointed Mr. Ashok Goel as Chairman and consequently recommends the shareholders to pass resolution re-designating him as Chairman & Managing Director of the Company.
In accordance with the provisions of section 152(6) of the Act and the Articles of Association of the Company, Mr. Atul Goel, Director is liable to retire by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.
All the Independent Directors have given declarations that they meet the criteria of independence laid down under Section 149 of the Companies Act, 2013 and the Listing Regulations.
Further details on the Directors including remuneration, remuneration policy, criteria for qualification, independence, meetings etc. are given in the Corporate Governance Report, which forms part of this Annual Report.
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 year ended 31 March 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 note 3A 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 31 March 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 were operating effectively;
f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
AUDIT COMMITTEE
Audit Committee of the Board has been constituted as per the Listing Regulations and section 177 of the Companies Act, 2013. Constitution, meetings, attendance and other details of the Audit Committee are given in Corporate Governance Report which is part of this Report.
PERFORMANCE EVALUATION
The Board has carried out the annual evaluation of its own performance, and of each of the directors individually, including the independent directors, as well of the working of its committees. The manner in which the evaluation has been carried out has been explained in detail in the Corporate Governance Report, which forms part of this Annual Report.
FAMILIARIZATION PROGRAMMES
The Company''s policy on programmes and measures to familiarize Independent Directors about the Company, its business, updates and development includes various measures viz. issue of appointment letters containing terms, duties etc., management information reports, presentation and other programmes as may be appropriate from time to time. The Policy and programme aims to provide insights into the Company to enable independent directors to understand the business, functionaries, business model and others matters. The said Policy and details in this respect is displayed on the Company''s website.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its Corporate Social Responsibility (CSR) initiative, the Company has undertaken CSR projects and programs. Thrust areas for CSR include care and empowerment of the underprivileged, education, health and environment and sanitation. These activities are in accordance with CSR activities as defined under the Act. The Company has a CSR Committee of Directors. Details about the Committee, CSR activities and the amounts spent during the year, as required under section 135 of the Act and the related Rules, reasons and other details are given in the CSR Report as Annexure 3 forming part of this Report.
The Company has framed a CSR Policy in compliance with the provisions of the Act and the same is placed on the Company''s website www.esselpropack.com. The CSR Policy lays down areas of activities, thrust area, types of projects, programs, modes of undertaking projects/programs, resources etc.
Your directors are pleased to report that the Company''s subsidiaries overseas also actively give back to the society in their respective geographies through various initiatives on the health, education and other fronts.
LOANS, GUARANTEES AND INVESTMENTS
Details of loans, guarantees and investments covered under applicable provisions of section 186 of the Act are given in the note 55 to the standalone financial statements.
RELATED PARTY TRANSACTIONS
Contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. All related party transactions are placed for approval before the Audit Committee and also before the Board wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/arrangements/ transactions with related parties which could be considered material in accordance with the policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC2.
Details of the related party transactions during the year as required under Listing Regulations and Accounting standards are given in note 54 to the Standalone Financial Statements.
The policy on dealing with the Related Party Transactions including determining material subsidiaries is posted in investors / corporate governance section on the Company''s website or link, http://www.esselpropack.com/wp-content/ uploads/2015/03/Related-Party-Transaction-Policy.pdf
HUMAN CAPITAL
Relations with employees across all the offices and units continued to be cordial. HR policies of the Company are focused on developing the potential of each employee. With this premise, a comprehensive set of HR policies are in place, aimed at attracting, retaining and motivating employees at all levels. Your Company had 1134 employees on payroll as of 31 March 2017.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 4(a) and forms part of this Report.
The median employee''s remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure 4(b) and forms part of this Report.
EMPLOYEE STOCK OPTIONS
The Nomination and Remuneration Committee of the Board of Directors (NRC) of the Company, inter alia, administers and monitors the Employee Stock Option Scheme 2014 ("ESOS 2014" or "Scheme") of the Company in accordance with applicable SEBI regulations.
The disclosure relating to the Scheme and other relevant details are posted in investors>corporate governance section on the Company''s website or link, http://www.esselpropack. com/corporate-governance/
During the year under review, the NRC at its meeting held on 17 June 2016 and 1 September 2016 granted 113096 and 39411 stock options respectively to eligible employee of the Company/its subsidiaries. These options when vested as per the terms and conditions of the Scheme will entitle the option holder to apply for and be allotted equal number of equity shares of face value of '' 2 each at an exercise price of '' 196.40 and '' 224.10 respectively being the respective closing market prices of the equity shares of the Company on the National Stock Exchange of India Limited as on relevant date at the time of Grant. These options will be due to vest in a manner as per Scheme, and may be exercised within maximum of four years from the date of vesting, subject to terms and conditions of the Scheme and the grant letter.
The amortized cost of options based on their fair value at the respective grant dates forms part of the Employee benefit expense in the manner required by the Ind AS.
Out of the 29,53,000 options granted in the past, NRC in its meeting held on 17 June 2016 has vested 9,38,661 Options in terms of the Scheme and the grant letter, the date of vesting being 1July 2016.
Your Directors believe this Scheme will help create long term value for shareholders and operate as long term incentive to attract and retain senior managerial talent. For the sake of clarity, this Scheme does not extend to any of the Directors and Promoters of the Company.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 5 and forms part of this Report.
OTHER INFORMATION / DISCLOSURES
There are no significant material orders passed by the regulator, courts or tribunal which would impact the going concern status of the Company and its future operation.
There have been no material changes and commitments affecting the financial position of the Company, occurred between end of financial year and date of this Report.
In accordance with section 134(3)(a) and section 92(3) of the Act, an extract of the annual return as at 31 March 2017 in Form MGT 9 forms part of this Report as Annexure 6.
As per applicable provisions of the Listing Regulations, business responsibility report is given herewith and form part of this Report as Annexure 7.
Wherever applicable, refer the Company''s website www. esselpropack.com or relevant details will be provided to the members on written request to the Company Secretary.
The Company has in place a policy against sexual harassment at work place in line with the requirements of the concerned statute. Internal complaint committees are set up in this respect. There was no complaint received from any employee during the year, nor any complaint remains outstanding for redressal as on 31 March 2017.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy laying down a vigil mechanism to deal with instances of unethical behavior, fraud or mismanagement. The said policy has been explained in the Corporate governance report and also displayed on the Company''s website www.esselpropack.com
INTERNAL FINANCIAL CONTROL
The Company has a proper and adequate Internal Financial Control System, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
The Internal Financial control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audit conducted by in house trained personnel and external firms of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee to ensure effectiveness of the Internal Financial Control System. The internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.
During the year as part of control assurance process, the financial controls were reviewed by an independent agency in line with the guidelines issue by ICAI on internal financial controls and reported satisfactory in design and operational effectiveness.
RISK MANAGEMENT
The Company has laid down a well-defined risk management mechanism covering the risk mapping and analysis, risk exposure, potential impact and risk mitigation measures. A detailed exercise is carried out every year to identify, evaluate, manage and monitor the principal risks that can impact the Company''s ability to achieve its strategic and financial objectives. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. Details on the risk elements which the Company is exposed to are covered in the Management Discussion and Analysis which forms part of this Annual Report. The Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. The Risk management committee under the chairmanship of an independent director oversees the risk management process.
AMALGAMATION
The Scheme of Amalgamation between your Company with White hills Advisory Services Private Limited (White hills) its holding company, and their respective shareholders (the Scheme) approved earlier by the members, was sanctioned by the Hon''ble Bombay High Court vide its order dated 1st September 2016. The amalgamation became effective following the filing by the Company of the certified copy of the said court order with the Registrar of Companies, Maharashtra on 6 October 2016. Pursuant to the approved Scheme and the High Court Order, 8,89,17,843 equity shares of face value of Rs.2 each of the Company have been allotted as fully paid up to the shareholders of the White hills in October 2016. As provided in the approved Scheme, 8,89,17,843 equity shares at face and paid up value of Rs.2 each, held by White hills in your Company were cancelled and extinguished.
There has been neither any change in the paid-up equity capital nor any change in the promoter and public shareholding of the Company by virtue of the Scheme. Pursuant to the Scheme, the shareholders of Whitehills directly hold shares in the Company. This helped in simplification of the holding structure and reduction of shareholding tiers. There is no any material financial impact on the Company because of the said amalgamation as all related costs were met by the holding company''s funds.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from the public and there are no outstanding deposits as on 31 March 2017.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion and Analysis may be forward looking within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Certain factors that could affect the Company''s operations include increase in price of inputs, availability of raw materials, changes in government regulations, tax laws, economic conditions and other factors.
APPRECIATION
Your directors wish to place on record their sincere thanks and appreciation to all our customers, suppliers, banks, authorities, members and associates for their co-operation and support at all times, and to all our employees for their unstinted contribution to the growth and profitability of your Company''s business, and look forward to continued support.
For and on behalf of the Board
Essel Propack Limited
Ashok Goel
Chairman & Managing Director
23 May 2017, Mumbai
Mar 31, 2015
The Members,
Essel Propack Limited
The Directors are pleased to present their Report on your Company''s
businessoperationsalongwith theAudited Financial statements for the
financial year ended March 31, 2015.
Your Company has posted yet another year of good performance, both in
India and in Global operations. The highlights of the results are set
out below:
RESULTS OF OPERATIONS
CONSOLIDATED GLOBAL RESULTS:
The summary results are set out below: (rs in million)
Year ended Year ended
31.03.2015 31 .03.2014
Total Revenue 23439 21490
(excluding Excise duty)
Profit Before Depreciation, 4117 3765
Finance and Tax (PBDIT)
inclusive of other income
PBDIT exclusive of other income 3908 3541
Finance cost (793) 814)
Depreciation (1318) (1257)
Profit before Tax and 2006 1694
exceptional items
Exceptional items 55 (8)
Tax (611) (569)
Share of profits from associates 3
Minority interest 47) 39)
Net profit 1406 1078
Total revenue increased by a healthy 9.1% with all the four regions
contributing to this achievement. Productivity gains helped the
operating margin to expand by 60 bps over the previous year. Further
helped by 2.6% reduction in the finance cost, lower effective tax rate
and exceptional items, your Company''s Net profit expanded 30.4% over
the previous year, to post an all-time high ofRs. 1406 million. The
exceptional items Rs. 55 million represent profit on sale during the year of
certain surplus land and building by subsidiaries which were not
required for business operations. Even after adjusting for the
exceptional items, the Net profit on underlying basis has grown a
healthy 24.4% over the previous year. The healthy increase in the Net
Profit witnessed in the recent years is indicative of a sustained
profitable growth in your Company''s business operations.
INDIA STANDALONE RESULTS:
The summary results are set out below: (rs in million)
Year ended Year ended
31.03.2015 31.03.2014
Total Revenue 7755 6922
(excluding Excise duty)
Total expenditure (6135) (5362)
Profit Before Depreciation, 1620 1560
Interest and Tax (PBDIT)
inclusive of other income
PBDIT exclusive of other income 1411 1298
Finance cost (409) (450)
Depreciation (457) (367)
Profit before Tax and 753 743
exceptional items
Exceptional items 0 13
Tax (188) (211)
Profit after Tax 565 545
Appropriations:
Dividend recommended 302 230
(inclusive of tax thereon)
Transfer to Debenture 75 0
Redemption Reserve
Transfer to General Reserve 0 55
Total revenue grew by 12% over the previous year, with Sales and
Operating income growing by 13.3% year over year. In fact, the Sales
and Operating income grew by a high 18% during the first half year,
which was partly offset by a weak 8% growth during the second half in
the wake of a sluggish Indian economy. New capacity investment made
early in the year thus could not ramp up as envisaged. With a higher
operating cost and the depreciation charge attributable to new capacity
which could not be ramped up on account of weakness in demand beginning
middle of the year, the India Standalone posted Net profit for the year
ofRs. 565 million as against Rs. 545 million in the previous year.
REVIEW OF BUSINESS AND OPERATIONS
Your Company is a leading manufacturer globally of Laminated and
Plastic Collapsible tubes and laminates. Its products are extensively
used in packaging of products across categories such as Beauty &
Cosmetics, Pharma & Health, Foods, Home and Oral care. The FMCG and
Pharma industry which consume your Company''s products has been a high
growth industry and is expected to sustain growth in future. In the so
called mature markets of Europe, USA and Japan, the FMCG is witnessing
introduction of new Beauty care products such as Anti Ageing, Beauty
Balms, Complexion Correction creams. Hair colorants, cosmetic and
therapeutic toothpastes etc which brings new growth opportunityforyour
Company in the emerging markets of India, China, Latin America, Middle
and Far East. The FMCG usage is expanding helped by increasing
disposable income, growing youth population, expansion of modern
retail/ etail and increasing awareness and demand to look and feel good
in the emerging markets. The Pharma demand too is buoyed by increasing
life expectancy, growth of generics and "health for all" policies
pursued globally by governments and the NGOs. Your Company as an
established player providing innovative packaging solutions for
products in paste/cream/gel forms, is in a sense firmly embedded in the
FMCG / Pharma space. In addition to benefitting from growth in the
brands traditionally in the tube form, your Company is also actively
involved in replacing packaging forms such as bottles, jars and
aluminum tubes for a number of brands, leveraging the inherent
advantage of laminated tubes and the technological improvement your
Company has been able to bring about.
INDIA STANDALONE
ndia Standalone accounts for 32.5% of your Company''s Consolidated
Sales. Your Company enjoys a massive franchise in India, having
pioneered the laminated tubes over three decades. The Customer
portfolio encompassing reputed FMCG and Pharma brands - Indian and MNC,
mass and niche, established and new, continues to grow. The second half
of the year witnessed a distinct slow down in customer off-take
reflective of the state of economy. This impacted the ramp up of new
capacity invested early in the year impacting the operating margin.
Your Company continued to pursue opportunity in Pharma packaging and
help change of other packaging form to laminated tube. Several
efficiency improvement measures too were implemented at the factories.
A new clean room for pharma packaging was commissioned in another unit.
The unit at Nallagarh is undergoing expansion to support new customers
located nearby. Exports to markets in South Asia, Middle East and
Africa continue to be a focus area. Your Directors are of the view that
India growth story remains intact, notwithstanding the recent
sluggishness. The oral care category in the country, even though large,
is far from mature even in comparison to ASEAN or China, and therefore
will continue to drive growth for your Company. The non oral care
category powered by increasing aspirations of growing young population
and expanding modern retail, presents your Company with exciting
opportunity to pursue growth. Your Company already derives 52.38% of
its sales from the non oral care category. Your
Directors are of the view that as the country''s per capita GDP
increases to mid to high range, demand for sophisticated packaging will
drive medium to long term value growth.
SUBSIDIARY, JOINT VENTURES, AND ASSOCIATES
Being a global player in the laminated and plastic tubes, your Company
has active manufacturing and marketing presence in twelve other
countries through its direct and step down subsidiaries, joint ventures
and associates. Your Company also has a wholly owned subsidiary in
India to manufacture and market flexible packaging used in the packing
of home care, personal care and food products. All these subsidiaries
/joint ventures/associates continue to work closely with the customers
and grow their business with product offerings relevant to their
respective markets. During the year, all the operating subsidiaries
have improved their financial performance over the previous year, with
the exception of the Chinese subsidiary whose profit was impacted by
reduced off-take from couple of existing Oral care customers. This
subsidiary is actively developing new business in the non-oral care
category and in the high value niche tooth paste packaging. As part of
this strategy, this subsidiary also commissioned a new Unit in the East
of China where the major part of the Cosmetic Industry of China is
located. Your Directors are pleased to report that your Company''s
subsidiary in Poland turned profitable during the year and underpinned
the strong growth in the Europe region Sales and Operating profit. Your
Company''s joint venture in Germany and associate company in Indonesia
continued to be profitable. The affairs of the subsidiaries are
reviewed throughout the year by the Board. The development at these
subsidiaries and the markets they operate in are further discussed in
the Management Discussion and Analysis (MDA) forming part of this
Report. The performance and the financial position of each of the
subsidiaries, associates and joint ventures is set out in the statement
in the prescribed form attached to the Financial statements.
During the year, as part of simplifying the holding structure, EP
Lamitubes Ltd., a wholly owned Indian subsidiary was amalgamated with
your Company with effect from the appointed date April 1, 2014,
pursuant to a Scheme approved by the Hon''ble High Court of Mumbai at
its hearing held on December 19, 2014, accordingly, this subsidiary has
ceased to exist.
Also completed during the year was the liquidation of your Company''s
overseas subsidiary Essel Packaging (Nepal) Pvt Ltd under the Company
regulations of Nepal. Following the distribution of balance cash,
representing a small gain ofRs. 3.33 lakhs, over the book value of
investment in your Company''s books, this subsidiary has since ceased to
exist.
With a few to exploring opportunity to trade in raw material and
finished products , a new step down subsidiary Lamitube Hongkong
Trading Company Ltd was incorporated during the year in the Hongkong
Autonomous Region. Further as stated elsewhere, to gain entry into the
cosmetic packaging market in China, a step down subsidiary Essel
Packaging (Jiangsu) Ltd was incorporated in China.
The Consolidated Financial Statements presented by the Company include
financial results of all its subsidiaries joint ventures and
associates. The Audited Financial Statements of the Subsidiary
Companies have been reviewed by the Audit Committee and the Board.
The Board of Directors at its Meeting held on March 05, 2015 has
formulated a policy for determining material subsidiaries pursuant to
the provisions of the Listing Agreement with the stock exchanges. The
same is displayed on the website of the Company (www.esselpropack.com).
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report of the operations of your
Company and all of its subsidiaries, associates and joint ventures is
provided in a separate section of this Annual Report and forms part of
the Directors'' Report.
DIVIDEND
Your Directors are satisfied that with various initiatives undertaken
over the last few years, your Company has got back to the path of
profitable growth. The debt servicing capability has improved too as
has the Company''s credit rating in respect of debt.
Considering the cash requirement for business growth and debt
servicing, your Directors advocate a policy of steady dividend payout
within a band of 20-25% of the consolidated Net profit subject to
statutory provisions, applicable dividend tax and unforeseen
exigencies. Your Directors believe this will serve the interests of the
shareholders especially those dependent on regular income. Accordingly,
your Directors recommend a dividend of Rs. 1.60 per share of face value
of Rs. 2 each, for the financial year ending on March 31, 2015 [previous
financial year: Rs. 1.25 per share of face value of Rs. 2 each).
TRANSFER TO RESERVES
Pursuant to the guidelines requiring creation of Debenture Redemption
Reserve (DRR) to the extent of 25% of the value of listed debt
securities issued, your Company has during the year under reporting
transferred a sum of Rs. 75 million to DRR to the issue of listed debt
securities. In view of the commencement of the Companies Act 2013 there
is no requirement to transfer any sum to General Reserve in relation to
the payment of dividend. Accordingly, the entire undistributed Net
Profit is taken to Surplus in the Profit and Loss account
SHARE CAPITAL
At the beginning of the year, there were 71650 partly paid shares on
which the allottees had not paid the call money alongwith premium and
interest on the said shares. After issuing a final reminder to the 129
allottees to pay the call money together with premium and interest, the
Board, during the year under review, forfeited 35725 partly paid up
equity shares belonging to 116 allottees who failed to respond to the
final reminder, together with the bonus entitlement thereon of 21395
fully paid equity shares. These shares have not been re-issued.
Consequently, the paid up capital of the Company stands reduced by
57120 equity shares at 157,044,165 equity shares of Rs. 2 each fully
paid. During the year under the review, the Company has not issued
shares with differential voting rights. As on March 31, 2015, Mr. Ashok
Goel, Vice Chairman & Managing Director holds 3,20,760 equity shares of
face value of Rs. 2 each and Dr. Subhash Chandra, Chairman holds 89,305
equity shares of face value of Rs. 2 each in the Company.
EMPLOYEE STOCK OPTION SCHEME
During the year under review. Members of the Company had approved the
Essel Employee Stock Option Scheme 2014 ("ESOS-2014"/"Scheme") for
granting options to the eligible employees of the Company and its
subsidiaries through postal ballot, the results of which were declared
on January 30, 2015. Pursuantto this,the Nomination and Remuneration
Committee of the Board of Directors of the Companyat its meeting held
on March 19, 2015, has granted 29,53,000 (Twenty Nine Lakhs Fifty Three
Thousand) Stock Options to the eligible employees of the Company and
its subsidiaries under the ESOS-2014 not being directors or promoters.
These options when vested as per the terms and conditions of the Scheme
entitle the option holder to apply for and be allotted equal number of
equity shares of face value of Rs. II- each at an exercise price of
Rs.121.65 per share being the closing market price of the equity shares
of the Company on the National Stock Exchange of India Limited as on
March 18, 2015. Since the Options have been granted at the market
price, the intrinsic value at grant is Nil and hence there is no charge
to the Profit and Loss account. The options will vest in a phased
manner over a period of 3 years from 2016, subject to performance
targets being met for the respective years and may be exercised within
maximum 4 years from the date of vesting, subject to terms and
conditions of the said Scheme. Your Directors believe this Scheme will
help create long term value for shareholders and operate as long term
incentive to attract and retain senior managerial talent.
Your Company''s Auditors, M/s. MGB & Co, LLP, Chartered Accountants,
have certified that the Company''s Employee Stock Option Schemes have
been implemented in accordance with the SEBI Regulations and the
resolutions passed by the Members in this regard.
FINANCE
YourCompanycontinuestofocuson reducingfinancial leverage and finance
costs through enhancing capital productivity and improving cash
generation. The Company continues to focus on judicious management of
its working capital. Receivables, inventories and other working capital
parameters were kept under strict check through continuous monitoring.
Cash and cash equivalent as at March 31, 2015 wasRs.9.56 million.
During the year, the Company has issued 900 Rated, Listed, Secured,
Redeemable, Non-Convertible Debentures of face value of Rs. 10,00,000
each for Rs. 900 million for cash at par to the face value on private
placement basis to further optimize the debt portfolio and finance
costs. Finance cost during the year was thus lower by 9.1 % as compared
to previous year, despite prevailing high interest regime in India.
Reflecting the improved financial strength, during the year under
reporting the Credit Analysis & Research Limited "CARE" has upgraded
the credit rating assigned to the Company''s Long term facilities from
CARE A- to CARE A and Short term Bank facilities from CARE A2 to CARE
A2 .
Forex exposures were closely reviewed and appropriately hedged in order
to minimize risk to the results during a year when the Indian rupee
depreciated to record lows against USD during the previous year.
ACCOUNTS
The merger of EP Lamitubes Ltd with your Company approved by the
Shareholders and confirmed by the Hon''ble Bombay High court has been
given effect as provided in the Approved Scheme under the Pooling of
interests method from the appointed date of April 1, 2014. A sum ofRs.
2750 million being the difference between the net assets taken over after
cancellation of inter-company investment and the merger expenses has
been charged to the Share premium account as provided by the approved
Scheme and explained in the note 30 to the accounts. The Companies Act
2013 has mandated depreciation to be provided with reference to useful
life for various assets as detailed in Schedule 2. The same has been
given effect to in the year''s accounts as detailed in note 11 to the
Stand alone accounts in accordance with the provisions of the Act.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23
and AS 27 issued by the Institute of Chartered Accountants of India
form part of this Annual Report.
MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF
THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR
OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF
THE REPORT
There has been no material changes and commitment affecting the
financial position of the Company which have occurred between the end
of the Financial year of the Company to which the Financial statements
relate and the date of the Report.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits from the public and
there are no outstanding fixed deposits from the public as on March
31,2015.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the regulators /
courts that would impact the going concern status of the Company and
its future operations.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Retirement by rotation
In accordance with the provisions of Section 152(6) and the Articles of
Association of the Company, Dr Subhash Chandra (DIN 00031458) will
retire by rotation at the ensuing Annual General Meeting of the Company
and being elligible, offer himself for re-appointment. The Board
recommends his re-appointment.
Appointments / Resignations from the Board of Directors
During the year under review, the Company appointed MrTapan Mitra (DIN
00101 574), Mr Boman Moradian (DIN 002421 23), Mr
MukundMChitale(DIN00101004)andMsRadhikaPereira(DIN 00016712) as
Independent Directors of the Company on July 09, 2014 for a period of
five years. All Independent Directors have given declaration that they
meet the criteria of Independence as laid down under Section 149(6) of
the Companies Act, 2013 and Clause 49 of the Listing Agreement entered
into with the stock exchanges.
The Board of Directors on the recommendation of Remuneration and
Nomination Committee appointed Mr. Atul Goel (DIN 00013157) as an
Additional Director (Non Independent) in accordance to Section 161 of
the Companies Act, 2013 w.e.f November 05, 2014. Mr. Atul Goel is a
graduate from The American Graduate School of International Management
at Thunderbird, USA. He leads E-City Ventures and has pioneering
experience in developing and managing malls & multiplexes on a PAN
India scale. As an Additional Director, Mr Atul Goel holds office upto
the date of the ensuing Annual General Meeting. The Company has
received a notice as per the provisions of Section 160(1) of the
Companies Act, 2013, from a Member proposing his candidature as
Director. The Board of Directors recommends his appointment as Director
at the ensuing Annual General Meeting.
Further details about the above Directors are given in the Corporate
Governance Report as well as in the Notice of the ensuing Annual
General Meeting being sent to the Members along with the Annual Report.
There was no resignation of Directors during the year.
Appointments / Resignations of the Key Managerial Personnel
Mr Ashok Goel, Vice Chairman & Managing Director; Mr A V Ganapathy,
Chief Financial Officer - Global and Mr Ajay N Thakkar, Company
Secretary & Head- Legal of the Company are the Key Managerial Personnel
as per the provisions of the Companies Act, 2013 and were already in
office before the commencement of the Companies Act, 2013.
None of the Key Managerial Personnel has resigned or was appointed
during the year under review.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013:
i. that in the preparation of the annual financial statements for the
year ended March, 31, 2015 , the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any;
ii. that such accounting policies as mentioned in note 2 of the 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, 2015 and of the profit of the Company for
the year ended on that date;
Hi. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. that the annual financial statements have been prepared on a going
concern basis;
v. that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
vi. that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
MEETINGS OF THE DIRECTORS
A calendar of meetings to be held in the forthcoming financial year is
prepared and circulated in advance to the Directors to enable them to
plan their schedule for effective participation in the meetings. Due to
business exigencies, at times decisions are taken by the Board also by
means of resolutions circulated among the Directors, During the year
Eight (8) Board Meetings and Seven (7) Audit Committee Meetings were
convened and held. Detailed information on the meetings of the Board
and all its Committees are included in the report on Corporate
Governance, which forms part of this Annual Report. The intervening gap
between the meetings was within the period prescribed under the
Companies Act, 2013 and the listing agreement entered into with the
stock exchanges.
COMPOSITION OF AUDIT COMMITTEE
The Board has constituted the Audit Committee which comprises of Mr
Mukund Chitale, Independent Director as Chairman and Mr Tapan Mitra,
Independent Director, Mr. Boman Moradian, Independent Director, as the
members. More details on the Committee are given in the Corporate
Governance Report which forms part of this Annual Report.
BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement with the stock exchanges, the Board has carried
out an annual performance evaluation of its own performance, and of the
directors individually, as well as the evaluation of the working of its
Audit, Nomination & Remuneration and Compliance Committees. The manner
in which the evaluation has been carried out has been explained in
detail in the Corporate Governance Report, which forms part of this
Annual Report.
FAMILIARIZATION PROGRAMMES
The Company had conducted various sessions during the financial year to
familiarize Independent Directors with the Company, their roles,
responsibilities in the Company, and the technology and the risk
management systems of the Company. Further, the Directors are
encouraged to attend the training programmes being organized by various
regulators/bodies/ institutions on above matters. The details of such
familiarization programmes are displayed on the website of the Company
(www.esselpropack.com).
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a proper and adequate Internal Financial Control
System, to ensure that all assets are safeguarded and protected against
loss from unauthorized use or disposition and those transactions are
authorized, recorded and reported correctly.
The Internal Financial Control is exercised through documented
policies, guidelines and procedures. It is supplemented by an extensive
program of internal audits conducted by in house trained personnel and
external firms of Chartered Accountants appointed by the Audit
Committee and the Board. The audit observations and corrective action
taken thereon are periodically reviewed by the Audit committee to
ensure effectiveness of the Internal Financial Control System. The
internal financial control is designed to ensure that the financial and
other records are reliable for preparing financial statements and other
data, and for maintaining accountability of persons.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
note 37 to the Standalone Financial Statements.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company
during the financial year with related parties were in the ordinary
course of business and on an arm''s length basis. During the year, the
Company had not entered into any contract / arrangement / transaction
with related parties which could be considered material in accordance
with the policy of the Company on materiality of related party
transactions. All contracts /arrangements/ transactions with related
parties are placed before the Audit Committee as also the Board, as may
be required, for approval.
The policy on the materiality of the Related Party Transactions and
also on dealing with the Related Party Transactions as approved by the
Audit Committee and the Board of Directors is displayed on the
Company''s website (www.esselpropack.com).
Details of contracts / arrangements / transactions with related parties
are given in the note 36 to the Standalone Financial Statements.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) and Section 92(3) of the Companies
Act, 2013, an extract of the Annual Return as at March 31, 2015 in the
prescribed format is given in Annexure 1 and forms part of this Report.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has a vigil mechanism to deal with instance of fraud and
mismanagement, if any. The details of the Whistle Blower Policy is
explained in the Corporate Governance Report and also displayed on the
website of the Company (www.esselpropack.com).
REMUNERATION POLICY
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The Remuneration Policy is
stated in the Corporate Governance Report.
RISK AND AREAS OF CONCERN
The Company has laid down a well-defined risk management mechanism
covering the risk mapping and trend analysis, risk exposure, potential
impact and risk mitigation process. A detailed exercise is being
carried out to identify, evaluate, manage and monitor the principal
risks that can impact its ability to achieve its strategic objectives.
The Board periodically reviews the risks and suggests steps to be taken
to control and mitigate the same through a properly defined framework.
Details on the risk elements which the Company is exposed to are
covered in the Management Discussion and Analysis which forms part of
this Report.
In line with the new regulatory requirements, the Company has formally
framed a Risk Management Policy to identify and assess the key risk
areas, monitor and report compliance and effectiveness of the policy
and procedure. A Risk Management Committee under the Chairmanship of
Mr. Boman Moradian, ndependent Director, has also been constituted to
oversee the risk management process in the Company.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to Section 135 of the Companies Act, 2013, and the relevant
rules, the Board has constituted the Corporate Social Responsibility
(CSR) Committee under the chairmanship of, Mr. Ashok Goel. The other
members of the Committee are Mr. Boman Moradian and Mr. Mukund
Chitale.Adetailed CSRpolicy has been framed which is placed on the
Company''s website. As a part of its initiative under the CSR drive, the
Company has undertaken CSR activities through registered trust or
registered society and other permissible entities by giving donations
and contributions to various permitted entities. The Company has also
undertaken CSR initiatives on its own and has started with the project
of providing benches and toilets to schools in the vicinity of the
plants of the Company. The said project could not be completed before
the end of the financial year under review since the Company was doing
some research in this regard. The project is at advanced stage and
will be completed during the current financial year.
These CSR projects are in accordance with Schedule VII of the Companies
Act, 2013 and the Company''s CSR policy. Details of the CSR activities
as required under Section 135 of the Companies Act, 2013 and rules
framed thereunder are given in the CSR Report as Annexure 2 forming
part of this Report.
Apart from the above CSR activities, the Company''s subsidiary companies
in India and overseas are also involved in CSR activities in their
respective geographies as per their respective CSR policies and
regulations applicable to the said subsidiaries.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has been employing women employees in various cadres within
its office and factory premises. The Company has in place a policy
against Sexual Harassment in line with the requirements of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. nternal Complaint Committees are set up at shop
floor level to redress any complaints received and are monitored by
women line supervisors. All employees are covered under the policy.
There was no compliant received from any employee during the financial
year 2014-15 and hence no complaint is outstanding as on 31.03.2015 for
redressal.
AUDITORS
STATUTORY AUDITORS
The Members at the 31st Annual General meeting held on July 09, 2014
appointed M/s. MGB & Co, Chartered Accountants as Statutory Auditors of
the Company to audit financial accounts for the financial years
2014-15, 2015-16, and 2016-17, subject to ratification by the Members
annually. During the year under review, M/S MGB & Co, informed the
Board of Directors of having converted themselves into a Limited
Liability Partnership (LLP) under the provisions of the Limited
Liability Partnership Act, 2008 under the name and title M/S MGB & Co.
LLP, Chartered Accountants. In terms of the Ministry of Company
Affairs, Government of India, General circular No 9/2013 dated April
30,2013, if a firm of Chartered Accountants, being an auditor of the
Company is converted into an LLP, then such LLP would be deemed as an
Auditor of the Company. Accordingly, the audit of the Company for the
year under reporting was conducted by M/s MGB & Co.LLP, Chartered
Accountants
Section 139 of the Companies Act, 2013 read along with the Companies
(Audit and Auditors) Rules, 2014, states that the appointment of the
Auditor shall be subject to ratification by the Members at every Annual
General Meeting till the expiry of the term of the Auditor.
M/s. MGB & Co, LLP, Chartered Accountants have confirmed their
eligibility under Section 141 of the Companies Act, 2013 and the Rules
framed thereunder for reappointment as Auditors of the Company. As
required under Clause 41 of the Listing Agreement with the stock
exchanges, the Auditors have also confirmed that they hold a valid
certificate issued by the Peer Review Board of the Institute of
Chartered Accountants of ndia. As required under the Companies Act,
2013, appointment of Auditors is required to be placed before the
Members in the General Meeting for their approval. Your Directors
propose ratification of appointment of M/s. MGB & Co, LLP, Chartered
Accountants as the Statutory Auditors of the Company to audit accounts
for the financial year 2015-16.
COST AUDITORS:
Pursuant to Section 148 of the Companies Act, 2013 read along with the
Companies (Cost Records and Audit) Rules, 2014 notified by the Ministry
of Corporate Affairs (MCA) on June 30, 2014 and further to its
amendment on December 31, 2014, the cost audit records maintained by
the Company is required to be audited in respect of the year ending
March 2016. Your Directors have, on the recommendation of the Audit
Committee, appointed M/s R Nanabhoy & Co., Cost Accountants to audit
the cost accounts of the Company for the financial year 2015-16 at a
remuneration of Rs. 1,00,000/- (plus service tax and out of pocket
expenses). As required under Section 148 of the Companies Act, 2013 and
read alongwith the Companies (Audit & Auditors) Rules 2014, the
remuneration payable to the cost auditor is required to be placed
before the Members in a general meeting for their approval.
Accordingly, a Resolution seeking Member''s approval for the
remuneration payable to M/s R Nanabhoy & Co., Cost Accountants is
included as item no. 6 of the Notice convening the Annual General
Meeting.
SECRETARIAL AUDIT:
Pursuant to Section 204 of the Companies Act, 2013 the Board of
Directors had appointed Mr. Dharmesh Zaveri of M/s. D.M. Zaveri & Co,
Practicing Company Secretary (C. P. No. 4363) as Secretarial Auditor to
undertake the Secretarial Audit of the Company. The report of the
Secretarial Auditor is annexed herewith as Annexure 3 and forms part of
this Report.
There is no secretarial audit qualification for the year under review.
HUMAN CAPITAL & PARTICULARS OF EMPLOYEES
Your Company had 2858 employees globally as of March 31, 2015, of which
945 employees are in India.
The statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013 read along with Rule 5(2)
and 5(3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed herewith as Annexure 4(a) and forms
part of this Report.
The ratio of the remuneration of each Director to the median employee''s
remuneration and other details in terms of Section 197(12) of the
Companies Act, 2013 read along with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, is
annexed herewith as Annexure 4(b) and forms part of this Report.
CONSERVATION OF ENERGY, 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 of The Companies
(Accounts) Rules, 2014, is annexed herewith as Annexure 5 and forms
part of this Report.
CORPORATE GOVERNANCE
Your Company has complied with the Corporate Governance requirements as
per the revised Clause 49 of the Listing Agreement with the stock
exchanges. A separate report on Corporate Governance along with a
Certificate of Compliance from the Auditors forms a part of this Annual
Report.
CAUTIONARY STATEMENT
Statements in the Directors'' Report and the Management Discussion and
Analysis may be forward looking within the meaning of the applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Certain factors that could
affect the Company''s operations include increase in price of inputs,
availability of raw materials, changes in government regulations, tax
laws, economic conditions and other factors.
APPRECIATION
Your Directors wish to place on record their appreciation for the
cooperation and support received from banks and financial institutions,
customers, suppliers, members and employees towards the growth and
prosperity of your Company and look forward to their continued support.
For and on behalf of the Board of Directors
ESSELPROPACK LIMITED
Subhash Chandra
Chairman
Mumbai, April 28,2015
Mar 31, 2013
To The Members of Essel Propack Limited
The Directors are pleased to present their Report on your company''s
business operations alongwith the Audited Statement of Accounts for the
financial year ended March 31, 2013.
Your Company''s relentless focus on customer development, new packaging
solutions and operational excellence has led to a satisfying
improvement in results, both on a Standalone and on Consolidated basis.
RESULTS OF OPERATIONS:
India Standalone results:
The summary results are set out below:
(Rs. Million)
Year ended Year ended
31.03.2013 31.03.2012
Total Revenue 6183 5419
(excluding Excise duty)
Total expenditure (4641) (4030)
Profit Before Depreciation, 1542 1389
Interest and Tax (PBDIT)
PBDIT exclusive of other income 1150 936
Finance cost (550) (587)
Depreciation (331) (286)
Profit before Tax and 661 516
exceptional items
Tax (163) (25)
Profit after Tax 498 491
Appropriations:
Dividend recommended 138 119
(inclusive of tax)
Transfer to General Reserve 50 49
The year''s revenues reflect a strong sales growth of 16.6% over the
previous year, driven by robust volume and increasing share in the
sales of high value non oral-care category. Tight control on costs and
higher asset productivity has helped the profit before depreciation,
interest, other income and tax to grow at a healthy 22.9%, reflecting a
margin gain of 100 bps over the previous year. In a year marked by high
interest rates, the finance cost has been reduced by 6.3% compared to
the previous year by active management of the debt portfolio. The tax
incidence during the previous year was lower on account of the merger
with your Company of Ras Propack Lamipack Ltd (RPLL) and Ras Extrusions
Ltd (REL) pursuant to a Merger Scheme forming part of the Modified
Scheme approved by the Hon''ble BIFR on 10 May, 2012. Consequently, the
profit after the tax for the year is seen at same level as in the
previous year. The profit before tax has recorded a healthy growth of
28% over the previous year.
Consolidated Global results:
The summary results are set out below:
(Rs. Million)
Year ended Year ended
31.03.2013 31.03.2012
Total Revenue 18620 16034
(excluding Excise duty)
Profit Before Depreciation, 3434 2864
Interest and Tax (PBDIT)
PBDIT exclusive of other income 3132 2667
Finance cost (912) (841)
Depreciation (1262) (1170)
Profit before Tax and 1260 853
exceptional items
Exceptional items - (13)
Tax (443) (223)
Share of profits from 23 24
associates
Minority interest (30) (25)
Profit after Tax and minority 810 616
interest from continuing
operations
Profit/(Loss) from discontinued -- (102)
operations
Net profit 810 514
The year''s Global Revenues reflect a strong sales growth of 15.7%
contributed by all four regions. This together with improved material
efficiencies and productivity has helped the Profit before tax and
exceptional items to increase by 47.7% and the Profit after tax from
continuing operations by 31.5%.
REVIEW OF BUSINESS AND OPERATIONS:
Your Company is a leading global manufacturer of laminated and plastic
collapsible tubes and laminates. Its products are extensively used by
industry in packaging of their products spanning categories such as
cosmetics, foods, pharmaceuticals and toothpaste. The packaging
industry continues to grow given its symbiotic linkage to Fast Moving
Consumer Goods (FMCG). The FMCG industry is a key driver of economic
growth globally and will continue in future too given the major
demographic shift in the developed world and fast improving standards
of living in the developing markets. As a leader in the tube space,
your Company is constantly striving to grow the market and gain share
through innovative offerings and efficient supply chain.
India accounts for approx. 30% of your company''s global revenues &
continues to be a key market where your Company has been a market
Leader since its inception in the 1980''s. The fast growing non oral
care category powered by increasing disposabLe income, growing young
popuLation and expanding modern retaiL, present your Company with a
great opportunity to pursue value growth, over and above the potential
offered by the Large oraL care category.
During the year, your Company has Leveraged its worLd cLass capability
for decoration and new product development to drive a strong growth in
the cosmetic category, offering packaging soLutions with both Laminated
and pLastic tubes. The Company''s plants in SiLvassa and Wada have
reached high levels of utiLization catering to demand of the cosmetic
category. Your Company continues to pursue opportunities in the pharma
category and this is evident in the number of new customer acquisitions
achieved during the year. The contribution to revenue of non oral care
category thus increased by 5 percent points (pp) over the previous
year. As the various stage gate processes get completed in our creative
& innovation Centre and at the customers, this pharma category wiLL add
to your Company''s saLes.
During the year your Company completed the expansion of capacity for
Laminated tubes and the new capacity has been significantly ramped up.
The Company also implemented number of programs to reduce scrap and
improve productivity at its various pLants. The pLants of the erstwhiLe
RPPL and REL were revamped and the capacity utiLized to meet the
increasing demand.
Being a gLobaL pLayer in the Laminated and pLastic tubes, your Company
has active manufacturing and marketing presence in eLeven other
countries through its direct and step down subsidiaries, joint ventures
and associates. Your Company also has a wholly owned subsidiary in
India to manufacture and market flexible laminates widely used in the
packaging of home care, personaL care, food and pharma products. ALL
these subsidiaries / joint ventures / associates continue to work
cLoseLy with the customers and grow their business with product
offerings relevant to their markets. During the year, all the operating
subsidiaries have improved their performance over the previous year.
FoLLowing the decision to service the Latin American markets from its
pLants in CoLombia and Mexico, your Company has discontinued the
operations of its subsidiary in VenezueLa. During the year, this
subsidiary was Liquidated and aLL reLated formaLities compLeted. There
were no other changes with respect to subsidiaries during the year.
The subsidiaries in Mexico, CoLombia, PhiLippines and PoLand are in the
process of increasing capacity in order to service new Long term
customer contracts.
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the Report of Board of Directors and Auditors, Balance sheet
and Statement of Profit and Loss (financial statements) of its
subsidiaries. In view of the general exemption granted by the Ministry
of Corporate Affairs, CentraL Government vide GeneraL CircuLar no. 2,
2011 dated February 08, 2011, the said reports and financial statements
of the subsidiaries are not attached. The Company wiLL make avaiLabLe
annuaL accounts of the subsidiary companies and the reLated prescribed
information, where appLicabLe, upon request by any member of the
Company. Any member interested in obtaining such particuLars may
inspect the same at the Company''s Registered and Corporate office
between 11:00 a.m. and 1:00 p.m. on aLL working days tiLL the date of
the 30th Annual General Meeting.
The ConsoLidated FinanciaL Statements presented by the Company include
financial results of all its subsidiaries.
JOINT VENTURES AND ASSOCIATES:
Your Company has a joint venture in Germany and an associate company in
Indonesia. These continued to be profitable and their resuLts have been
appropriateLy considered in the consolidated financial results of your
Company.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and AnaLysis of the operations of your
Company and aLL of its subsidiaries, associates and joint ventures is
provided in a separate section of the AnnuaL Report and forms part of
the Directors'' Report.
MERGER OF RAS PROPACK LAMIPACK LIMITED (RPLL) AND RAS ExTRUSIONS
LIMITED (REL), SICK INDUSTRIAL COMPANIES WITH THE COMPANY:
Pursuant to the order of the Hon''bLe BIFR in its hearing heLd on May
10, 2012 sanctioning a "Modified Scheme" including Scheme of Merger
(''the Scheme'') of RPLL and REL with EsseL Propack Limited (EPL) from
the appointed date of ApriL 1, 2011, your Company gave effect to the
merger and completed the issue of 500,155 equity shares of face value
of Rs. 2 each to the equity shareholders of RPLL and REL, as per the
share exchange ratio stipuLated in the Merger Scheme. These shares have
been issued from out of the share suspense account credited in your
Company''s books when giving effect to the merger in the financial
statements of the previous financial year. Your Company has also
applied to the various authorities and reguLators for making aLL
necessary changes in the documents, registrations, obLigations,
Licenses and permissions etc., of erstwhiLe RPLL and REL pursuant to
vesting of the undertaking, assets and LiabiLities of the erstwhiLe
RPLL and REL to your Company.
Dealing in RPLL and REL shares was stopped by the stock exchange w.e.f.
September 11, 2012 and September 05, 2012 respectively and the EPL
shares issued in exchange to RPLL and REL shareholders pursuant to
merger have been admitted for trading from December 13, 2012.
Taking into account the overall need to maximize internal accruals as
the means to lower your Company''s financial gearing and to support
future capital expenditure and keeping in mind the interests of the
shareholders, your Directors recommend a dividend of Rs. 0.75 per share
of face value of Rs. 2 each, for the financial year ending on March 31,
2013 (previous financial year Rs. 0.65 per share of face value of Rs. 2
each).
FINANCE AND ACCOUNTS:
Your Company continues to focus on reducing financial leverage and
finance costs through enhancing capital productivity and improving cash
generation. Forex and interest rate exposures are closely reviewed and
appropriately hedged in order to minimize risk to the results.
During the year, some of the subsidiaries of your Company successfully
raised finances and repaid the loan and advances they had earlier
received from your Company. The proceeds were used by your Company to
significantly reduce its India borrowing from Rs. 536.26 crores at the
end of previous year to Rs. 444.39 crores at the end of the current
year. Consequently, your Company''s short term debt is now at optimal
level.
Your Company has not accepted any fixed deposits from the public and
there are no outstanding fixed deposits from the public as on March 31,
2013.
Your Company has 865 employees in India and 2648 employees globally as
of March 31, 2013. The information on employees'' remuneration as per
Section 217 (2A) of the Companies Act, 1956 (the Act) read with the
Companies (Particulars of Employees) Rules, 1975, as amended till date,
forms part of this Report. However, as per provisions of Section
219(1)(b)iv of the Act, the Report and Accounts are being sent to all
the members, excluding the statement containing the particulars of
employees to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Company''s registered and corporate office between 11:00 a.m. and 1:00
p.m. on all working days till the date of the 30th Annual General
Meeting. Further, those seeking a copy of the said statement may write
to the Company Secretary at the Corporate Office.
DIRECTORS:
Mr K V Krishnamurthy, Director, expired on January 16, 2013. Your
Directors express their profound grief and sorrow at the sad demise of
Director Mr K V Krishnamurthy. His contribution to your Company was
immense.
The following Directors seek re-appointment:
Mr. Tapan Mitra, Director of the Company, retires by rotation and being
eligible, offers himself for re-appointment.
Mr. Boman Moradian, Director of the Company, retires by rotation and
being eligible, offers himself for re-appointment.
Brief resumes'' of Mr. Tapan Mitra and Mr. Boman Moradian as required by
Clause 49 of the Listing Agreement with the Stock Exchanges is annexed
to the Notice convening the 30th Annual General Meeting of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956, as amended by
the Companies (Amendment) Act, 2000, the Directors confirm that:
1. In the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed and no material departures have
been made from the same;
2. Appropriate Accounting Policies have been selected and applied
consistently and have made judgment 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, 2013 and of the profit for the financial
year ended March 31, 2013;
3. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956; for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
4. The Annual Accounts have been prepared on a "going concern"
basis.
AUDITORS:
M/s MGB & Co., Chartered Accountants, Statutory Auditors of the
Company, retire at the forthcoming Annual General Meeting and being
eligible, offer themselves for re-appointment.
COST AUDITORS:
During the year the Ministry of Corporate Affairs, Central Government
vide its order F.No. 52/26/CAB-2010 dated November 06, 2012 has made
cost audit mandatory in respect of various industries including your
Company''s products. Accordingly in terms of Section 233B (2) of the
Companies Act, 1956 the Board of Directors on the recommendations of
the Audit Committee has appointed M/s. R Nanabhoy & Co., Cost
Accountants, as Cost Auditors of the Company for the financial year
2013-14.
CORPORATE GOVERNANCE:
Your Company has complied with the Corporate Governance requirements as
per the revised Clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance along with a
Certificate of Compliance from the Auditors forms a part of this
Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN ExCHANGE
EARNINGS AND OUTGO:
The information as prescribed under Section 217 (1)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, is given in a separate
annexure, which forms a part of this Report.
CAUTIONARY STATEMENT:
Statements in the Directors'' Report and the Management Discussion and
Analysis may be forward looking within the meaning of the applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Certain factors that could
affect the Company''s operations include increase in price of inputs,
availability of raw materials, changes in government regulations, tax
laws, economic conditions and other factors.
APPRECIATION:
Your Directors wish to place on record their appreciation for the
co-operation and support received from banks and financial
institutions, customers, suppliers, members and employees towards the
growth and prosperity of your Company and look forward to their
continued support.
For and on behalf of the Board of Directors
ESSEL PROPACK LIMITED
Subhash Chandra
Chairman
Mumbai, 29 May, 2013
Mar 31, 2012
The Directors are pleased to present their Report on your Company's
business operations alongwith the audited statement of accounts for the
financial year ended March 31, 2012.
In a year that posed a challenging economic and business environment in
terms of rising input costs, sharp rupee devaluation, high interest
rates in India and sluggish economic growth, your Company by focusing
on pro- active customer development, efficiency improvement and cost
control measures was able to post satisfactory results both on India
Standalone and Consolidated basis.
Following the sanction by the Hon'ble Board of Industrial & Financial
Reconstruction (BIFR) at its hearing held on May 10, 2012 of a Modified
Scheme involving the merger of Ras Propack Lamipack Limited (RPLL) and
Ras Extrusions Limited (REL), both sick companies where your Company
was earlier joined as a co-promoter, the said companies merged with
your Company from the appointed date i.e. April 1, 2011 in terms of the
scheme of merger approved by the members earlier this year.
Accordingly, the merger has been given effect in the accounts of your
Company for the year ended March 31, 2012 and to this extent, the
results of the year are not strictly comparable with those of the
previous year.
Results of Operations:
India standalone results:
The summary results are set out below:
(Rs. Million)
Year Year
ended ended
31.03.2012 31.03.2011
Total Revenue (excluding 5,419 4,754
Excise duty)
Total expenditure (4,030) (3,284)
Profit Before Depreciation, 1,389 1,469
Interest and Tax
Finance cost (587) (594)
Depreciation (286) (243)
Profit before Tax and 516 632
exceptional items
Tax (25) (192)
Profit after Tax 491 441
Appropriations:
Dividend recommended 119 109
(inclusive of tax)
Transfer to General Reserve 49 44
A strong sales growth of 18.7% driven by robust volumes and a lower tax
incidence on account of the merger and availment of MAT credit helped
the Company to off-set higher input and energy costs and post a Net
profit of Rs. 491 million as against Rs. 441 million in the previous year.
Consolidated Global results:
The summary results are set out below:
(Rs. Million)
Year Year
ended ended
31.03.2012 31.03.2011
Total Revenue (excluding 16,034 14,347
Excise duty)
Profit before Depreciation, 2,864 2,750
Finance and Tax
Finance cost (841) (851)
Depreciation (1,170) (1,070)
Profit before Tax and 853 829
exceptional items
Exceptional items (13) (45)
Tax (223) (338)
Share of profits from 24 25
associates
Minority interest (25) (30)
Profit after Tax and minority 616 441
interest from continuing
operations
Profit/(Loss) from (102) 31
discontinued operations
Net profit 514 473
Strong sales growth in India, improved profitability in the Americas
operations, sharp reduction in the losses of Europe operations and a
lower tax incidence, underpin higher net profit of Rs. 616 million on
consolidated basis from the continuing operations, as compared to Rs. 441
million in the previous year. Loss of Rs. 102 million on account of
discontinuing operations for the year, relates to settlement during the
year of certain claims of the medical device subsidiary divested in the
year 2009. Consequently, the consolidated net profit of the Company for
the year is Rs. 514 million as against Rs. 473 million in the previous
year.
Review of business and operations:
Your Company is a leading manufacturer globally of multi- layered
plastic collapsible tubes and laminates, considered as specialty
packaging. Its tubes are extensively used by industry in the packing of
their products spanning categories such as toothpaste, cosmetics, foods
and pharmaceuticals. Packaging plays an important role in protecting
the product, keeping it fresh and potent and making for its aesthetics
and display value in the retail shelf, besides helping to deliver it to
consumer in an efficient and convenient manner. The packaging industry
continues to grow given its symbiotic linkage to products of mass daily
consumption. The growth in developing markets like India is even more
pronounced. As a leader in the tube space, your Company is constantly
striving to grow the market and gain share through innovative offerings
and efficient supply chain.
India:
Your Company having pioneered laminated tubes in India since the
1980's, continues to be the market leader. The toothpaste category is
a pre-dominant user of the laminated tubes in India. This category
holds high growth potential given the current low per capita usage of
tooth paste and the growing income and awareness levels and will
continue to power your Company's sales.
Complementing this, your Company is actively promoting the use of high
value laminated and plastic extruded tubes in categories such as
cosmetics, foods and pharmaceuticals. The increasing number and range
of customers and SKUs bear testimony to your Company's success with
this strategic foray. So much so, over 47% of your Company's India
sales this year is from the non- oral care category.
Your Company's innovation driven R&D, show-cased to customers as
Creativity & Innovation (C&I) has been powering these efforts through a
pipeline of innovations in material structure, product dispensing,
'look and feel' features, and product recyclability. During the year,
your Company filed 18 patent applications. Your Company has invested in
printing technologies which can produce high impact graphics and
decoration and can flexibly cater to varying run sizes and print
customization.
During the year, your Company ramped up its new plastic tube capacity
at Wada and continued to invest in new capacities to support the fast
growing demand. Customer service process was strengthened in order to
achieve higher order servicing levels and faster order turnaround.
The rupee devaluation coupled with escalating global commodity prices
put pressure on input costs. While your Company has an established
process of regular price review and pass through of cost escalation,
the margins were impacted on account of the lag effect in passing
through the cost escalation. Your Company has also initiated in
parallel, a number of measures to improve material and machine
productivity and to make its cost structure even more competitive on
long term basis.
Subsidiary operations:
Being a global player in the laminated and plastic extruded tubes, your
Company has active manufacturing and marketing presence in eleven other
countries through its direct and step down subsidiaries, joint ventures
and associates. Your Company also has a wholly owned subsidiary in
India to manufacture and market flexible packaging used in the packing
of home care, personal care, food and pharma products. All these
subsidiaries / joint ventures / associates continue to work closely
with the customers and grow their business with product offerings
relevant to their markets.
There was no change in the subsidiaries or in the holding pattern
during the year under report. Following the re- organisation of your
Company's Egypt business, the Egyptian Indian company for Modern
Packaging S.A.E. closed its operations during the year.
With a view to improving the cost structure, Essel Propack UK Limited,
UK has closed its manufacturing operations in the UK at the end of the
year and going forward will source its sales requirements from other
Essel Propack's group companies in Europe. The closure costs have been
provided in the consolidated accounts under 'exceptional items'.
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the Report of Board of Directors and Auditors', Balance sheet
and Statement of Profit and Loss (financial statements) of its
subsidiaries. In view of the general exemption granted by the Ministry
of Corporate Affairs, Central Government vide General Circular no. 2,
2011 dated February 8, 2011, the said reports and financial statements
of the subsidiaries are not attached. The Company will make available
annual accounts of the subsidiary companies and the related prescribed
information, where applicable, upon request by any member of the
Company. Any member interested in obtaining such particulars may
inspect the same at the Company's registered and corporate office
between 11.00 a.m. to 1.00 p.m. on all working days till the date of
the 29th Annual General meeting.
The Consolidated Financial Statements presented by the Company include
financial results of all its subsidiaries.
Joint ventures and Associates:
Your Company has a joint venture for manufacture of laminated tubes in
Germany and an associate company in Indonesia. These continued to be
profitable and their results have been appropriately considered in the
consolidated financial results of your Company.
Management Discussion and Analysis:
The Management Discussion and Analysis of the operations of your
Company and all of its subsidiaries, associates and joint ventures is
provided in a separate section of the Annual Report and forms part of
the Directors' Report.
Merger of Ras Propack Lamipack Limited (RPLL) and Ras Extrusions
Limited (REL), sick industrial companies with the Company:
Hon'ble BIFR in its hearing held on May 10, 2012, sanctioned a
'Modified Scheme' including Scheme of Merger ('the Scheme') of Ras
Propack Lamipack Limited (RPLL) and Ras Extrusions Limited (REL) with
Essel Propack Limited (EPL) from the appointed date of April 1, 2011.
The merger has since been effected and the other formalities including
the issue of your Company's shares to the shareholders of RPLL and REL
as per the share exchange ratio stipulated in the Merger scheme would
be completed shortly. Consequently, your Company will issue 500,155
equity shares of face value of Rs. 2 each to the equity shareholders of
RPLL and REL, while your Company's existing holding of equity shares in
these two companies will be cancelled. Pending allotment of these new
shares, your Company has credited the same to share suspense account.
Your Directors extend their warm welcome to the members of RPLL and REL
on their joining the Essel Propack family. Your Company will work to
improve the operations of the RPLL and REL facilities and leverage
their existing capacity to create value for all shareholders.
Dividend:
Taking into account the profits reported, the overall need to maximize
internal accruals as means to lower your Company's financial gearing
and keeping in mind the interests of the shareholders, your Directors
recommend a dividend of Rs. 0.65 per share of face value of Rs. 2 each, for
the financial year ending on March 31, 2012. (previous financial year:
Rs. 0.60 per share of face value of Rs. 2 each). The shares issued pursuant
to merger will also be entitled to the aforesaid dividend in respect of
the full financial year.
Finance and Accounts:
Your Company continues to focus on reducing financial leverage and
finance costs through enhancing capital productivity and improving cash
generation. Forex and interest rate exposures are closely reviewed and
appropriately hedged in order to minimize risk.
Your Company closely plans and monitors its fund flow with a view to
maintaining a healthy mix of long and short term debt that is optimal
in terms of cost, flexibility and risk. The Euro crisis during the
second half of the year 2011, caused some delay in the timely
completion of the borrowing programme of your Company's overseas
subsidiaries. Being just a timing issue, your Company supported their
requirement through advances resulting in an increase in short term
borrowings in the India standalone balance sheet. The subsidiaries have
since successfully raised finances and repaid these advances to your
Company to reduce the short term debt.
Buy-Back of shares:
Your Company has not announced in the last three years any Share
Buy-Back programme. If there is any future proposal for Buy-Back, fresh
mandate will be sought from the members as necessary under the
applicable guidelines.
Public Deposits:
Your Company has not accepted any fixed deposits from the public and
there are no outstanding fixed deposits from the public as on March 31,
2012.
Human Capital:
Your Company has 852 employees in India and 2,546 employees globally as
of March 31, 2012. The information on employees' remuneration as per
Section 217 (2A) of the Companies Act, 1956 (the Act) read with the
Companies (Particulars of Employees) Rules, 1975, as amended till date,
forms part of this Report. However, as per provisions of Section
219(1)(b)iv of the Act, the Report and Accounts are being sent to all
the members, excluding the statement containing the particulars of
employees to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Company's registered and corporate office between 11.00 a.m. to 1.00
p.m. on all working days till the date of the 29th Annual General
Meeting. Further, those seeking a copy of the said statement may write
to the Company Secretary at the Corporate Office.
Directors:
The following Directors seek re-appointment:
Mr. Subhash Chandra, Director of the Company, retires by rotation and
being eligible, offers himself for re- appointment.
Mr. Mukund M. Chitale, Director of the Company, retires by rotation and
being eligible, offers himself for re- appointment.
Brief resumes of Mr. Subhash Chandra and Mr. Mukund M. Chitale as
required by Clause 49 of the Listing Agreement with the Stock Exchanges
is annexed to the Notice convening the 29th Annual General Meeting of
the Company.
Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, as amended by
the Companies (Amendment) Act, 2000, the Directors confirm that:
1. In the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed and no material departures have
been made from the same;
2. Appropriate Accounting Policies have been selected and applied
consistently and have made judgment 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, 2012 and of the profit for the financial
year ended March 31, 2012;
3. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
4. The Annual Accounts have been prepared on a "going concern" basis.
Auditors:
M/s MGB & Co., Chartered Accountants, Statutory Auditors of the
Company, retire at the forthcoming Annual General Meeting and being
eligible, offer themselves for re-appointment.
Corporate Governance:
Your Company has complied with the Corporate Governance requirements as
per the revised Clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance along with a
Certificate of Compliance from the Auditors, forms a part of this
Report.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo:
The information as prescribed under Section 217 (1)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, is given in a separate
annexure, which forms a part of this Report.
Cautionary Statement:
Statements in the Directors' Report and the Management Discussion and
Analysis may be forward looking within the meaning of the applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Certain factors that could
affect the Company's operations include increase in price of inputs,
availability of raw materials, changes in government regulations, tax
laws, economic conditions and other factors.
Appreciation:
Your Directors wish to place on record their appreciation for the
co-operation and support received from banks and financial
institutions, customers, suppliers, members and employees towards the
growth and prosperity of your Company and look forward to their
continued support.
For and on behalf of the Board of Directors
ESSEL PROPACK LIMITED
Subhash Chandra
Chairman
Mumbai, August 31, 2012
Mar 31, 2011
The Members,
Essel Propack Limited
The Directors are pleased to present their Report on your Company's
business operations along with the audited statement of accounts for
the financial year ended March 31, 2011
As you are aware, your Company changed its Accounting year to align
with the Financial year (April - March), and consequently the previous
accounting year was a period of 15 months, January 2009 - March 2010.
The current accounting year being a period of 12 months ended March
2011, the current year figures are not comparable with those of the
previous period.
Results of Operations:
I India Standalone results:
The summary results are set out below:
(Rs. Million)
Year Period
ended ended
31.03.2011 31.03.2010
(Twelve (Fifteen
months) months)
Total Revenue (excluding 4,380 4,541
Excise duty)
Total expenditure (3,283) (3,457)
Profit Before Depreciation, 1,097 1,084
Interest and Tax
Financial expenses (net) (221) (352)
Depreciation (243) (289)
Profit before Tax and 633 443
exceptional items
Exceptional items - (1)
Tax (192) (97)
Profit after Tax 441 345
Appropriations:
Dividend recommended 109 73
(inclusive of tax)
Transfer to General Reserve 44 26
Your directors are pleased to highlight that amidst challenges posed
during the year by rising input costs and interest rates, your Company
recorded a Profit After Tax of Rs. 441 million i.e. 27% higher, compared
to Rs. 345 million during the previous period which was a 15 months
period. Improved Sales, reduction in the interest cost and capital
productivity have been the main drivers.
Consolidated Global results
The key financials are set out below. In comparing the current year
consolidated global results with those of previous period, it may be
noted that the previous year besides being a 15 months period also
included the results of the Medical devices business and the one-off
exceptional gain arising upon divestment of that business during
December 2009.
(Rs. Million)
Year Period
ended ended
31.03.2011 31.03.2010
(Twelve (Fifteen
months) months)
Total Revenue (excluding 14,117 16,941
Excise duty)
Profit Before Depreciation, 2,539 3,008
Interest and Tax
Financial expenses (net) (640) (947)
Depreciation (1,070) (1,329)
Profit before Tax and 829 732
exceptional items
Exceptional items (14) 302
Tax (338) (386)
Share of profits from 25 14
associates
Minority interest (29) (63)
Profit after Tax and minority 473 599
interest
Your directors are pleased to report that in a year which witnessed
economic malaise in the developed countries, relentless inflationary
pressures in the developing countries, significant volatility in the
commodity prices and forex rates, your Company's global operations
recorded a "Profit Before Tax and exceptional items" for the year of Rs.
829 million, 13% higher, as compared to Rs. 732, million reported for the
15 months period ended March 31, 2010. The "Profit after tax and
minority interest" for the year of Rs. 473 million is also a good
improvement considering that the previous period net profit of Rs. 599
million, included one off exceptional gain of Rs. 302 million relating to
the divestment of Medical Devices business. It is indeed satisfying
that the growth in your Company's plastic packaging business has within
just a year closed the gap in the revenue and profit stream caused by
divestment of the Medical Devices business. The exceptional charge for
the year of Rs. 14 million relates to one-off plant consolidation and
re-location costs, net of retention relating to divestment of Medical
Devices business.
Review of business and operations:
Global:
The packaging industry plays an important role in delivering Fast
Moving Consumer Goods in an efficient and attractive manner to the
ultimate consumer while protecting the product inside. The industry
continued to grow strongly in the emerging markets even as it recovered
from the 2009 lows in the developed markets of Europe and USA. Your
Company rolled out a number of market specific initiatives during the
year involving customer partnering, new customer development, new
product introduction, de- bottlenecking of supply chain, improvement in
customer servicing etc, which underpin the improved performance during
the year.
India:
Your Company continues to be the lead supplier of laminated and plastic
tubes in India. While ramping up its supplies to the large customer
category, your Company also strongly pursued opportunities in the high
value Cosmetics, Food and Pharma categories with innovative products
and improved order turnaround times. To this end, during the year, your
Company expanded the capacity at its units in Nallagarh, Goa and Wada.
The Company pioneered in the Indian market new decorative tubes
offerings involving customized printing and multi-effect decorations
and innovated new laminate structures to pack food products like cheese
and jams in tubes. The Company also established a focused pharma
manufacturing facility complete with a "Clean Room" and other
accessories meeting highest hygiene standards. Consequently, the
Company posted a double-digit annualized top line growth and improved
profits and grew its market share in India.
Subsidiary operations:
As a global player in tubing business, your Company has active presence
in eleven other countries through direct and step down Subsidiaries,
Joint Ventures and Associates. These entities manufacture and market
tubes in these various countries. Your Company also has a wholly owned
subsidiary in India to manufacture and market flexible plastic
laminates used in the packing of home care, personal care, food and
pharma products. All these subsidiaries continue to work closely with
customers and grow their business with product offerings relevant to
their markets. The highlights of the various subsidiary operations are
set out below:
During the year, all the Company's subsidiaries in the emerging markets
of China, Philippines, Egypt and Latin America continued to grow
profitably.
a. The subsidiary in China successfully ramped up its new
manufacturing units in North China and South China, and increased its
market share in laminated tubes. The unit was also granted license for
manufacture of pharma tubes, which is expected to open a new growth
avenue. The unit is actively developing customers in the cosmetics
category for its high decoration inviseam tubes.
b. The subsidiaries in Egypt were re-located to a new larger premises
with a view to develop into a regional manufacturing hub catering to
Africa and Middle East, and pioneering into the pharma category in
Egypt by accelerating conversion from the aluminium to laminated tubes.
c. With a view to create space for future growth, the Mexican
subsidiary relocated its manufacturing facility to a new modern
facility during the last quarter of the year under report.
d. Colombian plant also qualified for manufacture of baby care
products.
The subsidiaries in UK, Poland and Russia have cut their losses by more
than half compared to the previous period through several initiatives.
a. In Russia, new customer wins improved capacity utilisation.
b. The Poland subsidiary's plastic tube plant was not able to achieve
break even as planned given the weak market conditions in Europe during
the year. However, the unit has stabilized on productivity and quality
parameters. The unit has been able to fill its recently added
laminated tubes capacity through new customer development in Europe.
c. The UK subsidiary has been downsized in line with the customer
off-take, so as to minimize cash losses and with the new customer and
supply chain strategies that the management is working on, these losses
will be plugged.
The laminated tubes subsidiary in USA posted growth in a recession hit
market. Focussed measures to improve productivity! and efficiency
helped this unit to improve its profitability during! the year. The
subsidiary in USA manufacturing plastic tubes, however continued to
underperform. There were also capacity] bottlenecks on account of line
balancing which have since been streamlined. The unit has recently won
a large contract for export of plastic tubes which is expected to
improve capacity utilization and help achieve break even. The unit has
re-located its plant to Danville, USA, which has laminated tubes
manufacturing facility, in order to achieve operational and cost
synergies as part of its turn-around strategy. During the year, your
Company transferred its holding of equity and preference shares in its
wholly owned subsidiary, Essel Propack America LLC, USA to Arista Tubes
Inc., USA which in consideration has allotted its own equity shares to
your Company, thereby becoming a direct subsidiary, as detailed in the
note 4(b) (Investments and Restructuring) to India Standalone Accounts.
Packaging India Private Limited, the Indian wholly owned subsidiary
engaged in the flexible plastic laminate business increased its sales
and profitability in a very challenging local environment where prices
of some key raw material inputs, shot up three fold during the first
half of financial year ended March 31 2011. The unit worked closely
with customers for prompt review of sale prices and implemented a
number of cost effectiveness measures during the year. The Unit in
Uttarakhand set up in 2007 is fully ramped up.
The subsidiary in Venezuela and Nepal having ceased operations and will
go through dissolution process as per local regulatory frame-work.
During the year, your Company's holding of 1250 Non Cumulative
Preference shares of USD 1000 each in its wholly owned subsidiary,
Lamitube Technologies Limited, Mauritius were redeemed.
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the Report of Board of Directors and Auditors Balance sheet
and Profit and Loss account (financial statements) of its subsidiaries.
In view of the general exemption granted by the Ministry of Corporate
Affairs, Central Government vide General Circular no. 2, 2011 dated
February 8, 2011 and consent of the Board of Directors as required by
the circular, the said reports and financial statements of the
subsidiaries are not annexed
The Company will make available annual accounts of the subsidiary
companies and the related detailed information where applicable, upon
request by any member of the Company. These documents will also be
available for inspection to any member at the registered office of the
Company during business hours on any working day upto the date of this
Annual General Meeting. The Consolidated Financial Statements presented
by the Company include financial results of subsidiaries.
Joint ventures and Associates:
Your Company's joint venture for manufacture of laminated tubes in
Germany and its associate in Indonesia, both continued to be
profitable.
Ras Propack Lamipack Limited and Ras Extrusions Limited became
associate company following allotment of shares to your Company as a
Co-promoter pursuant to order of the Hon'ble Board of Industrial and
Financial Reconstruction (BIFR). The financial results of these
companies have been duly considered in your Company's accounts.
Proposed Merger of Ras Propack Lamipack Limited (RPLL) and Ras
Extrusions Limited (REL), sick industrial companies with the MCompany.
Your Company had agreed to be Co-Promoter in the rehabilitation of RPLL
and REL, sick industrial companies, and as per the scheme approved by
the Hon'ble BIFR, your Company has infused funds in these companies, by
way of equity and unsecured loans amounting toRs. 110 million. The
Company's shareholding in RPLL and REL is 39.57% and 36.67%
respectively.
BIFR in its recent hearing, gave directions to RPLL and REL (sick
industrial companies) to file a Draft Modified Rehabilitation Proposal
(DMRP) along with the requisite documents in connection with their
proposal to merge the sick industrial companies (RPLL & REL) with your
Company to achieve an early turnaround. The DMRP including the Scheme
of Merger and other documents were approved by the Board of Directors
of your Company and have since been filed with IDBI Bank Limited who is
the Monitoring Agency appointed by BIFR. Based on an independent
valuer's report, the proposed scheme of merger envisages issue of 10
equity shares of face value of Rs. 2 each | of your Company for every 165
equity shares of face value of Rs. 10 each held by the shareholders of
RPLL (other than to your Company) and 10 equity shares of your Company
of face value of Rs. 2 each for every 108 equity shares of face value of
Rs. 10 each held by the shareholders of REL (other than to your Company)
The DMRP involving the Scheme of Merger and allotment of Equity shares
as per aforesaid share exchange ratio is subject to sanction of BIFR,
approval of the Company's members, and all other necessary approvals,
as may be required
Group
Pursuant to the intimation received by the Company from the Promoter
entities, names of Promoter entities comprising 'group' for the purpose
of regulation 3(1)(e)(i) of SEBI (Substantial Acquisition of Shares and
Takeover) Regulations,1997 are disclosed in Annual Report.
Management Discussion and Analysis
The Management Discussion and Analysis on the operations of the Company
is provided in a separate section of the Annual report and forms part
of the Directors' report.
Equity Dividend
Taking into account the profits reported, the overall need to maximize
internal accruals as means to lower your Company's ) financial gearing
and keeping in mind the interests of the shareholders, your Directors
recommend a dividend of Rs. 0.60 per share of Rs. 2 each on 1,56,601,130
equity shares for the financial year ending March 31, 2011 [@30%].
(previous financial period (15 months) Rs. 0.40 per share of Rs. 2 each
[@20%]
Finance and Accounts:
Your Company continues to focus on reducing financial leverage and the
finance costs through higher capital productivity and improved cash
generation. Forex and interest rate exposures are closely reviewed and
appropriately hedged to minimize risk.
Buy-Back of shares
Your Company has not announced in the last three years any Share
Buy-Back program. If there is any future proposal for Buy-Back, fresh
mandate will be sought from the members as necessary under the
applicable guidelines.
Public Deposits
Your Company has not accepted any fixed deposits from the public and
there are no outstanding fixed deposits from the public as on March 31,
2011.
Human Capital
The information on employees' remuneration as per Section 217 (2A) of
the Companies Act, 1956 (the Act) read with the Companies (Particulars
of Employees) Rules, 1975, as amended till date, forms part of this
Report. However, as per provisions of Section 219(1)(b)(iv) of the Act,
the Report and Accounts are being sent to all the members excluding the
statement to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Company's registered and / or corporate office between 11.00 a.m. to
1.00 p.m. on all working days till the date of the 28th Annual General
Meeting of the Company. Further, those seeking a copy of the said
statement may write to the Company Secretary.
Directors
The following Directors seek re-appointment -
Mr. Tapan Mitra, Director of the Company retires by rotation and being
eligible, offers himself for re-appointment.
Mr. Boman Moradian, Director retires by rotation and being eligible,
offers himself for re-appointment.
Brief resume of Mr. Tapan Mitra and Mr. Boman Moradian as required by
Clause 49 of the Listing Agreement with the Stock Exchanges is annexed
to the Notice convening the 28th Annual General Meeting of the Company.
Your directors place on record their special appreciation to Late Shri
Davendra Ahuja for his long and meritorious association as Director of
the Company till his sad demise on August 20, 2010.
Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, as amended by
the Companies (Amendment) Act, 2000, the Directors confirm that:
1. In the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed and no material departures have
been made from the same;
2. Appropriate Accounting Policies have been selected and applied
consistently and have made judgment 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, 2011 and of the profit for the financial
year ended March 31, 2011;
3. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
4. The Annual Accounts have been prepared on a "going concern" basis.
Auditors
M/s MGB & Co. Chartered Accountants, Statutory Auditors of the Company,
retire at the forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment.
Corporate Governance
Your Company has complied with the Corporate Governance requirements as
per the revised Clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance along with a
Certificate of Compliance from the Auditors forms a part of this
Report.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The information as prescribed under Section 217 (1)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, is given in a separate
annexure, which forms a part of this Report.
Cautionary Statement
Statements in the Director's Report and the Management Discussion and
Analysis may be forward looking within the meaning of the applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Certain factors that could
affect the Company's operations include increase in price of inputs,
availability of raw materials, changes in government regulations, tax
laws, economic conditions and other factors.
Appreciation
Your Directors wish to place on record their appreciation for the
co-operation and support received from banks and financial
institutions, customers, suppliers, members and employees towards the
growth and prosperity of your Company and look forward to their
continued support.
For and on behalf of the Board of Directors
ESSEL PROPACK LIMITED
Subhash Chandra
Mumbai, July 15, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present their Report on your Companys
business operations along with the audited statement of accounts for
the fifteen months period ended March 31,2010.
As earlier communicated, in October 2009 it was decided to change the
Accounting year of the Company to align with the Financial year (April
- March). This would avoid duplication of time and efforts in preparing
financial statements separately under the Companies Act, 1956 and the
Income Tax Act, 1961. Consequently the Report and the Accounts
presented here relate to the fifteen months period from January 1, 2009
to March 31, 2010. The figures for this accounting year are thus not
comparable with those of the previous accounting year which covered a
period of twelve months ending December 2008.
Results of Operations
Consolidated Global results
The key financials are set out below:
(Rs. Million)
Period ended Year ended
31.03.2010 31.12.2008
(Fifteen months) (Twelve months)
Total Revenue (excluding 16941 12949
Excise duty)
PBDIT before exchange 3015 1841
gain/(loss)
Exchange gain/(loss) (7) (518)
PBDIT after exchange gain/ 3008 1323
(loss)
Net Interest (841) (619)
Profit before Tax and 732 (497)
exceptional items
Exceptional items 302 12
Tax (386) (346)
Minority interest (63) (60)
Profit afterTaxand Minority 599 (883)
interest
In a period challenged by recessionary pressures and cautious business
environment, your Company staged a quick turnaround and posted a Net
Profit of Rs 599 million against Net loss of Rs 883 million during the
previous year.
Revenue for the period grew 31% over the previous year.The PBDIT before
exchange gain/loss however grew much higher at 64% reflecting
significant improvement in business profitability helped by pro-active
material cost pass through, stringent operating cost reduction measures
and significant curtailment of losses in the European business.
Interest cost increased 36% on account of higher borrowings
necessitated by the losses of the previous year as well as higher
interest rate in the aftermath of the global financial crisis of 2008.
It has however shown significant reduction during the last quarter of
the period following repayment of substantial debt, helped by
divestment of the non-core Medical Devices Business.
The exceptional item for the period includes profit of Rs 314 million
attributable to the divestment of Medical Devices Business by
subsidiaries of your Company.
India standalone results
The summary results are set out below:
(Rs Million)
Period ended Year ended
31.03.2010 31.12.2008
(Fifteen months) (Twelve months)
Total Revenue (excluding 4541 3548
Excise duty)
Total expenditure (3457) (2708)
PBDIT 1084 840
Financial expenses (net) (352) (261)
Depreciation (289) (206)
PBT before exceptional 443 373
items
Exceptional items (1) 12
Tax (97) (113)
Profit after Tax 345 272
Appropriations:
Dividend recommended 73 55
(inclusive of tax)
Transfer to General 26 14
Reserve
Your Companys Standalone total revenue for 15 months period grew 28%
over the previous year (12 months), while the PBDIT grew 29% reflecting
improved cost management. Sharp increase in the financial expenses was
on account of higher short term interest rates and high level of
debt.Through reduction achieved in working capital and advances, the
Companys debt reduced significantly helping lower interest cost in the
last quarter of the year. Your Companys plant in Nalagarh (Himachal
Pradesh) ran to capacity during the period, helping optimize the tax
holiday benefit and the tax cost. The net profit for the period thus
grew 27% to Rs 345 million.
Review of business and operations
The packaging industry continues to play an important role in
delivering fast moving consumer goods in an efficient and attractive
manner to the ultimate consumer. Given this strong linkage to the FMCG
sector,the plastic collapsible tubes and laminate industry has
weathered the economic downturn caused by the financial crisis of 2008.
The off-take for plastic extruded tubes in the developed markets of US
and Europe has turned sluggish, however given the relatively minor
presence of your Company in this product category, this is not expected
to impede your Company in achieving its sales plans. The demand for
plastic laminated tubes on the contrary holds strong in the developed
markets and in fact is growing in the emerging markets.
India:
Your Company continues to lead the market for tubes in India. With
rapidly increasing penetration of oral care and personal care products
helped by strong economic growth and increasing disposable income,your
Company is faced with a growing demand for tubes from several FMCG
customers in the country. In seizing the opportunity, your Company
continues to pro-actively identify the changing needs of customers,
develop tube solutions for varied applications and actively encourage
conversion from conventional packaging solutions into tubes. Key
initiatives include, new customer development in the pharmaceuticals
and cosmetics categories. Besides continuing to grow its traditional
product offering of laminated tubes for the oral care segment, your
Company is now rapidly increasing its sale of plastic tubes targeted at
the cosmetics segment.
Subsidiary operations
Your Company is a global player in tubing business with an active
presence in eleven other countries through direct and step down
subsidiaries. These subsidiaries are involved in the manufacture and
marketing of tubes in the various countries. Your Company also has a
wholly owned subsidiary in India focusing on manufacture and marketing
of flexible packaging used in the packing of home care, personal care,
food and pharmaceutical products. All these subsidiaries continue to
work closely with customers and grow the business with product
offerings relevant to their markets.
During the year, the subsidiaries in China, Egypt, Philippines and
Latin America continued to perform well. Packaging India Private
Limited, the Indian subsidiary engaged in flexible packaging business,
increased its sales and profitability following the ramping up of its
operations in its new unit at Uttarakhand and improvement in the gross
margin.
The subsidiaries in the UK, Poland and Russia have significantly cut
their losses (almost by 60%) compared to the previous year through
several focused initiatives. The Polish subsidiary has added laminated
tubes to its product offerings, targeting the local East European
customers. All these units are actively developing new customers to
ramp up their volumes and turn profitable. The plastic tubes subsidiary
in the US posted loss as the off-take of a key customer fell short of
the plan in the recessionary climate. The Company is working to develop
new customers to be able to step up capacity utilization and achieve an
early break even.
The subsidiaries in Venezuela and Nepal having ceased operations are in
the process of winding up. During the year, the Nepal subsidiary
carried out capital reduction and remitted Rs 20 million to the holding
company.
Two of the Companys subsidiaries divested all of their shareholding in
one of the Companys step down subsidiaries viz. Avalon Medical
Services Pte. Ltd., Singapore, engaged in Medical Devices Business.
Consequently, this step down subsidiary along with its various
subsidiaries viz. Tacpro Inc, USA, Tactx Medical Inc, USA, Produxx Inc,
USA, Catheter and Disposables Technology Inc, USA, Medical Engineering
and Design Inc, USA have ceased to be Companys subsidiaries with
effect from December 23, 2009. The consolidated financial results for
the year therefore reflect the performance of these entities only until
this date,and these entities are not included in the Consolidated
Balance Sheet of the Company as on March 31, 2010. With this
divestment, Essel Propack has exited its non-core medical devices
business.
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the Directors Report, Balance Sheet and Profit and Loss
Account of its subsidiaries. Your Company had applied to the Government
of India and obtained exemption from such attachment (vide letter no.
47/289/2010-CL-III dated 21/06/2010), since the Audited Consolidated
financial statements are presented in the Annual report. Accordingly,
the annual report does not contain the financial statements of these
subsidiaries. The Company will make available the audited accounts and
related information of the subsidiary companies, where applicable, upon
request by any member of the Company. These documents will also be
available for inspection by any member between 11.00 am to 1.00 pm at
the Companys Registered office / Corporate office till the date of the
27th Annual General Meeting.
Management Discussion and Analysis
The Management Discussion and Analysis on the operations of the company
is provided in a separate section of the Annual Report and forms part
of the Directors Report.
Dividend
Taking into account the profits reported,the overall need to maximize
internal accruals as means to lower your Companys financial gearing
and keeping in mind the interests of the small shareholders, your
Directors recommend a dividend of 20% (Re.0.40 per share of Rs 2 each)
for the 15 months period ended March 31,2010 (previous year Re.0.30 per
share of Rs 2 each).This will also help your Company to maintain its
dividend paying record.
Annual General Meeting
Following the decision to change the accounting year as mentioned
earlier in this Report,the Company has sought and received approval for
extension of time from the Registrar of Companies, Mumbai for holding
this 27th Annual General meeting of the Company upto September 30,2010.
Finance and Accounts
In response to the economic downturn and as part of the turnaround
strategy, your Company implemented a number of measures to reduce
costs,improve asset productivity and conserve cash across its global
operations. The debt profile was rationalized minimizing the short-term
debt. Further helped by exit from the non-core Medical Devices
Business, the debt in the Consolidated Balance Sheet of the Company has
reduced by Rs 1.9 billion by end of the year.
During the year, your Company implemented SAP as its new ERP platform
worldwide, replacing its existing financial accounting software. This
has entailed the Company to cost the raw and packaging material
inventories using "moving weighted average of prices" method instead of
"FIFO" method followed earlier.
Effective January 1,2009, your Company has adopted the amended
provisions ofAS-11as per the Companies (Accounting Standards)
Amendment Rules 2009 related to" Effects of the changes in foreign
exchange rate."The impact on the reported results for the year has been
disclosed in the Accounts.
Mergers, Acquisitions, Disposals
Divesture of shareholding in Bericap India Private Limited
In December 2008, your Company had exercised the put option for
transfer of 31,41,971 equity shares of Rs. 10 each in associate
company, Bericap India Private Limited to its joint venture partner,
Bericap Holding GmbH, Germany ("Purchaser"). Accordingly, the share
transfer was completed and consideration amount of Euro 442,700 was
received by your Company during August, 2009 with all necessary
approvals. With this your Company has fully exited from the joint
venture company, Bericap India Private Limited.
Acquisition of shareholding in Ras Propack Lamipack Ltd (RPLL) and Ras
Extrusion Limited (REL)
These companies (RPLL & REL) having Units near Pune to manufacture 15
million sq m of laminate and 156 million laminated tubes were declared
as sick companies during the year 2001 and 2008 respectively. Your
Company had agreed in principle to act as Co-Promoter in connection
with an application for approval of the Scheme for Revival and
Rehabilitation submitted by RPLL and REL before the Board of Industrial
and Financial Reconstruction (BIFR), New Delhi.
As per the Scheme approved by BIFR and as part of Co-Promoters
contribution, the Company has infused funds in RPLL and REL, by way of
equity and unsecured loans. RPLL has allotted 41,09,100 equity shares
of Rs 10 each at par and REL allotted 7,50,000 equity shares of Rs 10
each at par to the Company on March 29,2010 and April 30,2010
respectively. These shares are subject to lock in for a period of three
years from the date of allotement as per the BIFR Order. Your Companys
shareholding in RPLL and REL stands at 39.57% and 36.67% respectively.
The unsecured loan amounts to Rs 30 million and Rs 15 million
respectively in the two companies.
Buy-Back of shares
Your Company has not announced in last three years, any Share Buy-Back
program. If there is any future proposal for Buy-Back, fresh mandate
will be sought from the members as necessary under the applicable
guidelines.
Public Deposits
Your Company has not accepted any fixed deposits from the public and
there are no outstanding fixed deposits from the public as on March
31,2010.
Human Capital
Your Company has 750 employees in India and 2044 employees globally in
various subsidaries as of March 31,2010.The information on employees
remuneration as per Section 217 (2A) of the Companies Act, 1956 (the
Act) read with the Companies (Particulars of Employees) Rules, 1975, as
amended till date, forms part of this Report. However, as per
provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts
are being sent to all the members excluding the statement containing
the particulars of employees to be provided under Section 217(2A) of
the Act. Any member interested in obtaining such particulars may
inspect the same at the Companys Registered / Corporate Office between
11.00 am to 1.00 pm on all working days till the date of the 27th
Annual General meeting. Further, those seeking a copy of the said
statement may write to the Company Secretary at the Corporate Office.
Directors
The following Directors seek re-appointment :-
Mr. Subhash Chandra, Director of the Company retires by rotation at the
ensuing Annual General Meeting and being eligible, offers himself for
re-appointment. Mr. Subhash Chandra is related to Mr. Ashok kumar
Goel,Vice Chairman & Managing Director of the Company.
Mr. K.V. Krishnamurthy, Director of the Company retires by rotation at
the ensuing Annual General Meeting and being eligible, offers himself
for re-appointment.
Brief resume of Mr. Subhash Chandra and Mr. K.V. Krishnamurthy as
required by Clause 49 of the Listing Agreement with the Stock
Exchanges is annexed to the Notice convening the 27th Annual General
Meeting of the Company. Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, as amended by
the Companies (Amendment) Act, 2000, the Directors confirm that:
1. In the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed and no material departures have
been made from the same;
2. Appropriate Accounting Policies have been selected and applied
consistently and have made judgment 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, 2010 and of the profit for the period
from January 1,2009, to March 31,2010;
3. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
4. The Annual Accounts have been prepared on a"going concern" basis.
Auditors
M/s MGB & Co., Statutory Auditors of the Company, retire at the ensuing
Annual General Meeting and being eligible,offerthemselves for
re-appointment. Corporate Governance
Your Company has complied with the Corporate Governance requirements as
per the revised Clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance along with a
Certificate of Compliance from the Auditors forms part of this Report.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The information as prescribed under Section 217 (1)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, is given in a separate
annexure, which forms part of this Report. Cautionary Statement
Statements in the Directors Report and the Management Discussion and
Analysis may be forward looking within the meaning of the applicable
laws and regulations. Actual results may differ materially from those
expressed in the statement. Certain factors that could affect the
Companys operations include increase in price of inputs, availability
of raw materials, changes in government regulations,tax laws, economic
conditions and other factors. Appreciation
Your Directors wish to place on record their appreciation for the co-
operation and support received from banks and financial institutions,
customers, suppliers, members and employees towards the growth and
prosperity of your Company and look forward to their continued support.
Cautionary Statement
Statements in the Directors Report and the Management Discussion and
Analysis may be forwardlooking within the meaning of the applicable
laws and regulations.Actual results may differ materially from those
expressed in the statement. Certain factors that could affect the
Companys operations include increase in price of inputs,availability
of raw materials,changes in government regulations,tax laws,economic
conditions and other factors.
Appreciation
Your Directors wish to place on record their appreciation for the co-
operation and support received from banks and financial institutions,
customers,suppliers,members and employees towards the growth and
prosperity of your Company and look forward to their continued support.
For and on behalf of the Board of Directors
ESSEL PROPACK LIMITED
Subhash Chandra
Chairman
Mumbai, July 28,2010
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