Mar 31, 2023
Your Board of Directors ("Board") is pleased to present the Thirty Fifth Annual Report of Marico Limited ("Marico" or "Company" or "your Company") for the financial year ended March 31,2023 ("year under review" or "year" or "FY23").
In compliance with the applicable provisions of the Companies Act, 2013 ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year from April 1, 2022 to March 31, 2023, in respect of Marico and "Marico Consolidated" comprising Marico and its subsidiaries. The consolidated entity has been referred to as "Marico Group" or "Group" in this report.
FINANCIAL RESULTS - OVERVIEW
(H in Crores) |
||
Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
Consolidated Summary for the Group |
||
Revenue from Operations |
9,764 |
9,512 |
Profit before Tax |
1,743 |
1,601 |
Profit before Tax and exceptional items |
1,743 |
1,601 |
Profit after Tax |
1,322 |
1,255 |
Marico Limited (Standalone) Revenue from Operations |
7,478 |
7,500 |
Profit before Tax |
1,492 |
1,413 |
Less: Provision for Tax for the current year |
313 |
250 |
Profit after Tax for the current year |
1,179 |
1,163 |
Other Comprehensive Income for the current year |
0.15 |
2 |
Add: Surplus brought forward |
2,874 |
2,904 |
Profit available for Appropriation |
4,053 |
4,069 |
Appropriations: Distribution to shareholders |
582 |
1,195 |
Surplus carried forward |
3,471 |
2,874 |
In FY23, Marico Limited posted a consolidated turnover of H 9,764 Crores (USD 1.2 billion), up 3% from the previous year. The underlying domestic volume growth for the year was 1% and constant currency growth in the international business was 13%. The business delivered operating profit of H 1,810 Crores, up 8% over the last year. The operating margin stood at 18.5%, up ~87 bps from the previous year. Recurring net profit after tax was at H 1,280 Crores, a growth of 4% over the last year.
The domestic business achieved a turnover of H 7,351 Crores, marginally higher than the last year. Volume growth was modest at 1%, owing to higher retail inflation weakening consumption trends, especially in the rural sector. The operating margin of the India business was at 19.8% in
FY23 vs 17.4% in the previous year. The improved profitability was a result of moderation in the prices of key commodities such as copra and vegetable oils as well as a more favourable portfolio mix.
The International business posted a turnover of H 2,413 Crores, a growth of 11 % over the last year. The business reported constant currency growth of 13%, with each of the key markets growing in tandem. The operating margin of the International business was at 23.7% in FY23 vs. 24.4% in the previous year. Higher input costs and currency headwinds in certain markets impacted profitability of the international business.
Further details on Marico''s business, outlook, financial and operational performance, etc. are provided as part of the Management Discussion and Analysis Report.
There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of FY23 and the date of this report.
Further, there has been no change in the nature of business of the Company.
There is no amount proposed to be transferred to the Reserves.
Your Company''s wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/disbursement of profits to its shareholders and also retaining sufficient profits in the business for various purposes. In accordance with Regulation 43A of the SEBI Listing Regulations, the Company has adopted the Dividend Distribution Policy, which details various parameters subject to consideration of which the Board may recommend or declare Dividend, including working capital and capital expenditure requirements, funds required for acquisitions, reducing debt, contingencies, etc. The Dividend Distribution Policy is available on the Company''s website at https://marico.com/investorspdf/Dividend Distribution Policy.pdf. Your Company is in compliance with the Dividend Distribution Policy as approved by the Board.
Based on the principles and factors enunciated in the above Policy, your Company paid an Interim Dividend of H 4.50 per equity share of H 1 each aggregating to H 581.87 Crores to equity shareholders during FY23, as declared by the Board on February 27, 2023. Thus, the Dividend pay-out ratio for FY23 was 45% of the recurring consolidated net profit after tax as compared to 97% on a similar basis in the previous year. The lower Dividend pay-out for FY23 is primarily on account of utilization of funds at a group level for strategic acquisitions made in India and Vietnam. Average Dividend pay-outs to shareholders for the last 3 years is at a healthy ~75% of the recurring consolidated net profit after tax, and your Company is committed to maintaining a strong dividend pay-out going forward, in accordance with its Dividend Distribution Policy.
During FY23, the paid-up equity share capital of the Company has increased from H 129.28 Crores to H 129.31 Crores, consequent to allotment of 2,97,100 equity shares of H 1 each upon exercise of stock options under the Marico Employee Stock Option Plan, 2016.
A list of bodies corporate which are subsidiaries of your Company is provided as part of the notes to the Consolidated Financial Statements. The following developments took place with regards to subsidiaries of Marico during FY23:
⢠Marico Bangladesh Limited continues to be the material subsidiary of the Company, in terms of provisions of Regulation 16(1)(c) of the SEBI Listing Regulations.
⢠On May 23, 2022, your Company acquired 53.98% equity stake in HW Wellness Solutions Private Limited ("True Elements") and consequently, True Elements became a subsidiary of the Company.
⢠Beauty X Joint Stock Company ("Beauty X"), Vietnam, became a wholly owned subsidiary of Marico South-East Asia Corporation ("MSEA"), pursuant to completion of acquisition by MSEA on January 31, 2023 as per the closing conditions and terms of the definitive agreement between the parties. Consequently, Beauty X became a step-down wholly owned subsidiary of the Company.
⢠On July 4, 2022 and November 11,2022, the Company acquired additional equity stake of 4.14% and 3.48% respectively in Apcos Naturals Private Limited, thereby increasing the total equity stake from 52.38% to 60%.
In accordance with Section 129(3) of the Act, a separate statement containing the salient features of the financial statements of all subsidiaries and associate companies/joint ventures, if any, in prescribed Form AOC - 1 forms part of this Report. The statement also provides details of performance and financial position of each of the subsidiaries.
The audited financial statements together with related information and other reports of each of the subsidiary companies are available on the Company''s website at https://marico.com/india/investors/documentation/annual-reports and the same are also available for inspection by the Members. Any Member desirous of inspecting the said financial statements or obtaining copies of the same may write to the Company Secretary & Compliance Officer at [email protected].
In line with the requirements of the Act and SEBI Listing Regulations, your Company has approved a policy for determining material subsidiaries and the same is available on the Company''s website at https://marico.com/investorspdf/ Policy for Determination of Material Subsidiary.pdf.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments, as required under Section 186 of the Act and Schedule V of the SEBI Listing Regulations, are provided as part of the notes to the financial statements of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and gives an update, inter alia, on the following matters:
⢠Industry structure and developments
⢠Segment-wise overview of business performance
⢠Financial Overview
⢠Shareholder Value
⢠Outlook
⢠Human Resources
⢠Information Technology & Digital
⢠Risk Management
⢠Internal control systems and their adequacy & Internal Financial Controls (IFC)
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
Your Company actively seeks to adopt global best practices for an effective functioning of the Board and believes in having a truly diverse Board whose wisdom and strength can be leveraged for creating greater stakeholder value, protection of their interests and better corporate governance. Marico''s Board comprises eminent persons with proven competence and integrity, who bring in vast experience and expertise, strategic guidance and leadership qualities.
As on March 31, 2023, the Board comprised one Executive Director, seven Non-Executive Independent Directors (including three Women Independent Directors) and three Non-Executive Non-Independent Directors.
The Company has received requisite declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under Section 149(6) of the Act read with Rule 5 of the Companies
(Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of the SEBI Listing Regulations. The Independent Directors have also confirmed that they are not aware of any circumstance or situation that exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. In the opinion of the Board, all the Independent Directors satisfy the criteria of independence as defined under the Act, rules framed thereunder and the SEBI Listing Regulations, and that they are independent of the Management of the Company.
In the opinion of the Board, all Independent Directors (including those appointed during the year) possess requisite qualifications, experience, expertise, proficiency and hold high standards of integrity for the purpose of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014. In terms of the requirements under the SEBI Listing Regulations, the Board has identified list of key skills, expertise and core competencies of the Board, including the Independent Directors, details of which are provided as part of the Corporate Governance Report.
As required under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors (including those appointed during the year) have registred themselves with the Independent Directors Databank and also completed the online proficiency test conducted by the Indian Institute of Corporate Affairs, wherever required.
As a measure of enhanced corporate governance and increased Board effectiveness, the Board based on the recommendation of the Nomination and Remuneration Committee ("NRC"), appointed Mr. Nikhil Khattau, Independent Director, as the Lead Independent Director amongst the Independent Directors with effect from April 7, 2022. The Lead Independent Director inter alia presides over separate meeting(s) of the Independent Directors as Chairperson, acts as a representative of Independent Directors and carries out such other roles and responsibilities as may be assigned by the Board or group of Independent Directors from time to time.
The Board met six times during FY23 on April 7, 2022, May 5, 2022, August 6, 2022, November 4, 2022, February 3, 2023 and February 27, 2023. The necessary quorum was present for all the meetings. The maximum interval between any two meetings did not exceed 120 days.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
I. Appointment/Re-appointment of Directors
In terms of the Company''s Policy on Nomination, Remuneration and Evaluation ("NRE Policy''), the Board at its meeting held on April 7, 2022, based on the recommendation of NRC and evaluation of the balance of skills, knowledge, experience and expertise on the Board and that of the respective Director, approved and recommended to the shareholders the following matters relating to appointment/re-appointment of Independent Directors, who are not liable to retire by rotation:
1. Re-appointment of Mr. Ananth Sankaranarayanan (DIN: 07527676) as an Independent Director for a second term of 5 (five) consecutive years with effect from June 26, 2022 to June 25, 2027, based on the positive outcome of his performance evaluation and contributions during his first term as Independent Director.
2. Appointment of Ms. Apurva Purohit
(DIN: 00190097) as an Independent Director for a term of 5 (five) consecutive years with effect from April 7, 2022 to April 6, 2027.
3. Appointment of Ms. Nayantara Bali
(DIN: 03570657) as an Independent Director for a term of 5 (five) consecutive years with effect from April 7, 2022 to April 6, 2027.
4. Recommendation of appointment of Mr. Rajeev Vasudeva (DIN: 02066480) as an Independent Director for a term of 5 (five) consecutive years with effect from November 1,2021 to October 31, 2026, as previously approved by the Board.
Subsequently, the Members approved the aforesaid appointment/re-appointment vide special resolutions dated May 14, 2022 passed through postal ballot. The results of postal ballot were declared by the Company on May 17, 2022, details whereof have been provided as part of the Corporate Governance Report.
The Board at its meeting held on May 5, 2023, based on the recommendation of NRC, approved the below matters subject to approval of Members at the 35th Annual General Meeting (AGM):
1 . Re-appointment of Mr. Saugata Gupta (DIN: 05251806) as the Managing Director & CEO ("MD & CEO'') of the Company for a term of 2
(two) years with effect from April 1,2024 to March 31,2026, not liable to retire by rotation, and terms thereof including remuneration.
2. Appointment of Mr. Rajan Bharti Mittal (DIN: 00028016) as an Additional Director in the capacity of Independent Director for a term of 5 (five) consecutive years with effect from July 1, 2023 to June 30, 2028.
The Company has received requisite notices in writing, proposing the candidature of Mr. Saugata Gupta for re-appointment as MD & CEO and Mr. Rajan Bharti Mittal for appointment as Independent Director, under Section 160 of the Act. The Board recommends the aforesaid re-appointment/appointment to the Members for approval. Relevant details pertaining to the proposals, including terms of appointment and remuneration, are provided as part of the Notice convening the 35th AGM.
In accordance with provisions of Section 152 of the Act read with the rules made thereunder and the Articles of Association of the Company, Mr. Rishabh Mariwala (DIN:03072284), Non-Executive Director, retires by rotation at the 35th AGM and being eligible, has offered himself for re-appointment. Based on the recommendation of NRC, the Board has recommended for the approval of the Members, re-appointment of Mr. Rishabh Mariwala as a Non-Executive Director at the 35th AGM. A brief profile of Mr. Rishabh Mariwala and other requisite information are provided as part of the Notice of 35th AGM.
II. Key Managerial Personnel
Other than the proposal for re-appointment of Mr. Saugata Gupta as MD & CEO as aforesaid, there were no changes in the Key Managerial Personnel of your Company.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company, confirm that:
a. in the preparation of the annual financial statements for the financial year ended March 31, 2023, the applicable accounting standards have been followed and there are no material departures from the same;
With respect to the focus areas identified by the Board last year, the following progress was made in the year under review: Focus Areas Progress made |
|
Strategic risk management- Board oversight and building management capability for implementing risk management strategies and practices amidst a highly volatile macro environment. |
Key risks and mitigation measures were monitored. Processes and systems were further strengthened with a view to de-risk the organisation and to sustain and improve the long-term performance. |
As part of Board rejuvenation, focus on induction and assimilation of New Board Members. |
Rejuvenation of the Board was executed during the year. Comprehensive induction was conducted by the Management team for new Board Members. A robust process for succession planning has been set up and regularly discussed at the Board and NRC. |
Mentoring the Senior Management to create an agile organisation that can adapt to the highly VUCA (Volatile, Uncertain, Complex & Ambiguous) environment. |
During the year, the Board continued to deeply engage with the Executive management team to successfully implement the strategies, including digital transformation, foods business and premiumisation. |
Focus Areas for the Committees: Audit Committee: further strengthening the GRCC (governance, risk management, controls and compliance) policies, processes and systems in the Company with special focus on automation and exception analytics. Nomination and Remuneration Committee: - helping strengthen the culture codes for the Company and improving the talent management processes, with specific focus on strengthening the top talent pipeline. - succession planning for MD & CEO and Senior Management Personnel. Corporate Social Responsibility Committee: bringing focus on improving the effectiveness of CSR spends. |
As part of its terms of reference and focused discussions on agenda matters, the Committees continued to drive their respective priorities to augment governance and internal controls. |
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2023 and of the profit of your Company for the said period;
c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a ''going concern'' basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively; and
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
Your Company believes that the process of performance evaluation at the Board level is pivotal to its Board Engagement and Effectiveness. The Policy and criteria for Board Evaluation is duly approved by NRC. Performance evaluation is facilitated by the Chairman of the Board who is supported by the Chairperson of NRC. This process at Marico is conducted through structured questionnaires which cover various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Member''s strengths and contribution, execution and performance of specific duties, obligations and governance.
Evaluation of Committees of the Board was based on criteria such as adequacy of Committee composition, adherence to charter and laying down the full year agenda, role
of Chairperson including allocation of time and eliciting contributions from all Committee members, effectiveness of Committee''s performance and quality of support/ recommendation to the Board, etc.
Evaluation of Directors was based on criteria such as preparedness and participation in discussions, quality of inputs, managing Board relationships, understanding of corporate governance framework, financial reporting, industry and market conditions, exercising independent judgment, etc.
Evaluation of the Board was based on criteria such as information architecture, Board dynamics and composition, focus on substantive issues, capacity building and future readying the organisation, governance mechanisms, etc.
In addition to the questionnaires, detailed one-on-one insighting is carried out annually by the Chairperson of the NRC with individual Board members. Feedback is also taken from senior management personnel on relevant aspects of Board functioning and shared with the Chairperson of the NRC. A quantitative analysis and Board Effectiveness presentation with in-sighting feedback and trends is shared and presented by the Chairperson of the NRC to all Board Members. Thereafter, the following process is followed to assimilate and process the feedback:
⢠A meeting of the Independent Directors is held wherein performance of Non-Independent Directors including the MD & CEO, Chairman of the Board and of the Board as a whole is evaluated.
⢠The entire Board discusses the findings of the evaluation with the Independent Directors and also evaluates the performance of the Individual Directors including the MD & CEO, the Board as a whole and all Committees of the Board.
⢠As an outcome of the above process, individual feedback is shared with each Director subsequently during the year.
For the year under review, the performance evaluation exercise conducted has resulted in identification of following focus areas, for the Company to work upon in the coming years:
1. Continued focus on Board effectiveness and assimilation of new Board members. Evaluating and enhancing the role of Lead Independent Director, wherever required, in fostering a cohesive and high-performing Board. Your Company already has an elaborate familiarization programme for effective induction to ensure seamless integration of the new Board Members.
2. Continued emphasis at a Board level on strategic risk management and building management capability in this area. Strengthening processes and systems coupled with robust monitoring, to mitigate key risks including
volatility in international markets, exposure to currency fluctuations in certain geographies, path to sustainable and profitable growth in digital and foods business. The Board will continue to provide strategic inputs to win and grow amidst such VUCA environment.
3. Relentless pursuit of sustainability, which has always been at the core of Marico''s business strategy. Deep focus on sustainable value creation and long-term win-win for all stakeholders, driving ESG leadership through cohesive and structured set of interventions under Marico ESG 2.0 framework, aligned with the relevant United Nations (UN) Sustainable Development Goals (SDGs). Maintaining best-in-class governance practices under the able guidance of the Board.
4. The Board will continue to mentor the MD & CEO and the senior management team for defining and
executing the transformation agenda which is aimed at building a future-ready Marico, more specifically the strategic transformational initiatives in areas of innovation and diversification of foods business and premium brands, cost management, digital maturity and talent management.
5. For the Board Committees, the following focus areas will continue for the coming year:
a. Audit Committee: Further strengthening the GRCC policies, processes and systems in the Company with special focus on automation and analytics, cyber security and standardisation of practices across all units within Marico;
b. Nomination and Remuneration Committee:
i. helping strengthen the culture within the organisation that is positive, enabling and inclusive with diverse talent across gender, ability and thought.
ii. further strengthening the top talent pipeline and succession planning for MD & CEO and the Senior Management Personnel.
c. Corporate Social Responsibility Committee: Bringing focus on effectively measuring impact created through CSR spends by Marico.
The Board is also committed to review the progress on these priorities during the annual Board Retreats held every year.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) AND BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)
At Marico, sustainability is regarded as a business enabler that influences key strategic decisions. Having ingrained sustainability into its culture, your Company has spurred towards a carbon neutral future. This transformation is driven by robust sustainability governance structure, ethical business conduct, ESG risk mitigation strategies, ambitious targets towards transitioning to low-carbon sources, lowering GHG emission intensity, achieving water stewardship, incorporating responsible sourcing principles, and mapping product sustainability footprint. Considering the Company''s deep focus on Sustainability, ESG is considered a Board-level mandate from a governance standpoint, and discussed periodically as part of Board meetings.
During the year, your Company launched its Sustainability 2.0 Framework that highlights its commitment to drive sustainable value creation and stakeholder capitalism in
this decade of action. Covering over 50 KPIs across the environmental, social, and governance pillars - the initiative defines Marico''s long-term sustainability goals that it aims to achieve by 2030. The launch of Marico''s Sustainability 2.0 initiative reaffirms its commitment to becoming a future-ready organization that creates value for all stakeholders, from its employees and business partners to the communities in which it operates. The initiative aims to reduce its environmental impact, balance profitability with sustainability, and implement a more transparent, efficient, and effective corporate governance framework. A detailed write-up on Marico''s stakeholder engagement process, covering interalia the constituents of stakeholder ecosystem, engagement objectives and mode of engagement, has been provided as part of the Chapter titled "Stakeholder Engagement" of this Integrated Annual Report.
As part of the deployment, Marico has outlined an extensive 8-point commitment to effect change around key focus areas ranging from Net Zero emissions in domestic operations by 2030, Responsible Sourcing, Inclusivity and Diversity, Human Rights and Ethics, etc.
Your Company realizes the power of being transparent and accountable as an organization, which in turn, helps in maintaining the trust that stakeholders'' have placed in us. Marico considers disclosure practice as a strong tool to share strategic developments, business performance and the overall value generated for various stakeholder groups over a period of time. Marico has published its fifth Integrated Annual Report underlining the new set of targets and business goals that pave the way for short, medium and long-term value creation of the Company. Keeping up with changes in regulatory requirements and evolving disclosure patterns, your Company is presenting its first Business Responsibility and Sustainability Report ("BRSR"), which forms part of this Integrated Annual Report. The BRSR covers the Company''s performance against the nine principles of the ''National Guidelines on Responsible Business Conduct'' and is in adherence to the SEBI Listing Regulations.
The financial sections of BRSR are presented in line with the requirements of the Act read with the rules made thereunder, the Indian Accounting Standards, the SEBI Listing Regulations and the requisite Secretarial Standards issued by the Institute of Company Secretaries of India. The non-financial section (Sustainability and Corporate Social Responsibility) is presented in conformance to the Global Reporting Initiative (GRI) Standard''s Core Performance Indicators, the UNSustainable Development Goals (SDGs) and other sector relevant international sustainability disclosure guidelines.
AUDIT COMMITTEE & AUDITORS AUDIT COMMITTEE
Your Company has constituted an Audit Committee which performs the roles and functions as mandated under the Act, the SEBI Listing Regulations and such other matters as prescribed by the Board from time to time. The detailed terms of reference of the Audit Committee, attendance at its meetings and other details have been provided in the Corporate Governance Report. As on the date of this Report, the Audit Committee consists of four Independent Directors, Mr. Nikhil Khattau, Ms. Hema Ravichandar, Mr. Milind Barve and Ms. Apurva Purohit. Mr. Nikhil Khattau is the Chairman of the Audit Committee.
During the year under review, the Board has accepted the recommendations of the Audit Committee on various matters. There have been no instances where such recommendations have not been accepted.
STATUTORY AUDITORS
Pursuant to the provisions of Section 139 of the Act, the Members at the 34th AGM held on August 5, 2022 approved the re-appointment of M/s. B S R & Co. LLP, Chartered Accountants (Firm registration No. 101248W/W-100022), as the Statutory Auditors of the Company for a second term of 5 (five) consecutive years, from the conclusion of 34th AGM upto the conclusion of 39th AGM to be held in the year 2027. Accordingly, the Statutory Auditors will hold office until the conclusion of 39th AGM of the Company.
The aforesaid re-appointment was recommended by the Audit Committee/Board to the shareholders based on the positive outcome of review of performance of M/s. B S R & Co. LLP during their first term as auditors and considering various factors such as their independence, industry experience, skills and expertise and quality of audit. The Audit Committee periodically reviews the independence of Auditors through quarterly affirmations, review of non-audit services, internal checks and balances to mitigate conflict of interest, etc.
The Auditor''s Report on the financial statements of the Company for the financial year ended March 31,2023 forms part of the Annual Report. The said report was issued by the Statutory Auditors with an unmodified opinion and does not contain any qualifications, reservations or adverse remarks. During the year under review, the Auditors have not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
COST AUDITORS
In terms of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year. Your Company has made and maintained the cost accounts and records, as required. Accordingly, the Board at its meeting held on May 5, 2023, based on the recommendation of the Audit Committee, appointed M/s. Ashwin Solanki & Associates, Cost Accountants (Firm registration no.: 100392), as the Cost Auditors of the Company to conduct audit of the cost records for the financial year ending March 31, 2024. A remuneration of H 10,00,000/- (Rupees Ten Lakhs only) plus applicable taxes and out of pocket expenses, has been fixed for the Cost Auditors, subject to the ratification of such fees by the Members at the 35th AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2024 forms part of the Notice of the 35th AGM. The Company has received requisite consent and certificate of eligibility from M/s. Ashwin Solanki & Associates.
During the year under review, the Cost Auditor has not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 5, 2023, based on the recommendation of the Audit Committee, approved the appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor of the Company to conduct audit of the secretarial records for the financial year ending March 31,2024. The Company has received consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report in form MR-3 for FY23 is enclosed as "Annexure A" to this report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks. During the year under review, the Secretarial Auditor has not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important aspect of Corporate Governance. Your Company believes that a robust Risk Management Framework ensures adequate controls and monitoring mechanisms for smooth and efficient running of the business. A risk-aware organization is better equipped to maximize shareholder value.
The key cornerstones of your Company''s Risk Management Framework are:
⢠A well-defined risk management policy;
⢠Periodic assessment and prioritization of risks that affect the business of your Company;
⢠Development and deployment of risk mitigation plans to reduce vulnerability to prioritized risks;
⢠Focus on both the results and efforts required to mitigate the risks;
⢠Defined review and monitoring mechanism wherein the functional teams, the top management, the Risk Management Committee, Audit Committee and the Board review the progress of the mitigation plans;
⢠Integration of Risk Management with strategic business plan, annual operating plans, performance management system and significant business decisions;
⢠Constant scanning of external environment for new and emerging risks;
⢠Wherever applicable and feasible, defining the risk appetite and implementing adequate internal controls to ensure that the limits are adhered to.
Your Company has also put in place a robust Crisis Management Framework monitored by internal crisis management committee which is responsible for laying out crisis response mechanism, communication protocols, and periodic training and competency building around crisis management.
Your Company has in place a Risk Management Committee ("RMC") chaired by an Independent Director, which assists the Board in monitoring and overseeing implementation of the risk management policy, including evaluating the adequacy of risk management systems and such other functions as mandated under the SEBI Listing Regulations and as the Board may deem fit from time to time. The composition, detailed terms of reference of the RMC and attendance at its meetings are provided as part of the Corporate Governance Report.
In terms of the applicable provisions of the SEBI Listing Regulations, your Board has adopted a Risk Management Policy, which is available on the Company''s website at https://marico.com/investorspdf/Risk Management Policy. pdf.
Further details of the risk management framework of the Company are provided as part of the Integrated Annual Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Internal Financial Controls are an integral part of the risk management process which in turn is a part of Corporate Governance addressing financial and financial reporting risks. The Internal Financial Controls have been documented and embedded in the business processes. Your Company''s approach on Corporate Governance has been detailed in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to:
⢠Effectiveness and efficiency of operations
⢠Reliability of financial reporting
⢠Compliance with applicable laws and regulations
⢠Prevention and detection of frauds
⢠Safeguarding of assets
Your Company has defined policies and standard operating procedures for all key business processes to guide business operations in an ethical and compliant manner. Compliance to these policies is ensured through periodic self-assessment as well as internal and statutory audits. The Company has robust ERP and other supplementary IT systems which are an integral part of internal control framework. The Company continues to constantly leverage technology in enhancing the internal controls. The Company also uses data analytics to identify trends and exceptions to proactively monitor any control deviations for corrective action.
Your Board reviews the internal processes, systems and the internal financial controls and accordingly, the Directors'' Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls. Assurances on the effectiveness of Internal Financial Controls is obtained through management reviews, self-assessment, continuous monitoring by functional heads as well as testing of the internal financial control systems by the internal auditors during the course of
their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
On a voluntary basis, your Company''s material subsidiary, Marico Bangladesh Limited ("MBL") has also adopted this framework and its progress is reviewed by MBL''s Audit Committee and its Board of Directors, which exhibits Marico''s commitment to good governance at a group level.
RELATED PARTY TRANSACTIONS
Vide amendments to the SEBI Listing Regulations effective April 1, 2022, substantial changes were introduced in the related party transaction framework, inter alia, by enhancing the purview of definition of related party, and overall coverage of transactions with related parties.
In line with the requirements of the Act, read with the amended SEBI Listing Regulations, the Company revised its Policy on Related Party Transactions and the same is available on its website at https://marico.com/investorspdf/Policy on Related Party_Transactions.pdf. The Policy captures framework for Related Party Transactions and intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions with related parties.
All transactions with related parties and subsequent material modifications are placed before the Audit Committee for its review and approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature, based on the criteria approved by the Audit Committee. In case of transactions which are unforeseen, the Audit Committee grants an approval to enter into such unforeseen transactions, provided the transaction value does not exceed the limit of H 1 Crore per transaction, in a financial year. The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted (including long-term or recurring RPTs), on a quarterly basis.
All transactions with related parties entered into during FY23 were at arm''s length basis and in the ordinary course of business and in accordance with the provisions of the Act and rules made thereunder, the SEBI Listing Regulations and the Company''s Policy on Related Party Transactions.
During the year under review, there were no transactions for which consent of the Board was required to be taken in terms of Section 188(1) of the Act and accordingly, no disclosure is required in respect of the related party transactions in Form AOC-2 under Section 134(3)(h) of the Act and rules framed thereunder. Further, there were no material related
party transactions in terms of the SEBI Listing Regulations requiring approval of the Members during the year under review. Attention of the Members is drawn to note no. 30 of the standalone financial statements setting out the disclosures on related party transactions for FY23.
Pursuant to Regulation 23(9) of the SEBI Listing Regulations, your Company has filed the reports on related party transactions with the Stock Exchanges within statutory timelines.
NOMINATION AND REMUNERATION COMMITTEE AND COMPANY''S POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
Your Company has in place NRC of the Board, which performs the functions as mandated under the Act, the SEBI Listing Regulations and such other functions as prescribed by the Board from time to time. The composition of NRC, attendance at its meetings and other details have been provided as part of the Corporate Governance Report.
In terms of the applicable provisions of the Act read with the rules framed thereunder and the SEBI Listing Regulations, your Board has amended its Policy for appointment, removal and remuneration of Directors, Key Managerial Personnel ("KMP") and Senior Management Personnel ("SMP") and also on Board Diversity, Succession Planning and Evaluation of Directors ("NRE Policy") at its meeting held on May 5, 2023 to incorporate the recent amendments under the SEBI Listing Regulations. The remuneration paid to Directors, KMP and SMP of the Company are as per the terms laid down in the NRE Policy. The MD & CEO of your Company does not receive remuneration or commission from any of the subsidiaries of your Company.
The salient features of this Policy are outlined in the Corporate Governance Report and the NRE Policy is made available on the Company''s website at https://marico.com/investorspdf/ Policy. on Nomination, Remuneration and Evaluation.pdf.
MARICO EMPLOYEE BENEFIT PLAN
Marico Employee Stock Option Plan, 2016
At the 28th AGM held on August 5, 2016, the Members approved institution of the Marico Employee Stock Option Plan, 2016 ("Marico ESOP 2016 Plan" or "Plan") as a
long-term incentive plan for grant of employee stock options
("Options") to eligible employees of the Company including the MD & CEO and that of its subsidiaries, whether in India or outside India ("Eligible Employee"). Stock options have long been proven to be an effective tool for organizations to incentivize employees to accelerate profitable growth and wealth creation while also working as a performance reward and retention tool. Marico ESOP 2016 Plan aims to align individual goals and performance of employees to annual and long-term business objectives of the Company, reward employees for creating long-term value for shareholders by achieving the business objectives and accelerating Company performance, and attract and retain high potential and critical employees in a competitive talent environment.
The NRC is entrusted with the responsibility of administering the Plan and the Scheme(s) notified or to be notified thereunder, from time to time.
During the year under review, based on the recommendation of NRC and the Board, the shareholders approved the following matters relating to Marico ESOP 2016 Plan vide special resolutions dated May 14, 2022 passed through postal ballot:
- Increase in limit of Options that can be granted from time to time under the Plan from the existing limits of an aggregate maximum of 0.6% of the issued equity share capital of the Company as on August 5, 2016 ("Commencement Date") (excluding outstanding warrants and conversions), being 77,41,027 Options, to revised limits of upto an aggregate of 2,09,41,027 Options (as may be adjusted for any changes in capital structure of the Company), constituting an additional 1,32,00,000 Options.
- Further, the limit for grant of Options to any single Eligible Employee in any one single scheme notified under the Plan, as previously approved at the 28th AGM held on August 5, 2016, remains unchanged at 0.15% of the issued capital as on the Commencement Date, being 19,35,257 Options.
- The Marico ESOP 2016 Plan was amended to modify the relevant clauses to give effect to the aforesaid increase in limits and certain other changes intended to bring the language thereof in uniformity with the re-enacted SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations") and adopt references to latest regulatory enactments.
The Board affirms that the amendments to the Marico ESOP 2016 Plan as aforesaid are in compliance with the
SBEB Regulations and the changes effected thereto are not prejudicial to the interests of the employees.
As on March 31,2023, an aggregate of 64,37,040 Options were outstanding which constitute about 0.50% of the paid-up equity share capital of the Company as on that date.
Marico Employees Stock Appreciation Rights Plan, 2011
The Company adopted Marico Stock Appreciation Rights Plan, 2011 ("STAR Plan") in the year 2011, for the welfare of its employees and those of its subsidiaries ("Eligible Employees"). Under the Plan, various schemes are notified for conferring cash incentive benefit to the Eligible Employees through grant of stock appreciation rights ("STARs").
The NRC administers the Plan and the Scheme(s) notified thereunder, from time to time. The NRC notifies various Schemes for granting STARs to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfilment of certain conditions and applicability of Income Tax. The STAR Plan involves secondary market acquisition of the equity shares by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to such Trust for making secondary acquisition of equity shares, subject to the statutory ceilings and provisions of applicable law.
As on March 31, 2023, an aggregate of 13,16,749 STARs were outstanding which constitute about 0.10% of the paid-up equity share capital of the Company as on that date.
STATUTORY INFORMATION ON MARICO EMPLOYEE BENEFIT SCHEME/PLAN AND TRUST
The disclosure in terms of Regulation 14 of the SBEB Regulations is made available on the Company''s website at https://marico.com/india/investors/documentation/annual-reports. Further, the Company has complied with the applicable accounting standards in this regard. During the year under review, the Company has not given loan to any of its employees for purchase of shares of the Company.
It is hereby affirmed that the Marico ESOP 2016 Plan and STAR Plan instituted by the Company are in compliance with the SBEB Regulations, as amended from time to time, and the resolutions passed by the Members approving the same.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employees'' remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is disclosed in "Annexure B" to this report.
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is available on the Company''s website at https://marico.com/india/investors/documentation/annual-re-ports. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members, excluding the aforesaid information. Any Member desirous of obtaining a copy of the said information may access the aforesaid weblink or write to the Company Secretary at [email protected].
Your Company believes that effective leadership, robust policies, processes and systems and a rich legacy of values form the hallmark of our best corporate governance framework. The Board, in conjunction with the management, sets values of your Company and drives the Company''s business with these principles. These ethics and values are reflected in Marico''s culture, business practices, disclosure policies and relationship with its stakeholders. These ethics and values are practiced by Marico and its subsidiaries globally, which is at par with best international standards and good corporate conduct.
Pursuant to Regulation 34 of the SEBI Listing Regulations, a separate report on Corporate Governance is annexed to this report as "Annexure C". Further, a certificate from Dr. K. R. Chandratre, Practicing Company Secretary, on compliance with corporate governance norms under the SEBI Listing Regulations forms part of the Corporate Governance Report.
Your Company has a robust vigil mechanism in the form of Code of Conduct ("CoC") which enables its stakeholders to report concerns about unethical or inappropriate behavior, actual or suspected fraud, leak of unpublished price sensitive information, unfair or unethical actions, or any other violation of the CoC. There are separate guidelines called Marico''s
Code of Business Ethics that are applicable to our associates who partner us in our organizational objectives. It is also made a part of agreements executed by your Company with its vendors. Your Company discourages bribery and corruption in any form and has adopted an Anti-Bribery and Anti-Corruption Policy, which is available on the website at https://marico.com/aboutus coc pdf/Anti-Bribery-Anti-Corruption-Policy.pdf. The objective of CoC is to ensure that your Company conducts its business in the most principled and ethical manner, the highest level of governance and a discrimination and harassment-free workplace for all its employees.
In compliance with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has adopted a policy ("Anti-Sexual Harassment Policy")
for the prevention of sexual harassment and constituted Internal Committees to deal with complaints relating to sexual harassment at workplace. Details of complaint on sexual harassment are as under:
Particulars |
Number of Complaint(s) |
Complaint(s) filed during FY23 |
Nil |
Complaint(s) disposed-off during FY23 |
Nil |
Complaint(s) pending as at end of FY23 |
Nil |
The Company conducts Global PoSH survey where members can anonymously confirm if they have experienced/ witnessed instances of sexual harassment while working with Marico in the past one year. Further, the survey results are shared by members of Executive Committee in their respective constituency to strengthen the awareness and sensitize the employees on the requirements under law.
All cases involving violation/potential violation of code are referred to the CoC Committee. The vigil mechanism of the Company provides for adequate safeguards against victimization of Directors, employees and third parties who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The CoC guidelines are designed to ensure that Directors, employees and third parties may report genuine concerns on CoC adherence or violations thereof without fear of retaliation (including through anonymous reporting). To encourage such members to report any concerns, the Company has engaged an independent agency for managing the whistleblowing system.
Any violation may also be reported anonymously. To this end, your Company has provided the below options for reporting:
1. Globally accessible toll-free telephone numbers in multiple countries and web-helpline available in multiple languages which are available 24*7, wherein grievances/concerns can be reported to the Company anonymously.
2. CoC Website- marico.ethicspoint.com (with an option to report anonymously).
3. CoC Mobile Helpline - maricomobile.ethicspoint.com (with an option to report anonymously).
For administration and governance of the Code, a committee called Code of Conduct Committee ("CoC Committee") is constituted. All cases reported under the whistleblower policy are reported to the CoC Committee and are subject to review by the Audit Committee and NRC. In addition to the independent Ethics helpline system, your Company has also provided in its CoC, direct access to the members of the CoC Committee, Internal Committee, respective Business HR/ CXO and a complaint drop box facility to report concerns or violations of the CoC (with an option to file a complaint anonymously).
All new employees go through a detailed personal orientation on CoC and anti-sexual harassment policy, along with an e-learning module which can be completed and referred to throughout the year. Your Company seeks affirmation on compliance of CoC on a quarterly basis from the Directors and the employees at senior level. Additionally, separate trainings (classroom/online) on Anti-Sexual Harassment Policy and Marico Insider Trading Rules, 2015 are conducted to educate the employees on the said policy/rules. The education and sensitization are further strengthened through periodic email communications and focused group discussions with employees to ensure the CoC is followed in spirit and failures are minimized. In addition to above, the Company ensures notifying the members in Townhall about the cases COC committee dealt with in the previous year in the form of case studies by concealing the identity of the members involved. The Company also ensures capability building of and mandatory certifications by its business partners on Marico''s Code of Conduct and Marico''s Code of Business Ethics. Further details on vigil mechanism are available on the website of the Company at https://marico.com/india/ about-us/code-of-conduct.
The Board, the Audit Committee and NRC are informed periodically on the matters reported under CoC and the status of resolution of such cases.
The Company affirms that no personnel has been denied access to the Audit Committee.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, is enclosed as "Annexure D" to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
Marico''s stated purpose is to "Make a Difference" and your Company''s CSR philosophy is anchored on this core purpose of making a difference to the lives of all its stakeholders to help them achieve their full potential. Your Company believes that economic value and social value are inter-linked, and it has a commitment towards the inter-dependent ecosystem consisting of various stakeholders.
In terms of the Act and rules framed thereunder, the Company has adopted a CSR Policy, which is available on the website at https://marico.com/investorspdf/Corporate-Social-Responsibility-Policy.pdf.
The Company has in place a CSR Committee, which functions in accordance with the applicable provisions of the Act and such other matters as prescribed by the Board from time to time. The detailed terms of reference of the CSR Committee, attendance at its meetings and other details have been provided in the Corporate Governance Report. As on the date of this Report, the CSR Committee consists of five Directors, Mr. Ananth Sankaranarayanan, Mr. Harsh Mariwala, Mr. Saugata Gupta, Mr. Milind Barve and Ms. Nayantara Bali. Mr. Ananth Sankaranarayanan is the Chairman of the CSR Committee.
During FY23, your Company spent H 22.69 Crores towards its CSR activities. A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2022-23 together with progress thereon and the report on CSR activities in the
prescribed format including details on impact assessment, as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in "Annexure E" to this Report.
Further, the Chief Financial Officer of the Company has certified that CSR spends of the Company for FY23 have been utilized for the purpose and in the manner approved by the Board of Directors of the Company.
During the year under review, the Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014, as amended, at the end of FY23 or the previous financial year. Your Company did not accept any deposits during FY23.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, there were no significant/ material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.
Pursuant to Section 134(3)(a) of the Act, the draft annual return for FY23 prepared in accordance with Section 92(3) of the Act is made available on the website of the Company at https://marico.com/india/investors/documentation/annual-reports.
The maintenance of cost records as specified under Section 148 of the Act, is applicable to the Company and accordingly all the cost records are made and maintained by the Company and audited by the cost auditors.
a. There are no proceedings made or pending under the Insolvency and Bankruptcy Code, 2016 and there are no instances of one-time settlement with any Bank or Financial Institution, during the year under review.
b. Your Company has not issued shares with differential voting rights and sweat equity shares during the year under review.
c. Details of unclaimed dividends and equity shares transferred to the Investor Education and Protection Fund authority have been provided as part of the Corporate Governance report.
Your Board takes this opportunity to thank the employees for their dedicated service and firm commitment to the goals and vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from the shareholders, distributors, third party manufacturers, bankers and all other business associates and from the neighborhood communities of various Marico locations. We look forward to continued support of all these partners in the future.
On behalf of the Board of Directors Harsh Mariwala
Place: Mumbai Chairman
Date: May 5, 2023 DIN: 00210342
Mar 31, 2022
The operating margin for the International business expanded to 24.3% in FY22 from 23.5% in the previous year.
Further details on Maricoâs business, outlook, financial and operational performance, etc. are provided as part of the Management Discussion and Analysis Report.
There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of FY22 and the date of this report.
Further, there has been no change in the nature of business of the Company.
RESERVES
There is no amount proposed to be transferred to the Reserves.
DIVIDEND
Your Companyâs wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/disbursement of profits to its shareholders. In accordance with Regulation 43A of the SEBI Listing
Your Board of Directors ("Board") is pleased to present the Thirty Fourth Annual Report of Marico Limited ("Marico" or "Company" or "your Company"), for the financial year ended March 31, 2022 ("year under review" or "year" or "FY22").
In compliance with the applicable provisions of the Companies Act, 2013 ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year from April 1, 2021 to March 31, 2022, in respect of Marico and "Marico Consolidated" comprising Marico and its subsidiaries. The consolidated entity has been referred to as "Marico Group" or "Group" in this report.
('' in Crores) _ .. . Year ended Year ended Particulars March 31, 2022 March 31, 2021 |
|
Consolidated Summary for the Group Revenue from Operations Profit before Tax Profit after tax before exceptional items Profit after Tax Marico Limited (Standalone) Revenue from Operations Profit before Tax Less: Provision for Tax for the current year Profit after Tax for the current year Other Comprehensive Income for the current year Add: Surplus brought forward Profit available for appropriation Appropriations: Distribution to shareholders Surplus carried forward |
|
9,512 8,048 |
|
1,601 1,523 |
|
1,601 1,165 |
|
1,255 1,199 |
|
7,500 6,337 |
|
1,413 1,311 |
|
250 205 |
|
1,163 1,106 |
|
1 |
|
2,904 2,765 |
|
4,069 3,872 |
|
1,195 968 |
|
2,874 2,904 |
In FY22, Marico Limited posted a consolidated turnover of '' 9,512 Crores (USD 1.3 billion), 18% higher than the previous year. The underlying domestic volume growth for the year was 7% and constant currency growth in the international business was 16%. The operating margin stood at 17.8%, down 201 bps from the previous year. Recurring net profit was at '' 1,230 Crores, a growth of 6% over the last year on a like-to-like basis.
Maricoâs domestic business achieved a turnover of ''7,333 Crores, up 18% over the last year. The underlying volume growth was healthy at 7%, despite weakening consumer sentiment and sharp volatility in key input cost prices. The operating margin for the India business was at 18.2% in FY22 vs 21.3% in the previous year. The profitability was impacted by severe input cost push through the year, while the Company did not hold back investments in brand building to protect short-term margins.
Maricoâs International business posted a turnover of '' 2,179 Crores, a growth of 17% over the last year. The business reported constant currency growth of 16%, with double-digit growth in each of the key markets.
Regulations, the Company has adopted the Dividend Distribution Policy, which details various parameters based on which the Board may recommend or declare Dividend, usage of retained earnings, etc. The Dividend Distribution Policy is available on the Companyâs website at https:// marico.com/investorspdf/Dividend Distribution Policy. pdf.
Based on the principles enunciated in the above Policy, your Company paid the following dividend to equity shareholders during FY22:
⢠First Interim Dividend of '' 3 per equity share of '' 1 each aggregating to '' 387.58 Crores declared by the Board on October 28, 2021; and
⢠Second Interim Dividend of'' 6.25 per equity share of '' 1 each aggregating to '' 807.73 Crores declared by the Board on January 28, 2022.
The total equity dividend during FY22 aggregated to '' 9.25 per equity share of '' 1 each, resulting in a total payout of '' 1,195.31 Crores. Thus, the dividend pay-out ratio was 97% of the consolidated profit after tax excluding one-offs as compared to 83% in the previous year. Your Company is in compliance with the Dividend Distribution Policy as approved by the Board.
During FY22, the paid-up equity share capital of the Company has increased from '' 129.13 Crores to '' 129.28 Crores, consequent to allotment of 14,37,280 equity shares of 1 each upon exercise of stock options under the Marico Employee Stock Option Plan, 2016.
A list of bodies corporate which are subsidiaries of your Company is provided as part of the notes to the Consolidated Financial Statements. The following developments took place with regards to Subsidiaries of Marico during FY22:
⢠Marico Bangladesh Limited continues to be the material subsidiary of the Company, in terms of provisions of the SEBI Listing Regulations.
⢠On July 21, 2021, the Company acquired 52.38% equity stake in Apcos Naturals Private Limited ("Apcos") and consequently, Apcos became a subsidiary of the Company.
⢠Marico Gulf LLC became a wholly owned subsidiary of Marico Middle East FZE with effect from January 17, 2022 and consequently, a step-down wholly owned subsidiary of the Company.
In accordance with Section 129(3) of the Act, a separate
statement containing the salient features of the financial statements of all subsidiaries and associate companies/ joint ventures, if any, in prescribed Form AOC - 1 forms part of this Report. The statement also provides details of performance and financial position of each of the subsidiaries.
The audited financial statements together with related information and other reports of each of the subsidiary companies are available on the Companyâs website at https://marico.com/india/investors/documentation/ annual-reports and the same are also available for inspection by the Members. Any Member desirous of inspecting the said financial statements or obtaining copies of the same may write to the Company Secretary at [email protected].
Your Company has approved a policy for determining material subsidiaries and the same is available on the Companyâs website at https://marico.com/investorspdf/ Policy for Determination of Material Subsidiary.pdf.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments, as required under Section 186 of the Act and Schedule V of the SEBI Listing Regulations, are provided as part of the notes to the financial statements of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and gives an update, inter-alia, on the following matters:
⢠Industry structure and developments
⢠Segment-wise overview of business performance
⢠Financial Overview
⢠Outlook
⢠Human Resources
⢠Risks & opportunities
⢠Internal control systems and their adequacy
BOARD OF DIRECTORS
Your Company actively seeks to adopt best global practices for an effective functioning of the Board and believes in having a truly diverse Board whose wisdom and strength can be leveraged for creating greater stakeholder value, protection of their interests and better corporate governance.
As on March 31, 2022, the Board comprised one Executive Director, six Non-Executive Independent Directors and three Non-Executive Non-Independent Directors. In the
opinion of the Board, all the Independent Directors satisfy the criteria of independence as defined under the Act, rules framed thereunder and the SEBI Listing Regulations, and that they are independent of the Management of the Company.
In the opinion of the Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity for the purpose of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014. List of key skills, expertise and core competencies of the Board, including the Independent Directors, is provided as part of the Corporate Governance Report.
As required under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors have completed the registration with the Independent Directors Databank and also completed the online proficiency test conducted by the Indian Institute of Corporate Affairs, wherever required.
As a measure of enhanced corporate governance and increased Board effectiveness, the Board based on the recommendation of the Nomination and Remuneration Committee ("NRC"), appointed Mr. Nikhil Khattau, Independent Director, as the Lead Independent Director amongst the Independent Directors with effect from April 7, 2022. The Lead Independent Director will preside over the separate meeting(s) of Independent Directors as Chairperson, act as a representative of Independent Directors and carry out such other roles and responsibilities as may be assigned by the Board or group of Independent Directors from time to time.
The Board met five times during FY22 on April 30, 2021, May 26, 2021, July 30, 2021, October 28, 2021 and January 28, 2022. The necessary quorum was present for all the meetings. The maximum interval between any two meetings did not exceed 120 days.
CHANGES IN DIRECTORS
Mr. Sanjay Dube and Mr. K.B.S. Anand, Independent Directors, stepped down from the Board with effect from July 30, 2021 on account of full time executive commitments and personal factors, respectively. Mr. B. S. Nagesh completed his second consecutive term as an Independent Director on March 31, 2022 and consequently ceased to be a Director of the Company with effect from end of day on March 31, 2022.
The Board places on record their deep appreciation for the invaluable contributions made by Mr. B. S. Nagesh, Mr. Sanjay Dube and Mr. K.B.S. Anand during their association with the Company.
At its meeting held on July 30, 2021, the Board based on
the recommendation of NRC, approved the appointment of Mr. Milind Barve (DIN: 00087839) as an Additional Director in the capacity of Independent Director for a term of 5 (five) consecutive years with effect from August 2, 2021, subject to approval of the shareholders. At the 33rd Annual General Meeting ("AGM") held on August 30, 2021, the shareholders of the Company approved, inter-alia, appointment of Mr. Milind Barve as an
Independent Director of the Company for a period of 5 (five) consecutive years from August 2, 2021 to August 1, 2026, not liable to retire by rotation.
At its meeting held on October 28, 2021, the Board based on the recommendation of NRC, approved the appointment of Mr. Rajeev Vasudeva (DIN: 02066480) as an Additional Director in the capacity of Independent Director for a term of 5 (five) consecutive years with effect from November 1, 2021, subject to approval of the shareholders.
Further, at its meeting held on April 7, 2022, the Board based on the recommendation of NRC, approved the below matters, subject to approval of the shareholders by way of postal ballot through remote e-voting:
1. Re-appointment of Mr. Ananth Sankaranarayanan (DIN: 07527676) as an Independent Director for a second term of 5 (five) consecutive years w.e.f. June 26, 2022 to June 25, 2027;
2. Appointment of Ms. Apurva Purohit (DIN: 00190097)
as an Additional Director in the capacity of
Independent Director for a term of 5 (five) consecutive years w.e.f. April 7, 2022 to April 6, 2027;
3. Appointment of Ms. Nayantara Bali (DIN: 03570657)
as an Additional Director in the capacity of
Independent Director for a term of 5 (five) consecutive years w.e.f. April 7, 2022 to April 6, 2027; and
4. Recommendation of appointment of Mr. Rajeev Vasudeva (DIN: 02066480) as an Independent Director by the shareholders, for a term of 5 (five) consecutive years w.e.f. November 1, 2021 to October 31, 2026.
Notice of postal ballot dated April 7, 2022, seeking approval, inter-alia, for the aforesaid matters, was sent to those Members, whose names appeared in the Register of Members/List of Beneficial Owners as on Friday, April 8, 2022 and whose e-mail addresses were registered with the Company/Depositories. The results of postal ballot through remote e-voting on the aforesaid matters will be declared by the Company on or before Tuesday, May 17, 2022.
In accordance with provisions of Section 152 of the Act read with the rules made thereunder and the Articles of Association of the Company, Mr. Harsh Mariwala
(DIN: 00210342), Non-Executive Director, retires by rotation at the 34th AGM and being eligible, has offered himself for re-appointment. Based on the recommendation of NRC, the Board has recommended for the approval of the Members, re-appointment of Mr. Harsh Mariwala as a Non-Executive Director at the 34th AGM. A brief profile of Mr. Harsh Mariwala and other requisite information will be provided as part of the Notice of AGM.
CHANGES IN KEY MANAGERIAL PERSONNEL
During the year under review, Ms. Hemangi Ghag resigned as the Company Secretary & Compliance Officer with effect from close of business hours of September 3, 2021, to pursue opportunities outside the Company. The Board places on record its appreciation for the invaluable contribution made by Ms. Ghag during the course of her service.
Mr. Vinay M A, a fellow member of the Institute of Company Secretaries of India, was appointed as the Company Secretary & Compliance Officer of the Company with effect from October 28, 2021.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company, confirm that:
a. in the preparation of the annual financial statements for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2022 and of the profit of your Company for the said period;
c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a ''going concernâ basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively; and
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
Your Company believes that the process of performance evaluation at the Board level is pivotal to its Board Engagement and Effectiveness. The Policy and criteria for Board Evaluation is duly approved by NRC. Performance evaluation is facilitated by the Chairman of the Board who is supported by the Chairperson of NRC. This process at Marico is conducted through structured questionnaires which cover various aspects of the Boardâs functioning such as adequacy of the composition of the Board and its Committees, Memberâs strengths and contribution, execution and performance of specific duties, obligations and governance.
Evaluation of Committees of the Board was based on criteria such as adequacy of Committee composition, adherence to charter and laying down the full year agenda, role of Chairperson including allocation of time and eliciting contributions from all Committee members, effectiveness of Committeeâs performance and quality of support/ recommendation to the Board, etc.
In addition to the questionnaires, detailed one-on-one in-sighting was carried out by the Chairperson of the NRC with individual Board members. Feedback was also taken from senior management personnel on relevant aspects of Board functioning and shared with the Chairperson of the NRC. A quantitative analysis and Board Effectiveness presentation with in-sighting feedback and trends was shared and presented by the Chairperson of the NRC to all Board Members. Thereafter, the following process was followed to assimilate and process the feedback:
⢠A meeting of the Independent Directors was held wherein performance of Non-Independent Directors including the Managing Director & CEO ("MD & CEO"), Chairman of the Board and of the Board as a whole was evaluated.
⢠The entire Board discussed the findings of the evaluation with the Independent Directors and also evaluated the performance of the Individual Directors including the MD & CEO, the Board as a whole and all Committees of the Board.
⢠As an outcome of the above process, individual feedback will be shared with each Director subsequently during the year.
With respect to the focus areas identified by the Board last year, the following progress was made in the year under review:
Focus Areas |
Progress made |
Effectively overseeing the risk management strategies and practices amidst a highly volatile macro environment accentuated by the pandemic. |
The top risks and challenges were tracked. The processes and systems were strengthened to future proof the organisation and execute the strategy better. |
Focus on Board Rejuvenation and assimilation of New Board Members. |
The process of rejuvenation of the Board was aligned and is being executed during the year. A robust process for succession planning has been set up and regularly discussed at the Board and NRC. |
Mentoring the Senior Management to create an agile organisation that can adapt to the highly VUCA (Volatile, Uncertain, Complex & Ambiguous) environment. |
During the year, the Board heavily engaged with the top management team to successfully implement the transformation journey, particularly portfolio diversification and digital transformation. |
Focus Areas for the Committees: Audit Committee: To strengthen the GRCC (governance, risk management, controls and compliance) policies, processes and systems in the Company with special focus on automation and exception analytics. Nomination and Remuneration Committee: |
The Committees continued to perform on their respective focus areas to augment governance and internal controls. |
- To help strengthen the culture codes for the Company and improving the talent management processes, with specific focus on strengthening the top talent pipeline. - To ensure succession planning for MD & CEO and Senior Management Personnel. Corporate Social Responsibility Committee: To bring focus on improving the effectiveness of CSR spends. |
4. For the Board Committees, the following focus areas will continue for the coming year:
a. Audit Committee: Further strengthening the GRCC policies, processes and systems in the Company with special focus on automation and exception analytics;
b. Nomination and Remuneration Committee:
i. helping strengthen the culture codes for the Company and improving the talent management processes, with specific focus on strengthening the top talent pipeline.
ii. succession planning for MD & CEO and the Senior Management Personnel.
c. Corporate Social Responsibility Committee: Bringing focus on improving the effectiveness of Marico''s CSR spends.
The Board is also committed to review the progress on these priorities during the annual Board Retreats held every year.
BUSINESS RESPONSIBILITY REPORT (BRR)
Your Company realizes the power of being transparent and accountable as an organization, which in turn, helps in maintaining the trust that stakeholders'' have placed in us. Marico considers disclosure practice as a strong tool to share strategic developments, business performance and the overall value generated for various stakeholder groups over a period of time. Keeping up with evolving disclosure
For the year under review, the performance evaluation exercise conducted has resulted in identification of the following focus areas, for the Company to work upon in the coming years:
1. Your Company already has an elaborate familiarization programme in place for effective induction of new directors. The Board acknowledged this and reiterated the importance of a rigorous execution of this induction process to ensure a smooth transfer and seamless integration of the new Board Members.
2. The Board laid specific emphasis on strategic risk management and building management capability in this area. It believes that the environment is very volatile. COVID-19 outbreak was a clear example of a black swan event. Should the situation escalate further, it may have a deeper impact on demand and supply scenarios. In light of this and such black swan events, itâs important to de-risk the Company to sustain and improve its operating and financial performance. The Board will therefore provide its strategic inputs to survive and win amidst such VUCA environment.
3. The Board will continue to mentor the MD & CEO and the senior management team for defining and executing the transformation agenda which is aimed at building a future-ready Marico more specifically in areas of portfolio, channel strategies, digital strategies and talent management.
patterns, your Company transitioned to Integrated Reporting (as per the International Integrated Reporting Council (IIRC) framework) which draws a correlation between the financial and non-financial factors.
Marico has published its fourth Integrated Report underlining the new set of targets and business goals that pave the way for short, medium and long-term value creation of the Company.
The financial sections of BRR are presented in line with the requirements of the Act read with the rules made thereunder, the Indian Accounting Standards, the SEBI Listing Regulations and the requisite Secretarial Standards issued by the Institute of Company Secretaries of India. The non-financial section (Sustainability and Corporate Social Responsibility) of BRR is presented in conformance to the Global Reporting Initiative (GRI) Standard''s Core Performance Indicators, the UN-Sustainable Development Goals (SDGs) and other sectorally relevant international sustainability disclosure guidelines. BRR has been published in adherence to the SEBI Listing Regulations and the Ministry of Corporate Affairs'' National Voluntary Guidelines (NVGs) that guides listed corporations to use a 9-principle framework for demonstrating their environmental, social and economic responsibilities, during the year under review.
At Marico, sustainability is regarded as a business enabler that influences key strategic decisions. Having ingrained sustainability into its culture, your Company has spurred towards a carbon neutral future. This transformation is driven by robust sustainability governance structure, ethical business conduct, ESG risk mitigation strategies, ambitious targets towards transitioning to low-carbon sources, lowering GHG emission intensity, achieving water stewardship, incorporating responsible sourcing principles, and mapping product sustainability footprint.
AUDIT COMMITTEE & AUDITORS AUDIT COMMITTEE
Your Company has constituted an Audit Committee which performs the roles and functions as mandated under the Act, the SEBI Listing Regulations and such other matters as prescribed by the Board from time to time. The detailed terms of reference of the Audit Committee, attendance at its meetings and other details have been provided in the Corporate Governance Report. As on the date of this Report, the Audit Committee consists of three Independent Directors, Mr. Nikhil Khattau, Ms. Hema Ravichandar and Mr. Milind Barve. Mr. Nikhil Khattau is the Chairman of the Audit Committee.
During the year under review, the Board has accepted the recommendations of the Audit Committee on various matters. There have been no instances where such recommendations have not been accepted.
STATUTORY AUDITORS
Pursuant to the provisions of Section 139 of the Act, the Members had at the 29th AGM held on August 1, 2017 appointed M/s. B S R & Co. LLP, Chartered Accountants (Firm registration No. 101248W/W-100022), as the Statutory Auditors of the Company for a term of 5 (five) consecutive years. Accordingly, the first term of Statutory Auditors expires on the conclusion of the 34th AGM.
The Board at its meeting held on May 5, 2022, based on the recommendation of the Audit Committee, approved the proposal for re-appointment of M/s. B S R & Co. LLP, Chartered Accountants (Firm registration No. 101248W/W-100022), as the Statutory Auditors of the Company for a second term of 5 (five) consecutive years commencing from the conclusion of 34th AGM upto the conclusion of 39th AGM to be held in the year 2027, subject to approval of the Members at the ensuing AGM.
M/s. B S R & Co. LLP have consented to act as Statutory Auditors and confirmed their eligibility to be re-appointed in terms of Section 141 and other applicable provisions of the Act.
The Auditor''s Report on the financial statements of the Company for the financial year ended March 31, 2022 forms part of the Annual Report. The said report was issued by the Statutory Auditors with an unmodified opinion and does not contain any qualifications, reservations or adverse remarks. During the year under review, the Auditors have not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
COST AUDITORS
In terms of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year. Your Company has made and maintained the cost accounts and records, as required. Accordingly, the Board at its meeting held on May 5, 2022, based on the recommendation of the Audit Committee, appointed M/s. Ashwin Solanki & Associates, Cost Accountants (Firm registration no: 100392), as the Cost Auditors of the Company to conduct audit of the cost records of the Company for the financial year ending March 31, 2023. A remuneration of ''10,00,000
(Rupees Ten Lakhs only) plus applicable taxes and out of pocket expenses has been fixed for the Cost Auditors, subject to the ratification of such fees by the Members at the 34th AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2023 will be placed as part of the Notice of
the 34th AGM. The Company has received requisite consent and certificate of eligibility from M/s. Ashwin Solanki & Associates.
During the year under review, the Cost Auditor has not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 5, 2022, based on the recommendation of the Audit Committee, approved the appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor of the Company to conduct audit of the secretarial records for the financial year ending March 31, 2023. The Company has received consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report in form MR-3 for FY22 is enclosed as "Annexure A" to this report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks. During the year under review, the Secretarial Auditor has not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important aspect of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize shareholder value.
The key cornerstones of your Companyâs Risk Management Framework are:
⢠A well-defined risk management policy;
⢠Periodic assessment and prioritization of risks that affect the business of your Company;
⢠Development and deployment of risk mitigation plans to reduce vulnerability to prioritized risks;
⢠Focus on both the results and efforts required to mitigate the risks;
⢠Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;
⢠Integration of Risk Management with strategic business plan, annual operating plans, performance management system and significant business decisions;
⢠Constant scanning of external environment for new and emerging risks;
⢠Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.
Your Company has also put in place a robust Crisis Management Framework monitored by internal crisis management committee which is responsible for laying out crisis response mechanism, communication protocols, and periodic training and competency building around crisis management.
Your Company has in place a Risk Management Committee ("RMC") chaired by an Independant Director, which assists the Board in monitoring and overseeing implementation of the risk management policy, including evaluating the adequacy of risk management systems and such other functions as mandated under the SEBI Listing Regulations and as the Board may deem fit from time to time. The composition, detailed terms of reference of the RMC and attendance at its meetings are provided as part of the Corporate Governance Report.
In terms of the applicable provisions of the SEBI Listing Regulations, your Board has adopted a Risk Management Policy, which is available on the Companyâs website at https:// marico.com/investorspdf/Risk Management Policy.pdf
Further details of the risk management framework of the Company are provided as part of the Management Discussion and Analysis Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Internal Financial Controls are an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial and financial reporting risks. The Internal Financial Controls have been documented and embedded in the business processes. Your Companyâs approach on Corporate Governance has been detailed in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to:
⢠Effectiveness and efficiency of operations
⢠Reliability of financial reporting
⢠Compliance with applicable laws and regulations
⢠Prevention and detection of frauds
⢠Safeguarding of assets
Your Company has defined policies and standard operating procedures for all key business processes to guide business operations in ethical and compliant manner. Compliance to these policies is ensured through periodic self-assessment as well as internal and statutory audits. The Company has robust ERP and other supplementary IT systems which are an integral part of internal control framework. The Company continues to constantly leverage technology in enhancing the internal controls. The Company also uses data analytics to identify trends and exceptions to proactively monitor any control deviations for corrective action.
Your Board reviews the internal processes, systems and the internal financial controls and accordingly, the Directorsâ Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls. Assurances on the effectiveness of Internal Financial Controls is obtained through management reviews, self-assessment, continuous monitoring by functional heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
On a voluntary basis, your Companyâs material subsidiary, Marico Bangladesh Limited ("MBL") has also adopted this framework and its progress is reviewed by MBLâs Audit Committee and its Board of Directors, which exhibits Maricoâs commitment to good governance at a group level.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature, based on the criteria approved by the Board. In case of transactions which are unforeseen, the Audit Committee grants an approval to enter into such unforeseen transactions, provided the transaction value does not exceed the limit of Rs. 1 Crore per transaction, in a financial year. The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted, on a quarterly basis.
All transactions with related parties entered into during FY22 were at armâs length basis and in the ordinary course of business and in accordance with the provisions of the Act and rules made thereunder, the SEBI Listing Regulations and the Companyâs Policy on Related Party Transactions.
During the year under review, there were no transactions for which consent of the Board was required to be taken in terms of Section 188(1) of the Act and accordingly, no disclosure is required in respect of the related party transactions in Form AOC-2 under Section 134(3)(h) of the Act and rules framed thereunder. The attention of
the Members is drawn to the note no. 30 to the standalone financial statements setting out the disclosures on related party transactions for FY22.
The Company has amended its Policy on Related Party Transactions pursuant to the recent amendments under the SEBI Listing Regulations regarding framework for related party transactions and the same is available on the Companyâs website at https://marico.com/investorspdf/ Policy on Related Party Transactions.pdf.
Pursuant to Regulation 23(9) of the SEBI Listing Regulations, your Company has filed the reports on related party transactions with the Stock Exchanges.
NOMINATION AND REMUNERATION COMMITTEE AND COMPANY''S POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
Your Company has in place NRC of the Board, which performs the functions as mandated under the Act, the SEBI Listing Regulations and such other functions as prescribed by the Board from time to time. The composition of NRC, attendance at its meetings and other details have been provided as part of the Corporate Governance Report.
In terms of the applicable provisions of the Act read with the rules framed thereunder and the SEBI Listing Regulations, your Board has adopted a Policy for appointment, removal and remuneration of Directors, Key Managerial Personnel ("KMP") and Senior Management Personnel ("SMP") and also on Board Diversity, Succession Planning and Evaluation of Directors ("NRE Policy"). The remuneration paid to Directors, KMP and SMP of the Company are as per the terms laid down in the NRE Policy. The MD & CEO of your Company does not receive remuneration or commission from any of the subsidiaries of your Company.
The salient features of this Policy are outlined in the Corporate Governance Report and the NRE Policy is made available on the Companyâs website at https://marico.com/ investorspdf/Policy on Nomination, Remuneration and Evaluation.pdf.
MARICO EMPLOYEE BENEFIT PLAN
⢠Marico Employee Stock Option Plan, 2016
At the 28th AGM held on August 5, 2016, the Members approved institution of the Marico Employee Stock Option Plan, 2016 ("Marico ESOP 2016 Plan" or "Plan") as a long-term incentive plan for grant of employee stock options ("Options") to eligible employees of the Company including the MD & CEO and that of its subsidiaries, whether in India or outside India ("Eligible Employee"). Marico ESOP 2016 Plan aims to align individual goals and performance of employees
to annual and long-term business objectives of the Company, reward employees for creating long-term value, and attract and retain high potential and critical employees in a competitive talent environment.
The NRC is entrusted with the responsibility of administering the Plan and the Scheme(s) notified or to be notified thereunder, from time to time.
The Plan envisaged grant of Options upto an aggregate maximum of 0.6% of the issued equity share capital of the Company as on August 5, 2016 ("Commencement Date") (excluding outstanding warrants and conversions), being 77,41,027 Options and upto an aggregate maximum of 0.15% of the issued equity share capital of the Company as on the Commencement Date to any single Eligible Employee in any single scheme notified/to be notified under the Plan.
Based on the recommendation of NRC, the Board at its meeting held on January 28, 2022 approved the following matters, for which the Company has sought approval of the Members through postal ballot by remote e-voting vide notice dated April 7, 2022 as mentioned earlier:
- Increase in limit of Options that can be granted from time to time under the Plan from the existing limits of 0.6% of the issued equity share capital of the Company as on the Commencement Date i.e. August 5, 2016, being 77,41,027 Options, to an aggregate of 2,09,41,027 Options (as may be adjusted for any changes in capital structure of the Company), constituting an additional 1,32,00,000 Options.
- Further, the limit for grant of Options to any single Eligible Employee in any one single scheme notified under the Plan remains unchanged at 0.15% of the issued capital as on the Commencement Date, being 19,35,257 Options.
- Amendments to the Marico ESOP 2016 Plan modifying the relevant clauses to give effect to the aforesaid increase in limits and certain other changes intended to bring the language thereof in uniformity with the re-enacted SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations") and adopt references to latest regulatory enactments.
As on March 31, 2022, an aggregate of 48,54,896 Options were outstanding which constitute about
0.38% of the issued equity share capital of the Company as on that date.
⢠Marico Employees Stock Appreciation Rights Plan, 2011
The Company adopted Marico Stock Appreciation Rights Plan, 2011 ("STAR Plan") in the year 2011, for the welfare of its employees and those of its subsidiaries ("Eligible Employees"). Under the Plan, various schemes are notified for conferring cash incentive benefit to the Eligible Employees through grant of stock appreciation rights ("STARs").
The NRC administers the Plan and the Scheme(s) notified thereunder, from time to time. The NRC notifies various Schemes for granting STARs to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfilment of certain conditions and applicability of Income Tax. The STAR Plan involves secondary market acquisition of the equity shares by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to such Trust for making secondary acquisition of equity shares, subject to the statutory ceilings and provisions of applicable law.
As at March 31, 2022, an aggregate of14,15,569 STARs were outstanding which constitute about 0.11% of the paid up equity share capital of the Company as on that date.
STATUTORY INFORMATION ON MARICO EMPLOYEE BENEFIT SCHEME/PLAN AND TRUST
The disclosure in terms of Regulation 14 of the SBEB Regulations is made available on the Companyâs website at https://marico.com/india/investors/documentation/ annual-reports. Further, the Company has complied with the applicable accounting standards in this regard. During the year under review, the Company has not given loan to any of its employees for purchase of equity shares of the Company.
It is hereby affirmed that the Marico ESOP 2016 Plan and STAR Plan instituted by the Company are in compliance with the SBEB Regulations, as amended from time to time, and the resolutions passed by the Members approving the same.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employeesâ remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is disclosed in "Annexure Bâ to this report.
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is available on the Companyâs website at https://marico.com/india/investors/documentation/ annual-reports. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members, excluding the aforesaid annexure. Any Member desirous of obtaining a copy of the said annexure may access the aforesaid weblink or write to the Company Secretary at [email protected].
Your Company believes that effective leadership, robust policies, processes and systems and a rich legacy of values form the hallmark of our best corporate governance framework. These values are reflected in Maricoâs culture, business practices, disclosure policies and relationship with its stakeholders. These ethics and values are practiced by Marico and its subsidiaries globally, which is at par with best international standards and good corporate conduct.
Pursuant to Regulation 34 of the SEBI Listing Regulations, a separate report on Corporate Governance is annexed to this report as "Annexure Câ. Further, a certificate from Dr. K.R. Chandratre, Practicing Company Secretary, on compliance with corporate governance norms under the SEBI Listing Regulations forms part of the Corporate Governance Report.
Your Company has a robust vigil mechanism in the form of Code of Conduct ("CoC") which enables its stakeholders to report concerns about unethical or inappropriate behaviour, actual or suspected fraud, leak of unpublished price sensitive information, unfair or unethical actions or any other violation of the CoC. There are separate guidelines called Maricoâs Code of Business Ethics that are applicable to our associates who partner us in our organizational objectives and customers. The objective of CoC is to ensure that your Company conducts its business in the most principled and ethical manner, the highest level of governance and a discrimination and harassment-free workplace for all its employees.
In compliance with the requirement of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has adopted a policy ("Anti-Sexual Harassment Policy") for the prevention of sexual harassment and constituted Internal Committees to deal with complaints relating to sexual harassment at workplace. Details of complaint on sexual harassment are as under:
The Company conducts Global PoSH survey where members can anonymously confirm if they have experienced/witnessed instances of sexual harassment while working with Marico in the past one year. Further the survey results are shared by Members of Executive Committee in their respective constituency to strengthen the awareness and sensitize the members on the law.
The vigil mechanism of the Company provides for adequate safeguards against victimization of Directors, employees and third parties who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The CoC guidelines are designed to ensure that Directors, employees and third parties may report genuine concerns on CoC adherence or violations thereof without fear of retaliation (including through anonymous reporting). To encourage such members to report any concerns and to maintain anonymity, the Company has engaged an independent agency for managing the whistleblowing system. To this end, your Company has provided the below options for reporting:
1. Globally accessible toll-free telephone numbers in multiple countries and web-helpline available in multiple languages which are available 24*7, wherein grievances/concerns can be reported to the Company anonymously.
2. CoC Website- marico.ethicspoint.com (with an option to report anonymously).
3. CoC Mobile Helpline- maricomobile.ethicspoint.com (with an option to report anonymously).
For administration and governance of the Code, a committee called Code of Conduct Committee is constituted ("CoC Committee"). All cases reported under the whistleblower policy are reported to the CoC Committee and are subject to review by the Audit Committee and NRC. In addition to the independent Ethics helpline system, your Company has also provided in its
Particulars |
Number |
of Complaint(s) |
|
Complaint(s) filed during FY22 |
1 |
Complaint(s) disposed-off during FY22 |
1 |
Complaint(s) pending as at end of FY22 |
0 |
ANNUAL RETURN
Pursuant to Section 134(3)(a) of the Act, the draft annual return for FY22 prepared in accordance with Section 92(3) of the Act is made available on the website of the Company at https://marico.com/india/investors/documentation/ annual-reports.
COST RECORDS
The maintenance of cost records as specified under Section 148 of the Act, is applicable to the Company and accordingly all the cost records are made and maintained by the Company and audited by the cost auditors.
OTHER DISCLOSURES
a) There are no proceedings made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution, during the year under review.
b) Your Company has not issued shares with differential voting rights and sweat equity shares during the year under review.
CoC direct access to the members of the CoC Committee, Internal Committee, contacting respective Business HR/CXO and a complaint drop box facility to report concerns or violations of the CoC (with an option to file a complaint anonymously).
All new employees go through a detailed personal orientation on CoC and anti-sexual harassment policy, along with the E-Learning module which can be completed and referred throughout the year. Your Company seeks affirmation on compliance of CoC on a quarterly basis from the Directors and the employees at senior level. Additionally, separate trainings (classroom/online) on Anti-Sexual Harassment Policy & Marico Insider Trading Rules, 2015 are conducted to educate the employees on the said policy/rules. The education and sensitization is further strengthened through periodic email communications and focused group discussions with the employees to ensure the CoC is followed in spirit and failures are minimized. In addition to above, the Company ensures notifying the members in Townhall about the cases COC committee dealt with in the previous year in the form of case studies by concealing the identity of the members involved. The Company also ensures capability building of and mandatory certifications by its business partners on Maricoâs Code of Conduct and Maricoâs Code of Business Ethics. Further details on vigil mechanism are available on the website of the Company at https://marico.com/india/about-us/code-of-conduct.
The Board, the Audit Committee and NRC are informed periodically on the matters reported under CoC and the status of resolution of such cases.
The Company affirms that no personnel has been denied access to the Audit Committee.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, is enclosed as "Annexure D" to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
Maricoâs stated purpose is to "Make a Difference" and your Companyâs CSR philosophy is anchored on this core purpose of making a difference to the lives of all its stakeholders to help them achieve their full potential. Your Company believes that economic value and social value are inter-linked and it has a commitment towards the inter-dependent ecosystem consisting of various stakeholders.
In terms of the Act and rules framed thereunder, the Company has adopted a CSR Policy, which is available on website of the Company at https://marico.com/ investorspdf/Corporate-Social-Responsibilitv-Policy.pdf.
The Company has in place a CSR Committee, which functions in accordance with the applicable provisions of the Act and such other matters as prescribed by the Board from time to time. The detailed terms of reference of the CSR Committee, attendance at its meetings and other details have been provided in the Corporate Governance Report. As on the date of this Report, the CSR Committee consists of six Directors, Mr. Ananth Sankaranarayanan, Mr. Harsh Mariwala, Mr. Saugata Gupta, Mr. Rajendra Mariwala, Mr. Milind Barve and Ms. Nayantara Bali. Mr. Ananth Sankaranarayanan is the Chairman of the CSR Committee.
During FY22, your Company spent 22.32 Crores towards its CSR activities. A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2021-22 together with progress thereon and the report on CSR activities in the prescribed format including details on
impact assessment, as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in "Annexure E" to this Report.
Further, the Chief Financial Officer of the Company has certified that CSR spends of the Company for FY22 have been utilized for the purpose and in the manner approved by the Board of Directors of the Company.
During the year under review, the Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014, as amended, at the end of FY22 or the previous financial year. Your Company did not accept any deposits during FY22.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, there were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.
c) Details of unclaimed dividends and equity shares transferred to the Investor Education and Protection Fund authority have been provided as part of the Corporate Governance report.
Your Board takes this opportunity to thank the employees for their dedicated service and firm commitment to the goals & vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from the shareholders, distributors, third party manufacturers, bankers and all other business associates and from the neighborhood communities of various Marico locations. We look forward to continued support of all these partners in the future.
On behalf of the Board of Directors Harsh Mariwala
Place: Mumbai Chairman
Date: May 5, 2022 DIN: 00210342
Mar 31, 2021
The Board of Directors ("Board") is pleased to present the Thirty Third Annual Report of Marico Limited ("Marico" or "the Companyâ or "The Companyâ), for the financial year ended March 31, 2021 ("the year under review" or "the year" or "FY21").
In compliance with the applicable provisions of Companies Act, 2013, ("the Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year from April 1, 2020 to March 31, 2021, in respect of Marico and Marico Consolidated comprising Marico, its subsidiaries and associate companies. The consolidated entity has been referred to as "Marico Group" or "the Group" in this report.
(r in Crores) |
||
Particulars |
Year ended March 31, 2021 |
Year ended March 31, 2020 |
Consolidated Summary for the Group |
||
Revenue from Operations |
8,048 |
7,315 |
Profit before Tax |
1,523 |
1,374 |
Profit after tax before exceptional items |
1,165 |
1,065 |
Profit after Tax |
1,199 |
1,043 |
Marico Limited (Standalone) Revenue from Operations |
6,337 |
5,853 |
Profit before Tax |
1,311 |
1,261 |
Less: Provision for Tax for the current year |
205 |
254 |
Profit after Tax for the current year |
1,106 |
1,007 |
Other Comprehensive Income for the current year |
2 |
(2) |
Add: Surplus brought forward |
2,906 |
2,759 |
Profit available for appropriation |
3,351 |
3,332 |
Appropriations: Distribution to shareholders |
968 |
872 |
Surplus carried forward |
2,904 |
2,765 |
REVIEW OF OPERATIONS
In FY21, Marico Group posted revenue from operations of INR 8,048 Crores (USD 1.1 billion) which was 10% higher than the previous year. The underlying domestic volume growth for the year was 7% and the constant currency growth in the international business was 7%. The business delivered an operating margin of 19.8% and recurring net profit of INR 1,162 crores, a growth of 11% over the last year on a like-to-like basis.
Marico India, the domestic FMCG business, achieved a turnover of INR 6,189 Crores in FY21, up 9% over the last year. The underlying volume growth was 7%, despite headwinds in discretionary consumption through the year and significant supply chain disruptions from the lockdown in Q1FY21, as business progressively scaled up with restrictions easing subsequently. The operating margin for the India business was at 21.3% in FY21 vs 22.4% in previous year. The profitability was impacted by severe input cost push in second half of FY21.
During the year, Marico International, the International FMCG business, posted a turnover of INR 1,859 Crores, a growth of 12% over the last year. The business reported constant currency growth of 7%. The operating margin for the International business expanded to 23.5% in FY21 from 21.5% in previous year, due to favourable market mix and tight cost management across all geographies.
There are no material changes and commitments affecting the financial position of your company, which have occurred between the end of the FY21 and the date of this report.
Further, there has been no change in the nature of business of the Company.
RESERVESThere is no amount proposed to be transferred to the Reserves.
DIVIDENDYour Companyâs wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/ disbursement of profits to its shareholders. In accordance with Regulation 43A of the SEBI Listing Regulations, the Company has adopted the Dividend Distribution Policy, which is made available on the Companyâs website and can be accessed using the link -https://marico.com/investorspdf/Dividend Distribution Policy.pdf.
Based on the principles enunciated in the above Policy, your Companyâs dividend to equity shareholders during FY21 comprised the following:
First Interim Dividend of 300% on the equity base of R129.12 Crores aggregating to R387.38 Crores declared by your Board of Directors on October 28, 2020; and
Second Interim Dividend of 450% on the equity base of R129.13 Crores aggregating to R581.11 Crores declared by your Board of Directors on March 3, 2021.
The total equity dividend during FY21 aggregated to R 7.5 per equity share of R 1 each resulting in a total payout of R968.48 Crores. Thus, dividend pay-out ratio was 83% of the consolidated profit after tax as compared to 95% in the previous year.
CHANGES IN SHARE CAPITALDuring FY21, the paid-up share capital of the Company has been increased from R 129.10 Crores to R 129.13 Crores, consequent to allotment of 331,910 equity shares of R 1 each under the Marico Employee Stock Option Plan, 2016.
SUBSIDIARIES AND ASSOCIATE COMPANIESA list of bodies corporate which are subsidiaries/associates/ joint ventures of your Company is provided as part of the notes to Consolidated Financial Statements. The following developments took place with regards to Subsidiaries and Associate Companies of Marico:
Subsidiaries and Associates:
Marico Bangladesh Limited continues to be the material subsidiary of the Company, in terms of provisions of the SEBI Listing Regulations.
Marico acquired balance 55% equity stake from the existing shareholders of Zed Lifestyle Private Limited ("ZED Lifestyle"), an associate company and consequently ZED Lifestyle became a wholly owned subsidiary of your Company, with effect from June 30, 2020.
Marico Consumer Care Limited (MCCL), a wholly owned subsidiary of the Company, amalgamated with the Company with effect from January 20, 2021, pursuant to the Scheme of Amalgamation ("Scheme") approved by the Honâble National Company Law Tribunal, Mumbai Bench vide its order dated December 2, 2020. Accordingly, MCCL ceased to be a subsidiary of the Company with effect from January 20, 2021.
On July 21, 2021, the Company acquired 52.4% equity stake in Apcos Naturals Private Limited ("Apcos") and consequently Apcos became the subsidiary of the company.
Revolutionary Fitness Private Limited and Hello Green Private Limited ceased to be the associates of your Company, with effect from September 23, 2020.
A separate statement containing the salient features of the financial statements of all subsidiaries and associate companies/ joint ventures of your Company (in Form AOC - 1) forms part of this Report.
The audited financial statements of the subsidiary companies and related information are available on the Companyâs website on -https://marico.com/india/investors/documentation and
the same are also available for inspection by the Members. Any Member desirous of inspecting the financial statements or obtaining copies of the same may write to the Company Secretary or email at [email protected].
Your Company has approved a policy for determining material subsidiaries and the same is available on the Companyâs website at:
https://marico.com/investorspdf/Policy for Determination of Material Subsidiary.pdf.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments covered under Section 186 of the Act, form part of the notes to the standalone financial statement of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and, inter-alia, gives an update on the following matters:
Economic scenario
Fast moving consumer goods sector in India Marico growth story
Overview of Consolidated results of operations Outlook
Human Resources
Information Technology and digital
Risks & opportunities
Internal control systems and their adequacy
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
The details of the Board of Directors and the number of meetings held and attended by the Board of Directors, during the year under review, are detailed in the Corporate Governance Report. Appended below are the changes in the Board of Directors and Key Managerial Personnel:
I. Director retiring by rotation
In accordance with the provisions of Section 152 of the Act read with Rules made thereunder and the Articles of Association of the Company, Mr. Rajendra Mariwala (DIN: 00007246) is liable to retire by rotation at the ensuing 33rd Annual
General Meeting ("AGM") and being eligible, has offered himself for re-appointment. Accordingly, the re-appointment of Mr. Rajendra Mariwala is being placed for the approval of the Members at the 33rd AGM. The Board of Directors of the Company based on the recommendation of the Nomination and Remuneration Committee has recommended his re-appointment at 33rd AGM. A brief profile of Mr. Rajendra Mariwala and other related information is appended to the Notice of the AGM.
II. Appointment of Independent Director
The Board at its Meeting held on July 30, 2021, based on the recommendation of the Nomination and Remuneration Committee, appointed Mr. Milind Barve (DIN: 00087839) as the Additional Director (Independent) of your Company with effect from August 2, 2021. Mr. Barve will hold office as Additional Director (Independent) upto the date of the 33rd AGM and subject to the approval of Members at the 33rd AGM shall be appointed as Independent Director to hold office for a period of 5 (five) consecutive years effective August 02, 2021. Notice in writing, proposing his candidature for appointment as Independent Director, under section 160 of the Act has been received by the Company from a Member.
Accordingly, the Board recommends to the Members, the appointment of aforesaid Independent Director and relevant details pertaining to his appointment are provided in the Notice convening 33rd AGM.
III. Key Managerial Personnel
During the year under review, Mr. Vivek Karve demitted his office as the Chief Financial Officer of the Company with effect from the close of business hours of September 10, 2020. The Board places on record its appreciation for the invaluable contribution made by Mr. Karve during the course of his service. In succession to Mr. Karve, Mr. Pawan Agrawal was appointed as the Chief Financial Officer of the Company with effect from close of business hours of September 10, 2020. Ms. Hemangi Ghag resigned as the Company Secretary and Compliance Officer of the Company to be effective from closure of Business hours on September 03, 2021.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of
your Company, to the best of their knowledge and based
on the information and explanations received from the
Company, confirm that:
evaluated the performance of the Individual Directors, the Board as a whole and all Committees of the Board.
As an outcome of the above process, individual feedback will be shared with each Director subsequently during the year.
With respect to the focus areas identified by the Board last year, the following progress was made in the year under review:
Focus Areas |
Progress made |
Effectively overseeing the risk management strategies and practices amidst a highly volatile macro environment accentuated by the pandemic. |
The top risks and challenges were tracked. The processes and systems were strengthened to future proof the organisation and execute the strategy better. |
Mentoring the Senior Management Personnel to set them up for success & helping in creating a process for succession to the level of Board, Managing Director and Senior Management Personnel. |
The process of rejuvenation of the Board was aligned and will be executed during the year. A robust process for succession planning has been set up and regularly discussed at the Board and Nomination and Remuneration Committee. |
Mentoring the Senior Management to create an agile organisation that can adapt to the highly volatile VUCA (Volatile, Uncertain, Complex & Ambiguous) environment. |
During the year, the Board heavily engaged with the top management team to successfully implement the transformation journey, particularly portfolio diversification and digital transformation. |
Focus Areas for the Committees: Audit Committee: To strengthen the GRCC (governance, risk management, controls and compliance) policies, processes and systems in the Company with special focus on automation and exception analytics. Nomination and Remuneration Committee: - To help strengthen the culture codes for the Company and improving the talent management processes, with specific focus on strengthening the top talent pipeline - To ensure succession planning for MD & CEO and Senior Management Personnel. Corporate Social Responsibility Committee: To bring focus on improving the effectiveness of CSR spends. |
The Committees continued to perform on their respective focus areas to augment governance and internal controls. |
For the year under review, the performance evaluation exercise conducted has resulted in identification of the following focus areas, for it to work upon in the coming years:
1. Your Company already has an elaborate familiarization programme in place for effective induction of new directors. The Board acknowledged this and reiterated the importance of a rigorous execution of this induction process to ensure a smooth transfer and seamless integration of the new Board Members.
a. in the preparation of the annual financial statement for the financial year ended March 31, 2021, the applicable accounting standards have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2021 and of the profit of your Company for the said period;
c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a ''going concernâ basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively and;
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
PERFORMANCE EVALUATIONYour Company believes that the process of performance evaluation at the Board level is pivotal to its Board Engagement and Effectiveness. The Policy and criteria for Board Evaluation is duly approved by the Nomination and Remuneration Committee. This process at Marico is conducted through structured questionnaires which cover various aspects of the Boardâs functioning such as adequacy of the composition of the Board and its Committees, Memberâs strengths and contribution, execution and performance of specific duties, obligations and governance. Performance evaluation is facilitated by the Chairman of the Board who is supported by the Chairperson of the Nomination and Remuneration Committee. Under the said evaluation mechanism, post receiving individual feedbacks (which also involved peer evaluation), the following process was followed to assimilate and process the feedback:
A meeting of the Independent Directors was held wherein performance of Non-Independent Directors, Chairman of the Board and of the entire Board was evaluated.
The entire Board discussed the findings of the evaluation with the Independent Directors and also
2. The Board laid specific emphasis on strategic risk management and building management capability in this area. It believes that the environment is very volatile. COVID19 outbreak was a clear example of a black swan event. Should the situation escalate further, it may have a deeper impact on demand and supply scenarios. In light of this and such black swan events, it is important to de-risk the Company to sustain and improve its operating and financial performance. The Board would therefore provide its strategic inputs to survive and win amidst such VUCA environment.
3. The Board would continue to mentor the MD & CEO and the senior management team for defining and executing out the transformation agenda which is aimed at building a future-ready Marico more specifically in areas of portfolio, channel strategies, digital strategies and talent management.
4. The Board would focus on Board Rejuvenation and assimilation of new Board members.
5. For the Board Committees, the following focus areas will continue for the coming year:
a. Audit Committee: Further strengthening the GRCC policies, processes and systems in the Company with special focus on automation and exception analytics;
b. Nomination and Remuneration Committee:
i. helping strengthen the culture codes for the Company and improving the talent management processes, with specific focus on strengthening the top talent pipeline
ii. succession planning for MD & CEO and the Senior Management Personnel.
c. Corporate Social Responsibility Committee: Bringing focus on improving the effectiveness of Maricoâs CSR spends.
The Board is also committed to review the progress on these priorities during the annual Board Retreats held every year.
BUSINESS RESPONSIBILITY REPORT (BRR)At Marico, we believe that transparent, accurate and comprehensive disclosure practices not only aid in strategic decision-making but also help in demonstrating incremental value created for all groups of stakeholders. In line with the global megatrends and evolving normal of business environment, your Company has transitioned to Integrated Reporting which enables financial and non-financial factors
to be viewed from the same lens. Marico has published its third Integrated Report emphasizing on the continual goal of focusing on the imperatives of how the Company creates value over the short, medium and long term for all its stakeholders.
The Integrated Report has been prepared as per the framework developed by International Integrated Reporting Council (IIRC). The financial sections of BRR are presented in line with the requirements of the Act read with the Rules made thereunder, the Indian Accounting Standards, the SEBI Listing Regulations and the requisite Secretarial Standards issued by the Institute of Company Secretaries of India. The non-financial section (Sustainability and Corporate Social Responsibility) is presented in conformance to the Global Reporting Initiative (GRI) Standard''s Core Performance Indicators, the UN-Sustainable Development Goals (SDGs) and other sectorally relevant international sustainability disclosure guidelines. BRR has been published in adherence to the SEBI Listing Regulations and to the Ministry of Corporate Affairs'' National Voluntary Guidelines (NVGs) that guides listed corporations to use a 9-principle framework for demonstrating their environmental, social and economic responsibilities, during the year under review.
Sustainability for your Company is the way of doing business. From vision, purpose, strategy, operations and communication perspective, your Company has integrated sustainability into its core business DNA. The value protection and value creation paradigms have been designed in a way that it propels socially inclusive growth that is impactful, innovative, and agile. Sincere efforts have been undertaken to enhance your Company''s environmentally positive footprint, expand socio-economic empowerment and demonstrate transparency in business conduct. Consequently, your Company has taken ambitious targets in relation to increasing the number of farmer beneficiaries, mapping product sustainability footprint, reducing energy intensity by transitioning to low-carbon sources, reducing GHG emission intensity, achieving water stewardship, responsible sourcing and building resilience across business dimensions to futureproof value creation.
AUDITORS & AUDITORS'' REPORT STATUTORY AUDITORS
Pursuant to the provisions of Section 139 of the Act, the Members at the 29th AGM held on August 1, 2017 had approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants, for a term of 5 (five) years, to hold office till the conclusion of the 34th AGM of the Company. Accordingly, the Statutory Auditors would hold office until the conclusion of
Your Company has complied with the applicable laws pertaining to Risk Management and Risk Management Policy thereof. Further, your Company has strengthened its Risk Management framework by adopting a comprehensive Risk Management Policy.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Internal Financial Controls are an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial and financial reporting risks. The Internal Financial Controls have been documented and embedded in the business processes. Your Company''s approach on Corporate Governance has been detailed out in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to
Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations Prevention and detection of frauds Safeguarding of assets
Your Company has defined policies and standard operating procedures for all key business processes to guide business operations in ethical and compliant manner. Compliance to these policies are ensured through periodic self-assessment as well as internal and statutory audits. The Company has robust ERP and other supplementary IT systems which are an integral part of internal control framework. The Company continues to constantly leverage technology in enhancing the internal controls. The Company also uses data analytics to identify trends and exceptions to proactively monitor any control deviations for corrective action.
Your Board reviews the internal processes, systems and the internal financial controls and accordingly, the Directors'' Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls. Assurances on the effectiveness of Internal Financial Controls is obtained through management reviews, self-assessment, continuous monitoring by functional heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
On a voluntary basis, your Company''s material subsidiary, Marico Bangladesh Limited ("MBL") has also adopted
the 34th AGM of the Company. The Statutory Auditors have confirmed their eligibility for acting as the Statutory Auditors of the Company for the financial year 2021-22.
The Auditor''s Report for the financial year ended March 31, 2021 on the financial statements of the Company forms part of the Annual Report. The said report was issued by the Statutory Auditor with an unmodified opinion and does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any fraud under Section 143 (12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.
COST AUDITORSIn terms of the Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year. Accordingly, the Board at its meeting held on July 30, 2021, based on the recommendation of the Audit Committee, appointed M/s. Ashwin Solanki & Associates, Cost Accountants, as the Cost Auditors of the Company to conduct audit of the cost records of the Company for the financial year ending March 31, 2022. A remuneration of R 9,50,000 (Rupees Nine Lacs Fifty Thousand only) plus applicable taxes and out of pocket expenses has been fixed for the Cost Auditors subject to the ratification of such fees by the Members at the 33rd AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2022 is placed at the 33rd AGM. The Company has received consent and certificate of eligibility from M/s. Ashwin Solanki & Associates.
During the year under review, the Cost Auditor had not reported any fraud under Section 143(12) of the Act and therefore, no details are required to be disclosed under Section 134(3)(ca) of the Act.
SECRETARIAL AUDITORPursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on April 30, 2021, based on the recommendation of the Audit Committee, approved the appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor of the Company to conduct audit of the secretarial records of the Company for the financial year ending March 31, 2022. The Company has received consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report for FY21 is enclosed as "Annexure A" to this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Secretarial Auditor has not reported any fraud under Section
143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.
RISK MANAGEMENTFor your Company, Risk Management is an integral and important aspect of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize shareholder value.
The key cornerstones of your Company''s Risk Management Framework are:
Periodic assessment and prioritization of risks that affect the business of your Company;
Development and deployment of risk mitigation plans to reduce vulnerability to prioritized risks;
Focus on both the results and efforts required to mitigate the risks;
Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;
Integration of Risk Management with strategic business plan, annual operating plans, performance management system and significant business decisions;
Constant scanning of external environment for new and emerging risks;
Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.
The Risk Management Committee ("RMC") constituted by the Board assists the Board in monitoring and reviewing the risk management plan, implementation of the risk management framework of the Company and such other functions as Board may deem fit. The Board is responsible for reviewing and guiding on the risk management policy of the Company while the Audit Committee of the Board is responsible for evaluating the risk management systems in the Company. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report. Your company has also put in place a robust Crisis Management Framework monitored by internal crisis management committee which is responsible for laying out crisis response mechanism, communication protocols, and periodic training and competency building around crisis management.
this framework and its progress is reviewed by MBLâs Audit Committee and its Board of Directors, which exhibits Maricoâs commitment to good governance at a group level.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature, based on the criteria approved by the Board. In case of transactions which are unforeseen or in respect of which complete details are not available, the Audit Committee grants an approval to enter into such unforeseen transactions, provided the transaction value does not exceed the limit of R 1 Crore per transaction, in a financial year. The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted, on a quarterly basis.
All transactions with related parties entered into during FY21 were at armâs length basis and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder, the SEBI Listing Regulations and the Companyâs Policy on Related Party Transactions. During the year under review, there were no transactions for which consent of the Board of Directors was required to be taken and accordingly, no disclosure is required in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules framed thereunder. The attention of the Members is drawn to the note no. 30 to the Standalone Financial Statement setting out the related party transaction disclosures, for FY21.
The Policy on Related Party Transactions is available on the Companyâs website and can be accessed using the link -
https://marico.com/investorspdf/Policy on Related Party Transactions.pdf
NOMINATION AND REMUNERATION COMMITTEE AND COMPANY''S POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
Your Company has in place the Nomination and Remuneration Committee of the Board (NRC), which performs the functions as mandated under the Act and the SEBI Listing Regulations. The composition of the NRC is detailed in the Corporate Governance Report forming part of the Annual Report.
In terms of the applicable provisions of the Act, read with the Rules framed thereunder and the SEBI Listing Regulations, your Board has adopted a Policy for appointment, removal and remuneration of Directors, Key Managerial Personnel ("KMP") and Senior Management Personnel ("SMP") and also
rights (STARs). The NRC administers the Plan and the Scheme(s) notified thereunder, from time to time. The NRC notifies various Schemes for granting STARs to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfillment of certain conditions and applicability of Income Tax. The STAR Plan involves secondary market acquisition of the Equity Shares of your Company by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to such Trust for making secondary acquisition of equity shares, subject to the statutory ceilings.
As at March 31, 2021 an aggregate of1,197,180 STARs were outstanding which constitute about 0.09% of the paid up equity share capital of the Company as on that date.
STATUTORY INFORMATION ON MARICO EMPLOYEE BENEFIT SCHEME/PLAN AND TRUST
The disclosure requirements in terms of Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended and the SEBI Circular dated June 16, 2015, for Marico Employee Benefit Scheme/Plan and Trust, is made available on the Companyâs website and can be accessed using the link: https://marico.com/india/investors/documentation. Further, the Company has complied with the applicable accounting standards in this regard. Further, during the year under review, the Company has not given loan to any of its employees for purchase of shares of the Company.
All Marico Employee Benefit Schemes/Plans are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended and the resolutions passed by the Members at the General Meetings approving such employee benefit Schemes/Plans. Further, an annual certificate to that effect is obtained from the Statutory Auditors of the Company i.e. M/s. B S R & Co. LLP.
DISCLOSURES
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employeeâs remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended is disclosed in "Annexure B" to this report.
on the Board Diversity, Succession Planning and Evaluation of Directors ("NRE Policy"). The remuneration paid to Directors, KMP and SMP of the Company are as per the terms laid down in the NRE Policy. The Managing Director & CEO of your Company does not receive remuneration or commission from any of the subsidiaries of your Company.
ThesalientfeaturesofthisPolicyareoutlinedintheCorporate Governance Report and the Policy is made available on the Companyâs website, which can be accessed using the link
https://marico.com/investorspdf/Policy on Nomination. Remuneration and Evaluation.pdf
MARICO EMPLOYEE BENEFIT SCHEME/PLANMarico Employee Stock Option Plan, 2016
The Members at the 28th AGM held on August 5, 2016, had approved the Marico Employee Stock Option Plan, 2016 ("Marico ESOP 2016" or "the Plan") for issuance of the employee stock options ("Options") to the eligible employees of the Company including the Managing Director & CEO and also the eligible employees of its subsidiaries, both in India and outside India. Marico ESOP 2016 aims to promote desired behavior among employees for meeting the Companyâs long-term objectives and enable retention of employees for desired objectives and duration, through a customized approach.
The Plan envisages to grant options, not exceeding in aggregate, 0.6% of the issued equity share capital of the Company as on August 5, 2016 ("the Commencement Date") to the eligible employees of the Company and its subsidiaries and not exceeding 0.15% of the issued equity share capital of the Company as on the Commencement Date, to any individual employee.
The NRC is entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder, from time to time.
As on March 31, 2021, an aggregate of 5,334,530 Options were outstanding which constitute about 0.41% of the issued equity share capital of the Company as on that date.
Marico Employees Stock Appreciation Rights Plan, 2011The Company had adopted Marico Stock Appreciation Rights Plan, 2011 (''STAR Planâ) in the year 2011, for the welfare of its employees and those of its subsidiaries. Under the Plan, various schemes are notified for conferring cash incentive benefit to the eligible employees through grant of stock appreciation
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended is available on the Companyâs website https://marico.com/india/investors/documentation. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members, excluding the aforesaid annexure. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary or email at [email protected].
CORPORATE GOVERNANCE REPORTPursuant to Regulation 34 of the SEBI Listing Regulations, a separate report on Corporate Governance along with the certificate from Dr. K.R. Chandratre, Practicing Company Secretary, on its compliance is annexed to this report as "Annexure C".
VIGIL MECHANISMYour Company has a robust vigil mechanism in the form of Code of Conduct ("CoC") which enables its stakeholders to report concerns about unethical or inappropriate behaviour, actual or suspected fraud, leak of unpublished price sensitive information, unfair or unethical actions or any other violation of the CoC. There are separate guidelines called Maricoâs Code of Business Ethics that are applicable to our associates who partner us in our organizational objectives and customers.
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules made thereunder, your Company has adopted a policy ("Anti-Sexual Harassment Policy") for the prevention of sexual harassment and constituted Internal Committees to deal with complaints relating to sexual harassment at workplace. During the FY2020-21, the Company has not received any complaint on sexual harassment.
The vigil mechanism of the Company provides for adequate safeguards against victimization of directors, employees and third parties who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The CoC guidelines are designed to ensure that Directors, employees and third parties may report genuine concerns on CoC adherence or violations thereof without fear of retaliation. To encourage such members to report any concerns and to maintain anonymity, the Company has engaged an independent agency for managing the whistleblowing system and has provided toll-free helpline numbers across the geographies where it is having a presence along with a website and email address, wherein the grievances/ concerns can reach
ANNUALRETURN
Pursuant to Section 134 (3) (a) of the Act, the draft annual return for FY21 prepared in accordance with Section 92(3) of the Act is made available on the website of the Company and can be accessed using the link: https://marico.com/india/investors/documentation.
COST RECORDS
The maintenance of cost records as specified under Section 148 of the Act, is applicable to the Company and accordingly all the cost records are made and maintained by the Company and audited by the cost auditors.
ACKNOWLEDGEMENT
Your Board takes this opportunity to thank Companyâs employees for their dedicated service and firm
the Company. For administration and governance of the Code, a committee called Code of Conduct Committee is constituted ("CoC Committeeâ). All cases reported under the whistleblower policy are reported to the CoC Committee and are subject to a review by the Audit Committee and the Nomination and Remuneration Committee of the Company. In addition to the independent Ethics Hotline system, your Company has also provided in its CoC direct access to the members of the CoC Committee and a drop box facility to report concerns or violations of the CoC.
All new employees go through a detailed personal orientation on CoC and anti-sexual harassment policy. Further, all employees have to mandatorily complete the online learning cum certification course on CoC on an annual basis. Your Company seeks affirmation on compliance of CoC on an annual basis from all the employees and on a quarterly basis from the Directors and the employees at senior level. Additionally, separate trainings (classroom/online) on Anti-Sexual Harassment Policy & Marico Insider Trading Rules are conducted to educate the employees on the said Policy/Rules. The education and sensitization is further strengthened through periodic e-mail communications and focused group discussions with the employees to ensure the CoC is followed in spirit and failures are minimized. The Company also ensures capability building of and mandatory certifications by its business partners on Maricoâs Code of Conduct and Maricoâs Code of Business Ethics.
The Board and the Audit Committee thereof are informed periodically on the matters reported under CoC and the status of resolution of such cases.
The Company affirms that no person has been denied access to the Audit Committee.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended is enclosed as "Annexure D" to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The composition of the CSR Committee is disclosed in the Corporate Governance Report. During the year under review, the Company amended its CSR policy to align the
same with the amendments to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021.
A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2020-21 together with progress thereon and the report on CSR activities in the prescribed format, as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in "Annexure E" to this Report and the CSR Policy can be accessed using the link
https://marico.com/investorspdf/Corporate-Social-Responsibility-Policy.pdf
Further, the Chief Financial Officer of the Company has certified that CSR spends of the Company for FY21 have been utilized for the purpose and in the manner approved by the Board of Directors of the Company.
SECRETARIAL STANDARDS
During the year under review, the Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs of India.
DEPOSITS
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014, as amended, at the end of the financial year 2020-21 or the previous financial year. Your Company did not accept any deposits during FY21.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, there were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future, apart from the order dated December 2, 2020, passed by the Honâble National Company Law Tribunal, Mumbai Bench, approving the Scheme of Amalgamation, between the Company, Marico Consumer Care Limited and their respective shareholders.
NO PENDING PROCEEDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016
Your Board confirms that there is no proceeding pending under the Insolvency and Bankruptcy Code, 2016 and that there is no instance of onetime settlement with any Bank or Financial Institution, during the year under review.
commitment to the goals & vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, distributors, third party manufacturers, bankers and all other business associates and from the neighborhood communities of the various Marico locations. We look forward to continued support of all these partners in progress.
On behalf of the Board of Directors Harsh MariwalaPlace: Dubai ChairmanDate: July 30, 2021 DIN: 00210342
Mar 31, 2019
To the Members,
The Board of Directors (âBoardâ) are pleased to present the Thirty First Annual Report of Marico Limited (âMaricoâ or âthe Companyâ or âyour Companyâ), for the financial year ended March 31, 2019 (âthe year under reviewâ or âthe yearâ or âFY19â).
In compliance with the applicable provisions of Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) thereof, for time being in force) (âthe Actâ) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe SEBI Regulationsâ), this report covers the financial results and other developments during the financial year April 1, 2018 to March 31, 2019 and upto the date of the Board meeting held on May 6, 2019 to approve this report, in respect of Marico and Marico Consolidated comprising Marico, its subsidiaries and associate companies. The consolidated entity has been referred to as âMarico Groupâ or âYour Groupâ or âthe Groupâ in this report.
FINANCIAL RESULTS - AN OVERVIEW
(Rs. in Crore)
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
Consolidated Summary for the Group |
||
Revenue from Operations |
7,334 |
6,333 |
Profit before Tax |
1,263 |
1,117 |
Profit after Tax |
1,135 |
827 |
Marico Limited - Revenue from Operations |
5,971 |
5,181 |
Profit before Tax |
1,187 |
954 |
Less: Provision for Tax for the current year |
55 |
236 |
Profit after Tax for the current year |
1,132 |
718 |
Other Comprehensive Income for the current year |
(1) |
(1) |
Add: Surplus brought forward |
2,348 |
2,266 |
Profit available for appropriation |
3,480 |
2,984 |
Appropriations: Distribution to shareholders |
613 |
549 |
Tax on dividend |
89 |
87 |
702 |
636 |
|
Surplus carried forward |
2,777 |
2,348 |
REVIEW OF OPERATIONS
During FY19, Marico posted revenue from operations of INRS. 7,334 Crores, a growth of 16% over the previous year. Volume growth for the year was 8%. The value growth was led by price increases taken in core portfolios of the domestic business to counter significant input cost push and favorable forex impact on translation of overseas revenues. The business delivered an operating margin of 17.5% and recurring bottom line of INRS. 930 Crores (excluding the impact of the tax adjustments for earlier years), a growth of 14% over the last year. The reported bottom line was INRS. 1,118 Crores.
Marico India, the domestic FMCG business, achieved a turnover of INRS. 5,756 Crores in FY19, a growth of 16% over the last year. Volume growth for the year was 8%, in line with the medium term aspiration. The value growth was led by price hikes taken in core portfolios in response to rising input costs. The operating margin (before corporate allocations) for the India business was at 19.6% in FY19. Profitability for the year was subdued by gross margin contraction, which was only partly contained by the price hikes taken in respective portfolios.
During the year, Marico International, the International FMCG business, posted a turnover of INRS. 1,578 Crores, a growth of 16% over the last year. The business reported a 9% constant currency growth (volume growth of 8%) during the year. The operating margin (before corporate allocations) for the International business was at 19.1% in FY19, a sustained structural shift over the last few years from levels of below 10%.
There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the FY19 and the date of this report.
Further, there has been no change in the nature of business of the Company.
RESERVES
There is no amount proposed to be transferred to the Reserves.
DIVIDEND
Your Companyâs wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/ disbursement of profits to its shareholders. The Dividend Distribution Policy (âDD Policyâ) adopted by your Company is available on the Companyâs website which can be accessed using the link https://marico.com/investorspdf/ Dividend Distribution Policy.pdf. The Policy also forms part of the Corporate Governance Report.
Based on the principles enunciated in the DD Policy, your Companyâs distribution to equity shareholders during FY19 comprised the following:
- First Interim Dividend of 200% on the equity base of RS.129.09 Crores aggregating to RS. 258.17 Crores declared by your Board of Directors on November 1, 2018 and
- Second Interim Dividend of 275% on the equity base of RS.129.09 Crores aggregating to RS.354.99 Crores declared by your Board of Directors on February 5, 2019.
The total equity dividend for FY19 (including dividend distribution tax) aggregated to R702.62 Crores. Thus, dividend pay-out ratio was 76% of the consolidated profit after tax as compared to 78% in the previous year.
CHANGES IN SHARE CAPITAL
During FY19, there was no change in the paid up share capital of the Company.
SUBSIDIARIES AND ASSOCIATE COMPANIES
A list of bodies corporate which are subsidiaries/associates/ joint ventures of your Company is provided as part of the notes to Consolidated Financial Statements. During the year under review, the Company entered into Shareholdersâ Agreement and Share Subscription Agreement with Revolutionary Fitness Private Limited (âRevofitâ) and acquired 22.46% of its equity stake. Consequently, Revofit became an associate company of Marico.
The Company incorporated the following subsidiaries during the year under review:
a. A non-profit company limited by guarantee in India named âParachute Kalpavriksha Foundationâ to undertake the Companyâs CSR initiatives towards community and ecological sustenance and
b. A private limited company named âMarico (Lanka) Private Limitedâ in Sri Lanka to strengthen the Companyâs business in that country.
A separate statement containing the salient features of the financial statements of all subsidiaries and associate companies/ joint ventures of your Company (in Form AOC -1) forms part of this report.
The financial statements of the subsidiary companies and related information are uploaded on the website of your Company and can be accessed using the link http://marico.com/india/investors/documentation and the same are available for inspection by the Members at the Registered Office of your Company during business hours on all working days except Saturdays and Sundays up to the date of the 31st Annual General Meeting (â31st AGMâ), as required under Section 136 of the Act. Any Member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office Address.
Your Company has approved a policy for determining material subsidiaries and the same is uploaded on the Companyâs website which can be accessed using the link https://marico.com/investorspdf/Policy for Determining Material subsidiaries.pdf As per this Policy, your Company did not have any material subsidiary as on March 31, 2019. However, based on financials of FY 19, Marico Bangladesh Limited has been identified as material subsidiary in FY 2019-20.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments covered under Section 186 of the Act, form part of the notes to the standalone financial statement of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and, inter-alia, gives an update on the following matters:
- Macro-Economic Indicators & FMCG Industry
-Opportunities and threats
-Risks and concerns
-Internal control systems and their adequacy
-Discussion on financial and operational performance
-Outlook
-Segment-wise performance
-Human capital Initiative outlook
-Details of significant changes in key financial ratios, etc.
-Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
I. Re-appointment of Mr. Rajeev Bakshi, Mr. B. S. Nagesh, Ms. Hema Ravichandar and Mr. Nikhil Khattau as Additional Directors (Independent) of the Company.
The tenure of Mr. Rajeev Bakshi (DIN: 00044621), Mr. B. S. Nagesh (DIN: 00027595), Ms. Hema Ravichandar (DIN:00032929)andM r. Nikhil Khattau(DIN:00017880), Independent Directors was due to expire on March 31, 2019. The Board of Directors at its Meeting held on March 12, 2019, approved the re-appointment of the said Directors as Additional Directors (Independent) to hold office as Independent Directors for a tenure as mentioned below, subject to the approval of the shareholders by a Special Resolution at the ensuing 31st AGM of the Company. Accordingly, the matters with respect to their re-appointment are proposed in the Notice of the 31st AGM. Brief profile of each of the said Director and other related information is appended in the Corporate Governance Report.
Sr. No. |
Names of the Independent Director |
No. of year(s) re-appointed for |
Tenure |
1. |
Mr. Rajeev Bakshi |
1 |
From April 1, 2019 to March 31, 2020 |
2. |
Mr. B.S. Nagesh |
3 |
From April 1, 2019 to March 31, 2022 |
3. |
Ms. Hema Ravichandar |
5 |
From April 1, 2019 to March 31, 2024 |
4. |
Mr. Nikhil Khattau |
5 |
From April 1, 2019 to March 31, 2024 |
II. Re-appointment of Mr. Saugata Gupta as the Managing Director of the Company
As the tenure of Mr. Saugata Gupta, Managing Director & Chief Executive Officer was due to expire on March 31, 2019, the Board of Directors at their meeting held on March 12, 2019, re-appointed him for another term of 5 years with effect from April 1, 2019, subject to the approval of the Shareholders. Accordingly, the matter with respect to the re-appointment of Mr. Saugata Gupta is proposed in the Notice of the 31st AGM. A brief profile of Mr. Saugata Gupta and other related information is appended in the Corporate Governance Report.
III. Director retiring by rotation
In accordance with the provisions of Section 152 of the Act read with Rules made thereunder and the Articles of Association of the Company, Mr. Harsh Mariwala (DIN: 00210342) is liable to retire by rotation at the AGM and being eligible, has offered himself for re-appointment. Accordingly, the appointment of Mr. Harsh Mariwala is being placed for the approval of the Members at the 31st AGM. A brief profile of Mr. Harsh Mariwala and other related information is appended in the Corporate Governance Report.
IV. Declaration by Independent Directors
The Company has received declaration from each of its Independent Directors confirming that they satisfy the criteria of independence as prescribed under the provisions of the Act and the SEBI Regulations.
None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules 2014.
V. Key Managerial Personnel
During the year under review, there were no changes in the Key Managerial Personnel of the Company.
Mr. Saugata Gupta was re-appointed by the Board, subject to the approval of the shareholders, as the Managing Director & CEO of the Company for another term of5 consecutive years with effect from April 1,2019.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company confirm that:
a. in the preparation of the annual financial statement for the financial year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2019 and of the profit of your Company for the said period;
c. 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. the annual accounts have been prepared on a âgoing concernâ basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively and
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
PERFORMANCE EVALUATION
In accordance with the relevant provisions of the Act read with the corresponding Rules framed thereunder, the SEBI Regulations, evaluation of the performance of the individual Directors, Chairman of the Board, the Board as a whole and its individual statutory Committees was carried out for the year under review. The manner in which the evaluation was carried out and the outcome of the evaluation are explained in the Corporate Governance Report.
BUSINESS RESPONSIBILITY REPORT & SUSTAINABILITY REPORT
The current financial year marks an important milestone in the Companyâs corporate reporting journey as it is transitioning towards Integrated Reporting, which focuses on the imperatives of how the Company creates value over the short, medium and long term for all its stakeholders. The Companyâs maiden Integrated Report for the period 1 April 2018 to 31 March 2019 has been prepared as per the framework developed by International Integrated Reporting Council (IIRC).
Your Company strives to create value for all stakeholders whilst growing responsibly and sustainably. Accordingly, your Company has aligned its sustainability efforts towards reducing environmental footprint and increasing positive social impact. Consequently, your Company has taken ambitious targets in relation to increasing the number of farmer beneficiaries, reducing energy intensity, reducing GHG emission intensity, achieving water stewardship and responsible sourcing.
During the year under review, the Company has subsumed the sustainability disclosures in the Integrated Report, which has been exhibited in line with the Global Reporting Initiative (GRI) Sustainability Reporting Standards (SRS) core guidelines. The Company has also presented the Business Responsibility Report (BRR) as per the requirements of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 describing the environmental, social and governance initiatives taken by the Company. The Integrated Report of the Company for the financial year 2018-19 can be accessed on its website using this link https://marico.com/india/investors/documentation.
AUDITORS & AUDITORS REPORT
STATUTORY AUDITORS
Pursuant to the provisions of Section 139 of the Act, the Members at the 29th Annual General Meeting held on August 1, 2017 had approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants, for a term of five years, to hold office till the conclusion of the 34th Annual General Meeting of the Company. The requirement for the annual ratification of the appointment of the Statutory Auditors by Shareholders at every AGM has been omitted pursuant to the Companies (Amendment) Act, 2017 notified on May 7, 2018 and accordingly the same is not placed for ratification.
The Statutory Auditors have confirmed their eligibility for acting as the Statutory Auditors of the Company for the financial year 2019-20.
The Auditorâs Report for the year ended March 31, 2019 on the financial statements of the Company forms part of Annual Report. There is no qualification, reservation or adverse remark or disclaimer in the said Auditorâs Report. During the year under review, the Auditors have not reported any fraud under Section 143 (12) of the Act and therefore no detail are required to be disclosed under Section 134(3)(ca) of the Act.
COST AUDITORS
In terms of the Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year. The Board at its meeting held on May 6, 2019, based on the recommendation of the Audit Committee, approved the appointment of M/s. Ashwin Solanki & Associates, Cost Accountants, as the Cost Auditors of the Company to conduct audit of the cost records of the Company for the financial year ending March 31, 2020, at a fee of Rs. 9.5 lacs plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the Members at the ensuing 31st AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2020 is placed at the 31st AGM. The Company has received a written consent and certificate of eligibility from M/s. Ashwin Solanki & Associates.
During the year under review, the Cost Auditor had not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 6, 2019, based on the recommendation of the Audit Committee, approved the appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor to conduct audit of the secretarial records of the Company for the financial year ending March 31, 2020. The Company has received consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report for FY19 is enclosed as âAnnexure Aâ to this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important component of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize the shareholder value.
-The key cornerstones of your Companyâs Risk Management Framework are:
-Periodic assessment and prioritization of risks that affect the business of your Company;
-Development and deployment of risk mitigation plans to reduce the vulnerability to the prioritized risks;
-Focus on both the results and efforts required to mitigate the risks;
-Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;
-Embedding of the Risk Management processes in significant decisions such as large capital expenditures, mergers, acquisitions and corporate restructuring;
-Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.
The Risk Management Committee (âRMCâ) constituted by the Board assists the Board in monitoring and reviewing the risk management plan, implementation of the risk management framework of the Company and such other functions as Board may deem fit. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Internal Financial Controls are an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial and financial reporting risks. The Internal Financial Controls have been documented, embedded in the business processes. Your Companyâs approach on Corporate Governance has been detailed out in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to the financial statements. Your Board has also reviewed the internal processes, systems and the internal financial controls and the Directorsâ Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls. Assurances on the effectiveness of Internal Financial Controls is obtained through management reviews, self-assessment, continuous monitoring by functional heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
On a voluntary basis, your Companyâs largest overseas subsidiary, Marico Bangladesh Limited (MBL) has also adopted this framework and progress is reviewed by MBLâs Audit Committee and its Board of Directors, which exhibits Maricoâs commitment to good governance at a group level.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature. In case of transactions which are unforeseen or in respect of which complete details are not available, the Audit Committee grants an omnibus approval to enter into such unforeseen transactions, provided the transaction value does not exceed RS. 1 Crore (per transaction in a financial year). The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted on a quarterly basis.
All transactions with related parties entered into during FY19 were at armâs length basis and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder, the SEBI Regulations and the Companyâs Policy on Related Party Transactions. There were no transactions which were material (considering the materiality thresholds prescribed under the Act and Regulation 23 of the SEBI Regulations). Accordingly, no disclosure is made in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules framed thereunder.
The Policy on Related Party Transactions is uploaded on the Companyâs website and can be accessed using the link https://marico.com/investorspdf/Policv on Related Party Transactions.pdf
NOMINATION AND REMUNERATION COMMITTEE AND COMPANYâS POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
Your Company has in place the Nomination and Remuneration Committee (âformerly known as Corporate Governance Committeeâ) which performs the functions as mandated under the provisions of Section 178 of the Act and SEBI Regulations. The composition of the Committee is detailed in the Corporate Governance Report.
In terms of the applicable provisions of the Act, read with the Rules framed thereunder and the SEBI Regulations, your Board has in place a Policy for appointment, removal and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP) and also on Board Diversity, Succession Planning and Evaluation of Directors (âNR Policyâ). The remuneration paid to Directors, KMP and SMP of the Company are as per the terms laid down in the NR Policy of the Company. The Managing Director & CEO of your Company does not receive remuneration or commission from any of the subsidiaries of your Company.
The salient features of this Policy are outlined in the Corporate Governance Report and the Policy can be accessed using this link - https://marico.com/mvestorspdf/PoNcy on Nomination, Remuneration and Evaluation.pdf
MARICO EMPLOYEE BENEFIT SCHEME/PLAN
- Marico Employee Stock Option Plan, 2016
The Members at the 28th Annual General Meeting held on August 5, 2016, had approved the Marico Employee Stock Option Plan, 2016 (âMarico ESOP 2016â or âthe Planâ) for issuance of the employee stock options (âOptionsâ) to the eligible employees of the Company including the Managing Director & CEO and the eligible employees of its subsidiaries, whether in India or outside India. Marico ESOP 2016 aims to promote desired behavior among employees for meeting the Companyâs long term objectives and enable retention of employees for desired objectives and duration, through a customized approach.
The Plan envisages to grant options, not exceeding in aggregate, 0.6% of the issued equity share capital of the Company as on August 5, 2016 (âthe Commencement Dateâ) to the eligible employees of the Company and its subsidiaries and not exceeding 0.15 % of the issued equity share capital of the Company as on the commencement date to any individual employee.
The Nomination and Remuneration Committee is entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder.
As on March 31, 2019, an aggregate of 3,059,590 Options were outstanding which constitute about 0.24% of the issued equity share capital of the Company.
- Marico Employees Stock Appreciation Rights Plan, 2011
The Company had adopted Marico Stock Appreciation Rights Plan, 2011 (âSTAR Planâ) in the year 2011, for the welfare of its employees and those of its subsidiaries. Under the Plan, various schemes have been notified from time to time for conferring cash incentive benefit to the eligible employees through grant of stock appreciation rights (STARs). The Nomination and Remuneration Committee acts as the Compensation Committee for the purpose of the administration of the Plan. The Committee notifies various Schemes for granting STARs to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfillment of certain conditions and applicability of Income Tax. The STAR Plan involves secondary market acquisition of the Equity Shares of your Company by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to the Trust for making secondary acquisition of Equity Shares, subject to statutory ceilings.
As at March 31, 2019 an aggregate of 980,940 STARs were outstanding which constitute about 0.076% of the current paid up equity share capital of the Company.
STATUTORY INFORMATION ON
ESOS, STAR AND TRUST
Disclosure on ESOS, STAR and Trust in terms of Regulation 14 of the SEBI (Share Based Employee Benefits) Regulation, 2014 and SEBI Circular dated June 16, 2015 is made available on the website of the Company and can be accessed using the link: https://marico.com/india/investors/documentation. Further, the Company has complied with the applicable accounting standards in this regard. Also, during the year under review, your Company has not given loan to any of its employees for purchase of shares of the Company.
All schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 as applicable, and the resolutions passed by the Members at the General Meetings approving such employee benefit Schemes/Plans. Further, a certificate to that effect has been obtained from the Statutory Auditors of the Company i.e. M/s. B S R & Co. LLP.
DISCLOSURES
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Seven (7) meetings of the Board of Directors were held during the financial year under review. The details of the meetings of the Board and its Committees held during the year under review are stated in the Corporate Governance Report.
AUDIT COMMITTEE
The Audit Committee comprises Independent Directors namely Mr. Nikhil Khattau (Chairman), Mr. B. S. Nagesh, Ms. Hema Ravichandar and Non-Executive (Non-Independent) Director, Mr. Rajen Mariwala. Powers and role of the Audit Committee are included in the Corporate Governance Report. During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employeeâs remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2016 is disclosed in âAnnexure Bâ to this report.
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available on the website of the Company . In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members excluding the aforesaid annexure. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office Address.
CORPORATE GOVERNANCE REPORT
Pursuant to Regulation 34 of the SEBI Regulations, a separate report on Corporate Governance along with the certificate from the Statutory Auditors on its compliance is annexed to this report as âAnnexure Câ.
VIGIL MECHANISM
Your Company has a robust vigil mechanism in the form of Unified Code of Conduct (âCoCâ) which enables the stakeholders to report concerns about unethical/inappropriate behaviour, actual or suspected fraud or violation of the Code. Considering the changes, in the internal as well as external environment, the Board has revised and adopted the amended CoC on May 6, 2019. The CoC can be accessed on its website using the link http://marico.com/investorspdf/Marico CoC.PDF .
This mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The guidelines are meant for all members of the Company from the day they join the organization and are designed to ensure that they may raise any specific concern on integrity, value adherence without fear of being punished for raising that concern. The guidelines also cover our associates who partner us in our organizational objectives and customers for whom we exist.
Your Company has a policy for the prevention of sexual harassment which is embedded in the CoC. As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted an Internal Committee (âICâ) to deal with complaints relating to sexual harassment at workplace. During the FY19, this Committee has received and resolved one complaint on sexual harassment.
To encourage employees to report any concerns and to maintain anonymity, the Company has provided a toll free helpline number and a website, wherein the grievances/ concerns can reach the Company. For administration and governance of the Code, a Committee called Code of Conduct Committee (âCCCâ) is constituted.
All new employees go through a detailed personal orientation on CoC. Further, all employees have to mandatorily complete the online learning cum certification course on CoC. Your Company seeks an affirmation on compliance of CoC on an annual basis from all the employees and on a quarterly basis from the employees at senior level. Additionally, separate trainings (classroom/online) on Anti-Sexual Harassment Policy & Insider Trading Rules are conducted to educate the employees on the said Policy/Rules. The education and sensitization is further strengthened through periodic email communications and focused group discussions with the employees to ensure the CoC is followed in spirit and failures are minimized.
The Board and the Audit Committee are informed periodically on the matters reported to CCC and the status of resolution of such cases.
The Company affirms that no person has been denied access to the Audit Committee.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is enclosed as âAnnexure Dâ to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The composition of the CSR Committee is disclosed in the Corporate Governance Report.
A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company and changes therein, the CSR initiatives undertaken during the financial year 2018-19 together with progress thereon and the report on CSR activities as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in âAnnexure Eâ to this Report and the CSR policy can be accessed through the link https://marico.com/investorspdf/CSR Policy (1).pdf.
SECRETARIAL STANDARDS
The Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs of India.
DEPOSITS
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014, at the end of the financial year 2018-19 or the previous financial year. Your Company did not accept any deposits during FY19.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.
ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 in accordance with Section 92(3) of the Act, read with the Companies (Management and Administration) Rules, 2014, are enclosed as âAnnexure Fâ to this report.
Pursuant to Section 134 (3) (a) of the Act, annual return will be placed on the website of the Company and can be accessed using the link: htttps://marico.com/india/investors/ documentation.
COST RECORDS
The maintenance of cost records as specified under Section 148 of the Act is applicable to the Company and accordingly all the cost records are made and maintained by the Company and audited by the cost auditors.
ACKNOWLEDGEMENT
Your Board takes this opportunity to thank Companyâs employees for their dedicated service and firm commitment to the goals &vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, distributors, third party manufacturers, bankers and all other business associates and from the neighborhood communities of the various Marico locations. We look forward to continued support of all these partners in progress.
On behalf of the Board of Directors.
Harsh Mariwala
Place : Mumbai Chairman
Date : May 6, 2019 DIN: 00210342
Mar 31, 2018
To the Members,
The Board of Directors (âBoardâ) is pleased to present the Thirtieth Annual Report of Marico Limited (âMaricoâ or âthe Companyâ or âyour Companyâ), for the financial year ended March 31, 2018 (âthe year under reviewâ or âthe yearâ or âFY18â).
In compliance with the applicable provisions of Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) thereof, for time being in force) (âthe Actâ) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe SEBI Regulationsâ), this report covers the financial results and other developments during the financial year April 1, 2017 to March 31, 2018 and upto the date of the Board meeting held on June 28, 2018 to approve this report, in respect of Marico and Marico Consolidated comprising Marico, its subsidiaries and associate companies. The consolidated entity has been referred to as âMarico Groupâ or âYour Groupâ or âthe Groupâ in this report.
FINANCIAL RESULTS - AN OVERVIEW
(Rs. in Crore)
Particulars |
Year ended March 31, 2018 |
Year ended March 31, 2017 |
Consolidated Summary for the Group |
||
Revenue from Operations |
6,333.09 |
5,935.92 |
Profit before Tax |
1,117.02 |
1,148.70 |
Profit after Tax |
827.45 |
810.97 |
Marico Limited - Revenue from Operations |
5,181.32 |
4,868.88 |
Profit before Tax |
953.73 |
1,141.72 |
Less: Provision for Tax for the current year |
235.50 |
299.02 |
Profit after Tax for the current year |
718.23 |
842.70 |
Other Comprehensive Income for the current year |
(0.48) |
(1.18) |
Add: Surplus brought forward |
2,266.21 |
1,933.31 |
Profit available for appropriation |
2,983.96 |
2,774.83 |
Appropriations: Distribution to shareholders |
548.58 |
451.59 |
Tax on dividend |
87.26 |
57.03 |
635.84 |
508.62 |
|
Surplus carried forward |
2,348.12 |
2,266.21 |
REVIEW OF OPERATIONS
During FY 18, Marico posted revenue from operations of IN .6,333 Crores, a growth of 7% over the previous year. Volume growth for the year was at 1.3%. The value growth was led by price increases taken in the Coconut Oil portfolio to counter the significant input cost push during the year. The business delivered an operating margin of 18% and reported a bottom line of INR 814 Crores, a growth of 2% over the last year.
Marico India, the domestic FMCG business, achieved a turnover of INR.4,969 Crores in FY18, a growth of 9% over the last year. Volume growth for the year was 1.5%. The value growth was led by price increases in the Coconut Oil portfolio. Annual volume growth this year was dampened by destocking in trade prior to GST implementation, which led to a sharp volume decline across portfolios in Q1 FY18, and a subdued year for Saffola Edible Oil. The operating margin for the India business was at 21.3% (before corporate allocations) versus 24.3% in FY17. Lower operating margins can be attributed mainly to gross margin contraction on account of the severe input cost push during the year.
During the year, Marico International, the International FMCG business, posted a turnover of INR 1,364 Crores, a growth of 1% over the last year. The business reported a 9% constant currency growth (volume growth of 1%) during the year. The operating margin for the year was at 16.6% (before corporate allocations) reflecting a sustained structural shift over the last few years from levels of below 10%.
There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the FY18 and the date of this report.
Further, there has been no change in the nature of business of the Company.
RESERVES
There is no amount proposed to be transferred to the Reserves. DIVIDEND
Your Companyâs wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/ disbursement of profits to its shareholders. The Dividend Distribution Policy (âDD Policyâ) adopted by your Company is available on the Companyâs website which can be accessed using the link http://marico.com/investorspdf/Dividend_Distribution_ Policy.pdf.
Based on the principles enunciated in the DD Policy, your Companyâs distribution to equity shareholders during FY18 comprised the following:
- First Interim Dividend of 175% on the equity base of RS.129.08 Crores aggregating to RS.225.89 Crores declared by your Board of Directors on October 30, 2017; and
- Second Interim Dividend of 250% on the equity base of RS.129.08 Crores aggregating to RS.322.69 Crores declared by your Board of Directors on February 9, 2018.
The total equity dividend for FY18 (including dividend distribution tax) aggregated to RS.636 Crores. Thus, dividend pay-out ratio was 78% of the consolidated profit after tax as compared to 64% in the previous year.
CHANGES IN SHARE CAPITAL
During FY18, the paid up share capital of the Company has been increased from RS.129.05 Crores to RS.129.09 Crores, pursuant to allotment of 3,93,200 Equity Shares of RS.1/- each under two different Employee Stock Option Schemes of the Company.
SUBSIDIARIES AND ASSOCIATE COMPANIES
A list of bodies corporate which are subsidiaries/associates of your Company is provided as part of the notes to Consolidated Financial Statements. During the year under review, M/s. MEL Consumer Care & Partners - Wind, a partnership firm in Egypt was converted in to a joint stock company and consequently became a subsidiary of your Company. Further, Bellezimo Professionale Products Private Limited ceased to be an associate company with effect from March 7, 2018.
A separate statement containing the salient features of the financial statements of all subsidiaries and associate companies of your Company (i.e. Form AOC - 1) forms part of the consolidated financial statements.
The financial statements of the subsidiary companies and related information are uploaded on the website of your Company and can be accessed using the link http://marico.com/india/investors/ documentation and the same are available for inspection by the Members at the Registered Office of your Company during business hours on all working days except Saturdays and Sundays up to the date of the 30th Annual General Meeting (â30th AGMâ), as required under Section 136 of the Act. Any Member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office Address.
Your Company has approved a policy for determining material subsidiaries and the same is uploaded on the Companyâs website which can be accessed using the link http://marico.com/ investorspdf/Policy_for_determining_Material_Subsidiaries.pdf. As per this Policy, your Company did not have a material subsidiary as on March 31, 2018.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments covered under the Section 186 of the Act, are given in the notes to the standalone financial statement of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and, inter-alia, gives an update on the following matters
- Macro-Economic Indicators & FMCG Industry
- Opportunities and threats
- Risks and concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
- Human capital Initiative outlook, etc.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
I. Resignation of Mr. Anand Kripalu as a Director
Mr. Anand Kripalu (DIN: 00118324), Independent Director of the Company stepped down from the Board of Directors with effect from October6, 2017 on account of his other professional commitments. The Board places on record its appreciation for the invaluable contribution made by Mr. Kripalu during his tenure with the Company as an Independent Director.
II. Appointment of Mr. Rishabh Mariwala and Mr. Ananth Sankaranarayanan as Directors
The Shareholders at theiRs.29th Annual General Meeting (AGM) held on August 1, 2017 approved the appointment of Mr. Rishabh Mariwala (DIN: 03072284) as a NonExecutive (Non-Independent) Director and Mr. Ananth Sankaranarayanan (DIN: 07527676) as an Independent Director of the Company.
III. Directors retiring by rotation
In accordance with the provisions of Section 152 of the Act read with Rules made thereunder and the Articles of Association of the Company, Mr. Rajen Mariwala (DIN 00007246) is liable to retire by rotation at the 30th Annual General Meeting and being eligible, has offered himself for re-appointment. Accordingly, the appointment of Mr. Rajen Mariwala is being placed for the approval of the Members at the 30th AGM. A brief profile of Mr. Rajen Mariwala and other related information is appended in the Corporate Governance Report.
IV. Declaration by Independent Directors
The Company has received declarations from all its Independent Directors confirming that they satisfy the criteria of independence as prescribed under the provisions of the Act and the SEBI Regulations.
None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules 2014.
V. Key Managerial Personnel
During the year under review, the Board at its meeting held on October 30, 2017 appointed Ms. Hemangi Ghag as the Company Secretary & Compliance Officer in place of Mr. Surender Sharma, who had resigned from the Company with effect from October16, 2017. There were no other changes in the Key Managerial Personnel of the Company.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company confirm that:
a. in the preparation of the annual financial statement for the financial year ended March 31, 2018, the applicable accounting standards have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2018 and of the profit of your Company for the said period;
c. 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. the annual accounts have been prepared on a âgoing concernâ basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively;
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
PERFORMANCE EVALUATION
In accordance with the relevant provisions of the Act read with the corresponding Rules framed thereunder, the SEBI Regulations and the Guidance Note on Board Evaluation issued by SEBI vide its circular dated January 5, 2017, evaluation of the performance of the individual Directors, Chairman of the Board, the Board as a whole and its individual statutory Committees was carried out for the year under review. The manner in which the evaluation was carried out and the outcome of the evaluation are explained in the Corporate Governance Report.
BUSINESS RESPONSIBILITY REPORT & SUSTAINABILITY REPORT
Pursuant to Regulation 34 of the SEBI Regulations, the Company is obliged to publish Business Responsibility Report along with its Annual Report. The Board has adopted the Sustainability Policy envisaging the broad principles that would drive the sustainability activities of the Company which can be accessed at this link http:// marico.com/make-a-difference/sustainability.
The Board has nominated the Managing Director & CEO of the Company as the Director responsible for ensuring the Business Responsibility activities of the Company. A Sustainability Committee has been constituted by the Board to drive the sustainability activities of the Company and reviews the business responsibility and sustainability performance of the Company on annual basis. The Chief Supply Chain Officer of the Company heads the Sustainability Committee. The composition of the Committee is detailed in the Corporate Governance Report.
Your Company strives to ensure value for all stakeholders whilst growing responsibly and sustainably. Accordingly, your Company has aligned the sustainability efforts towards reducing environmental footprint and increasing positive social impact. Your Company has taken ambitious targets on increasing farmer beneficiaries, reducing energy intensity, reducing GHG emission intensity, achieving water positivity and responsible sourcing. During the year under review, the Company has made available its second Sustainability Report which is a voluntary report and exhibits your Companyâs approach towards sustainability. The said report has been exhibited in line with the Global Reporting Initiative (GRI) Sustainability Reporting Standards (SRS) core guidelines. The report presents the Company sustainability performance across three pillars i.e. economic, environmental and social aspects as per the GRI SRS guidelines. All the relevant aspects related to standard, specific disclosures and sector supplement have been referred to, while defining the report content. The Sustainability Report of the Company can be accessed at this link http://marico.com/make-a-difference/ sustainability.
AUDITORS & AUDITORS REPORT STATUTORY AUDITORS
Pursuant to the provisions of Section 139 of the Act, the Members at the 29th Annual General Meeting (AGM) held on August 1, 2017 had approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants, for a term of five years, to hold office till the conclusion of the 34th Annual General Meeting of the Company, subject to ratification of their appointment by the Members of the Company at every subsequent Annual General Meeting. Accordingly, your Directors seek ratification of the appointment of the Statutory Auditors for the financial year 2018-19. The Statutory Auditors have confirmed their eligibility for acting as the Statutory Auditors of the Company.
The Auditorâs Report for the year ended March 31, 2018 on the financial statements of the Company forms part of Annual Report. There is no qualification, reservation or adverse remark or disclaimer in the said Auditorâs Report. During the year under review, the Auditors have not reported any fraud under Section 143 (12) of the Act and therefore no detail are required to be disclosed under Section 134(3)(ca) of the Act.
COST AUDITORS
In terms of the Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year. The Board at its meeting held on May 2, 2018, based on the recommendation of the Audit Committee, approved the appointment of M/s. Ashwin Solanki & Associates, Cost Accountants, as the Cost Auditors of the Company to conduct audit of the cost records of the Company for the financial year ending March 31, 2019, at a fee of RS.9 lacs plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the Members at the ensuing 30th AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2019 is placed at the 30th AGM. The Company has received a written consent and certificate of eligibility from M/s. Ashwin Solanki & Associates.
During the year under review, the Cost Auditor had not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 2, 2018, based on the recommendation of the Audit Committee, approved the appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor to conduct audit of the secretarial records of the Company for the financial year ending March 31, 2019. The Company has received a consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report for FY 18 is enclosed as âAnnexure Aâ to this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important component of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize the shareholder value.
The key cornerstones of your Companyâs Risk Management Framework are:
- Periodic assessment and prioritization of risks that affect the business of your Company;
- Development and deployment of risk mitigation plans to reduce the vulnerability to the prioritized risks;
- Focus on both the results and efforts required to mitigate the risks;
- Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;
- Embedding of the Risk Management processes in significant decisions such as large capital expenditures, mergers, acquisitions and corporate restructuring;
- Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.
The Risk Management Committee (âRMCâ) constituted by the Board assists the Board in monitoring and reviewing the risk management plan, implementation of the risk management framework of the Company and such other functions as Board may deem fit. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Internal Financial Controls are an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial and financial reporting risks. The Internal Financial Controls have been documented, embedded in the business processes. Your Companyâs approach on Corporate Governance has been detailed out in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to the financial statements. Your Board has also reviewed the internal processes, systems and the internal financial controls and the Directorsâ Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls. Assurances on the effectiveness of Internal Financial Controls is obtained through management reviews, self-assessment, continuous monitoring by functional heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
On a voluntary basis, your Companyâs largest overseas subsidiary, Marico Bangladesh Limited (MBL) has also adopted this framework and progress is reviewed by MBLâs Audit Committee and its Board of Directors, which exhibits Maricoâs commitment to good governance at a group level.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature. In case of transactions which are unforeseen and in respect of which complete details are not available, the Audit Committee grants an omnibus approval to enter into such unforeseen transactions, provided the transaction value does not exceed RS.1 Crore (per transaction in a financial year). The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted on a quarterly basis.
All transactions with related parties entered into during FY18 were at armâs length basis and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder and the SEBI Regulations. There were no transactions which were material (considering the materiality thresholds prescribed under the Act and Regulation 23 of the SEBI Regulations). Accordingly, no disclosure is made in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules framed thereunder.
The Policy on Related Party Transactions is uploaded on the Companyâs website and can be accessed using the link http://marico.com/investorspdf/Policy_on_Related_Party_ Transactions.pdf.
CORPORATE GOVERNANCE COMMITTEE AND COMPANYâS POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
Your Company has in place the Corporate Governance Committee which performs the functions of the Nomination and Remuneration Committee as mandated under the provisions of Section 178 of the Act and SEBI Regulations. The composition of the Committee is detailed in the Corporate Governance Report.
In terms of the applicable provisions of the Act, read with the Rules framed thereunder and the SEBI Regulations, your Board has in place a Policy for appointment, removal and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP) and also on Board Diversity, Succession Planning and Evaluation of Directors (âNR Policyâ). The remuneration paid to Directors, KMP and SMP of the Company are as per the terms laid down in the NR Policy of the Company. The Managing Director & CEO of your Company does not receive remuneration from any of the subsidiaries of your Company.
The salient features of this Policy are outlined in the Corporate Governance Report and can be accessed using this link -http://marico.com/investorspdf/Policy_on_Nomination,_Removal,_Remuneration_and_Board_Diversity.pdf
MARICO EMPLOYEE BENEFIT SCHEME/PLAN
- Marico Employee Stock Option Scheme 2014
The Members of the Company at its Extra Ordinary General Meeting held on March 25, 2014, had approved Marico Employee Stock Option Scheme 2014 (âthe Schemeâ) for the benefit of the Managing Director & Chief Executive Officer (âMD & CEOâ). The objective of this Scheme was to give a wealth building dimension to the remuneration structure of the MD & CEO. Further, it also aimed at promoting desired behavior for meeting organizationâs long term objectives and to enable retention through a customized approach.
During the year under review, the MD & CEO exercised 300,000 stock options vested on him. Pursuant to the exercise of stock options, the Securities Issue Committee of the Board allotted 300,000 equity shares to the MD & CEO on SeptembeRs.28, 2017. The perquisite value in respect of the stock option so exercised has been included as part of the disclosure on remuneration of the MD & CEO in the Corporate Governance Report. The Scheme is now closed as it was adopted for making a one-time grant of options to the MD & CEO which were fully exercised by him during the year.
- Marico MD CEO Employee Stock Option Plan 2014
The Members at the 26th Annual General Meeting of the Company held on July 30, 2014, had approved Marico MD CEO Employee Stock Option Plan 2014 (âMD CEO ESOP Plan 2014â or âthe Planâ) for the benefit of the MD & CEO.
The Corporate Governance Committee entrusted with the responsibility of administering the Plan had granted 46,600 stock options to MD & CEO. The said 46,600 stock options have been increased to 93,200 on account of issue of bonus equity shares by the Company.
During the year under review, the MD & CEO exercised 93,200 stock option available to him under this plan. Pursuant to the exercise of stock options, the Securities Issue Committee of the Board allotted 93,200 equity shares to the MD & CEO on March 20, 2018. The perquisite value in respect of the stock option so exercised has been included as part of the disclosure on remuneration of the MD & CEO in the Corporate Governance Report.
- Marico Employee Stock Option Plan, 2016
The Members at the 28th Annual General Meeting held on August 5, 2016, had approved the Marico Employee Stock Option Plan, 2016 (âMarico ESOP 2016â or âthe Planâ) for issuance of the employee stock options (âOptionsâ) to the eligible employees of the Company including the Managing Director & CEO and the eligible employees of its subsidiaries, whether in India or outside India. Marico ESOP 2016 aims to promote desired behavior among employees for meeting the Companyâs long term objectives and enable retention of employees for desired objectives and duration, through a customized approach.
The Plan envisages to grant options, not exceeding in aggregate, 0.6% of the issued equity share capital of the Company as on August 5, 2016 (âthe Commencement Dateâ) to the eligible employees of the Company and its subsidiaries and not exceeding 0.15 % of the issued equity share capital of the Company as on the commencement date to any individual employee.
The Corporate Governance Committee is entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder. Accordingly, the details of Schemes notified under the Plan and the Options granted thereunder are given in âAnnexure Bâ to this report.
As on March 31, 2018, an aggregate of 24,69,770 Options were outstanding which constitute about 0.19% of the issued equity share capital of the Company.
- Marico Employees Stock Appreciation Rights Plan, 2011
The Company had adopted Marico Stock Appreciation Rights Plan, 2011 (âSTAR Planâ) in the Year 2011, for the welfare of its employees and those of its subsidiaries. Under the Plan, various schemes have been notified from time to time for conferring cash incentive benefit to the eligible employees through grant of stock appreciation rights (STARs). After the notification of SEBI (Share Based Employees Benefits) Regulations, 2014, approval of the Members was sought at the 27th Annual General Meeting of the Company held on August 5, 2015, for continuing implementation of the STAR Plan and schemes thereunder. The Corporate Governance Committee is the Compensation Committee for the purpose of the administration of the Plan. The Committee notifies various Schemes for granting STARs to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfillment of certain conditions and applicability of Income Tax. The STAR Plan involves secondary market acquisition of the Equity Shares of your Company by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to the Trust for making secondary acquisition of Equity Shares, subject to statutory ceilings.
As at March 31, 2018 an aggregate of 17,90,530 STARs were outstanding which constitute about 0.14% of the current paid up equity share capital of the Company.
STATUTORY INFORMATION ON ESOS, STAR AND TRUST
Disclosure on ESOS, STAR and Trust in terms of Section 62(1)(b) of the Act, read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, Regulation 14 of the SEBI (Share Based Employee Benefits) Regulation, 2014 and SEBI Circular dated June 16, 2015 is enclosed as âAnnexure Bâ and forms part of this report. Further, the Company has complied with the applicable accounting standards in this regard.
The Statutory Auditors of the Company i.e. M/s. B S R & Co. LLP, have certified that implementation of all the above employee benefit Schemes/Plans is in accordance with the SEBI (Share Based Employees Benefits) Regulations, 2014, as applicable, and the resolutions passed by the Members at the respective General Meetings approving such employee benefit Schemes/Plans.
DISCLOSURES MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Seven (7) meetings of the Board of Directors were held during the financial year under review. The details of the meetings of the Board and its Committees held during the year under review are stated in the Corporate Governance Report.
AUDIT COMMITTEE
The Audit Committee comprises Independent Directors namely Mr. Nikhil Khattau (Chairman), Mr. B. S. Nagesh, Ms. Hema Ravichandar and Non-Executive (Non-Independent) Director, Mr. Rajen Mariwala. Powers and role of the Audit Committee are included in the Corporate Governance Report. During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employeeâs remuneration as per Section 197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2016 is disclosed in âAnnexure Câ to this report.
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an annexure to the Annual Report. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members excluding the aforesaid annexure. However, this annexure shall be made available on the website of the Company twenty one days prior to the date of the 30th AGM. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office Address.
CORPORATE GOVERNANCE REPORT
Pursuant to Regulation 34 of the SEBI Regulations, a separate report on Corporate Governance along with the certificate from the Statutory Auditors on its compliance is annexed to this report and labelled as âAnnexure Dâ.
VIGIL MECHANISM
Your Company has a robust vigil mechanism in the form of Unified Code of Conduct (âCoCâ) which enables employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Code. The CoC can be accessed on its website using the link http://marico.com/investorspdf/Marico_CoC.PDF .
This mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The guidelines are meant for all members of the Company from the day they join and are designed to ensure that they may raise any specific concern on integrity, value adherence without fear of being punished for raising that concern. The guidelines also cover our associates who partner us in our organizational objectives and customers for whom we exist.
Your Company has a policy for the prevention of sexual harassment which is embedded in the CoC. As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted the Prevention of Sexual Harassment Committee (PoSH Committee). During the FY18, this Committee has not received any complaint on sexual harassment.
To encourage employees to report any concerns and to maintain anonymity, the Company has provided a toll free helpline number and a website, wherein the grievances/ concerns can reach the Company. For administration and governance of the Code, a Committee called Code of Conduct Committee (âCCCâ) is constituted. The CCC has the following sub-Committees namely:
- HR Committee - with an objective to appoint investigation team for investigation of HR related concerns / complaints.
- IT Committee - with an objective of implementing the IT policy and resolution of IT related concerns / complaints under the Code.
- PoSH Committee - with an objective to ensure a harassment free work environment including but not limited to appointment of investigation team for investigation of sexual harassment concerns/complaints.
The Board, the Audit Committee and the Corporate Governance Committee are informed periodically on the matters reported to CCC and the status of resolution of such cases.
The Company affirms that no person has been denied access to the Audit Committee.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is enclosed as âAnnexure Eâ to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The composition of the CSR Committee is disclosed in the Corporate Governance Report.
A brief outline of the CSR Policy of the Company, the CSR initiatives undertaken during the financial Year 2017-18 together with progress thereon and the report on CSR activities as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in âAnnexure Fâ to this Report.
SECRETARIAL STANDARDS
The Company has complied with all the applicable provisions of Secretarial Standards issued by Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs of India.
DEPOSITS
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014, at the end of the financial Year 2017-18 or the previous financial year. Your Company did not accept any deposits during FY18.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 in accordance with Section 92(3) of the Act, read with the Companies (Management and Administration) Rules, 2014, are enclosed as âAnnexure Gâ to this report.
ACKNOWLEDGEMENT
Your Board takes this opportunity to thank Companyâs members for their dedicated service and firm commitment to the goals & vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, distributors, third party manufacturers, bankers and all other business associates and from the neighborhood communities of the various Marico locations. We look forward to continued support of all these partners in progress.
On behalf of the Board of Directors
Harsh Mariwala
Place : Mumbai Chairman
Date : June 28, 2018 DIN: 00210342
Mar 31, 2017
To the Members,
The Board of Directors (âBoardâ) is pleased to present the Twenty Ninth Annual Report of Marico Limited (âMaricoâ or âthe Companyâ or âyour Companyâ), for the financial year ended March 31, 2017 (âthe year under reviewâ or âthe yearâ or âFY17â).
In line with the requirements of the Companies Act, 2013, including any statutory modification(s) or re-enactment(s) thereof for time being in force (âthe Actâ) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (ââthe SEBI Regulationsâ), this report covers the financial results and other developments during the financial year April 1, 2016 to March 31, 2017 in respect of Marico and Marico Consolidated comprising Marico, its subsidiaries and associate companies. The consolidated entity has been referred to as âMarico Groupâ or âYour Groupâ or âthe Groupâ in this report.
FINANCIAL RESULTS - AN OVERVIEW
(Rs. in Crore)
Particulars |
Year ended March 31, 2017 |
Year ended March 31, 2016 |
Consolidated Summary Financials for the Group |
||
Revenue from Operations |
5,935.92 |
6,024.45 |
Profit before Tax |
1,148.70 |
1,028.70 |
Profit after Tax |
810.97 |
723.33 |
Marico Limited - Revenue from Operations |
4,868.88 |
4,867.99 |
Profit before Tax |
1,141.72 |
935.74 |
Less: Provision for Tax for the current year |
299.02 |
244.48 |
Profit after Tax for the current year |
842.70 |
691.26 |
Other Comprehensive Income for the current year |
(1.18) |
(1.87) |
Add: Surplus brought forward |
1,933.31 |
1,744.78 |
Profit available for appropriation |
2,774.83 |
2,434.16 |
Appropriations: Distribution to shareholders |
451.59 |
435.43 |
Tax on dividend |
57.03 |
65.43 |
508.62 |
500.86 |
|
Surplus carried forward |
2,266.21 |
1,933.31 |
REVIEW OF OPERATIONS
During 2017, Marico achieved revenue from operations of INR 5,986 Crore, a decline of 1% over FY16. Volume growth for the year was at 4%. The value growth was lower owing to price reductions in the Coconut Oil portfolio in India and Bangladesh and currency devaluation in the Egypt region in H2FY17. The operating margin was at 19.5%. The business reported bottom line of INR 799 Crores, a satisfactory growth of 12% over last year.
Marico India, the domestic business, achieved a turnover of R4,579 Crores in FY17, a decline of 2% over last year. Volume growth for the year was at 4%. The value growth was lower owing to price reductions in the Coconut Oil portfolio. This year witnessed the demonetization impact in Q3FY17 which acted as a dampener on the overall annual volume growths. The operating margin for the India business was healthy at 24.3% before corporate allocations. Higher operating margins can be attributed mainly to gross margin expansion led by softer input costs.
During the year, Marico International, the International FMCG business, posted a turnover of R1,356 Crores, a growth of 1% over FY16 in constant currency terms. The operating margin for the year was at 16.5% (before corporate allocations) reflecting a sustained structural shift over the last few years.
Over the last 5 years, at a consolidated level, the top line has grown by 10% and bottom line by 18% at a Compounded Annual Growth Rate.
There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the FY17 and the date of this report.
SUBSIDIARIES AND ASSOCIATE COMPANIES
A list of bodies corporate which are subsidiaries/associate of your Company is provided as part of the notes to Consolidated Financial Statement. During the period under review, in Vietnam, Thuan Phat Foodstuff Joint Stock Company merged with its Holding Company, Marico South East Asia Corporation (Formerly: International Consumer Products Corporation) with effect from December 1, 2016. Your Company acquired 35.44% equity stake in Zed Lifestyle Private Limited (âZedâ) on March 17, 2017. Consequently, Zed became an associate company of Marico.
A separate statement containing the salient features of the financial statement of all subsidiaries and associate companies of your Company (i.e. Form AOC - 1) forms part of the consolidated financial statement in compliance with Section 129 and other applicable provisions of the Act.
The financial statement of the subsidiary companies and related information are uploaded on the website of your Company and can be accessed using the link http://marico.com/india/investors/ documentation and the same are available for inspection by the Members at the Registered Office of your Company during business hours on all working days except Saturdays and Sundays up to the date of the 29th Annual General Meeting (â29th AGMâ), as required under Section 136 of the Act. Any Member desirous of obtaining a copy of the said financial statement may write to the Company Secretary at the Registered Office Address.
Your Company has approved a policy for determining material subsidiaries and the same is uploaded on the Companyâs website which can be accessed using the link http://marico.com/ investorspdf/Policy_for_determining_Material_Subsidiaries.pdf. As per this Policy, your Company does not have any material subsidiary.
INDIAN ACCOUNTING STANDARDS
The Ministry of Corporate Affairs (âMCAâ), vide its notification dated February 16, 2015 issued Indian Accounting Standards (âIND ASâ) applicable to certain classes of companies. In exercise of the powers conferred by Section 133 read with section 469 of the Act and Section 210A(1) of the Companies Act, 1956, the Central Government, in consultation with the National Advisory Committee on Accounting Standards, has replaced the existing Indian GAAP with IND AS. For Marico, IND AS is applicable for the accounting periods beginning April 1, 2016, with the transition date of April 1, 2015.
The following are the key areas which had an impact on account of IND AS transition:
- Revenue reclassification
- Share based payments
- Fair valuation of certain financial instruments
- Defined employee benefit obligations
- Intangible assets
The detailed reconciliation of the transition from IGAAP to IND AS has been provided in Note 35 in the notes to accounts of Standalone Financial Statement and Note 39 in the notes to accounts of Consolidated Financial Statement.
RESERVES
There is no amount proposed to be transferred to the Reserves.
DIVIDEND
Your Companyâs wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/ disbursement of profits to its shareholders. During the year under review, your Board adopted a Dividend Distribution Policy (âDD Policyâ) pursuant to Regulation 43A of the SEBI Regulations.
The DD Policy is available on the website of the Company at http://marico.com/india/investors/documentation/corporate-governance.
Based on the principles enunciated in the DD Policy, your Companyâs distribution to equity shareholders during FY17 comprised the following;
- First Interim Dividend of 150% on the equity base of Rs.129.02 Crores; and
- Second Interim Dividend of 200% on the equity base of 129.04 Crores.
The total equity dividend for FY17 (including dividend distribution tax) aggregated to Rs. 508.64 Crores. Thus, dividend pay-out ratio is 64% of the consolidated profit after tax as compared to 69% (including one-time special third interim dividend of 100%) during FY16.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the loans, guarantees and investments covered under the Section 186 of the Act, are given in the notes to the standalone financial statement of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis forms an integral part of this Report and, inter-alia, gives an update on Macro Economic Indicators & FMCG Industry, opportunities and threats, risks and concerns, internal control systems and their adequacy, discussion on financial and operational performance, segment-wise performance, human capital initiatives outlook, etc.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
I Resignation of Mr. Atul Choksey
Mr. Atul Choksey (DIN: 00002102), Independent Director of the Company stepped down from the Board of Directors with effect from April 1, 2017 on account of paucity of time. The Board of Directors of Marico placed on record, its appreciation for the invaluable contribution that Mr. Choksey has made during his long tenure with the Company as an Independent Director.
II Appointment of Mr. Rishabh Mariwala and Mr. Ananth Narayanan
The Board at its meeting held on May 2, 2017 appointed Mr. Rishabh Mariwala (DIN: 03072284) as an Additional (Non-Executive) Director of your Company with effect from May 2, 2017. Further, the Board vide a resolution passed by circulation on June 26, 2017 appointed Mr. Ananth Narayanan (DIN: 07527676) as an Additional (Independent) Director of the Company with effect from the said date i.e. June 26, 2017.
Mr. Rishabh Mariwala and Mr. Ananth Narayanan shall hold office as an Additional (Non-Executive) Director and Additional (Independent) Director, respectively, upto the date of the 29th AGM of the Company. Notices in writing, signifying their candidature for appointment as Non-Executive Director and Independent Director, respectively, under Section 160 of the Act has been received from the shareholders of the Company. Accordingly, the matter relating to their appointment is being placed for the approval of the shareholders at the 29th AGM.
III Directors retiring by rotation
In accordance with the provisions of Section 152 of the Act read with Rules made thereunder and the Articles of Association of the Company, Mr. Harsh Mariwala (DIN: 00210342) is liable to retire by rotation at the 29th AGM and being eligible, has offered himself for re-appointment. Accordingly, the matter relating to re-appointment of Mr. Harsh Mariwala is being placed for the approval of the shareholders at the 29th AGM.
The Company has received declarations from all the Independent Directors confirming that they satisfy the criteria of independence as prescribed under the provisions of the Act and the SEBI Regulations.
Brief profiles of Mr. Rishabh Mariwala, Mr. Ananth Narayanan and Mr. Harsh Mariwala and other related information is appended in the Corporate Governance Report. The revised composition of the Board of the Company is also stated in the said Report.
IV Key Managerial Personnel
During the year under review, the Board of Directors at its meeting held on April 29, 2016 appointed Mr. Surender Sharma as the Company Secretary & Compliance Officer in place of Ms. Hemangi Ghag, who had tendered her resignation with effect from April 29, 2016. Ms. Ghag continues as an employee with the Company in a different role. There were no other changes in the Key Managerial Personnel of the Company.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company confirm that:
a. in the preparation of the annual financial statement for the financial year ended March 31, 2017, the applicable accounting standards have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2017 and of the profit of your Company for the said period;
c. 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. the annual accounts have been prepared on a âgoing concernâ basis;
e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively;
f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.
PERFORMANCE EVALUATION
In accordance with relevant provisions of the Act read with Rules made thereunder, Regulation 17(10) of the SEBI Regulations and the Guidance Note on Board Evaluation issued by SEBI vide its circular dated January 5, 2017, the evaluation of the performance of the individual Directors, Chairman of the Board, the Board as a whole and its individual statutory Committees was carried out for the year under review. The manner in which the evaluation was carried out is explained in the Corporate Governance Report.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Five meetings of the Board of Directors were held during the year. The details of the meetings of the Board and its Committees held during the year under review are stated in the Corporate Governance Report.
CORPORATE GOVERNANCE REPORT
Pursuant to Regulation 34 of the SEBI Regulations, a separate report on Corporate Governance along with the certificate from the Statutory Auditor on its compliance, forms an integral part of this report.
BUSINESS RESPONSIBILITY REPORT & SUSTAINABILITY REPORT
Pursuant to Regulation 34 of the SEBI Regulations, the Company had published its maiden Business Responsibility Report in the Annual Report for the previous financial year. During the year under review, the Board adopted the Sustainability Policy through a resolution passed by circulation on June 20, 2016. The Sustainability Policy envisages the broad principles which would drive the sustainability activities of the Company. The said Sustainability Policy can be accessed at this link http://marico. com/make-a-difference/sustainability
Further, the Board of Directors of your Company constituted the Sustainability Committee to drive the sustainability activities of the Company and review the business responsibility and sustainability performance of the Company on annual basis. The Chief Supply Chain Officer of the Company heads the Sustainability Committee and it comprises three more Senior Managerial Personnel of the Company. The composition of the Committee is detailed in the Corporate Governance Report. The Managing Director & CEO of the Company is the Director responsible for ensuring the Business Responsibility activities of the Company.
During the year under review, the Company has also made available its maiden Sustainability Report which is a voluntary report and exhibits your Companyâs approach towards sustainability. The Sustainability Report has been exhibited in line with the Global Reporting Initiative (GRI) G4 core guidelines. The said Report presents the sustainability performance of the Company across three pillars of sustainability i.e. economic, environmental and social aspects as per the GRI G4 guidelines. All the relevant aspects related to standard, specific disclosures and sector supplement have been referred to, while defining the report content. The Sustainability Report of the Company can be accessed at this link http://marico.com/make-a-difference/sustainability
AUDITOR & AUDITORâS REPORT
Statutory Auditor
The Members at the 26th Annual General Meeting had appointed M/s Price Waterhouse, Chartered Accountants as the Statutory Auditor of the Company to hold office until the conclusion of the 29th AGM. Pursuant to Section 139 of the Act and Rules made thereunder, M/s Price Waterhouse retire as the Statutory Auditor at the 29th AGM and are not eligible for re-appointment in view of completion of their tenure.
Accordingly, the Board at its meeting held on May 2, 2017 based on the recommendation of the Audit Committee, approved the appointment of B S R & Co. LLP, Chartered Accountants as the Statutory Auditor of the Company in place of the retiring Auditor for a term of five years to hold office from the conclusion of the 29th AGM till the conclusion of the 34th Annual General Meeting of the Company, subject to ratification of their appointment by the shareholders of the Company at every Annual General Meeting held thereafter.
The Company has received written consent and certificate of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules made thereunder from B S R & Co. LLP. Further, the Company has also received a written confirmation stating that B S R & Co. LLP holds a valid Peer Review Certificate issued by the Institute of Chartered Accountants of India.
The Auditorâs Report for the year ended March 31, 2017 on the financial statement of the Company forms part of Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in the said Auditorâs Report. During the year under review, the Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
M/s. Price Waterhouse over many years successfully met the challenge that the size and scale of the Companyâs operations pose for the Auditor and have maintained the highest level of governance, ethical standards, rigour and quality in their audit The Board places its sincere appreciation for services rendered by M/s. Price Waterhouse as Statutory Auditor of the Company.
COST AUDITOR
As per Section 148 of the Act read with the Companies (Cost Records and Audits) Rules, 2014, the Board of Directors at its meeting held on May 2, 2017, based on the recommendation of the Audit Committee, approved the appointment of M/s. Ashwin Solanki & Associates, Cost Accountants as the Cost Auditor to conduct audit of the cost records of the Company for the financial year ending March 31, 2018. The Company has received written consent and certificate of eligibility in accordance with Section 148 read with Section 141 and other applicable provisions of the Act and Rules made thereunder from M/s. Ashwin Solanki & Associates.
The remuneration payable to the Cost Auditor has been approved by the Board at its aforesaid meeting, based on the recommendation of the Audit Committee. In terms of the provisions of Section 148(3) of the Act read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditor for the financial year ending March 31, 2018 is being placed at the 29th AGM.
During the year under review, the Cost Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act
SECRETARIAL AUDIT
Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 2, 2017, based on the recommendation of the Audit Committee, approved appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor to conduct audit of the secretarial records of the Company for the financial year ending March 31, 2018. The Company has received consent from Dr. K. R. Chandratre to act as such.
The Secretarial Audit Report for the FY17 is enclosed as âAnnexure Aâ to this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important component of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize the shareholder value.
The key cornerstones of your Companyâs Risk Management Framework are:
- Periodic assessment and prioritization of risks that affect the business of your Company;
- Development and deployment of risk mitigation plans to reduce the vulnerability to the prioritized risks;
- Focus on both the results and efforts required to mitigate the risks;
- Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;
- Embedding of the Risk Management processes in significant decisions such as large capital expenditures, mergers, acquisitions and corporate restructuring;
- Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.
The Constitution of the Risk Management Committee (âRMCâ) is stated in the Corporate Governance Report. The RMC assists the Board in monitoring and reviewing the risk management plan, implementation of the risk management framework of the Company and such other functions as Board may deem fit. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Your Companyâs approach on Corporate Governance has been detailed out in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to the financial statements. Your Board has also reviewed the internal processes, systems and the internal financial controls and the Directorsâ Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The composition of the CSR Committee is disclosed in the Corporate Governance Report.
A brief outline of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2016-17 together with progress thereon and the report on CSR activities as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in âAnnexure Bâ to this Report.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval of the Audit Committee is obtained for the related party transactions which are repetitive in nature. In case of transactions which are unforeseen and in respect of which complete details are not available, the Audit Committee grants an omnibus approval to enter into such unforeseen transactions, provided the transaction value does not exceed R1 Crore (per transaction in a financial year). The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted on a quarterly basis.
All transactions with related parties entered into during FY17 were at armâs length basis and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder. There were no transactions which were material (considering the materiality thresholds prescribed under the Act and Regulation 23 of the SEBI Regulations). Accordingly, no disclosure is made in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules made thereunder.
The Policy on Related Party Transactions is uploaded on the Companyâs website and can be accessed using the link http://marico.com/investorspdf/Policy on Related Party Transactions.pdf.
COMPANYâS POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION
In terms of the applicable provisions of the Act, read with the Rules made thereunder and the SEBI Regulations, your Board has formulated a Policy on appointment, removal and remuneration of Directors, Key Managerial Personnel and Senior Management Personnel and also on Board Diversity, Succession Planning and Evaluation of Directors (âNR Policyâ). The remuneration paid to Directors of the Company is as per the terms laid down in the NR Policy of the Company. The Managing Director & CEO of your Company does not receive remuneration from any of the subsidiaries of your Company.
The salient aspects of the said Policy are outlined in the Corporate Governance Report and can be accessed using this link http://marico.com/investorspdf/Policy on Nomination, Removal, Remuneration and Board Diversity.pdf
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The ratio of remuneration of each Director to the median employeeâs remuneration as per section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2016 is disclosed in â âAnnexure Câ to this report.
The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an annexure to the Annual Report. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members excluding the aforesaid annexure. However, this annexure shall be made available on the website of the Company twenty one days prior to the date of the 29th AGM. The information is also available for inspection by the Members at the Registered Office of the Company during business hours on all working days except Saturdays and Sundays up to the date of the 29th AGM. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office Address.
MARICO EMPLOYEE BENEFIT SCHEME/PLAN
- Marico Employee Stock Option Scheme 2014
The Members of the Company at its Extra Ordinary General Meeting held on March 25, 2014, had approved the Marico Employee Stock Option Scheme 2014 (âthe Schemeâ) for the benefit of the Managing Director & Chief Executive Officer of the Company (âMD & CEOâ). The objective of this Scheme was to give a wealth building dimension to the remuneration structure of the MD & CEO. Further, it also aimed at promoting desired behavior for meeting organizationâs long term objectives and to enable retention through a customized approach.
The Corporate Governance Committee, responsible for administering the Scheme, had granted 3 lac stock options to the MD & CEO. As at March 31, 2016, the said 3 lac stock options have increased to 6 lacs on account of issue of bonus equity shares by the Company in the ratio of 1:1. These stock options are now vested in the MD & CEO and constitute 0.02% of the paid up equity share capital of the Company as on the date of this report.
During the year under review, out of the stock options vested as above, the MD & CEO had exercised, in aggregate 3 lacs stock options on November 15, 2016, December 26, 2016 and March 24, 2017, respectively. Pursuant to the exercise of stock options, the Securities Issue Committee of the Board had approved, in aggregate, allotment of 3 lac equity shares, vide resolutions passed by circulation on November 21, 2016, December 29, 2016 and March 29, 2017 respectively. The perquisite value in respect of the stock options exercised has been included as part of the disclosure on remuneration of the MD & CEO in the Corporate Governance Report.
- Marico MD CEO Employee Stock Option Plan 2014
The Members at the 26th Annual General Meeting of the Company held on July 30, 2014, had approved the Marico MD CEO Employee Stock Option Plan 2014 (âMD CEO ESOP Plan 2014â or âthe Planâ) for the benefit of Managing Director & Chief Executive Officer (âMD & CEOâ) of the Company.
The Corporate Governance Committee entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder had granted 46,600 stock options to MD & CEO. As at March 31, 2016, the said 46,600 stock options have increased to 93,200 on account of issue of bonus equity shares by the Company in the ratio of 1:1. These stock options are now vested in the MD & CEO and constitute 0.007% of the paid up equity share capital of the Company as on the date of this report. So far, MD & CEO has not exercised any stock options under this Plan.
In view of the implementation of Marico Employee Stock Option Plan, 2016, as explained below, no further grant of stock options is envisaged under this Plan.
- Marico Employee Stock Option Plan 2016
The Members at the 28th Annual General Meeting held on August 5, 2016, had approved the Marico Employee Stock Option Plan, 2016 (âMarico ESOP 2016â or âthe Planâ) for issuance of the employee stock options (âOptionsâ) to the eligible employees of the Company including the Managing Director & CEO and the eligible employees of its subsidiaries, whether in India or outside India. Marico ESOP 2016 aims to promote desired behavior among employees for meeting the Companyâs long term objectives and enable retention of employees for desired objectives and duration, through a customized approach.
The Plan envisages to grant Options, not exceeding in aggregate, 0.6% of the issued equity share capital of the Company as on August 5, 2016 (âthe Commencement Dateâ) to the eligible employees of the Company and its subsidiaries and to grant Options to any single employee not exceeding 0.15% of the issued equity share capital of the Company as on the commencement date.
The Corporate Governance Committee is entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder. Accordingly, the details of Schemes notified under the Plan and the Options granted thereunder are given in âAnnexure Dâ to this report.
- Marico Employees Stock Appreciation Rights Plan, 2011
The Members at the 27th Annual General Meeting of the Company held on August 5, 2015, had approved the Marico Stock Appreciation Rights Plan, 2011 (âSTAR Planâ), for the welfare of its employees and those of its subsidiaries. Under the STAR Plan, the Corporate Governance Committee notifies various Schemes for granting Stock Appreciation Rights (STARs) to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfillment of certain conditions and applicability of income tax. The STAR Plan involves secondary market acquisition of the equity shares of your Company by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to the Trust for making secondary acquisition of equity shares, subject to statutory ceilings.
As at March 31, 2017 an aggregate of 34,35,730 STARs were outstanding which constitute about 0.27% of the paid up equity share capital of the Company.
STATUTORY INFORMATION ON ESOS, STAR AND TRUST
Disclosure on ESOS, STAR and Trust in terms of Section 62(1)(b) of the Act, read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI Circular dated June 16, 2015 is enclosed as âAnnexure Dâ and forms part of this report. Further, the Company has complied with the applicable accounting standards in this regard.
The statutory auditor of the Company i.e. M/s. Price Waterhouse, have certified that implementation of all the above employee benefit Schemes/Plans is in accordance with the SEBI (Share Based Employees Benefits) Regulations, 2014, as applicable, and the resolutions passed by the Members at the respective General Meetings approving such employee benefit Schemes/Plans.
AUDIT COMMITTEE
The Audit Committee comprises Independent Directors namely Mr. Nikhil Khattau (Chairman), Mr. B. S. Nagesh, Ms. Hema Ravichandar and Non-Executive Director, Mr. Rajen Mariwala. Powers and role of the Audit Committee are included in the Corporate Governance Report. During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.
VIGIL MECHANISM
Your Company has a robust vigil mechanism in the form of Unified Code of Conduct which enables employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Code. The Companyâs Unified Code of Conduct can be accessed on its website using the link http://marico.com/ investorspdf/CoC book 09-04-14.pdf.
This mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The guidelines are meant for all members of the Company from the day they join and are designed to ensure that they may raise any specific concern on integrity, value adherence without fear of being punished for raising that concern. The guidelines also cover our associates who partner us in our organizational objectives and customers for whom we exist.
To encourage employees to report any concerns and to maintain anonymity, the Company has provided a toll free helpline number and a website, wherein the grievances/ concerns can reach the Company. For administration and governance of the Code, a Committee called âthe Code of Conduct Committeeâ (âCCCâ) is constituted. The CCC has the following sub-committees namely:
- HR Committee - with an objective to appoint investigation team for investigation of HR related concerns / complaints.
- IT Committee - with an objective of implementing the IT policy and resolution of IT related concerns / complaints under the Code.
- Whistle Blower Committee - with an objective to appoint an investigation team for investigation for whistle blower complaints.
- Prevention of Sexual Harassment Committee (PoSH Committee) - with an objective to ensure a harassment free work environment including but not limited to appointment of investigation team for investigation of sexual harassment concerns/complaints.
The Board, the Audit Committee and the Corporate Governance Committee are informed periodically on the matters reported to CCC and the status of resolution of such cases.
The Company affirms that no personnel has been denied access to the Audit Committee.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has a policy for the prevention of sexual harassment which is embedded in the CCC. As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted PoSH Committee During FY17, this Committee received 1 complaint on sexual harassment and the same was disposed of in accordance with applicable laws and the policy of your Company.
DEPOSITS
There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014, at the end of the financial year 2016-17 or the previous financial year. Your Company did not accept any deposit during FY17.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is enclosed as âAnnexure Eâ to this report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 in accordance with Section 92(3) of the Act, read with the Companies (Management and Administration) Rules, 2014, are enclosed as âAnnexure Fâ to this report.
ACKNOWLEDGEMENT
Your Board takes this opportunity to thank Companyâs members for their dedicated service and firm commitment to the goals & vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, distributors, vendors, bankers and all other business associates and from the neighborhood communities of the various Marico locations. We look forward to continued support of all these partners in progress.
On behalf of the Board of Directors
Harsh Mariwala
Place : Mumbai Chairman
Date : June 29, 2017 (DIN: 00210342)
Mar 31, 2016
The Board of Directors (''Board'') is pleased to present the Twenty
Eighth Annual Report of your Company, Marico Limited, for the year
ended March 31, 2016 (''the year under review'', ''the year''or ''FY16'').
In line with the requirements of the Companies Act, 2013 (''the Act'')
and the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (''the SEBI Regulations''),
this report covers the financial results and other developments during
the financial year April 1, 2015 to March 31, 2016 in respect of Marico
Limited (''Marico'' or ''the Company''or ''your Company'') and Marico
Consolidated comprising Marico, its subsidiaries and associate in India
and overseas. The consolidated entity has been referred to as ''Marico
Group''or ''Your Group''in this report.
FINANCIAL RESULTS - AN OVERVIEW
(Rs. in Crore)
Year ended Year ended
Particulars March 31, March 31,
2016 2015
Consolidated Summary Financials
for the Group
Revenue from Operations 6,132.04 5,732.98
Profit before Tax 1,033.75 821.65
Profit after Tax 724.78 573.45
Marico Limited - financial 4,947.37 4,681.20
Revenue from Operations
Profit before Tax 944.10 731.04
Less: Provision for Tax for the 242.24 185.87
current year
Profit after Tax for the current year 701.86 545.17
Add: Surplus brought forward 1,753.12 1,393.63
Profit available for Appropriation 2,454.98 1,938.80
Appropriations:Distribution to 435.43 161.24
shareholders
Tax on dividend 65.43 13.27
500.86 174.51
Transfer to Debenture - 11.17
Redemption Reserve
Surplus carried forward 1,954.12 1,753.12
Total 2,454.98 1,938.80
RESERVES
There is no amount proposed to be transferred to the Reserves.
BONUS ISSUE AND RECLASSIFICATION OF AUTHORIZED SHARE CAPITAL OF THE
COMPANY
In order to increase the overall liquidity to enable broad- based
investor participation, the Company, during the year under review
issued bonus equity shares in the ratio of 1:1 to the shareholders
which were allotted in December, 2015.
To facilitate the aforesaid bonus issue, your Company re-classified its
Authorized Share Capital to Rs. 215 Crores divided into Rs.150 Crores
Equity Shares of Re. 1 each and Rs.6.5 Crores Preference Shares of Rs. 10
each, which led to consequential alteration of Clause V of the
Memorandum of Association of your Company.
DIVIDEND
Your Company''s wealth distribution philosophy has aimed at sharing its
prosperity with its shareholders, through a forma
earmarking/disbursement of profits to the shareholders.
Your Company''s distribution to equity shareholders during FY16
comprised the following:
First Interim Dividend of 175% on the equity base of Rs. 64.51 Crores.
Second Interim Dividend of 150% on the post bonus equity base of Rs.
129.02 Crores.
One time Special Third Interim Dividend of 100% on the post bonus
equity base of Rs. 129.02 Crores.
The total equity dividend for FY16 (including dividend distribution
tax) aggregated to Rs. 500.86 Crores. The overal dividend payout ratio
hence is 69% of the consolidated profit after tax as compared to 30%
during FY15.
REVIEW OF OPERATIONS
During FY16 Marico posted revenue from operations of Rs. 6,132 Crores,
a growth of 7% over the previous year. The business delivered a volume
growth of 7% with an operating margin of 17.3%. The business reported
bottom line of Rs. 725 Crores, growth of 26% over last year.
Marico India, the domestic FMCG business, achieved a turnover of Rs.
4,755 Crores in FY16, a growth of 7% over last year. Volume growth for
the year was also at 7%. The overal sales growth was backed by
continued growth momentum in categories of Parachute Coconut Oil,
Edible Oils and Value Added Hair Oils (VAHO). The operating margin for
the India business was healthy at 21.6% before corporate allocations.
Higher operating margins can be attributed mainly to gross margin
expansion led by softer input costs.
During the year, Marico International, the International FMCG business,
posted a turnover of Rs. 1,376 Crores, a growth of 7% over FY15 in
constant currency terms. The operating margin for the year was at 17.7%
(before corporate allocations) reflecting a sustained structural shift
over the last few years.
Your Company has demonstrated steady growth on both, the top line and
the bottom line. Over the last 5 years, the top line has grown by 16%
and bottom line by 19% at a Compounded Annual Growth Rate.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed Management Discussion and Analysis, which inter- alia,
covers the following, forms part of the Annual Report.
- Update on Macro Economic Indicators & FMCG Industry
- Opportunities and Threats
- Risks and Concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
- Outlook
- Material development in Human Resource /Industrial Relations including
number of people employed
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The composition of the CSR Committee is disclosed in the Corporate
Governance Report.
A brief outline of the CSR Policy of the Company, the CSR initiatives
undertaken during the financial year 2015-16 together with progress
thereon and the report on CSR activities as required by the Companies
(Corporate Social Responsibility Policy) Rules, 2014, are set out in
Annexure A to this Report.
SUBSIDIARIES AND ASSOCIATE
A list of companies which are subsidiaries/associate to your Company is
provided as part of the notes to Consolidated Financial Statements.
During the period under review, there were no companies which have
become subsidiaries of your Company. Beauté Cosmétique Societé Par
Actions, a company in Vietnam, ceased to be a subsidiary of your
Company w.e.f May 14, 2015 consequent to divestment. During the year
under review, Bellezimo Professionale Products Private Limited became
an associate of your Company w.e.f October 21, 2015 as per Section 2(6)
of the Companies Act, 2013, consequent to acquisition of 45% equity
stake by your Company.
A separate statement containing salient features of the financial
statements of all subsidiaries of your Company forms part of the
Consolidated Financial Statement in compliance with Section 129 and
other applicable provisions of the Act. The statement reflects the
performance and financial position of each of the subsidiaries.
The financial statements of the subsidiary companies and related
information shall be uploaded on the website of your Company which can
be accessed using the link http://
marico.com/india/investors/documentation and the same are available for
inspection by the Members at the Registered Office of your Company
during business hours on all working days except Saturdays and Sundays
up to the date of the Annual General Meeting, as required under Section
136 of the Act. Any Member desirous of obtaining a copy of the said
financial statements may write to the Company Secretary at the
Registered Office Address.
Your Company has approved a policy for determining material subsidiaries
and the same is uploaded on the Company''s website which can be accessed
using the link http://marico. com/investorspdf/Policy for determining
Material Subsidiaries.pdf
RELATED PARTY TRANSACTIONS
All transactions with related parties entered into during the financial
year 2015-16 were at arm''s length basis and in the ordinary course of
business and in accordance with the provisions of the Act and the Rules
made thereunder. There were no transactions which were material
(considering the materiality thresholds prescribed under the Act or
clause 49 of the erstwhile Listing Agreement/Regulation 23 of the SEBI
Regulations). Accordingly, no disclosure is made in respect of the
Related Party Transactions in the prescribed Form AOC-2 in terms of
Section 134 of the Act and Rules made thereunder.
All transactions with related parties are placed before the Audit
Committee for approval. An omnibus approval of the Audit Committee is
obtained for the related party transactions which are repetitive in
nature. In case of transactions which are unforeseen and in respect of
which complete details are not available, the Audit Committee grants an
omnibus approval to enter into such unforeseen transactions provided
the transaction value does not exceed Rs. 1 Crore (per transaction in a
financial year). The Audit Committee reviews all transactions entered
into pursuant to the omnibus approvals so granted on a quarterly basis.
During the year under review, in accordance with the amendment brought
to the Companies (Meetings of Board and its Powers) Rules, 2014, on
December 14, 2015, the Audit Committee, as authorized by the Board, has
framed Criteria for granting an omnibus approval to the related party
transactions to be entered into by the Company.
During the year under review, your Board updated the policy on Related
Party Transactions as required under the SEBI Regulations. The policy
is uploaded on the Company''s website and can be accessed using the link
http://marico.com/ investorspdf/Policy on Related Party
Transactions.pdf.
DEPOSITS
There were no outstanding deposits within the meaning of Sections 73
and 74 of the Act, read together with the Companies (Acceptance of
Deposits) Rules, 2014, at the end of the financial year 2015-16 or the
previous financial year. Your Company did not accept any deposit
during the financial year 2015-16.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Act, are given in the notes to the
Standalone Financial Statements of the Company.
DIRECTORS''RESPONSIBILITY STATEMENT
To the best of their knowledge and information and based on the
information and explanations provided to them by the Company, your
Directors make the following statement in terms of Section 134(3)(c) of
the Act:
- that in the preparation of the annual financial statements for the
year ended March 31, 2016, the applicable accounting standards have
been followed and there are no material departures from the same;
- that the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of your Company as at March 31, 2016 and of the profit and loss of your
Company for the said period;
- 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;
- that the annual accounts have been prepared on a ''going
concern''basis;
- that proper internal financial controls to be followed by the Company
were laid down and such internal financial controls are adequate and
were operating effectively;
- that proper systems to ensure compliance with the provisions of all
applicable laws were devised and that such systems were adequate and
operating effectively.
DIRECTORS
There is no change in the composition of the Board.
During the year under review, declarations were received from all
Independent Directors of the Company that they satisfy the ''criteria of
Independence''as defined under Regulation 16(1)(b) of the SEBI
Regulations and Section 149(6) of the Act, read with Schedule IV and
the relevant Rules made thereunder.
DIRECTORS RETIRING BY ROTATION
In accordance with the provisions of the Companies Act, 2013 and in
terms of the Memorandum and Articles of Association of the Company, Mr.
Rajen Mariwala (DIN: 00007246) is liable to retire by rotation at the
28th Annual General Meeting (AGM) and being eligible, has offered
himself for re-appointment. His re-appointment is being placed for your
approval at the AGM. Your Directors recommend his re-appointment as the
Non-Executive Director of your Company.
KEY MANAGERIAL PERSONNEL
During the year under review, there is no change in the Key Managerial
Personnel of the Company. Subsequent to the close of the year, Mr.
Surender Sharma, Head Legal - International Business has been appointed
as the Company Secretary & Compliance Officer w.e.f. April 29, 2016 in
place of Ms. Hemangi Ghag, who resigned from the post of Company
Secretary & Compliance Officer on April 28, 2016. Ms. Ghag continues as
an employee of your Company.
The Key Managerial Personnel of the Company as on date are:
1. Mr. Saugata Gupta is the Managing Director (MD) & Chief Executive
Officer (CEO).
2. Mr. Vivek Karve is the Chief Financial Officer (CFO).
3. Mr. Surender Sharma is the Company Secretary (CS).
MEETINGS
The details of the meetings of the Board of Directors and its
Committees held during the year under review are stated in the
Corporate Governance Report.
The details of attendance of the Directors in the Board Meetings and
its Committees during the year under review are stated in the Corporate
Governance Report.
AUDIT COMMITTEE
The composition of the Audit Committee of the Board of Directors along
with the composition of other Committees is stated in the Corporate
Governance Report.
COMPANY''S POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY,
EVALUATION AND SUCCESSION
In terms of the applicable provisions of the Act, read with the Rules
made thereunder and the SEBI Regulations, your Board has formulated a
Policy on appointment, removal and remuneration of Directors, Key
Managerial Personnel and Senior Management Personnel and also on Board
Diversity, Succession Planning and Evaluation of Directors. Salient
features of the said Policy are stated in the Corporate Government
Report.
BOARD EVALUATION
Your Board is committed to assessing its own performance as also
performance of individual director in order to identify its strengths
and areas in which it may improve its functioning. Towards this end,
the Corporate Governance Committee of the Board (''CGC) (which functions
as the Nomination and Remuneration Committee of the Company for the
purpose of the Companies Act, 2013), established the criteria and
processes for evaluation of performance of individual Directors,
Chairman of the Board, the Board as a whole and its individual
statutory Committees. The appointment/re- appointment/ continuation of
Directors is subject to positive outcome of the annual evaluation
process. The manner in which the evaluation has been carried out has
been explained in the Corporate Governance Report. In terms of the Act,
the Independent Directors on your Board also meet separately once in a
year to discuss the matters as prescribed under Schedule IV to the Act
and to assess the performance of the Non - Independent Directors of
your Board.
The board evaluation exercise during the year under review has resulted
in the Board identifying three focus areas for it to work upon in the
coming years:
1. Intensifying its efforts in guiding the organization to get future
ready, especially in identifying new growth drivers;
2. Renewed focus and time commitment for mentoring the senior
management, setting them up for success in the ever changing macro
environment; and
3. Revisiting the Board composition with an eye on future trends
especially in the digital era.
The Board is also committed to review progress on these priorities
during the annual Board Retreats held once a year.
DISCLOSURE RELATING TO REMUNERATION
The information required pursuant to Section 197(12) of the Act, read
with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is disclosed in ''Annexure B''to this
report.
The Managing Director & CEO of your Company does not receive
remuneration from any of the subsidiaries of your Company.
The statement containing particulars of remuneration of employees as
required under Section 197(12) of the Act, read with Rule 5(2) & 5(3)
of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, is given in an annexure to the Annual Report. In terms of
Section 136(1) of the Act, the Annual Report is being sent to the
Members excluding the aforesaid annexure. However, this annexure shall
be made available on the website of the Company 21 days prior to the
date of Annual General Meeting (''AGM''). The information is also
available for inspection by the Members at the Registered Office of the
Company during business hours on all working days except Saturdays and
Sundays up to the date of the AGM. Any Member desirous of obtaining a
copy of the said annexure may write to the Company Secretary at the
Registered Office Address.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Your Company''s approach on Corporate Governance has been detailed out
in the Corporate Governance Report. Your Company has deployed the
principles enunciated therein to ensure adequacy of Internal Financial
Controls with reference to the financial statements. Your Board has
also reviewed the internal processes, systems and the internal financial
controls and the Directors''Responsibility Statement contains a
confirmation as regards adequacy of the internal financial controls.
VIGIL MECHANISM
Your Company has a robust vigil mechanism in the form of Unified Code
of Conduct which enables employees to report concerns about unethical
behaviour, actual or suspected fraud or violation of the Code. The
Company''s Unified Code of Conduct can be accessed on its website using
the link http://marico.com/investorspdf/CoC book 09-04-14.pdf
This mechanism also provides for adequate safeguards against
victimization of employees who avail of the mechanism and also provide
for direct access to the Chairman of the Audit Committee in exceptional
cases. The guidelines are meant for all members of the Company from the
day they join and are designed to ensure that they may raise any
specific concern on integrity, value adherence without fear of being
punished for raising that concern. The guidelines also cover our
associates who partner us in our organizational objectives and customers
for whom we exist.
To encourage employees to report any concerns and to maintain
anonymity, the Company has provided a toll free helpline number and a
website, wherein the grievances/ concerns can reach the Company. For
administration and governance of the Code, a Committee called ''the Code
of Conduct Committee''(''CCC'') is constituted. The CCC has the following
sub-Committees namely:
HR Committee - with an objective to appoint investigation team for
investigation of HR related concerns / complaints.
IT Committee - with an objective of implementing the IT policy and
resolution of IT related concerns / complaints under the Code.
Whistle Blower Committee - with an objective to appoint an
investigation team for investigation for whistle blower complaints.
Prevention of Sexual Harassment Committee (PoSH Committee) ÂÂ with an
objective to ensure a harassment free work environment including but
not limited to appointment of investigation team for investigation of
sexual harassment concerns/complaints.
The Board, the Audit Committee and the Corporate Governance Committee
are informed periodically on the matters reported to CCC and the status
of resolution of such cases.
The Company affirms that no personnel has been denied access to the
Audit Committee.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has a policy for the prevention of sexual harassment which
is embedded in the CCC. As per the requirement of the Sexual Harassment
of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013
and Rules made thereunder, your Company has constituted an Internal
Complaints Committees (ICC). During the financial year 2015- 16, the
ICC received 1 complaint on sexual harassment and the same was disposed
of in accordance with applicable laws and the policy of your Company.
RISK MANAGEMENT
For your Company, Risk Management is an integral and important
component of Corporate Governance. Your Company believes that a robust
Risk Management ensures adequate controls and monitoring mechanisms for
a smooth and efficient running of the business. A risk-aware
organization is better equipped to maximize the shareholder value.
The key cornerstones of your Company''s Risk Management Framework are:
1. Periodic assessment and prioritization of risks that affect the
business of your Company;
2. Development and deployment of risk mitigation plans to reduce the
vulnerability to the prioritized risks;
3. Focus on both the results and efforts required to mitigate the
risks;
4. Defined review and monitoring mechanism wherein the functional
teams, the top management and the Board review the progress of the
mitigation plans;
5. Embedding of the Risk Management processes in significant decisions
such as large capital expenditures, mergers, acquisitions and corporate
restructuring;
6. Wherever, applicable and feasible, defining the risk appetite and
install adequate internal controls to ensure that the limits are
adhered to.
The constitution of the Risk Management Committee (''RMC'') is stated in
the Corporate Governance Report. The RMC assists the Board in
monitoring and reviewing the risk management plan, implementation of
the risk management framework of the Company and such other functions
as Board may deem fit. The detailed terms of reference and the
composition of RMC are set out in the Corporate Governance Report.
Details of significant and material orders passed by the regulators
There were no significant/material orders passed by the regulators or
courts or tribunals impacting the going concern status of your Company
and its operations in future.
ESOP/Stock Appreciation Rights Schemes
Marico Employee Stock Option Scheme 2007
Your Company had formulated and implemented an Employee Stock Option
Scheme (''the Scheme'') in 2007 for grant of Employee Stock Options (''the
Options'') to certain employees of the Company and its subsidiaries.
Accordingly, during the year under review, in view of exercise of the
Options by the eligible employees of the Company, an aggregate of
1,03,600 equity shares were issued to them by the Company.
Subsequent to exercise of all the Options under the Scheme, the Scheme
was concluded.
None of the Non-Executive Directors (including Independent Directors)
have received Options in pursuance of the above Scheme. Likewise, no
employee has been granted stock options, during the year equal to or
exceeding 0.5% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time of grant.
Marico Employee Stock Option Scheme 2014
The Members of the Company at its Extra Ordinary Genera Meeting held on
March 25, 2014 approved the Marico Employee Stock Option Scheme 2014
(''the Scheme'') for the benefit of the Managing Director & Chief
Executive Officer (MD & CEO). The objective of this Scheme was to give
a wealth building dimension to the remuneration structure of the MD &
CEO. Further, it also aimed at promoting desired behaviour for meeting
organization''s long term objectives and to enable retention through a
customized approach.
The CGC is responsible for administrating the Scheme. The stock options
(3,00,000) granted to the MD & CEO by the CGC on April 1, 2014, stand
increased to 6,00,000 as at March 31, 2016 due to bonus equity shares
issued by the Company during the year under review (in the ratio of
1:1) and are vested in the MD & CEO. The stock options vested in the MD
& CEO constitute 0.05% of the current paid up equity capital of the
Company as on the date of this Report.
Marico MD CEO Employee Stock Option Plan 2014
At the 26th Annual General Meeting of the Company held on July 30,
2014, the Members had approved the Marico MD CEO Employee Stock Option
Plan 2014 (''MD CEO ESOP Plan 2014'' or ''the Plan'') for the benefit of
Managing Director & Chief Executive Officer (''MD & CEO'') of the
Company. The objective of this Plan is to enable grant of stock options
on an annual basis to the MD & CEO as a part of his remuneration through
one or more Scheme(s) notified under the Plan. The number of equity
shares that may arise on a cumulative basis upon exercise of stock
options under this Plan shall not exceed in aggregate 0.5% of the total
paid up equity share capital of the Company.
The CGC is entrusted with the responsibility of administering the Plan
and the Scheme(s) notified thereunder. Accordingly, no stock options
were granted to the MD & CEO under the said Scheme for the year under
review. However, the options granted (46,600) to the MD & CEO on
January 5, 2015 by the CGC stand increased to 93,200 as at March 31,
2016 due to bonus equity shares issued by the Company during the year
under review (in the ratio of 1:1). These stock options constitute
0.007% of the paid up equity share capital of the Company as on the
date of this Report.
Marico Employees Stock Appreciation Rights Plan, 2011
At the 27th Annual General Meeting of the Company held on August 5,
2015, the Members had approved the Marico Stock Appreciation Rights
Plan, 2011 (''STAR Plan''), for the welfare of its employees and those of
its subsidiaries. Under the STAR Plan, the Corporate Governance
Committee notifies various Schemes for granting Stock Appreciation
Rights (STARs) to the eligible employees. Each STAR is represented by
one equity share of the Company. The eligible employees are entitled to
receive in cash the excess of the maturity price over the grant price
in respect of such STARs subject to fulfillment of certain conditions
and applicability of tax. The STAR Plan involves secondary market
acquisition of the equity shares of your Company by an independent
Trust set up by your Company for the implementation of the STAR Plan.
Your Company lends monies to the Trust for making secondary acquisition
of shares.
As at March 31, 2016 an aggregate of 50, 67,800 STARs were outstanding
which constitute about 0.39% of the current paid up equity share
capital of the Company.
Statutory information on ESOS, STAR and Trust
Disclosure on ESOS, STAR and Trust in terms of Section 62(1)(b) of the
Act, read with Rule 12(9) of the Companies (Share Capital and
Debentures) Rules, 2014, Regulation 14 of the SEBI (Share Based
Employee Regulations) and SEBI Circular dated June 16, 2015 is enclosed
as ''Annexure C and forms part of this report. Further, the Company has
complied with the applicable accounting standards in this regard.
The statutory auditors of the Company i.e. M/s. Price Waterhouse, have
certified that implementation of all the above ESOP Schemes/Plans is in
accordance with the erstwhile Securities and Exchange board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, the SEBI (Share Based Employees Benefits)
Regulations, 2014, as applicable, and the resolutions passed by the
Members at the respective General Meetings approving the ESOP
Schemes/Plans.
AUDITORS
Statutory Auditors
The Members, pursuant to the appointment of M/s. Price Waterhouse,
Chartered Accountants as the statutory auditors of your Company at the
26th Annual General Meeting of your Company (AGM''), had ratified their
appointment at the 27th AGM, to hold office from the conclusion thereof
till the conclusion of the 28th AGM of the Company. Further, as required
under Regulation 33(1)(d) of the SEBI Regulations, the Auditors have
confirmed that they hold a valid certificate issued by the Peer Review
Board of the Institute of Chartered Accountants of India.
The appointment of statutory auditors is approved by the Members up to
the conclusion of 29th AGM of the Company.
Accordingly, your Directors seek ratification of the appointment of the
statutory auditors for the financial year 2016-17.
Cost Auditors
M/s. Ashwin Solanki & Associates, Cost Accountants, were appointed as
the Cost Auditor for the financial year 2015-16 to conduct the audit of
the cost records of your Company. Your Directors have re-appointed M/s.
Ashwin Solanki & Associates, Cost Accountants, as the Cost Auditor for
the financial year 2016-17. In terms of the provisions of Section
148(3) of the Act, read with the Companies (Audit and Auditors) Rules,
2014, as amended, the remuneration payable to the Cost Auditors has to
be ratified by the Members of the Company. Accordingly, the Board
seeks ratification of the remuneration payable to the Cost Auditors for
the financial year 2016-17 at the 28th AGM.
SECRETARIAL AUDIT
Pursuant to Section 204 of the Act, read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014,
your Company appointed Dr. K. R. Chandratre, Practising Company
Secretary, to conduct the secretaria audit of your Company. The
Secretarial Audit Report is enclosed as ''Annexure D''to this report. The
Secretarial Audit Report does not contain any qualification, reservation
or adverse remark.
STATUTORY AUDITOR''S REPORT
The Auditor''s Report for the year ended March 31, 2016 does not contain
any qualification, reservation or adverse remark.
CORPORATE GOVERNANCE
As per the SEBI Regulations, a separate section on Corporate Governance
practices followed by the Company together with a certificate from the
Company''s statutory auditors, confirming compliance thereto is attached
to this Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m)
of the Act, read with Rule 8 of The Companies (Accounts) Rules, 2014 is
enclosed as ''Annexure E'' to this report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT 9 in accordance with Section 92(3) of the Act, read with the
Companies (Management and Administration) Rules, 2014, are enclosed as
''Annexure F'' to this report.
ACKNOWLEDGEMENT
Your Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals & vision of the
Company. Your Board also wishes to place on record its sincere
appreciation for the wholehearted support received from shareholders,
distributors, bankers and all other business associates and from the
neighborhood communities of the various Marico locations. We look
forward to continued support of all these partners in progress.
On behalf of the Board of Directors
Place: Mumbai Harsh Mariwala
Date: April 29, 2016 Chairman
(00210342)
Mar 31, 2013
To the Members
The Board of Directors (''Board'') is pleased to present the Twenty Fifth
Annual Report of your Company, Marico Limited, for the year ended March
31, 2013 (''the year under review'', ''the year'' or ''FY13'').
In line with the requirements of the Listing Agreement with the BSE
Limited and National Stock Exchange of India Limited, your Company has
been reporting consolidated results - taking into account the results
of its subsidiaries. This discussion therefore covers the financial
results and other developments during April 2012 - March 2013 in
respect of Marico Consolidated comprising Domestic Consumer Products
Business under Marico Limited (Marico) in India, International Consumer
Products Business comprising exports from Marico and operations of its
overseas subsidiaries and the Skin Solutions Business of Kaya in India
and overseas. The consolidated entity has been referred to as ''Marico''
or ''Group'' or ''Your Group'' in this discussion.
FINANCIAL RESULTS - AN OVERVIEW
Rs. Crore
Year ended March 31,
2013 2012
Consolidated Summary Financials for
the Group
Revenue from Operations 4596.2 3979.7
Profit before Tax 551.9 400.3
Profit after Tax 395.9 317.1
Marico Limited - financials
Revenue from Operations 3407.1 2965.3
Profit before Tax 542.0 399.3
Less: Provision for Tax for the current year 112.9 62.7
Profit after Tax for the current year 429.1 336.6
Add : Surplus brought forward 835.4 602.5
Profit available for Appropriation 1264.5 939.1
Appropriations:
Distribution to shareholders 32.2 43.0
Tax on dividend 5.2 7.0
37.4 50.0
Transfer to General Reserve 42.9 33.7
Debenture Redemption Reserve 21.3 20.0
Surplus carried forward 1162.8 835.4
Total 1264.5 939.1
DISTRIBUTION TO EQUITY SHAREHOLDERS
Your Company''s distribution policy has aimed at sharing your Company''s
prosperity with its shareholders, through a formal earmarking /
disbursement of profits to shareholders.
Keeping in mind the increase in the profits made by the Company over
the last five years and in an endeavor to maximize the returns to its
shareholders, the Company increased its dividend payout favourably
during the year to 100% as compared to 70% during FY12. Your Company''s
distribution to equity shareholders during FY13 comprised the
following:
First interim dividend of 50% on the equity base of Rs 64.46 Crore
Second interim dividend of 50% on the equity base of Rs. 64.48 Crore
The total equity dividend for FY13 was at 100% amounting to (including
dividend tax) Rs. 74.93 Crore. The overall dividend payout ratio hence
is 19.3% as compared to 15.8% during FY12.
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
- Industry structure and development
- Opportunities and Threats
- Risks and Concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
- Outlook
In addition, a Review of Operations of your Company has been given in
this report.
REVIEW OF OPERATIONS
During FY13 Marico registered revenue from operations of INR 4,596
Crore, a growth of 15% over the previous year. This was contributed by
12% expansion in volumes (includes 4% inorganic growth) accompanied by
3% through price increases and sales mix. The top line increase was
accompanied by a bottom-line growth of 25%. Profit After Tax (PAT)
including exceptional items during the year was at INR 396 Crore as
against INR 317 Crore in FY12. The financial statements of FY13 and
FY12 include certain exceptional items. The growth in PAT after
excluding the impact of such items is healthy 18%. The details about
the exceptional items is provided under section "Results of
Operations".
The Company has demonstrated steady growth on both the top line and the
bottom line. Over the last 5 years, they have grown at a Compounded
Annual Growth Rate of 19% each.
Consumer Products Business: India
The Consumer Products Business in India (CPB) achieved a turnover of
INR 3,253 Crore during FY13, a growth of about 18% over FY12. The
organic domestic volume growth was about 11% in an environment of
subdued demand. The healthy volume growth reflects strong equity of the
Company''s brands in consumers'' minds.
Marico participates in the INR 2800 crore (USD 518 million) branded
coconut oil market through Parachute, Nihar and Oil of Malabar.
Parachute coconut oil in rigid packs, the focus part of its portfolio,
grew by 10% in volume as compared to FY12. During the 12 month period
ended March 2013 Parachute along with Nihar improved its market share
by about 240 basis points (bps) over the same period last year to 57.6%
Marico''s hair oil brands (Parachute Advansed, Nihar and Hair & Care)
have performed well over the past few years. These brands continued to
record very healthy growths and market share gains during FY13. The
volume growth rate was 24% for FY13. Marico''s basket of hair oil brands
achieved market leadership position in the Value Added Hair Oils space
and now have about 27% share (for 12 months ended March 31, 2013) in
the INR 4500 crore (USD 834 million) market. This compares to a share
of about 17%-18% about 5-6 years ago.
The Saffola refined edible oils franchise grew by about 7% in volume
terms during FY13 compared to FY12. The deceleration in the growth can
be attributed to two reasons: a softer demand environment in premium
packaged foods that are discretionary in nature and inflation in the
safflower oil and rice bran oil being at significantly higher levels
compared to inflation in sunflower oil. This had led to expansion in
premium of Saffola vis-a-vis the other refined edible oils. Though the
Company doesn''t believe that Saffola''s existing consumers are down
trading there is a deceleration in the rate at which new consumers are
upgrading into the Saffola brand, leading to a lower growth rate. The
Company has initiated some price reduction in select packs in order to
bring the premium back to sustainable levels.
Saffola oats, including its savory variants, are now available on a
national basis. Saffola has an exit market share of about 13% by volume
in the Oats category and has emerged as the number two player in the
category showing a fast paced growth of 30% per annum. Besides offering
oats Saffola strengthened its position in the breakfast category by
introducing Muesli on a national basis. The market size of Muesli is
estimated to be around INR 80 crore to INR 100 crore (USD 14.8 million
to USD 18.5 million) growing rapidly at rates in excess of 40%. Saffola
Muesli has already become a number 3 player with an exit market share
of about 9%.
Parachute Advansed Body Lotion has achieved a market share of over 7%
(moving 12 months basis) within a short period of time and has become
the number 3 participant in the market. The brand gained about 320 bps
in market share during the current season as compared to the last
season.
The acquired portfolio of the youth brands has completed its first
financial year in Marico''s hands (even though this year was of 9 months
as the transaction was completed in end of May 2012). The overall
performance thus far is tracking better than the company''s acquisition
assumptions. The turnover achieved from the youth brands during the
year was INR 139 crore (USD 25.7 million), a growth of 18% over the
corresponding period in FY12.
International FMCG Business
The year FY13 has been a mixed year for the international FMCG
business. The overall business environment in international business
remained challenging throughout the year. There were some pockets of
the business that performed well whereas at the same time some faced
challenges. The overall performance was subdued during the year mainly
on account of de-growth in Middle East region.
During FY13, the Company''s international business recorded a turnover
growth of 8% over FY12. Without considering the impact of adverse
performance in GCC region, the international business grew by 17%.
Kaya
Kaya offers skin care solutions - its technology led cosmetic
dermatological services and products through 105 clinics: 83 in India
across 26 cities and 18 in the Middle East in addition to the 4 DRx
clinics and medispas in Singapore and Malaysia.
During the year FY13, Kaya achieved a turnover of INR 336 crore (USD
62.2 million) registering a growth of about 21% over FY12. The Kaya
business in India and in the Middle East achieved same store sales
growth of about 12% during FY13 as compared to FY12. Amidst an
environment where the discretionary spends are witnessing a
deceleration in growth rates Kaya business has continued to report
growth.
During FY13, Kaya recorded a loss of about INR 18.5 crore (USD 3.4
million) at the PBIT level. This compares with a loss of INR 30.8 crore
(USD 5.7 million) at PBIT level for FY12 (this includes a financial hit
of INR 13 crores of one-time adjustment in Kaya Middle East). The
losses for the year FY13 also include a financial hit amounting to INR
15 crore (USD 2.8 million) on account of impairment of certain clinics
in India and Middle East which are not performing as per expectation.
Taking the objective of increasing the product sales further, Kaya has
introduced a new concept in the month of December 2012 called "Kaya
Skin Bar". The Company now has three such stores opened in Delhi and
Bangalore. The Company plans to prototype this concept with 4 or 5
stores and depending upon the response it will decide the future course
of action.
OTHER CORPORATE DEVELOPMENTS
Completion of acquisition of Personal Care brands of Paras
Pharmaceuticals from Reckitt Benckiser
Marico completed the acquisition of Halite Personal Care India Private
Limited (the Company that owned personal care brands of Paras
Pharmaceuticals Limited) from Reckitt Benckiser on May 29, 2012. This
acquisition gave Marico an access to the male grooming brands Set Wet
and Zatak and the post wash hair serum brand Livon. This acquisition is
in line with the strategy to strengthen our participation in categories
of hair care, skin care and male grooming. The acquired business
operates in categories such as Hair creams/gels, Leave-on conditioner
and Deodorants. While this acquisition gives your Company a leadership
position in the categories of hair creams and gels and Leave-on
conditioners, it also provides an entry into the fast growing deodorant
category. The Company also expects to leverage synergies in the areas
of buying (input materials and media) and distribution. There are also
reverse distribution synergies of the acquired portfolio with Marico''s
existing portfolio as the acquired portfolio gives Marico an access to
the chemist and cosmetic channel of distribution in a much larger way.
This year, the Company focused on integrating the operations into its
own manufacturing, sales and distribution network. The integration
process was successful and now complete.
Preferential Allotment of Equity Shares to part fund the acquisition of
Personal care business of Paras Pharmaceuticals
The shareholders of the Company, at their meeting held on May 2, 2012,
approved issue of equity shares on preferential allotment basis
aggregating Rs. 50,000 lacs at a price of Rs. 170 per equity share to
two overseas investors for funding a part of the Halite acquisition.
Subsequently, the Company allotted 29,411,764 equity shares of face
value of Re. 1 each at a share premium of Rs. 169 each to these
investors on May 16, 2012. This resulted in increase of equity share
capital by Rs. 294.12 lacs and securities premium reserve by Rs.
49,705.88 lacs. The proceeds of the issue together with internal
accruals were infused by Marico as equity investment in MCCL. MCCL
utilized the equity proceeds for acquiring 100% equity stake in Halite
on May 29, 2012.
Restructuring of businesses, corporate entities and organization
The Board of Directors of Marico Limited, at its meeting held on 7th
January 2013, passed a resolution approving restructuring of Marico''s
businesses, corporate entities and organization, effective April 1,
2013.
This restructuring is a proactive step to build on Marico''s sustained
value creation, taking into account
- the increasing convergence of businesses in Consumer Products in
India (Current CPB) and the International Business Group (Current IBG)
and
- Kaya''s distinct potential to create value as an independent
business.
Marico Limited is currently the apex corporate entity, which
effectively owns all businesses in the group. The objective is to
create two separate companies through partitioning of the current
Marico Limited, into an FMCG Business Company which is Marico Limited
and Marico Kaya Enterprises Limited (MaKE), a newly formed Skin Care
Solutions Business Company for this purpose.
As a consideration, the shareholders of Marico Limited as on the record
date shall be issued 1 share of MaKE with a face value of Rs. 10 each
for every 50 shares of Marico with a face value of Re. 1 each.
Consequently, the shareholding structure of MaKE will mirror the
shareholding structure of Marico Limited.
The Corporate Entity restructuring is subject to shareholders,
creditors, lenders and other contractual, statutory and regulatory
approvals as may be required.
Subsidiaries of the Company
With effect from March 15, 2013, Marico Innovation Foundation (MIF), a
company registered under Section 25 of the Companies Act, 1956, as a
company limited by guarantee not having share capital, became a wholly
owned subsidiary of the Company. MIF was set up with an objective to
fuel innovation and promote application of qualified innovation in all
forms of businesses, educational, social, cultural, and creative and
sports related enterprises. Your Company would continue to make
contributions towards CSR through the activities of MIF.
Halite Personal Care India Private Limited (Halite), a step down
subsidiary of the Company, is under voluntary liquidation. On January
18, 2013, the shareholders of Halite passed a special resolution for
voluntarily liquidation and appointment of a liquidator. The liquidator
distributed the assets of Halite in species to its only shareholder
Marico Consumer Care Limited, a wholly owned subsidiary of your
Company.
MCCL Capital Reduction Scheme
The shareholders of MCCL, at their meeting held on April 1, 2013
decided to adjust the carrying costs of acquired intellectual property
right upon voluntary liquidation of Halite, directly against net worth
of the company, in accordance with the provisions of Section 78 (read
with Sections 100 to 103) of the Companies Act, 1956. The said capital
reduction is subject to the approval of the Hon''ble High Court of
Judicature at Bombay. MCCL has filed a petition in this regard with the
High Court.
Transfer of KME ownership from MME to DIAL
To align the shareholding in Kaya''s skin care business so as to
integrate the ownership under Kaya Limited in view of the proposed
de-merger in Kaya''s skin care business from the Company, the
shareholders of Marico Middle East FZE at their meeting held on March
18, 2013 approved disinvestment of 100% stake in Kaya Middle East FZE
to Derma Rx International Aesthetics Pte. Ltd (DIAL) for a
consideration of 55,050,000 UAE Dirhams. The disinvestment was effected
through a share purchase agreement between MME and DIAL dated February
7, 2013 subject to approval from Hamriyah Free Zone Authority (HFZA).
Post approval it will become a subsidiary of DIAL.
Marico Employee Stock Option Scheme 2007
In pursuance of shareholders'' approval obtained on November 24, 2006,
your Company formulated and implemented an Employee Stock Options
Scheme (the Scheme) for grant of Employee Stock Options (ESOS) to
certain employees of the Company and its subsidiaries. The Corporate
Governance Committee (''Committee'') of the Board of Directors of your
Company is entrusted with the responsibility of administering the
Scheme and in pursuance thereof, the Committee has granted 1,13,76,300
stock options (as at March 31, 2013) comprising about 1.76% of the
current paid up equity capital of the Company as at March 31, 2013. An
aggregate of 3,52,665 options were outstanding as on March 31, 2013.
Additional information on ESOS as required by Securities and Exchange
Board of India (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999 is annexed and forms part of this
Report.
None of the Non-executive Directors (including Independent Directors)
have received stock options in pursuance of the above Scheme. Likewise,
no employee has been granted stock options, during the year equal to or
exceeding 0.5% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time of grant.
The Company''s Auditors, M/s. Price Waterhouse, have certified that the
Scheme has been implemented in accordance with the SEBI Guidelines and
the resolution passed by the members at the Extra-Ordinary General
Meeting held on November 24, 2006.
Marico Employees Stock Appreciation Rights Plan, 2011
Your Company had implemented a long term incentive plan namely, Marico
Stock Appreciation Rights Plan, 2011 (''STAR Plan'') in the previous
financial year for the welfare of its employees and those of its
subsidiaries. Pursuant to the STAR Plan the Corporate Governance
Committee of the Board of Directors notifies various Schemes granting
Stock Appreciation Rights (STARs) to certain eligible employees. Each
STAR is represented by one equity share of the Company. The eligible
employees are entitled to receive excess of the maturity price over the
grant price in respect of such STARs subject to fulfillment of certain
conditions and subject to deduction of tax. During the financial year
under review the Corporate Governance Committee notified Scheme III on
December 7, 2012 under the STAR Plan granting additional STARs to
certain eligible employees. The vesting date of the STARs granted under
Scheme III is November 30, 2015. As on March 31, 2013, an aggregate of
58,79,800 STARs were outstanding.
Exemption from attaching the Balance Sheets, etc. of the Subsidiary
Companies with the Balance Sheet of the Company
The Ministry of Corporate Affairs ("MCA") has vide its circular no.
02/2011 dated 8th February, 2011, granted a general exemption under
Section 212(8) of the Companies Act from attaching copies of the
Balance Sheet, Statement of Profit and Loss, Directors'' Report and
Auditors'' Report of its subsidiary companies with the Balance Sheet of
the Company, subject to fulfillment of certain conditions.
In terms of the said circular, copies of the Balance Sheet, Statement
of Profit and Loss, Report of the Board of Directors and the Report of
the Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. The Company has presented Consolidated
Financial Statements comprising Marico Limited and its subsidiaries
duly audited by the Statutory Auditors of the Company. The Consolidated
Financial Statements prepared by the Company are in compliance with the
Accounting Standard AS-21 as prescribed by the Companies (Accounting
Standards) Rules, 2006 and the Listing Agreement with the Stock
Exchanges. The statement required under Section 212 of the Companies
Act, 1956 is attached to the annual accounts of the Company. The Annual
Accounts and related documents of all the Subsidiary Companies shall be
made available for inspection to the shareholders of the Company and
its subsidiaries at the Registered Office of the Company from Monday to
Friday during the hours between 11.00 a.m. and 1.00 p.m. The Company
will also make available physical copies of such documents upon request
by any Member of the Company or its subsidiaries interested in
obtaining the same and the same would also be made available on the
website of the Company.
PUBLIC DEPOSITS
There were no outstanding Public deposits at the end of this or the
previous year. The Company did not accept any public deposits during
the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act)
amended by the Companies (Amendment) Act, 2000, the Directors confirm
that:
- In preparation of the Annual Accounts of your Company, the
Accounting Standards, laid down by the Institute of Chartered
Accountants of India from time to time, have been followed and that no
material departures have been made from the same;
- Appropriate accounting policies have been selected and applied
consistently, and reasonable and prudent judgment and estimates have
been made so as to ensure that the accounts give a true and fair view
of the state of affairs of your Company as at March 31, 2013 and the
profits of your Company for the year ended March 31, 2013;
- Proper and sufficient care has been taken for maintenance of
appropriate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis;
- The observation(s) and qualification(s) of the Auditors in their
report to the Members have been adequately dealt with in the relevant
notes to the accounts. Hence no additional explanation is considered
necessary.
CORPORATE GOVERNANCE
A report on Corporate Governance has been provided as a separate part
of this Report.
DIRECTORS
Directors retiring by rotation
Mr. Rajen Mariwala and Mr. Atul Choksey, Directors of the Company, are
liable to retire pursuant to the provisions of Section 256 of the
Companies Act, 1956 respectively and being eligible offer themselves
for re-appointment.
ADDITIONAL STATUTORY INFORMATION
Information under Section 217(1)(e) of the Act read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988 is annexed and forms part of this Report. Information
pursuant to Section 217(2A) of the Act read with the Companies
(Particulars of Employees) Rules, 1975, as amended by the Companies
(Particulars of Employees) Amendment Rules, 1999 forms part of this
Report. Although in accordance with the provisions of Section 219(1)
(b)(iv) of the Act such information has been excluded from the Report
and Accounts sent to the Members, any member desirous of obtaining this
information may write to the Company Secretary at the Registered Office
of the Company.
STATUTORY AUDITORS
M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and have
confirmed their eligibility for re-appointment.
COST AUDITORS
Your Company appointed M/s. Ashwin Solanki & Associates, Cost
Accountants, Mumbai, to conduct the cost audit for the Financial Year
ended March 31, 2013 with respect to the products falling under
Pharmaceutical, Edible Oil seeds and Oils (including Vanaspati) and
packaged foods category. The Company has received necessary approval
from Central Government for appointment of the Cost Auditor. The Cost
Audit Report for the year ended March 31, 2013, will be submitted to
the Central Government in due course.
INTERNAL AUDITORS
Ernst & Young LLP, a Chartered Accountant Firm, has been associated
with your Company from the financial year 2012-13 as its internal
auditor partnering your Company in the area of risk management and
internal control systems.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, bankers
and all other business associates, and from the neighbourhood
communities of the various Marico locations. We look forward to
continued support of all these partners in progress.
On behalf of the Board of Directors
Place : Mumbai HARSH MARIWALA
Date : April 30, 2013 Chairman and Managing Director
Mar 31, 2012
The Board of Directors ('Board') is pleased to present the Twenty
Fourth Annual Report of your Company, Marico Limited, for the year
ended March 31, 2012 ('the year under review', 'the year' or
'FY12').
In line with the requirements of the Listing Agreement with the Bombay
Stock Exchange and National Stock Exchange, your Company has been
reporting consolidated results - taking into account the results of its
subsidiaries. This Discussion therefore covers the financial results
and other developments during April 2011 - March 2012 in respect of
Marico Consolidated comprising Domestic Consumer Products Business
under Marico Limited (Marico) in India, International Consumer Products
Business comprising exports from Marico and operations of its overseas
subsidiaries and the Skin Solutions Business of Kaya in India and
overseas. The consolidated entity has been referred to as 'Marico'
or 'Group' or 'Your Group' in this discussion.
FINANCIAL RESULTS - AN OVERVIEW
Rs. Crore
Year ended
March 31,
2012 2011
Consolidated Summary Financials for the Group
Revenue from Operations 4008.3 3135.0
Profit before Tax 400.3 376.4
Profit after Tax 317.1 286.4
Marico Limited - financials
Revenue from Operations 2970.3 2350.4
Profit before Tax 399.3 374.6
Less: Provision for Tax for the current year 62.7 59.2
Profit after Tax for the current year 336.6 315.3
Add : Surplus brought forward 602.5 382.6
Profit available for Appropriation 939.1 697.9
Appropriations:
Distribution to shareholders 43.0 40.5
Tax on dividend 7.0 6.7
50.0 47.2
Transfer to General Reserve 33.7 31.5
Debenture Redemption Reserve 20.0 16.7
Surplus carried forward 835.4 602.5
Total 939.1 697.9
DISTRIBUTION TO EQUITY SHAREHOLDERS
Your Company's distribution policy has aimed at sharing your
Company's prosperity with its shareholders, through a formal
earmarking / disbursement of profits to shareholders.
Marico has identified acquisitions as one of its avenues to pursue
growth. In February 2012, your Company entered into an agreement to
acquire the Personal Care business of Paras Pharmaceuticals from
Reckitt Benckiser, Singapore. This transaction is expected to be
completed by May 2012. Since April 2005, the Group has consummated 11
acquisitions including two each in India, Bangladesh, Egypt and South
Africa and one each in Malaysia, Singapore and Vietnam. As part of its
growth agenda, Marico would continue to explore new acquisition
opportunities in the focus categories of skin care, hair care and
functional food in the emerging markets of Asia and Africa to
supplement its organic growth. These would create a need for additional
funds. Your Company therefore intends to remain conservative in the
quantum of dividend payout in the near future.
Your Company's distribution to equity shareholders during FY 12
comprised the following:
First interim dividend of 30% on the equity base of Rs 61.49 Crore
Second interim dividend of 40% on the equity base of Rs. 61.49 Crore
The total equity dividend for FY12 at 70.0% is thus slightly higher
compared to the dividend paid during FY11. The total dividend
(including dividend tax) was Rs. 50.0 Crore (about 15.8 % of the Group
PAT).
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
- Industry structure and development
- Opportunities and Threats
- Risks and Concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
- Outlook
In addition, a Review of Operations of your Company has been given in
this report.
REVIEW OF OPERATIONS
Your Group continued to focus on expanding its consumer franchise.
During FY12 Marico registered revenue from operations of INR 4008
Crore, a growth of 28% over the previous year. This was contributed by
17% expansion in volumes (includes 6% inorganic growth) accompanied by
11% through price increases and sales mix. The top line increase was
accompanied by a bottom-line growth of 11%. Profit After Tax (PAT)
including exceptional / extra-ordinary items during the year was at
INR317 Crore as against INR 286 Crore in FY11. The growth in profits
does not mirror the growth in top line due to inflationary pressures
faced by the Company during the year. The Company consciously decided
to absorb a part of the increase in input costs in order to maintain
and grow its long term consumer franchise. Further, the financial
statements of FY12 and FY11 include certain exceptional items. The
growth in PAT after excluding the impact of such exceptional items is a
healthy 25%.
During the year, Marico extended its record of year on year quarterly
growth.
The company has demonstrated steady growth on both the top line and the
bottom line. Over the last 5 years, they have grown at a Compounded
Annual Growth Rate of 21% and 23% respectively.
Consumer Products Business: India
The Consumer Products Business in India (CPB) achieved a turnover of
INR 2766 Crore during FY12, a growth of about 37% over FY11 (excluding
turnover from Sweekar which was divested in March 2011 from the base.
If sales of Sweekar were to be included in the base the growth would be
26%). The turnover growth reflected healthy demand and continued
business momentum manifest in a volume growth of about 14% over FY11.
Parachute, Marico's flagship brand, continued to expand its franchise
during the year. Parachute coconut oil in rigid packs, the focus part
of its portfolio, grew by 11% in volume as compared to FY11. Small
packs helped in driving this volume growth. Also, owing to the
inflationary environment in the key input prices of coconut oil the
competitive environment (specially the local/regional players) during
the last few quarters has been soft thereby resulting in Marico's
brands gaining market share. Its share during the 12 months ended March
'12 was 55%.
Marico offers its consumers a basket of value added hair oils for their
pre-wash and post wash hair conditioning, nourishment and grooming
needs (Key brands being Parachute Advansed hair oil, Parachute Advansed
Cooling oil, Parachute Jasmine non sticky hair oil, Parachute Advansed
Ayurvedic Hair Oil, Nihar Naturals perfumed hair oil, Hair & Care
nourishing non sticky hair oil, and Nihar Shanti Badam Amla hair oil).
During the year, Marico's hair oil brands recorded healthy growth and
the portfolio as a whole grew by about 24% in volume terms over FY11.
Marico's premium refined edible oils brand Saffola grew by about 11%
in volume terms compared to FY11. The brand's strong heart health
equity is now being leveraged through functional food extensions in
breakfast cereal and low glycemic index rice.
Marico has been constantly investing in a healthy pipeline of new
products. During the year your Company launched savory oats under
Saffola and Body Lotion under Parachute Advansed.
International FMCG Business
From a single digit share in FY05, about 24% of the group's turnover
is now contributed by Marico's International FMCG business. Its key
geographical presence is in Bangladesh, MENA (Middle East and North
Africa), South Africa and South East Asia.
During FY12, the company's international business recorded a turnover
growth of 30% over FY11. During the year, your Company also
successfully integrated the 85% acquisition of International Consumer
Products (ICP) in Vietnam.
Marico has entered new geographies as well as scaled up presence in
Nepal/Bhutan, Malaysia and Myanmar. During the year your Company has
used the connect & develop model of faster innovation to launch an
exciting new range of water gels, Ice gels & Rave Gels, Wax and Clay
under Code 10 within six months of opportunity identification. We have
also started using ICP as a sourcing base for the Malaysian market.
Myanmar tripled its base in FY12 with both the Nourishment (Parachute
Advansed) and Male grooming (Code 10) business showing good traction.
In the process we have gained significant market share. The Group
expects to scale up this business significantly in the coming year(s).
Kaya
Kaya offers its technology led cosmetic dermatological services through
107 clinics: 82 in India across 26 cities and 19 in the Middle East, 2
in Dhaka and 4 clinics through Derma Rx in Singapore and Malaysia.
During FY12, Kaya's skin solutions business achieved a turnover of
INR 279 Crore, recording a revenue growth of ~33% over FY11. On an
overall basis Kaya made a loss of INR 29.1 Crore at PBIT level. During
the year Kaya initiated a change in its positioning from 'cure' to
'cure care'. The new services introduced to take care of regular
skin care needs received good traction. The focus on increasing revenue
from products, led by introducing products from the Derma Rx range into
the clinics in India has resulted in the contribution from the sales of
products increasing from 13% to about 23%. These initiatives also
helped Kaya business in India and Middle East to achieve the same
clinic growth of 15%. Sustaining same store growth would reinforce
Marico's belief in the Kaya Business model, especially as we perceive
a significant long term opportunity in skin care solutions.
OTHER CORPORATE DEVELOPMENTS
Acquisition of Personal Care brands of Paras Pharmaceuticals from
Reckitt Benckiser
Marico has entered into an agreement to acquire the erstwhile personal
care business of Paras Pharmaceuticals Limited from Reckitt Benckiser,
Singapore. Upon completion of this transaction, Marico shall own well
known brands such as Set Wet, Livon, Zatak. The transaction is expected
to be completed in the month of May 2012. This acquisition is in line
with the strategy to strengthen our participation in categories of hair
care, skin care and male grooming. The acquired business operates in
categories such as Hair creams/gels, Leave-on conditioner and
Deodorants. While your Company already participates in hair creams and
gels and Leave-on conditioners, the acquisition provides an entry into
the fast growing deodorant category. The Company also expects to
leverage synergies in buying (input materials and media) and
distribution of the acquired portfolio with Marico's existing
portfolio.
Preferential Allotment of Equity Shares to part fund the acquisition of
Personal care business of Paras Pharmaceuticals
Your Company, considering its medium term funds requirements, will be
issuing additional equity shares amounting to INR 500 Crore
preferential basis. The shareholders of the Company have accorded
necessary approval for the preferential issue of equity shares at their
extra-ordinary general meeting held on May 2, 2012. The allotment will
be made on a preferential basis to Indivest Pte. Ltd. (an affiliate of
Government of Singapore Investment Corporation Pte Ltd) and Baring
India Private Equity Fund III Listed Investments Limited in the ratio
of 3:1. These funds shall be used to fund part of the purchase
consideration for the proposed acquisition of Paras personal care
business by the Company. The issue is placed at a price of Rs. 170 per
share. Your Company was able to get a premium of about 2.5% over the
SEBI floor price. The receipt of funds and allotment of shares is
expected to take place during May. 2012.
Marico Employee Stock Option Scheme 2007
In pursuance of shareholders' approval obtained on November 24, 2006,
your Company formulated and implemented an Employee Stock Options
Scheme (the Scheme) for grant of Employee Stock Options (ESOS) to
certain employees of the Company and its subsidiaries. The Corporate
Governance Committee ('Committee') of the Board of Directors of
your Company is entrusted with the responsibility of administering the
Scheme and in pursuance thereof, the Committee has granted 1,13,76,300
stock options (as at March 31, 2012) comprising about 1.85% of the
current paid up equity capital of the Company as at March 31, 2012. An
aggregate of 7,78,313 options were outstanding as on March 31, 2012.
Additional information on ESOS as required by Securities and Exchange
Board of India (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999 is annexed and forms part of this
report.
None of the Non-executive Directors (including Independent Directors)
have received stock options in pursuance of the above Scheme. Likewise,
no employee has been granted stock options, during the year equal to or
exceeding 0.5% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time of grant.
The Company's Auditors, M/s. Price Waterhouse, have certified that
the Scheme has been implemented in accordance with the SEBI Guidelines
and the resolution passed by the members at the Extra-Ordinary General
Meeting held on November 24, 2006.
Marico Employees Stock Appreciation Rights Plan, 2011
Your Company had implemented a long term incentive plan namely, Marico
Stock Appreciation Rights Plan, 2011 ('STAR Plan') in the previous
financial year for the welfare of its employees and those of its
subsidiaries. Pursuant to the STAR Plan the Corporate Governance
Committee of the Board of Directors notifies various Schemes granting
Stock Appreciation Rights (SARs) to certain eligible employees. Each
SAR is represented by one equity share of the Company. The eligible
employees are entitled to receive excess of the maturity price over the
grant price in respect of such SARs subject to fulfillment of certain
conditions and subject to deduction of tax. During the financial year
under review the Corporate Governance Committee notified Scheme II on
December 1, 2011 under the STAR Plan granting additional SARs to
certain eligible employees. The vesting date of the SARs granted under
Scheme II is November 30, 2014. As on March 31, 2012, an aggregate of
41,46,600 SARs were outstanding.
Exemption from attaching the Balance Sheets, etc. of the Subsidiary
Companies with the Balance Sheet of the Company
The Ministry of Corporate Affairs ("MCA') has vide its circular no.
02/2011 dated 8th February, 2011, granted a general exemption under
Section 212(8) of the Companies Act from attaching copies of the
Balance Sheet, Profit and Loss Accounts, Directors' Report and
Auditors' Report of its subsidiary companies with the Balance Sheet
of the Company, subject to fulfillment of certain conditions.
In terms of the said circular, copies of the Balance Sheet, Profit and
Loss Account, Report of the Board of Directors and the Report of the
Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. The Company has presented Consolidated
Financial Statements comprising Marico Limited and its subsidiaries
duly audited by the Statutory Auditors of the Company. The Consolidated
Financial Statements prepared by the Company are in compliance with the
Accounting Standard AS-21 as prescribed by the Companies (Accounting
Standards) Rules, 2006 and the Listing Agreement with the Stock
Exchanges. The statement required under Section 212 of the Companies
Act, 1956 is attached to the annual accounts of the Company. The Annual
Accounts and related documents of all the Subsidiary Companies shall be
made available for inspection to the shareholders of the Company and
its subsidiaries at the Registered Office of the Company from Monday to
Friday during the hours between 11.00 a.m. and 1.00 p.m. The Company
will also make available physical copies of such documents upon request
by any Member of the Company or its subsidiaries interested in
obtaining the same and the same would also be made available on the
website of the Company,
PUBLIC DEPOSITS
There were no outstanding Public deposits at the end of this or the
previous year. The Company did not accept any public deposits during
the year,
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act)
amended by the Companies (Amendment) Act, 2000, the Directors confirm
that:
- In preparation of the Annual Accounts of your Company, the
Accounting Standards, laid down by the Institute of Chartered
Accountants of India from time to time, have been followed and that no
material departures have been made from the same;
- Appropriate accounting policies have been selected and applied
consistently, and reasonable and prudent judgment and estimates have
been made so as to ensure that the accounts give a true and fair view
of the state of affairs of your Company as at March 31, 2012 and the
profits of your Company for the year ended March 31, 2012;
- Proper and sufficient care has been taken for maintenance of
appropriate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis;
- The observation(s) and qualification(s) of the Auditors in their
report to the Members have been adequately dealt with in the relevant
notes to the accounts. Hence no additional explanation is considered
necessary,
CORPORATE GOVERNANCE
A report on Corporate Governance has been provided as a separate part
of this Report.
DIRECTORS
Directors retiring by rotation
Mr. Anand Kripalu and Mr. B. S. Nagesh, Directors of the Company, are
liable to retire pursuant to the provisions of Section 256 and 262 of
the Companies Act, 1956 respectively and being eligible offer
themselves for re-appointment.
ADDITIONAL STATUTORY INFORMATION
Information under Section 217(1)(e) of the Act read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988 is annexed and forms part of this Report. Information
pursuant to Section 217(2A) of the Act read with the Companies
(Particulars of Employees) Rules, 1975, as amended by the Companies
(Particulars of Employees) Amendment Rules, 1999 forms part of this
Report. Although in accordance with the provisions of Section
219(1)(b)(iv) of the Act such information has been excluded from the
Report and Accounts sent to the Members, any member desirous of
obtaining this information may write to the Company Secretary at the
Registered Office of the Company,
STATUTORY AUDITORS
M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and have
confirmed their eligibility for re-appointment,
COST AUDITORS
Your Company appointed M/s. Ashwin Solanki & Associates, Cost
Accountants, Mumbai, to conduct the cost audit of the formulations for
the Financial Year ended March 31, 2012. The Company has received
necessary approval from Central Government for appointment of the Cost
Auditor. The Cost Audit Report for the year ended March 31, 2012, will
be submitted to the Central Government in due course.
INTERNAL AUDITORS
Aneja Associates, a Chartered Accountant Firm, has been associated with
your Company as its internal auditor partnering your Company in the
area of risk management and internal control systems. This role has now
been taken over by Ernst & Young, a Chartered Accountants Firm, who
have been appointed as the new internal auditor of the Company for the
financial year 2012-13 and onward. Your Company places on record its
sincere appreciation for the services rendered by Aneja Associates as
internal auditors of the Company,
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, bankers
and all other business associates, and from the neighbourhood
communities of the various Marico locations. We look forward to
continued support of all these partners in progress.
On behalf of the Board of Directors
Place : Mumbai HARSH MARIWALA
Date : May 3, 2012 Chairman and Managing Director
Mar 31, 2011
The Board of Directors (Board) is pleased to present the Twenty
Third Annual Report of your Company, Marico Limited, for the year ended
March 31, 2011 (the year under review, the year or FY11).
In line with the requirements of the Listing Agreement with the Bombay
Stock Exchange and National Stock Exchange, your Company has been
reporting consolidated results à taking into account the results of its
subsidiaries. This Discussion therefore covers the financial results
and other developments during April 2010 Ã March 2011 in respect of
Marico Consolidated comprisingà Domestic Consumer Products Business
under Marico Limited (Marico) in India, International Consumer Products
Business comprising exports from Marico and operations of its overseas
subsidiaries and the Solutions Business of Kaya in India and overseas.
The consolidated entity has been referred to as Marico or Group or
Your Group in this discussion.
FINANCIAL RESULTS - AN OVERVIEW
Rs. Crore
Year ended March 31,
2011 2010
Consolidated Summary Financials
for the Group
Sales and Services 3128.3 2660.8
Profit before Tax 376.4 297.9
Profit after Tax 286.4 231.7
Marico Limited - financials
Sales and Services 2346.9 2024.3
Profit before Tax 374.6 292.6
Less: Provision for Ta x for the
current year 59.2 57.5
Profit after Tax for the current year 315.3 235.0
Add : Surplus brought forward 382.61 233.1
Profit available for Appropriation 697.9 468.1
Appropriations :
Distribution to shareholders 40.5 40.2
Tax on dividend 6.7 6.8
47.2 47.0
Transfer to General Reserve 31.5 23.5
Debenture Redemption Reserve 16.7 15.0
Surplus carried forward 602.5 382.6
Total 697.9 468.1
DISTRIBUTION TO EQUITY SHAREHOLDERS
Your companys Distribution policy has aimed at sharing your Companys
prosperity with its shareholders, through a formal earmarking /
disbursement of profits to shareholders.
Marico has identified acquisitions as one of its avenues to pursue
growth. Since April 2005, the Group has consummated 11 acquisitions
including two each in India, Bangladesh, Egypt and South Africa and one
each in Malaysia, Singapore and Vietnam. As part of its growth agenda,
Marico would continue to explore new acquisition opportunities. These
would call for additional funding.
As indicated last year, your Company intends to be more conservative in
the quantum of dividend payout in the near future.
Your Companys distribution to equity shareholders during FY 11
comprised the following:
First interim dividend of 30% on the equity base of Rs 61.41 Crore
Second interim dividend of 36% on the equity base of Rs. 61.45 Crore
The total equity dividend for FY11 at 66.0% is thus at par with the
dividend paid during FY10. The total dividend (including dividend tax)
was Rs. 47.2 crore (about 16.5 % of the group PAT).
DIRECTORS REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
Industry structure and development
Opportunities and Threats
Risks and Concerns
Internal control systems and their adequacy
Discussion on financial and operational performance
Segment-wise performance
Outlook
In addition, a Review of Operations of your Company has been given in
this report.
REVIEW OF OPERATIONS
Marico achieved a strong growth of 18% in revenue over the previous
year and registered a top line of Rs 3128 crores during FY11. A
substantial part of the growth was organic growth, with 12% volume led
growth while the remaining came from price increases and sales mix. The
top line increase was accompanied by a bottom-line growth of 24%, after
considering the impact of extra-ordinary / exceptional items. Profit
After Tax (PAT) including exceptional / extra-ordinary items during the
year was at Rs 286.4 crore as against Rs. 232 crore in FY10. The
financials for FY11 include certain exceptional items of Rs 48.9 crores
(Rs 29.4 Cr on account of write back of provision towards contingent
excise duty liability provided in FY10, Rs. 50 Cr on account of profit
on sale of Sweekar intellectual property rights, Rs. 7.7 Cr on account
of impairment of clinic assets in Kaya Limited and Rs 22.7 Cr on
account of impairment of intangibles related to Fiancée business) while
the financials of FY 10 include certain exceptional items . The
exceptional items have been explained in detail in the Management
Discussion and Analysis, which is an integral part of this Report. Had
it not been for these items, the PAT for FY11 would have been Rs. 256.3
Cr, a growth of 6% over FY10 (extraordinary items excluded from the
comparable figure in the previous year).
During the year, Marico extended its record of year on year quarterly
growth.
Q4FY11 was on a Y-o-Y basis:
The 42nd consecutive Quarter of growth in Turnover and
The 46th consecutive Quarter of growth in Profits
The company has demonstrated steady growth on both the top line and
bottom line. Over the last 5 years, they have grown at a Compounded
Annual Growth Rate of 22 % and 27% respectively
Consumer Products Business: India
Parachute, Maricos flagship brand, continued to expand its franchise
during the year. Parachute coconut oil in rigid packs, the focus part
of its portfolio, grew by 8% in volume as compared to FY10. Coconut oil
category as a whole grew by 5% in volume as compared to FY10. The
volume growth have been lower than expected due to steep rise in the
input prices due to which the Company took the prices up of the
Products. Marico offers its consumers a basket of value added hair oils
for their pre-wash and post wash hair conditioning, nourishment and
grooming needs (Key brands being Parachute Advansed hair oil, Parachute
Advansed Cooling oil, Parachute Jasmine non sticky hair oil, Nihar
Naturals perfumed hair oil, Hair & Care nourishing non sticky hair oil,
Hair & Care Almond Gold and Shanti Badam Amla hair oil). During the
year, all Maricos hair oil brands recorded healthy growth and the
portfolio as a whole grew by about 23% in volume terms over FY10. Super
Premium edible oils brand Saffola grew by about 16% in volume terms
compared to FY10. These growths were aided by introduction of new
products.
Marico has been constantly investing in a healthy pipeline of new
products. During the year your company launched new prototypes. These
included variants of Saffola Rice Arise (Basmati and Long grain) -
lower GI rice, Parachute Advansed Ayurvedic hair fall solution and
Parachute Advansed Body Lotion.
International FMCG Business
From a single digit share in FY05, about 23% of the groups turnover is
now contributed by Maricos International FMCG business. Its key
geographical presence is in Bangladesh, MENA (Middle East and North
Africa), Malaysia, South Africa and Vietnam.
Maricos South African subsidiary acquired the healthcare brand
"Ingwe". Its product portfolio complements the existing healthcare
brand Hercules. In February 2011, Marico strengthened its entry into
the South East Asian region through the acquisition of International
Consumer Products in Vietnam.
During FY11, the companys international business recorded a turnover
growth of 22% over FY10. Much of this growth was derived from consumer
franchise expansion - about 19%, accompanied by price led growth of 8%.
However, this was impacted adversely by forex appreciation of 5%.
Political disturbance in the MENA region adversely effected the growth
of the international business in Q4 of FY11.
Kaya
Kaya is the first organized player in the segment of cosmetic
dermatology and now enjoys a large first mover advantage in the segment
in India. It now offers its technology led cosmetic dermatological
services through 103 clinics: 81 in India across 26 cities and 16 in
the Middle East, 2 in Dhaka and 4 clinics through Derma Rx in Singapore
and Malaysia.
During the year Kaya acquired Singapore based skin care solutions
business Derma Rx. This gave Kaya an access to an advanced skin care
market in terms of a wide bouquet of products and technology capable of
being transported across geographies.
Kayas offering are in the nature of discretionary spends. We had seen
a down turn in Kayas performance in FY10 due to some external and
internal factors. While external macro environment is picking up we had
identified customer retention and share of product sales as key issues
to be addressed internally during FY11. There were efforts put to
tackle these issues. Kaya has seen a reasonable success as a result of
these measures taken.
Our overall experience with Kaya Skin care business has been
encouraging. This is a fairly young business- only 8 years since its
inception. We have already experienced, in a few accounting periods,
profitability at both clinic level and regional level. Maricos belief
in the Kaya Business model is therefore intact, especially as we
perceive the long term opportunity in skin care solutions to be
significant.
OTHER CORPORATE DEVELOPMENTS
Acquisition of Derma Rx
Kaya Limited, Maricos wholly owned subsidiary delivering skin care
solutions in India acquired the cosmetic dermatological business of the
Singapore based Derma Rx Asia Pacific Pte Ltd (DRx AP). This
acquisition provides Kaya access to a range of highly efficacious skin
care products. These products are capable of being transported across
geographies. Some of these products have already been introduced in
India and are in the process of being introduced in the Middle East. We
believe that it will help in increasing the share of products to total
revenue of Kaya.
Acquisition of the Brand Ingwe
Marico, through its wholly owned subsidiary, Marico South Africa (Pty)
Ltd acquired the brand "Ingwe" from South Africa based Guideline
Trading Company. The range comprises immuno boosters focused on the
ethnic consumer in South Africa. The acquisition of Ingwe brings in a
range of products that complements that of MSAs brand Hercules.
Acquisition of the International Consumer Products (ICP)
Marico strengthened its foot hold in South East Asia by taking up 85%
equity in International Consumer Products Corporation (ICP), one of the
most successful Vietnamese FMCG companies. ICP was founded, in 2001, by
Dr. Phan Quoc Cong and his partner. Its brands (X-Men, LOvite, Thuan
Phat and others) have a significant presence across personal care,
beauty cosmetics and sauces/ condiments categories. X-Men is a leading
player in the male grooming segment in Vietnam and is the 2nd Most
Trusted Personal Care brand in the country. With over 35% market share,
it leads the mens shampoo category. LOvite, the companys premium
cosmetics brand ranks amongst the top 5 premium cosmetics brands in
Vietnam.
Divestment of Brand Sweekar
Marico divested its refined sunflower oil brand "Sweekar" to Cargill
India private Limited (Cargill). This is in line with Companys focus
towards wellness platform through Saffola and thus focusing on healthy
edible oils and functional foods.
Marico Employee Stock Option Scheme 2007
In pursuance of shareholders approval obtained on November 24, 2006,
your Company formulated and implemented an Employee Stock Options
Scheme (the Scheme) for grant of Employee Stock Options (ESOS) to
certain employees of the Company and its subsidiaries. The Corporate
Governance Committee (Committee) of the Board of Directors of your
Company is entrusted with the responsibility of administering the
Scheme and in pursuance thereof, the Committee has granted 1,13,76,300
stock options (as at March 31, 2011) comprising about 1.85% of the
current paid up equity capital of the Company. Additional information
on ESOS as required by Securities and Exchange Board of India
(Employees Stock Option Scheme and Employees Stock Purchase Scheme)
Guidelines, 1999 is annexed and forms part of this report.
None of the Non-executive Directors (including Independent Directors)
have received stock options in pursuance of the above Scheme. Likewise,
no employee has been granted stock options, during the year equal to or
exceeding 0.5% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time of grant.
The companys Auditors, M/s. Price Waterhouse, have certified that the
Scheme has been implemented in accordance with the SEBI Guidelines and
the resolution passed by the members at the Extra-Ordinary General
Meeting held on November 24, 2006.
Marico Employees Stock Appreciation Rights Plan, 2011
During the financial year under review, the Board of Directors of your
Company implemented a long term incentive plan namely, Marico Stock
Appreciation Rights Plan, 2011 (STAR Plan) for the welfare of its
employees and those of its subsidiaries.
The purposes envisaged in the STAR Plan and the various schemes
thereunder are:
a. To promote amongst Members the desired behavior for meeting long
term business objectives of Marico Group
b. To enable retention of desired Members in Marico Group
c. To enable attraction of talent especially to challenging roles
d. To provide a wealth building dimension to the remuneration
structure
The Corporate Governance Committee of the Board of Directors has
granted stock appreciation rights to certain eligible employees
pursuant to the Companys Employee Stock Appreciation Rights Scheme,
2011("Scheme"), which is notified under the STAR Plan . The vesting
period under the Scheme is from March 28, 2011 to September 30, 2013.
Under the Scheme, the respective employees are entitled to receive
excess of the maturity price over the grant price subject to fulfilment
of certain conditions. The stock appreciation rights equivalent to
2,874,000 shares were granted to employees which were outstanding as on
March 31, 2011.
Application to the Central Government for exemption from including
Balance Sheets of the Subsidiary Companies
Your Company had applied to the Central Government under Section 212(8)
of the Companies Act seeking an exemption from attaching copies of the
Balance Sheet, Profit and Loss Accounts, Directors Report and
Auditors Report of its subsidiary companies. With reference to the
application, the Ministry of Corporate Affairs has granted a general
exemption subject to fulfillment of certain conditions.
In terms of the said exemption granted by the Ministry of Corporate
Affairs; copies of the Balance Sheet, Profit and Loss Account, Report
of the Board of Directors and the Report of the Auditors of the
Subsidiary Companies have not been attached to the Balance Sheet of the
Company. However, the statement required under section 212 of the
Companies Act, 1956 is attached. The Company will make these documents
/ details available upon request by any member of the Company
interested in obtaining the same and same would also be made available
on its website. The Consolidated Financial Statements prepared by the
Company pursuant to Accounting Standard AS-21 as prescribed by the
Companies (Accounting Standards) Rules, 2006, include financial
information of its subsidiaries.
PUBLIC DEPOSITS
There were no outstanding Public deposits at the end of this or the
previous year. The Company did not accept any public deposits during
the year.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act)
amended by the Companies (Amendment) Act, 2000, the Directors confirm
that:
In preparation of the Annual Accounts of your Company, the Accounting
Standards, laid down by the Institute of Chartered Accountants of India
from time to time, have been followed.
Appropriate accounting policies have been selected and applied
consistently, and reasonable and prudent judgement and estimates have
been made so as to ensure that the accounts give a true and fair view
of the state of affairs of your Company as at March 31, 2011 and the
profits of your Company for the year ended March 31, 2011.
Proper and sufficient care has been taken for maintenance of
appropriate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting frauds and other irregularities.
The annual accounts have been prepared on a going concern basis.
The observation(s) and qualification(s) of the Auditors in their report
to the Members have been adequately dealt with in the relevant notes to
the accounts. Hence no additional explanation is considered necessary.
CORPORATE GOVERNANCE
A report on Corporate Governance has been provided as a separate part
of this Report.
GROUP
Pursuant to intimation from Promoters of your Company, the names of
Promoters and companies comprising Group as defined in the Monopolies
and Restrictive Trade Practices Act, 1969, have been disclosed in the
Annual Report of your Company for the purpose of Regulation 3(1)(e) of
the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997.
DIRECTORS
Directors retiring by rotation
Mr. Nikhil Khattau and Ms. Hema Ravichandar, Directors of the Company,
retire by rotation as per Section 256 of the Companies Act, 1956 and
being eligible offer themselves for re-appointment.
Changes in the Board of Directors
Mr. B. S. Nagesh was appointed with effect from July 16, 2010 as a
Non-executive and Independent Director in casual vacancy created by
resignation of Director, Mr. Bipin Shah. Mr. Nagesh would hold office
as Director of the Company up to the conclusion of the Annual General
Meeting to be held for the Financial Year 2011-12.
Mr. Harsh Mariwalathe Managing Director of your Company was
re-appointed as the Managing Director by the Board of Directors at its
meeting held on January 27, 2011 for a further period of 3 years with
effect from April 1, 2011, subject to the approval of the Shareholders
at the ensuing Annual General Meeting.
Change in the Company Secretary & Compliance Officer
Ms Rachana Lodaya ceased to be the Company Secretary & Compliance
Officer with effect from October 27, 2010 and Ms. Hemangi Wadkar was
appointed as the Company Secretary & Compliance Officer of the Company
in her place with effect from that date.
ADDITIONAL STATUTORY INFORMATION
Information under Section 217(1)(e) of the Act read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988 is annexed and forms part of this Report. Information
pursuant to Section 217(2A) of the Act read with the Companies
(Particulars of Employees) Rules, 1975, as amended by the Companies
(Particulars of Employees) Amendment Rules, 1999 forms part of this
Report. Although in accordance with the provisions of Section
219(1)(b)(iv) of the Act such information has been excluded from the
Report and Accounts sent to the Members, any member desirous of
obtaining this information may write to the Company Secretary at the
Registered Office of the Company.
AUDITORS
M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and have
confirmed their eligibility for re-appointment.
Aneja Associates, a Chartered Accountant Firm, has been associated with
your Company as its internal auditor. They have been partnering your
Company in the area of risk management and internal control systems.
Your Company has re-appointed Aneja Associates as its internal auditor
for the year 2010-11.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, bankers
and all other business associates, and from the neighbourhood
communities of the various Marico locations. We look forward to
continued support of all these partners in progress.
On behalf of the Board of Directors
HARSH MARIWALA
Chairman and Managing Director
Place : Mumbai
Date : May 2, 2011
Mar 31, 2010
The Board of Directors (Board) is pleased to present the Twenty
Second Annual Report of your Company, Marico Limited (Your Company),
for the year ended March 31,2010 (the year under review, the year
or FY10).
In line with the requirements of the Listing Agreement with the Bombay
Stock Exchange and National Stock Exchange, your Company has been
reporting consolidated results - taking into account the results of its
subsidiaries. This Discussion therefore covers the financial results
and other developments during FY10 in respect of Marico Consolidated
comprising- Domestic Consumer Products Business under Marico Limited in
India, International Consumer Products Business comprising exports from
Marico Limited and operations of its overseas subsidiaries and the
Solutions Business of Kaya in India and overseas. The consolidated
entity has been referred to as Marico or Group or Your Group in
this discussion.
FINANCIAL RESULTS - AN OVERVIEW
Rs. Crore
Year ended March 31,
2010 2009
Consolidated Summary Financials
for the Group
Sales and Services 2660.8 2388.4
Profit before Tax 297.9 229.6
Profit after Tax 231.7 188.7
Marico Limited Financials
Sales and Services 2024.3 1917.5
Profit before Tax 292.6 171.0
Less: Provision for Tax 57.5 28.9
Profit After Tax 235.0 142.1
Add .Surplus brought forward 233.1 151.9
Profit available for Appropriation 468.1 294.0
Appropriations:
Distribution to shareholders 40.21 39.89
Tax on dividend 6.83 6.78
47.04 46.67
Transfer to General Reserve 23.5 14.2
Debenture Redemption Reserve 15.0 -
Surplus carried forward 382.6 233.1
Total 468.1 294.0
DISTRIBUTION TO EQUITY SHAREHOLDERS
Your Companys Distribution policy has aimed at sharing your Companys
prosperity with its shareholders, through a formal earmarking /
disbursement of profits to shareholders.
Marico has identified acquisitions as one of its avenues to pursue
growth. Since April 2005, the Group has consummated 8 acquisitions
including two each in India, Bangladesh and Egypt and one each in South
Africa and Malaysia. As part of its growth agenda, Marico would
continue to explore new acquisition opportunities. These would call for
additional funding.
As indicated last year, your Company intends to be more conservative in
the quantum of dividend payout in the near future.
Your Companys distribution to equity shareholders during FY 10
comprised the following:
First interim dividend of 30% on the equity base of Rs. 60.92 Crore
Second interim dividend of 36% on the equity base of Rs. 60.93 Crore
DIRECTORS REPORT
The total equity dividend for FY10 at 66.0% is thus at par with the
dividend paid during FY09. The total dividend (including dividend tax)
was Rs. 47 crore (about 20 % of the group PAT).
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
à Industry structure and development
à Opportunities and Threats
à Risks and Concerns
à Internal control systems and their adequacy
à Discussion on financial and operational performance
à Segment-wise performance Outlook
In addition, a Review of Operations of your Company has been given in
this report.
REVIEW OF OPERATIONS
Marico achieved a strong growth of 11 % in revenue over the previous
year and registered a topline of Rs 2661 crore during FY10. Almost the
entire growth was organic growth, with volume led growth of 14% while
the remaining came from price increases and sales mix. All its
businesses, those of consumer products in India, international business
and Kaya skin solutions contributed to the overall growth of the group.
The top line increase was accompanied by a bottom-line growth of 23%,
after considering the impact of extra-ordinary / exceptional items.
Profit After Tax (PAT) including exceptional / extra-ordinary items
during the year was at Rs 232 crore as against Rs. 189 crore in FY09.
The financials for FY10 include certain exceptional items of Rs 9.79
crores (Rs 4.05 crore on account of foreign currency translation
reserves consequent to sale of membership interest in Sundari LLC and
Rs 5.73 crore on account of closure of Kaya Life clinics in India and
Gulf) while the financials of FY 09 include certain exceptional items
(loss on sale of membership interest in Sundari LLC). Had it not been
for these items, the PAT for FY10 would have been Rs 242 crore, a
growth of 30% over FY09 (exceptional items excluded from the comparable
figure in the previous year).
During the year, Marico extended its record of year on year quarterly
growth.
Q4FY10 was on a Y-o-Y basis:
à The 38th consecutive Quarter of growth in Turnover and
à The 42nd consecutive Quarter of growth in Profits
The company has demonstrated steady growth on both the top line and
bottom line. Over the last 5 years, they have grown at a Compounded
Annual Growth Rate of 21% and 27% respectively.
Consumer Products Business: India
Parachute, Maricos flagship brand, continued to expand its franchise
during the year. Parachute coconut oil in rigid packs, the focus part
of its portfolio, grew by over 10% in volume as compared to FY09.
Similarly Nihar in rigid packs grew at about 9% in volume terms.
Marico offers its consumers a basket of value added hair oils for their
pre-wash and post wash hair conditioning, nourishment and grooming
needs (key brands being Parachute Advansed coconut hair oil, Parachute
Jasmine non sticky coconut hair oil, Nihar Naturals perfumed coconut
hair oil, Hair & Care nourishing non sticky hair oil, Hair & Care
Almond Gold and Shanti Badam Amla hair oil). During the year, all the
aforesaid hair oils brands recorded healthy growth and the portfolio as
a whole grew by about 16% in valumeoverFY09.
Further, Marico has been constantly investing in a healthy pipeline of
new products. During the year your company launched new prototypes.
These included Saffola Arise - lower Glycemic Index (Gl) rice,
Parachute Advansed Ayurvedic Hot Oil, Parachute Advansed Ayurvedic
Cooling Oil and Nihar Cooling Oil.
International FMCG Business
From a single digit share in FY05, about 23% of the groups turnover is
now contributed by Maricos International FMCG business. Its key
geographical presence is in Bangladesh, MENA (Middle East and North
Africa) and South Africa.
In January 2010, Marico established an entry into the South East Asian
region through the acquisition of the hair styling brand Code 10 in
Malaysia.
During FY10, Your Groups international business crossed the Rs 600
crore mark in turnover, a growth of 36% over FY09. Much of this growth
was derived from consumer franchise expansion - about 21 %, accompanied
by price led growth of 9%. An additional 6% growth was on account of
favourable foreign exchange rates.
Kaya
Kaya is the first organized player in the segment of cosmetic
dermatology and now enjoys a large first mover advantage in the segment
in India. During FY10, Kaya opened its first clinic in Dhaka,
Bangladesh. It now offers its technology led cosmetic dermatological
services through 101 clinics: 87 in India across 27 cities and 13 in
the Middle East in addition to the most recent one in Dhaka. Kaya also
introduced many new products during the year, details whereof are given
in the Annexure to this Report.
Kayas offering are in the nature of discretionary spends. Apart from
the impact of the overall economic downturn, the Kaya skin business in
India faced two adverse developments during the first half of FY10. The
outbreak of swine flu, though temporary, led to a drop in customer
appointments particularly in cities such as Pune and Bangalore where
the incidence of the outbreak was more acute. The introduction of
service tax in the Union Budget in an already unfavorable ambience made
growth more challenging. While there was some improvement in the macro
environment in the latter part of the year, Kaya continued to
experience a decline in same clinic revenue (revenue from clinics that
have been in existence for over a year) in India. In addition to the
above, opening of 31 new clinics in last two years which in normal
course would have required 3-4 years to achieve profitability as well
as provision of a significant one time costs resulting from strategic
decisions to close down Kaya Life centers (details whereof are given
below) and 7 Kaya Skin Clinics by June 30,2010 resulted in net worth of
Kaya Limited turning negative as on March 31,2010.
Kaya had launched the Kaya Life prototype to offer customers holistic
weight Management solutions and had opened 5 Kaya Life centres in
Mumbai and 1 centre in the Middle East during the past 3 years. While
clients had been experiencing effective results on both weight loss and
inch loss, the prototype had less than expected progress in building a
sustainable business model. Hence, the Management took a strategic
decision of closing down the centres in March, 2010. Consequently, the
Group has made an aggregate provision of Rs. 5.74 Crore for the year
ended March 31,2010 towards impairment of assets and other related
estimated liabilities.
Kaya is a fairly young business - only 7 years since its inception. The
business has been able to ramp up its presence to 87 clinics in India
across 27 cities and 13 clinics in the Middle East and a large customer
base with significant long term growth potential. We have already
experienced, in a few accounting periods, profitability at both clinic
level and regional level. We therefore believe that the losses during
FY10 are not reflective of future trends and the Kaya business model
continues to be robust and offers significant long term growth
opportunities. Further, the operations of Kaya are expected to improve
significantly due to positive changes in economic environment, maturity
of new clinics, renewed focus on reducing the time to scale up revenues
in new clinics, improve capacity utilizations in existing ones and add
to Kayas range of service and product offerings and anticipated
savings resulting from restructuring of operations.
OTHER CORPORATE DEVELOPMENTS
IPO - Marico Bangladesh Limited
Marico Bangladesh Limited (MBL), a wholly owned Subsidiary of Marico
Limited, received approval of the Bangladesh Securities & Exchange
Commission (SEC) for its proposal to make an Initial Public Offer (IPO)
in Bangladesh. Accordingly, MBL issued a total of 3,150,000 ordinary
shares (about 10% of MBLs expanded equity) of the face value of Taka
10 each at a price of Taka 90 per share. MBLs shares are listed on
the Dhaka Stock Exchange and the Chittagong Stock Exchange. The
proceeds of the IPO, aggregating to Taka 283.5 million are being
utilized to strengthen MBLs financials to enable continued growth.
Acquisition of Brand Code 10
Marico entered the Malaysian hair styling market through the
acquisition of the brand Code 10 and related IPR from Colgate-Palmolive
Company through Marico Malaysia Sdn Bhd, a wholly owned subsidiary of
Marico Middle East FZE. The Code 10 range comprises hair creams and
hair gels. Marico estimates the Malaysian hair styling market to be
about RM150 million in size. Code 10 is the number 3 player and enjoys
a double digit market share.
Divestment of Sundari LLC
Your Company concluded divestment of its stake in Sundari LLC (Sundari)
on June 8,2009 upon completion of necessary compliances under FEMA
regulations. Sundari ceased to be subsidiary of the Company from the
said date. Accordingly, the financial statements of Sundari have been
consolidated with that of Marico Limted for the period from April
1,2009 to June 8,2009. The net effect of the divestment of Rs. 4.05
crore is charged to the Profit and Loss account and reflected as an
Exceptional Item.
Marico Employee Stock Option Scheme 2007
In pursuance of shareholders approval obtained on November 24,2006,
your Company formulated and implemented an Employee Stock Options
Scheme (the Scheme) for grant of Employee Stock Options (ESOS) to
certain employees of the Company and its subsidiaries. The Corporate
Governance Committee (Committee) of the Board of Directors of Your
Company is entrusted with the responsibility of administering the
Scheme and in pursuance thereof, the Committee has granted 1,13,76,300
stock options (as at March 31,2010) comprising about 1.86% of the
current paid up equity capital of the Company. Additional information
on ESOS as required by Securities and Exchange Board of India
(Employees Stock Option Scheme and Employees Stock Purchase Scheme)
Guidelines, 1999 is annexed and forms part of this report.
None of the Non-executive Directors (including Independent Directors)
have received stock options in pursuance of the above Scheme. Likewise,
no employee has been granted stock options, during the year equal to or
exceeding 0.5% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time of grant.
The Companys Auditors, M/s. Price Waterhouse, have certified that the
Scheme has been implemented in accordance with the SEBI Guidelines and
the resolution passed by the members at the Extra-Ordinary General
Meeting held on November 24,2006.
Application to the Central Government for exemption from including
Balance Sheets of the Subsidiary Companies
Your Company had applied to the Central Government under Section 212(8)
of the Companies Act seeking an exemption from attaching copies of the
Balance Sheet, Profit and Loss Accounts, Directors Report and
Auditors Report of its subsidiary companies.
In terms of the approval granted by the Central Government for the
financial year FY10; copies of the Balance Sheet, Profit and Loss
Account, Report of the Board of Directors and the Report of the
Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. However, the statement required under
section 212 of the Companies Act, 1956 is attached. The Company will
make these documents / details available upon request by any member of
the Company interested in obtaining the same and same would also be
made available on its website. The Consolidated Financial Statements
prepared by the Company pursuant to Accounting Standard AS-21 as
prescribed by the Companies (Accounting Standards) Rules, 2006, include
financial information of its subsidiaries.
PUBLIC DEPOSITS
There were no outstanding Public deposits at the end of this or the
previous financial year. The Company did not accept any public deposits
during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act)
amended by the Companies (Amendment) Act, 2000, the Directors confirm
that:
In preparation of the Annual Accounts of your Company, the Accounting
Standards, as prescribed by the Companies (Accounting Standards) Rules,
2006, from time to time have been followed. However, attention is drawn
specifically to note 24 of Schedule R to the Stand-alone Financial
Statements and note 22 of Schedule R to the Consolidated Financial
Statements in this regard.
Appropriate accounting policies have been selected and applied
consistently, and reasonable and prudent judgment and estimates have
been made so as to ensure that the accounts give a true and fair view
of the state of affairs of your Company as at March 31, 2010 and the
profits of your Company for the year ended March 31,2010.
Proper and sufficient care has been taken for maintenance of
appropriate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting frauds and other irregularities.
The annual accounts have been prepared on a going concern basis.
The qualification of the Auditors in their Report to the Members in
connection with provision made by the Company towards contingencies on
account of possible excise obligations on manufacture of pure coconut
oil (CNO) is self-explanatory. Adequate explanations have been provided
in the relevant notes to the accounts. Hence no additional explanation
is considered necessary.
CORPORATEGOVERNANCE
A report on Corporate Governance has been provided as a separate part
of this Report.
GROUP
Pursuant to intimation from Promoters of your Company, the names of
Promoters and companies comprising Group as defined in the Monopolies
and Restrictive Trade Practices Act, 1969, have been disclosed in the
Annual Report of your Company for the purpose of Regulation 3(1 )(e) of
the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997.
DIRECTORS
Directors retiring by rotation
Mr. Rajeev Bakshi and Mr. Rajen Mariwala, Directors of the Company,
retire by rotation as per Section 256 of the Companies Act, 1956 and
being eligible offer themselves for re-appointment.
Changes in the Board of Directors
Mr. Bipin Shah and Mr. Jacob Kurian resigned from the Board of
Directors of the Company with effect from close of business hours on
January 28, 2010. The Board of Directors has accepted their resignation
and would like to place on record their sincere appreciation of the
valuable services rendered by Mr. Bipin Shah and Mr. Jacob Kurian.
ADDITIONAL STATUTORY INFORMATION
Information under Section 217(1 )(e) of the Act read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988 is annexed and forms part of this Report. Information
pursuant to Section 217(2A) of the Act read with the Companies
(Particulars of Employees) Rules, 1975, as amended by the Companies
(Particulars of Employees) Amendment Rules, 1999 forms part of this
Report. Although in accordance with the provisions of Section 219(1)
(b) (iv) of the Act such information has been excluded from the Report
and Accounts sent to the Members, any member desirous of obtaining this
information may write to the Company Secretary at the Registered Office
of the Company.
AUDITORS
M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and have
confirmed their eligibility for re-appointment.
Aneja Associates, a Chartered Accountant Firm, has been associated with
your Company as its internal auditor. They have been partnering your
Company in the area of strengthening the internal control systems
through internal audits. Your Company has re- appointed Aneja
Associates as its internal auditor for the year 2010-11.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, bankers
and all other business associates, and from the neighbourhood
communities of the various Marico locations. We look forward to
continued support of all these partners in progress.
On behalf of the Board of Directors
Place: Mumbai HARSH MARIWALA
Date : April 28, 2010 Chairman and Managing Director
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