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3M India Ltd.

BSE: 523395 Sector: Others
NSE: 3MINDIA ISIN Code: INE470A01017
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OPEN 11005.00
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VOLUME 5143
52-Week high 15200.00
52-Week low 9405.00
P/E 55.40
Mkt Cap.(Rs cr) 12351.64
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 11005.00
CLOSE 10999.45
VOLUME 5143
52-Week high 15200.00
52-Week low 9405.00
P/E 55.40
Mkt Cap.(Rs cr) 12351.64
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

3M India Ltd. (3MINDIA) - Director Report

Company director report

To the Members of 3M India Limited

Your Directors have pleasure in presenting the 29th Annual Report of theCompany together with the Audited Financial Statements for the Financial Year ended March31 2016.

FINANCIAL HIGHLIGHTS

Following are the working results: (Rs. in Lakhs)

Particulars Year ended March 312016 Year ended March 312015 %age

Increase(+)/

(Audited) (Audited) Decrease(-)
Total Income(excluding excise duty) 212019.48 185477.60 +14.31%
Of which - Export Sales 4672.24 3942.92 +18.50%
- Other Income 1721.61 1447.84 +18.91%
Less : Expenditure 176112.69 163718.62 +7.57%
Profit Before Interest and Depreciation 35906.79 21758.98 +65.02%
Less : Interest 218.65 342.27 -36.12%
Less : Depreciation 4888.91 4960.49 -1.44%
Profit Before Taxation 30799.23 16456.22 +87.16%
Less: Provision for Taxation 10706.25 5622.06 +90.43%
Profit after Taxation 20092.98 10834.16 +85.46%

STATE OF COMPANY'S AFFAIRS

The external environment indicates long term growth in India. Several leading financialinstitutions have vouched for the growth as well. While the Indian economy gives us longterm optimism currently prevailing issues also made us play cautiously in the marketenvironment. Your Company focused on improving productivity and gearing up for the muchfaster paced economy that is expected over the next few years.

The mantra we followed is productivity led growth in this financial year. Productivityimprovement was achieved through 5 distinct steps that the Company undertook;

Portfolio prioritization and Commercialization focus: We focused onrelentlessly prioritizing our resources to our prioritized businesses.

Vital Few Metrics: We strengthened the predictability of our actions byfocusing on a few metrics following the Hoshin Kanri methodology of Business ProcessExecution.

Market & Segment Prioritization: Developed a deep understanding ofthe external environment and focusing on segments that are profitable.

Keeping the Customer First: Enhanced our customer service team anddeveloped newer business models including ecommerce which helped in attaining a moreeffective reach to our end customers.

• Developing a bigger bolder and smarter plan through increased internalcollaboration.

Change Management was integral to executing the above five steps while keeping ouremployees engaged and energized. Following these steps helped us to enter a phase of"Efficient growth" which is central to our growth strategy.

The Company registered an overall turnover growth of 14.31% at Rs. 212019.4.Lakhs for the financial year ended March 31 2016 compared to Rs.185477.60 Lakhs inthe previous year. The Profit Before Interest and Depreciation was at Rs. 35906.79 Lakhscompared to Rs. 21758.98 Lakhs for the previous year. The operating margin for thecurrent year was at 6.94% compared to 11.73% for the last year. Profit Before Taxwas at Rs.30799.23 Lakhs compared to Rs. 16456.22 Lakhs for the previous year. ProfitAfter Taxation was at Rs. !0092.9 Lakhs compared to Rs.10834.16 Lakhs for theprevious year. Lower material cost and interest portfolio prioritization and expenseproductivity increased the profitability at all levels for the year under review.Export Sales was at Rs.4672.24 Lakhs for the year ended March 31 2016 compared to Rs.3942.92 Lakhs in the previous year an increase of 1 %.

The Industrial business grew by %; Health Care business grew by 5.51%: Safety andGraphics business grew by 16.71%; Consumer business grew by 16.8 % and Energybusiness grew by 10.12 %.

The EPS (Basic and Diluted) of the Company for the year 2015-16 was Rs. 178.31 pershare as compared to Rs. 96.17 per share in the previous year. Detailed analysis of theperformance has been discussed in the Management's Discussion and Analysis Section of theAnnual Report.

CONTRIBUTION TO EXCHEQUER

During the Financial year 2015-16 the Company through its business contributed tovarious taxes viz. VAT TDS Sales Tax State Excise CENVAT and Customs close to Rs. 46707.08Lakhs in aggregate.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and/or commitments affecting the financial positionof the Company since the close of the Financial year and the date of this report.

CHANGE IN THE NATURE OF BUSINESS

There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014.

DIVIDEND AND TRANSFER TO RESERVES

The Company has launched new growth plan with a long term objective and is in theprocess of implementing many initiatives and projects. A more detailed assessment is beingcarried out to estimate the required resources. As a result it has been decided toconserve and retain the earnings and therefore not propose dividend or transfer anyamounts to reserves.

CAPITAL INVESTMENTS

Capital Investments during the year 2015-16 were at Rs. L092.46 Lakhs (Net ofcapital work-in-progress and capital advances) (2014-15: Rs. 1471.70 Lakhs).

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report is annexed herewith as "AnnexureA".

CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION

A separate Report on Corporate Governance in terms of Regulation 34 of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred as "Listing Regulations") along with a Certificatefrom a Practising Company Secretary regarding compliance to the Conditions stipulatedunder Chapter IV of Regulations is annexed as "Annexure B".

DETAILS OF BOARD MEETINGS DURING THE YEAR

During the financial year ended March 31 2016 five (5) Meetings of the Board wereheld on May 292015 August 32015 October30 2015 February 52016 and February262016.The details of other committee meetings are given in the Corporate GovernanceReport.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. B.S. Iyer Chairman of the Board ceased to be a Director on the Board of theCompany upon completion of his term as Independent Director with effect from the closinghours on 31st March 2016. He was associated with the Company as Director from December2001. The Board expresses its deep appreciation of the valuable contributions made by Mr.Iyer to the progress of the Company.

At the Meeting of the Board held on May 27 2016:

- Ms. Radhika Rajan was appointed as Additional Director categorized as Non-ExecutiveIndependent Director of the Company from May 27 2016. The Board of Directors welcomes Ms.Radhika Rajan to the Board. The details of Ms. Radhika Rajan are furnished in theExplanatory Statement to the Notice of the Annual General Meeting pursuant to Section 102of the Companies Act 2013. The Board recommends her appointment.

- Ms. Debarat Sen was appointed subject to the requisite approvals from the Members andthe Central Government as Additional Director and as Managing Director of the Company fora period of five (5) years from June 1 2016 in place of Mr. Amit Laroya. The Board ofDirectors welcomes Ms. Debarat Sen to the Board. The details of Ms. Debarat Sen arefurnished in the Explanatory

Statement to the Notice of the Annual General Meeting. The Board recommends herappointment. She will be a Key Managerial Personnel of the Company from June 1 2016.

- Mr. Amit Laroya shall cease to be the Managing Director of the Company from theclosing hours of May 31 2016 consequent upon his appointment as Managing Director of 3MKorea. The Board expresses its deep appreciation of the valuable contributions made by Mr.Laroya during his tenure as Managing Director of the Company to the progress of theCompany. Mr. Laroya will continue as Non-Executive Director of the Company.

- Mrs. Sadhana Kaul resigned as Director of the Company with effect from the closinghours of May 27 2016 due to her pre-occupation and other commitments. The Board expressesits appreciation of the contributions made by Mrs. Kaul during her tenure as Director ofthe Company.

- Mr. Bharat Shah was appointed as Chairman of the Board. The Board of Directorswelcomes Mr. Bharat Shah as new Chairman of the Board.

Mr. Ramesh Ramadurai Non-Executive Non-Independent Director will retire by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.The details of Mr. Ramesh Ramadurai are given in the Explanatory Statement to the Noticeof the Annual General Meeting. The Board of Directors recommends his re-appointment.

Mr. Sameer Agarwal ceased to be Chief Financial Officer (CFO) with effect from theclosing hours of March 31 2016 and Mr. Panagiotis Goulakos (Panos) was appointed as CFOfrom March 15 2016.

As at the financial year ending March 31 2016 Mr. Amit Laroya Managing Director Mr.B.V. Shankaranarayana Rao Whole-time Director Mr. Panagiotis Goulakos (Panos) ChiefFinancial Officer and Mr. V. Srinivasan Company Secretary and Compliance Officer are theKey Managerial Personnel of the Company.

COMPOSITION OF AUDIT COMMITTEE

As at the financial year ending March 31 2016 the Audit Committee of the Companyconsisted of three (3) Non-Executive Independent Directors and one (1) Non-ExecutiveDirector and all of them have financial and accounting knowledge. The members of theCommittee are Mr. Biren Gabhawala (Chairman) Mr. B. S. Iyer (up to March 312016) Mr. Bharat Shah and Mr. Manuel B Pardo. The Board has accepted all therecommendations of the Audit Committee during the year under review.

NOMINATION AND REMUNERATION COMMITTEE POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and forother employees and their remuneration. The same has been disclosed in the website at http://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/information/corporate/financial-facts/summarv/. The compositioncriteria for selection of Directors and the terms of reference of the Nomination andRemuneration Committee is stated in the Corporate Governance Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has also established an effective vigil mechanism by way of BusinessConduct Concern Reporting Policy (Whistleblower Policy) for upholding 3M's Code ofConduct. The details of the said Policy are stated in the Corporate Governance Report andalso available on the website of the Company )ttp://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/information/corporate/ tinancial-facts/summary/.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Directors had laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.

3M globally is aligned to Company's internal control over financial reporting based onthe framework established by the Committee of Sponsoring Organizations of the TreadwayCommission(COSO) in Internal Control — Integrated Framework (2013). The internalcontrol framework essentially has two elements viz. (1) structures policies andguidelines designed to achieve efficiency and effectiveness in operations and compliancewith laws and regulations and (2) an assurance function provided by Internal Audit.

The Company has in place adequate systems of internal control commensurate with itssize and the nature of its operations. These have been designed to provide reasonableassurance with regard to recording and providing reliable financial and operationalinformation complying with applicable statutes safeguarding assets from unauthorized useor losses executing transactions with proper authorization and ensuring compliance ofcorporate policies.

The Company through its own Corporate Internal Audit Department carries out periodicaudits to cover all the offices factories and key areas of business segments based on theplan approved by the Audit Committee and bring out any deviation to internal controlprocedures. The Internal Auditor functionally reports to the Audit Committee andadministratively to the Managing Director. The observations arising out of audit areperiodically reviewed and compliance ensured. The summary of the Internal Auditobservations and status of the implementation is submitted to the Audit Committee of theBoard of Directors. The status of implementation of the recommendations is reviewed by theCommittee on a regular basis and concerns if any are reported to the Board. The AuditCommittee also meets the Company's Statutory Auditors to ascertain their views onfinancial statements including the financial reporting system compliance to accountingpolicies and procedures the adequacy and effectiveness of internal control system.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3) (c) of the Companies Act 2013:

(a) that in the preparation of the annual financial statements for the Financial yearended March 31 2016 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;

(b) that such accounting policies as mentioned in Notes to the Financial Statementshave been selected and applied consistently and judgement and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2016 and of the profit of the Company for the year ended onthat date;

(c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) that the annual financial statements have been prepared on a going concern basis;

(e) that proper internal financial controls were in place and that the financialcontrols were adequate and operating effectively;

(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.

INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES /ASSOCIATES/ JOINT VENTURE

The Company does not have any Subsidiaries/Associates/Joint Venture.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure C".

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedVijayakrishna K.T Company Secretary in Practice to undertake the Secretarial Audit of theCompany. The Report of the Secretarial Audit Report is annexed herewith as "AnnexureD". There were no qualifications in the Secretarial Audit report for the yearended March 31 2016.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed as "AnnexureE"

DEPOSITS

During the year under review the Company has neither accepted nor renewed any depositsfrom public within the meaning of Section 73 of the Companies Act 2013 and the Companies(Acceptance of Deposits) Rules 2014.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the year under review the Company has not given any Loan provided anyguarantees or made any Investments covered under Section 186 of the Companies Act 2013.

RISK MANAGEMENT POLICY

The Company has a Risk Management Policy pursuant to the requirements of ListingRegulations. The details of Committee and its terms of reference are set out in theCorporate Governance Report forming part of the Board's Report.

CORPORATE SOCIAL RESPONSIBILITY

As part of its initiatives under Corporate Social Responsibility (CSR) the Company hasundertaken projects in the areas of Education Innovation and Women Empowerment. Theseprojects are in accordance with Schedule VII to the Companies Act 2013.

In Education:The Company worked with NGO partners to inculcate the spiritof inquiry and innovative thinking among underprivileged children. We work with theAgastya Foundation on the Mobile Science Lab initiative which helps disseminate scientificpractical knowledge to 100 Government schools in 2 states in India (Karnataka andMaharashtra) sparking curiosity among 20000+ children.

Women Empowerment: The Company's vision is to help develop leadershipskills to empower underprivileged women though entrepreneurship and local governance. TheCompany works with two reputable NGOs in Bangalore to deliver a skills development programwhich is equipping more than 150 young women with the necessary skills to make thememployable.

Social Innovation: As a way to contribute to the innovation eco-system inthe country the Company supports young innovators in the age group of 18 to 30 years withan Incubation Fund and Awards Program jointly with the Confederation of Indian Industries(CII). The program identifies unique innovations that can help solve social challenges inIndia. The award winners are offered grants by the Company to pursue their projects anddevelop prototypes for further development.

The Annual Report on CSR activities is annexed herewith as "Annexure F"including the reasons for not spending the full amount for the year 2015-16.

RELATED PARTY TRANSACTIONS (RPTs)

All Related Party Transactions (RPTs) that were entered into during the financial yearwere on an arm's length basis and were in the ordinary course of business. All RPTs areplaced before the Audit Committee for approval. Prior omnibus approval of the AuditCommittee is obtained on a yearly basis for the transactions which are of a foreseen andrepetitive nature. A statement giving details of all RPTs is placed before the AuditCommittee for their approval on a quarterly basis. The policy on RPTs as approved by theBoard is uploaded on the Company's website at ittp://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/information/corporate/ tinancial-facts/summary/.

The Company being a part of 3M conglomerate has rights to carry out the businesswithin India and accordingly has access to Group's synergies state of art products andtechnologies competencies and "3M" brand name which are very critical andessential to carry out its business operations more efficiently in an increasinglyglobalized and competitive scenario. As a part of its regular business the Companypurchases avails/renders services from/to 3M Company USA at arm's length basis.

As per the provisions of the Companies Act 2013 and Listing Regulations all RPTsrequire approval of the members by an ordinary resolution. Based on past trend thetransactions with 3M Company USA(Holding Company) are likely to exceed 10% of the annualturnover of the Company as per the last audited financial statements of the Company andmay exceed the materiality threshold as prescribed under the provisions of ListingRegulations. Thus in terms of Listing Regulations these transactions would requireapproval of the members.

The RPTs are necessary normal to business plays a significant role in the Company'sbusiness operations and also form integral part of the Company's business. An analysis ofall the RPTs entered into / by the Company and the basis of charge was undertaken througha third party professional firm. Accordingly the Board recommends for the approval of themembers in terms of the provisions of Listing Regulations. The Form No. AOC-2 is annexedherewith as "Annexure G".

ANNUAL BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and The Listing Regulations theBoard has carried out an annual performance evaluation of its own performance itsCommittee and the Directors individually. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.

HUMAN RESOURCES

Your Company considers people as its biggest assets and is at the heart of its humanresource strategy. It has put concerted efforts in talent management and successionplanning practices strong performance management and learning and training initiatives toensure that your Company consistently develops inspiring strong and credible leadership.Your Company has established an organization structure that is agile and focused ondelivering business results. With regular communication and sustained efforts it isensuring that employees are aligned on common objectives and have the right information onbusiness evolution. As at March 31 2016 the Company had employee strength of 1388personnel.

PARTICULARS OF EMPLOYEES

Pursuant to Section 197(12) of the Companies Act 2013 and Rule 5(1) (2) & (3) ofthe Companies (Appointment & Remuneration) Rules 2014 details / disclosures of Ratoof Remuneration to each Director to the median employee's remuneration is annexed herewithas "Annexure H".

Further the Statement showing details of employees of the Company employed throughoutthe year and employees employed for part of the year who were in receipt of remunerationof Rs. 60 Lakhs or more per annum / Rs. 5 Lakhs or more per month is annexed herewith as "AnnexureI."

DECLARATION FROM INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that they meet the criteria oftheir Independence laid down in Section 149(6) of the Companies Act 2013 read withListing Regulations. The same is annexed herewith as "Annexure J".

STATUTORY AUDITORS

Messrs. Lovelock & Lewes have been the Statutory Auditors of your Company since1995. As you may be aware at the Annual General Meeting (AGM) of the Company held onAugust 4 2015 Messrs. Lovelock & Lewes were appointed as Statutory Auditors for aperiod of two years viz. FY 2015-16 & 2016-17 (subject to ratification by theshareholders at the AGM in 2016) in line with the provisions of Section 139 of theCompanies Act 2013 ("Act") read with Companies (Audit and Auditors) Rules2014.

Subsequent thereto Messrs. Lovelock & Lewes informed us of the rotation ofassigned partner as part of its internal policy for the financial year 2016-17. As the newStatutory Auditors for the Company were to be appointed under the Act for the FY 2017-18onwards it was considered desirable to have the new Statutory Auditors appointed from thefinancial year 2016-17 itself. This was deliberated between the Company and Messrs.Lovelock & Lewes and was unconditionally agreed by both so as to ensure andfacilitate smooth transition of audit work. Accordingly a written confirmation videletter dated May 19 2016 from Messrs. Lovelock & Lewes was received.

Pursuant to the above the Company has identified Messrs. BSR & Co. LLP CharteredAccountants (ICAI Firm Registration No. 101248W/ W-100022) Bengaluru- 560071 as newStatutory Auditor.

The Company has received a Special Notice under Section 140(4) (i) of the CompaniesAct 2013 read with Rule 23 of the Companies (Management and Administration) Rules 2014from 3M Company USA shareholder holding 75% of total share capital proposing the name ofMessrs. BSR & Co. LLP Chartered Accountants for appointment as Statutory Auditorsfor a period of 5 years (effective from the Financial Year 2016-17) from the conclusion ofthe 29th Annual General Meeting.

Messrs. BSR & Co. LLP Chartered Accountants have furnished their eligibilitycertificate under Section 141 of the Companies Act 2013. As required under the ListingRegulations Messrs. BSR & Co. LLP Chartered Accountants have also confirmed thatthey hold a valid certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India. The Board of Directors of the Company on therecommendation of Audit Committee have appointed Messrs. BSR & Co. LLP CharteredAccountants (ICAI Firm Registration No. 101248W/W-100022) Bengaluru- 560071 as StatutoryAuditors of the Company subject to the approval of the members of the Company at theensuing Annual General Meeting. The Notice of AGM contains a business to this effect foryour approval.

Messrs. Lovelock & Lewes over many years have since 1995 successfully met thechallenge that the size and scale of the Company's operations posed for auditors and havemaintained the highest level of governance rigour and quality in their audit. The Boardof Directors wishes to place on record its deep appreciation and gratitude to Messrs.Lovelock & Lewes for their guidance and support as Statutory Auditors of the Company.

COST AUDIT

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 the cost audit records maintained by the Company inrespect of the products covered under the said rules are required to be audited by a CostAccountant. Accordingly the Board of Directors of the Company at its meeting held on May27 2016 on the recommendation of the

Audit Committee approved re-appointment of Messrs. Rao Murthy & Associates CostAccountants Bengaluru (holding Registration No. 000065) to conduct the audit of thecost records of the Company for the financial year ended March 31 2017 on an remunerationof Rs. 430000/- plus service tax as applicable and out of pocket expenses at actuals. TheAudit Committee has also received a certificate from the Cost Auditor certifying theirindependence and arm's length relationship with the Company.

As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in a General Meeting for their ratification.Accordingly a resolution seeking ratification of the remuneration payable to Messrs. RaoMurthy & Associates Cost Accountants Bengaluru is included in the Notice conveningthe Annual General Meeting.

Disclosure on cost audit: For the financial year ending March 31 2015 the duedate of filing the Cost Audit Report submitted by Messrs. Rao Murthy & AssociatesCost Accountants Bengaluru was September 27 2015 and the same was filed with theMinistry of Corporate Affairs on September 24 2015 vide SRN No. S39552641.

OTHER DISCLOSURES

• The Company has in place an Anti-Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-2016:

No of complaints received: 2 No of complaints disposed off: 2

There were no qualifications by the Auditors in their report forming part ofthis financials for the year ended March 31 2016.

• During the year under review the Company has not bought its own shares nor hasgiven any loan to the employees (including KMPs) of the Company for purchase of theCompany shares.

• During the year under review no Commission or Remuneration was paid to theExecutive Directors from Holding / Subsidiary Companies.

LISTING WITH STOCK EXCHANGES

The Company has paid the Annual Listing Fees for the year 2016-2017 to National Stockexchange of India Limited (NSE) and BSE Limited (BSE) where the Company's Shares arelisted. The new SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015came into effect from December 1 2015 with a view to consolidate and streamline theprovisions of the Listing Agreement for different segments of capital markets to ensurebetter enforceability. The Company has complied with the said Regulations by entering intonew Listing Agreement with BSE and NSE.

EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS

The Company has only one class of share i.e. equity share with a face value of Rs. 10each. The Authorized/Issued/Subscribed and fully paid-up Capital as at March 31 2016 wasRs. 112650700 (divided into 11265070 equity shares of Rs. 10 each).During the yearunder review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity.

ENVIRONMENT HEALTH AND SAFETY

Compliance with relevant regulations and 3M Global Environmental Health and Safetypolicies is an integral part of the Company's operating philosophy and the Company standscommitted to continually improve on these objectives. There was a considerable focus onimproving Environment Health and Safety during the period under review by the Company.

Environment: The Company has three (3) Manufacturing Plants in operation inIndia. All three (3) plants have environmental management systems certified to ISO 14001:2004. The Company continuously endeavors to improve on environmental management tominimize the environmental impacts. All plants have sewage / waste water treatment plantsand the treated water is recycled for horticulture within the facilities. The plants haveset up various measures to reduce and reuse water where ever possible. The plants havealso installed rain water harvesting systems to divert the rain water for ground waterrecharging. With the approval from local Pollution Control Boards plants have now startedsending industrial waste to cement companies to generate energy instead of in-houseincineration and thereby reducing overall carbon foot prints by saving the part of thecoal consumption of cement plants. As part of World Environmental day initiative theplants have taken up various environmental awareness programs including tree plantation inplants as well as public places.

Health and Safety: All three (3) manufacturing plants have health and safetymanagement systems certified to OHSAS 18001: 2007. All plants have dedicated safetyofficers supported by Corporate EHS. Plant Safety committees which include shop flooremployees and chaired by Plant managers are in place and meet regularly to review issuesimpacting plant safety and employees health. High risk

operations are controlled through the hierarchy of controls identified through 3M'srisk prioritization matrix initiative. Key measures like conducting training programs onvarious health and safety issues including dealing with epidemics ergonomics industrialhygiene process safety management machine guarding work safety road safety first-aidmanual handling etc. have been implemented. Regular health checkup of the plant employeesis carried out. Every year plants celebrate safety month in March and conduct varioussafety awareness programs like safety quiz drawing competition slogan and hazardidentification competition. All plants have full- fledged emergency communication andmanagement systems including fire alarms fire hydrants and fire sprinklers. Regular mockdrills are conducted to check the adequacy and preparedness of these systems. The plantshave a well-equipped first aid rooms to attend to immediate medical needs. During thisperiod under consideration there were no lost time accidents across three plants. 3MAhmedabad plant has been audited by 3M Global EHS auditors and the auditors commended theplant for complying with 3M Global EHS policies. During this period under consideration3M Ranjangaon plant received National Safety Systems Excellence award from FICCI post arigorous site audit and review by FICCI safety experts.

AWARDS AND RECOGNITION

• 3M India Ranjangaon plant's commitment to stringent safety systems at theworkplace earned national recognition with the FICCI "Safety Systems ExcellenceAward". The award recognizes companies for the robustness of their safety systems andnot for performance alone. The selection across Indian companies is conducted through arigorous four-stage process which includes onsite audit by safety experts and a finalselection by the Hon'ble Jury for the awards.

• 3M India received various awards for demonstrating quality & technicalexcellence for some of the Company's key account customers. The Company was awarded a"Certificate of Appreciation for Outstanding Support in Sales Promotion" byHonda Cars at their Annual Supplier convention. Toyoda a supplier of Toyota recognizedthe Company for outstanding effort and commitment in the area of quality and delivery.Honda Motorcycle and Scooters also recognized 3M India for outstanding contributiontowards Honda's two-wheeler business.

• 3M India's top consumer brand Scotch-Brite released a television commerciallast year which was selected for the best advertisement award in the home care category atthe first edition of the IndIAA Awards. These awards were instituted by the India Chapterof International Advertising Association. The awards recognized 16 brands from a finalshortlist of 76 nominees that were selected from over 500 entries by an eminent panel ofbusiness and brand leaders.

• 3M India Ranjangaon plant received 3M Corporate recognition for quality andmanufacturing excellence with global awards for 3 projects - 1 for quality achievement and2 for process technology excellence.

• 3M India also received accolades for excellence in marketing innovation andsupport functions with regional awards.

ACKNOWLEDGEMENT

The Board wishes to place on record its appreciation to all employees in the Companyfor their sustained efforts and immense contributions to the good levels of performanceand growth that your Company has achieved during the year. The Board also acknowledges thecontinued support and co-operation received from 3M Company USA.

The Directors express their gratitude to the Central Government and the StateGovernments of Karnataka Maharashtra and Gujarat for the support given to the Company.The Directors also thank all customers dealers suppliers banks members and othersconnected with the business of the Company for their co-operation.

On behalf of the Board of Directors
Amit Laroya B.V. Shankaranarayana Rao
Place : Bengaluru Managing Director Whole-ime Director
Date : May 27 2016 DIN:00098933 DIN:00044840

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