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|BSE 05:30 | 01 Jan|
|NSE 05:30 | 01 Jan|
|BSE: N.A.||Sector: N.A.|
|NSE: N.A.||ISIN Code: N.A.|
|BSE 05:30 | 01 Jan|
|NSE 05:30 | 01 Jan|
The Directors are pleased to present to you the 59th Annual Report of AdityaBirla Nuvo Limited along with the Audited Financial Statements for the year ended 31stMarch 2016.
India's economy has shown sign of growth in fiscal 2015-16 with estimated GDP growthat 7.6% compared to 7.2% in FY 2014-15. India continues to be the fastest growing largeeconomy with stable macro-economic conditions. The government has maintained momentum byunveiling multiple new initiatives like Startup India Standup India and Digital India inaddition to its focus on Make in India and Ease of Doing Business. These initiatives areexpected to provide impetus to the Indian economy. A significant drop in commodity pricesled by crude oil and other measures resulted in lower consumer inflation which enabledeasing of interest rates in the economy.
The World Bank and the International Monetary Fund have forecast India's GDP willcontinue to grow at a robust rate. Despite challenging global headwinds a stable macroperformance will help India to remain an attractive investment destination. Execution ofthe reforms agenda and reviving the investment cycle will be key determinants of India'seconomic performance in the long term.
CONSOLIDATED FINANCIAL PERFORMANCE
Your Company has posted sound earnings growth and improved performance across most ofthe businesses. Pursuant to the demerger of the Company's Madura Fashion division (Madura)into its listed subsidiary Pantaloons Fashion & Retail Ltd. (PFRL) Madura & PFRLhave ceased to be a division and a subsidiary respectively of your Company and hence notconsolidated w.e.f. 1st April 2015. Your Company's IT-ITeS subsidiary wasdivested w.e.f. 9th May 2014. To that extent the previous year's financialsare not comparable.
Like-to-like consolidated revenue of your Company that is excluding IT-ITeS andFashion businesses grew by 11% to ' 23129 Crore. On a like-to-like basis the Company'sEBITDA rose by 24% to ' 6535 Crore largely driven by the NBFC the Asset Management theTelecom the Rayon and the Agri businesses. Net profit surged to ' 1886 Crore.
Aditya Birla Financial Services one of the largest non-bank financial servicesplayers ranks among the top 5 fund managers in India (excluding LIC). Its assets undermanagement rose year-on-year by 12% to ' 184276 Crore. Its revenue grew by 17% to ' 9299Crore and earnings before tax by 17% to ' 995 Crore. The lending book of Aditya BirlaFinance Ltd. at ' 25755 Crore continues to grow ahead of the market posting ayear-on-year rise of 47%. Aditya Birla Housing Finance Ltd. which commenced itsoperations in October 2014 has extended its loan book from ' 142 Crore in March 2015 to '1973 Crore in March 2016. Birla Sun Life Insurance ranked 4th among privateplayers in India and remained the number 1 private life insurer in the Group segment.Birla Sun Life Asset Management cemented its position as India's 4th largest with aconsistently rising market share. The proposed Health Insurance partnership with MMIHoldings Ltd. has received an inprinciple approval from FIPB and is awaiting finalapproval from IRDAI. MyUniverse India's number 1 online personal finance managementportal now enjoys the trust of more than 2.6 million registered users who are managing aportfolio close to ' 20000 Crore through this portal.
In the telecom business Idea Cellular ranks 3rd in India with animproved revenue market share of 18.9% up from 17.5% a year ago. To capitalise on thedata opportunity Idea is aggressively expanding its 3G and 4G footprints and leveragingits strong spectrum bank. On the back of annual cash profit generation of over ' 10000Crore Idea is competitively well-positioned to support its growth plans.
Amongst the divisions the Rayon business attained its highest everprofitability on account of higher volumes and improved realisation in both VFY andcaustic segments. The earnings of Agri business improved sharply year-on-year led by itshighest ever urea sales volume and increased contribution per tonne. The Insulatorsbusiness posted healthy earnings growth driven by higher volumes and realisation. Whileprofitability of Jaya Shree textiles remained flat due to subdued demand in Linen segmentthe business is planning to expand its Linen yarn Capacity from 3400 TPA to 6200 MTPAconsidering the long term sector growth potential.
STANDALONE FINANCIAL PERFORMANCE
Your Company's standalone like-to-like revenue that is excluding Madura Fashiondivision remained flat at ' 5466 Crore. Revenue growth was constrained due to Agribusiness having to pass through a reduction in natural gas prices on account of the gaspooling policy effective from 1st June 2015. On a like-to-like basis EBITDAat ' 846 Crore and Net Profit at ' 360 Crore surged by 19% and 11% respectively drivenprimarily by the Rayon and the Agri businesses.
NEW INITIATIVES AND CORPORATE ACTION Solar Power:
With the renewed focus of the Indian Government on clean energy and in line with thevision of the Company to invest in promising sectors your Company has forayed into theSolar Power business. Towards this initiative Aditya Birla Renewables Limited (ABReL) asubsidiary of the Company was incorporated on 7th August 2015 to develop andoperate utility-scale solar power plants that can provide clean and cost-effectiveelectricity to the national grids across several key states in India and various stategrids under its solar platform.
Your Company has entered into a 51:49 partnership with the AEIF Mauritius SPV1 Limited(AEIF) an affiliate of the Abraaj Group. Accordingly the Company and AEIF hold 51% and49% of the paid- up share capital respectively in ABReL. The partnership brings togetherhighly experienced management and operations teams with strong execution capabilities.
Your Company has won a total of 60 MW Solar Power projects in three talukas ofKarnataka in March 2016. The Power Purchase Agreement has been signed in June 2016 and thecommissioning of the solar power plants is targeted in the fourth quarter of FY 2016-17.
Your Company has received an in-principle approval from Reserve Bank of India (RBI) forsetting up a Payments Bank as a Promoter. It has incorporated 'Aditya Birla Idea PaymentsBank Ltd.' a venture of the Company in 51:49 partnership with Idea Cellular Ltd. inFebruary 2016. It is in the process of appointing senior management team procuring theright technology and IT system and defining innovative products and cost efficientprocesses. It is planning to launch its services by the end of FY2016-17 after requisiteapprovals from RBI are in place.
Health Insurance and Wellness:
Your Company and Aditya Birla Financial Services Ltd. (ABFS) a 100% subsidiary of yourCompany entered into a 51:49 agreement with MMI Holdings Ltd. (MMI) in June 2015 to forayin health insurance and wellness business in India. Having received FIPB approval MMIStrategic Investments (PTY) Limited a wholly owned subsidiary of MMI Holdings Ltd. hasacquired a 49% stake in the health insurance venture Aditya Birla Health Insurance Co.Ltd. (ABHICL) in June 2016. ABHICL is targeting launch of its services in the second halfof FY 201617 subject to approval from Insurance Regulatory and Development Authority ofIndia. ABFS has incorporated a separate company 'Aditya Birla Wellness Private Ltd.(ABWPL).' for the wellness business. ABWPL shall also be a 51:49 partnership with MMI.
Sun Life Financial Canada increases its stake in Birla Sun Life Insurance (BSLI) from26% to 49%
Pursuant to an agreement with your Company Sun Life Financial has bought 23% stake inBSLI from the Company for '1664 Crore in April 2016. Your Company has received theproceeds and it continues to hold the controlling stake in BSLI at 51%.
Consolidation of Branded Apparels businesses
To capitalise on its large market presence in the branded fashion space in India yourCompany -
Aditya Birla Nuvo Ltd. ("ABNL") - had announced consolidation of its brandedapparels businesses under its listed subsidiary - Pantaloons Fashion & Retail Ltd.("PFRL") now known as Aditya Birla Fashion & Retail Ltd. (ABFRL) through aComposite Scheme of Arrangement ("Scheme") under Sections 391 to 394 of theCompanies Act 1956. As part of the Scheme Madura Fashion the branded apparel retailingdivision of ABNL and Madura Lifestyle the luxury branded apparel retailing division ofMadura Garments Lifestyle Retail Company Limited ("MGLRCL") - a subsidiary ofABNL have been demerged from the respective companies into ABFRL.
As the Scheme has become effective 9th January 2016 Madura Fashion andMadura Lifestyle divisions have been transferred to and vested in ABFRL with effect fromthe Appointed Date i.e. 1st April 2015 as a going concern in the mannermore particularly provided in the Scheme.
21st January 2016 was fixed as the Record Date for determining theentitlement of the shareholders to receive pursuant to the Scheme fully paid up equityshares of the face value of ' 10 each of ABFRL. Equity shares have been allotted by ABFRLon 27th January 2016 to the eligible shareholders of the transferor companiesas under:-
Eligible Equity Shareholders of your Company have been allotted 26 equity sharesof ABFRL for every 5 equity shares held in the ABNL pursuant to the demerger of MaduraFashion
Equity Shareholders of MGLRCL have been allotted 7 equity shares of ABFRL forevery 500 equity shares held in MGLRCL pursuant to the demerger of Madura Lifestyle and
Preference shareholder of MGLRCL has been allotted 1 equity share of ABFRL.
Consequent to the allotment of shares by ABFRL as aforesaid it has ceased to be asubsidiary of the Company. Trading in the newly allotted shares of ABFRL commenced on 4thFebruary 2016.
The aforesaid consolidation has created India's largest pure-play branded apparelcompany by bringing India's #1 branded menswear and #1 branded women's wear retailerstogether. The move has given the shareholders of your Company an opportunity toparticipate in the promising fashion space directly through ABFRL.
Amalgamation of Wholly Owned Subsidiaries:
A) During the year under review your Board had approved the amalgamation of thefollowing subsidiaries with the Company viz.
a) ABNL IT & ITES Limited a wholly owned subsidiary of the Company
b) Aditya Birla Minacs BPO Pvt. Limited a wholly owned subsidiary of ABNL IT &ITES Limited and
c) Indigold Trade and Services Limited a wholly owned subsidiary of the Company
on a going concern basis with effect from the Appointed Date i.e. 1stOctober 2015 in accordance with the Scheme of Amalgamation ("Scheme"). TheScheme has been made effective on 31st March 2016 after obtaining therequisite approvals and sanction from the Hon'ble High Court of Gujarat pursuant to theprovisions of Sections 391 - 394 of the Companies Act 1956 ("Act") and as suchthe aforesaid three subsidiaries stands amalgamated with the Company.
B) During the year under review Madura Garments Lifestyle Retail Company Limited(MGLRCL) a wholly owned subsidiary of the Company was merged with Aditya Birla FinanceLimited (ABFL) another wholly owned subsidiary of the Company on a going concern basiswith effect from the Appointed Date i.e. 1st July 2015 in accordance with theScheme of Amalgamation ("Scheme"). The Scheme has been made effective on 25thJanuary 2016. As MGLRCL stands amalgamated with ABFL MGLRCL has ceased to be asubsidiary of the Company.
Termination of the Global Depository Receipts issued by the Company:
Your Company had issued Global Depository Receipts (GDRs) representing the equityshares and had executed the Depository Agreement on 31st January 1994 withCitibank N.A. New York the Depository. ICICI Bank Limited Mumbai was appointed as aCustodian of the said GDRs. Each GDR was equivalent to one underlying equity share of theCompany. During the year under review your Company has terminated the GDR Program w.e.f.8th December 2015 and as such there are no outstanding GDRs of the Company.
Note: Figures of ' 50000 or less have been denoted as 6.
Your Directors are pleased to recommend a dividend of ' 5 (Rupees Five only) per EquityShare of ' 10 each (last year ' 7 (Rupees Seven only) per Equity Share) for the financialyear ended on 31st March 2016 for your consideration.
The dividend on the equity shares if approved by the shareholders would involve cashoutflow of ' 75.48 Crore (including Corporate dividend Tax of ' 10.37 Crore) compared to '109.65 Crore (including Corporate Dividend Tax of ' 18.55 Crore) paid for the year2014-15.
The equity shares as may be allotted upon the exercise of options granted under theEmployees Stock Option Schemes and out of the Share Capital Suspense before the BookClosure for payment of dividend will rank pari passu with the existing shares and shallalso be entitled to receive the aforesaid dividend.
TRANSFER TO RESERVES
The Company proposes to transfer an amount of ' 200 Crore to General Reserves. Anamount of ' 423.23 Crore is proposed to be retained in the Standalone Statement of Profitand Loss.
During the year the paid up equity share capital of the Company has increased from '130.14 Crore to ' 130.22 Crore consequent to the allotment of 85665 equity shares to theeligible employees on exercise of Options granted under the Employees Stock Option schemesof the Company.
Your Company has neither issued any shares with differential voting nor issued anysweat equity shares.
During the year 2015-16 your Company has:
- Raised long term loans aggregating to ' 195.75 Crore by way of foreign currencyborrowings (excluding ' 2.99 Crore due to MTM of External Commercial Borrowings) and '6.77 Crore by way of Rupee Term Loan.
- Repaid term loans (including Foreign Currency Borrowings and Finance Lease Liability)aggregating to ' 245.35 Crore.
Credit rating agency ICRA has re-affirmed the long term rating of [ICRA] AA+ / Stablefor your Company's fund based limits of ' 1250 Crore nonfund based limits of ' 1500Crore term loans of ' 500 Crore and NCDs of ' 1000 Crore. ICRA has also assigned[ICRA]AA+ / Stable rating to fresh ' 500 Crore NCD programme of your Company. ICRA hasalso reaffirmed short term rating of [ICRA] A1+ to ' 1750 Crore Commercial paperprogramme of your Company.
Credit rating agency CRISIL has re-affirmed the long term rating of Crisil AA+/Stablefor ' 200 Crore NCD programme of your Company.
During the year under review your Company has not accepted any deposits from thepublic falling under Section 73 of the Company Act 2013 ("Act") and theCompanies (Acceptance of Deposits) Rules 2014 and as such no amount of principal orinterest was outstanding as on the balance sheet date.
PARTICULARS OF LOAN GUARANTEE AND INVESTMENT
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act read with Companies (Meetings of Board and its Powers) Rules 2014 aregiven in the Notes to the Financial Statements.
Your Company is committed to the adoption of best practices of Corporate Governance andits adherance in true spirit to the requirements set out by Securities and Exchange Boardof India (SEBI). During the year under review your Company was in compliance with theprovisions of Regulation 27 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (SEBI LODR) with theStock Exchanges pertaining to the corporate governance compliances.
The Report on Corporate Governance as stipulated under Regulation 34 read with ScheduleV of the SEBI LODR forms part of the Annual Report. The Statutory Auditors' Certificateconfirming compliance with Schedule V of the SEBI LODR is given in Annexure I andthe same forms part of the Directors' Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34 (2) of the SEBI LODR the ManagementDiscussion and Analysis is set out in this Annual Report.
SUBSIDIARIES JOINT VENTURES AND
During the year the following changes have taken place in the Subsidiary Companies:
The Company entered into a definitive agreement to sell 23% stake in Birla SunLife Insurance Company Limited (BSLI) to its partner Sun Life Financial Canada for '1664 Crore . The Company has completed the sale in April 2016 and received the saleconsideration. It continues to hold the controlling stake in BSLI at 51%.
Aditya Birla Financial Services Limited (ABFSL) was granted Certificate ofRegistration (CoR) as a Non - Deposit taking Systemically Important Core InvestmentCompany (CIC-ND-SI) on 16th October 2015 by Reserve Bank of India (RBI).
The Company and ABFSL have signed an Agreement with MMI Strategic Investments(PTY) Ltd. and MMI Holdings Ltd. on 3rd June 2015 to enter into HealthInsurance and Wellness Business in India.
The Company had incorporated Aditya Birla Health Insurance Co. Ltd. (ABHICL)(formerly known as Aditya Birla Health Insurance Limited) on 22nd April 2015for carrying on the Health Insurance business in India in partnership with MMI Holdings.ABFSL upon receiving approval from Reserve Bank of India for making investment in HealthInsurance business in India has acquired all the shares of ABHICL from the Company on 28thMarch 2016. MMI Holdings Ltd. has acquired 49% stake in ABHICL in June 2016 afterreceiving approval from Foreign Investment Promotion Board (FIPB). ABHICL is expected tocommence the business operations in the second half of FY2016-17 after obtaining all therequisite approvals.
The Company had incorporated Aditya Birla Idea Payments Bank Limited on 19thFebruary
2016 for undertaking banking operations as per the Reserve Bank of India guidelines forLicensing of Payments Banks. The Company holds 51% stake in the same and balance is heldby Idea Cellular Limited.
ABCAP Trustee Company Pvt. Limited became the direct subsidiary of ABFSL on 25thMarch 2016.
A new subsidiary in the name of "Aditya Birla Renewables Limited" hasbeen incorporated on 7th August 2015 for setting up and for execution /commissioning of Solar Power Projects; for providing Engineering Procurement andConstruction Services (EPC); for providing Operation and Maintenance Services (O&M);and allied activities.
As mentioned herein above during the year under review:
Madura Garments Lifestyle Retail Company Limited has been amalgamated with Aditya BirlaFinance Limited by way of a Scheme of Amalgamation Appointed Date of the Scheme being 1stJuly 2015.
ABNL IT & ITES Limited Aditya Birla Minacs BPO Private Limited and Indigold Tradeand Services Limited have been amalgamated with the Company by way of a Scheme ofAmalgamation Appointed Date of the Scheme being 1st October 2015.
The Policy of determining material subsidiaries may be accessed on the Company'swebsite at the link below:
IDEA Cellular Limited is a Joint Venture of the Company and continues to be a JointVenture during the year under review. Idea Cellular ranks 3rd in India with arevenue market share of 18.9%. Having a base of 184 million active subscribers Idea isthe 6th largest cellular operator in the world in terms of subscribers basedon operations in a single country.
In accordance with the provisions of Section 129(3) of the Companies Act 2013("the Act") read with the Companies (Accounts) Rules 2014 a report on theperformance and financial position of each of the subsidiaries associates and jointventure companies is attached as Annexure II to this Report.
The audited financial statements of your Company's subsidiaries and related informationhave been placed on the website of your Company viz. www.aditvabirlanuvo.com. Any Memberwho is interested in obtaining a copy of audited financial statements of your Company'ssubsidiaries may write to the Company Secretary at the Registered Office of your Company.
CONSOLDATED FINANCIAL RESULTS
The Consolidated Financial Statements have been prepared in accordance with theprovisions of the Section 129(3) of the Act read with the Companies (Accounts) Rules2014 applicable Accounting Standards and the provisions of the SEBI LODR and pursuant tothe provisions of Section 136 of the Act the same forms part of this Annual Report.
During the year 2015-16 your Company channelized its resources towards strengtheningits Employee Value Proposition in line with Aditya Birla Group's "A World ofOpportunities". Various initiatives for development of people and creating a robusthigh performance organization were implemented. Programmes for planned leadershipsuccession development of successors through structured training & development andcoaching skill and competency development across all levels were actively conductedacross the organization. The process of upgrading and improving facilities for employeesat the unit locations was underway in line with the Group's initiative of "Add moreto life".
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 including any statutory modification(s) orre-enactment(s) thereof for the time being in force are attached as Annexure III.
In accordance with the provisions of Section 197(12) of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 including anystatutory modification(s) or re- enactment(s) thereof for the time being in force thenames and other particulars of employees are to be set out in the Directors' Report as anaddendum thereto. However having regard to the provisions of
Section 136(1) of the Act the Annual Report excluding the aforesaid information aboutthe employees is being sent to the Members of the Company. The said information isavailable for inspection at the Registered Office of your Company during the workinghours. Any Member interested in obtaining such particulars may write to the CompanySecretary at the Registered Office of the Company and the same will be furnished onrequest.
EXTRACT OF ANNUAL RETURN
In terms of the provisions of Section 92 (3) of the Act read with the Companies(Management and Administration) Rules 2014 an extract of the Annual Return of yourCompany for the financial year ended 31st March 2016 is given in AnnexureIV to this report.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34 (2)(f) of the SEBI (LODR) a separate section on BusinessResponsibility Reporting forms part of this Annual Report.
RELATED PARTY TRANSACTIONS
During the financial year your Company entered into related party transactions whichwere on an arm's length basis and in the ordinary course of business. There were nomaterial transactions with any related party as defined under Section 188 of the Act readwith the Companies (Meetings of Board and its Powers) Rules 2014. All related partytransactions were approved by the Audit Committee of your Company and the same are beingreviewed by it on a periodical basis.
The Policy on the Related Party Transactions as approved by the Audit Committee and theBoard of your Company is posted on the Company's website viz. www.adityabirlanuvo.com.
The details of contracts and arrangement with related parties of your Company for thefinancial year ended 31st March 2016 is given in Note No. 41 to the financialstatements of your Company.
Your Directors have constituted a Risk Management Committee which has been entrustedwith the responsibility to review the risk management plan / process of your Company. ThisCommittee identifies the potential risks assesses their potential impact and takes timelyactions to mitigate the same. The Risk Management framework and the Risk Managementapproach are covered in the Management Discussion and Analysis forming part of this AnnualReport.
INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY
Your Company has in place adequate internal control systems commensurate with the sizeof its operations. The internal control systems comprising of policies and proceduresare designed to ensure sound management of your Company's operations safekeeping of itsassets optimal utilization of resources reliability of its financial information andcompliance. Clearly defined roles and responsibilities have been institutionalized.Systems and procedures are periodically reviewed to keep pace with the growing size andcomplexity of your Company's operations.
DIRECTORS' RESPONSIBILITY STATEMENT
The audited accounts for the year under review are in conformity with the requirementsof the Act and the Accounting Standards. The financial statements reflect fairly the formand substance of transactions carried out during the year under review and reasonablypresent your Company's financial condition and results of operations.
Based on the information and explanations obtained by your Directors from themanagement of your Company your Directors confirm that:
i) in the preparation of the Annual Accounts for the financial year ended 31stMarch 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and ofthe profit of the Company for the year ended on that date;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities;
iv) the Directors have prepared the Annual Accounts of the Company on a going concernbasis;
v) the Directors have laid down internal financial controls and that such internalfinancial controls are adequate and were operating effectively; and
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and were operating effectively.
EMPLOYEE STOCK OPTION SCHEMES 2006 and 2013 (ESOS 2006 & ESOS 2013)
ESOS - 2006
During the year under review the Nomination and Remuneration Committee ("theCommittee") has allotted 62331 equity shares of ' 10/- each of your Company uponexercise of Stock Options by the employees.
ESOS - 2013
During the year 23651 Stock Options have vested in the option grantees in terms of theprovisions of the Company's Employee Stock Option Scheme ("Scheme - 2013").However no Restricted Stock Units have vested in the option grantees in terms of theprovisions of Scheme - 2013.
The Committee has allotted 23334 equity shares of ' 10 each of your Company uponexercise of Stock Options by the employees.
Consequent to the Composite Scheme of Arrangement of the branded apparel business asmentioned herein above in this Report having become effective on 9th January2016 in respect of the Stock Options (Options) and the Restricted Stock Units (RSUs)granted by the Company to the eligible employees the Grant Price and related planelements required an adjustment so as to ensure fair and equitable treatment for theconcerned employees under ESOS - 2013.
In view of the same:
a. an additional grant of 48777 Options and 26551 RSUs under ABNL ESOS - 2013 wasmade to the concerned grantees;
b. the Exercise Price under various tranches of Options granted under ABNL ESOS - 2013has been reset as under:
(i) Tranche I : ' 694.30 per Option as against ' 1239.80 per Option;
(ii) Tranche II : ' 590.15 per Option as against ' 1053.85 per Option;
(iii) Tranche III : ' 967.10 per Option as against ' 1726.95 per Option
In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations2014 the details of the Stock Options and Restricted Stock Units granted under theCompany's Employees Stock Option Schemes are available on your Company's website viz.www.adityabirlanuvo.com
A certificate received from the Statutory Auditors of the Company on the implementationof the Employees Stock Option Schemes shall be placed at the ensuing Annual GeneralMeeting for inspection by the Members.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy technology absorption foreign exchange earningsand out go required to be disclosed pursuant to provision of Section 134 of the Act readwith the Companies (Accounts) Rules 2014 is given in Annexure V to this Report.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions Section 135 of the Act read with Companies (Corporate SocialResponsibility Policy) Rules 2014 the Board of Directors of your Company has constituteda Corporate Social Responsibility ("CSR") Committee which is Chaired by Mrs.Rajashree Birla. The other Members of the Committee are Ms. Tarjani Vakil an IndependentDirector and Mr. Lalit Naik the Managing Director of your Company. Dr. (Mrs.) PragnyaRam Group Executive President Corporate Communications & CSR is a Permanent Inviteeto the Committee. Your Company also has in place a CSR Policy and the same is available onthe website of the Company at www.aditvabirlanuvo.com.The Committee places before theBoard the details of the activities to be undertaken during the year.
Your Company is a caring corporate citizen and lays significant emphasis on thedevelopment of the host communities around which it operates. With this intent theCompany has identified several projects relating to Social Empowerment & WelfareInfrastructure Developments Sustainable Livelihood Health Care and Education during theyear and initiated various activities in neighbouring villages around the plant locations.
The work on several CSR initiatives has gained momentum during the year resulting in aspend of ' 7.40 Crore (the same being 2.11% of the average net profits of the last 3 yearsas defined for the purposes of CSR). A detailed report is attached as Annexure VI formingpart of this report.
Changes in Board constitution
Mr. Sushil Agarwal Whole Time Director & Chief Financial Officer of your Companyhas relinquished his office from the close of business on 30th June 2015. Mr.Gian Prakash Gupta an Independent Director has stepped down as a Director of the Companyw.e.f. 9th November 2015 on health grounds. Mr. Tapasendra ChattopadhyayNominee of LIC of India (LIC) on the Company's Board has ceased to be the Non-ExecutiveDirector of the Company consequent to the withdrawal of his nomination by LIC. The Boardplaces on record its deep appreciation for the services rendered by Mr. Sushil AgarwalMr. Gian Prakash Gupta and Mr. Tapasendra Chattopadhyay during their tenure as the Membersof the Board.
At the request of LIC Mr. V. Chandrasekaran Executive Director of LIC has beenappointed as an Additional Director of the Company w.e.f. 14th April 2016 andaccordingly his appointment is placed for your approval at the ensuing AGM.
Mrs. Rajashree Birla and Mr. Lalit Naik Directors of the Company retire from officeby rotation and being eligible have offered themselves for re-appointment.
Further details on the Board of Directors are provided in the Corporate GovernanceReport forming part of this Annual Report.
Your Directors recommend the said appointment / re-appointments. Items seeking yourapproval on the above appointment / re-appointments are included in the Notice conveningthe Annual
General Meeting. Brief resumes of the Directors seeking appointment / re-appointmentsform part of the Notice of the ensuing Annual General Meeting.
Meetings of the Board
During the year the Board of Directors of your Company met 6 times to deliberate onvarious matters. The details of Board Meetings held are given in the Corporate GovernanceReport.
Composition of the Audit Committee
The Audit Committee of the Board comprises of Ms. Tarjani Vakil Mr. Baldev Raj GuptaMr. Pejavar Murari and Mr. Subhash Chandra Bhargava the Independent Directors as itsmembers. Other details of the Audit Committee are listed in the Corporate GovernanceReport. The Audit Committee met 7 times during the year under review.
Ms. Tarjani Vakil Mr. Baldev Raj Gupta Mr. Pejavar Murari and Mr. Subhash ChandraBhargava the Independent Directors of the Company hold office for a fixed term of fiveyears and are not liable to retire by rotation.
In accordance with Section 149(7) of the Act each Independent Director has given awritten declaration to the Company confirming that he/ she meets the criteria ofIndependence as mentioned under Section 149(6) of the Act and SEBI LODR.
Policy on Appointment and Remuneration of Directors and Key Managerial Personnel
The appointment and remuneration of Directors and KMPs is as per policy of yourCompany.
Formal Annual Evaluation
The evaluation framework for assessing the performance of the Directors of your Companycomprises of contributions at the meetings strategic perspective or inputs regarding thegrowth and performance of your Company among others.
Pursuant to the provisions of the Act and the Listing Regulations the Directors havecarried out the annual performance evaluation of the Board Independent DirectorsNon-Executive Directors Executive Directors Committees of the Board and the Chairman ofthe Board. The manner of evaluation is provided in the Corporate Governance Report.
Details of the familiarisation programme for the Independent Directors of the Companyis available on the Company's website www.aditvabirlanuvo.com.
The Nomination and Remuneration Committee has formulated the Remuneration Policy ofyour Company which is attached as Annexure VII to this report. The Policy isavailable on the Company's website viz. www.adityabirlanuvo.com.
KEY MANAGERIAL PERSONNEL
In terms of the provision of Section 203 of the Act Mr. Lalit Naik Managing Director;Mrs. Pinky Mehta Chief Financial Officer (w.e.f. 1st July 2015); and Mr.Ashok Malu Company Secretary are the Key Managerial Personnel of your Company.
Statutory Auditors and their Report
In terms of the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 an audit firm can hold office as statutory auditor for 2 terms of 5consecutive years i.e. for a maximum period of 10 years. Such audit firm can bere-appointed after a cooling period of 5 years. In computing the period of 10 years theperiod for which the auditor has held office before the commencement of the Act i.e.before 1st April 2014 is also required to be considered.
Your Company has M/s. Khimji Kunverji & Co. Chartered Accountants Mumbai (Reg.No. 105146W) as the Joint Statutory Auditors and in compliance with the provisions of theAct they will continue in office till the ensuing AGM. M/s. S R B C & CO LLPChartered Accountants Mumbai (Reg. No. 324982E) the other Joint Statutory Auditor iseligible for re-appointment.
M/s. S R B C & CO LLP Chartered Accountants Mumbai (Reg. No. 324982E) willcontinue to hold the office as the Joint Statutory Auditors of the Company from theconclusion of ensuing Annual General Meeting until the conclusion of 60thAnnual General Meeting of the Company.
M/s. S R B C & CO LLP has given its consent in writing and have furnished acertificate to the effect that their re-appointment if made would be in accordance withthe provisions of Section 139(1) of the Act and that it meet with the criteria prescribedunder Section 141 of the Act. Your Directors recommend their re-appointment at the ensuingAnnual General Meeting.
New Joint Statutory Auditor
M/s. Khimji Kunverji & Co. Chartered Accountants Mumbai the Joint StatutoryAuditor has been in office for more than ten years and in compliance with the provisionsof the Act your Company will have to appoint a new auditor in their place. The Board ofDirectors has at its meeting held on 11th July 2016 recommended theappointment of M/s. Deloitte Haskins & Sells LLP Chartered Accountants Mumbai (Reg.No. 117366W/W- 100018) as one of the Joint Statutory Auditors of your Company in place ofM/s. Khimji Kunverji & Co. to hold office from the conclusion of this AGM until theconclusion of the 64th AGM of your Company subject to ratification by theMembers at every AGM till the 63rd AGM.
Resolutions seeking your approval on appointment/ re-appointment of Statutory andBranch Auditors are included in the Notice convening the AGM.
The observation made in the Auditor's Report are self explanatory and therefore do notcall for any further comments under Section 134(3)(f) of the Act. The Auditors' Reportdoes not contain any qualification reservation or adverse remark.
In terms of the provisions of the Section 148 of the Act read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Board of Directors of your Company have onthe recommendation of the Audit Committee appointed the following Cost Auditors forconducting the audit of the cost records of the Company for the financial year 2016-17 atthe remuneration as mentioned in the Notice convening the AGM:-
i) M/s. Ashwin Solanki & Associates Cost Accountants (Registration Number -100392) for Indian Rayon Veraval - for Viscose Filament Yarn and Chemicals
ii) M/s. K. G. Goyal & Associates Cost Accountants (Registration Number - 000024)for Indo Gulf Fertilisers Jagdishpur- for Fertilisers
iii) M/s. R. Chakraborty & Co. Cost Accountants (Registration Number -100481) forJaya Shree Textiles Rishra - for Textiles and
iv) M/s. S. S. Puranik & Associates Cost Accountants (Registration Number-100133) for Insulators- Halol & Rishra
As required under the Act the remuneration payable to the Cost Auditor is required tobe placed before the Members at the general meeting for their ratification. Accordingly aResolution seeking Members ratification for the remuneration payable to Cost Auditors isincluded in the Notice convening the Annual General Meeting. The Members are requested toratify the remuneration payable to the Cost Auditors for 2016 -17.
Your Company has filed the Cost Audit and Compliance Report for Financial Year 2015with the Government.
In terms of the provision of the Section 204 of the Act read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Board hasappointed M/s. BNP & Associates Company Secretaries Mumbai as the SecretarialAuditors for conducting the Secretarial Audit of your Company for the financial year ended31st March 2016. The report of the Secretarial Auditors is attached as AnnexureVIII. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.
AWARDS AND RECOGNITION
Some of the significant accolades earned by your Company during the year include:
Indo Gulf Fertlisers:
i) "National Energy Conservation Award - 2015" by Ministry of PowerGovernment of India First Prize in the Fertilizers Sector (Sub-sector Urea)
ii) Global CSR Excellence & Leadership Awards for "Best use of CSR practicesin Manufacturing"
iii) Asian CSR Leadership Award for Community Development in Manufacturing awarded byWorld CSR Congress
Aditya Birla Insulators - Halol Division:
i) Certificate of Export Recognition being Special Export Award received from CAPEXILon 28th January 2016
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
During the year under review your Company has not received any complaint under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
In compliance with the provisions of Section 177 (10) of the Act and Regulation 4(2)(d)of the SEBI (LODR) your Company has in place a vigil mechanism for the directors andemployees to report concerns about unethical behaviour and actual or suspected fraud orviolation of your Company's Code of Conduct. Adequate safeguards are provided againstvictimization to those who avail of the mechanism and access to the Chairman of the AuditCommittee in exceptional cases is provided to them.
The vigil mechanism is available on the Company's website at www.aditvabirlanuvo.com
There are no significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and the Company's operations in future.
There were no material changes and commitments affecting the financial positionof your Company between end of the financial year and the date of this report.
There was no revision in the financial statements.
Your Directors take this opportunity to express their sincere appreciation for theexcellent support and co-operation extended by the shareholders customers suppliersbankers and other business associates. Your Directors gratefully acknowledge the ongoingcooperation and support provided by Central and State Governments and all Regulatorybodies.
Your Directors place on record their deep appreciation for the exemplary contributionmade by the employees of the Company at all levels. Their dedicated efforts and enthusiasmhave been pivotal to your Company's growth.