Your Directors have immense pleasure in submitting the 27th Annual Report of theCompany together with the audited annual accounts showing the financial position of theCompany for the year ended 31st March 2016. Consolidated results include the results of(a) Petroleum Specialities Pte. Ltd. Singapore (PSPL) a Wholly-Owned Subsidiary of theCompany (WOS) (b) Quantum Apar Speciality Oils Pty. Ltd. Subsidiary of PSPL and (c)Petroleum Specialities FZE Sharjah a WOS of PSPL.
1. Financial results
| || || || || || ||( Rs. in crore) |
|Particulars ||Company ||Consolidated |
| ||2015-16 ||2014-15 ||% of Increase ||2015-16 ||2014-15 ||% of Increase |
|Sales turnover (after deduction of excise duty ) ||5009.95 ||5010.97 ||-0.02% ||5080.03 ||5121.86 ||-0.82% |
|Other income ||3.37 ||8.37 || ||3.37 ||1.75 || |
|Profit for the year before finance cost depreciation / amortisation tax expenses and exceptional items ||359.01 ||249.61 ||43.83% ||366.65 ||253.78 ||44.48% |
|Deducting therefrom: || || || || || || |
|- Depreciation / amortisation ||37.69 ||31.04 || ||37.77 ||31.21 || |
|Finance Costs ||151.56 ||150.09 || ||151.38 ||149.85 || |
|Profit before adjustment of exceptional items taxation and minority interest ||169.76 ||68.48 ||147.92% ||177.50 ||72.72 ||144.09% |
|Exceptional items (Profit on sale of Trust Shares - Refer Note 20 (a) of Annual Audited Accounts) ||(43.15) ||0.25 || ||(43.15) ||0.25 || |
|Profit before taxation for the year ||212.91 ||68.23 ||212.07% ||220.65 ||72.47 ||204.48% |
|Deducting therefrom: || || || || || || |
|- Tax expenses ||55.93 ||20.37 || ||57.10 ||23.06 || |
|Net profit for the year after taxation and before minority interest ||156.98 ||47.86 ||227.99% ||163.55 ||49.41 ||231.01% |
|Adjustment of: || || || || || || |
|- Minority Interest (profit)/loss ||- ||- || ||(0.76) ||0.10 || |
|Net profit after taxation and above adjustments ||156.98 ||47.86 ||227.99% ||162.79 ||49.51 ||228.79% |
|Add: Profit brought forward from previous year ||208.84 ||183.71 || ||299.40 ||272.72 || |
|Add/(Less) :Adjustment (net) on account of Amalgamation of Subsidiary w.e.f. 01st January 2015 ||0.00 ||- || ||(7.57) ||- || |
|Amount available for appropriations ||365.82 ||231.57 || ||454.62 ||322.23 || |
|Appropriation made by the Board of Directors: || || || || || || |
|- Transitional provisions for depreciation net of deferred tax ||- ||2.84 || ||- ||2.83 || |
|- General reserve ||15.00 ||5.00 || ||15.00 ||5.00 || |
|- Tax on Dividend paid by Subsidiary company ||- ||- || ||- ||0.11 || |
|Dividends on Equity shares : || || || || || || |
|- Interim-cum-Final Dividend at Rs. 6.50 (65.00 %) per share ||25.02 ||- || ||25.02 ||- || |
|- Proposed dividend at Rs. Nil (0.00 %) per share (previous year Rs. 3.50 (35.00%) ||- ||13.47 || ||- ||13.47 || |
|- Income tax on dividends ||5.06 ||1.42 || ||5.06 ||1.42 || |
|- Leaving balance of profit carried to balance sheet ||320.74 ||208.84 || ||409.54 ||299.40 || |
|Earnings per equity share (EPS) || || || || || || |
|- Basic & Diluted before & after extraordinary items ||40.78 ||12.44 || ||42.29 ||12.87 || |
2. Dividend: Your Company has paid an interim dividend @ Rs. 6.50 (65.00 %)[including Special Dividend @ Re. 1.00 (10.00 %) on account of 100th Birth Anniversary ofLate Shri Dharmsinh D. Desai Founder of the Company ] per Equity Share for the financialyear 2015-2016 on 38496769 Equity Shares of the face value of Rs. 10/- each amountingto Rs. 25.02 Crores for the financial year 2015-2016. The members are requested to confirmthe above interim dividend at the ensuing Annual General Meeting (AGM) of the Company. TheBoard of Directors do not recommend any Final Dividend for the Financial Year 2015-16 andaccordingly the Interim Dividend @ Rs. 6.50 (65.00 %) declared and paid in March 2016may be treated as Interim-cum-Final Dividend.
3. Amalgamation of Apar Lubricants Limited with the Company :
The Companys Wholly-owned Subsidiary Apar Lubricants Limited (ALL) (formerlyApar ChemateK Lubricants Limited) was amalgamated with the Company by Order of theHonble High Court of Gujarat dated 23rd October 2015. The Scheme of Amalgamationhas become effective from 10th November 2015 with retrospective effect from 1st January2015 being the Appointed Date and the said business is now carried on as part ofCompanys Oil Division. Consequent to the Amalgamation of ALL with the Company theentire Authorised Share Capital of ALL viz 10000000 Equity Shares of Rs. 10/- eachaggregating to Rs. 100000000/- has been added to the Authorised Share Capital of theCompany. Hence the Authorised Share Capital of the Company now stands at Rs.1019987500/- divided into 101998750 Equity Shares of Rs. 10/- each.
4. Transfer to Reserves:
The Company proposes to transfer an amount of Rs. 15.00 Crores to the General reserves.An amount of Rs. 409.54 Crore is proposed to be retained in the Consolidated Statement ofProfit and Loss.
5. Management Discussion and Analysis / Outlook :
Management Discussion and Analysis FY16 was a pivotal year for the Indian powersector which saw the government setting the stage for the next round of initiatives tomove the sector forward. With strong focus on 24x7 power for all revival of Discomsthrough UDAY amendments to the national tariff policy and strong capital expenditure inTransmission and Distribution (transmission projects worth Rs. 1 lakh Crores were launchedin the year) Indias power sector is well poised for take-off. As the benefits ofthese measures gradually percolate down Apar with 70% of its revenue coming from thepower sector and a leading presence in Indias Transmission & Distribution(T&D) sector stands to strongly benefit. Apar is the fourth-largest transformer oilmanufacturer in the world and among the worlds top five largest conductormanufacturers. The company is a leading player in cables largest in cables for Renewablesector. Apart from being a market leader in India the Company has a formidable globalpresence exporting to over 100 countries.
The company has built a strong basket of futuristic value-added products focussed onincreasing efficiency in T&D. Already the government has announced its emphasis onbuilding high-quality T&D infrastructure with a shift in favour of efficienttransmission structures. Apars in-house R&D initiatives and strategic tie-upswith global firms such as CTC Global USA and ENI S.p.A Italy have resulted in aportfolio of new technology products like extra-high-voltage transformer oils hightemperature conductors Elastomeric E-Beam and optical fibre cables (OFC). During theyear the Company bagged Four awards: Indian Wind Energy Forum Excellence Award forOutstanding Achievements and Leadership in the Wind industry; Indian Rooftop Solar Summit(IRSS) 2016 Award for Outstanding Contribution in the Development of the Rooftop SolarIndustry; the First Few Intelligence Business Award as the Solar Cable Company of the Yearand for development of New Conductor viz High Temperature Low Sag by Power GridCorporation India Ltd.
The awards are in recognition to the Companys extensive R&D efforts. Ourleadership across businesses higher-value-added product offerings strong globalpresence technical capabilities and continued focus on R&D coupled with industryopportunities like turnaround of discoms expected shift towards high-efficiency T&Dnetwork and increased investment in the renewables sector & railways will lead toApars profitable growth going forward. The opportunities and outlook that exist forthe Company are as follows:
The global power sector is expected to attract investments worth $19.7 trillion from2015 to 2040. In line with the 2C climate change goal concerted efforts are being madeto reduce the environmental consequences of power generation. Renewable energy investmentwitnessed a new world record in 2015 with investment of $286 billion flowing into greenenergy projects and is expected to account for half of the additional global powergeneration overtaking coal around 2030 to become the largest power source. Increasingglobal energy production over the past decade has led to the rising need for expandingT&D networks globally. It has been estimated that new T&D infrastructure wouldrequire a cumulative investment of $1.9 trillion by 2024 to meet the growing energydemands. This includes substations power lines and associated equipment and newtechnology. The power transformer market is projected to reach $29.9 billion by 2020 from$20.7 billion in 2015 at a CAGR of 7.6%. The global low voltage cable & accessoriesmarket is projected to grow to $147.3 billion at a CAGR of 7.0% from 2015 to 2020.
The year gone by saw commodity driven economies like Australia South Africa otherparts of Africa and the Middle East facing a cash crunch due to fall in commodity prices.These economies have huge need for T&D Investment however the cash crunch has led toa curtailment or delay of investment spending. However keeping these factors in mindApar has been strategically focussing on the domestic market in the short to medium term.
Indias path to power
Indias power sector is expected to receive investments of about $250 billion overthe next 5 years to catch up and keep pace with electricity demand which is increasing at5% per annum. With renewable energy being a thrust area the government has set anambitious plan to add 175 GW of renewable energy generation capacity with addition of100GW under Solar and 60 GW under wind energy by 2022 at total investment of $120 billion.Transmission segment is expected to see investment of $50 billion.
UDAY - Governments flagship initiative to fix the weakest link in the IndianPower Sector: The Ujwal Discom Assurance Yojna or UDAY aspires to financially turnaround distribution companies by:
a) Reducing the interest cost of discoms
b) Improving the operational efficiencies of discoms
c) Lowering the cost of power and
d) Enforcing financial discipline on discoms through state finances. Under UDAY stateswill take over 75% of the outstanding debt of discoms as on 30th September 2015 over thenext two years and will issue non-SLR including state development bonds to therespective financial institutions (FIs) holding the discom debt. The expected rate ofinterest on these bonds will be 8-9% versus 13-15% on existing debt savings of Rs. 15000Crores per year for the discoms. The future losses of the discoms will be taken over andfunded by the states progressively from 5% in FY18 to 50% by FY21. As at the end of thisfiscal year 10 states i.e. Jharkhand Bihar Uttar Pradesh Madhya Pradesh GujaratRajasthan Haryana Punjab Jammu & Kashmir and Uttarakhand had signed the respectiveMemorandum of Understanding to join UDAY. Other initiatives in the T&D sector includeschemes such as Deen Dayal Upadhyaya Gram Jyoti Yojana (Rs. 75893 Crores) and IntegratedPower Development Scheme (Rs. 65424 Crores) among others.
Conductors: The market for Electrical Conductors is expected to grow at 13.5%till 2018. During FY17 7500 MW of inter-regional transmission capacity along with about19436 circuit km (ckm) of transmission lines and 3934 MW HVDC terminal capacity areexpected to be added so as to reach the targets specified in the 12th Plan. It isestimated that during the 13th Plan period about 62800 circuit kilometres (ckm) oftransmission lines of 400 kV and above voltage level transmission systems would berequired.
Transformers: Transformer orders of around Rs. 13070 Crores are expected tomaterialize in FY17. To achieve the targets specified in the 12th Plan a total of 25852MVA of AC transformation capacity and 7500 MW of HVDC systems are estimated to be addedin FY17. During the 13th Plan period ~128000 MVA of transformation capacity of the 400kV and above voltage level & 15000 MW of HVDC terminal capacity is planned to beadded.
Cables: The market has been growing steadily and is expected to touch Rs. 57200Crores by 2018. The wire and cables market in India comprises nearly 40% of the electricalindustry. The industry is growing at a CAGR of
15% as a result of growth in the power and infrastructure segments. Rollout of 3G andbroadband on a pan-India basis and revival of distribution companies will be importantdrivers of growth.
Auto Lubes: FY16 ended on a positive note for the automobile industry with allthe segments cars two-wheelers CVs and tractors posting good growth in themonth of March. The Society of Indian Automobile Manufacturers (SIAM) has forecast apositive outlook for overall sales across vehicle categories for 2016-17 motorcycle salesare forecast to grow between 0-3% compared to decline in FY16 Passenger vehicle sales areprojected to grow between 6-8%. Industry experts expect low fuel prices benign interestrates and benefits from the 7th Pay Commission to drive four-wheeler volumes. Asustainable recovery in demand linked to the rural markets will be dependent on normalmonsoons.
(a) Overall Business performance
We are happy to report Apar delivered strong performance despite a challengingenvironment during the year which saw: a lack of long term visibility in the domesticmarket led to volatile ordering a credit crunch in various commodity driven economiesimpacting investment in global T&D markets coupled with falling raw material pricesand a volatile foreign exchange rate. The Company reported consolidated revenue (net ofexcise) of Rs. 5080 Crores in FY16 as compared to Rs. 5121 Crores in FY15 driven byrevenue growth of over 20% in Cables and 10% in Conductors which partially offset thedecline in Specialty Oils which was affected by the fall in crude prices. Not only wereour volumes across all business segments at historical highs there has been significantimprovement in our profitability across segments. EBITDA margin increased from 5.0% to7.2% during the year. This was primarily led by the improvement in profitability in ourSpecialty Oils and Cables business. The margin expansion has been possible because ofbetter cost management and a focused approach to increase contribution of highervalue-added products. The profit after tax excluding an exceptional gain of Rs. 43 Croresfrom the placement of treasury stock came in at Rs. 120 Crores as compared to Rs. 49Crores in the previous year. The Company is undergoing capacity expansion in theConductors and Specialty Oils segments and is at an advanced stage of planning anexpansion of its Power Cables capacity. Our overall outlook remains positive as we expectboth the domestic and export scenarios to improve in all our business segments.
Business Segments (i) Conductors
Performance review 2015-16
| || || ||( Rs. in crore) |
|Particulars ||2015-16 ||2014-15 ||Variation (%) |
|Turnover ||2550 ||2320 ||10% |
|Segment profit / (Loss) ||131 ||117 ||12% |
|Export ||1025 ||997 ||3% |
The Conductors business reported revenue growth of 10% driven by improved marketconditions in the domestic market. Exports contributed ~ 40.3% of revenue from Conductors.Volumes for the year grew by 13% to reach 170070 tonnes compared to 150557 tonnes inprevious year. In the export market the biggest positive development has been thereduction of the cost difference between the London Metal Exchange and the Shanghai MetalExchange where the peak difference was as high as $400 per tonnes. This restores a levelplaying field for the company to participate in most of the export opportunities.
EBITDA per metric ton post forex adjustment for the period came in at Rs. 7606compared to Rs. 7698 in the previous year as the orders that were executed at thebeginning of the year were booked at a time of aggressive pricing in the domestic market.EBITDA per metric ton post-forex adjustments for the last quarter was at Rs. 9705compared to Rs. 6717 in the first quarter of the year.
The Company has been actively growing its presence in the High Efficiency Conductors(HEC) segment. HEC revenue grew to 6.2% of overall Conductor revenue in FY16 from 1.1% inFY15. During the year we also received our biggest order of ACCC & AL59 from UPPTCLand GETCO respectively. In both cases these orders are in excess of Rs. 50 Crores. Wehave also received an order for GAP Conductors from GETCO. We successfully completed theFirst Longest transmission line Re-Conductoring work with ACCC Casablanca conductor forOdisha Power Transmission Corporation ltd. Other projects
Export orders have contributed 29% of the order book. Our Conductor capacityutilization stands at 100% for the entire year.
Demand for Conductors is expected to grow strongly driven by successful implementationof UDAY which aims to reduce AT&C losses to 15% in 2018-19 from 32% in 2013-14inducing huge investments in T&D infrastructure.
Risks and concerns
The cyclical nature of the power business has an obvious impact on our performance.Project delays from the customers side may result in underutilization of capacityeven though the order book remains robust. There can be delay in debtor collections due tostress at the customers end. Regional political instability and changes in theexternal environment in certain export markets affect execution of delivery. Thevolatility in Aluminium premiums has been an area of concern mainly with respect toexports and is a challenge to manage in the absence of any hedging mechanism. Efforts byvarious aluminium manufacturers may result in implementation of Safeguard duty which willincrease the raw material prices and have a negative impact on fixed price contracts inthe short to medium term. Any delay in the implementation of GST may impact thecompetitiveness of our new facility at Jharsuguda.
(ii) Specialty Oil
Performance review 2015-16
| || || || || || ||( Rs. in crore) |
| ||Company ||Consolidated |
|Particulars ||2015-16 ||2014-15 ||Variation (%) ||2015-16 ||2014-15 ||Variation (%) |
|Turnover ||1771 ||2115 ||-16% ||1841 ||2251 ||-18% |
|Segment profit / (Loss) ||187 ||98 ||91% ||195 ||102 ||91% |
|Export ||548 ||640 ||-17% ||618 ||751 ||-18% |
completed in the high efficiency segment were: Varanasi to Sarnath SubstationChinhat-Barabanki line Hardoi Rd-NKN line for UPPTCL and New Pirana to Pirana Feeders(ACCC DRAKE) Pirana to Jamalpur S/S (ACCC LISBON) Vinzol-Vastral (ACCC Lisbon) forTorrent Power and Bamnauli Naraina DC Line for PGCIL. We are clearly seeing that theofftake of HECs is now gradually showing a rising trend on all parameters like volume oforders number of clients adopting these technologies variety of HECs being deployed aswell as repeat orders of progressively larger sizes. The margins for these HECs are higheras compared to conventional conductors and are likely to improve the profitability of theConductor business.
The Company is setting up a Conductor plant in Jharsuguda (Orissa) of 30000 MTcapacity at an investment of Rs. 36 Crores. The plant is strategically located givenincreasing generation capacity in eastern India along with its proximity to smelters forlogistical benefits. Work on the plant is in full swing and it should be commissioned onschedule by October-17.
The segments order book is at Rs. 1751 Crores as of March 31 2016 compared toRs. 1452 Crores as on March 31 2015.
In Specialty Oils revenue for the year came in at Rs. 1841 Crores lower than lastyear primarily due to falling Crude oil prices. However we posted 2.6% growth inaggregate volume highest ever volume till date led by Rubber processing oil Auto &Industrial Lubricants and White Oils. EBITDA per KL after forex adjustment for the yearincreased significantly to Rs. 5407 up from Rs. 2722 in the previous year which can beattributed to sale of richer product mix disciplined pricing good client mix and lowerraw material costs. The Company is setting up a port-based plant at Hamriyah Sharjah of100000 KL capacity at an investment of $ 15.5 million (Rs. 100 Crores). This will add newopportunities like bulk exports and is strategically located in terms of proximity tocustomers.
The Auto Lubes segment continued to grow and delivered 2.9% volume growth to reach23480 KL highest ever achieved despite demand from the rural sector being especiallylow. The net sales stood at Rs. 263 Crores compared to Rs. 273 Crores in the previousyear. Profitability in the segment continues to be relatively better due to improvedproduct mix clients mix disciplined pricing and lower raw material cost. As the Companyimplements its strategy of expanding distribution network and continuous efforts towardsincreasing share of higher-margin products we are quite confident that in the coming yearwe should see relatively good results for the segment.
Risks and concerns
The Company is exposed to volatility in the prices of its raw materials and in foreignexchange rates. However in order to mitigate its risks the Company continues to exerciseprudence in its inventory control and hedging strategies. Also addition in globalrefining capacities has resulted in a mismatch in demand and supply which has an effecton base oil prices. The prices of long-term buy contracts take time to correct in case offluctuations in crude prices as formula prices are always backward looking. Debtorscollection period can increase on account of stressed financial condition of customers.The Company had to implement strict credit controls to limit exposure to customers facingcash flow issues. Rapid commoditization taking place at the lower end especially attechnical grade white oils may have an impact on the margins. Exports markets are facingthe heat as Cash strapped commodity driven developing markets are forced to cut keyinvestments like Transmission & Distribution Investments.
(iii) Cables division
Performance review 2015-16
| || || ||( Rs. in crore) |
|Particulars ||2015-16 ||2014-15 ||Variation (%) |
|Turnover ||675 ||560 ||20% |
|Segment profit / (Loss) ||28 ||20 ||40% |
|Export ||101 ||78 ||29% |
The Cables business delivered strong revenue growth of 20% despite lower metalcommodity and polymer prices. Revenue growth was driven by growth in our Elastomeric andPower Cables segments. These segments grew by 68% and 24% respectively. Copper andAluminium processing increased by 76 % and 29 % YOY respectively - depicting the increasedvolumes. The EBITDA margins post forex adjustment has increased by 20 basis points from5.5% in FY15 to 5.7% in FY16. Our focus on the Renewable Energy sector both Wind andSolar has been yielding good results. Today we are the largest supplier in the countryto the segment and are working with major companies such as Suzlon Wind World Gamesaetc. Besides orders from Defence and Railways involving electron beam cables are alsolikely to improve as several projects in both these sectors are being announced. The orderbook as on March 31 2016 is up 8% to reach Rs. 199 Crores versus Rs. 184 Crores in theprevious year. The Company is also at an advanced stage of planning an expansion of itspower cables capacity as demand for power cables is expected to increase driven by theincreased spending capability of discoms following successful implementation of UDAY. Wealso expect EBITDA in the coming year to further improve in the Cables segment as areflection of better product mix and higher volumes.
Risks and concerns
The excess capacity in the power cables segment impacts pricing. Collection periods canget extended and delivery schedules delayed due to lack of financial arrangements by keycustomers in the renewable energy sector and EPC contractors. In optical fiber cablesclientele is concentrated among a handful of telecom companies and BBNL wherein the Capexspending have been severely impacted. The cyclical nature of their tendering too has abearing on the order situation in the industry.
(b) Operations of subsidiaries:
(i) Petroleum Specialities Pte. Ltd Singapore (PSPL) a Wholly Owned Subsidiary (WOS):
During the year under review Net sales of PSPL was US$ 7.93 Million as against US$24.52 Million in the previous year and Profit after tax stood at US$ 0.65 Million asagainst US$ 0.61 Million in the previous year. Operations of its down stream subsidiariesare :
Quantum Apar Speciality Oils Pty. Ltd. Australia (Quantum)
PSPL holds 65% equity in Quantum. It has reported Net sales of AUD 8.38 Million asagainst AUD 9.02 Million in the previous year and Profit after tax of AUD 0.41 Million asagainst AUD 0.07 Million in the previous year. After the end of the Financial Year theDirectors and Shareholders of the Company decided to cease the business liquidate all theAssets and payout all the liabilities and return the net proceeds to shareholders. It isanticipated that the whole process will complete in 6 months period. Company has appointeda Distributor for sale of Petroleum Products and Lubricants in Australian & NewZealand markets.
Petroleum Specialities FZE (PSF)
PSF was registered in November 2014 as Free Zone Establishment under an IndustrialLicense issued by Hamriyah Free Zone Authority Government of Sharjah UAE for settingmanufacturing facility for manufacture of a comprehensive range of Speciality Oils andLubricants. During the year Share Capital of PSF increased from US$ 40825 to US$3405995. PSPL holds 100% equity in PSF. As at the end of March 2016 total US$ 10.02million capital expenditure has been incurred for setting up the Plant. The Constructionof the Plant is under progress. There has been no material change in the nature of thebusiness of the subsidiaries. A statement containing salient features of the financialstatements of the Companys subsidiaries in Form AOC-1 is attached to the financialstatements of the Company.
(c) Cautionary statement
The statements made in the Management Discussion
& Analysis section describing the Companys goals expectations andpredictions among others do contain some forward looking views of the management. Theactual performance of the Company is dependent on several external factors many of whichare beyond the control of the management viz. growth of Indian economy continuation ofindustrial reforms fluctuations in value of Rupee in the foreign exchange marketvolatility in commodity prices applicable laws / regulations tax structure domestic /international industry scenario movement in international prices of raw materials andeconomic developments within the country among others.
(d) Internal control systems (ICS) and their adequacy
The Company established adequate ICS in respect of all the divisions of the Company.The ICS are aimed at promoting operational efficiencies and achieving savings in cost andoverheads in all business operations. The System Application and Product (SAP) a worldclass business process integration software solution which was implemented by the Companyat all business units (including Cable unit) has been operating successfully. Fortightening and more effective internal control systems and risk management the Companycontinued the engagement of M/s. KPMG India Pvt. Ltd. Chartered Accountants as InternalAuditors of the Company. The system cum internal audit reports of the Internal Auditorsare discussed at the Audit Committee meetings and appropriate corrective steps have beentaken. Further all business segment prepare their annual budget which are reviewed alongwith performance at regular intervals.
(e) Development of human resources
The Company promotes an open and transparent working environment to enhance teamworkand build business focus. The Company equally gives importance to the development of humanresource (HR). It updates its HR policy in line with the changing HR culture in theindustry as a whole. In order to foster excellence and reward those employees who performwell the Company practices performance / production linked incentive schemes andintroduced Employees Stock Option Scheme as detailed in an attachment to this report. TheCompany also takes adequate steps for in-house training of employees and maintaining asafe and healthy environment.
6. Directors and Key Managerial Personnel :
Mr. Chaitanya N. Desai Director shall retire by rotation at the ensuing annual generalmeeting of the Company and he being eligible offers himself for re-appointment. TheIndependent Directors hold office for a fixed term of five years. In accordance withSection 149(7) of the Act all Independent Directors have given declarations that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and SEBI Regulations. Details of the proposal for re-appointment of Mr. Chaitanya N.Desai are mentioned in the Statement pursuant to Regulation 36(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with the Stock Exchanges asannexed to the Notice of the 27th Annual General Meeting.
The Board recommends re-appointment of Mr. Chaitanya N. Desai as a Director of theCompany.
Board Evaluation :
Pursuant to the provisions of the Companies Act 2013 and SEBI Regulations the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Committee Nominationand Compensation-cum-Remuneration Committee Corporate Social Responsibility (CSR)Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders RelationshipCommittee. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report. Remuneration Policy :
The Board has on the recommendation of Nomination and Compensation-cum-RemunerationCommittee framed a policy for selection and appointment of Directors Senior Managementand their remuneration. The Remuneration Policy is stated in the Corporate GovernanceReport.
During the year five Board Meetings and four Audit Committee Meetings were convened andheld the details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.
7. Deposits :
Company has not accepted deposits during the year. There were no outstanding depositsand no amount remaining unclaimed with the Company as on 31st March 2016.
8. Particulars of Loans Guarantees or Investments :
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
9. 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 : i. that in the preparation of the annualaccounts for the financial year ended March 31 2016 the applicable accounting standardshave been followed along with proper explanation relating to material departures if any.ii. that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been selected and applied consistently and judgments and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2016 and of the profit of the Company for thefinancial year ended on that date. iii. that proper and sufficient care has been taken forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities.
iv. that the annual accounts have been prepared on a going concern basis. v. thatproper internal financial controls were in place and that the financial controls wereadequate and were operating effectively. vi. that systems to ensure compliance with theprovisions of all applicable laws were in place and were adequate and operatingeffectively.
10. Related Party Transactions :
All related party transactions that were entered into during the financial year were onan arms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for the transactions which are of a foreseen and repetitive nature. A statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis. The policy on RelatedParty Transactions as approved by the Board has been uploaded on the Companyswebsite. None of the Directors has any pecuniary relationships or transactions vis--visthe Company.
11. Adoption of New Articles :
The Companies Act 2013 and The Companies (Amendment) Act 2015 have necessitatedchanges in the Articles of Association of the Company. It is accordingly proposed that anew set of Articles of Association be adopted by the members and a Special Resolution tothis effect is included at Item No. 6 in the Notice of the Annual General Meeting (AGM).The Board recommends the resolution for adoption by the Members.
12. Auditors :
In terms of Section 139 of the Companies Act 2013 read with The Companies (Audit andAuditors) Rules 2014 and in terms of the Ordinary Resolution passed by the Shareholdersof the Company at the 26th Annual General Meeting M/s. Sharp & Tannan the presentStatutory Auditors of the Company have been appointed to hold office from the conclusionof the 26th AGM till the Conclusion of 31st AGM to be held in the year 2020 subject toratification by the Members at every Annual General Meeting. An Ordinary Resolution inthis respect is included in item No. 4 of the Notice of AGM and Board recommends the saidResolution.
M/s. Sharp & Tannan have confirmed their eligibility under Section 141 of theCompanies Act 2013 and the Rules framed thereunder for re-appointment as Auditors of theCompany. The Notes on financial statement referred to in the Auditors Report areself-explanatory and do not call for any further comments. The Auditors Report doesnot contain any qualification reservation or adverse remark.
Cost Auditors :
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of Conductors Oils and Cables Divisions of the Company are required to beaudited by a Cost Accountant. Your Directors on the recommendation of the AuditCommittee appointed Mr. T. M. Rathi to audit the cost accounts of the Company for thefinancial year 2016-17 on a remuneration of Rs. 120000/-. A Resolution seekingmembers ratification for the appointment and remuneration payable to Mr. T. M.Rathi Cost Auditor is included at Item No. 5 of the Notice convening the AGM and Boardrecommends the said Resolution.
Secretarial Auditors :
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 hasappointed Mr. Hemang M. Mehta of H. M. Mehta & Associates Company Secretary inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis annexed herewith as "Annexure - I". The Secretarial Audit Report doesnot contain any qualification reservation or adverse remarks.
13. Other Information : a. Green Initiative
To support the "Green Initiative" under taken by the Ministry of CorporateAffairs (MCA) to contribute towards a greener environment the Company has alreadyinitiated / implemented the same from the year 2010-11. As permitted delivery of notices /documents and annual reports etc. are being sent to the shareholders by electronic modewherever possible.
Further the Company has started using recyclable steel drums in place of woodenpallets in its Conductors Divisions in order to protect the environment and reduce costsfor the Company.
b. Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) Committee constituted by the Board ofDirectors in terms of the provisions of Section 135(1) of the Companies Act 2013 reviewsand restates the Companys CSR policy in order to make it more comprehensive andaligned with the activities specified in Schedule VII of the Companies Act 2013. With thestrong belief in the principle of Trusteeship Apar Group continues to serve the communitythrough a focus on healthcare and upliftment of poor sections of Society education Foodand mid-day meal for children Environmental sustainability and Health and Welfare ofSenior Citizens initiatives. The Annual Report on CSR activities is annexed herewith as "Annexure- II".
c. Attached to and forming part of this report are the following inter alia:
i) Particulars relating to Employee Stock Option Scheme "Annexure III"
ii) Particulars of Information as per Section 197 of the Companies Act 2013 read withRule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014- a Statement showing the names and other particulars of the Employees drawingremuneration in excess of the limits set in the Rules "Annexure IV(a)" and Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 - "Annexure IV (b)".
iii) Particulars relating to conservation of energy technology absorption research& development and foreign exchange earnings and outgo "Annexure V".
iv) Report on Corporate Governance and auditors certificate regarding complianceof conditions of corporate governance.
v) Statement containing brief financial details of the subsidiaries in form AOC-1 whichis attached to the financial statements of the Company.
d. Extract of Annual Return :
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as "Annexure - VI".
e. The company has not attached the Balance Sheet Profit & Loss Accounts andother documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte.Ltd. Singapore as well as its subsidiaries Quantum Apar Speciality Oils Pty. Ltd.Australia and Petroleum Specialities FZE Sharjah WOS of PSPL. As per the provisions ofSection 129(3) read with Section 136 of the Companies Act 2013 a statement containingbrief financial details of the said subsidiaries for the year ended March 31 2016 areincluded in the annual report and shall form part of this report. The annual accounts ofthe said subsidiaries and the related information will be made available to any member ofthe Company seeking such information at any point of time and are also available forinspection by any member of the Company at the registered office of the Company.
Further pursuant to provisions of Section 136 of the Act the financial statements ofthe Company Consolidated Financial Statements alongwith relevent documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
14. General :
No disclosure or reporting is required in respect of the following items as there wereno transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOP referred to in this Report.
3. No Managing Director of the Company receive any remuneration or commission from anyof its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys operations in future.
There were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
15. Acknowledgement :
Your Directors wish to place on record their sincere appreciation for continuouscooperation support and assistance provided by stakeholders financial institutionsbanks government bodies technical collaborators customers dealers and suppliers of theCompany. Your Directors also wish to place on record their appreciation for the dedicatedservices rendered by the loyal employees of the Company.
| ||For and on behalf of the Board |
| ||Dr. N. D. Desai |
|Place : Mumbai ||Chairman |
|Date : May 25 2016. ||DIN - 00005285 |
Annexure I to the Directors Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the financial year ended 31st March 2016
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
The Members Apar Industries Limited
301 Panorama Complex R. C. Dutt Road Vadodara-390 007 Gujarat
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Apar Industries Limited(hereinafter called the Company). Secretarial Audit was conducted in a manner thatprovided me/us a reasonable basis for evaluating the corporate conducts / statutorycompliances and expressing our opinion thereon.
Based on our verification of the Companys books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on 31st March 2016 compliedwith the statutory provisions listed hereunder and also that the Company has proper Boardprocesses and compliance mechanism in place to the extent in the manner and subject tothe reporting made hereinafter: We have examined the books papers minute books formsand returns filed and other records maintained by the Company for the financial year endedon 31st March 2016 according to the provisions of :
(i) The Companies Act 2013 (the Act) and the rules made there under;
(ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings; (v) The following Regulations and Guidelines prescribedunder the Securities and Exchange Board of India Act 1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 - Not Applicable as the Company has not issued anysecurities through a Public Issue or Right issue during the financial year under review;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 / Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 (made effective from 28th October2014);
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 - Not Applicable as the Company has not issued and listed on any stockexchanges any debt securities during the financial year under review;
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client -Not Applicable as the Company is not registered as Registrar to Issue and Share TransferAgent during the financial year under review;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 - Not Applicable as the Company has not delisted its equity shares fromany stock exchanges during the financial year under review; and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998
- Not Applicable as the Company has not bought back any of its securities during thefinancial year under review and I/we have also examined compliance with the applicableclauses of the following:
(i) Secretarial Standards with respect to Board Meeting (SS-1) and General Meetings(SS-2) issued by the Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with National Stock Exchange ofIndia Limited (NSE) and BSE Limited (BSE) respectively.
(iii) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above.
We further report that
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
Decisions at Board Meetings were carried out unanimously.
We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith Labour Laws Environmental Laws and other applicable laws rules regulations andguidelines.
| ||For H. M. Mehta & Associates |
| ||Company Secretories |
| ||Hemang M. Mehta- Proprietor |
| ||FCS No.: 4965 |
| ||C P No.: 2554 |
|Place: Vadodara || |
|Date: 19.05.2016 || |
Apar Industries Limited
301 Panorama Complex
R. C. Dutt Road
Our Secretarial Audit Report of even date is to be read along with this letter.
1. It is the responsibility of the management of the Company to maintain secretarialrecords devise proper systems to ensure compliance with the provisions of all applicablelaws and regulations and to ensure that the systems are adequate and operate effectively.
2. Our responsibility is to express an opinion on these secretarial records systemsstandards and procedures based on our audit.
3. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
4. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.
5. Wherever required we have obtained the managements representation about thecompliance of laws rules and regulations and happening of events etc.
6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
| ||For H. M. Mehta & Associates |
| ||Company Secretaries |
| ||Hemang M. Mehta- Proprietor |
|Place: Vadodara ||FCS No.: 4965 |
|Date: 19.05.2016 ||C P No.: 2554 |
Annexure - II to the Directors Report
Annual Report on Corporate Social Responsibility (CSR) Activities 2015-16
1. A brief outline of the Companys CSR policy including overview of projectsor programmes proposed to be undertaken and a reference to the web-link to the CSR policyand projects or programmes.
The Company has framed the Corporate Social Responsibility (CSR) Policy in terms of theprovisions of Section 135(1) of the Companies Act 2013. The CSR activities of the Companymainly aims at Principle of Trusteeship by serving the community through a focus on - i.Healthcare and upliftment of poor sections of society ii. Education iii. Food and Mid-daymeal for children iv. Environmental sustainability and v. Health and Welfare of SeniorCitizens The CSR activities of the Company are more aligned with the activities specifiedin Schedule VII of the Companies Act 2013.Weblink : http://www.apar.com/pdf/financedata/our-policies/5-CSR-Policy.pdf
2. Composition of the CSR Committee :
Dr. N. D. Desai - Chairman
Mr. F. B. Virani - Independent Director
Mr. K. N. Desai - Managing Director & Chief Executive Officer (CEO)
3. Average Net Profit of the company for last 3 financial years :
Average Net Profit : Rs. 107.20 Crores.
4. Prescribed CSR Expenditure (2% of this amount as in item 3 above) :
Rs. 2.14 Crores
5. Details of CSR spent during the financial year : a. Total amount spent forthe financial year: Rs. 1.73 Crores
b. Amount unspent if any; Rs. 0.41 Crores.
c. Manner in which the amount spent during the financial year is detailed below :
|Sr. No. ||CSR project or activity identified ||Sector in which the Project is covered ||Projects/ Programmes 1.Local area or other 2.specify the State and district where projects or programs was undertaken || |
Amount outlay (budget) Project or Programs wise
Amount spent on the projects or programs Subheads: 1.Direct expendi- ture on projects or program 2.Over- heads:
Cumulative Expenditure upto to the reporting period.
Amount spent: Direct or through implement- ting agency
| || || || ||Rs. Crore ||Rs. Crore ||Rs. Crore ||Rs. Crore |
|1. ||Rural Development / Organic Farming / Alternative Energy / Soil Bio-Technology Donation to Sri Chaitanya Seva Trust ||Upliftment of poor sections of society particularly tribal and Aadivasis. ||Wada Dist. Thane - Maharashtra || ||0.5233 ||0.5233 ||0.5233 |
|2. ||Mid Day Meal Programme Annamrita a Scheme providing meals to Government school children. Donation to Iskcon Food Relief Foundation ||Food and Mid Day Meal for Children ||Wada & Vikramgad Dist. Thane Maharashtra || || |
|3. ||Health Care Programme on Clinic on Wheels Donation to GMCC & R Society ||Health Care - Medical Van and Medical laboratory equipment ||Nadiad Gujarat || ||0.25 ||0.25 ||0.25 |
|4. ||Education Rural School Education Programme School on Wheels for Rural Government School. Donation to Sister Nivedita Foundation ||Education School on Wheels Programmes include teachers training scholership for economically bright rural Girls Students reading workshop and environment awareness and protection etc. ||Rajkot Gujarat || || |
|5. ||Health Care Life Line Express Camp Donation to Shrimant Madhavrao Scindia Swasthya Seva Mission ||Health-care Rural Medical Facilities ||Shivpuri Gwalior-Chambal Region Madhya Pradesh || |
|6. ||Education Programme for development of human resources- Donation to Dharmsinh Desai Foundation ||Upliftment of Poor and Education to weaker section of Society ||Nadiad Gujarat || |
|7. ||Education to the underprivileged and specially challenged and Aids affected students help for setting of schools Health Care and Welfare of Senior Citizens- Donation to Maat Pita Smruti Trust. ||Education & Health and Welfare of Senior Citizens ||Rajkot Gujarat || |
|8. ||Upliftment of poor sections of society- Construction of Community Hall at Dhodipada Umbergaon Donation to Sanskruti Vikas Mandal ||Upliftment of Poor and weaker section of Society ||Dhodipada Ta. : Umbergaon || |
| ||TOTAL || || || |
6. Reasons for spending less :
Projects have been identified and evaluated and amounts have been spent as per the needand cash flow availability of the Company. The balance unspent amount of Financial Year2015-16 has been spent in the subsequent Financial Year.
7. Responsibility Statement :
The Committee hereby confirms that the implementation and monitoring of CSR policy isin compliance with CSR objectives and Policy of the Company.
|sd/- ||sd/- |
|(Kushal N. Desai) ||(Dr. N. D. Desai) |
|Managing Director & CEO ||Chairman CSR Committee |
|DIN-00008084 ||DIN-00005285 |
Annexure III to the Directors Report
Employee Stock Option
Members approval was obtained at the Annual General Meeting held on August 92007 for introduction of Employees Stock Option Scheme to issue and grant upto 1616802options and it was implemented by the Company. The options have been granted to employeesin accordance with the Securities and Exchange Board of India (Employees Stock OptionScheme and Employees Stock Purchase Scheme) Guidelines 1999 and amended to date (the SEBIGuidelines). The Nomination and Compensation-cum-Remuneration Committee constituted inaccordance with the SEBI Guidelines administers and monitors the Scheme.
The disclosures stipulated under the SEBI Guidelines are :
|a. Options granted by the Compensation Committee ||175150 |
|b. Exercise price ||Rs. 207.05 per option |
|c. Options vested ||175150 |
|d. Options exercised ||26338 (options exercised upto 31st March 2015-26072 and on 14th May 2015-266 options) |
|e. The total number of shares arising as a result of exercise of options ||26338 |
|f. Options lapsed ||148812 |
|g. Variation in terms of options ||See note 1 below |
|h. Money realised by exercise of options ||Rs. 5453282.90 |
|i. Total number of options in force ||Nil |
|j. Employee-wise details of options granted to: || |
|i. Senior Management Personnel / Directors || |
|(a) Dr. N. K. Thingalaya ||4000* |
|(b) Shri F.B.Virani ||4000** |
|(c) Mr. V.C.Diwadkar CFO and Mr. Sanjaya Kunder CS have exercised 1952 and 133 options respectively and equal number of shares were allotted. Balance options lapsed. || |
|* All the Options lapsed. || |
|** Of these 2/3rd Options lapsed and 1/3rd Options exercised and equal no. of shares (1333) allotted. || |
|ii. Any other employee who received a grant in any one year of options amounting to 5% or more of options granted during that year ||Nil |
|iii. Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant ||Nil |
|k. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 Earnings Per Share ||Rs. 40.78 |
1) 175150 options at the exercise price of Rs. 259.75 granted on January 23 2008 werecancelled on May 27 2008. The cancellation was necessary due to substantial reduction inthe price of shares in the secondary market and simultaneously therewith the abovedetailed options were granted. The confirmation of the shareholders for the saidcancellation and subsequent grant were sought at the 19th Annual General Meeting held onAugust 29 2008.
2) As the exercise of options would be made at the market linked price of Rs. 207.05the issuance of equity shares pursuant to exercise of options will not affect the profitand loss account of the Company.
3) The Company obtained in-principle approval for the listing of the entire 1616802equity shares to be issued and allotted on exercise of options as and when exercised underthe scheme. The Company has also obtained listing and trading approvals from both theStock Exchanges viz. BSE Limited (BSE) and the National Stock Exchange of India Limited(NSE) in respect of entire 26338 Equity Shares allotted to the employees under thescheme.
4) The Company has received a certificate from the Auditors of the Company that theScheme has been implemented in accordance with the SEBI Guidelines and the resolutionpassed at the Annual General Meeting held on 9th August 2007. The Certificate would beplaced at the Annual General Meeting for inspection by members.
Annexure IV (a) to the
Information pursuant to Section 197 of the Companies Act 2013 read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors Report for the year ended 31st March 2016.
|Names ||Age (Years) ||Designation / Nature of Duty ||Qualifications ||Experience (Years) ||Remuneration Rs. ( ) ||Date of Commencement of Employment ||Last Employment and Designation |
|Mr. Kushal N. Desai ||49 ||Managing Director ||B.Sc. (Hons.) (Ele.Engg.) U.S.A. B.S.Eco. (Hons) (Wharton) U.S.A. ||27 ||26979306 ||24-03-1999 ||GE Lighting (India) Ltd. - President |
|Mr. Chaitanya N. Desai ||44 ||Managing Director ||B.Sc. (Hons.) (Chem.Engg.) U.S.A. B.S.Eco. (Hons) (Wharton) U.S.A. ||22 ||27260114 ||29-05-1993 ||- |
1) The Remuneration includes salary allowances commission paid to Directorsreimbursement of leave travel and medical expenses / benefits companys contributionto provident fund leave encashment and other perquisites in respect of motor caraccomodation and telephone etc.
2) Above directors are related to each other. None of the employees of the Company isrelated to any of the Directors.
3) All appointments are contractual and terminable by notice on either side.
4] Information regarding remuneration and particulars of other employees of the Companywill be available for inspection by the members at the Corporate Office of the Companyduring business hours on working days upto the date of the ensuing Annual General Meetingof the company. If any member is interested in obtaining a copy thereof such member maywrite to the Company Secretary where upon a copy would be sent.
Annexure IV (b) to the Directors Report
Details Pertaining to Remuneration as required under Section 197(12) of the CompaniesAct 2013 read with rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) rules 2014
(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:
|Sr. No. ||Name of Director/KMP and Designation ||% increase/decrease (-) in Remuneration in the Financial Year 2015-16 ||Ratio of remuneration of each Director / to median remuneration of employees ||Comparison of the Remuneration of the KMP against the performance of the Company |
|1. ||Dr. N. D. Desai* Chairman ||98% $ ||46.39:1 || |
|2. ||Mr. Kushal N. Desai Managing Director ||89% $ ||53.11:1 ||Net Sales decreased marginally by 0.02%. However Profit before tax |
|3. ||Mr. Chaitanya N. Desai Managing Director ||87% $ ||53.66:1 ||(excluding exceptional gain of Rs. 43.15 cr.) increased substantially by 147.92%. |
|4. ||Dr. N. K. Thingalaya Independent Director** ||23% ||0.48:1 || |
|5. ||Mr. F. B. Virani Independent Director** ||34% ||0.56:1 || |
|6. ||Mr. Suyash Saraogi Independent Director** ||124% ||0.50:1 || |
|7. ||Smt. Nina Kapasi Independent Director** ||44% ||0.43:1 || |
|8. ||Mr. Rajesh Sehgal Investor Director ||*** NA ||NA || |
|9. ||Mr. V. C. Diwadkar ||15% || ||Net Sales decreased marginally by 0.02%. |
|10. ||Mr. Sanjaya R. Kunder Company Secretary ||15% || ||However Profit before tax (excluding exceptional gain of Rs. 43.15 cr.) increased substantially by 147.92%. |
$ Increase in remuneration is due to increase in commission amount calculated on netprofit before tax (excluding exceptional gain of Rs. 43.15 crores) which is higher by148%.
* Dr. Narendra D. Desai decided not to receive any Consultancy Fees and re-imbursementof actual rent upto Rs. 300000/- per month for a period of 5 years during his currenttenure from 01.02.2016 to 31.01.2021.
** Independent directors are paid only sitting fees.
***No remuneration and sitting fees paid to the Investor Director.
ii) The median remuneration of employees of the Company during the financial year wasRs. 5.08 lakh.
iii) In the financial year there was a decrease of 3.58% in the median remuneration ofemployees;
iv) There were 1186 permanent employees on the rolls of Company as on March 31 2016;
v) Relationship between average increase in remuneration and company performance:- Netsales decreased marginally by 0.02% and Profit after Tax (excluding exceptional gain ofRs. 43.15 crores) for the financial year ended March 31 2016 increased by 138% whereasthe decrease in median remuneration was 3.58%.
vi) Comparison of Remuneration of the Key Managerial Personnel(s) against theperformance of the Company: The total remuneration of Key Managerial Personnel increasedby 72% from Rs. 3.73 crore in 2014-15 to Rs. 6.41 crore in 2015-16 whereas the Profitbefore Tax (excluding exceptional gain of Rs. 43.15 crore) increased substantially by 148%to Rs. 169.76 crore in 2015-16 (Rs. 68.23 crore in 2014-15).
vii) a) Variations in the market capitalisation of the Company : The marketcapitalisation as on March 31 2016 was Rs. 1777 crore ( Rs. 1420 crore as onMarch 31 2015).
b) Price Earnings ratio of the Company was 10.92 as at March 31 2016 and was 29.74 asat March 31 2015.
c) Percentage increase over/ decrease in the market quotations of the shares of thecompany as compared to the rate at which the company came out with the last public offerin the year :- The Company had come out with initial public offer (IPO) in 1991. The shareprice of the company first listed on BSE in April 1991 at Rs. 15.50 per share of the facevalue of Rs.10 per share. Share price of the Company quoted on BSE on 31st March 2016 wasRs. 461.80 per share of Company. Percentage increase in the Net-worth of the Company was20% as compared to previous year.
viii) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2015-16 was 27% whereas the increasein the managerial remuneration for the same financial year was 72%.
ix) The key parameters for the variable component of remuneration availed by thedirectors are considered by the Board of Directors based on the recommendations of theNomination and Compensation-cum-Remuneration Committee as per the Remuneration Policy forDirectors Key Managerial Personnel and other Employees.
x) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year Not Applicable; and
xi) Remuneration paid is as per the Remuneration Policy for Directors Key ManagerialPersonnel and other Employees.
Annexure V to the Directors Report
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information as per Section 134(3) (m) of the Companies Act 2013 read with Rule 8(3) ofThe Companies (Accounts) Rules 2014 and forming part of the Directors Report forthe year ended 31st March 2016.
I. Conservation of Energy :
1) Energy Conservation measures taken and continuing on regular basis:
Conductor Division : i) Converted 2 numbers of Aluminium RBDs to multi wire drawingmachines. ii) Converted Thyristor base heating system to advance technological heatingdevices in two number heat treatment furnaces for faster and efficient temperatureattainment and controls. iii) Converted spooling machines motors supported with VFD ACdrive for better control. iv) Converted Aluminum rolling mill main motor from DC drivesystem to AC VFD for improving the energy efficiency. v) Skip main analog DC driveconverted into VFD AC drive. vi) Heavy rewinding has been converted from Eddy currentmotor to VFD AC drive. vii) Replacement of HPSV/HPMV light fittings to LED for extendedplant and street lightening. viii) Improved melting /holding furnace efficiency throughbetter relining and putting up efficient heat recovery system.
Oil Division : i) 39619 KWH Solar power generated which reduces the carbonemissions. ii) Replaced the inefficient light fitting with the efficient light fittings inthe plant with same lumens output. iii) Maintained power factor above 0.995 throughout theyear. iv) Steam condensate recovery system is working efficiently recovered 75%condensate. v) Rain water collected through water harvesting & use the same in theboiler for steam generation. vi) Compressed air leakages monitored regularly &maintained the leakages below 10%. vii) Installed 100CFM screw compressor with VFD inplace of reciprocating compressor.
Cable Division : i) Various machines at power Rubber OFC and conductor plantsconverted from DC to AC. ii) Maintained power factor 0.99 throughout the year at alllocations. iii) APFC panel installed for new transformer unit at Khatalwada. iv)Introduced tapping machine drive synchronizes with main machine at MSD machine to enhanceproductivity and product quality at conductor division. v) Replaced highway light fittings250W HPMV with 150W metal halid 88 numbers thereby saving 70 KWH per day at Umbergaon. vi)Increased line speed of sioplas and 72B armouring machine by 20% each.
2) Additional Investment proposals if any being implemented for reduction ofconsumption of energy: i) Conversion of all ageing furnaces into proven advancetechnological heating system. ii) CCR Chimney exhausts blower conversion from starter baseto VFD drive base. iii) Conversion of Aluminum Spooling from starter base to VFD AC drive.iv) Up gradation of extrusion lines (120 80/60 ASACO and OFC extruders) for energysaving by converting DC system to AC system. v) New CCV line for 66KV to be installed andcommissioned. vi) Installation of Sioplas line and 150 mm sheathing line for HT cablecapacity enhancement. vii) Up gradation of wire drawing machines at unit-153 for energysaving by converting DC system to AC system. viii) Furnace temperature control throughIGBT system which can save 13% electrical power. ix) Replacement of inefficient lightfitting with the efficient/energy conservation light fitting in the plant. x) To installthe 300CFM screw type Air compressor with VFD in place of reciprocating compressor toreduce the power consumption. xi) Installation of additional 45KW solar power generationsystem
3) Impact of measures at (1) and (2) above: a) Enhanced productivity inmulti-wire drawing machine-4 by 20% and saving in energy approximately 10%. b) Savedenergy in ageing furnace approximately 13% & same to be considered in other ageingfurnaces after conversion. c) Rolling mill main motor DC drive converted to AC driveresulted in direct saving of electrical consumption by 5% and increased in throughput dueto practically zero maintenance as compared to DC drives. d) In street lights & plantlights energy save approximate 20% by LED lights.
4) Total Energy Consumption and Energy Consumption per unit of production : (A)Power and Fuel Consumption: (i) Electricity :
| ||2015-16 ||2014-15 |
|(a) Purchased units ||59127483 ||49485394 |
|Total Amount (Rs./crore) ||33.53 ||27.44 |
|Rate/Unit (Rs.) ||5.67 ||5.54 |
|(b) Own Generation ||759216 ||698858 |
|Through Diesel Generator (Units) || || |
|Average Units generated per liter of diesel oil ||3.24 ||2.70 |
|Average Cost of Unit (Rs.) ||13.63 ||20.63 |
|(ii) Furnace Oil : || || |
|Quantity (Kl.) ||7026 ||5775 |
|Total Amount ( Rs. /crore) ||14.92 ||19.39 |
|Average Rate/Kl.( Rs.) ||21232 ||33585 |
|(iii) Natural Gas: || || |
|Quantity (M3) ||2180663 ||2816935 |
|Total Amount (Rs./crore) ||6.53 ||10.32 |
|Average Rate/M3( Rs. ) ||29.95 ||36.64 |
|(iv) LPG: || || |
|Quantity (Kl.) ||68780 ||15428 |
|Total Amount (Rs./crore) ||0.28 ||0.09 |
|Average Rate/Kl.(Rs.) ||40.30 ||59.72 |
(B) Consumption per unit of production (Average per unit consumption on totalproduction of each division is included in the table below):
| || ||2015-16 ||2014-15 |
| || ||Electricity (Units) ||Furnace Oil (liters) ||Natural Gas (M3) ||LPG (liters) ||Electricity (Units) ||Furnace Oil (liters) ||Natural Gas (M3) ||LPG (liters) |
|(i) ||Oil Division : || || || || || || || || |
| ||Per KL output of Oil ||9.12 ||1.23 ||- ||- ||8.82 ||1.28 ||- ||- |
|(ii) ||Conductors || || || || || || || || |
| ||Division : || || || || || || || || |
| ||Per MT output of Aluminum/Alloy ||207 ||40 ||14 ||1.39 ||194 ||36 ||22 ||0.37 |
| ||Conductors || || || || || || || || |
|(iii) ||Cable Division: || || || || || || || || |
| ||Per Km. of cable ||145 ||- ||81 ||- ||136 ||- ||56 ||- |
Reasons for change in consumption: change in Product mix II. TechnologyAbsorption and Research & Development :
1. Research and Development (R&D) :
(i) Specific areas in which R & D is carried out by the Company:
a) Development and establishment of special Aluminum Alloy wire rod and wire for highperformance conductor for power transmission and distribution (8176 Alloy AL 59TAL/STAL Mech Alloy).
b) Improvement in various aluminum alloys towards high conductivity and superiorperformance (AL 59/ High Conductivity Alloy).
c) Design and establishment of conductor wire configuration core for HTLS low lossand cost optimization with latest technological up-gradation (TW/ Z shaped Wire Annealingthrough Drawing dies and conforming process Eco conductor).
d) Development of critical test facility for testing and evaluation of bare OHTLconductor including HTLS for investigation and assessment of conductor performance inrespect to product quality handling and installation reliability and in-serviceperformance (Mechanical testing by using appropriate design of clamps/ fittings/ epoxyfittings Stress and strain test behavior through laser type non-contact micro-straingauge Torsional ductility test for HTLS Torsion test on composite core Dye penetrationtest facility for carbon fiber matrix composite core).
e) Development of Intron make tensile machine with pneumatic grips for accurate testingof wires specially those very precise ductility (INVAR/AW ACS EHS and UHS).
f) Development of speciality elastomeric pressure tight cables hybrid rubber cableswith integrated fiber optics Electron Beam irradiated Solar and Windmill cables heavyand low tow cables for Indian Navy Electron Beam XLPE Tether Cables for Army.
g) Development of Medium Voltage Covered Conductors.
h) Development of high performance Metal working fluids/ Metal protection fluids
i) Semi-synthetic metal working fluids for high speed and multi machining applications.
ii) Rust preventive oils for hot rolled/cold rolled steel protection precisioncomponents and high protection rust preventive oils.
i) Development of spray oils for agricultural and horticultural applications:laboratory evaluation completed and field evaluation studies are in progress.
j) Development of applications for the PTFE Micronized powders produced by the Cablesdivision in ink lubricant and coating applications. Stability studies and productperformance studies are in progress.
k) Development of high flash and long life transformer oil for transformers used inurban/mining and commercial areas with special safety norms.
l) Development of biodegradable transformer oils with high flash meeting specialrequirements of safety and biodegradability.
m) Development and optimization of Petroleum jelly product line for variousapplications such as oilments balms veternaary applications and ophthalmic applications.
n) Development of White oils for various grades of polymer applications.
o) Collaborative research work with DDU Nadiad Taylors University Malaysia andUniversity of Nottingham Malaysia and Malaysian Nuclear Agency Malaysia in nanolubricants/PTFE and other areas of research.
(ii) Benefits derived as a result of the R&D:
a) Development establishment and commercialization of all type of 4th and 5thgeneration high performance smart aluminum conductors for all power utilities.
b) Premium product for the profitability of the company.
c) Rapport towards market leader in HTLS for indigenous development.
d) Competency enhancement of the team on design manufacture supply and installationof Bare OHTL conductors and competing global market.
e) Improvement in quality and reliability of product and services.
f) New orders awaited in FY 2016-17 for Tether and Tow Cables & E-Beam XLPE.
g) Cost Reduction of various compounds.
h) Energy Saving.
i) Substitutes of import cables for defense and railway application.
j) Product differentiation in rust preventive applications with target segmentrequirements.
k) Introduction of metal working fluids for target metal working applications for autosegments.
l) New range of transformer oils meeting high safety long life and biodegradabilityrequirements.
m) New application areas in white oil usage such as Spray oils polymer/adhesiveapplications.
(iii) Future plan of action:
a) Development of process and product (ACS wire and Aluminum clad Invar).
b) Additional test facility development for Sheave test Creep Test Aeolian vibrationtest.
c) Creation of separate (re-located) independent laboratory with Government approval.
d) To continue to carry on the R&D activity and try to absorb to reduce costespecially the E-beam cables and Medium Voltage Covered Conductors.
e) Develop 33 KV Elastomeric cables for export market.
f) Development of submarine cable through electron beam technology. g) Introduction ofnew testing equipment such as DGA analysis oxidation stability methods such as DGA
h) Increase the strength of R&D team to meet the product category developmentalwork
i) To represent Company in various technical and standardizing committees.
j) Obtaining GMP certification for the Pharmaceutical line of production facility.
(iv) Expenditure on R&D:
a) Capital = Rs. 0.73 crore
b) Revenue = Rs. 3.21 crore
c) Total = Rs. 3.94 crore
d) Total R&D Expenditure as a percentage of total turnover = 0.08%.
2. Technology Absorption Adaptation and Innovation :
|Technology imported (in last five years) ||Year of Import ||Has technology been |
| || ||fully absorbed |
|License to use proprietary knowhow formulae trademarks and trade names relating to manufacture & sale of lubricating Oils greases and other special Lubricants for industrial automotive and marine applications ||2013 ||Yes |
|License to manufacture high performance conductor (ACCC) ||2012 ||Yes |
III. Foreign Exchange Earnings and Outgo :
1. Activities related to exports :
Efforts are continuing to increase exports of all products.
2. Total Foreign Exchange used and earned :
(i) Total foreign exchange used :
| || ||(Rs. in crore) |
| ||2015-16 ||2014-15 |
|(a) Raw Materials (CIF) ||2228.44 ||3043.23 |
|(b) Stores & Spares ||3.33 ||2.63 |
|(c) Capital Goods ||12.73 ||18.05 |
|(d) Others ||73.20 ||70.86 |
| ||2317.70 ||3134.77 |
|(ii) Total foreign exchange earned: || || |
| || ||(Rs. in crore) |
| ||2015-16 ||2014-15 |
|(a) Physical Exports (FOB) ||1503.56 ||1512.15 |
|(b) Deemed Exports (eligible for export incentives) ||114.90 ||151.48 |
|(c) Others ||56.50 ||71.20 |
| ||1674.96 ||1734.83 |