TO THE MEMBERS OF
APL APOLLO TUBES LIMITED
Your Directors have pleasure in presenting the Thirty First Annual Report on thebusiness and operations of your Company together with the Standalone and ConsolidatedAudited Financial Statements for the year ended 31 March 2016.
The Companys Financial performance for the year under audit along with theprevious years figures are given hereunder:-
(Rs. in crore)
|Particulars || |
| || |
|Gross sales ||4656.36 ||3481.73 ||3213.83 ||2301.37 |
|Less: Excise duty and cess ||442.77 ||343.46 ||218.23 ||200.80 |
|Net sales / Income from operations ||4213.59 ||3138.27 ||2995.60 ||2100.57 |
|Operating EBIDTA ||281.66 ||181.62 ||112.87 ||93.75 |
|Add: Other income ||10.27 ||4.51 ||21.62 ||12.65 |
|Less: Finance cost ||69.51 ||66.44 ||48.73 ||50.16 |
|Less: Depreciation and amortisation ||34.10 ||22.01 ||18.67 ||12.01 |
|Profit before exceptional items and tax ||188.32 ||97.67 ||67.09 ||44.23 |
|Less: Exceptional items ||25.33 ||- ||25.33 ||- |
|Profit before tax (PBT) ||163.00 ||97.67 ||41.76 ||44.23 |
|Less: Tax expense ||62.42 ||33.92 ||10.93 ||12.78 |
|Profit after Tax for the year (PAT) ||100.57 ||63.75 ||30.83 ||31.45 |
|Add: Balance in statement of profit and loss ||257.27 ||216.89 ||105.99 ||94.69 |
|Profit available for Appropriation ||357.84 ||280.64 ||136.82 ||126.14 |
|Transfer to General Reserve ||0.50 ||6.50 ||0.50 ||5.00 |
|Transfer to Debenture redemption reserve ||18.75 ||- ||18.75 ||- |
|Proposed dividend on Equity Shares ||23.44 ||14.06 ||23.44 ||14.06 |
|Tax on dividends ||4.68 ||2.81 ||1.98 ||1.09 |
|Balance Carried over to Balance Sheet ||310.47 ||257.27 ||92.16 ||105.99 |
The companys consolidated gross turnover in financial year 2015-2016 increased by34% from Rs. 3481.73 crore to Rs. 4656.36 crore mainly because of our customizedproducts across all the users. The EBIDTA has been significantly increased by 57% from Rs.186 crore to Rs. 292 crore for the year under audit. The net profit of the Company hasalso increased by 58% from Rs. 64 crore to Rs. 101 crore for the year under audit.
The Board has subject to the approval of the members at the ensuing Annual GeneralMeeting recommended dividend of Rs. 10/- (100%) per fully paid-up equity share of Rs.10/- each of the Company for the year ended 31 March 2016 as against Rs. 6/- (60%) forthe previous year.
TRANSFER TO RESERVES
The company proposes to transfer Rs. 0.5 crore to the General Reserve out of amountavailable for appropriations and an amount of Rs. 92.16 crore standalone basis proposedto be retained in the Statement of Profit and Loss during the financial year 2015-16.
The global economy as well as Indian economy during the current financial year remainedsubdued and witnessed overall fall in demand slow down and uneven recovery acrossadvanced and emerging markets. The Government has taken several initiatives and measuresfor development to improve the economic conditions of the country but due to poormonsoons disappointing manufacturing output and growing NPAs and stressed assets amongothers has kept the economy under stress. However the performance of the company is notmuch affected and it managed to achieve the targets through innovative designed productsand increasing its production capacity. The Company has set the vision 2020 for achievingthe capacity up to 2.5 millions MTPA including installation and commissioning of newmachineries based on HSU technology. The road map of development will take shape in thecoming years consequent to the implementation of government projects and otherinitiatives undertaken for growth. The strategy and steps taken by the Company indesigning new products in steel tubes and pipes segment by innovative means has succeededin a big way with the production and launch by the Company for the first time in India andother new products like window / door frames designed and patented by the company willboost the sales of the company as demand for these products is expected to growsignificantly in rural and semi-urban areas of the country. The Company focussed onreducing cost of raw materials by procuring through imports improving efficienciesreducing cost of borrowings increasing penetration particularly in Tier II citiesdeveloping new product sizes finding new markets etc. Due to various other measures takenby the Company it has maintained steady in its operations.
The company has increased its capacities by adding new mills and adopting latesttechnologies across all the plants. To create demands for all diversified products theCompany is focussing on creation and spreading of Companys popular Brand APL Apolloacross the targeted markets. With this the Company expects to maintain the growth momentumand improve margins.
During the financial year 2015-16 the Company has achieved the highest ever volumeonce again and break its previous volume despite the adverse conditions across the globe.The Company is focusing on the products of new designed and gradually the positiveresponse is witnessing in its sales. The continued focus on brand image exercise andextending the geographical reach to the end-users strengthened our presence in Tier IIand Tier III cities either via own warehouse cum branches or through dealer-distributionnetwork. The dealer-distribution network increased significantly to 600. This along withwarehouses will help the Company to meet the increasing demand for our products acrossvarious industrial applications.
The effective steps towards measures to enhance cost efficiency across the verticalsinnovative approach in production and distribution of the products helped the Company tocontrol the manufacturing selling and distribution cost.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements presented by the
Company include financial information of its subsidiaries prepared in compliance withapplicable Accounting Standards. The audited Consolidated Financial Statements and theAuditors Report thereon form part of this annual report.
PROJECTS AND EXPANSION PLANS
Project commissioned during financial year 2015-16 and
New Projects in the upcoming years
New 5 lines commissioned during the year across all existing plant therebyenhancing the capacity from 10.50 lacs TPA to 13 lacs TPA.
Setting up a new plant in Raipur with 3.25 lacs TPA including HSU technology formaking our presence Pan India.
Ordered 8 lines of new HSU technology mills that will add over 5 lacs TPA at theexisting sites and Raipur in this year.
SUBSIDIARIES COMPANIES JOINT VENTURES
& ENTERPRISES OVER WHICH SUBSIDIARIES KEY MANAGERIAL PERSONNEL & RELATIVE OFKMP EXERCISES SIGNIFICANT INFLUENCE
The Company has three wholly-owned subsidiaries and five Enterprises over whichSubsidiaries Key Managerial Personnel & Relative of KMP exercises significantinfluence as on 31 March 2016.
No subsidiaries were acquired/formed during the year.
A. Wholly Owned Subsidiaries
1. M/s Shri Lakshmi Metal Udyog Limited (SLMUL)
Shri Lakshmi Metal Udyog Limited is a wholly owned subsidiary of the Company acquiredon
28 April 2008. The turnover of the Company during financial year 2015-16 stoodat Rs. 457.39 crore. The profit before tax was Rs. 57.24 crore in the financial year2015-16 as compared to Rs. 24.59 crore in the financial year 2014-15. The profit after taxstood at Rs. 35.43 crore in the financial year 2015-16 as compared to Rs. 16.50 crore inthe financial year 2014-15.
2. M/s Lloyds Line Pipes Limited (LLPL)
Lloyds Line Pipes Limited is a wholly owned subsidiary of the Company acquired on 11November 2010. The turnover of the Company during financial year 2015-16 stood at Rs.879.02 crore. The profit before tax was Rs. 49.55 crore in financial year 2015-16 ascompared to Rs. 25.75 crore in financial year 2014-15. The profit after tax stood at Rs.31.29 crore in financial year 2015-16 as compared to Rs. 17.19 crore in financial year2014-15.
3. M/s Apollo Metalex Private Limited (AMPL)
APL Apollo Tubes Limited acquired 100% stake in Apollo Metalex Private Limited on 15June 2007. The turnover of The Company during the financial year 2015-16 stood at Rs.580.95 crore. The profit before tax Rs. 27.91 crore in financial year 2015-16 as comparedto Rs. 12.94 crore in financial year 2014-15. The profit after tax stood at Rs. 16.47crore in financial year 2015-16 as compared to Rs. 8.46 crore in financial year 2014-15.
B. Enterprises over which Subsidiaries Key Managerial
Personnel & Relative of KMP exercises significant influence
M/s Apollo Pipes Limited
M/s V S Exim Private Limited
APL Infrastructure Private Ltd
Assawa Associates Private Limited
SMT Finance and Investment Limited
A report on the performance and financial position of each of the subsidiaries andassociates companies as per the Companies Act 2013 is provided as Annexure "C"to the Consolidated Financial Statements and hence not repeated for the sake of brevity.
During the financial year 2015-16 the Board of Directors in its Meeting held on 13June 2015 has also approved the Scheme of Amalgamation of Lloyds Line Pipes Limited(wholly owned subsidiary) with the Company to enable consolidation and further expansionof the Company.
Your Company has since filed a petition with the Honble High Court of Delhi forits approval to the said amalgamation of the Company with Lloyds Line Pipes Limited(wholly owned subsidiary) and same is pending with the Court. The company is hopeful toget the approval of High Court and other requisite approvals will be obtained by the endof September 2016.
Your Directors believe that the amalgamation would achieve economies of scale andother operational synergies which would result in the optimization of operation andcapital expenditure and lead to increased competitive strength cost reduction andefficiencies productivity gains by pooling the financial managerial and technicalresources personnel capabilities skill expertise and technologies of both the Companies.
The audited financial statement and related information of the subsidiaries whereapplicable will be available for inspection during regular business hours at theCompanys Corporate Office at 36 Kaushambi Near Anand Vihar Terminal GhaziabadUttar Pradesh-201010 and the same are also available at our website i.e. www.aplapollo.comas prescribed in Section 136 of the Companies Act 2013.
The Company has in place of mechanism to identify access monitor and mitigate variousrisks to business key objectives. Major risks identified by the business and functions aresystematically addressed through mitigating actions on a continuing basis. These arediscussed at the meeting of the Board of Directors of the Company.
The board has adopted formal Risk Management Policy for the Company whereby risks arebroadly categorized into Strategic Operational Compliance and Financial & ReportingRisks. The Policy outlines the parameters of identification assessment monitoring andmitigation of various risks which are keys to the business objectives.
The Risk Management Policy has been uploaded on the Companys website and may beaccessed at the link:
INTERNAL CONTROL AUDIT AND INTERNAL
A robust system of internal control commensurate with the size and nature of itsbusiness forms an integral part of the Companys governance policies.
The Company has a proper and adequate system of internal control commensurate with thesize and nature of its business internal control system are integral to CompanysCorporate Governance framework. Some significant features of internal control system are:
Adequate documentation of policies guidelines authorities and approvalprocedures covering all the important functions of the Company.
Ensuring complete compliance with laws regulations standards and internalprocedures and systems.
De-risking the Companys assets/resources and protecting them from anyrisks.
Ensuring the integrity of the accounting system; proper and authorized recordingand reporting of all transactions.
Preparation and monitoring of annual budgets for all operating and servicefunctions.
Ensuring reliability of all financial and operational information.
Audit Committee of the Company comprising of Independent Directors. TheCommittee regularly reviewing audit plans significant audit findings adequacy ofInternal Controls Compliance with Accounting Standards etc.
Comprehensive Information Security Policy and Continuous updation of IT systems.
The Internal Control systems and procedures are designed to assist in theidentification and management of risks the procedure-led verification of all complianceas well as enhanced control consciousness.
The Company has an internal audit function that inculcates global best standards andpractices. The Company has strong internal audit department reporting to Audit Committee.
AUDIT PLAN AND EXECUTION
Internal Audit department prepares a risk based Audit plan. The frequency of audit isdecided by risk rating of areas/functions. The audit plan is reviewed periodically toinclude areas which have assumed significant importance in line with the regulatorychanges emerging industry trends and value of the transactions. The audit is based on aninternal audit plan which is reviewed this year in consultation with the audit committee.The Internal Audit team develops an annual audit plan based on the risk profile of thebusiness activities. The Internal Audit plan is approved by the Audit Committee whichalso reviews compliance to the plan.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internalcontrol systems in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based on thereport of internal audit function process owners undertake corrective action(s) in theirrespective area(s) and thereby strengthen the controls. Significant audit observations andcorrective action(s) thereon are presented to the Audit Committee.
INTERNAL FINANCIAL CONTROL
As per Section 134(5)(e) of the Companies Act 2013 the Directors have an overallresponsibility for assuring that the Company has implemented robust systems and frameworkof Internal Financial Controls.
The Company has successfully laid down the framework and ensured its effectiveness.APLs internal controls are commensurate with its size and the nature of itsoperations. These have been designed to provide reasonable assurance with regard torecording and providing reliable financial and operational information complying withapplicable statutes safeguarding assets from unauthorised use executing transactionswith proper authorisation and ensuring compliance of corporate policies.
APL has a well-defined delegation of power with authority limits for approving revenueas well as expenditure. Processes for formulating and reviewing annual and long termbusiness plans have been laid down. It has continued its efforts to align all itsprocesses and controls with global best practices.
Our management assessed the effectiveness of the Companys internal control overfinancial reporting (as defined in Clause 17 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as of 31 March 2016. The assessment involved self reviewpeer review and external audit.
The audit committee reviews reports submitted by the management and audit reportssubmitted by internal auditors and statutory auditors. Suggestions for improvement areconsidered and the audit committee follows up on corrective action. The audit committeealso meets statutory auditors of the Company periodically to inter alia ascertain theirviews on the adequacy of internal control systems and keeps the board of directorsinformed of its major observations periodically.
Based on its evaluation (as defined in section 177 of Companies Act 2013 and Clause 18of SEBI Regulations 2015) the audit committee has concluded that as of 31 March 2016internal financial controls of the Company were adequate and operating effectively.
The Companys borrowings enjoy the following credit ratings:
|Nature of Borrowing ||CARE ||ICRA |
|Long term bank Loans ||- ||[ICRA] A |
|Short Term ||- ||[ICRA] A1 |
|Commercial Papers ||- ||[ICRA] A1 |
| || ||& ICRA A1+[SO] |
|NCDs ||CARE A ||- |
Your Company has obtained upgraded rating from M/s ICRA Limited and further obtainedrating for the Non- Convertible Debentures for the first time during the year with stableoutlook.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the year under audit as stipulated underRegulation 34 and 53 of the SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 is presented in a separate section forming part of the Annual Report.
Your Company has not accepted any public deposits within the meaning of Section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014.Therefore company is not required to furnish information in respect of outstandingdeposits under Non-banking Non-financial Companies (Reserve Bank) Directions 1966 andCompanies (Accounts) Rules 2014.
There was no change in the Companys share capital during the year under audit.The Companys paid up equity share capital remained at Rs. 234386360 comprising of23438636 equity shares of Rs. 10/- each. The company has not issued shares withdifferential voting rights nor sweat equity or bonus shares.
Your Company has established share incentive schemes APL Apollo Employees Stock OptionPlan pursuant to which options to acquire shares have been granted to eligible employeesof the Company and its subsidiaries. During the year stock options have been granted tothe employees of the Company and its subsidiaries. On exercise of the options so grantedthe paid-up equity share capital of the Company will increase in terms of the Stock OptionPlans mentioned above. The details of stock options granted by the Company are disclosedin compliance with Regulation 14 of Securities and Exchange Board of India (Share BasedEmployee Regulations) 2014 is placed on the Website of the Company at www.aplapollo.com.
During the period under audit your Company issued fully secured listed redeemableNon-convertible debentures (the "Debentures") amounting to Rs. 75 crore on aPrivate Placement basis. The outstanding balance of Debentures as on 31 March 2016amounts to Rs. 75 crore. The proceeds of the aforesaid issue were utilized for generalcorporate purposes.
Debenture Trust Agreement in favour of HDFC Trustee
Co. Limited for the aforesaid issue was executed.
The Companys NCDs have been assigned the rating of
CARE A by Credit Analysis and Research Limited (CARE).
The Commercial Paper Programme of your Company has been rated by M/s ICRA Limited andis assigned the rating of [ICRA] A1 & [ICRA] A1+ [SO] for Rs. 70 crore and Rs. 130crore respectively. During the year under audit Commercial Papers outstanding amountstood at Rs. 25 crore.
At APL Apollo we ensure that we evolve and follow the corporate governance guidelinesand best practices sincerely to not just boost long-term shareholder value but to alsorespect minority rights. We consider it our inherent responsibility to disclose timely andaccurate information regarding our financials and performance as well as the leadershipand governance of the Company.
Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) and Clause 49 of theerstwhile Listing Agreement regarding the Corporate Governance Report and theAuditors Certificate regarding compliance of conditions of Corporate Governance areannexed to this report (Annexure H).
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Companies Act 2013 and interms of Articles of Association of the Company Shri Vinay Gupta (DIN: 00005149) willretire at the ensuing Annual General Meeting (AGM) and being eligible offer himself forreappointment. The profile and particulars of experience attributes and skills thatqualify Shri Vinay Gupta for the Board membership is disclosed in the notice convening theAGM. The Board recommends and seeks your support in confirming Shri Vinay Guptasreappointment.
Shri Sameer Gupta (DIN: 00005209) ceased to be Director of the Company effective from30 May 2016. The Directors place on record their appreciation towards Shri SameerGuptas contribution during the tenure as a Director of the Company.
Shri Romi Sehgal (DIN: 03320454) who was appointed as an Additional Director of theCompany by the Board of Directors with effect from 13 August 2016 in terms of Section 161of the Companies Act 2013 and in terms of Articles of Association of the Company holdsoffice until the date of ensuing Annual General Meeting. Your Company has received anotice under Section 160 of the Companies Act 2013 from a shareholder of your Companysignifying his intention to propose the name of Shri Romi Sehgal for appointment as aDirector of your Company.
Key Managerial Personnel
Pursuant to Section 203 of the Companies Act 2013 the Key Managerial Personnel of theCompany are Shri Sanjay Gupta (Chairman) Shri Ashok Kumar Gupta (ManagingDirector) Shri Deepak Goyal (Chief Financial Officer) and Shri Adhish Swaroop (CompanySecretary). During the year there has been no change in the key managerial personnel.
POLICY ON DIRECTORS APPOINTMENT AND
Matching the needs of the Company and enhancing the competencies of the Board are thebasis for the Nomination and Remuneration Committee to select a candidate for appointmentto the Board.
The current policy is to have a balance mix of executive and non-executive IndependentDirectors to maintain the Independence of the Board and separate its function ofgovernance and management. As at 31 March 2016 the Board of Directors comprises of 8Directors of which 4 are non-executive including 1 women Director. The number ofIndependent Directors is 4 which is one half of the total numbers of Directors.
The Policy of the Company on Directors appointment including criteria for determiningqualifications positive attributes independence of Directors and other matters asrequired under Section 178 of Companies Act 2013 is governed by Nomination Policy readwith Companys policy on appointment/reappointment of Independent Directors. Theremuneration paid to the Directors is in accordance
with the remuneration policy of the Company.
COMPENSATION POLICY FOR THE BOARD AND
Based on the recommendations of NRC the Board has approved the Remuneration Policy forDirectors Key Managerial Personnel (KMP) and all other employees of the Company. As partof the policy the Company strives to ensure that:
i. the level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
ii. relationship between remuneration and performance is clear and meets appropriateperformance benchmarks; and
iii. remuneration to Directors KMP and Senior
Management involves a balance between fixed and incentive pay reflecting short mediumand long-term performance objectives appropriate to the working of the Company and itsgoals.
During the year there have been no changes to the policy. Hence the same is notannexed to this report but is available on our website www.aplapollo.com.
DECLARATION BY INDEPENDENT DIRECTOR(S):
All the Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149 of the Companies Act 2013 andRegulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015so as to qualify themselves to be appointed as Independent Directors under the provisionsof the Companies Act 2013 and the relevant rules.
BOARD EVALUATION & CRITERIA FOR
The board of directors has carried out an annual evaluation of its own performanceBoard Committees and individual directors pursuant to the provisions of the Act and theCorporate Governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements Regulations) 2015 ("SEBI ListingRegulations").
The Board evaluated the effectiveness of its functioning that of the Committees and ofindividual Directors. The Board through NRC sought the feedback of Directors on variousparameters such as:
Degree of fulfillment of key responsibilities towards stakeholders (by way ofmonitoring corporate governance practices participation in the long-term strategicplanning etc.);
The structure composition and role clarity of the Board and Committees;
Extent of co-ordination and cohesiveness between the Board and its Committees;
Effectiveness of the deliberations and process management;
Board/Committee culture and dynamics; and
Quality of relationship between Board Members and the Management.
The Chairman of the Board had one-on-one meeting with the Independent Directors and theChairman of NRC had one-on-one meeting with the Executive and Non-Executive Directors.These meeting were intended to obtain Directors inputs on effectiveness of theBoard/Committee processes.
The Board considered and discussed the inputs received from the Directors. Also theIndependent Directors at their meeting reviewed the performance of the Board Chairman ofthe Board and that of Non-Executive Directors. The evaluation process endorsed the BoardMembers confidence in the ethical standards of the Company the cohesiveness thatexists amongst the Board Members the two-way candid communication between the Board andthe Management and the openness of the Management in sharing strategic information toenable Board Members to discharge their responsibilities. In the coming year the Boardintends to enhance its focus on the strategic plan for portfolio restructuring riskmanagement policy advocacy and regulatory affairs environmental matters includingsustainability (particularly on aspects such as emissions and climate change) andsuccession planning for the Board.
AUDITORS AND AUDITORS REPORT
A. Statutory Auditors
Deloitte Haskins & Sells LLP Chartered Accountants Gurgaon(FRN117366W/W-100018) who are statutory auditors of the Company hold office until theconclusion of ensuing AGM and are eligible for re-appointment. Members of the Company atthe AGM held on 28 August 2015 had approved the appointment of Deloitte Haskins &Sells LLP as the statutory auditors for a period of five years i.e. upto 35 AGM of theCompany.
As required by the provisions of the Companies Act 2013 their appointment should beratified by members each year at the AGM. Accordingly requisite resolution forms part ofthe notice convening the AGM.
B. Cost Auditors
Pursuant to the provisions of Section 148(2) of the Companies Act 2013 read withCompanies (Cost Records and Audit) Amendment Rules 2014 required to have the audit ofits cost records conducted by a Cost Accountant in practice. In this connection the Boardof Directors of the Company has on the recommendation of the Audit Committee approved there-appointment of M/s R.J. Goel & Co. Cost Accountants (Registration No.000026) asthe Cost Auditors of the Company for the year ending
31 March 2017. The remuneration proposed to be paid to the Cost Auditor requiresratification in terms of Section 148 read with Rule 14 of the Companies (Audit &Auditors) Rules 2014 and is accordingly forms part of the notice convening the AGM.
C. 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 Board had appointedM/s Anjali Yadav & Associates a firm of Company Secretaries in Practice to undertakethe Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for thefinancial year ended 31 March 2016 is annexed herewith marked as Annexure E to thisReport. The Secretarial Audit Report is self-explanatory and does not contain anyqualification reservation or adverse remark.
RELATED PARTY TRANSACTIONS
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 the particulars of all Related PartyTransactions (RPT) that were entered into during the financial year were on armslength basis and in ordinary course of business. There were no material related partytransactions entered during the financial year 2015-16.
Accordingly particulars of contracts or arrangements with related parties referred toin Section 188(1) along with the justification for entering into such contracts orarrangements in Form AOC-2 form part of the report
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Companys website at thelink:
The Policy intends to ensure that proper reporting
approval and disclosure process are in place for all transactions between theCompany and related parties. All related party transaction are placed before the AuditCommittee for review and approval.Your Directors draw attention of the
EMPLOYEE STOCK OPTION PLAN (ESOP)
The board of directors of the company at its meeting held on 13 June 2015 formulatedthe APL Apollo Tubes Limited - Employees Stock Option Scheme-2015 ("ESOS Plan")with an objective of enabling the Company to attract and retain talented human resourcesby offering them the opportunity to acquire a continuing equity interest in the Companywhich will reflect their efforts in building the growth and the profitability of theCompany. More than being a compensation element the plan will have a strategicsignificance and will act as a key enable to achieve long-term business objectives.
At the said meeting the board authorised the Nomination and Remuneration Committee ofthe APL Apollo Tubes Limited for the superintendence of the ESOS Plan.
Grant of stock options under the ESOS plan shall be as per the terms and conditions asmay be decided by the Board/Committee from time to time in accordance with the provisionsof Companies Act 2013 the rules made thereunder and the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 ("ESOS Regulations").
Under the provisions of the Companies Act 2013 and the ESOS Regulations approval ofthe members by way of a special resolution vide a postal Ballot was obtained on 27 July2015 and 22 December 2015 for the ESOS plan involving issue of shares to the employees ofthe Company and its subsidiaries.
A total of 750000 options would be available for grant to the eligible employees ofthe Company and its subsidiaries and total of 724000 options would be available for grantto the eligible employees of the Company and its Subsidiaries under the ESOS plan.
724000 options have been granted under this plan by the Committee in its meeting heldon 28 July 2015 under the 1st Grant to the eligible employees of the Company and itssubsidiaries.
The applicable disclosures relating to the APL Apollo Tubes Limited - ESOS Scheme -2015as stipulated under the ESOS Regulations pertaining to the year ended 31 March 2016 arehosted on the website of the Company at www.aplapollo.com.
The ESOS plan are in compliance with the ESOS Regulations and the Certificate fromStatutory Auditor of the Company certifying that the Companys stock option plans arebeing implemented in accordance with the ESOS Regulations and the resolution passed by theMembers would be placed at the Annual General Meeting for inspection by Members.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to requirement under Section 134 sub-section 3(c) and sub-section 5 of theCompanies Act 2013 your Directors to the best of their knowledge hereby state andconfirm that:
a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanations relating to material departures.
b. Such accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent to give a true and fair viewof the Companys state of affairs as at 31 March 2016 and of the Companysprofit for the year ended on that date.
c. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
d. The annual financial statements have been prepared on a going concern basis.
e. The internal financial controls were laid down to be followed that and such internalfinancial controls were adequate and were operating effectively.
f. Proper systems were devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In line with the provisions of the Companies Act 2013 the Company has framed itsCorporate Social Responsibility (CSR) policy for development of programmes and projectsfor the benefit of weaker sections of the society and the same has been approved byCorporate Social Responsibility Committee (CSR Committee) and the Board of Directors ofthe Company. The Corporate Social Responsibility (CSR) policy of the Company provides aroad map for its CSR activities.
During the subsequent year the Company has made contribution of Rs. 1.01 crore toPrime Ministers National Relief Fund for Education of Poor Children Rs. 0.11 croreto World Hope Foundation and 0.015 crore to U.P. Science Centre Jhansi in compliance tothe provisions of Companies Act 2013 relating to Corporate Social Responsibility.
The Annual Report on CSR activities is annexed herewith
as Annexure B.
The CSR Policy has been uploaded on the Companys website and may be accessed atthe link: http://www.aplapollo.com/pdf/csr-policy.pdf
During the year SEBI notified the Listing Regulations and the same were effective from1 December 2015. The Listing Regulations aim to consolidate and streamline the provisionsof the erstwhile listing agreement for different segments of capital markets to ensurebetter enforceability. In terms of the Listing Regulations all listed entities wererequired to enter into a new listing agreement with the stock exchanges. In compliancewith the requirement we on 15 February 2016 executed the listing agreement with the BSELimited and the National Stock Exchange of India Limited.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the financial year 2015-16 7 (Seven) Board Meetings were convened and helddetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013 and Regulation17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Clause49 of the erstwhile Listing Agreement.
The Audit Committee comprises of four Directors of which three are Non-Executive andIndependent Directors. Shri Anil Kumar Bansal Non-Executive Independent Director is theChairman of the Audit Committee. Members possess the adequate knowledge of Accounts Auditand Finance etc. The Composition of the Committee meets the requirement as per Section177 of the Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Clause 49 of the erstwhile ListingAgreement.
There are no recommendations of the Audit Committee which have not been accepted by theBoard.
EXTRACT OF THE ANNUAL RETURN
In accordance with the provisions of Section 134 (3(a) of the Companies Act 2013 theextract of the Annual Return in Form no. MGT-9 is annexed hereto as Annexure-"A"and forms part of this report.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
In compliance with the provisions of Section 177 (9) of the Companies Act 2013 andRegulation 22 of SEBI (Listing Obligation and Disclosure Requirements)
Regulations 2015 the Company has framed a Vigil Mechanism / Whistle Blower Policy todeal with unethical behavior actual or suspected fraud or violation of the Companyscode of conduct or ethics policy if any.
In staying true to our values of Strength Performance and Passion and in line with ourvision of being one of the most respected companies in India the Company is committed tothe high standards of Corporate Governance and stakeholder responsibility.
The Policy ensures that strict confidentiality is maintained whilst dealing withconcerns and also that no discrimination will be meted out to any person for a genuinelyraised concern.
The Vigil Mechanism / Whistle Blower Policy have also been uploaded on theCompanys website and may be accessed at the link:
PARTICULARS OF LOANS GUARANTEES OR
INVESTMENTS UNDER SECTION 186
Details of Loans Guarantees and Investments covered under provisions of Section 186 ofthe Companies Act 2013 during the financial year 2015-16 are furnished in the notes tothe financial statements.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of Companies Act 2013read with the Rule 8 (3) of the Companies (Accounts) Rules 2014 is furnished AnnexureG forming part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED
Details pursuant to Section 197(12) of the Companies Act 2013 read with Rules 5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016 pursuant to MCA Notification dated 30 June 2016 forms part of this AnnualReport and annexed herewith as Annexure F.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment in line with theprovisions of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the rules framed there under. No complaint has been received forsexual harassment of women at work place by the Company during the financial year 2015-16.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT.
There are no material changes and commitments affecting the financial position of theCompany occurred between the end of the financial year of the Company to which thefinancial statements relate and the date of the report other than those disclosed in thefinancial statements.
Further the Board of Directors in its meeting held on
13 August 2016 constituted the share allotment committee for allotment of equityshares to the employees of the Company and its subsidiaries who will exercise theirvesting rights pursuant to APL Apollo Employee Stock Option Scheme-2015 from time to time.
OTHER DISCLOSURES AND REPORTING
Your Directors state that no disclosure or reporting is required with respect to thefollowing items as there were no transactions on these items during the year under audit:
1. Change in the nature of business of the Company.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Any remuneration or commission received by Managing Director of the Company fromany of its subsidiary.
4. Significant or material orders passed by the Regulators or Courts or Tribunal whichimpacts the going concern status and companys operations in future.
5. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this report.
Yours Directors take this opportunity to express their appreciation for theco-operation received from the customers vendors bankers stock exchanges
depositories auditors legal advisors consultants stakeholders debenture holdersbusiness associates Govt. of India state government and local bodies during the yearunder audit. The Directors also wish to place on record their appreciation of the devotedand dedicated services rendered by the employees of the Company.
For and on behalf of Board of Directors
Date: 13 August 2016