BASF India Ltd.
|BSE: 500042||Sector: Industrials|
|NSE: BASF||ISIN Code: INE373A01013|
|BSE LIVE 15:40 | 20 Jan||1149.35||
|NSE LIVE 15:46 | 20 Jan||1152.10||
|Mkt Cap.(Rs cr)||4975.54|
|Mkt Cap.(Rs cr)||4975.54|
BASF India Ltd. (BASF) - Director Report
Company director report
Your Directors have pleasure in presenting their Report for the financial year ended 31stMarch2016.
Revenue from operations (net of excise) at Rs.47517.3 millionrepresents a marginalincrease of 1% over the previous year.Despite the challenging yearyour Company reported aprofit after tax (after exceptional items) of Rs.44.5 million for the year ended 31stMarch2016 as compared to a loss after tax (after exceptional items) of Rs.669 million inthe previous year.
The performance of the Agricultural Solutions business of your Company was affected onaccount of advent of the second El Nino which resulted in a drought across significantparts of the country.
The Performance Products segment which includes the performance chemicalsdispersion& pigmentscare chemicalsnutrition & health products and paper chemicalsbusinesses recorded good growth in sales during the year under review.
The Chemicals segment of your Company comprising of the intermediatespetrochemicals& monomers businesses registered substantial increase in sales during the year mainlydue to sales of monomer products manufactured at Dahej site.
The Functional Material & Solutions segment of your Company which comprises of thecoatingsconstruction chemicalsperformance materials and process catalysts technologiesbusinesses registered growth in sales in volume terms during the year as compared to theprevious year.
Exports sales (including sales to Nepal & Bhutan) stood at Rs.5595 million duringthe year under report.
Restructuring of businesses
Divestment of the textile chemicals business to Archroma
In July2015your Company sold its textile chemicals business to Archroma India PrivateLimited pursuant to the global divestment of the said business by BASF SEafter receipt ofthe requisite approvals.Effective 1st July2015your Company has entered into along-term supply agreement with Archroma India Private Limited to manufacture & supplytextile chemicals products in India.
Setting up of a new Global Business unit for all pigments businesses
In July2015BASF SEGermany announced the setting up of the new global business unitcombining all its pigments activities effective January2016.The new unit would fullyconcentrate on the pigments business and help to further strengthen the support to itscustomers worldwide.The Pigments business of the Company belongs to the operating divisionDispersions & Pigmentswhich forms part of the Performance Products segment.ThePigments business serves a variety of industries including paints & coatingsprinting& packaging and plastics.
Sale of Industrial Coatings business to AkzoNobel
GloballyBASF and AkzoNobel reached a general agreement for sale of its industrialcoatings businesssubject to receipt of the requisite approvals.In Indiayour Company'sindustrial coatings business forms part of the Functional Materials & Solutionssegment and mainly caters to coatings for the wind energy segment.With the divestiture ofthis business by end of 2016your Company will continue to emphasize on core automotiveOEMautomotive refinish coatings and decorative paints businesses.
Restructuring of Plant Biotechnology Research
BASF SEGermany has decided to refocus its global plant biotechnology researchportfolio and restructure the global operations of its Plant Science subsidiary.InIndiathe Company has been engaged in a project to develop yield enhancing traits in riceon behalf of BASF Plant Science CompanyGmbHGermany.Consequent upon the globalrestructuringthe yield enhancement project in rice will be discontinued and the fieldtesting sites in India will be closed by end of the year 2016subject to receipt ofrequisite approvals.
Divestment of Polyolefin Catalysts Business to W.R.Grace & Co.
GloballyBASF SEGermany announced the sale of its Polyolefin Catalysts businesstoW.R.Grace & Co.subject to receipt of regulatory approvals.The Polyolefin Catalysts ispart of the Process Catalysts businesswhich forms part of the Functional Materials &Solutions segment of the Company and caters to the petroleum refiningpetrochemicals anddownstream base and fine chemicals industries.With the divestment of this business by thesecond quarter of 2016your Company will re-focus on key growth areas including itsChemical & Refinery Catalysts businesses.
Inauguration of the new Agricultural Research Station in Pune
In May2015your Company inaugurated the new Agricultural Research Station in Pune.Thisnew research & development center will focus on undertaking global research in thearea of crop protection.
Alteration of Memorandum & Articles of Association of the Company
During the yearyour Company adopted new Articles of Associationwhich are inconformity with the provisions of the Companies Act2013 and the Rules framed thereunder.
The Company also modified the existing objects in the Memorandum of Association of theCompany to align the same with the present business scenario and included new objects inline with your Companys long-term business strategy.
Change of Registered Office of the Company
The Registered Office of your Company is shifted from 3rd FloorVIBGYORTowersPlot No.C-62G-BlockBandra Kurla ComplexMumbai-400 098 to PlotNo.37Chandivali Farm RoadChandivaliAndheri (East)Mumbai-400 072with effect from 1stApril2016.
Corporate Social Responsibility
As required under the provisions of the Companies Act2013the Board of Directors ofthe Company constituted a Corporate Social Responsibility (CSR) Committee on 30thApril2013.
Mr.R.R.Nair and Mr.Arun BewoorIndependent Directors along with Mr.N.J.Baliga aremembers of the CSR Committee.
Mr.Pradeep ChandanDirector - LegalGeneral Counsel & Company Secretary is theSecretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the activities tobe undertaken by the Company as specified under the revised Schedule VII of the CompaniesAct2013.
On account of the challenging yearwhich impacted the overall performance of theCompanythe Board of Directors of the Company approved an amount of Rs.6.5 million towardsCSR activities under the provisions of the Companies Act2013 and the Rules framedthereunder.
Your Company continued its efforts to drive sustainability and focused on activities ofwaterhealtheducationenvironment and resource efficiency.
Based on the aboveyour Company undertook CSR projects mainly in the area of communitydrinking water supplywaste managementsanitation facilitieseducation and hygiene and hasspent an amount of Rs.6.2 million as direct expenditure for projects or programs andRs.0.4 million on overheads aggregating to Rs.6.6 million in the financial year2015-2016details of which are provided in the prescribed format forming part of thisReport in Annexure I.
In view of the difficult year which impacted the overall performance of theCompanyyour Directors have recommended a dividend of Re.1/- per equity share of Rs.10/-each (i.e 10%) for the financial year ended 31st March2016subject to theapproval of the Members at the forthcoming 72nd Annual General Meeting of theCompany to be held on 11th August2016.The dividend will absorb Rs.43.3million.The dividend distribution tax to be borne by the Company would amount to Rs.8.8million.
Finance & Accounts
Your Company continued to optimise borrowings during the year by focusing on cash flowsand working capital management.By availing of alternate funding options such as CommercialPapersefficiency in borrowing costs was ensured.
Your Company follows a prudent financing policy and aims to maintain optimum financialgearing at all times.Your Companys debt equity ratio was 1.16 as at 31stMarch2016.
Capital expenditure incurred during the year aggregated to Rs.1655.8 million.
Your Company's credit rating is "AAA/ Negative/ A1+" as awarded by CRISIL onits long term & short term programs respectively.
During the yearyour Company has not invitedaccepted or renewed any fixed depositsfrom the public as at 31st March2016 and accordinglythere is no principal orinterest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015theManagement Discussion and Analysis Report is appended to this Report.
Your Company is committed to maintaining the highest standards of Corporate Governanceand has complied with the Corporate Governance requirements as per SEBI (ListingObligations and Disclosure Requirements) Regulations2015.
A separate report on Corporate Governance as stipulated under SEBI (Listing Obligationsand Disclosure Requirements) Regulations2015 along with a Certificate of Compliance fromthe Statutory Auditorsforms part of this report.
The Company has established a vigil mechanism for Directorsemployees and third partiesto report their genuine concernsdetails of which have been given in the CorporateGovernance Report annexed to this Report.This policy is available on the Company's websiteand can be accessed at: http: //on.basf.com/28LPlls
Directors Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accountsthe applicable accounting standards havebeen followed;
(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended 31stMarch2016 and of the profit of the Company for that period; and
(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act2013forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and
(iv) they have prepared the annual accounts on a going concern basis; and
(v) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings and Outgo:
Information pursuant to Section 134(3)(m) of the Companies Act2013 read with sub-rule3 of Rule 8 of the Companies (Accounts) Rules 2014forms part of this Report as AnnexureII.
In accordance with the provisions of the Companies Act2013 and the Articles ofAssociation of the CompanyDr.Rainer Diercks retires by rotation at the ensuing AnnualGeneral Meeting and being eligibleoffers himself for re-appointment.As required underSEBI (Listing Obligations and Disclosure Requirements) Regulations2015the details of theDirector seeking re-appointment at the ensuing Annual General Meeting is provided on pageno 44 in the Corporate Governance Reportforming part of this Annual Report.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations2015the Company has devised a policy containingcriteria for evaluating the performance of the ExecutiveNon-Executive and IndependentDirectorsBoard and its Committees based on the recommendation of the Nomination &Remuneration Committee.Feedback was sought by way of a structured questionnaire coveringvarious aspects of the Boards functioningsuch as adequacy of the composition of theBoard and its CommitteesBoard cultureexecution and performance of specificdutiesobligations and governance.The manner in which the evaluation has been carried outhas been explained on page no.41 in the Corporate Governance Reportforming part of thisAnnual Report.
Policy on Directors appointment and remuneration
The policy on Directors appointment and remuneration including the criteria fordetermining the qualificationspositive attributesindependence of a Director and othermatters provided under Section 178(3) of the Companies Act2013forms part of theNomination & Remuneration Committee policy of the Company.This policy is available onthe Companys website and can be accessed at: http: //on.basf.com/28MYFX6
M/s.B S R & Co.LLPChartered Accountants (RegistrationNo.101248W/W-100022)Mumbaihold office until the conclusion of the Annual General Meetingto be held for the financial year 2016-17subject to ratification of their appointment bythe members at every Annual General Meeting.They have confirmed to the Company that theirappointmentif ratified by the members at the ensuing 72nd Annual GeneralMeetingwould be within the limits prescribed under Section 141 of the Companies Act2013and that they are not disqualified from appointment within the meaning of the said Act.
Pursuant to the provisions of Section 204 of the Companies Act2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules2014the Company hadappointed Mr.Hemant S.Shetye of M/s.H.S.AssociatesPractising CompanySecretariesMumbaihaving CP No.1483to conduct the Secretarial Audit of the Company forthe financial year 2015-16 and to furnish the report to the Board.The Secretarial AuditReport dated 3rd May2016 forms part of this Report as Annexure III.
Auditors Report & Secretarial Audit Report
There are no qualifications/reservations/emphasis of matter placed by the StatutoryAuditors and the Secretarial Auditors in their respective reports for the financial yearended 31st March2016.
The Board of Directorsin pursuance to the Orders issued by the Central Governmentunder Section 148 of the Companies Act2013have appointed M/s.R.Nanabhoy & Co.CostAccountantsMumbaihaving Registration No.000010for conducting the audit of the costaccounting records maintained by the Company for the financial year 2016-17.The CostAuditors have certified that their appointment is within the limits of Section 141 (3)(g)of the Companies Act2013 and that they are not disqualified from appointment within themeaning of the said Act.
Composition of the Audit Committee
As required under Section 177(8) read with Section 134(3) of the Companies Act2013 andthe Rules framed thereunderthe composition of the Audit Committee is in line with theprovisions of the Companies Act2013details of which are provided on page nos.38 and 39in the Corporate Governance Reportforming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company during thefinancial year were on arms length basis.There are no materially significant relatedparty transactions entered into by the Company with its PromotersDirectorsKey ManagerialPersonnel or other designated personswhich may have a potential conflict with theinterest of the Company at large.
All related party transactions are placed before the Audit Committee for itsapproval.Prior omnibus approval of the Audit Committee is obtained for the transactionswhich are repetitive in nature.Such transactions are audited and a statement givingdetails of all related party transactions is placed before the Audit Committee and theBoard of Directors for their approval on a quarterly basis.The policy on Related PartyTransactionsas approved by the Boardis available on the Companys website and canbe accessed at: http: //on.basf.com/28LPrte
The Company does not have contracts or arrangements with its related parties underSection 188(1) of the Companies Act2013which are not on arms' length basis and hence thedetails are not disclosed in Form AOC-2 as prescribed under the Companies Act2013 and therules framed thereunder.
The Company has entered into material transactions with related parties viz.BASFSEBASF South East Asia Pte Ltd & BASF Belgium Co-ordination Centreon arms' lengthbasis under Regulation 23 of the SEBI (Listing Obligations & Disclosure Requirements)Regulations2015 and the same are within the maximum limits approved by the shareholdersat the last Annual General Meeting of the Company.Your Directors draw the attention of themembers to Note No.25(17) of the financial statement which sets out related partydisclosures under Accounting Standard 18.
Particulars of loansguarantees or investments under Section 186 of the CompaniesAct2013
The Company has not provided any loan to any person or body corporate or given anyguarantee or provided security in connection with such loan or made any investment in thesecurities of any body corporate pursuant to Section 186 of the Companies Act2013.TheCompany has given advance against salary to some employees in terms of the applicablepolicies of the Company.
Particulars of Employees
The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Companies Act2013 read with sub-rules 2 and 3 of Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules2014forms part of this Report.Howeverasper the provisions of Section 136 of the Companies Act2013read with sub-rules 2 and 3 ofRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules2014the Annual Report excluding the statement of particulars of employeesis beingsent to all members of the Company.Any member interested in obtaining a copy of the saidstatement may write to the Company Secretary at the Registered Office of the Company.
Prevention of Sexual Harassment at Workplace
Your Company gives prime importance to the dignity and respect of its employeesirrespective of their gender or hierarchy and expects responsible conduct and behaviour onthe part of all the employees at all levels.Providing for a safe and congenial workenvironment to all employees is an integral part of the Company's Code of Conduct.
The Company has an anti-Sexual Harassment Policy in line with the requirements of theSexual Harassment of Women at Workplace (PreventionProhibition and Redressal)Act2013.Your Company has also constituted an Internal Complaints Committee (ICC) and thenames of the Committee members are displayed on the notice board in each office.Allemployees (permanentcontractualtemporarytrainees) are covered under thisPolicy.Allegations of sexual harassment reported are expeditiously and discreetlyinvestigated and disciplinary actionif requiredis taken in accordance with the policy.
The following is a summary of sexual harassment complaints received and disposed ofduring the year 2015-16:
(a) Number of complaints of sexual harassment received during the year - NIL
(b) Number of complaints disposed of during the year - NIL
(c) Number of cases pending for more than 90 days - NIL
Training programs on the policy are also conducted at regular intervals.During the yearunder reportyour Company conducted 3 workshops/awareness programmes on the Policy for theemployees.
The Company has in place a mechanism to inform the Board about the risk assessment andminimization procedures and periodical review to ensure that risk is controlled by meansof a properly defined framework.In the Board's viewthere are no material riskswhich maythreaten the existence of the Company.
Internal Financial Control Systems and their Adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conductof its businessincluding adherence to Company's policiesthe safeguarding of itsassetsthe prevention and detection of frauds and errorsthe accuracy and completeness ofthe accounting recordsand the timely preparation of reliable financial information.Formore detailsplease refer to the Management Discussion and Analysis Report forming part ofthis Annual Report.
Significant and material orders passed by the Regulators or Courts
The relevant pending litigations with regulators or courts have been disclosed asContingent Liabilities in note no.25(10) of the notes to the financial statements for theyear ended 31st March2016.Besides thisthere are no significant materialorders passed by the Regulators/Courts which would impact the going concern status of theCompany and its future operations.
Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this report.
Seven Board Meetings were held during the financial year 2015-16 on the followingdates: -
(1) 6th April2015
(2) 7th May 2015
(3) 28th July2015
(4) 20th August 2015
(5) 20th October2015
(6) 19th January2016
(7) 30th March2016
Declaration of Independence
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations2015.
Extract of Annual Return
The details forming part of the extract of Annual Return in Form MGT-9 forms part ofthis Report as Annexure IV.Personnel and Welfare
Your Directors place on record their sincere appreciation to the employees at alllevels for their hard workdedication and commitment.
Industrial Relations at all our factories remained cordial.
The Board of Directors take this opportunity to thank BASFSEGermanycustomerssuppliersbankersbusiness partners/associatesCentral and StateGovernmentsregulatory authorities and the society at large for their consistent supportand co-operation to the Company.Your Directors thank the members and investors for theirconfidence in the Company.
Annual Report on CSR activities
Details of CSR Amount Spent
We hereby affirm that the CSR Policyas approved by the Boardhas been implemented andthe CSR Committee monitors the implementation of the CSR Projects and activities incompliance with our CSR objectives.
Statement containing particulars pursuant to Section 134(3)(m) of the CompaniesAct2013 and Rule 8 of the Companies (Accounts) Rules2014 and forming part of theDirectors Report.
A. CONSERVATION OF ENERGY
The Company continued its policy of giving priority to energy conservation measuresincluding regular review of energy generationdistribution and consumption and effectivecontrol on utilization of energy in its manufacturing facilities at Navi Mumbai(Maharashtra)Mangalore (Karnataka)Ankleshwar & Dahej (Gujarat)Howrah (WestBengal)Nellore (Andhra Pradesh) and Nalagarh (Himachal Pradesh).
During the year under reportthe following energy saving measures were implemented inthe Company's factories: -
Installation of Variable Frequency Drive to agitatorpump motors & induceddraft fans.
Replacing the sodium vapourCFL bulbs with energy efficient LED lamps.
Installation of energy efficient cooling tower.
Installation of Timer control motor to avoid excess running ofReactors/Agitators to save on electricity consumption.
Rationalisation of electricity consumption for cooling water circulation byreplacing high capacity motor with low capacity motor.
Replacement of old Air conditioners with new energy efficient Air conditionersto save on Electricity consumption.
Installation of capacitor banks in electrical line to improve the power factor.
Installation of energy efficient scroll chillers.
Heat recovery from the process to conserve energy.
Reduction in process water consumption in plants was achieved by:
Change in plant process.
Reduction of effluent water load from plants to Effluent Treatment Plant (ETP).
Recycling of waste water inside the plants to reduce load.
In additionthe Company is actively considering the following energy conservationmeasures:
Initiating employee engagement program to identify & develop energy savingmeasuresoperation excellence.
By carrying out steam & energy audit.
Creating awareness on energy conservation among employees.
Configuration of timers in distributed controlled system to prevent overrunningof agitatorsstirrersfansblowers.
Carrying out feasibility study of solar power for building air conditioningsystem.
Installation of efficient steam trap to avoid steam losses.
Condensation of recovery system to reduce the fuel consumption in boilers.
Requisite data in respect of Energy Consumption is given below:
B. TECHNOLOGY ABSORPTION
Research & Development (R&D):
1. Specific areas in which R&D was carried out by the Company:
During the yearthe R&D Centre of the Company was engaged in supporting all thebusinesses through innovations and undertook multifold research activities including:
Carrying out ongoing research.
Introducing new products in existing production lines.
Developing cost effective processes and streamlining existing processes.
Optimizing effluent treatment processes.
Developing new analytical methods.
Supporting indenting activities.
Developing new formulations and products based on customer I marketrequirements.
Your Company has a Pharma lab in its Navi Mumbai factory which provides completesupport to various global projects and has been instrumental in launching innovativeproducts during the year under report.The technical and R&D team has been able toprovide hands-on experience for platform technology and a solution provider fordevelopmental batches using various excipients.This laboratory was also actively involvedin conducting various workshops & training programs to educate & update potentialcustomers on emerging technologies.
Your Company also has its Organic Synthesis Research team at its Chandivali Laboratorywhich is concerned with construction of organic compounds based on organic reactions.YourCompany also has development laboratories of Dispersion & PigmentsCareChemicalsPaper and Performance Chemicals businesses and an analytical lab engaged indeciding purity and structural aspects.
2. Benefits derived as a result of the above R&D:
The R&D laboratories remained focused on their mission to explore and apply new andinnovative chemistryexpand the product offering and strengthen the infrastructuralfacilities and technology.
The R&D initiatives resulted in multi-fold benefits during the yearincluding:
Development of new products and some of these have been introduced in themarket.
Development of innovative products by Industry Target Groups which worked oncross-functional innovations.
Improvisation of plant processeswhich led to higher efficiency andsustainability.
Completion of the annual/intensive annual review of processes with respect tosafetyefficiencyqualityquantity and sustainability.
The Pharma lab team joined forces with instrument partners to raise awareness andencourage the application of Hot Melt Extrusion (HME) and also offered innovativesolutions in pharmaceutical coatings for big and small sized customers in thepharmaceutical industry.They were also able to deliver solutions for life threateningdiseases such as retroviraldiabetes and cardiovascular.
3. Expenditure on R&D: Rs.9.3 million.
TECHNOLOGY ABSORPTIONADAPTATION AND INNOVATION:
1. Efforts in brieftowards technology absorptionadaptation and innovation:
The R&D Centre of the Company is recognized by the Ministry of Science andTechnologyGovernment of India.The Centre is ISO 9000 and 9014 certified and undertakesresearch in several areas including:
New Organic Chemical Intermediates for various applications.
Process Development and scale-up.
Polymers and other chemicals.
Other Specialty Chemicals.
The Centre is also engaged in developmental activities including new cost effectivetechnologies for existing and new productsreduction in batch cycle timeetc.as alsoresearch activities pertaining to the adaptation of process technologies received fromBASF SE.
2. Benefits derived and the results of the above efforts:
New products were developed and commercialized during the year.Efforts in processoptimization led to cost reduction.This helped the businesses to remain costcompetitive.Batch sizes and cycle times were optimized for better efficiency andmanufacturing equipments were modified for overall improved productivity.
3. Imported Technology:
During the year 2015the Company has not entered into agreements with BASF SE and/orits group Companies for sourcing of technical know-how.
During the years 2013 & 2014the Company entered into agreements with BASF SEand/or its group Companies for sourcing the following technical know-how.
In 2013 for Care Chemicals at Dahej.
In 2014 for Performance Materials and Care Chemicals at Dahej.
In 2014 for Construction Products.
C.FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars with regard to foreign exchange earnings and outgo appear on page no.74of the Annual Report.
Secretarial Audit Report
FOR THE FINANCIAL YEAR ENDED ON 31st MARCH2016.
[Pursuant to Section 204(1) of the Companies Act2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules2014]
BASF INDIA LTD.
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by BASF India Limited(hereinafter called "The Company").Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.
Based on our verification of the bookspapersminute booksforms and returns filed andother records maintained by the Company and also the information provided by theCompanyits officersagents and authorized representatives during the conduct ofsecretarial auditwe hereby report that in our opinionthe Company hasduring the auditperiod ended on 31st March2016complied with the statutory provisions listedhereunder and also that the Company has proper Board-processes and compliance-mechanism inplace to the extentin the manner and subject to the reporting made hereinafter:
We have examined the bookspapers and minute books as mentioned in Annexure 1Forms andreturns filed and other records maintained by the Companyfor the financial year ended on31st March2016 to the extent applicable provisions of:
I. The Companies Act2013 ("The Act") and the Rules made thereunder;
II. The Securities Contracts (Regulation) Act1956 ("SCRA") and the Rulesmade thereunder;
III. The Depositories Act1996 and the Regulations and Bye-laws framed thereunder;
IV. Foreign Exchange Management Act1999 and the Rules and Regulations made thereunderto the extent of Foreign Direct InvestmentOverseas Direct Investment and ExternalCommercial Borrowings;
V. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act1992 ("SEBI Act") to the extent applicable to theCompany:
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)Regulations1992;
c. The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations2009;
d. The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations1993 regarding the Companies Act and dealing with client;
e. The Company has complied with the requirements under the Equity Listing Agreementsentered into with BSE LimitedNational Stock Exchange of India Limited; and
VI. We have relied on the representation made by the Company and its Officers forsystems and mechanism put in place by the Company for Compliances under other applicableActLaws and Regulations to the Company as given in Annexure 2.
We have also examined compliance with the applicable clauses of the following:
i) Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries ofIndia.
ii) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations2015 (with effect from 1st December2015);
iii) The Listing Agreements entered into by the Company with the BSE LimitedNationalStock Exchange of India Limited.
During the year under reviewthe Company has complied with the provisions of theActRulesRegulationsGuidelinesStandards and Listing Agreement/Obligations mentionedabove.
We further report that:
The Board of Directors of the Company is duly constituted with proper balance ofExecutive DirectorsNon-Executive Directors and Independent Directors.The changes in thecomposition of the Board of Directors that took place during the year under review werecarried out in compliance with the provisions of the Act.
Adequate notice is given to all Directors to schedule the Board Meetingsagenda anddetailed notes on agenda were sent at least seven days in advanceand a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
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 applicable lawsrulesregulations and guidelines.
We further report that during the audit period the company has:
1. Received approvals from Central Government in respect of payment of managerialremuneration pursuant to provisions of Section 197 read with Schedule V of the Act.Theremuneration paid during the period under review is within the limits of the abovementioned approval.
2. The Final dividend declared and paid by the Company for the financial year ended 31stMarch2015 was in compliance with the provisions of Section 123 of the Companies Act2013read with rule 3 of the Companies (Declaration and Payment of Dividend) Rules2014.
Annexure - 1 to the Secretarial Audit Report
REGISTERSBOOKSPAPERS AND MINUTE BOOKS MAINTAINED BY THE COMPANY
1. Minutes of BoardShareholders and Committee Meeting.
2. Register of Renewed or duplicate Share certificate.
3. Book of accounts.
4. Register of Members.
5. Index of Members.
6. Register of Directors and Key Managerial Personnel.
7. Register of Directors shareholdings.
8. Register of Charges.
9. Register of investments or loans madeguarantee or security provided.
10. Register of particulars of contracts in which Directors are interested.
11. Register of Directors Attendance.
12. Register of Shareholders Attendance.
13. Register of Proxies.
14. Register of Transfers.
15. Postal Ballot Register.
Annexure - 2 to the Secretarial Audit Report
OTHER APPLICABLE LAWS
1. Factories Act1948.
2. The Contract Labour (Regulation & Abolition) Act1970.
3. The Indian Electricity Act & Rules.
4. Air & Water (Prevention and Control of Pollution) Acts.
5. The Air (Prevention and Control of Pollution) Act1981 and Rules1982.
6. The Water (Prevention and Control of Pollution) Cess Act and Rules.
7. The Water (Prevention and Control of Pollution) Act1974 and Rules1975.
8. Environment Protection Act1986 read with Environment (Protection) Rules1986.
9. The Noise Pollution (Regulation & Control) Rules2000.
10. The ManufactureStorage and Import of Hazardous Chemical Rules1989.
11. The Hazardous Waste (Management and Handling) Rules1989.
12. The Batteries (Management and Handling) Rules2001.
13. E-waste (Management and Handling) Rules2011.
14. Industrial Disputes Act1947.
15. Workmen Compensation Act1923 and Rules1924.
16. Labour Welfare Funds Act.
17. Indian Boilers Act1923.
18. GIDC / MIDC / KIADB Act and Rules.
19. Chemical Weapons Convention Act2000.
20. The Narcotics Drugs and Psychotropic Substances Act1985.
21. The Indian Explosives Act1884.
22. The Explosives Substances Act1908.
23. The Inflammable Substances Act1952.
24. Insecticides Act1968 and Rules1993.
25. The Destructive Insects & Pests Act1914.
26. Legal Metrology Act2009 and Legal Metrology (Packaged Commodity) Rules2011.
27. Insecticides (PriceStockDisplay and Submission of Reports) Order2000.
28. Fertilizer (Control) Order1985.
29. Competition Act2002.
30. Import-Export Policies.
31. The Petroleum Act1934 read with Petroleum Rules1976.
32. The Apprentices Act1961 and Rules1991.
33. Employees Provident Funds and Miscellaneous Provisions Act1952.
34. Trade Union Act1926 read with Central Trade Union Regulation 1938.
35. Employees' State Insurance Act1948.
36. Equal Remuneration Act1976.
37. Industrial Employment (Standing Order) Act1946 and Rules.
38. Minimum Wages Act1948.
39. Payment of Wages Act1936.
40. Payment of Bonus Act1965.
41. SMPV Rules1981.
42. Employment Exchange (Compulsory Notification of Vacancies) Act1959.
43. Indian Telegraph Act1885.
44. Private Security Agency (Regulation) Act2005.
45. Solvent Raffinate & Slop (Licensing) Order2007.
46. Gas Cylinder Rules.
47. Payment of Gratuity Act1972 and Rules.
48. Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service)Act1979 and Rules.
49. Maternity Benefit Act1961.
50. Weekly Holidays Act1942.
51. Shops & Establishment Act.
52. State Employees Compensation Act1923.
53. Child Labour (Prohibition & Regulation) Act1986.
54. MRTU & PULP Act & Rules.
55. Motor Vehicles Act1988 and Rules1989.
56. State Profession Tax Acts.
57. Service Tax Act1994.
58. Central Sales Tax Act1956.
59. Income Tax Act1961.
60. State VAT Acts.
61. Central Excise Act1944 and Central Excise Rules2002.
62. Karnataka Value Added Tax Act and Rules.
63. Karnataka Tax on ProfessionTradesCallings and Employments Act1976 andRules1976.
64. Karnataka Entry of Goods Act.
65. Customs Act1962 / Customs Tariff Act1975.
66. Indian Stamp Act1899 and State Stamp Acts.
67. Transfer of Property Act1882.
68. Indian Contract Act1872.
69. Negotiable Instruments Act1881.
70. Sale of Goods Act1930.
71. Foreign Contribution Regulation Act2010.
72. Information Technology Act2000.
73. Prevention of Money Laundering Act2002.
74. Consumer Protection Act1986.
75. Trade Marks Act1999.
76. Patents Act1970.
77. Drugs and Cosmetics Act1940.
78. Public Liability Insurance Act1991.
79. Foreign Trade Act1962 and Foreign Trade Policy.
REMUNERATION DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT2013 READ WITHRULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014.
1. The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial year 2015-2016:
* Salary paid w.e.f.1st July2015.
2. Percentage increase in remuneration of each DirectorChief Financial OfficerCompanySecretary in the financial year 2015-2016:
3. Percentage increase in the median remuneration of employees in the financial year2015-2016 is 3.27%
4. The number of permanent employees on the rolls of the Company as on 31stMarch2016 are 1904.
5. Relationship between average increase in remuneration and Company performance:
Your Company offers competitive remuneration to its employees.The remuneration alsoincorporates external factors like cost of living to maintain concurrence with theenvironment.The compensation philosophy of the Company is to provide market competitivecompensation that has a strong linkage to performance of the employee as well as otherfactors such as BASF's performance globally.
6. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:
In line with the Company's compensation philosophymerit increases and annual bonuspay-out to its employeesincluding Key Managerial Personnel are directly linked toindividual performance as well as that of BASF's business globally.Looking at theperformance rating of the Key Managerial Personnelappropriate reward by the way ofvariable pay have been paid to the Key Managerial personnel for the current year.
7. Variations in the market capitalization of the Companyprice earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company:
-$ as Earning per share is negativedetails of P/E ratio are not provided.
8. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
Average percentile increase for Managerial Personnel is 5.11% and for other employeesis 2.63%.
In line with the Company's compensation philosophymerit increases and annual bonuspay-out to its employeesincluding Key Managerial Personnel are directly linked toindividual performance as well as that of BASF's business globally.Looking at theperformance rating of the Key Managerial Personnelappropriate reward by the way ofvariable pay have been paid to the Key Managerial Personnel for the current year.
9. Key parameters for any variable component of remuneration of the ExecutiveDirectors:
The key parameters for the variable component of remuneration availed by the Directorsare considered by the Board of Directors based on the recommendations of the Nominationand Remuneration Committee as per the Policy for Remuneration of the DirectorsKeyManagerial Personnel and other Employees.
10. The ratio of remuneration of highest paid Director to that of the employees who arenot Directors but received remuneration in excess of the highest paid Director during theyear is 0.39.
11. It is hereby affirmed that the remuneration paid during the year is as per theRemuneration Policy of the Company.