Report of the Directors to the Shareholders of the Company in respect of the year ended31st December 2014.
|Particulars ||For the year ended 31st December 2014 ||For the year ended 31st December 2013 |
| ||(Rupees in crores) ||(Rupees in crores) |
|Profit before Interest Depreciation Exceptional Items & Tax ||732.78 ||722.54 |
|Interest Income (Net of Finance Cost) ||29.66 ||46.87 |
|Exceptional items || ||22.80 |
|Profit before Depreciation & Tax ||762.44 ||792.21 |
|Depreciation & Amortisation ||36.13 ||30.45 |
|Tax Expenses || || |
|Current Tax ||260.60 ||241.06 |
|Deferred Tax ||(8.85) ||12.13 |
|Profit after Tax ||474.56 ||508.57 |
|Adding thereto: || || |
|Balance as per last Balance Sheet brought forward ||94.86 ||43.53 |
|Profit available for Appropriation ||569.42 ||552.10 |
|The appropriations are: || || |
|Dividend || || |
|Interim ||173.10 ||173.10 |
|Final ||197.82 ||173.10 |
|Tax on Dividend || || |
|Interim ||29.42 ||29.42 |
|Final ||39.55 ||29.42 |
|Final 2013 || ||1.34 |
|Tax on Capital Reduction ||42.03 || |
|Transfer to General Reserves || ||50.86 |
|Net surplus in the Statement of Profit & Loss ||87.50 ||94.86 |
| ||569.42 ||552.10 |
Sales realisation of the Company has increased by about 7% over the previous year toRs. 3907 crores mainly due to an increase in per unit sales realizations. However thesales volumes have declined by 1% over the previous year. Cost of material has increasedby about 8% over the previous year to Rs. 1938 crores primarily due to weakening ofRupee. Despite the challenging economic environment its the performance of personalmobility brands which has helped your Company to improve its unit gross margins and grossprofit. Operating and other expenses increased by about Rs. 40 crores as compared to theprevious year mainly due to inflation. Profit from operations has increased by about 4%.Profit Before Tax decreased by about 5% over previous year to Rs. 726.3 crores. ProfitAfter Tax decreased by 7% over the previous year to Rs. 474.6 crores. The Companysperformance has been discussed in detail in Management Discussion and Analysis Report.
Your Directors are pleased to recommend a Final Dividend of Rs. 4.00 per equity shareof Rs. 5/- each for the year ended 31st December 2014. The Interim Dividendof Rs. 3.50 per equity share was paid in August 2014.
The Final Dividend subject to approval of members will be paid within statutoryperiod to the members whose names appear in the Register of Members as per the bookclosure. The total dividend for the financial year including the proposed Final Dividendamounts to Rs. 7.50 per equity share and will absorb Rs. 370.9 crores (Previous year Rs.7.00 per equity share amounting to Rs. 346.20 crores). The Company also returned Rs. 5 pershare to its shareholders (Rs. 247.28 crores) under Capital Reduction Scheme inMarch 2014.
In accordance with the provisions of Section 161 of the Companies Act 2013 (the Act)and Article 115(a) of the Articles of Association Mr. Jayanta Chatterjee was appointed asan Additional Director with effect from 30th October 2014. Mr. Chatterjee wasalso appointed as Whole-time Director designated as Director
Supply Chain with effect from 30th October 2014. Hisappointment has been put up for approval of Members of the Company through Postal Ballotand approval of Central Government is also being obtained. Pursuant to provisions of theAct and Clause 49 of the Listing Agreement Mr. S.M. Datta Mr. R. Gopalakrishnanand Mr. Uday Khanna were appointed as Independent Directors for a period of 5 yearsfrom 1st October 2014 and shall not be liable to retire by rotation.Mr. Ravi Kirpalani and Mr. Peter Weidner retire by rotation and being eligibleoffer themselves for re-appointment. The information of directors seekingappointment/re-appointment as required under Clause 49 of the Listing Agreement has beengiven in Corporate Governance section of the Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Companies Act 1956 with respectto Directors Responsibility Statement it is hereby confirmed that: (i) inthe preparation of the annual accounts the applicable accounting standards have beenfollowed and no material departures have been made from the same. (ii) the Directors haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as on 31st December 2014 and of the profitsof the Company for the year ended 31st December 2014. (iii) the Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities. (iv) theDirectors have prepared the annual accounts on a going concern basis.
The present statutory auditors of the Company M/s. S.R. Batliboi & Co. LLPChartered Accountants have communicated that from FY 2015 the statutory audit willbe conducted by their associate firm M/s. SRBC & Co. LLP CharteredAccountants due to internal restructuring. The Board of Directors on recommendation ofthe Audit Committee recommends the appointment of M/s. SRBC & Co. LLP CharteredAccountants (Firm Registration No. 324982E) as the Statutory Auditors of theCompany from the conclusion of this Annual General Meeting until the conclusion of thenext Annual General Meeting of the Company. A certificate from them has been received tothe effect that their appointment as Statutory Auditors of the Company if made would bein accordance with the provisions of Sections 139 and 141 of the Companies Act 2013 andrules framed thereunder.
Further the Board of Directors on recommendation of the Audit Committee haveappointed M/s. Kishore Bhatia & Co. Cost Accountants as Cost Auditors of theCompany for the Financial Year 2015 subject to the approval of the Members whichis being obtained in the ensuing Annual General Meeting. A certificate from M/s.Kishore Bhatia & Co. has been received assuring that their appointment as CostAuditors of the Company if made would be in accordance with the limits specifiedunder of Section 141 of the Companies Act 2013 and rules framed thereunder.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Following steps were taken at Patalganga Silvassa and Paharpur factories:
Usage of LED lights across different areas in the plant to reduce powerconsumption and increase in lux level.
Maximize output in general shift by ensuring uptime of equipment so as tominimize power and utility operations in second shift.
Provide timers for ACs in IT server room to run in alternate mode therebyreducing total power consumption.
Change stacking in pail line from 3*3 to 3*4 matrix resulting in reduction ofcycle time.
Replace the conventional float valves by SS PUF filled floats of water storagetank.
Reduction in lighting power consumption by usage of automated plant lightsduring night time.
Air leakage audits and addressing most of identified leak points.
Usage of energy efficient luminaries in the filling area.
Provision of solar tube on plant shed roofs for utilization of natural light.
Fuel saving in Hot Oil System (HSD) by insulation & repair and creatingawareness by monitoring & sharing of information to run the operation efficiently.
Replacement of water cooled induction sealers with energy efficient air cooledinduction sealers.
Provision of control with timer mechanism for switching on/off of airconditioners in administration office.
Provision of aluminum cladding on thermic fluid heater line to minimize the heattransfer loss.
Usage of Jet mixers for blenders which help in reducing the batch cycle time.
Rationalization of certain blending operations for a few products with reducedtemperature to reduce energy consumption.
Increasing awareness level amongst the work force for various energyconservation measures at the plant level.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy.
(c) Impact of Measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods.
The improvement measures have led to efficient use of energy and optimization in theproduction per unit cost.
1. Your Company continues to derive sustainable benefits from its India TechnologyCentre located in Mumbai. The year 2014 was yet another year where your Companysproduct development capability helped the business meet pressing consumer needs partnerclosely with its customers and leverage strengths of its global affiliates to meet theneeds of the local market.
2. In the year under review your Company continued its investment in a world-classtwo-wheeler oil product development team based out of the India Technology Centre tosupport the needs of the domestic and global market. To enable this team in its work yourCompany further added state-of-the-art test rigs specific to two-wheeler engine oildevelopment. This has helped us to study friction properties and screen candidates forfurther engine trials. It not only helps us develop differentiation but also hastens theproduct development cycle.
3. With Intelligent Molecules that cling and protect Castrol Magnatec is an engine-oilfor cars with a unique proposition. But with unique requirements of city driving withmultiple start and stops in a journey; Castrol embarked on a journey to launch a custommade oil for driving in these conditions yet fulfilling the Magnatec promise ofcling and protect. Your Company launched a project focused on the Indian passengercar market aimed to develop a fuel efficient durable SAE 5W-30 ACEA A5/B5 2012compliant Engine oil for Maruti Suzuki diesel engines. This was a first everco-engineering project with this important passenger car OEM with dominant market share inthe domestic market that resulted in Castrol being the only oil marketer to supply oilthat optimized fuel efficiency performance while maintaining engine protection. In 2014your Company also focused on the Indian passenger car market to develop a fuel efficientdurable SAE 5W-30 ACEA A5/B5 2012 compliant engine oil common for Tata Motors coveringentire range of Gasoline and Diesel engines. This product is extensively tested fordurability and fuel efficiency in Tata Motors gasoline and diesel cars. This is also theonly and first lubricant to be approved for the Tata new generation "Revotron Seriesof Engine" with optimized fuel efficiency performance while maintaining engineprotection.
4. India where the hub and spoke model plays a key role in its supply chain hasa large number of ultra-light commercial vehicles. To cater to this unique demand where the engine is constantly under stress your Company developed andlaunched Castrol CRB Mini Truck specifically designed and locally tested for thesevehicles.
5. Building capability within to sell the technologically superior products developedby your Company is a critical link to ensure our customers understand the superior valuethey are getting when they purchase our products. Towards this end your company hadinvested in a "Liquid Engineering Centre" (LEC) a few years ago. This year yourCompany launched the virtual engine training program to bring multiple locations togetherusing virtual reality platform. This created a huge impact in the market wherein thebenefits of our products could be technically explained to the customers. Your Companyinvests in creating a state-of-the-art semi replica of the liquid engineering centre atour key customer Maruti Suzuki India Ltd.
6. Another major milestone that was achieved in the year 2014 was the renewal of theISO 14001 and 9001:2008 certification for the India Technology Centre. Both thesecertifications are effectively a license-to-operate today for a reputed organization suchas your Company. The ISO 9001:2008 assures the management of your Company that theoperations of the Centre continue to be streamlined and efficient. The ISO 14001certification is a mark of your Companys commitment to the customer and shareholderto be environmentally responsible and to adopt sustainable business practices.
RESEARCH & DEVELOPMENT (R&D)
(A) Specific areas in respect of which R&D was carried out: (i) Newproduct launches with stronger consumer benefit:
Following brands were re-launched during the year with strong consumer benefits viz.:a. Magnatec 5W-30 Stop Start with intelligent molecules that give you instant protectionfrom the moment you start every time you start. b. Magnatec Professional A1 5W-30c. CRB Mini Truck to cater to the fast growing category of mini trucks d. SF0007 RP a mid-flash rust preventive for tube industry e. Optigear MX320 for windturbines
(ii) New products and offers for Original Equipment Manufacturers (OEMs):
Your Company has been successful in obtaining endorsement for fuel efficientproducts from two of the leading car manufacturers viz. TATA Motors and Maruti Suzuki.
(iii) Driving efficiencies:
Several initiatives were taken during the year to ensure that your Company availed ofthe maximum efficiencies by creating alternative raw material options. This will alsoensure a strong security of supply in case of any crisis.
(B) Benefits derived as a result of R&D
Based on the R&D activities mentioned above being implemented your Company wasable to further strengthen its connect with its consumers and the OEMs. It alsohelped your Company in forging new partnerships with OEMs and demonstrating itstechnical superiority.
(C) Future plan of action
Innovation is a journey and your Company is well placed to ensure that itcontinues to maintain a strong track record in this field.
Your Company will continue its focus on generating fuel efficient products for itsconsumers strengthening its synthetic technology based portfolio and working on thestate-of-the-art technologies of modelling to fast track product development cycles.
(D) Expenditure on R&D
(Rs. in crores)
|(i) ||Capital ||3.65 |
|(ii) ||Recurring ||10.56 |
|(iii) ||Total ||14.21 |
FOREIGN EXCHANGE EARNING AND OUTGO
1. Activities relating to Export
There were no significant exports by the Company during the year. However somequantities of the products were exported to China Thailand & Saudi Arabia.
2. Earning and Outgo
Members are requested to refer to note Nos. 32 and 33 of notes to FinancialStatements for the year ended 31st December 2014.
PARTICULARS OF EMPLOYEES
The information required to be published under the provisions of Section 217(2A) of theCompanies Act 1956 (the Act) read with Companies (Particulars of Employees) Rules 1975as amended is provided in the Annexure forming part of the Report. In terms of Section219(1)(b)(iv) of the Act the Report and Accounts are being sent to the Members excludingthe aforesaid Annexure. Any member interested in obtaining a copy of the same may write tothe Company Secretary at the Registered Office address.
The Board wishes to place on record its sincere
appreciation of the efforts put in by the Companys workers staff and executivesfor achieving encouraging results in difficult environment. The Board also wishes to thankits members distributors vendors customers bankers government and all other businessassociates for their support during the year.
On behalf of the Board of Directors
|Ravi Kirpalani || |
|Managing Director || |
|Dated: 25th February 2015 |