Your Directors have pleasure in presenting the Thirty-sixth Annual Report and theAudited Financial Statements of the Company for the financial year ended 31st March 2017.The consolidated performance of the Company and its subsidiaries has been referred towherever required.
The Company's financial performance for the year ended 31st March 2017 is summarisedbelow:
| || || |
Rs. in crore
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Gross Income ||1943.01 ||1776.71 ||1984.41 ||1781.45 |
|Profit before Depreciation Interest & Tax ||314.71 ||290.00 ||334.53 ||295.47 |
|Depreciation ||52.38 ||43.73 ||59.34 ||47.46 |
|Interest & Finance Charges ||28.64 ||46.46 ||30.21 ||47.88 |
|Profit before Tax ||233.69 ||199.81 ||244.98 ||200.13 |
|Tax Expenses ||48.13 ||30.00 ||51.50 ||30.38 |
|Profit after Tax ||185.56 ||169.81 ||193.48 ||169.75 |
|Attributable to: || || || || |
|Owners of the Company ||185.56 ||169.81 ||190.46 ||168.94 |
|Non-controlling interests ||- ||- ||3.02 ||0.81 |
|Other Comprehensive Income (net of taxes) ||(1.99) ||(1.86) ||(2.43) ||(1.86) |
|Total Comprehensive Income for the year ||183.57 ||167.95 ||191.05 ||167.89 |
|Attributable to: || || || || |
|Owners of the Company ||183.57 ||167.95 ||188.25 ||167.08 |
|Non-controlling interests ||- ||- ||2.80 ||0.81 |
|Opening balance in Retained Earnings ||470.30 ||362.52 ||468.48 ||361.57 |
|Adjustment with other equity ||(1.99) ||(1.86) ||(2.43) ||(1.86) |
|Amount available for appropriation ||653.87 ||530.47 ||656.51 ||528.65 |
|Final Dividend- FY 2014-15 ||- ||27.77 ||- ||27.77 |
|Interim Dividend- FY 2015-16 ||- ||22.22 ||- ||22.22 |
|Tax on Dividend ||- ||10.18 ||- ||10.18 |
|Adjustment on cessation of subsidiaries ||- ||- ||0.55 ||- |
|Closing Balance in Retained Earnings ||653.87 ||470.30 ||655.96 ||468.48 |
INDIAN ACCOUNTING STANDARDS
Pursuant to the notification dated 16th February 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from 1st April 2016. Financial statements for the year ended and as at 31st March2016 have been restated to conform to Ind AS. The reconciliations and descriptions of theeffect of the transition from IGAAP to Ind AS have been provided in Note 34 in the notesto accounts in the standalone and consolidated financial statements.
Your Company has had a consistent track record of dividend distribution balancing thedual objective of appropriately rewarding Members through dividends and retainingsufficient funds to support the long term growth of your Company. Continuing this trendyour Directors are pleased to recommend a final dividend of RS.1.00 per equity share offace value RS.1 each (exclusive of applicable dividend distribution tax) for the financialyear ended 31st March 2017. The Final Dividend subject to approval of Members at theensuing Annual General Meeting will be paid within the statutory period.
TRANSFER TO RESERVES
No amount is proposed to be transferred to any Reserves.
The paid up Equity Share Capital of the Company as on 31st March 2017 wasRS.222527240 divided into 222172990 Equity Shares of RS.1 each and includingH354250 received on account of 1380000 (post-split) forfeited shares. There has notbeen any change in the Equity Share Capital of the Company during the financial year ended31st March 2017. During the year under review the Company has neither issued shares withdifferential voting rights nor issued sweat equity or granted stock options.
INDIAN ECONOMY AND STATE OF AFFAIRS
Against the backdrop of robust macroeconomic stability the year was marked by twomajor domestic policy developments. One was the constitutional amendment which paved wayfor the transformational Goods and Services Tax (GST) and the other was to demonetise thetwo highest denomination currency notes that were in circulation in India. The GST aims tocreate a common Indian market by creating a level playing field for the organised andunorganised player through the establishment of a unified taxation regime. It seeks toimprove tax compliance and governance and boost investment and growth. Demonetisation hashad short-term costs but holds the potential long-term benefits.
Follow-up actions to minimise the costs and maximise the benefits include: fastdemand-driven remonetisation implementing tax reforms like bringing land and real estateunder the ambit of GST reducing tax rates and stamp duties and taking decisive steps toallay anxieties pertaining to over-zealous tax administration. These actions will helpIndia resume its journey on the growth track during FY 2017-18. In the aftermath ofdemonetisation on the domestic front and Brexit and the US elections on the internationalfront addressing these challenges will be critical towards ensuring that India'sresurgence is enduring. Shrugging off a disappointing FY 2016-17 the real estate industryis expected to bounce back in FY 2017-18. Regulations like RERA Benami Transactions(Prohibition) Amended Act 2016 REITS GST have paved the way for sustainable growth andenhanced transparency in the Indian real estate sector.
Moreover tax benefits in the realm of affordable housing interest subsidies forfirst-time home buyers and reduction in overall interest rates would lend a shot in thearm to the sector. Amidst adequate policy and regulatory support the Indian economy isbound to emerge stronger healthier and capable of long periods of sustained growth.
Despite the fact that the overall economic conditions during the FY 2016-17 was facedwith several challenging developments your Company managed a top-line growth of 9% overthe previous year. At Standalone level the Gross Income stood at RS.1943.01 crore ascompared to RS.1776.71 crore in the previous year. Profit before tax increased fromRS.199.81 crore to RS.233.69 crore reflecting a growth of almost 17%. Net Profit after taxwas RS.185.56 crore compared to RS.169.81 crore in previous year reflecting a growth of9%. Top-line was aggressively supported by the laminate business which grew almost 14%YoY while the Plywood segment grew by 7% YoY.
The Consolidated Gross Income for FY 2016-17 was placed at RS.1984.41 crore againstRS.1781.45 crore during the previous year reflecting a growth of 11%. Profit before taxincreased from RS.200.13 crore to RS.244.98 crore reflecting a growth of 22% while the NetProfit before adjustment of non-controlling interests was up by 14%.
The operations and financial results of the Company are elaborated in the annexedManagement Discussion and Analysis.
The pie of Indian organised plywood market is set to expand with GST rollout and highbrand aspirations. A constant shift towards the organised sector is being witnessed owingto brand and quality awareness wider choice of products product innovation and warranty.Since plywood is often a one-time purchase greater readiness for a premium purchase hasbeen witnessed in the recent years amongst the people owing to a better durability andeco-friendliness offered by the branded products. All these combined together are set tobring about a paradigm shift in the Indian wood-based panel products segment.
Further good monsoon and 7th Pay Commission could result in higher spendingtranslating into higher plywood laminate and MDF demand. Centuryply being a leadingplayer in its segment is expected to emerge as a major beneficiary as it could leverageits strong brand presence and wide distribution network to capture the demand shifttowards organised sector.
On the basis of demand drivers it is expected that the plywood and panel industrywould grow at a decent rate. With the structural shift in the industry the Company isexpected to be a key beneficiary going ahead. Centuryply's strong brand equity rawmaterial security and robust distribution network would give a significant boost to itsrevenues in coming years.
The Company has been able to counter the threat posed by progressive commoditisation ofplywood by garnering increased realisations from its well established brands enabling theCompany's products to command 15-30% premium over those manufactured by its sectoralpeers. Centuryply's prudent strategy to augment capacities in both plywood and laminatesin challenging times paid-off splendidly in as much as almost 90% of its capacitiesremained utilised during the year.
Furthermore the long term demand for the wood panel products is likely to remainrobust led by an increase in middle-class population urbanisation and per capita incomeamong others. The Central Government's "Housing for all by 2022" programme isalso expected to fuel demand for most building products with Plywood products being oneof them. Overall the Indian plywood industry is on an upward growth trajectory and isprojected to grow considerably over the next five years.
Centuryply has been the front-runner when it comes to implementing innovative practicesat work. During the year the Company forayed into new categories by launching uniquerange of products in the industry branded as 'Zykron' and 'Starke'.
Zykron is a Fibre cement composite board wherein cellulose fibre is reinforced withcement while Starke PVC board is made out of PVC and Calcium carbonate along with otherperformance enhancing additives. Both of them are promising and quality products belongingto evolving category of alternate material to pure wood based product. Both of them areaimed at reducing the usage of wood-based raw-materials without compromising on qualitystrength and durability. The Company is hopeful that the industry will embrace this newtechnology in the form 'Zykron' and 'Starke' and through our trusted network of dealersthey are sure to become a preferred choice amongst the consumers in the days to come.
FUTURE PLANS OF EXPANSION
The Company's Particle Board unit at Chennai successfully commenced commercialproduction in July 2016. The Company incurred a capex of H60 crore for the plant which isexpected to operate at 70% capacity utilisation during the coming year.
The construction of the Company's Medium Density Fibre (MDF) Board unit at Hoshiarpurin Punjab is also in final stage and the unit is expected to commence commercialproduction in the first half of the FY 2017-18. The plant will have a capacity of 200000cbm per year with easy access to timber in the nearby vicinity. Total capex incurred forthe plant till end of FY 2016-17 is RS.283 crore. It is expected that the plant wouldreach 60% capacity utilisation in FY 2017-18 itself given that almost 40% of India's MDFrequirement is still imported. Going ahead the Company also has plans to use its MDFproduce to make doors pre-laminated boards and wooden flooring.
Your Company's strategy in Myanmar for securing availability of raw material paid-offwell. On similar line considerable investments are being made in south-east Asiancountries primarily Laos and Indonesia through its subsidiaries and step-downsubsidiaries to ensure uninterrupted supply of raw materials. On the sales front yourCompany has expanded its distribution network considerably. Your Company is also investingheavily on brand positioning for ensuring that the Centuryply brand occupies a distinctposition relative to competing brands in the mind of the customers.
The Company's entry in to the economy segment product through its secondary brand'Sainik' has also received overwhelming response particularly in the smaller cities andrural markets.
CHANGE IN NATURE OF BUSINESS IF ANY
There has not been any change in the nature of business of the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which this financialstatements relate and the date of this report.
CHANGES IN SUBSIDIARIES
As a purposeful strategy your Company carries a part of its business operationsthrough several subsidiaries which are formed either directly or as step-down subsidiariesor in certain cases by acquisition of majority stake in an existing entity. Auro SundramPly and Door Pvt. Ltd. Century MDF Ltd. Ara Suppliers Pvt. Ltd. Arham Sales Pvt. Ltd.Adonis Vyaper Pvt. Ltd. Apnapan Viniyog Pvt. Ltd. Century Infotech Ltd. CenturyplyMyanmar Pvt. Ltd. Century Ply (Singapore) Pte. Ltd. continue to remain subsidiaries ofthe Company while Century Ply Laos Co. Ltd. and PT Century Ply Indonesia continued asstep-down subsidiaries.
Vietnam Innovation Pacific JSC was incorporated on 19th May 2016 as a subsidiary ofInnovation Pacific Singapore Pte. Ltd. (IPSPL) thereby becoming a step-down subsidiary ofour Company. However with the disinvestment of our entire shareholding in the subsidiaryIPSPL both IPSPL and step-down subsidiary Vietnam Innovation Pacific JSC ceased to besubsidiaries of the Company with effect from 24th August 2016. There are no associatecompanies or joint venture companies within the meaning of Section 2(6) of the CompaniesAct 2013.
There has been no material change in the nature of the business of the subsidiaries.Auro Sundram Ply and Door Pvt. Ltd. is operating a plywood unit at Roorkee in Uttarakhand.This unit is manufacturing plywood and allied products from eco-friendly agro-forestrytimber.
Century Infotech Ltd. is engaged in the business of e-commerce e-shopping onlineinformation services online application integration including buying selling marketingtrading and dealing in various kinds of products and services.
Centuryply Myanmar Pvt. Ltd. is operating a veneer and plywood unit near Yangon city inMyanmar and is supplying the same primarily to our Company.
Century Ply (Singapore) Pte. Ltd. is undertaking trading in veneer and plywood. It hasentered into arrangements with various entities in Laos whereby it has provided them plantand machinery for manufacture and supply of veneer and plywood to it.
Century Ply Laos Co. Ltd. has already set up a unit in Attapeu province in Laos formanufacturing veneer out of raw material sourced locally while PT Century Ply Indonesia isexamining the viability of setting up similar facilities in Indonesia.
Ara Suppliers Pvt. Ltd. Arham Sales Pvt. Ltd. Adonis Vyaper Pvt. Ltd. and ApnapanViniyog Pvt. Ltd. jointly own and hold some land in Kolkata which is yet to be developed.
Century MDF Ltd. is yet to commence any commercial activity as on the date of thisAnnual Report.
POLICY FOR DETERMINING MATERIAL SUBSIDIARIES
The Company does not have any material subsidiary as on the date of this report havinga net worth exceeding 20% of the consolidated net worth or income of 20% of theconsolidated income of your Company. The Company has formulated a Policy for determiningMaterial Subsidiaries and the same can be accessed on the Company's website at the weblinkhttp://www.centuryply.com/investor/codes&policies/policy-on-material-subsidiary.pdf.
FINANCIAL POSITION AND PEFORMANCE
The minutes of the Board Meetings of the subsidiary companies along with the details ofsignificant transactions and arrangements entered into by the Subsidiary Companies areshared with the Board of Directors on a quarterly basis. The financial statements of theSubsidiary Companies are presented to the Audit Committee for its review. The Statement inForm AOC-1 containing the salient feature of the financial statement of the Company'ssubsidiaries pursuant to first proviso to Section 129(3) of the Companies Act 2013 readwith Rule 5 of the Companies (Accounts) Rules 2014 is appended as Annexure '1' to thisReport.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared by your Company in accordancewith the provisions of the Companies Act 2013 read with the Companies (Accounts) Rules2014 Companies (Indian Accounting Standards) Rules 2015 and other applicable AccountingStandards and provisions of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") and the same forms part of this Annual Report.
The Annual Report of the Company containing therein its standalone and theconsolidated financial statements has been placed on the website of the Company www.centuryply.com.Financial statements of each of the subsidiary companies have also been placed on thewebsite of the Company. Shareholders interested in obtaining a copy of the auditedfinancial statements of the subsidiary companies may write to the Company Secretary at theCompany's registered office.
The audited financial statements and audit reports of each of the subsidiaries areavailable for inspection at the registered office of the Company and that of therespective subsidiaries during working days between 11.00 A.M. and 1.00 P.M.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of loans guarantees and investments made by the Company under Section 186of the Companies Act 2013 read with Companies (Meetings of Board and its Powers) Rules2014 are given in Annexure '2' hereto and forms part of this Report.
The Company has not given loans guarantees or made investments exceeding sixty percentof its paid-up share capital free reserves and securities premium account or one hundredpercent of its free reserves and securities premium account whichever is more asprescribed in Section 186 of the Companies Act 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts and arrangements with related parties entered into or modified duringthe financial year were on an arm's length basis and in compliance with the applicableprovisions of the Companies Act 2013 and the Listing Regulations. All such contracts orarrangements have been approved by the Audit Committee. No material contracts orarrangements with related parties were entered into during the year under review.Accordingly the disclosure of Related Party Transactions as required under Section134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules2014 in Form AOC-2 is not applicable.
Details of Related Party transactions as per Regulation 53(f) read with Part A ofSchedule V of the Listing Regulations is provided under Note-44 of the Notes to thefinancial statements. There are no materially significant transactions with related partywhich may have a potential conflict with the interest of the Company at large.
The Board of Directors has devised and adopted a policy on 'Materiality of and dealingwith Related Party Transactions' for determining the materiality of transactions withrelated parties and dealings with them. The said policy may be referred to at theCompany's website: http://www.centuryply.com/investor/codes&policies/policy-for-transactions-with-related-parties. pdf.
The Company has not invited or accepted deposits from the public covered under Section73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules2014. As such no amount on account of principal or interest on public deposits wasoutstanding as on the date of the Balance Sheet.
M/s Singhi & Co. Chartered Accountants (Firm Registration No. 302049E) wereappointed as Statutory Auditors of the Company for a term of five years from theconclusion of the Thirty-third Annual General Meeting held in calendar year 2014 till theconclusion of the Thirty-eighth Annual General Meeting to be held in the calendar year2019 subject to ratification of their appointment at every Annual General Meeting.Accordingly Members are requested to ratify the appointment of M/s. Singhi & Co. asthe Statutory Auditors of the Company and to fix their remuneration for the financial yearending 31st March 2018.
The Company has received confirmation from M/s. Singhi & Co. to the effect thatthey continue to satisfy the criteria provided in Section 141 of the Companies Act 2013and that their appointment if ratified would be within the limits prescribed underSection 141(3)(g) of the Act.
STATUTORY AUDITORS' REPORT
There are no qualifications reservations or adverse remarks made by M/s. Singhi &Co. Statutory Auditors in their report on your Company's financial statements for thefinancial year ended 31st March 2017. The Statutory Auditors have not reported anyincident of fraud to the Audit Committee of the Company in the year under review.
The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments.
During the year Secretarial Audit was carried out by M/s. MKB & AssociatesCompany Secretaries in Practice and Secretarial Auditor of the Company for the financialyear 2016-17. There were no qualifications reservations or adverse remarks given bySecretarial Auditors of the Company. The detailed report on the Secretarial Audit in FormMR-3 given by the Secretarial Auditor is appended as Annexure '3' to this Report.
I. INDEPENDENT DIRECTORS:
APPOINTMENT OF INDEPENDENT DIRECTORS:
The Board of Directors at its meeting held on 31st January 2017 appointed Sri VijayChhibber (DIN- 00396838) as an Additional Director in the Independent category with effectfrom 1st February 2017 for a term upto 31st January 2020 subject to regularisation/approval of the shareholders of the Company at the ensuing Annual General Meeting. TheBoard of Directors of your Company recommends his appointment.
DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB- SECTION (6) OF SECTION 149
Declarations have been received from each of the Independent Directors under Section149(7) of the Companies Act 2013 that he/ she meets the criteria of independence laiddown in Section 149(6) of the Companies Act 2013 and Regulation 16 of the ListingRegulations.
FAMILIARIZATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS
The provision of an appropriate induction programme for new Directors and ongoingtraining for existing Directors is a major contributor to the maintenance of highCorporate Governance standards of the Company.
The Board members are provided with necessary documents/ brochures reports andinternal policies to enable them familiarise with the Company's procedures and practices.Periodic presentations are made at the Board and Committee Meetings on business andperformance updates of the Company global business environment business strategy andrisks involved. Relevant statutory changes/ updates are also brought to the knowledge ofthe Directors to help them to take informed decisions. Site visits to the Company'sfactory locations are organised for the Independent Directors to enable them to understandthe operations of the Company.
The Independent Directors from time to time request management to provide detailedunderstanding of any specific project activity or process of the Company. The managementprovides such information and training either at the meeting of Board of Directors orotherwise.
Independent Directors are issued Letters of Appointment setting out in detail theterms of appointment duties responsibilities and expected time commitments. Theinduction process for Non-executive Independent Directors include interactive sessionswith Board and Committee members Business and Functional Heads visit to market/ plantetc. All new Independent Directors inducted to the Board are given an orientation.Presentations are made by Executive Directors and Senior Management giving an overview ofthe Company's strategy operations products markets group structure and subsidiariesBoard constitution and guidelines and matters reserved for the Board.
The Board has open channels of communication with executive management which allowsfree flow of communication amongst Directors in terms of raising query seekingclarifications and other related information. A detailed overview of the familiarisationprogram is available on the Company's website: http://www.centuryply.com/investor/ codes&policies/familiarization-programme.pdf.
II. NON - INDEPENDENT DIRECTORS:
(a) APPOINTMENT OF WHOLE-TIME DIRECTOR:
The Board of Directors at its meeting held on 31st January 2017 appointed Smt. NikitaBansal (DIN- 03109710) as an Additional Director in the Executive category with effectfrom 1st February 2017 for a period of five years subject to approval of the shareholdersof the Company at the ensuing Annual General Meeting.
Smt. Nikita Bansal is the daughter of Sri Sanjay Agarwal Managing Director and hasalready been working with the Company in executive capacity. The Board of Directors ofyour Company recommends her appointment.
(b) RETIREMENT BY ROTATION:
Pursuant to the provisions of Section 152(6)(c) of the Companies Act 2013 Sri HariPrasad Agarwal and Sri Prem Kumar Bhajanka retire by rotation and being eligible offerthemselves for re-appointment. In view of their considerable experience and contributionto the Company your Directors recommend their re-appointment. Brief resume of theDirectors being reappointed would form a part of the notice of the ensuing Annual GeneralMeeting.
III. KEY MANAGERIAL PERSONNEL
Pursuant to the recommendation of the Nomination and Remuneration Committee the Boardof Directors at its meeting held on 31st January 2017 reappointed subject to theapproval of the shareholders Sri Hari Prasad Agarwal as the Vice- Chairman and ExecutiveDirector of the Company for a further period of five years with effect from 1st June2017. His re-appointment shall be subject to approval of the shareholders in the ensuingGeneral Meeting. However since Sri Agarwal would be attaining the age of 70 on 26th May2018 his re-appointment for a term of five years would require approval of theshareholders by way of a special resolution. The Board of Directors of your Companyaccordingly recommends the same.
MEETINGS OF BOARD OF DIRECTORS
The Board meets at least once in every quarter to review the Company's operations andthe maximum time gap between any two meetings is not more than 120 days. The Board metfour times during the financial year ended 31st March 2017 details of which are given inthe Corporate Governance Report forming part of Annual Report.
MEETINGS OF INDEPENDENT DIRECTORS
In terms of Schedule IV of the Companies Act 2013 and the Listing Regulationsseparate meetings of the Independent Directors of the Company were held on 1st November2016 and 31st January 2017 without the presence of Executive Directors and members of themanagement wherein they inter alia discussed:
the performance of Non-independent Directors and the Board as a whole;
the performance of the Chairperson of the Company taking into account the viewsof Executive Directors and Non-executive Directors; and
the quality quantity and timeliness of flow of information between the Companymanagement and the Board that is necessary for the Board to effectively and reasonablyperform their duties.
PARTICULARS OF MANAGERIAL REMUNERATION
The information required under Section 197 (12) read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given in Annexure'4' forming part of this Annual Report.
Your Directors state that none of the Executive Directors of the Company receive anyremuneration or commission from any of its Subsidiaries.
PARTICULARS OF EMPLOYEES
A statement containing particulars of employees as required under Section 197 of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is given in Annexure '4' forming part ofthis Annual Report. There was also no employee receiving remuneration during the year inexcess of that drawn by the Managing Director or Whole-time Director and holding byhimself or along with his spouse and dependent children not less than two percent of theequity shares of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act 2013 your Directors confirmthat they have:-
(i) followed the applicable accounting standards in the preparation of the AnnualAccounts for the year ended 31st March 2017 along with proper explanations relating tomaterial departures if any;
(ii) selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at the end of the financial year and of the profit ofthe Company for that period;
(iii) taken proper and sufficient care 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;
(iv) prepared the Annual Accounts of the Company on a 'going concern' basis;
(v) laid down internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and were operating effectively; and
(vi) devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors and external consultants including the audit of internalfinancial controls over financial reporting by the statutory auditors and the reviewsperformed by management and the relevant board committees including the audit committeethe board is of the opinion that the Company's internal financial controls were adequateand effective during FY 2017.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34(3) read with Schedule V of the ListingRegulations Management Discussion and Analysis for the year under review is presented ina separate section forming part of this Annual Report.
Your Company has been practicing the principle of good Corporate Governance over theyears and it is a continuous and ongoing process. The Company believes in achievingbusiness excellence and optimising long-term value for its shareholders on a sustainedbasis through ethical business conduct. Your Company complies with all mandatory andcertain discretionary requirements of Corporate Governance as set out in the ListingRegulations. As required under the Listing Regulations a separate section on CorporateGovernance practices followed by your Company together with a certificate from M/s. MKB& Associates Company Secretaries in Practice confirming compliance with therequirements of Corporate Governance forms part of this Annual Report.
CEO & CFO CERTIFICATION
A certificate from the chief executive officer and chief financial officer of theCompany addressed to the Board of Directors in terms of Listing Regulations interalia confirming the correctness of the financial statements and cash flow statementsadequacy of the internal control measures and reporting of matters to the Audit Committeeis contained elsewhere in this Annual Report.
INTERNAL CONTROLS/ INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company's Internal Control System is commensurate with the nature of its businessand the size and complexity of its operations and ensures compliance with policies andprocedures. Your Company has a dedicated and independent Internal Audit Departmentreporting directly to the Audit Committee of the Board. The Internal Control Systems arebeing constantly updated with new/ revised standard operating procedures.
The Company has laid down framework for internal financial controls through acombination of Entity level controls Process level controls and IT general controls interalia to ensure orderly and efficient conduct of business accuracy and completeness ofaccounting records and timely preparation and reporting of reliable financial statements/information safeguarding of assets prevention and detection of frauds and errors.Standard operating procedures have been laid down to guide the operations of the business.Unit heads are responsible to ensure compliance with the policies and procedures laid downby the management. Robust and continuous internal monitoring mechanisms and reviewprocesses ensure that such systems are reinforced on an ongoing basis. Such controls havebeen tested during the year and no reportable material weakness or significantdeficiencies in the design or operation of internal financial controls was observed.
Your Company uses ERP systems which has inbuilt transactional controls tiered approvalmechanisms and maintenance of supporting records. The Company's Internal Audit Departmentstudies the internal control systems and checks & balances for continuous updation andimprovements therein. Based on the report of internal audit function process ownersundertake corrective action in their respective areas and thereby strengthen the controls.All these steps facilitate timely detection of any irregularities and early remedialmeasures. The Audit Committee evaluates and reviews the adequacy and effectiveness of theinternal control systems and suggests improvements. It also regularly reviews thebudgetary control system of the Company as well as system for cost control financialcontrols accounting controls physical verification controls etc. to assess the adequacyand effectiveness of the internal control systems.
In terms of the requirements of the Companies Act 2013 and Listing Regulations theIndependent Directors of the Company reviewed the performance of Non-independentDirectors the Board as a whole and of the Chairperson of the Company. The Nomination andRemuneration Committee carried out evaluation of every director's performance. The Boardafter taking into consideration the evaluation exercise carried out by the Nomination andRemuneration Committee and by the Independent Directors carried out an evaluation of itsown performance and that of its Committees. The individual performance of all Directors(including the Independent Directors) was also carried out by the entire Board (excludingthe director being evaluated).
A detailed note on parameters and process applied for carrying out the evaluation hasbeen discussed in the Corporate Governance Report.
Based on the evaluations the performance of the Board its Committees and IndividualDirectors (including Independent Directors) was found to be satisfactory. The IndependentDirectors unanimously opined that the Non-independent Directors including the Chairman& Managing Director have an in-depth knowledge of the Company and the environment inwhich it operates. All Directors are participative interactive and communicative.Besides the Chairman has abundant knowledge experience skill and understanding of theBoard's functioning and conducts the meetings with poise and maturity.
The information flow between the Company's Management and the Board is also properadequate and timely. The Directors have expressed their satisfaction over the evaluationprocess and outcome thereof.
The Board has constituted following Committees of Directors to deal with matters andmonitor the activities falling within the respective terms of reference:-
Nomination and Remuneration Committee
Stakeholders Relationship Committee
Share Transfer Committee
Corporate Social Responsibility Committee
The details of the membership terms of reference and attendance at the meetings of theabove Committees of the Board are provided in the Corporate Governance Report forming apart of this Annual Report. There has been no instance where the Board has not acceptedthe recommendations of its Committees.
The Remuneration Policy of the Company is aimed to attract retain and motivate highlyqualified members for the Board and other executive level and to provide a well-balancedand performance-related compensation package taking into account shareholder interestsindustry standards and relevant regulations. The Nomination and Remuneration Committee interalia considers qualification positive attributes area of expertise and independenceof a Director and Executives while finalising and recommending to the Board a policyrelating to their appointment and remuneration. The Policy of the Company on appointmentand remuneration of Directors Key Managerial Personnel and Senior Management Personnelcontaining criteria and other matters provided in Section 178(3) of the Companies Act2013 is appended as Annexure '5' to this Report.
BOARD DIVERSITY POLICY
The Company has also adopted a Board Diversity Policy which is based on the principlethat the Company's Board of Directors should have a balance of skills experience anddiversity of perspectives appropriate to the Company's business. The Company recognisesthat a Board composed of appropriately qualified people with a broad spectrum ofexperience relevant to the business is important for effective corporate governance andsustained commercial success of the Company. A diverse Board leverages differences inthought perspective knowledge skill regional and industry experience cultural andgeographical background thereby enhancing the quality of decisions made by the Board forachieving sustainable and balanced growth of the Company. The Company's Board DiversityPolicy is available on our website at http://www.centuryply.com/investor/codes&policies/board-diversity- policy.pdf.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism for reporting illegal and unethical behaviour. The Company's WhistleBlower Policy/ Vigil Mechanism encourages Directors and employees to bring to theCompany's attention instances of unethical behaviour actual or suspected incidents offraud or violation of the Company's Code of Conduct that could adversely impact theCompany's operations business performance and/ or reputation. The Policy provides thatthe Company investigates such incidents when reported in an impartial manner and takesappropriate action to ensure that requisite standards of professional and ethical conductare always upheld. The Company has also made provisions for adequate safeguards againstvictimisation of employees and Directors who bring such incidents to the attention of theCompany.
The Audit Committee oversees the implementation of the Whistle Blower Policy whichprovides for direct access to the Chairman/ CEO/ Chairman of the Audit Committee inexceptional cases. The said policy may be referred to at the Company's website at: http://www.centuryply.com/investor/codes&policies/vigil-mechanism-policy.pdf. During the financial year ended 31stMarch 2017 no case was reported under this policy.
RISK MANAGEMENT POLICY
The Board of Directors of your Company has framed and adopted a policy on RiskManagement to minimise the adverse consequence of risks on business objectives of theCompany. The Board is kept informed about the risk assessment and minimisation procedures.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The policy is periodically reviewed bythe Audit Committee to ensure that the executive management controls the risk as perdecided policy. The risk management issues are discussed in Management Discussion andAnalysis.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
Your Company firmly believes in providing a safe supportive and friendly workplaceenvironment - a workplace where our values come to life through the underlying behaviours.Positive workplace environment and a great employee experience are integral parts of ourculture. Your Company believes in providing and ensuring a workplace free from harassmentand gender-based discrimination. The Company also organises training sessions across theorganisation to create awareness on the subject amongst the employees.
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and Rules made thereunder your Company has adopteda Policy on prevention prohibition and redressal of sexual harassment at workplace andhas also constituted an Internal Complaints Committees (ICC).
The Company affirms that adequate mechanisms are in place for reporting of complaintsunder the Policy. Employees may report complaints to the Complaints Committee formed forthis purpose or to any member thereof or to the location head. During the year nocomplaint regarding sexual harassment was received by the said Committee.
DIVIDEND DISTRIBUTION POLICY
In terms of Regulation 43A of the Listing Regulations your Company has formulated andadopted a Dividend Distribution Policy with the object of rewarding its shareholdersappropriately by sharing a portion of the profits whilst also ensuring that sufficientfunds are retained for growth of the Company. The Policy broadly specifies the externaland internal factors including financial parameters that shall be considered whiledeclaring dividend the circumstances under which the shareholders of the Company may ormay not expect dividend and other related aspects. Through this policy the Companyendeavours to maintain a consistent approach to dividend pay-out plans. The said policyhas been appended as Annexure '6' to this Annual Report and may also be referred to at theCompany's website at: http://www.centuryply.com/ investor/codes&policies/dividend-distribution-policy.pdf.
Policy on Materiality of and dealing with Related Party Transactions Policy forPreservation of Documents Archival Policy and Policy for determining Materiality ofEvents/ Information are some of the other policies formulated and adopted by the Boardpursuant to the requirement of Listing Regulations. These policies may be accessed on theCompany's website www.centuryply.com.
CODE OF CONDUCT
A Code of Conduct as applicable to the Board of Directors and Senior ManagementPersonnel has been displayed on the Company's website www.centuryply.com anddetails thereof has been included in the Corporate Governance Report forming part of thisAnnual Report. The Code requires Directors and Senior Management Personnel to avoid anddisclose any activity or association that creates or appears to create a conflict betweenthe personal interests and the Company's business interests.
CODE OF CONDUCT TO REGULATE MONITOR AND REPORT TRADING BY INSIDERS AND CODE OFPRACTICES AND PROCEDURES FOR FAIR DISCLOSURE OF UNPUBLISHED PRICE SENSITIVE INFORMATION
In accordance with the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015 the Company has adopted a 'Code of Conduct to regulatemonitor and report trading by Insiders'. The Code prohibits the Directors of the Companyand other specified employees from dealing in the securities of the Company on the basisof any unpublished price sensitive information available to them by virtue of theirposition in the Company. The Code also provides for periodical disclosures from designatedemployees as well as pre-clearance of transactions by such persons so that they may notuse their position or knowledge of the Company to gain personal benefit or to providebenefit to any third party.
A copy of the said Code is made available to the employees of the Company andcompliance of the same is ensured.
The Code is available on the website of the Company www.centuryply.com.
Code of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation also adopted by the Company lays down principles and practices to be followedby the Company with respect to adequate and timely disclosure of unpublished pricesensitive information.
Your Company has formulated a Corporate Social Responsibility Policy which is availableon the website of the Company at http://www.centuryply.com/investor/codes&policies/csr-policy.pdf. Annual report on CSR activities as required under the Companies (CorporateSocial Responsibility Policy) Rules 2014 has been appended as Annexure '7' to this AnnualReport.
The Company's Policy on Corporate Social Responsibility (CSR Policy) indicates theactivities to be undertaken by the Company monitoring implementation of the framework ofCSR Policy and the amount to be spent on CSR activities. The CSR Policy focuses onaddressing social environmental and economic needs of the marginalised/underprivilegedsections of the society. The CSR Committee has confirmed that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and policy of the Company.
Securities and Exchange Board of India extended the applicability of BusinessResponsibility Report (BRR) to top 500 listed entities based on market capitalisation witheffect from 1st April 2016. Your Company falls in the category of top 500 Companies andaccordingly in terms of Regulation 34(2) of the Listing Regulations a separate sectionon Business Responsibility Report (BRR) is brought out and appended as Annexure '8' tothis Report mapping the sustainability performance of your Company against the reportingframework suggested by SEBI.
The Report describes the initiatives taken by the Company from an environmental socialand governance perspective. For sustainable development the management of the Companyendeavours to strike a proper balance between economic social and environmentalperformance in dealings with its various stakeholders. The policy is rooted in theCompany's core values of quality reliability and trust guided by the best practices andis driven by our aspiration for excellence in the overall performance of our business.
Your Company's sustainability strategy aims at creating significant value for thenation by enriching the country's economic environmental and social capital. Thesustainability strategy is premised on the belief that the transformational capacity ofbusiness can be very effectively leveraged to create significant societal value through aspirit of innovation and enterprise.
EXTRACT OF THE ANNUAL RETURN
An extract of Annual Return as on the financial year ended on 31st March 2017 in FormNo. MGT-9 as required under Section 92(3) of the Companies Act 2013 read with Rule 12(1)of the Companies (Management and Administration) Rules 2014 is set out as Annexure '9' tothe Directors' Report and forms part of this Annual Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS/ TRIBUNALS
No significant or material orders have been passed by the Regulators/ Courts/ Tribunalswhich may impact the going concern status of the Company and its operation in the future.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
The Company sends notices Annual Report and other communications through email toMembers whose email IDs are registered with the Company/ Depository Participant(s). Formembers who have not registered their email addresses physical copies of the AnnualReport are sent through permitted mode. Members requiring physical copies can send arequest to the Company.
HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS
People are a key resource for your Company. The Company believes that the power of itspeople is propelling its progressive growth. Their knowledge experience and passion toperform are fundamental to building the organisation further.
Your Company has been proactive in providing its workforce with a right mix ofchallenges and opportunities learning platforms and leading positions safe workplace andegalitarian work culture along with professional growth and personal development.Long-service award are being organised to recognise the loyalty and commitment ofemployees. Performance recognition through initiatives like 'Sarvada SarvottamAmbassadors' 'Champions' 'Star Performers' and 'i-lead' are also beingcarried out from time to time. All these initiatives coupled with quick grievanceresolution mechanisms has enabled the Company to create a highly motivated pool ofprofessionals and skilled workforce that share a passion and vision of the Company.
INFORMATION REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
Particulars as required under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure '10'hereto and forms part of this Annual Report.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Unclaimed dividend for the years prior to and including the financial year 2008-09 andunclaimed interim dividend for financial year 2009-10 has been transferred to the InvestorEducation and Protection Fund established by the Central Government (IEPF). The Companyhas also uploaded the details of unpaid and unclaimed amounts lying with the Company as on31st August 2016 (date of last Annual General Meeting) on the Company's website www.centuryply.comand also on the website of Ministry of Corporate Affairs.
Dividends for the financial year 2009-10 onwards (excluding interim dividend for2009-10) if remaining unclaimed for 7 years will be transferred by the Company to IEPFon respective due dates. Shareholders who have not claimed the dividend for this periodare requested to lodge their claim with the Company. The Company regularly sends reminderletters through electronic and/or physical means to all those shareholders whose dividendare lying unclaimed for any year/ (s) during the last seven years requesting them to claimtheir dividend amounts.
Annexures forming a part of this Report of the Directors
The Annexures referred to in this Report containing information required to bedisclosed are annexed as under:
|Annexure ||Particulars |
|1 ||Statement containing salient features of the financial statements of subsidiaries/ associate companies/ joint ventures |
|2 ||Details of Loans Guarantees and Investments |
|3 ||Secretarial Audit Report |
|4 ||Particulars of Employees and Managerial Remuneration |
|5 ||Remuneration Policy |
|6 ||Dividend Distribution Policy |
|7 ||Report on Corporate Social Responsibility |
|8 ||Business Responsibility Report |
|9 ||Extract of Annual Return |
|10 ||Particulars of conservation of energy technology absorption and foreign exchange earnings and outgo |
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The Board wishes to place on record itssincere appreciation of the efforts put in by the Company's employees for achievingencouraging results under difficult conditions.
The Board places on record its appreciation for the support and co-operation yourCompany has been receiving from its suppliers redistribution stockists retailersbusiness partners bankers financial institutions Government and Regulatory AuthoritiesStock Exchanges and Central and State Governments. The trust and confidence reposed by thecustomers in the Company and its products is especially cherished. Your Directors alsowish to place on record their appreciation of the wholehearted and continued supportextended by the Shareholders and Investors which had always been a source of strength forthe Company. Your Directors look forward to your continued support.
| ||For and on behalf of the Board of Directors |
| ||Sajjan Bhajanka |
| ||(DIN: 00246043) |
|Kolkata 23rd May 2017 ||Chairman & Managing Director |