Your Directors have pleasure in presenting the 57th Annual Report and theaudited standalone and consolidated financial statements of your company for the yearended 31st March 2016.
| || |
| ||FY16 ||FY15 ||FY16 ||FY15 |
|Revenue from Operations ||34318 ||34525 ||100042 ||104281 |
|Other Income ||1066 ||882 ||1215 ||1105 |
|Profit Before Interest Tax and Depreciation (PBITDA) ||4384 ||4299 ||10007 ||10049 |
|Depreciation ||1277 ||837 ||4287 ||3591 |
|Finance Costs ||2375 ||1637 ||5049 ||4178 |
|Profit before Exceptional Items and Tax ||732 ||1825 ||671 ||2280 |
|Exceptional Items ||- ||578 ||577 ||1940 |
|Profit before Tax ||732 ||1247 ||94 ||340 |
|Tax Expenses ||125 ||322 ||515 ||256 |
|Profit/ (Loss) for the period from Continuing Operations ||607 ||925 ||(421) ||84 |
|Profit/ (Loss) from Discontinuing Operations ||- ||- ||(158) ||- |
|Share in Profit/ (Loss) of Associates (Net) ||- ||- ||175 ||175 |
|Minority Interest in Profit/ (Loss) (Net) ||- ||- ||(449) ||(596) |
|Net Profit ||607 ||925 ||45 ||854 |
|Basic EPS - ' ||2.94 ||4.48 ||0.22 ||4.14 |
The amounts proposed to carry to any reserves:
Standalone Accounts :
|Surplus in the Statement of Profit and Loss ||As at 31/03/2016 ||As at 31/03/2015 |
|Balance as at the beginning of the year ||1279.35 ||750.00 |
|Add: Profit for the year ||607.25 ||925.16 |
|Less: Transferred to Debenture Redemption Reserve ||(150.00) ||(150.00) |
|Less: Dividend on Equity Shares - (a) ||(206.50) ||(206.52) |
|Less: Dividend Distribution Tax - (a) & (b) ||(21.07) ||(39.29) |
|Balance as at the end of the year ||1509.03 ||1279.35 |
a) Dividend on Equity Shares and Tax on Dividend include ' Nil (Previous year ' 0.02crore) pertaining to previous year for Equity shares issued before the record date ofdividend.
b) Dividend Distribution Tax is net of ' 20.97 crore (Previous year ' 0.30 crore) beingdividend distribution tax paid by subsidiaries.
For the year ended 31st March2016 the Board of Directors of your Companyhave recommended dividend of ' 1 per share (Previous year ' 1 per share) to equityshareholders aggregating to ' 249 crore (Previous year ' 246 crore) including DividendDistribution Tax.
Equity shares that may be allotted upon exercise of Options granted under the EmployeeStock Option Scheme and before the Book Closure for payment of dividend will rank paripassu with the existing shares and shall also be entitled to receive the aforesaiddividend.
OVERVIEW AND STATE OF THE COMPANY'S AFFAIRS
For the year ended March 31 2016 the Company's revenue at ' 34318 crore was broadlystable at FY 15 level notwithstanding the sharp fall in both aluminium and copperrealisations. The steep fall in copper revenues was offset by increased revenues fromaluminium business. The aluminium higher revenues were achieved primarily on the back ofhigher volumes and improved product mix despite a sharp decline in realisations.
Profit before Interest Tax Depreciation and Amortisation (PBITDA) for the year wasmarginally higher by 2%. This reflects a robust operational performance in a challengingyear when average realisations were much lower. PBIDTA was also augmented by higher otherincome.
As anticipated depreciation and finance cost increased by ' 1178 crore over FY 15following progressive capitalisation of the projects. The PBT during FY 16 (beforeexceptional items) was lower by 60% at ' 733 crore. Net profit for the year at ' 607 crorewas lower by 34% as compared with that delivered in FY 15.
Standalone Segmental Results:
| ||FY16 ||FY15 |
|Aluminium Segment || || |
|Net Sales ||17125 ||14105 |
|Earnings Before Interest & Tax (EBIT) ||880 ||1349 |
|Copper Segment || || |
|Net Sales ||17209 ||20451 |
|Earnings Before Interest & Tax (EBIT) ||1419 ||1516 |
During FY 16 our primary focus was on ramping up the Greenfield projects to theirdesigned capacities and stabilise these operations. This objective was achieved during theyear and all plants are now running at their designed capacities.
For the year Alumina production (including Utkal refinery) was 2.7 Mn tonnes anincrease of 19% over FY 15. Aluminium production for the year reached a record high. Itcrossed the 1 Mn tonnes mark for the first time reaching 1.13 Mn tonnes an increase of 36%or almost 300 KT over that produced during the previous financial year. In spite of highervolumes the EBIT of Aluminium segment declined because of higher depreciation followingprogressive capitalisation of the projects. The standalone financials do not includeUtkal's financial performance.
Though copper production for the year was steady at 388 KT Fertiliser production roseby 8%. Our continued thrust on Value addition led to higher production of Continuous cast(CC) rods. The production of CC rods was higher by 5%. Despite all these initiatives forvalue maximisation EBIT was 6% lower as compared with that achieved in FY15. This wasprimarily on account of the abolition of certain export incentive scheme during the yearand challenging market conditions.
Consolidated revenue decreased by 4% while profit before interest depreciation andtaxes was at same level compared to the last year's corresponding figures.
Net profit was lower at ' 45 crore on back of adverse macroeconomic conditions higherinterest cost depreciation and loss from discontinuing operations.
Novelis Inc. (A wholly owned subsidiary):
Revenues decreased 11% to $9.9 billion in FY 2016 as higher shipments were more thanoffset by a 16% decrease in average base aluminium prices and a 58% decrease in localmarket premiums.
For fiscal year 2016 the company recorded a net loss of $38 million. Excluding taxeffected special items net income was $131 million for the full year.
The rapid decline in local market premiums over the early months of FY 2016 resulted in$172 million in negative metal price lag for the full year and was primarily responsiblefor the 12% decrease in EBITDA to $791 million in FY 2016. Excluding the impact of metalprice lag in both years EBITDA was $963 million in FY 2016 up 7% compared to $896million in FY 2015.
The company more than doubled its free cash flow as compared to the prior yeargenerating $160 million in FY 2016 after investing $370 million in capital expenditure. Asof March 31 2016 the company reported a strong liquidity of $1.2 billion.
Utkal Alumina International Limited (UAIL) (A wholly owned subsidiary):
The alumina refinery at UAIL produced 1.4 Mn tonne of alumina in FY 16 compared to 1 Mntonne in FY 15. Of this 130 KT of alumina was sold outside and the balance was suppliedto smelters at Hindalco. The cost of production of alumina at UAIL is comparable to theworld benchmark cost of production.
UAIL reported an EBITDA of ' 714 crore. Its net loss stood at ' 93 crore afteraccounting for interest charge of ' 518 crore and depreciation of ' 289 crore.
Aditya Birla Minerals Limited:
Aditya Birla Minerals Limited (ABML) Australia a subsidiary of the Company has sold100% of the shares in Birla Mt Gordon Pty Ltd to M/s Lighthouse Minerals Holdings Pty Ltdon 27th October 2015. Further Metals X Ltd a listed company in Australiamade a takeover offer for shares of ABML. As per the offer the Shareholders of ABML willreceive A$ 0.08 per share of ABML in cash and 1 share of Metals X Limited for every 4.5shares of ABML. The Company has accepted the said offer on 19th July 2016 inrespect of its entire shareholding of ABML.
There were no other material changes and commitments affecting the financial positionof your Company between end of financial year and the date of report.
Business Reconstruction Reserve:
The Company had formulated a scheme of financial restructuring under Sections 391 to394 of the Companies Act 1956 ("the Scheme") between the Company and its equityshareholders approved by the High Court of judicature of Bombay to deal with various costsassociated with its organic and inorganic growth plan. Pursuant to this a separatereserve account titled as Business Reconstruction Reserve ("BRR") was createdduring the year 2008-09 by transferring balance standing to the credit of SecuritiesPremium Account of the Company for adjustment of certain expenses as prescribed in theScheme. Accordingly the Company had transferred ' 8647.37 crore from Securities PremiumAccount to BRR and till 31st March 2015 ' 250.33 crore and ' 2165.80 crorehave been adjusted against BRR in stand-alone and consolidated accounts respectively.During the year following expenses has been adjusted with BRR in both accounts:
(a) ' 279.46 crore towards expenses on exited Projects.
(b) Impairment loss of ' 367.31 crore (Net of deferred tax ' 194.39 crore).
(c) Provision of ' 35.50 crore towards diminution in value of investments.
Had the Scheme not prescribed aforesaid treatment the impact on results and Earningsper Share (EPS) would have been as under:
i) Standalone and Consolidated Net Profit for the year ended 31st March2016 lower by ' 682.27 crore.
(ii) Standalone and Consolidated Basic and Diluted EPS for the year ended 31stMarch 2016 lower by ' 3.30.
Several innovative people - focused initiatives have been instituted at the Grouplevel and these are translated into action at all of the Aditya Birla Group Companies.Our basic objective is to ensure that a robust talent pipeline and a high-performanceculture centred around accountability is in place. We feel this is critical to enable usretain our competitive edge.
RESEARCH AND DEVELOPMENT
Your Company's Research & Development (R&D) activities are focused on providinginnovative cost-effective and sustainable solutions to support consistent growth ofbusiness.
The R&D activities of your Company include process product and applicationdevelopment to develop short term as well as long term solutions to the issues faced bynonferrous sector such as raw material quality cost effective management of wastegenerated during processing recovery of value from byproduct as well as any wasteproducts developing better understanding of the science of processes reducing thespecific energy consumption and carbon footprint etc. Specific programs have also beeninitiated to foster better understanding of the requirement of existing and prospectivecustomers and to provide a better service through application development so as toincrease your company's market share in the chosen market space. Technical competenciesdeveloped by your company will go a long way in terms of quick absorption of technologiesenabling pushing boundaries of our processes so as to increase the economic performanceand improve our new product/new application pipeline to address the impending marketopportunities.
Your Company already operates two Hindalco Innovation Centres (HIC) one HIC-Alumina atBelagavi working on R&D of bauxite alumina and specialty alumina products and oneHIC-SemiFab located at Taloja near Mumbai working in the area of aluminium fabricatedproducts. In addition your company engages the Aditya Birla Group's corporate researchand development centre Aditya Birla Science and Technology Company Private Limited("ABSTCPL") for conducting R&D in select areas of work through charteredR&D projects. These are based on the domain expertise and R&D facilities availablein ABSTCPL. The engagement has resulted into some patent applications which have been andwill be assigned to your company on the grant of the patent. ABSTCPL's forte of havingmultidisciplinary teams of technical experts scientists and engineers enables yourcompany to develop building competencies in select areas as a long term value tobusiness.
AWARDS & RECOGNITIONS
Several accolades have been conferred upon your Company in recognition of itscontribution in diverse field. A selective list:
Hindalco awarded the Top Exporter - Gold Trophy in the category of large enterprise foroutstanding performance in financial year 2013-14. This was the second consecutive yearthat Hindalco has won the top award in this category. This recognition of excellence inexports is an award administered by EEPC (formerly Engineering Export Promotion Council)an export promotion council under Union Ministry of Commerce and Industry Government ofIndia.
The London Metal Exchange in March 2016 approved Aluminium Ingots & Sows producedat Aditya and Mahan Smelters as good delivery brands against its high grade primaryAluminium contracts.
Aditya Aluminium wins Safety Award by the National Safety Council of India -Certificate of Appreciation in recognition of appreciable achievement in OccupationalSafety and Health.
Belagavi Alumina wins the State Safety Award - Unnatha Suraksha Puraskara - by theNational Safety Council of Karnataka State for outstanding work in safety performance andmanagement systems in the manufacturing sector category.
Belur Rolling Plant:
Belur Rolling Plant wins First Prize in Industrial Relations category for the 16thLong Term Settlement signed at a 78 year old unit which has contributed towards survivaland profitability of the plant presented by the National HRD Network Eastern RegionalZenith Awards & Recognition Programme held in January 2016.
Birla Copper Dahej wins the Greentech Environment Gold Award for 2015 in the Metal& Mining sector for continual sustainable development approach presented by theGreentech Foundation New Delhi.
Birla Copper Dahej awarded the Greentech Gold Safety Award 2015 in the Metal &Mining Sector for outstanding achievement in Safety Management.
Birla Copper Dahej wins the FAI Environmental Protection Award - 2015 constituted bythe Fertilizer Association of India for control of pollution.
Gare Palma Coal Mines:
Gare Palma Coal Mines wins First Prize in the HR Best Practices category for culturalchange brought about in the newly acquired mines presented by the National HRD NetworkEastern Regional Zenith Awards & Recognition Programme held in January 2016.
Hirakud Complex awarded the Greentech Safety Gold Award 2015 in Metal Mining & CPPSector category presented by the Greentech Foundation New Delhi. Hirakud Power wins theCII Odisha State Award 2015 First Prize for Best Practices in Environment Health &Safety.
Utkal Alumina International Limited:
(wholly owned subsidiary)
Utkal Alumina awarded the OTV (Odisha Television) CSR Award 2015 in the category ofWomen's Empowerment.
Mr. D. Bhattacharya Managing Director Hindalco and Vice Chairman Novelis namedGlobal Leader of the Year by CEO India for his multiple distinctions achieved on theworld stage and leading the Aditya Birla Group's metals business in a highly volatileenvironment.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements for the year ended 31st March 2016have been prepared by your Company in accordance with the provisions of the Companies Act2013 read with the Companies (Accounts) Rules 2014 applicable Accounting Standards andthe provisions of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 "Listing Regulations" and forms partof the full Annual Report.
Consolidated Financial Statements (CFS) were approved by the Board of Directors on 28thMay 2016 which incorporated accounts of Aditya Birla Minerals Limited (ABML) Australiaa subsidiary of the Company for six months ended 30th September 2015 as full yearaccounts of ABML were not available at that time. ABML has subsequently finalized itsaccounts for the year ended 31st March 2016. Accordingly the Board ofDirectors in the meeting held on 21st July 2016 approved updated CFS based onfull year accounts of ABML which is a part of full Annual Report.
EMPLOYEE STOCK OPTION SCHEMES ESOS - 2006:
During the year ended 31st March 2016 the Company has allotted 3185 fullypaid-up equity share of ' 1/- each (Previous year 373666) on exercise of options underESOS 2006 for which the Company has realised ' 0.03 crore (Previous year ' 3.83 crore) asexercise money. The weighted average share price at the exercise date was ' 134.70 pershare (Previous year ' 168.73 per share).
ESOS - 2013:
During the year ended 31st March 2016 the Company has allotted 2193 fullypaid-up equity share of ' 1/- each (Previous year 18848) on exercise of options underESOS 2013 for which the Company has realised ' 0.03 crore (Previous year ' 0.22 crore) asexercise money. The weighted average share price at the exercise date was ' 114.30 pershare (Previous year ' 154.54 per share).
The details of Stock Options and Restricted Stock Units granted under the abovementioned Schemes are available on your Company's website viz. www.hindalco.com.
A certificate from the statutory auditor on the implementation of your Company'sEmployees Stock Option Schemes will be placed at the ensuing Annual General Meeting forinspection by the members.
Your Directors reaffirm their continued commitment to good corporate governancepractices. Your Company fully adheres to the standards set out by the Securities andExchange Board of India for Corporate Governance practices and has implemented all of itsstipulations.
The entire report on Corporate Governance forms part of full Annual Report.
ABRIDGED ANNUAL REPORT
In terms of the provision of Section 136(1) of the Companies Act 2013 Rule 10 ofCompanies (Accounts of Companies) Rules 2014 and Regulation 36 of the ListingRegulations the Board of Directors has decided to circulate the Abridged Annual Reportcontaining salient features of the balance sheet and statement of profit and loss andother documents to the shareholders for the Financial Year 2015-16 under the relevantlaws.
The Abridged Annual Report is being circulated to the members excluding theAnnual Report on CSR Activities' Remuneration Philosophy/ Policy'Secretarial Audit Report' Extract of Annual Return' Full Report onCorporate Governance and Shareholders' Information'.
Members who desire to obtain the full version of the Annual Report may write to theCompany Secretary at the registered office. Full version of the Annual Report is alsoavailable on the Company's website www.hindalco.com.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 134(3)(c) of the Companies Act 2013 "the Act" yourDirectors subscribe to the "Directors' Responsibility Statement" and confirmthat:
a) in the preparation of the annual accounts applicable accounting standards have beenfollowed along with proper explanations relating to material departures;
b) the accounting policies selected have been applied consistently and judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as at 31st March 2016 and of the profit ofyour company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of yourcompany and for preventing and detecting fraud and other irregularities;
d) the annual accounts of your Company have been prepared on a going concern basis;
e) your Company had laid down internal financial controls and that such internalfinancial controls are adequate and were operating effectively;
f) your Company has devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
ENERGY TECHNOLOGY AND FOREIGN EXCHANGE
The information on conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Companies (Accounts) Rules 2014 is set out in Annexure I to the full andAbridged Annual Report.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 197(12) of the Companies Act 2013"the Act" read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the names and other particulars of employees are to be set out inthe Directors' Report as an addendum thereto. However in line with the provisions ofSection 136(1) of the Act the Report and Accounts as set out therein are being sent toall Members of your Company excluding the aforesaid information about the employees. AnyMember who is interested in obtaining these particulars about employees may write to theCompany Secretary at the Registered Office of your Company.
Disclosures pertaining to remuneration and other details as required under section197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are attached as Annexure II to the full and Abridged Annual Report.
Board constitution and changes:
Mr. Y.P. Dandiwala (DIN:01055000) was appointed as an Independent Director of theCompany for a term of five years which was also approved by the members in the AnnualGeneral Meeting held on 16th September 2015. At the same Annual GeneralMeeting Mr. Kumar Mangalam Birla and Mr. Satish Pai were reappointed as the Directors ofthe Company.
Mr. N. J. Jhaveri passed away hence ceased to be a Director w.e.f. 6thJune 2015.
Mr. D. Bhattacharya (DIN:00033553) will demit the office as the Managing Directorw.e.f. the close of business hours of 31st July 2016. He is appointed as theVice Chairman of the Board.
Mr. Satish Pai (DIN:06646758) is appointed as the Managing Director for a term of 5years w.e.f. opening hours of 1st August 2016.
Mr. Praveen Kumar Maheshwari (DIN:00174361) is appointed as the Whole-time Director fora term of 5 Years w.e.f. 28th May2016. He is also the Chief Financial Officerof the Company.
Mr. Girish Dave (DIN:00036455) is appointed as an Independent Director for a term of 5years w.e.f. 28th May 2016.
These changes are based on recommendation of the Nomination and Remuneration Committee.The Board places on record its deep appreciation for the services rendered by Mr.Bhattacharya as the Managing Director of your Company.
Notices pursuant to Section 160 of the Companies Act 2013 have been received frommembers proposing Mr. Praveen Kumar Maheshwari and Mr. Girish Dave as Directors of theCompany.
Smt. Rajashree Birla (DIN:00022995) and Mr. D. Bhattacharya (DIN:00033553) will retirefrom office by rotation at the ensuing Annual General Meeting and being eligible offersthemselves for reappointment.
The Board recommends the appointment of Mr. Satish Pai Mr. Praveen Kumar Maheshwariand Mr. Girish Dave and reappointment of Smt. Rajashree Birla and Mr. D. Bhattacharya.Items seeking your approval on the above are included in the Notice convening the AnnualGeneral Meeting.
Brief resume of the directors being appointed/ reappointed forms part of the notice ofthe ensuing Annual General Meeting.
All the directors being appointed/reappointed have given required declaration underCompanies Act 2013 and Listing Regulations.
All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013 and ListingRegulations.
Policy on appointment and remuneration of Directors and Key Managerial Personnel:
The Nomination and Remuneration Committee has formulated the remuneration policy ofyour company which is attached as Annexure III to the full Annual Report.
Meetings of the Board:
The Board of Directors of your Company met 5 times during the year details of which aregiven in the Corporate Governance Report forming part of the full Annual Report.
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theDirectors have carried annual performance evaluation of Board Independent Directors Nonexecutive Directors Executive Directors Committee and Chairman of the Board.
The evaluation framework focused on various aspects of the Board and Committees such asreview timely information from management etc. Also the performance of individualdirectors was divided into Executive Non Executive and Independent Directors and based onthe parameters such as contribution attendance decision making action orientedexternal knowledge etc.
Board members have evaluated Independent Directors Non executive Directors ExecutiveDirectors Committee and Chairman of the Board. The result of evaluation was satisfactoryand meets the requirements of the Company. Board fully agreed and rated 100% on itsfunctioning skill sets and working atmosphere. Independent Directors scored well onexpressing their views and in understanding the Company and its requirements.Non-Executive Directors scored well in understanding the Company and its requirement.Executive Directors are action oriented and ensures timely implementation of the Boarddecisions. Board is completely satisfied with the functioning of various Committees. Boardhas full faith in the Chairman in leading the Board effectively and ensuring contributionfrom all its members.
The Audit Committee comprises of Mr. M.M. Bhagat Mr. K.N. Bhandari Mr. Y.P.Dandiwala Independent Directors of your Company. Mr. D. Bhattacharya: Managing DirectorMr. Satish Pai: Deputy Managing Director and Mr. Praveen Kumar Maheshwari: Chief FinancialOfficer are the permanent invitees. Further details relating to the Audit Committee areprovided in the Corporate Governance Report forming part of the full Annual Report.
KEY MANAGERIAL PERSONNEL
In terms of provisions of Section 203 of the Companies Act2013 Mr. D. Bhattacharya:Managing Director Mr. Satish Pai: Deputy Managing Director Mr. Praveen Kumar Maheshwari:Chief Financial Officer and Mr. Anil Malik: Company Secretary are the Key ManagerialPersonnel of your Company.
Your Company has in place a vigil mechanism for directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of yourCompany's Code of Conduct. Adequate safeguards are provided against victimisation to thosewho avail of the mechanism or access to the Chairman of the Audit Committee.
The vigil mechanism is available on your Company's website viz. www.hindalco.com.
Pursuant to provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 M/s Singhi & Co Chartered Accountantswere appointed as Statutory Auditors of the Company from the conclusion of fifty fifthAnnual General Meeting held on 24th September 2014 until the conclusion offifty-eighth Annual General meeting to be held in the calendar year 2017 subject toratification of their appointment at every Annual General Meeting. Resolution seeking yourratification is included in the Notice convening the Annual General Meeting. Theobservation made in the Auditor's Report are self explanatory and thereofore do not callfor any further comments under Section 134(3)(f) of the Act.
In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Board of Directors of your Company have onthe recommendation of the Audit Committee appointed M/s. Nanabhoy & Co. CostAccountants Mumbai as Cost Auditors to conduct the cost audit of your Company for thefinancial year ending 31st March 2017 at a remuneration as mentioned in theNotice convening the Annual General Meeting. As required under the Act the remunerationpayable to the cost auditor is required to be placed before the Members in a generalmeeting for their ratification. Accordingly a resolution seeking Member's ratificationfor the remuneration payable to Cost Auditors forms part of the Notice of the ensuingAnnual General Meeting.
Pursuant to provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhad appointed BNP & Associates Company Secretaries Mumbai as Secretarial Auditor forconducting the Secretarial Audit of your Company for the financial year ended 31stMarch 2016. The Report of the Secretarial Auditor is annexed as Annexure IV to thefull Annual Report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
ENVIRONMENT PROTECTION AND POLLUTION CONTROL
Your Company is committed to sustainable development. A detailed report of theCompany's initiatives and commitment to environment conservation is part of Sustainability& Business Responsibility Report forming part of the full and Abridged Annual Report.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:
Details of Loans Guarantee and Investments covered under the provisions of Section 186of the Companies Act 2013 read with Companies (Meetings of Board and its Powers) Rules2014 are given in the notes to Financial Statements of the full Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
In terms of the provisions of Section 135 of the Companies Act 2013 ("theAct") read with Companies (Corporate Social Responsibility Policy) Rules 2014 theBoard of Directors of your Company has constituted a Corporate Social Responsibility("CSR") Committee which is chaired by Mrs. Rajashree Birla. The other Members ofthe Committee are Mr. Jagdish Khattar Independent Director Mr. A.K. Agarwala NonExecutive Director and Mr. D. Bhattacharya Managing Director. Dr. Pragnya Ram GroupExecutive President Corporate Communication & CSR is a permanent invitee to theCommittee. Your Company also has in place a CSR Policy and the same is available on yourCompany's website viz. www.hindalco.com. The Committee recommends to the Board activitiesto be undertaken during the year.
Your Company is a caring corporate citizen and lays significant emphasis on developmentof the communities around which it operates. Your Company has identified several projectsrelating to Social Empowerment & Welfare Infrastructure Development SustainableLivelihood Health Care and Education during the year and initiated various activities inneighbouring villages around plant locations.
During the Financial Year 2015-16 the Company has spent ' 34.15 crore under Section 135of the Companies Act 2013 on CSR Activities which represent 2.20% of average net profitsof the Company for last three Financial Years.
The Annual Report on CSR activities is attached as Annexure V to the full AnnualReport.
Pursuant to the requirement of Listing Regulations the Company has constituted RiskManagement Committee to review the risk management plan/ process of your company.
Risk evaluation and management is an ongoing process within the Organization. YourCompany has comprehensive risk management policy which is periodically reviewed by theRisk Management Committee.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the financial year your Company entered into related party transactions whichwere on arm's length basis and in the ordinary course of business. There are no materialtransactions with any related party as defined under Section 188 of the Act read withCompanies (Meetings of Board and its Powers) Rules 2014 and Listing Regulations. Allrelated party transactions have been approved by the Audit Committee of your Company.
The policy on Related Party Transactions as approved by the Audit Committee and theBoard is available on your Company's website viz. www.hindalco.com.
EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) of the Companies Act 2013 ("theAct") read with the Companies (Management and Administration) Rules 2014 an extractof the Annual Return of your Company for the financial year ended 31st March2016 is given in Annexure VI to the full Annual Report.
BUSINESS RESPONSIBILITY REPORT:
As per Listing Regulations a separate section of Business Responsibility Report formspart of the full and Abridged Annual Report.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
Your Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit (IA) functionis defined by the Audit Committee. The Internal Audit Department monitors and evaluatesthe efficacy and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company.
Based on the report of internal auditors the process owners undertake correctiveaction in their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions thereon are presented to the Audit Committee.
INTERNAL FINANCIAL CONTROL
Your directors confirm having laid down internal financial controls and that suchinternal financial controls are adequate and were operating effectively.
SUBSIDIARY JOINT VENTURES OR ASSOCIATE COMPANIES:
The financial statements of your Company's subsidiaries and related information havebeen placed on the website of your Company viz. www.hindalco. com and also available forinspection during business hours at the registered office of your Company. Any Member whois interested in obtaining a copy of financial statements of your Company's subsidiariesmay write to the Company Secretary at the Registered Office of your Company.
In accordance with the provisions of the section 129 (3) of the Act read with theCompanies (Accounts) Rules 2014 a statement on the performance and financial position ofeach of the subsidiaries associates and Joint Venture is attached as Annexure VII tothe full and Abridged Annual Report.
The names of Companies which have become or ceased to be subsidiaries Joint Venturesand associates are also provided in the aforesaid statement.
Your Company has not issued any shares with differential voting.
There was no revision in the financial statements. However the Board ofDirectors in the meeting held on 21st July 2016 approved Consolidated FinancialStatements (updated) as disclosed in the Directors Report.
Your Company has not issued any sweat equity shares.
Mr. D. Bhattacharya and Mr. Satish Pai are directors on the Board of NovelisInc wholly owned subsidiary. They are in receipt of annual fee of US$ 150000 and US$150000 respectively in the calendar year 2015.
There was no change in the nature of business.
During the year under review your Company has not accepted any fixed depositsfrom the public falling under Section 73 of the Act read with the
Companies (Acceptance of Deposits) Rules 201 4. Thus as on 31 st March201 6 there were no deposits which were unpaid or unclaimed and due for repayment.
There are no significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company's operations in future.
There were no frauds reported by the Auditors u/s 143(12) of the Companies Act2013.
Your Directors place on record their sincere appreciation for the assistance andguidance provided by the Honorable Ministers Secretaries and other officials of theMinistry of Mines Ministry of Coal the Ministry of Chemicals and Fertilizers and variousState Governments. Your Directors thank the Financial Institutions and Banks associatedwith your Company for their support as well.
Your Company's employees are instrumental in your Company scaling new heights yearafter year. Their commitment and contribution is deeply acknowledged. Your involvement asShareholders is greatly valued. Your Directors look forward to your continuing support.
For and on behalf of the Board
| ||Kumar Mangalam Birla |
|Mumbai ||Chairman |
|Dated : 21st July 2016 ||(DIN: 00012813) |