Your Directors have pleasure in presenting the 67th Annual Report along withthe Audited Statements of Accounts for the year ended 31st December 2016.
Your Company's financial performance during the year was as follows:
(Rs. in lacs)
|Particulars ||2016* ||2015* ||2015* |
| || ||(Consolidated) ||(Standalone) |
|Net Sales ||215410 ||200975 ||114059 |
|Profit before Tax & Exceptional Item ||14008 ||11563 ||6848 |
|Profit before Tax ||13752 ||11563 ||6848 |
|Less: Provision for Current Tax ||5974 ||3674 ||1988 |
|Provision for Deferred Tax ||(737) ||16 ||(51) |
|Less: Share of Minority Intrest ||- ||180 ||- |
|Profit after Tax ||8515 ||7693 ||4911 |
|Add: balance of profit for earlier years ||23800 ||24127 ||23756 |
|Add: Profit and Loss balance transferred pursuant to Amalgamation ||7124 ||- ||- |
|Profit available for appropriation ||39439 ||31820 ||28667 |
|Transfer to General Reserve ||887 ||492 ||492 |
|Transfer to Debenture Redemption Reserve ||1925 ||1925 ||1925 |
|Proposed Dividend on Equity Shares & Dividend Tax thereon ||2784 ||2450 ||2450 |
|Balance Carried forward ||33843 ||26953 ||23800 |
*Previous year figures are not comparable with current year since current year figuresinclude full year figures of erstwhile Positive Packaging Industries Limited("Positive") and Webtech Labels Private Limited ("Webtech") consequentto their merger with Huhtamaki PPL Ltd (HPPL). In view of that we have included the 2015Consolidated numbers for ease of comparison.
Your Directors are pleased to recommend a dividend of Rs. 3/- (Rupees three only) perequity share (@150%) having face value of Rs.2/- each for the year ended 31stDecember 2016. The said dividend including dividend of Rs. 57 lakh (which includes Rs.17 lakh as Dividend Distribution Tax) declared or paid by erstwhile Webtech Labels PrivateLimited will absorb an amount of Rs. 2784 lakh including the dividend distribution taxand cess thereon.
The Company did not invite or accept deposits covered under Chapter V of the CompaniesAct 2013 and there are no deposits pending with the Company.
TRANSFER TO RESERVES:
Debenture Redemption Reserve is created to the extent of 25% of the Non ConvertibleDebentures (NCDs) equally over the period till maturity of the NCDs as per therequirements of the applicable laws. Further an amount of Rs. 887 lakh has beentransferred to the General Reserve.
Pursuant to the approval of the National Company Law Tribunal Mumbai Bench erstwhilesubsidiaries of the Company viz. Positive Packaging Industries Limited and Webtech LabelsPrivate Limited merged into the Company effective 1st April 2017. Furtherpursuant to the said merger 2810000 equity shares of the Company were allotted to theshareholders of Webtech Labels in the ratio of 281 equity shares of Rs. 2/- each of theCompany for every 1 equity share of Rs. 10/- each of Webtech Labels Private Limited heldby them.
After the merger of erstwhile Positive and Webtech your company has emerged as one ofthe largest entities in the flexible packaging industry in AfroAsian region. Wehave over the past two years integrated key functions of Marketing NASP Procurementand Supply Chain Management and achieved significant synergies. However we had tofunction as separate legal entities pending the merger. Completion of this legal mergerwill help us to align business processes improve controls simplify the reporting needsand further streamline our Corporate Governance standards.
COMMISSIONING OF NEW MANUFACTURING UNITS:
In line with our philosophy of servicing our customers better we have established twonew manufacturing units in North East India in Guwahati for Flexibles and in Sikkimfor Pressure Sensitive Labels. Both these units have been established to service ourcustomers who have their manufacturing plants in the North East. These units have goneinto commercial production from March 2017.
CHANGES IN CAPITAL STRUCTURE
Pursuant to the allotment of shares consequent to the merger of erstwhile WebtechLabels Private Limited with the Company in April 2017 the paid-up share capital of theCompany has increased from Rs. 1454 lakh to Rs. to Rs. 1510 lakh.
SUBSIDIARY COMPANIES AND FINANCIAL STATEMENTS :
Since both the subsidiaries have been merged with the Company pursuant to Order of theNational Company Law Tribunal Mumbai Bench your Company does not have any subsidiariesand hence Form AOC-1 is not applicable.
In accordance with the provisions of Section 136 of the Companies Act 2013 theaudited financial statements and related information of the Company are available on thewebsite of the Company - www.ppl.huhtamaki.com. These documents will be made available tothe Members for inspection at the Registered Office of the Company up to the date of theensuing Annual General Meeting.
AUDITORS AND AUDITORS' REPORT:
Pursuant to provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 S R B C & CO LLP Chartered Accountants(SRBC) were appointed as Statutory Auditors for a term of five years to hold office fromthe conclusion of 65th Annual General Meeting up to the conclusion of the 70thAnnual General Meeting subject to ratification at every Annual General Meeting.
The approval of members is being sought for ratification of appointment of SRBC asStatutory Auditors of the Company to examine and audit the accounts of the Company for theFinancial Year 2017.
The Auditors' Report to the Members on the Accounts of the Company for the year ended31st December 2016 does not contain any qualification reservation or adverseremark.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO :
Information pursuant to the provisions of Section 134 of the Companies Act 2013 andthe rules framed thereunder relating to conservation of energy technology absorptionforeign exchange earnings and outgo forms part of this Report and is given at Annexure 1.
BUSINESS RESPONSIBILITY REPORT :
As per Regulation 34 of the Listing Regulations 2015 Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 BusinessResponsibility Report forms part of this Report and is annexed hereto. The BusinessResponsibility Report of the Company for the year ended 31st December 2016 inline with the green initiative is available on the website of the Companyhttp://www.huhtamaki.com/web/flexible-packaging-india/policies and forms part of thisReport and is kept at the registered office of the Company for inspection. A copy of theaforesaid report shall be made available to such shareholders who are desirous of andinterested in perusing them upon receipt of a written request from them.
CORPORATE GOVERNANCE REPORT:
The Report on Corporate Governance and the Certificate of the Auditors of the Companyregarding compliance of the conditions of Corporate Governance as stipulated in Part C ofSchedule V of the Listing Regulations 2015 are enclosed as a separate section and formspart of this Report. A declaration signed by the Managing Director in regard to compliancewith the Code of Conduct by the members of the Board and Senior Management Personnel alsoforms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS:
A detailed review of the operations performance and future outlook of the Company andits businesses are given in the Management Discussion and Analysis and forms a part ofthis Report.
DIRECTORS & KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. OlliKoponen retires by rotation and being eligible offers himself for re-appointment.Further as stipulated under Regulation 36 of the Listing Regulations 2015 his briefresume is given in the section on Corporate Governance which forms part of this AnnualReport.
Further at the Extra Ordinary General Meeting (EGM) of the Company held on 30thMarch 2017 the shareholders approved the re-appointment of Independent Directors MrArun Gandhi Mr. N S Chawla Mr. S K Palekar and Ms. Sukanya Kripalu for a tenure of 3years and that of Mr. Ramesh Dhir for a tenure of 1 year. Further the shareholders at thesaid EGM also approved the re-appointment of Mr. Suresh Gupta Executive Chairman for aperiod of 2 years.
EVALUATION OF PERFORMANCE OF BOARD ITS COMMITTEES AND OF DIRECTORS:
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations 2015 theBoard of Directors has undertaken an annual evaluation of its own performance its variousCommittees and individual directors. The manner in which the performance evaluation hasbeen carried out has been given in detail in the Corporate Governance Report annexed tothis Report.
The policy of the Company on directors' appointment and remuneration including criteriafor determining qualifications positive attributes independence of a director and othermatters provided under Section 178(3) of the Act and Part D of Schedule II of the ListingRegulations adopted by the Board is appended as Annexure 2 to the Directors' Report. Weaffirm that the remuneration paid to the directors is as per the terms laid out in theNomination and Remuneration Policy of the Company.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS :
Your Company has put in place a Familiarisation Programme for Independent Directors tofamiliarize them with their roles rights responsibilities nature of the IndustryCompany's strategy business plan operations markets products etc. The details of theCompany's Familiarisation Programme is available on the Company's website - web link:http://www.huhtamaki. com/web/flexible-packaging-india/policies.pdf.
DECLARATION BY INDEPENDENT DIRECTORS:
The Company has received necessary declaration from all the Independent Directors ofthe Company confirming that they meet the criteria of independence laid down in Section149(6) of the Companies Act 2013 and SEBI Listing Regulations 2015.
MEETINGS OF THE BOARD:
During the year nine meetings of the Board of Directors were held particulars ofattendance of directors at the said meetings are detailed in the report on CorporateGovernance Report which forms part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT :
Pursuant to the provisions of Section 134 of the Companies Act 2013 your Directorsstate that : a. in the preparation of the annual financial statements for the year ended31st December 2016 the applicable accounting standards have been followedalong with no material departures; b. appropriate accounting policies have been selectedand applied consistently and based on judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at 31stDecember 2016 and of the profit of the Company for the year ended on that date; c. properand sufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; d. the annualfinancial statements have been prepared on a going concern basis; e. proper internalfinancial controls have been laid down to be followed by the Company and that suchinternal financial controls are adequate and were operating effectively; and f. the propersystems to ensure compliance with the provisions of all applicable laws are in place andwere adequate and operating effectively.
COST AUDITORS :
The Board has appointed M/s. R. Nanabhoy & Co. Cost Accountants as the CostAuditors of the Company to conduct the Cost Audit for the Financial year 2017. Membersapproval is being sought for ratification of their remuneration as Cost Auditors of theCompany for the Financial Year 2017.
SECRETARIAL AUDITOR :
The Board has appointed M/s. S.N. Ananthasubramanian & Co. Practicing CompanySecretaries to conduct Secretarial Audit for the Financial year 2016. The SecretarialAudit Report in prescribed format is annexed as Annexure 3 to this Report.
PARTICULARS OF EMPLOYEES :
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this Report as Annexure 4. The statementcontaining particulars of employees as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this report. Further the report and thefinancial statements are being sent to the members excluding the aforesaid statement.Further in terms of provisions of Section 136(1) of the Act the Annual Report excludingthe aforesaid information is being sent to the members of the Company. The saidinformation is open for inspection at the registered office of the Company during workinghours and any member interested in obtaining such information may write to the CompanySecretary and the same will be furnished on request. Further the Annual Report includingthe aforesaid information is also available on the Company's websitewww.ppl.huhtamaki.com.
PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :
Your Company has formulated a policy on related party transactions which is alsoavailable on Company's website at http://www.huhtamaki.com/web/flexible-packaging-india/policies.pdf. This policy deals with thereview and approval of related party transactions. The Board of Directors of the Companyhas approved the criteria for making omnibus approval by the Audit Committee within theoverall framework of the policy on related party transactions. Prior omnibus approval isobtained for related party transactions which are of repetitive nature and entered in theordinary course of business and on arm's length basis. All related party transactions areplaced before the Audit Committee for review and approval.
All related party transactions entered during the Financial Year were in ordinarycourse of the business and on arm's length basis. During the year the Company had notentered into any contract/arrangement/transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions. Accordingly the disclosure of related party transactions as requiredunder Section 134(3)(h) of the Companies Act 2013 in Form AOC 2 is not applicable to yourCompany. However members may refer to Notes to the financial statement which sets outrelated party disclosures pursuant to the Accounting Standards.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :
The Company has not granted any loans guarantees and investments covered under Section186 of the Companies Act 2013 for the financial year ended 31st December2016.
CORPORATE SOCIAL RESPONSIBILITY :
Your Company is committed to Corporate Social Responsibility (CSR) and stronglybelieves that the business objectives of the Company must be in congruence with thelegitimate development needs of the society in which it operates. The Company hasimplemented various CSR projects in the areas like:
Community & Societal Development;
Promotion of education & skill development; and
Promoting healthcare including preventive healthcare.
This is in accordance with Schedule VII of the Act and a detailed report on CSRactivities is given in Annexure 5 forming part of this Report.
Pursuant to the provisions of the Section 135 of the Companies Act 2013 (the Act)your Company has constituted a CSR Committee to monitor the CSR activities of the Companydetails of which are provided in the Corporate Governance Report forming part of thisReport.
EXTRACT OF ANNUAL RETURN :
Extract of Annual Return of the Company in prescribed format is annexed herewith asAnnexure 6 to this Report.
RISK MANAGEMENT & INTERNAL FINANCIAL CONTROLS :
The Company has in place mechanism to inform Board Members about the Risk Assessmentand Minimization procedures which are periodically reviewed to ensure that risk iscontrolled by the Executive Management.
Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are given in the Management's Discussion and Analysis which formspart of this Report.
WHISTLEBLOWER POLICY :
The Company has in place a Whistleblower Policy with a view to provide a mechanism forits directors/employees to approach the Chairman of the Audit Committee in case of anygrievances or concern. The Whistleblower Policy can be accessed on the Company's websitehttp://www.huhtamaki.com/web/flexible-packaging-india/policies.pdf
DIVIDEND DISTRIBUTION POLICY:
SEBI Listing Regulations requires that the top 500 listed companies based on marketcapitalization to formulate Dividend Distribution Policy. In compliance of the saidrequirement the Company has formulated its Dividend Distribution Policy the details ofwhich is given in Annexure 7 to this Report.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY:
The Directors have laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. The Audit Committee evaluates the internal financialcontrol system periodically.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
Your Company has zero tolerance for sexual harassment at workplace and as per therequirement of the Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013 (Act') and Rules made thereunder has constituted an InternalComplaints Committees (ICC). During the year one case was reported to the ICC which wasduly addressed resolved and disposed of in accordance with the Company's Policy and thesaid Act.
HUMAN RESOURCES (HR):
The Company's HR policies and procedures are designed to recruit and retain the besttalent to support the operations of your Company and to align the interests of allemployees with the long term organisational goals.
Your Directors state that no disclosure and/or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
Issue of equity shares with differential rights as to dividend voting orotherwise;
Issue of shares (including sweat equity shares) to employees of the Companyunder any scheme;
Neither the Managing Director nor the Whole-time Directors of the Companyreceive remuneration or commission from any of its subsidiaries;
No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future;
Except for the merger of its subsidiaries with the Company there have been nomaterial changes and commitments if any affecting the financial position of the Companywhich have occurred between the end of the Financial Year of the Company to which theFinancial Statements relate and the date of this Report;
APPRECIATION & ACKNOWLEDGEMENTS:
The Board wishes to place on record its gratitude for the assistance and co-operationreceived from Banks Government Authorities Customers Vendors and all its shareholdersfor the trust and confidence reposed in the Company. The Board further wishes to recordits sincere appreciation for the significant contributions made by employees at all levelsfor their commitment dedication and contribution towards the operations of the Company.Further the Board would also like to congratulate all employees for achieving animportant milestone of successful completion of the Integration exercise.
| ||By Order of the Board |
| ||For Huhtamaki PPL Ltd. |
| ||Suresh Gupta |
|Place : Mumbai ||Chairman |
|Date: 20th April 2017 ||(DIN No.:00235354) |