It is our pleasure to present the 26th Annual Report of your Companytogether with the Audited Financial Statements for the financial year ended March 312017.
Your Company's financial performance on standalone basis for the year ended March 312017 compared with previous financial year is summarised below:
| || ||(H in Crore) |
| ||Financial Year ended March 31 2017 ||Financial Year ended March 31 2016 |
|Gross Revenue from Operations ||1698.16 ||1608.90 |
|Other Income ||4.24 ||11.74 |
|Earnings before interest tax depreciation amortization and impairment ||264.39 ||239.75 |
|Interest & Finance Charges/(Income) Net ||43.73 ||52.12 |
|Depreciation and Amortization- Tangibles ||23.38 ||23.08 |
|Depreciation and Amortization- Intangibles ||31.36 ||31.12 |
|Profit before tax and Share of (profit)/loss of an associate and a joint ||165.92 ||133.42 |
|venture || || |
|Share of (profit)/loss of an associate and a joint venture ||(0.04) ||0.07 |
|Profit Before Tax ||165.96 ||132.34 |
|Provision for tax || || |
|- Current tax- (MAT) ||- ||14.52 |
|- Adjustment of Tax relating to earlier period ||7.85 ||- |
|- Deferred Tax Charge ||(43.94) ||44.30 |
|Profit after tax ||202.05 ||74.52 |
|Earning Per Share (Basic) (In H) ||11.12 ||4.12 |
|Earning Per Share (Diluted) (In H) ||11.12 ||4.06 |
|Dividend Per Share of face value of H1/- (In H) ||6.00 ||5.00 |
The gross revenue from operations (inclusive of excise duty) on standalone basis ofyour Company for the financial year 2016-17 grew by 5.55% and stood at H1698.16 Crorecompared to H1608.90 Crore in the previous financial year. The profit before tax was atH165.96 Crore as against H133.34 Crore in the previous financial year registering agrowth of 24.46%. The net profit for the financial year 2016-17 amounted to H202.05 Crorecompared to H74.52 Crore in the previous financial year depicting a growth of 171.14%.The consolidated gross revenue from operations (inclusive of excise duty) of your Companyfor the year under review stood at H1749.19 Crore as against
H1659.51 Crore in the previous year reporting a growth of 5.40%. The consolidatedprofit before tax was at H178.65 Crore registering a growth of 24.84% over theconsolidated profit before tax of the previous financial year. The consolidated profitafter tax for the financial year under review stood at H204.15 Crore against profit aftertax of H73.81 Crore in the previous financial year reflecting a growth of 176.59%.
The Board is pleased to recommend a dividend of H6/- (Rupees Six) per Equity Share(i.e. @ 600% of face Value of Equity Share of H1/- each) for the financial year endedMarch 31 2017. The aforesaid dividend will involve a total payout of H131.20 Crore(inclusive of tax of H22.19
Crore) and is subject to the approval of Members at the ensuing Annual General Meetingof your Company. During the previous financial year your Company had paid a totaldividend of H5/- (Rupees Five) per Equity Share of H1/- each for the financial year2015-16 including interim dividend of H4/- (Rupees Four) per Equity share of H1/- eachinvolving total cash outflow of H109.00 Crore (inclusive of tax of H18.44 Crore).
DIVIDEND DISTRIBUTION POLICY
Your Company has adopted a policy on Dividend Distribution formulated in accordancewith the Regulation 43A of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (hereinafter referred to as ListingRegulations') and the same is attached as annexure to this report and can be accessedfrom your Company's website at the link: http://www.jyothylaboratories.com/admin/docs/DIVIDEND%20DISTRIBUTION%20 POLICY_JLL_FINAL.pdf
TRANSFER TO RESERVES
Your Company did not transfer any sum to the General Reserve for the financial yearunder review. However your Company has transferred a sum of H62.50 Crore (H45.60 Crore inthe previous financial year) to the Debenture Redemption Reserve during the year underreview.
The consolidated financial statements of your Company are prepared in accordance withthe relevant Indian Accounting Standards issued by the Central Government under Section133 of the Companies Act 2013 and forms integral part of the Annual Report.
PERFORMANCE OF SUBSIDIARIES ASSOCIATE COMPANIES/ JOINT VENTURES
A report on the performance and financial position of each of the SubsidiariesAssociates and Joint Venture Companies as per the Companies Act 2013 is attached asAnnexure to this report and hence not repeated here for the sake of brevity. Policy fordetermining material subsidiaries formulated and adopted by your Company can be accessedfrom your Company's website at the link: http://www.jyothylaboratories.com/admin/docs/PMS_JLL_Website.pdf During the year under review Jyothy Consumer Products MarketingLimited - JCPML (Wholly Owned Subsidiary of your Company) amalgamated with your Companypursuant to the Scheme of Amalgamation sanctioned by the Hon'ble Mumbai Bench of National
Company Law Tribunal vide its Order dated March 1 2017. The Appointed date for theabove mentioned amalgamation was April 1 2016 which came into e3ect on March 17 2017after filing of certified copy of the Order of the Hon'ble Mumbai Bench of NationalCompany Law Tribunal with the Registrar of Companies and/ or Ministry of Corporate A3airs.
Except as mentioned above no Company has become or ceased to be its subsidiariesjoint ventures or associate companies during the financial year 2016-17.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 in relation to the AuditedFinancial Statements of your Company for the financial year ended March 31 2017 theBoard of Directors hereby confirms that: a. in the preparation of the annual accounts forthe financial year ended March 31 2017 the applicable accounting standards read with therequirements set out under Schedule III to the Act have been followed and there were nomaterial departures from the same; b. your Directors have selected such accountingpolicies and applied them consistently and made judgments and estimates that werereasonable and prudent so as to give a true and fair view of the state of a3airs of yourCompany as at March 31 2017 and of the profit of your Company for the year ended on thatdate; c. your Directors have taken proper and su3cient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of your Company and for preventing and detecting fraud and otherirregularities; d. your Directors have prepared annual accounts of your Company on a goingconcern basis; e. your Directors have laid down internal financial controls to be followedby your Company and that such internal financial controls are adequate and are operatinge3ectively; and f. your Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatinge3ectively.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
In terms of the provisions of Regulation 34(2) of the Listing Regulations theManagement Discussion &
Analysis Report is attached and forms an integral part of this Report.
ISSUE OF SHARES
Issue of Equity Shares with di3erential rights
During the year under review and to date your Company has not issued any shares withdi3erential rights hence no information prescribed under provisions of Section 43(a)(ii)of the Companies Act 2013 read with Rule 4(4) of the Companies (Share Capital &Debentures) Rules 2014 has been furnished.
Issue of Sweat Equity Shares
During the year under review and to date your Company has not issued any sweat equityshares. Hence no information as per the provisions of Section 54(1)(d) of the CompaniesAct 2013 read with Rule 8(13) of the Companies (Share Capital & Debentures) Rules2014 is furnished.
Issue of Employee Stock Option
During the year under review your Company in terms of the provisions of Section62(1)(b) read with Section 39 of the Companies Act 2013 has issued and allotted 452558(Four Lacs Fifty Two Thousand Five Hundred and Fifty Eight) Equity Shares of H1/- each toMr. S. Raghunandan under "Jyothy Laboratories Employees Stock Option Scheme2014-A" (ESOS 2014-A) and 111486 (One Lac Eleven Thousand Four Hundred and EightySix) Equity Shares of H1/- each to other eligible employees under "JyothyLaboratories Employees Stock Option Scheme 2014" (ESOS 2014) respectively as approvedby Members of your Company at the 23rd Annual General Meeting held on August13 2014.
INCREASE IN SHARE CAPITAL
During the year under review pursuant to the Scheme of Amalgamation of Jyothy ConsumerProducts Marketing Limited into your Company the Authorised Share Capital of your Companyhas increased to H2723000000 consisting of: (a) 2720000000 Equity Shares of theface value of H1/- each and (b) 30000 11% Cumulative Redeemable Preference Shares of theface value of H100/- each.
Further after the issue of 564044 Equity Shares under ESOS 2014 and ESOS 2014-A thePaid up Equity Share Capital of your Company stands increased to H181683724 consistingof 181683724 equity shares of your Company of H1/- each fully paid-up.
During the year under review your Company redeemed 4000 Zero Coupon Secured RedeemableNon-Convertible Debentures of H1000000/- each aggregating to H400 Crores on November 112016 at an aggregate redemption premium of H146.73 Crores. Further your Company duringthe year under review has also raised H400 Crores through private placement of 4000Secured Rated Unlisted Redeemable Non-Convertible Debentures of face value of H1000000/-each on December 9 2016 to refinance its existing debt.
The report on Corporate Governance as stipulated under Regulation 34(3) read withSchedule V of the Listing Regulations together with the Certificate received from yourCompany's Statutory Auditors confirming compliance of Corporate Governance requirements isattached and forms an integral part of this report.
BUSINESS RESPONSIBILITY REPORT
The Securities and Exchange Board of India (SEBI) vide amendment to Regulation34(2)(f) of the Listing Regulations dated December 22 2015 had extended theapplicability of Business Responsibility Reports to top 500 listed companies based onmarket capitalization. Earlier the requirement of Business Responsibility Report wasapplicable only to Top 100 Listed entities based on market capitalization. As a resultyour Company being one of the top 500 listed Companies is required to report on BusinessResponsibility. Accordingly the report on Business Responsibility is attached as annexureand forms an integral part of this report.
RELATED PARTY TRANSACTIONS
Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed form AOC-2 is appended as Annexure tothe Board's report. During the year your Company had entered into contract / arrangement/ transaction with related parties which were on arm's length basis and none of whichcould be considered as material in accordance with the policy of your Company onmateriality of related party transactions. Further none of the contract/ arrangement/transaction with related parties required approval of shareholders as the same were withinthe limits prescribed under Section 188(1) of the Companies Act 2013 and the Rules framedthereunder.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed from your Company's website at thelink: http://www.jyothylaboratories. com/admin/docs/RPT_JLL_Website.pdf Attention ofMembers is also drawn to Note 35 to the financial statements for the year ended March 312017 which sets out the related party disclosures as per the Indian Accounting Standard(Ind AS) 24.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has been a firm believer that each and every individual including anartificial person owe something to the society at large. Mr. M. P. Ramachandran Chairman& Managing Director of your Company even before the inception of Corporate SocialResponsibility provisions under the Companies Act 2013 has been involved in charitableand social activities in his individual capacity.
Your Company has undertaken projects in the area of skill development promotion ofeducation and rural development as part of its CSR initiative. These projects were inaccordance with Schedule VII to the Companies Act 2013 and the CSR policy framed by yourCompany. The report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is appended as annexure and forms an integral part ofthis report.
Details about the CSR Policy adopted and formulated by your Company can be accessedfrom your Company's website at the link: http://www.jyothylaboratories.com/admin/docs/JLL_CSR%20Policy_Website.pdf Your Company was required to spend H294.10lacs (2% of the average net profits of last three financial years) on CSR activitiesduring the financial year 2016-17. Accordingly your Company spent H238.37 lacs on CSRactivities during the year 2016-17 and an amount of H55.73 lacs stands committed towardscontribution for skill development etc. and the same will be expended in the currentfinancial year. Further an amount of H6.06 lacs pertaining to financial year 2015-16 wasspent towards housing in adivasi area of Trichur District Kerala in the financial year2016-17.
MATERIAL CHANGES AND COMMITMENTS
Except as disclosed elsewhere in this report no material changes and commitments whichcould a3ect your Company's financial position have occurred between the end of thefinancial year 2016-17 and date of this report.
INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls adopted and followed by your Company are adequate andare operating e3ectively. Your Company has adopted a dynamic Internal Financial Controlsframework formulated by Ernst & Young LLP based on the best practices followed in theindustry. Under the said framework Risk and Control Matrix are defined for the followingprocess(es):-
1. Fixed Assets;
2. Financial Statement Closing Process;
3. Information Technology;
4. Inventory Management;
5. Marketing and Advertising;
6. Order to Cash;
8. Production Process;
9. Purchase to Pay; 10. Taxation; 11. Treasury.
During the year under review no material or serious observations has been receivedfrom the Internal Auditors of your Company regarding ine3ciency or inadequacy of suchcontrols.
CHANGE IN NATURE OF BUSINESS
During the year under review there was no change in the nature of business of yourCompany.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by any Regulator/ Court that wouldimpact the going concern status of your Company and its future operations.
REMUNERATION/ COMMISSION FROM ANY OF ITS SUBSIDIARIES
During the year under review neither the Managing Director nor the Whole TimeDirectors of your Company received any remuneration or commission from any of itsSubsidiaries.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The details of Loans Guarantees and Investments as prescribed under Section 186 of theCompanies Act 2013 are appended as Annexure and forms integral part of this report.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
Your Company has adopted Jyothy Laboratories Employee Stock Option Scheme 2014 -A("ESOS 2014-A") for granting of options to Mr. S. Raghunandan Whole TimeDirector and Chief Executive officer of your Company (relinquished the o3ce of Whole TimeDirector and Chief Executive officer of the Company w.e.f. May 23 2016) and JyothyLaboratories Employee Stock Option Scheme 2014 ("ESOS 2014") for granting ofoptions to other eligible employees of your Company as approved by the Members of yourCompany at the 23rd Annual General Meeting held on August 13 2014.
Disclosure as required under Section 62(1)(b) of the Companies Act 2013 read with Rule12(9) of the Companies (Share Capital and Debenture) Rules 2014 and Regulation 14 of theSecurities Exchange Board of India (Share Based Employee Benefits) Regulation 2014 arefurnished below:
| ||Jyothy Laboratories Employee Stock Option Scheme 2014- A ("ESOS 2014-A") ||Jyothy Laboratories Employee Stock Option Scheme 2014 ("ESOS 2014") |
|1 Date of Shareholders' approval ||August 13 2014 ||August 13 2014 |
|2 Total number of options approved under ESOS ||2715352 ||2715352 |
|3 Vesting Requirements ||Options granted under ESOS 2014- A would Vest after one year but not later than four years from the date of grant of such options. Vesting of options would be subject to continued employment with the Company and certain performance parameters. ||Options granted under ESOS 2014 would Vest after one year but not later than four years from the date of grant of such options. Vesting of options would be subject to continued employment with the Company and certain performance parameters |
|4 Exercise price or pricing formula ||H1 per option ||H1 per option |
|5 Maximum term of options granted ||5 years ||5 years |
|6 Source of shares ||Primary ||Primary |
|7 Variation in terms of option ||No variation in the ||No variation in the |
| ||terms of option ||terms of the option |
|8 Method of Option Valuation ||Intrinsic Value ||Intrinsic Value |
|9 Option Movement during the year || || |
|Number of Options outstanding at the beginning of the ||2262793 ||300804 |
|period || || |
|Number of options granted during the year ||- ||- |
|Number of options forfeited/ lapsed during the year ||- ||54181 |
|Number of options vested during the year ||452558 ||111486 |
|Number of options exercised during the year ||452558 ||111486 |
|Number of shares arising as a result of exercise of options ||452558 ||111486 |
|Money realized by exercise of options (Amount in H) ||452558 ||111486 |
|Loan repaid by the Trust during the year from exercise ||N.A. ||N.A. |
|price received || || |
|Number of Options outstanding at the end of the year ||1810235 ||135137 |
|Number of options exercisable at the end of the year ||1810235 ||135137 |
|10 Employee Wise details of Options Granted || || |
|i. Senior Managerial Personnel || || |
|Name Designation ||Options Granted during the Year ||Exercise Price |
|None - ||- ||- |
| ||Jyothy Laboratories ||Jyothy Laboratories |
| ||Employee Stock ||Employee Stock |
| ||Option Scheme 2014- ||Option Scheme 2014 |
| ||A ("ESOS 2014-A") ||("ESOS 2014") |
ii. any other employee who receives a grant in any one year of option amounting to 5%or more of option granted during the year; and Name
| ||Designation ||Options Granted ||Exercise Price |
| || ||during the Year || |
|None ||- ||- ||- |
iii.identified employees who were granted option during any one year equal to orexceeding 1% of the issued capital (excluding outstanding warrants and conversations) ofthe company at the time of grant.
|Name ||Designation ||Options Granted during any one Year ||Exercise Price |
|Mr. S. Raghunandan ||Whole Time Director & ||2715352# ||H1/- per Option |
| ||Chief Executive officer* || || |
*Ceased to be Whole Time Director and Chief Executive officer of the Company andre-designated as President of the Company w.e.f. May 23 2016.
# Options Granted to Mr. S. Raghunandan during the financial year 2014-15.
Note: Other details as required under Regulation 14 of the Securities Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 read with SEBI circular bearingnumber CIR/CFD/POLICY CELL/2/2015 dated June 16 2015 forms part of the Notes to Accountsof the Financial Statements in the Annual Report.
Further the aforesaid details are also available on your Company's website at thelink: http://www.jyothylaboratories. com/admin/docs/ESOP_Reg.%2014.pdf The certificatefrom the Statutory Auditors in respect of implementation of Jyothy Laboratories EmployeeStock Option Scheme 2014-A ("ESOS 2014-A") and Jyothy Laboratories EmployeeStock Option Scheme 2014 ("ESOS 2014") in accordance with the resolution passedby the Members at the 23rd Annual General Meeting of your Company held onAugust 13 2014 shall be placed at the ensuing Annual General Meeting for inspection byMembers.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and the Article 140 of theArticles of Association of your Company Ms. M. R. Jyothy Whole Time Director and ChiefMarketing officer of your Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible officers herself for re-appointment.
During the year under review the members approved re-appointment of Mr. M. P.Ramachandran as the Chairman and Managing Director of your Company for a term of fiveyears with e3ect from August 22 2016 to August 21 2021 at the 25th AnnualGeneral Meeting of your Company held on July 21 2016 by passing special resolution.Further the members have also approved re-appointment of Mr. K. Ullas Kamath as the JointManaging Director and Chief Financial officer of your Company for a term of five yearswith e3ect from January 23 2017 to January 22 2022 and Ms. M. R. Jyothy as the WholeTime Director and Chief Marketing officer of your Company for a term of five years withe3ect from January 1 2017 to December 31 2021 through Postal Ballot dated December 12016. Mr. Bipin R. Shah resigned as the Independent Director of your Company with e3ectfrom August 11 2016. The Board placed on record its appreciation for the contributionmade by Mr. Shah during his tenure as the Independent Director.
All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Board in accordance with the provisions of sub-section (3) of Section 178 of theCompanies Act 2013 formulated the policy setting out the criteria for determiningqualifications positive attributes independence of a Director and remuneration forDirectors Key Managerial Personnel and other employees.
Major criteria defined in the Policy framed for appointment of the Directors includingcriteria for determining qualifications positive attributes Independence etc. are asunder:
In case of Executive Directors and Key Managerial Personnel the selection can be madeeither by recruitment from outside or from within your Company hierarchy or uponrecommendation by the Chairman or other Directors. The appointment may be made either tofill up a vacancy caused by retirement resignation death or removal of an existingExecutive Director and Key Managerial Personnel or it may be a fresh appointment.
In case of Non-Executive Directors the selection can be made either by way ofselection from the data bank of Independent Directors maintained by the Government ofIndia or upon recommendation by the Chairman or other Directors. The appointment may bemade either to fill up a vacancy caused by resignation death or removal of an existingNon-Executive Director or it may be an appointment as an additional director or analternate director.
(II) Qualifications Experience and Positive Attributes a) While appointing a Directorit has to be ensured that the candidate possesses appropriate skills experience andknowledge in one or more fields of finance law management sales marketingadministration research corporate governance technical operations or other disciplinesrelated to your Company's business. b) In case of appointment as an Executive Directorthe candidate must have the relevant technical or professional qualifications andexperience as are considered necessary based on the job description of the position. Incase no specific qualification or experience is prescribed or thought necessary for theposition then while recommending the appointment the Human Resource Department shallprovide the job description to the Committee and justify that the qualificationsexperience and expertise of the recommended candidate are satisfactory for the relevantappointment. In such circumstances the Committee may call for an expert opinion on theappropriateness of the qualifications and experience of the candidate for the position ofthe Executive Director. c) In case of appointment as a Non-Executive Director thecandidate must have a post graduate degree diploma or a professional qualification in thefield of his practice/ profession/ service and shall have not less than five years ofworking experience in such field as a professional in practice advisor consultant or asan employee. Provided that the Board may waive the requirements of qualification and/ orexperience under this paragraph for a deserving candidate. d) The Board while making theappointment of a Director shall also try to assess from the information available andfrom the interaction with the candidate that he is a fair achiever in his chosen field andthat he is a person with integrity diligence and open mind.
(III) Board Diversity and Independence
While making appointment of directors following principles shall be observed by theBoard as far as practicable: a) There shall be a proper mix of Executive andNon-Executive Directors and Independent and Non-Independent Directors on the Board. YourCompany must always be in compliance of the provisions of Section 149 of the CompaniesAct 2013 and Clause 17 of the Listing Regulations as amended from time to time in thisregard. b) There shall be a workable mix of directors drawn from various disciplines liketechnical finance commercial legal etc. The Board shall not at any time be entirelycomprised of persons drawn from one discipline or field. c) While appointing a director tofill in a casual vacancy caused by death resignation etc. of a director an e3ort shallbe made as far as possible to appoint such a person in his place who has the relevantexperience in the fields or disciplines in which the outgoing director had the experienceor the person with relevant experience in the fields or disciplines which are notrepresented in the Board as requisite to business of your Company. d) No preference on thebasis of gender religion or cast shall be given while considering the appointment ofdirectors. e) Generally an e3ort shall be made to maintain the Board diversity byappointment of persons from diverse disciplines (relevant to your Company's business) ofdi3erent age groups and of both the genders (male as well as female) as Directors. f)While appointing Independent Directors the criteria for the independent directors aslaid down in Section 149 (6) of the Companies Act 2013 and Listing Regulations arefollowed.
Your Company follows the policy on Remuneration of Directors and Senior ManagementEmployees as approved by the Nomination Remuneration and Compensation Committee and theBoard. A detailed report on the same is given in the Corporate Governance Report.
In accordance with the Companies Act 2013 and Regulation 4(2)(f) of the ListingRegulations your Company has framed a Policy for Evaluation of Performance of IndependentDirectors Board Committees and other Individual Directors which includes criteria forperformance evaluation of Non-Executive Directors and Executive Directors. A questionnaireis formulated for evaluation of performance of the Board after taking into considerationseveral aspects such as board composition strategic orientation board functioning andteam dynamics. Performance evaluation of Independent Directors was conducted by the Boardof Directors excluding the Director being evaluated. The criteria for performanceevaluation of Independent Directors laid down by the Nomination Remuneration andCompensation Committee include ethics and values knowledge and proficiency diligencebehavioral traits and e3orts for personal development.
Similarly performance evaluation of the Chairman and Non Independent Directorswas carried out by the Independent Directors. Your Directors also expressed theirsatisfaction with the evaluation process.
All Independent Directors are familiarized with your Company their roles rights andresponsibilities in your Company nature of the industry in which your Company operatesbusiness model strategy operations and functions of your Company through its ExecutiveDirectors and Senior Managerial Personnel. The details of programs for familiarization ofIndependent Directors with your Company are available on the website of your Company atthe link: http://www.jyothylaboratories.com/admin/docs/Familiarisation%20Programme_JLL_2016-17.pdf
MEETING OF INDEPENDENT DIRECTORS
Your Company's Independent Directors meet at least once in every financial year withoutthe presence of the Executive Directors or Management Personnel and the meeting isconducted informally. During the year under review one meeting of Independent Directorwas held on May 23 2016.
The Board of Directors met 6 times during the financial year ended March 31 2017 inaccordance with the provisions of the Companies Act 2013 and the Rules made thereunder.
The dates on which the Board of Directors met during the financial year under revieware provided in the Corporate Governance Report.
The Audit Committee of your Company consists of all Independent Directors and Mr. K.Ulass Kamath Joint Managing Director and Chief Financial officer of your Company. Thedetailed composition of the Audit Committee is provided in the Corporate GovernanceReport. All the recommendations made by the Audit Committee were accepted by the Board.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company has a Vigil Mechanism in place which includes a Whistle Blower Policy interms of the Listing Regulations for Directors and employees of your Company to provide amechanism which ensures adequate safeguards to Employees and Directors from anyvictimization on raising of concerns of any violations of legal or regulatoryrequirements incorrect or misrepresentation of any financial statements and reports etc.
The Vigil Mechanism/ Whistle Blower Policy of your Company can be accessed from yourCompany's website at the link:
http://www.jyothylaboratories.com/admin/docs/ JLL_Vigil%20Mechanism%20Policy_amended_Final_28012016.pdf The Whistle Blowers have a right/option to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Codes of conduct orpolicy directly to the Chairman of the Audit Committee. During the year under review noprotected disclosure from any Whistle Blower was received by the designated o3cer underthe Vigil Mechanism.
The Board of Directors of your Company has designed a Risk Management Policy in astructured manner taking into consideration the following factors and the same ismonitored on a periodic basis by your Company :
1. The Management Approach;
2. JLL's Vision & Mission;
3. Key Business Goals;
4. Risk Library;
5. Risk Management Focus.
Also the Management has adopted the following 5 step approach keeping in view yourCompany's Vision and Mission:
Identifying Key' Business goals;
Identifying the Risk Management focus;
Identifying Business risks;
Prioritizing the identified business risks;
Rating the current risk management capability for identified risks.
Further your Company identified Key Business Goals for a five year horizon and alibrary of risk events which could be bottleneck in achieving the same. After defining thekey business goals and the library of risk events your Company identified the goals onwhich the management would focus.
INTERNAL CONTROL SYSTEMS
Your Company has adequate internal control systems and procedures in place for e3ectiveand smooth conduct of business and to meet exigencies of operations and growth. YourCompany has set up Standard Operating Process (SOP) procedures and controls apart fromregular Internal Audits. Roles and responsibilities have been laid down for each processowners. Management Information System has been established which ensure that adequate andaccurate information is available for reporting and decision making.
Internal Audit is conducted by an independent firm of Chartered Accountants viz M/sMahajan & Aibara Chartered Accountants LLP. Internal Auditors regularly check theadequacy of the system their observations are reviewed by the management and remedialmeasures as necessary are taken. Internal Auditors report directly to the Chairman ofthe Audit Committee to maintain its objectivity and independence.
Your Company has also in place a Complaince Tool' designed and implemented byErnst & Young LLP which ensures compliance with the provisions of all applicable lawsto your Company adequately and e3ciently.
AUDITORS & AUDIT REPORTS
Statutory Auditors and their Report
The present Statutory Auditors of your Company M/s S R B C & Co LLPChartered Accountants (ICAI Registration No. 324982E/ E300003) have served as StatutoryAuditors of your Company for a period more than two terms of five consecutive years asprovided under Section 139(2) of the Companies Act 2013 and will hold o3ce till theconclusion of 26th Annual General Meeting (AGM) of your Company.
Therefore the Board upon recommendation of the Audit Committee proposed appointmentof M/s B S R & Co. LLP Chartered Accountants in place of M/s S R B C & CoLLP Chartered Accountants the retiring Auditors as the Statutory Auditors who shallhold the o3ce from the conclusion of the 26th Annual General Meeting for a termof five consecutive years i.e. until the conclusion of the 31st Annual GeneralMeeting subject to ratification by the members at 27th 28th 29thand 30th Annual General Meeting to be held in the financial year 2018 20192020 and 2021 respectively. Further Special Notice under Section 115 read with Section140(4) of the Companies Act 2013 is not required as the retiring Auditor has completed aconsecutive tenure of ten years as provided under Section 139(2) of the Companies Act2013.
A certificate has been received from M/s B S R & Co. LLP Chartered Accountants tothe e3ect that they are eligible for appointment and if made would be as per theprovisions of Section 141 of the Companies Act 2013 read with Section 139 ibid and rulesmade thereunder.
The Board placed on record its appreciation for the services rendered by M/s S R B C& Co LLP Chartered Accountants Mumbai as Statutory Auditors of your Company.
The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or any adverse remark.
Cost Auditors and their Report
As per section 148 of the Companies Act 2013 read with the Companies (Cost Records andAudits) Rules 2014 as amended the Board of Directors of your Company on recommendationof the Audit Committee appointed M/s R. Nanabhoy & Co. Cost Accountants Mumbai(Registration No. 000010) as the Cost Auditors to carry out the cost audit of its productscovered under the Ministry of Corporate A3airs Order dated
June 30 2014 (as amended on December 31 2014) for the financial year 2017-18. Theremuneration of Cost Auditors has been approved by the Board of Directors on therecommendation of Audit Committee and the requisite resolution for ratification ofremuneration of Cost Auditors by the members has been set out in the Notice of the 26thAnnual General Meeting of your Company.
The appointment of M/s R. Nanabhoy & Co. Cost Accountants Mumbai as the CostAuditors of your Company is within the prescribed limits of the Companies Act 2013 andfree from any disqualifications specified thereunder. Your Company has received theCertificate from the Cost an Auditors confirming their independence and relationship onarm's length basis. The Cost Audit Report for the financial year ended 31stMarch 2016 issued by M/s R. Nanabhoy & Co. Cost Auditors in respect of the variousproducts prescribed under Cost Audit Rules does not contain any qualification reservationor adverse remark and the same was filed with the Ministry of Corporate A3airs onSeptember 9 2016. The Cost Audit Report for the financial year ended March 31 2017 isbeing submitted shortly.
Secretarial Auditors and their Report
In terms of Section 204 of the Companies Act 2013 the Board had appointed M/s Rathi& Associates Company Secretaries Mumbai as the Secretarial Auditors of your Companyto carry out Secretarial Audit for the financial year 2016-17. The report of theSecretarial Auditors in the prescribed form MR-3 is appended as annexure to this report.The report does not contain any qualification reservation or adverse remark which callsfor any explanation from the Board of Directors. Your Board has decided to appoint M/sRathi & Associates Company Secretaries Mumbai as the Secretarial Auditors of yourCompany for the financial year 2017-18 based on the recommendations of the AuditCommittee.
INSTANCES OF FRAUD IF ANY REPORTED BY THE AUDITORS
There have been no instances of any fraud reported by the Statutory Auditors underSection 143(12) of the Companies Act 2013.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 124(6) of the Companies Act 2013 and theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 notified by the
Ministry of Corporate A3airs on September 7 2016 and subsequently amended videnotification dated February 28 2017 all the Equity Shares of the Company in respect ofwhich dividend amounts have not been paid or claimed by the shareholders for sevenconsecutive years or more are required to be transferred to demat account of InvestorEducation and Protection Fund Authority (IEPF Account).
Accordingly 1322 shares of your Company belonging to 28 Shareholders would be due fortransfer to IEPF Account on May 31 2017. Your Company has sent individual notices to allthe aforesaid 28 shareholders of your Company and has also published the notice in theleading English and Marathi newspaper. The details of the aforesaid 28 shareholders areavailable on the website of your Company viz. www.jyothylaboratories. com.
Further pursuant to the provisions of Section 124(5) of the Companies Act 2013 thedividend which remained unclaimed/ unpaid for a period of seven years from the date oftransfer to unpaid dividend account is required to be transferred to the InvestorEducation and Protection Fund (IEPF) established by the Central Government.
As a result the unclaimed/ unpaid dividend for the year 2008-09 which remained unpaidand unclaimed for a period of 7 years has already been transferred by your Company to theIEPF.
Your Company has uploaded the details of unclaimed/ unpaid dividend for the financialyear 2009-10 onwards on its website viz. www.jyothylaboratories.com and on website of theMinistry of Corporate A3airs viz. www.mca.gov.in and the same gets revised/updated from time to time pursuant to the provisions of IEPF (Uploading of InformationRegarding Unpaid and Unclaimed Amount Lying with Companies) Rules 2012. Further theunpaid dividend amount pertaining to the financial year 2009-10 will be transferred toIEPF during the Financial Year 2017-18.
EXTRACT OF ANNUAL RETURN
The Extract of Annual Return as prescribed under Section 92(3) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 isappended as annexure to this Report.
Your Company has always provided a congenial atmosphere for work to all its employeesthat is free from discrimination and harassment. Employee relations remained cordialduring the year under review.
Your Company has state-of-the-art facilities at all of its manufacturing locationsspread across India. Furthermore five manufacturing plants of your Company situated atRoorkee Wayanad Jammu Pithampur Puducherry and Baddi are ISO 9001:2015 certified.
PREVENTION OF SEXUAL HARASSMENT
Your Company has framed Anti Sexual Harassment Policy' at workplace andhas constituted an Internal Complaints Committee (ICC) as per the requirement of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules framed thereunder. No complaints with allegations of any sexual harassment werereported during the year under review.
Your Company did not accept/ renew any fixed deposits from public and no fixed depositswere outstanding or remained unclaimed as on March 31 2017.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION
With regard to the requirements of conservation of energy and technology absorptionpursuant to the provision of Section 134 of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 your Company has nothing specific to report.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of foreign exchange earnings and outgo are
|For and on behalf of the Board of Directors |
|For Jyothy Laboratories Limited |
|M. P. Ramachandran |
|Chairman & Managing Director |
|(DIN: 00553406) |
|Mumbai May 18 2017 |
|as below: || || |
| || ||(H in Crore) |
|Particulars ||2016-17 ||2015-16 |
|Foreign exchange earnings ||13.30 ||12.29 |
|Foreign exchange outgo ||37.80 ||26.92 |
PARTICULARS OF EMPLOYEES
The disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 and forming part of theDirectors' Report for the year ended March 31 2017 is given in a separate Annexure tothis Report.
Certain statements in the "Management Discussion and Analysis" section may beforward-looking'. Such forward looking' statements are subject to risks anduncertainties and therefore actual results could be di3erent from what your Directorsenvisage in terms of future performance and outlook.
Your Directors express their sincere appreciation for the contribution and commitmentof the employees of your Company at all levels and for the excellent support provided byshareholders customers distributors suppliers bankers media and other Stakeholdersduring the financial year under review. Your Company looks forward to continued andunstinted support in its endeavor to make lives of consumers better by providing worldclass products at a3ordable price.
FORM AOC - I
STATEMENT CONTAINING THE SALIENT FEATURES OF THE FINANCIAL STATEMENT OF SUBSIDIARIES /ASSOCIATES / JOINT VENTURES.
(Pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act 2013read with Rule 5 of the Companies (Accounts) Rules 2014)
Part " A": Subsidiaries
| || || || ||(H in Lacs) |
|Name of the Subsidiary Company ||Jyothy Fabricare Services Limited ||Jyothy Kallol Bangladesh Limited ||Snoways Laundrers and Drycleaners Pvt. Ltd # ||Four Seasons Dry Cleaning Company Private Limited |
| || || || ||# |
|Country ||India ||Bangladesh ||India ||India |
|Financial Year / Period Local Currency ||April 1 2016 to March 31 2017 INR ||April 1 2016 to March 31 2017 BDT ||April 1 2016 to March 31 2017 INR ||April 1 2016 to March 31 2017 INR |
|Exchange rate as on March 31 2017 ||- ||1BDT = 0.79 ||- ||- |
| || ||INR || || |
|1 Share Capital ||2385.00 ||801.84 ||100.00 ||220.70 |
|2 Reserves & Surplus ||(896.56) ||(127.86) ||(10.00) ||(471.99) |
|3 Total Assets ||7140.67 ||698.04 ||97.91 ||19.71 |
|4 Total Liabilities ||5652.23 ||24.06 ||7.91 ||271.00 |
|5 Details of Investment (except ||1437.73 ||0.00 ||0.00 ||0.00 |
|investment in subsidiaries) || || || || |
|6 Turnover (Net) ||3488.31 ||701.73 ||0.00 ||195.96 |
|7 Profit / (Loss) before taxation ||(1826.63) ||(9.04) ||(0.55) ||(29.69) |
|8 Provision for taxation ||0.00 ||4.34 ||0.00 ||0.00 |
|9 Profit / ( Loss) after taxation ||(1826.63) ||(13.39) ||(0.55) ||(29.69) |
|10 Proposed / Interim Dividend ||Nil ||Nil ||Nil ||Nil |
|11 % of shareholding ||86.37% ||75.00% ||42.32% ||86.37% |
# Snoways Laundrers and Drycleaners Pvt. Limited and Four Seasons Dry-Cleaning Co. Pvt.Limited are subsidiaries of Jyothy Fabricare Services Limited.
1. None of the subsidiaries of your Company are yet to commence operations.
2. None of the subsidiaries have been liquidated or sold during the year under review.However during the financial year 2016-17 Jyothy Consumer Products Marketing LimitedWholly Owned Subsidiary of your Company amalgamated with your Company with appointed dateas April 1 2016 vide Order of the Mumbai Bench of Hon'ble National Company Law Tribunaldated March 1 2017.
Part 'B": Associates and Joint Ventures
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures
Name of Joint Venture JFSL JLL JV (Partnership firm) Latest audited BalanceSheet Date March 31 2017 Shares of Associate/Joint Ventures held by the company on theyear end:
1. No. N.A.
2. Amount of Investment in Joint Venture 84.93
3. Extent of Holding (%) 25% Description of how there is significant influence Controlof Business decisions under an Agreement Reason why the joint venture is not consolidatedN.A Networth attributable to Shareholding as per latest audited Balance Sheet 276.28Profit/(Loss) for the year 14.72 i. Considered in Consolidation 14.72 ii Not Considered inConsolidation -
1. None of the associates or joint ventures of your Company are yet to commenceoperations.
2. None of the associates or joint ventures of your Company have been liquidated orsold during the year under review.
3. Your Company does not have any associate company.
|For and on behalf of the Board of Directors || |
|For Jyothy Laboratories Limited || |
|Sd/- ||Sd/- |
|M.P. Ramachandran ||K. Ullas Kamath |
|Chairman and Managing Director ||Joint Managing Director and Chief Financial officer |
|DIN: 00553406 ||DIN: 00506681 |
|Sd/- || |
|Shreyas Trivedi || |
|Head Legal & Company Secretary || |
|Membership No.: A12739 || |
|Place: Mumbai || |
|May 18 2017 || |
FORM AOC - 2
PARTICULARS OF CONTRACTS/ ARRANGEMENTS MADE WITH RELATED PARTIES
[Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014]
1. Details of Contracts or arrangements or transactions not at arm's length basis:
(a) Name(s) of the related party and nature of relationship (b) Nature ofcontracts/arrangements/transactions (c) Duration of the contracts /arrangements/transactions
(d) Salient terms of the contracts or arrangements or transactions including the valueif any
(e) Justification for entering into such contracts or arrangements or transactions NIL(f) Date(s) of approval by the Board (g) Amount paid as advances if any (h) Date on whichthe special resolution was passed in general meeting as required under first proviso toSection 188
2. Details of material Contracts or arrangements or transactions at arm's length basis:
(a) Name(s) of the related party and nature of relationship (b) Nature ofcontracts/arrangements/transactions (c) Duration of the contracts /arrangements/transactions
NIL (d) Salient terms of the contracts or arrangements or transactions including thevalue if any (e) Date(s) of approval by the Board (f) Amount paid as advances if any
|For and on behalf of the Board of Directors |
|For Jyothy Laboratories Limited |
|M.P. Ramachandran |
|Chairman and Managing Director |
|DIN: 00553406 |
|Place: Mumbai |
|May 18 2017 |