The members of
Your Directors have pleasure in presenting their report and audited accounts for theyear ended on 31st March 2017.
|Financial Results || || |
(Rs. In crores)
| ||Consolidated ||Standalone |
| ||Current Year ||Previous Year ||Current Year ||Previous Year |
|Total Revenue ||17124 ||14660 ||7602 ||6758 |
|Earnings before interest tax depreciation amortisation exceptionals prior period adjustments and minority interest ||3429 ||2711 ||1268 ||1319 |
|Depreciation/amortisation ||672 ||676 ||655 ||619 |
|Finance Cost ||735 ||704 ||149 ||192 |
|Exceptional items ||81 ||129 ||46 ||- |
|Prior period adjustments ||- ||- ||- ||- |
|Loss from Associates ||19 ||85 ||- ||- |
|Profit before tax ||1922 ||1117 ||418 ||508 |
|Provision for taxation ||- ||- ||- ||- |
|Current tax ||298 ||342 ||89 ||107 |
|MAT credit entitlements ||- ||- ||- ||- |
|Deferred tax ||(109) ||(177) ||84 ||16 |
|Tax effect of earlier year ||- ||- ||- ||- |
|Profit after tax ||1733 ||952 ||245 ||385 |
|Minority Interest ||6 ||12 ||- ||- |
|Net profit for the year ||1727 ||940 ||245 ||385 |
The Company has delivered another year of good results.
Some of the financial highlights of the Company's global performance are as under:
a) Revenue from operations increased by 16% to Rs. 16680 crores.
b) EBIDTA improved by 23% to Rs. 3223 crores
c) Profit before taxes have gone up by 52% to Rs. 2022 crores.
d) Profit after taxes have gone up by 57% to Rs. 1833 crores.
Region wise performance highlights are as under.
In India the market for agrochemicals grew by about 9%. While cotton acreage reducedmainly in the North there was significant increase in pulses and oilseed planted area. Insome parts of the country like Karnataka Tamil Nadu Andhra Pradesh and Maharashtraerratic rainfalls adversely affected the sales. Due to good rains elsewhere agrochemicalusage in both Kharif and Rabi seasons increased. The Company increased its strategic focuson vegetable and fruit crops apart from traditional food crops. Due to all of this someof its brands recorded highest ever sales. During the year the Company introduced newbio-based and nutritional products. Company's policy to engage with customers wasimplemented very successfully. The Company sprayed 2 lakh acres of farm land in variousparts of the country. It has also enrolled 14 lakh farmers under its Adarsh Kisan Centreprogramme and this number is likely to increase significantly in coming years. All theseinitiatives made the Company achieve above industry average growth in India. During theyear demonetization of high value currency notes affected the collections for a briefperiod but now the market has rebounded.
In Latin America the market saw de-growth of 6%. However the Company's sales weresignificantly higher in all the key countries in this region. During the year the Companylaunched six herbicides one fungicide and one insecticide. The year also witnessedsignificant currency volatility. In Brazil disease pressure in soyabean was low resultingin reduced consumption of fungicides.
North America market remained steady with very marginal growth. The western partswhich had witnessed three successive years of drought had excellent rainfalls and due togood rains across the region it had a good harvest. The company launched two herbicidesand one fungicide in this market. The aquatic business grew significantly with newlaunches. However the income of farmers in this region did not go much higher and hencethe spending on agri-inputs remained low. However the Company recorded good growth in theregion.
European Market also remained steady with very marginal growth. However as quotas forsugar beet ended the area for its plantation went up which helped the Company toincrease its sales in this market. In Northern Europe there was high disease pressure onpotatoes. In southern Europe dry weather prevailed which affected sale and consumption offungicides on rice and vegetable crops. Overall the Company's performance in Europe wasmuch better.
In rest of the world also the market recorded de-growth marginally. However theCompany due to its strategic marketing moves improved its sales. After several years ofdrought Australia had very good rains. In some of the key markets recovery in rice cropsresulted in increase in sales of the Company's products. The Company also expanded itsnon-selective herbicides share to key markets including China. In Nigeria the Companyhas established partnership to grow its business. In Africa the Company has created aregional base in Kenya to service its customer needs regionally.
Prices of some of the inputs had increased but the Company had taken effective costreduction measures to counter any adverse effects arising out of such price increases.
For the year 2017 the monsoon in India is predicted to be normal. This shall improvefarm and economic growth and increase agricultural production in the country.
The Indian economic growth is on higher trajectory. The reforms undertaken by theCentral Government in this regard are most laudable and should result into overallimproved performance in all the sectors.
In this year's Union Budget the government has announced a number of proposals whichwill result into improvement in credit flow to farmers increase in irrigation acreagecrop insurance and giving boost for farm incomes. The government initiatives forirrigation will result in higher crop yields and water security. With these measures theincome of farmers will increase leaving them with higher disposable income and this inturn will benefit all agri-input companies.
The Company is also exploring new markets for its products. It is gaining a foothold inAfrican market. Latin American market also looks very promising for the Company'sproducts.
Overall the Company expects the coming year to be very promising.
Your Directors have recommended dividend of 350% i.e. Rs. 7 per Equity Share of Rs. 2each for the financial year ended 31st March 2017 which if approved at the forthcomingAnnual General Meeting will be paid to all those Equity Shareholders of the Company whosenames appear in the Register of Members as on 8th July 2017 and whose names appear asbeneficial owners as per the beneficiary list furnished for the purpose by NationalSecurities Depository Limited and Central Depository Services (India) Limited.
DIVIDEND DISTRIBUTION POLICY
Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("LODR") requires top 500 listed companies based on themarket capitalization to formulate Dividend Distribution policy. In compliance of thesaid requirement the Company has formulated its Dividend Distribution Policy. The Policyis uploaded on the website of the Company which can be accessed at www.uplonline. com
(a) Fixed Deposits
The Company has not accepted fixed deposits during the year. There are no fixeddeposits outstanding as at 31st March 2017.
(b) Particulars of Loans Guarantees or Investments
The details of Loans Guarantees or Investments are given in the notes to the FinancialStatements.
(c) Changes in Paid-up Share Capital
During the year the Company has issued and allotted the following shares:
(i) 78313422 equity shares of Rs. 2 each to the shareholders of erstwhile AdvantaLimited pursuant to Scheme of Amalgamation;
(ii) 108628440 Convertible Preference Shares of Rs. 10 each to the shareholders oferstwhile Advanta Ltd. pursuant to Scheme of Amalgamation;
(iii) 43429 equity shares of Rs. 2 each on conversion of Convertible Preference Sharesand
(iv) 55993 equity shares of Rs. 2 each to Employees under Employee Stock Option Plan ofthe Company.
The Honorable High Court of Gujarat vide its Order dated 23rd June 2016 sanctioned theCompany's scheme of Amalgamation with Advanta Limited. In pursuance of the scheme all thebusiness assets and liabilities of Advanta Limited were transferred to the Company. Newequity and preference shares were issued to the erstwhile shareholders of Advanta Limited.
The Company enjoys a good reputation for its sound financial management and ability tomeet in financial commitments. CARE a reputed Rating Agency has re-affirmed the creditrating of CARE AA+ for the long term and CARE AI+ for the short term Bank facilities. ForNon-Convertible Debentures CARE and Brickwork Ratings have re-affirmed the credit ratingof CARE AA+ and BWR AA+ respectively.
UPL Corporation Limited wholly-owned subsidiary was rated by S&P Moody's andFitch for its USD 500 mn bond issuance under 144A/Reg. S as BBB- Baa3 and BBB-respectively with stable outlook.
Erstwhile Advanta Limited which has now merged with the Company had come out with twostock option plans in 2006 and 2013. Upon amalgamation the shares were allotted to theoption holders during the year. The disclosures in respect of these two plans are as per"Annexure 1"
The Company is proposing ESOP 2017 plan and enabling resolutions are proposed as itemnos. 8 and 9 at the forthcoming Annual General Meeting.
SAFETY AND ENVIRONMENT
The Company has taken significant steps to ensure improvement in the operating safetyconditions and standards in its manufacturing units as well as project sites.
In addition the manufacturing sites have taken on the challenge to decrease theutility consumptions overall as well as on a unit production basis.
As a result of these initiatives external bodies both governmental as well asnon-government organisations associated with enhancing the industrial safety andenvironment standards have recognised the efforts of our manufacturing units.
During the year 2016-17 UPL manufacturing units won multiple awards in the areas ofSafety Environment Energy Conservation and good manufacturing practises.
Major Award Details:
|Award Category ||No. of Awards ||Awarded by |
|Business ||3 ||National Business Success Award Institute Exame Magazine Icontec |
|Energy Conserva- tion ||3 ||FICCI BEE Ministry of Power |
|Environ- ment ||4 ||Vietnam Association of Environmental Economics International Reserarch Institute for Manufacturing (IRIM) |
|Manufac- turing ||10 ||IMEA International Reserch Institute for Manufacturing Frost & Sullivan QCFI [Quality Circle Forum of India] agency |
|People ||1 ||Epoca Magazine |
|Safety ||8 ||Institute of Directors Department of industrial safety and fire protection police-vietnam OSHAI international fundation ORP Occupational Risk insurance COLMENA NSCI EKDKN |
The Company had introduced measurement criteria in the areas of Safety and EnvironmentManagement at each of its factories in the previous year namely measurement of Lost TimeAccidents (LTI) Total Recordable Frequency Rate (TRFR) Major Process Safety Incidents(MPSI) etc.
The organisation has been able to improve upon these metrics over a period of time. Inaddition the larger group of indirect employees including contract workmen employed forancillary work as well as capital projects have been brought under the umbrella of safetyoversight and continuous training initiatives.
In addition the following initiatives have been spearheaded at most manufacturing andconstruction sites:
a. Safety Induction and orientation of new employees :
Upon joining all new employees at our manufacturing sites are taken through a level 0and Level 1 program which essentially talks about the layout of the factory processeswithin the site safety procedures usage of personnel protective equipment (PPE) etc.This process ensures a basic level of awareness for all new employees and makes themunderstand the potential hazards that might exist within the factory.
b. Employee Education process:
Before the employee is allowed to work in a process area within the manufacturing sitehe/ she is taken through a Level 2 training which includes details of processes detailsof materials being handled material safety data sheets (MSDSs) design and operation ofkey equipment etc. This training lasts for at least four man days per employee before heis allowed to work. We have started a program by which the employee's performance isevaluated on a periodic basis to ensure that the levels of training and compliance arecontinuously enhanced.
Over a period of time this will be extended to all categories of contract employees.
c. Hazard and operability study (HAZOP):
For each new project and/or process modification it is now mandatory to conduct aHAZOP study which in turn throws up potential hazards due to changes and process processparameters equipment design and equipment changes.
d. Emergency Response Team (ERT) program:
Specific Emergency Teams which are trained by accredited agencies like St JohnAmbulance are available at all sites to handle emergencies and medical procedures.Likewise trained firefighting teams which are able to understand and handle specificmaterial related fire emergencies at specific plant sites are available round the clockat all manufacturing units.
e. Safety Self Recognition Program (SSRP):
This program was set up with the objective of empowering own as well as contractemployees to recognize their achievements towards predefined safety goals in theirrespective plants and operational areas. This works with the concept of motivating own aswell as contract employees to carry out their jobs in a safe manner and ensure the highestsafety standards for the collective team.
f. Near Miss Reporting:
One of the essential ingredients of reducing major safety incidents is to continuouslymonitor and oversee smaller and less significant incidents. It helps the teams addresspotential risks through detection of a combination of unsafe acts and conditions. A totalof Rs. 14 crores has been invested specifically to enhance the operating safety standardsat the factories in addition to the above mentioned initiatives.
Major improvements have been initiated to enhance the environmental footprint of ourunits both in India as well as for the international sites. The overall utilityconsumptions for the major Indian manufacturing sites has shown an encouraging trend:
The following major steps have been initiated at our factories: a. Reduction ofeffluent discharge at Jhagadia by way of segregation and better recycling of differenteffluent streams. This is expected to result in better effluent management especiallyduring the monsoon seasons. b. Operation of formulation and few active ingredientsmanufacturing units in a "Zero Liquid Discharge" (ZLD) mode. c. Dedicatedtechnology groups work to enhance the environmental compliance and management standardsthereby resulting in reduction of the utility and effluent footprint. d. Implementedmetering monitoring and targeting (MMT) to ensure the efficient performance of system.
Environment and Sustainability
The Company believes that Sustainability is the best opportunity for business to drivesmarter innovation and profitable growth. Sustainability ensure a fair society livingwithin environmental limits and creating a sustainable profitable business. It isconstantly working to reduce environmental footprint and find innovative product solutionsthat benefit the environment. Its environmental standards apply worldwide.
The Company's commitment to environmental protection extends beyond the scope of legalrequirements. It is committed to the chemical industry's Responsible Care initiativeand have set out the basic principles of this commitment in our Global EnvironmentalFootprint Reduction Plan. Certified HSEQ management systems control its operationalimplementation.
This year company has formulated "UPL Sustainable Development Plan" to reduceenvironmental footprint of company. UPL Sustainable Development Plan is fully aligned withUN Sustainable Development Goals.
Reducing Environmental Impact
Our target is to reduce 30% environmental footprint in our manufacturing plants by 2020compared to last year across all the four parameters a. water consumption b. carbonemission c. waste disposal and d. waste water discharge.
|Water Consumption Performance ||Carbon Emissions Performance ||Waste Disposal Performance ||Wastewater Discharge Performance |
|In 2016-17 water consumption per tonne of production in UPL manufacturing plants reduced by 19% compared to 2015-16. ||In 2016-17 CO2 emissions per tonne of production in UPL manufacturing plants reduced by 22% compared to 2015-16. ||In 2016-17 waste disposal per tonne of production in UPL manufacturing plants reduced by 6% compared to 2015-16. ||In 2016-17 wastewater discharge per tonne of production in UPL manufacturing plants reduced by 27% compared to 2015-16. |
Major improvements have been initiated to reduce the environmental footprint of ourunits both in India as well as for the international sites. The overall sustainabilityperformance for the major Indian manufacturing sites has shown an encouraging trend:
The Company has taken following initiatives to make the operating plants sustainable:
Specific Water Reduction Initiatives
Sustainable industrial water management plays a vital role in achieving future watersecurity in a world where water stress will increase. The optimum utilization of allnatural resources is an integral part of UPL's commitment to sustainable development.Aiming to decrease abstracted water demand in our operating plants following initiativeshas been taken this year:
Reduced 19% specific water consumption by operational excellency.
Achieved Zero Liquid Discharge (ZLD) in our Unit 04 at Halol by implementingworld class effluent reuse & recycling system.
Completed piloting of Scaleban technology to reuse treated wastewater intocooling towers. This will reduce cooling water demand and decrease treated wastewaterdischarge in our operating plants.
Developed controlled discharge facilities at Unit 05 for effective surfacerunoff management.
Specific Carbon Emissions Reduction Initiatives
Greenhouse gases trap heat and make the planet warmer. Human activities are responsiblefor almost all of the increase in greenhouse gases in the atmosphere. Climate change dueto greenhouse gas emissions will have a growing impact on our business. Aiming to decreasecarbon emissions in our operating plants following initiatives has been taken this year:
Reduced 13 % specific energy consumption by operational excellency.
Reduced 22 % CO2 emissions by changing energy mix and by reducing specificenergy consumption.
Specific Waste Reduction Initiatives
We have taken special care to reduce recycle and eliminate hazardous as well asnon-hazardous solid waste. Aiming to decrease waste disposal from our operating plantsfollowing initiatives have been taken this year:
Reduced 6 % specific waste disposal from our operating plants by operationalexcellency.
Reduced waste from packaging process by improvement in packing material
Implemented waste segregation practices for efficient waste management
Implemented the practices of 4R (reduce recycle reuse reprocess) concept inHazardous waste management
Recovered value added products from waste.
Specific Wastewater Reduction Initiatives
Aiming to decrease wastewater discharge from our operating plants followinginitiatives have been taken this year:
Reduced 27% specific wastewater discharge by operational excellency.
Achieved Zero Liquid Discharge (ZLD) in our Unit 04 at Halol by implementingworld class effluent reuse & recycling system.
Reduction of effluent discharge in our Unit 05 at Jhagadia by way of segregationand better recycling of different effluent streams. This is expected to result in bettereffluent management specially during the monsoon seasons.
Adopted new technologies which use continuous manufacturing processes as againstthe current batch mode of manufacturing reactions. This not only reduces the footprint andconsequent capex spends of the plant but also results in significant reduction in thequantity of effluent generated.
Completed piloting of volute technology for efficient dewatering of sludge. Thiswill help us in efficient management of sludge generated from our wastewater treatmentplants.
RESEARCH AND DEVELOPMENT
Company has been always striving to be world class organization while caring for itscustomers employees and environment. Company is also setting up new standards ofperformance quality assurance and innovation.
In accomplishing the company's mission of manufacturing and supplying crop protectionand specialty chemicals and providing solutions to optimize farm productivity throughinnovative and cost-effective products the Research and Development Centres of theCompany have been playing a very vital role.
The Research and Development Centres located in various geographical locations withstate-of-the art facilities have been further strengthened with additional skilledmanpower and equipment/instruments.
The Research and Development Centres are engaged in development of technical activeproducts as well as pre-mix formulations which are introduced in the market after duesafety and bio evaluations.
Highly skilled scientists work on the new active ingredients for future launches andalso work on the products which have been commercialized to manufacture them in a bettercost-effective way and to achieve better quality.
New projects for Speciality Chemicals and Industrial Chemicals are taken up in theResearch and Development Centres to take them to manufacturing scale in a highlycost-effective manner.
There are conscious efforts to develop the pre-mix formulations which are safe lesshazardous and less toxic environmentally friendly and at the same time affordable to thefarmers.
Since company is delivering innovative products and follows innovative processes theproducts and the processes are safe guarded against copying by way of creating andprotecting the intellectual property.
Patent protections are obtained in the countries where the products are launched.Appropriate measures are taken to create and safe guard the intellectual property.
Registration of the active ingredients and the final products is an important activity.R&D also generates the data like chemical composition physico-chemical propertiestoxicity bio-efficacy residue and packaging required for submission to the authoritiesin various countries.
CORPORATE SOCIAL RESPONSIBILITY
The Company believes in contributing to harmonious and sustainable development ofsociety and that a company's performance must be measured not only by its bottom line butalso with respect to the social contributions made by the company while achieving itsfinancial goals! During the year the CSR expenditure incurred by the Company was INR2379 Crore (9.7% of Profit after tax). Our CSR activities focus not just around ourfactory and Offices but also in other backward locations based on the needs of thecommunities. Before undertaking any program a sound assessment of the scope needprojected benefits are carried out. Based on need assessment our commitment to CSR havetranslated into 6 key focus areas. They are:
Employability & Entrepreneurship
Education & Empowerment
Environment & Nature Conservation
Health & Sanitation
National & Local Area needs
Every year brings with it its own set of challenges and along comes opportunities tomeet those challenges and create something more meaningful together with the community.The focus in current year has been to create sustainable replicable and transformativesolutions where impacts are measurable so as to bring in more accountability andtransparency in our system. Earlier we had conducted a need assessment study and arrivedat a list of needs prioritized by the community. With the Impact Assessment study theCompany intends to meet the needs of the community. The results have been veryencouraging.
The Company continues to work with renewed vigour and commitment on all the programsundertaken. The Agriculture Development interventions are today impacting the lives ofaround 4500 farmers in Dang Ankleshwar and Vapi. There are around 1200 women who havebecome a part of the micro finance movement and are leading a better life today. 5000students are today members of Eco Clubs and working on preserving our flora and fauna.Around 45000 trees have been planted and taken care under social forestry project.
During the year we initiated a couple of new programmes to either strengthen the oldones or add completely new dimensions of growth to them. This year we started UnnatiProject with 6 CBOs from Mumbai with an objective to provide hand holding and mentoringsupport to 6 organizations located in Mumbai. Project aim was to improve the functionalefficiency and effectiveness of said 6 CBOs and hence enabled a large slum communityaccess to quality education better sanitation employability & entrepreneur skill andlivelihood support. Social Forestry Project Mangrove plantation. Goatery project GlobalParli Vandri Cluster development Artificial insemination (AI) Centre etc are other newinitiatives undertaken during the year.
Toilet construction (Sanitation) remained a focus area this year more emphasis waslaid on spearheading social and cultural changes related to sanitation. Volunteerparticipation during the year saw more than 3800 hours of voluntary service acrosslocations.
All CSR projects undertaken in 6 key focus areas are according to company's CSR policyand are in line with Schedule VII of the Companies Act 2013. The Annual Report on CSRactivities is annexed to this report as "Annexure 2"
VIGIL MECHANISM / WHISTLEBLOWER POLICY
The Company has in place whistleblower policy to deal with any fraud irregularity ormismanagement in the Company. The Company has posted this policy on its website and thelink is http:/www.uplonline.com/pdf/ policies/UPL_whistleblowerpolicy.pdf. The Chairman ofthe Audit Committee oversees this policy. As per the policy any employee or director candirectly communicate with the Chairman of the Audit Committee to report any actual/suspected fraud or non-compliance.
During the year the Company made all efforts to create awareness among the employeesabout the Policy. The policy ensures complete protection and no victimization ordiscrimination to the whistleblower. Total confidentiality of the proceedings of thePolicy is maintained.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company has implemented a policy as required under the Sexual Harassment of Womenat the Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules framedthereunder. This policy covers all women-permanent temporary or contractual workers. Thepolicy is very strictly enforced by the Company. The Policy is communicated to all theemployees by placing it on the website of the Company and all the employees have confirmedtheir abidance.
Workshops were arranged conducted by an esteemed agency to educate the employeesacross the Company to uphold dignity of their colleagues at the workplace and preventsexual harassment.
An internal committee consisting of mainly women staff and one woman from an NGO isformed to attend and redress complaints relating to sexual harassment. At each unit of theCompany sub-committees are formed to receive any such complaints and address and redressthe same in consultation with the main committee.
Strict implementation of the policy is to ensure women staff to work with dignity in asafe environment free from sexual harassment at the workplace and provide equality inworking conditions. During the year the Company has not received any complaint of sexualharassment.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an in-house internal audit team headed by a qualified professionalwhich carries out audits of various functions of the Company. The report prepared by themis placed before the Audit Committee at every quarterly meeting. The internal auditfunction reports to the Audit Committee. Internal Audit plan for the year is worked outand the same is approved by Audit Committee. The plan is worked out to ensure adequacy ofinternal control system compliance of various regulations and adherence of correctaccounting procedures at all locations of the Company. The Company engages services ofexternal professional agencies to ensure all legal compliances. In case any weaknesses areobserved by the internal audit team in any of the processes or compliances necessarycorrective action is immediately taken by the process owner to ensure strengthening of thecontrols.
The Internal audit team form the basis of certification by the Managing Director andChief Financial Officer for financial reporting.
Internal Controls over Financial Reporting:
The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. During the year all these controls weretested and no reportable material weaknesses in any operating areas were observed. Thecompany strives to ensure robust internal financial controls.
The Company has laid down various policies and procedures for efficient conduct of itsbusiness safeguard the assets of the Company prevention and detection of any frauds anderrors maintenance of accounts and complete accounting records and timely availability ofreliable information for the management.
INDIAN ACCOUNTING STANDARD (IND AS)
Pursuant to the Notification issued by the Ministry of Corporate Affairs dated February16 2015 relating to the Companies (Indian Accounting Standard) Rules 2015 the Companyits subsidiaries associates and Joint Venture Companies have adopted "IND AS"with effect from 1st April 2015 with comparatives for the previous year ending 31st March2016. This transition has happened very smoothly. The impact of the change on adoption ofIND AS is given in the notes to the financial statements.
RISK MANAGEMENT FRAMEWORK
The Company has a robust Risk Management Framework to identify and evaluate variousbusiness risks faced by the Company. Pursuant to Regulation 21 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a Risk Management Committee isappointed consisting of three Executive/Promoter Directors of the Company. RegularCommittee meetings are held every quarter. Inputs are taken from senior executives andthereafter various risks are identified and mitigating plans are developed to resolve suchrisks.
Some of the key business risks and their mitigation plans are as under: Industry Risks:The demand for Company's products depend on various factors such as rainfall pestattacks weather conditions drought or insufficient rains etc. In case of drought orless pest attacks the product off take will be adversely affected resulting in inventorypileup. To mitigate this risk the Company strengthened its supply chain and product mix.A number of subsidiaries mainly marketing arms for the parent company are set up acrossthe globe. The product portfolio of the Company is enlarged year after year to ensureregular supply of products for diverse applications at all times across the world.
R&D Risk: The effective life of agrochemicals gets reduced over a period of time asthe insects become immune and develop resistance to them. Constant innovation is necessaryand introduction of newer agrochemicals on continuous basis is essential for effectivelyeliminating pest attacks. To mitigate this risk the Company has set up a very big R&Dteam consisting of chemists chemical engineers and other experts to work constantly oninnovation of new products and processes. The Company protects some of its products bygetting them patented.
Currency Fluctuation Risk: The Company's business is expanding in many geographiesbeyond India. The Company's agrochemicals are marketed in almost all the countries of theworld. The Company's import bill is also quite significant. It is exposed to almost allthe foreign currencies of the World. Any volatile fluctuations in the exchange rates ofthe foreign currencies can result into huge losses for the Company. To mitigate this riskthe Company takes adequate insurance cover for open exposures. Company's huge exports actas natural hedge against imports. The Company carries out its business into majorcurrencies such as USD Euro Yen and Pound sterling. These currencies are comparativelymore stable. Hence the Company is adequately protected against these risks.
Demonetization Impact: The Company caters to the rural market mainly farmers of thecountry. To encourage cashless payment methods and to aim at greater transparency thePrime Minister had declared in November 2016 demonetization of high currency notes of Rs.1000 and Rs. 500. This impacted the collections for a short time as the liquidity wassqueezed temporarily. But thereafter the re-monetization by issue of new currency notesresulted in slackening of demonetization effect. The Company is encouraging cashlesspayment methods and the customers are also getting used to the new methods and the Companyexpects that in the coming years its performance will improve further.
SUBSIDIARY COMPANIES / ASSOCIATE COMPANIES
Shroffs United Chemicals Limited:
This is engaged in trading activities in a very limited way.
SWAL Corporation Limited:
SWAL Corporation limited is engaged in distribution and marketing of agro chemicalformulations and organic fertilizers in India. The Sales Turnover for the year is Rs. 607Cr and the Profit before tax is Rs. 8 Cr.
Optima Farm Solutions Ltd:
Optima farm solutions ltd is engaged in the manufacture of agrochemicals in Jammu. TheCompany has made sales of Rs. 115 Cr in the current year.
UPL Europe Ltd. (Formerly known as United Phosphorus Limited U.K.):
UPL Europe is engaged in the production and distribution of Agrochemicals in UK &Europe. The company has a formulation production site at Sandbach UK and a sales Officeat Warrington UK. The Turnover for the year ended 31st March 2017 is Rs. 778 Cr and theProfit before tax is Rs. 89 Cr.
UPL Deutschland GmbH (Formerly Known as United Phosphorus GMBH - Germany):
UPL Deutschland GmbH is engaged in the distribution of formulated products in Germany& Austria. The Turnover for the year is Rs. 201 Cr and the Profit before tax is Rs. 7Cr.
UPL Polska Sp z o o (Formerly Known as United Phosphorus Polska Sp.z o.o - Poland):
UPL Polska is engaged in the sales and marketing of formulated products in Poland. Thebusiness in this Company has been on a very low scale.
UPL Benelux B.V. (Formerly Known as Agri Chem B.V.):
UPL Benelux BV is engaged in the distribution of formulated products in Benelux andSwitzerland. The Turnover for the year is Rs. 221 Cr and the Profit before tax is Rs. 19Cr.
Cerexagri B.V. Netherlands:
Cerexagri BV is a manufacturing entity specializing in EBDC based fungicides. It has atechnical and formulation facility based in Rotterdam. The Sales Turnover for the yearended 31st March 2017 is Rs. 556 Cr and the Profit before tax is Rs. 19 Cr.
Blue star BV:
Blue Star BV is the Holding company for Neo Fog SA.
United Phosphorus Holdings Cooperatief U.A.:
United Phosphorus Holdings Cooperatief U.A. is the holding company for UnitedPhosphorus Holdings B V Netherlands.
United Phosphorus Holdings B.V Netherlands:
United Phosphorus Holdings BV is the holding company for entities in Europe & Restof the world.
United Phosphorus Switzerland Limited:
United Phosphorus Switzerland is providing management services and holding investmentsand registrations for the Company's products.
Decco Worldwide Post-Harvest Holdings Cooperatief U.A.:
Decca Worldwide Post-harvest Holdings Coperatief UA is theholding company for Decco Worldwide Post-Harvest Holdings BV.
United Phosphorus Holding Brazil B.V. (Formerly known as Regentstreet B.V.):
United Phosphorus Holdings Brazil B.V. is the holding company of Brazil entity.
UPL Italia S.R.L.(Formerly Known as Cerexagri Italia S.R.L.):
UPL Italia S.R.L is engaged in the distribution of formulated products in Italy. TheTurnover is Rs. 283 Crand the Profit before tax for the year ended 31st March 2017 is Rs.13 Cr.
UPL IBERIA SOCIEDAD ANONIMA (formerly known as Compania Espanola Industrial Quimica deProductos Agricolas Y Domesticos S.A.U.Spain):
UPL Iberia is engaged in the distribution of formulated products in Spain &Portugal. The Turnover is Rs. 163 Cr and the Profit before tax is Rs. 14 Cr.
Decco Worldwide Post-Harvest Holdings B.V.:
This is the holding company for other Decco entities and holds registrations for theseentities.
Transterra Invest S. L. U. Spain:
Transterra Invest S L is the holding company for group entities in Spain and LatinAmerica.
Cerexagri SAS is a supply chain company for the group with 3 key production facilitiesin France involved in the production of Copper & Sulphur based fungicides. It has aformulation facility at Bassens to formulate herbicides and insecticides. The SalesTurnover for the year ended 31st March 2017 is Rs. 372 Cr and the Profit before tax is Rs.21 Cr.
Neo-Fog S.A is engaged in the distribution of Anti-sprouting herbicides in the Frenchdomestic market. The Turnover for the year ended 31st March 2017 is Rs. 25 Cr and theProfit before tax is Rs. 4 Cr.
UPL France (formerly Known as AS pen SAS):
UPL France SAS is engaged in the distribution of formulated products in France.Products are sourced from UPL's manufacturing facilities in Europe and India as well aslocally formulated in toll manufacturing facilities. The Turnover is Rs. 351 Cr and theProfit before tax is Rs. 45 Cr.
UPL Corporation Limited Mauritius (formerly known as Biowin Corporation Ltd.):
UPL Corporation does trading business and also holds investments for the group. TheTurnover is Rs. 2411Cr and the Profit before tax is Rs. 328 Cr. The Company made itsmaiden USD 500 mn bond issue.
Decco Iberica Postcosecha S.A.U. Spain (formerly Cerexagri Iberica):
Decco Iberica is involved in fabrication & commercialization of chemical productswaxes & fungicides as well as the machinery used for their application. The Turnoveris Rs. 103 Cr and the Profit before tax is Rs. 15 Cr.
Limited Liability Company UPL (formerly known as JSC United Phosphorus Limited):
Limited Liability Company UPL is engaged in the distribution of technical andformulated products in Russia and other CIS countries. The Turnover for the year ended31st March 2017 is Rs. 31 Cr and the Profit before tax is Rs. 5 Cr.
United Phosphorus Inc. U.S.A. (Consolidated along with Group entities UPI Finance LLCCerexagri Inc (PA) USA Cerexagri Delaware Inc USA Canegrass LLC USA RiceCo LLC USAUnited Phosphorus Inc is engaged in the distribution of AI's as well as formulatedproducts in the United States and Canada. UPI also provides technologies for pestmanagement aquatics Turf & Ornamental as well as fumigants for grain storage. TheTurnover is Rs. 2452 Cr and the Profit before tax is Rs. 82 Cr.
Canegrass is Company for the distribution of Asulam (Sugarcane Herbicide) in the USA.RiceCo LLC is dedicated to meet specific technology needs of rice farmers in the USA. Itsturnover during the year is Rs. 392 Cr and Profit before tax is Rs. 12 Cr.
Decco US Post Harvest Inc USA:
Decco US Post Harvest Inc is engaged in the production and selling of post harvestproducts and fumigants for use in the treatment of fresh agricultural produce. It hasmanufacturing facilities in Monrovia CA and Yakima WA. Turnover for the year is Rs. 231Cr and Profit Before Tax is H-2 Cr.
RiceCo International Inc. Bahamas:
RiceCo International is a rice focused company operating mainly in Asia and LatinAmerica. The Turnover for the year is Rs. 439 Cr and the Profit before tax is Rs. 24 Cr.
UPL Limited MAURITIUS (Formerly known as Uniphos Limited Mauritius):
UPL Mauritius does Trading business. The Turnover for the year is Rs. 2798 Cr and theProfit before tax is Rs. 514 Cr.
UPL LIMITED Gibraltar (Formerly Known as Uniphos Limited Gibraltar):
UPL Limited Gibraltar does Trading operations. The Turnover for the year is Rs. 3248 Crand the Profit before tax is Rs. 595 Cr.
United Phosphorus Cayman Limited:
United Phosphorus Cayman Ltd is a Company having branch in Colombia. The Turnover forthe year is Rs. 223 Cr and the Profit before tax is H- 6 C.
UPL Agro SA DE CV (Formerly Known as United Phosphorus de Mexico S.A. de C.V:
UPL Agro SA DE CV is engaged in sales and marketing of branded formulations in Mexico.This entity received the ESR award on parameters of business ethics environment andcommunity engagement. The Turnover for the year is Rs. 404 Cr and the Profit before taxfor the year is H 23 Cr.
Decco Jifkins Mexico Sapi:
Decco Jifkins Mexico SAPI De CV is primarily engaged in purchase sale distributionand import of goods and service in post harvest for fruits and vegetables in Mexico. TheTurnover for the year is Rs. 9 Cr. and the Profit before tax for the year is H-2 Cr.
Uniphos Industria e Comercio de Produtos Quimicos Ltda:
This is a holding company.
UPL Do Brasil - Industria e Comrcio de Insumos Agropecurios S.A.:
United Phosphorus do Brazil Ltda has a strong distribution network in Brazil for itsAI's as well as formulated sales. It is located in Campinas and also has a manufacturingfacility in Ituverava. The Sales Turnover for the year is Rs. 3450 Cr and the Profitbefore tax for the year is Rs. 124 Cr.
UPL Costa Rica S.A.(Formerly known as Cerexagri Costa Rica S.A.):
UPL Costa Rica SA is engaged in marketing and distribution of Agro chemicals in CostaRica. It also provides value added services such as contract spraying. The Turnover forthe year is Rs. 261 Cr and the Profit before tax for the year is H-1 Cr.
UPL Bolivia S.R.L (Formerly Known as UP Bolivia S.A.):
UPL Bolivia is engaged in the sales and marketing of agro chemicals in Bolivia. TheTurnover for the year is Rs. 27 Cr and the Profit before tax for the year is H 3 Cr.
Icona Sanluis S A Argentina:
Icona Sanluis SA is a manufacturing and marketing company for selling formulatedproducts in Argentina. It has a manufacturing plant in San Luis Argentina. The Turnoverfor the year is Rs. 17 Cr and the Profit before tax for the year is H-4 Cr.
DVA Technology Argentina S.A. :
DVA Technology Argentina holds registrations in Argentina.
UPL Argentina S A (formerly known as Icona S A - Argentina):
The company is a manufacturing and marketing company for selling formulated products inArgentina. It has a manufacturing facility in Abott Argentina. The Turnover for the yearis Rs. 376 Cr and the Profit before tax for the year is H-28 Cr.
Decco Chile SpA:
Decco Chile SpA provides post harvest solutions to maintain the quality of fresh fruitsand vegetables. The Turnover for the year is Rs. 29 Cr and the Profit before tax for theyear is Rs. 4 Cr.
UPL Colombia SAS (Formerly Known as Evofarms Colombia SA):
UPL Colombia is engaged in sales and marketing of agro chemicals for the Andean markets- Venezuela Ecuador Peru and Colombia. The Turnover for the year is Rs. 135 Cr and theProfit before tax for the year is Rs. 1 Cr.
UP Aviation Limited Cayman Island:
UP Aviation Ltd owns the aircraft for Business purposes.
UPL Management DMCC:
UPL Management DMCC provides management services. The Turnover for the year is Rs.117Cr and the Profit before tax for the year is Rs. 15 Cr.
UPL Australia Limited (Formerly known as United Phosphorus Limited Australia):
UPL Australia is engaged in sales and marketing of branded agro chemicals in Australia.It holds the registrations as well as inventory for prompt supply of material to servicelocal demand. The Turnover for the year is Rs. 214 Cr and the Profit before tax for theyear is Rs. 16 Cr.
UPL New Zealand Limited (Formerly known as United Phosphorus Limited New Zealand):
UPL New Zealand is engaged in distribution of Agro Chemicals in New Zealand. It holdsthe registrations as well as inventory for prompt supply of material to service localdemand. The Turnover for the year is Rs. 16 Cr and the Profit before tax for the year isRs. 2 C.
UPL Shanghai Ltd (Formerly known as United Phosphorus (Shanghai) Company Limited):
UPL Shanghai is engaged in distribution of Company's products in China. It has procuredOffice in Shanghai and is engaged in purchase of actives and intermediates required bymanufacturing facilities globally.
UPL Limited Korea (Formerly known as United Phosphorus (Korea) Limited):
UPL Korea was formed to grow UPL's agro chemical and fumigation business in Korea. TheTurnover for the year is Rs. 2 Cr and the Profit before tax for the year is Rs. 1 Cr.
PT.UPL Indonesia (Formerly Known as PT. United Phosphorus Indonesia):
UPL Indonesia is doing business in Indonesia. It mainly caters to the requirements ofstrategic partners like Nufarm FMC and other top local companies as well assemi-government organization. The Turnover for the year is Rs. 43 Cr and the Profit beforetax for the year is Rs. 3 Cr.
PT Catur Agrodaya Mandiri Indonesia:
The major business is branding and distribution of formulated products through anetwork of distributors in Indonesia. The company holds 50 plus registrations and hassuccessfully commercialized most of these. The Turnover for the year is Rs. 55 Cr and theProfit before tax for the year is Rs. 3 Cr.
UPL Limited Hong Kong (Formerly Known as United Phosphorus Limited Hong Kong):
UPL Hong Kong is engaged in the sales and marketing of agro chemicals in Hong Kong. Italso acts as a supply source of raw material purchases of the manufacturing facilities.The Turnover 31st March 2017 is Rs. 574 Cr and the Profit before tax is Rs. 44 Cr.
UPL Philippines Inc. (Formerly Known as United Phosphorus Corp. Philippines):
UPL Philippines is engaged in the distribution of agro chemicals in Philippines. Itholds registrations and inventory for servicing domestic demand. It also provides valueadded services to plantation business in Philippines. The Turnover is Rs. 54 Cr and theProfit before tax is 0.47 Cr.
UPL Vietnam Co. Ltd. (Formerly Known as United Phosphorus Vietnam Co. Limited):
UPL Vietnam is engaged in the manufacturing and marketing of branded agro chemicalformulations in Vietnam. It also exports its production to Australia South East Asia andfew African countries as well other than catering to local demand. The Turnover is Rs.142 Cr and the Profit before tax is Rs. 27 Cr.
UPL Limited Japan (Formerly Known as United Phosphorus Limited Japan):
This entity is for registering and selling UPL products in Japan. The local presence inJapan has boosted access to Japanese technology and expertise and built relations withother Japanese companies. UPL Japan sells both AI's as well as branded products which areformulated and repacked locally. It has a JV with Hodogaya Chemical Co Ltd withheadquarters in Tokyo. The Turnover is Rs. 165 Cr and the Profit before tax is H-57 Cr.
Anning Decco Fine Chemical Co. Limited China:
Anning Decco is a joint venture in China. The company is engaged in the production anddistribution of Shellac. The Turnover for the year is Rs. 23 Cr and the Profit before taxis Rs. 4 C.
UPL Ziraat Ve Kimya Sanayi Ve Ticaret Limited Sirketi (Formerly Known as CerexagriZiraat Ve Kimya Sanayi Ve Ticaret Limited Sirketi Turkey):
The Company has a strong distribution network as well as brand presence in Turkey(mainly western region). The Turnover is Rs. 112 Cr and the Profit before tax is H-11 Cr.
UPL Agromed Tohumculuk SaTurkey:
UPL Agromed has a strong marketing presence in the eastern part of Turkey. It also hasa manufacturing and repacking facility in Turkey. The Turnover is Rs. 75 Cr and the Profitbefore tax is H-5 Cr.
Safepack Products Limited Israel:
Safepack is engaged in the production and distribution of Post-Harvest Productsin Israel and export to neighboring countries. The Turnover is Rs. 41 Cr and the Profitbefore tax is Rs. 2 Cr.
Citrashine (Pty) Ltd South Africa (Formerly known as Friedshelf 1114 (Pty) LtdSouthAfrica):
Citrashine is engaged in the manufacturing and distribution of chemicals and waxes forthe post harvest treatment of fruits and vegetables and operates primarily in SouthAfrica. The Turnover is Rs. 22 Cr and the Profit before tax is H-1Cr.
Decco Portugal Post Harvest Unipessoal LDA (formerly known as UPL Portugal UnipessoalLDA):
Decco Portugal Unipessoal LDA is a new entity which will start operations shortly.
Decco Italia SRL Italy:
Decco Italia SRL is engaged in the production and selling of post-harvest products andfumigants for use in the treatment of fresh agricultural produce. The Turnover is Rs. 32Cr and the Profit before tax is Rs. 3 Cr.
UPL Paraguay S.A. (Formerly Known as United Phosphorus Paraguay S.A.):
UPL Paraguay is engaged in the sales and marketing of agro chemicals in Paraguay. TheTurnover is Rs. 14 Cr and the Profit before tax is H-3 Cr.
UPL Africa SARL:
UPL Africa is established for sales in African region. It holds registration for salesin CILSS countries in Africa.
Details of companies which have become or ceased to be its subsidiaries joint venturesor associate companies during the year:
a) New subsidiaries:
1. Essentiv LCC
2. Advanta Seeds Ukraine LLC
b) New associate:
1. Weather Risk Management Services Private Limited
c) Cessation of subsidiaries:
1. United Phosphorus do Brasil Ltda
2. United Phosphorus Limited Gibraltar
3. Advanta (BVI) Ltd.
Details of companies which have become its subsidiaries during the year pursuant toamalgamation of erstwhile Advanta Ltd.:
1) Advanta Seeds International Mauritius; is engaged in distribution andmarketing of seeds in the various countries . The Sales Turnover for the year is Rs. 180Cr and the Profit before tax is Rs. 30 Cr.
2) Advanta Seeds DMCC (formerly known as Advanta Seeds JLT) is engaged in distributionand marketing of seeds in the UAE. The Sales Turnover for the year is Rs. 211 Cr and theProfit before tax is Rs. 87 Cr.
3) PT Advanta Seeds Indonesia is engaged in distribution and marketing of field Cornand Sweet Corn seeds in Indonesia. The Sales Turnover for the year is Rs. 34 Cr and theProfit before tax is Rs. 11 Cr.
4) Advanta Holdings B.V. Netherlands; is engaged in distribution and marketingof seeds in Europe. The Sales Turnover for the year is Rs. 126 Cr and the Profit beforetax is H-23 Cr.
5) Advanta Semillas SAIC is engaged in distribution and marketing of Sorghum cornsunflower seeds in Argentina. The Sales Turnover for the year is Rs. 223 Cr and the Profitbefore tax is H-4 Cr
6) Advanta Netherlands Holding B.V. is engaged in distribution and marketing of andresearch and technical solutions to farmers & breeders into seeds in the Netherlandsand Europe. The Sales Turnover for the year is Rs. 5 Cr and the Profit before tax is Rs. 3Cr
7) Pacific Seeds Holdings (Thailand) Limited is holding Company. The Profit before taxis Rs. 108 Cr largely contributed by other income.
8) Pacific Seeds (Thai) Limited is engaged in distribution and marketing of seeds inThailand. The Sales Turnover for the year is Rs. 316 Cr and the Profit before tax is Rs.97 Cr
9) Advanta Comercio De Sementas Ltda. is engaged in distribution and marketing ofSorghum Soyabean Canola Corn seeds in Brazil. The Sales Turnover for the year is Rs. 152Cr and the Profit before tax is H-6 Cr.
10) Advanta Seeds Pty Ltd (Formerly Pacific Seeds Pty Ltd) is engaged in distributionand marketing of Sorghum Corn and Canola seeds in Australia. The Sales Turnover for theyear is Rs. 202 Cr and the Profit before tax is H-23 Cr.
11) Advanta US Inc. is engaged in distribution and marketing of Hybrids of Corn foragesorghumGrain sorghum seeds in the US and Mexico. The Sales Turnover for the year is Rs.106 Cr and the Profit before tax is H-126 Cr 12) Advanta Seeds Ukraine LLC has juststarted operation in Ukraine. The Profit before tax is H-10 Cr.
The Company does not have any material subsidiary as per the parameters laid down bythe Companies Act 2013.
RELATED PARTY TRANSACTIONS
All Related Party Transactions entered into during the year were on arm's length basisand were in the ordinary course of business. There are no materially significant relatedparty transactions made by the Company with Promoters Directors Key Managerial Personnelor other designated persons which may have a potential conflict with the interest of theCompany at large.
All Related Party Transactions are approved by the Audit Committee. Prior omnibusapproval is obtained from the Audit Committee in respect of the transactions which arerepetitive in nature. The transactions entered into pursuant to the omnibus approval sogranted are reviewed on a quarterly basis by the audit committee.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. The same can be accessed on www.uplonline.com/investors/policies/related party transactions.
All the properties and operations of the Company have been adequately insured.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Appeal before the Supreme Court:
The Competition Commission of India (CCI) has levied a penalty of Rs. 25244 lakhs onthe Company vide its order in April 2012 for alleged violations of Cartel under theprovisions of section 3(3)(b) and 3(3)(d) of the Competition Act 2002. The order of CCIwas challenged before the Competition Appellate Tribunal (COMPAT) which by its orderdated 29th October 2013 has reduced the penalty to Rs. 694 lakhs. The Company and CCI havechallenged the order of the COMPAT before the Hon'ble Supreme Court. The Hon'ble SupremeCourt vide its order dated 8th May 2017 has upheld the decision of COMPAT and confirmedpenalty of Rs. 694 lakhs. It has dismissed the appeal filed by CCI.
a) Statutory Auditors
As per the provisions of Section 139 of the Companies Act 2013 the term of the Officeof M/s S R B C & CO LLP as Statutory Auditors of the Company will conclude from theclose of the forthcoming Annual General Meeting of the Company.
The Board of Directors places on record its appreciation for the services rendered byM/s S R B C & CO LLP as the Statutory Auditors of the Company.
Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of B S R & Co. LLP Chartered Accountants (ICAI FirmRegistration Number 101248W/W-100022) as the Statutory Auditors of the Company pursuant toSection 139 of the Companies Act 2013.
Members' attention is drawn to a Resolution proposing the appointment of B S R &Co. LLP Chartered Accountants as Statutory Auditors of the Company which is included atitem No. 5 of the Notice convening the Annual General Meeting.
b) Cost Auditors
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost account records maintained by theCompany are required to be audited. Your Directors had on the recommendation of the AuditCommittee appointed Messrs RA & Co. Cost Accountants to audit the cost accounts ofthe Company for the financial year 2017-18 on a remuneration of Rs. 7.00 lakhs. The CostAuditors have submitted a certificate of their eligibility for such appointment. Asrequired under the Companies Act 2013 the remuneration payable to the cost auditor isrequired to be placed before the Members in a general meeting for their ratification.
Accordingly a Resolution seeking Member's ratification for the remuneration payable toMessrs RA & Co. Cost Auditors is included at Item No. 6 of the Notice convening theAnnual General Meeting.
For the year 2016-17 the due date for filing the Cost Audit Report is 27th September2017 and the same will be filed in due course. The Cost Audit Report for the year 2015-16was filed on 27th August 2016.
c) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Messrs N.L. Bhatia & Associates a firm of Company Secretaries in Practiceto undertake the Secretarial Audit of the Company. The Report of the Secretarial AuditReport is annexed herewith as "Annexure 3".
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified under section 143(12) of the Companies Act 2013.
98.70% of the total paid-up equity shares of the Company are dematerialised as on 31stMarch 2017.
In accordance with the provisions of section 152 of the Companies Act 2013 andArticles of Association of the Company Mr. Jaidev Rajnikant Shroff (DIN: 00191050) andMrs. Sandra Rajnikant Shroff (DIN: 00189012) Directors of the Company retire by rotationat the forthcoming Annual General Meeting of the Company and being eligible offerthemselves for re-appointment.
The information of Directors seeking appointment/ reappointment as required pursuant toRegulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is provided in the notice covering the Annual General Meeting of the Company.
All the independent directors have given declaration that they meet the criteria ofindependence laid down under section 149 (6) of the Companies Act 2013 and Regulation16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
EVALUATION OF THE BOARD'S PERFORMANCE
Pursuant to the provisions of the Companies Act 2013 and Regulations 17 (10) and25(4)(a) of the Listing Regulations the evaluation process for performance of the Boardvarious committees and directors was carried out. Each director was provided aquestionnaire to be filled up providing feedback on the overall functioning of the Boardand the committees. The questionnaire covered various parameters such as compositionexecution of specific duties quality and timeliness of flow of information discussionsand deliberations of different items of agenda independence of judgments etc. Thedirectors were also asked to provide their suggestions for areas of improvement to ensurehigher degree of engagement with the management.
Evaluation of individual director was also carried out and parameters such ascontribution attendance expertise decision making and other related factors wereconsidered in this exercise.
The Independent Directors held a meeting on 24th January 2017 to review theperformance of evaluation of the Non-independent/Non-promoter Directors and the entireBoard including the Chairman. The Independent Directors expressed complete satisfaction ofthe professionally managed overall functioning of the Board various committees as well asall the directors of the Company. They appreciated the knowledge and expertise of theChairman and his exemplary leadership qualities which demonstrate positive attributes infollowing the highest standards of corporate values and culture of the Company.
The Board has on the recommendation of the Nomination and Remuneration Committee framedand adopted the Policy for selection and appointment of directors senior management andtheir remuneration. The Board recognizes that the various Committees of the Board havevery important role to play to ensure highest standards of corporate governance. TheChairman of the Board and other Executive Directors form broad policies and ensure theirimplementation in the best interests of the Company.
The Criteria for selection of directors and senior management are mainlyqualifications experience integrity independence of the directors etc.
The remuneration to Non-executive Directors consists of sitting fees for attendingBoard/Committee meetings commission and other reimbursements. As per the approval givenby the members the said commission shall not exceed 1% of the net profits of the Company.All the Non-executive Non-Promoter Directors are paid commission on uniform basis. TheIndependent directors are not entitled to any stock options under the Stock Option Schemeof the Company.
The remuneration to the Managing Director and other Executive Directors consist ofmonthly salary allowances perquisites commission and other retirement benefits. Theremuneration payable to them is subject to the approval of the members of the Company. Theoverall managerial remuneration payable to them shall not exceed 10% of the net profits ofthe Company.
In respect of senior management the remuneration is based on the performancecompany's performance targets achieved industry benchmark and compensation trends in theindustry. Their remuneration consists of monthly salary bonus perquisites KPI and otherretirement benefits.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
Pursuant to the SEBI regulations the Company has worked out a Familiarization programmefor the Independent Directors with a view to familiarize them with their role rights andresponsibilities in the Company nature of Industry in which the Company operatesbusiness model of the Company etc.
Through the Familiarization programme the Company apprises the independent directorsabout the business model corporate strategy business plans and operations of theCompany. These directors are also informed about the financial performance annualbudgets internal control system statutory compliances etc. They are also familiarizedwith Company's vision core values ethics and corporate governance practices.
At the time of appointment of independent director a formal letter of appointment isgiven to him which explains his role responsibility and rights in the Company.
Subsequently they are appraised of the Company's policies on CSR nomination andremuneration plant safety HR succession policy for directors and senior management.They are updated with global business scenario marketing strategies legislative changesetc. Factory visits are arranged to appraise them of various operational and safetyaspects of the plants to get complete understanding of the activities of the Company.Eminent personalities are invited to educate the independent directors about the latesthappenings relevant to the duties rights and responsibilities of the independentdirectors.
Details of Familiarization programme of Independent Directors with the Company areavailable on the website of the Company www.uplonline.com.
As on 31st March 2017 The Company has 3489 employees in India and 5714 employeesglobally which includes 676 employees of Advanta who moved to the Company. The Company hasalways believed that its people are its biggest asset. The year 2016-17 saw several keyinitiatives to nurture on our core values.
1. SUPPLY CHAIN ACADEMY
Supply Chain Academy (SCA) was launched on 3rd November 2016. The objective of SCA isto enhance employees' capabilities be it technical Know-How professional skills orleadership behaviors. The academy has active involvement of senior leaders to guide designof programs and projects focused on practical learnings that can be implemented in theworkplace. During the year 27 programs have been delivered under SCA benefiting 614employees.
2. GLOBAL SALES EXCELLENCE AWARDS
The Company attributes its tremendous growth over the past year to its employees whodrive the sales of the Company's product offerings. To recognize their talent and motivatethem to continue the good work we recognized high performers during our inaugural GlobalSales Excellence Function held in Mumbai on 16th November 2016. In this prestigiousevent high-performing sales (wo)men from 13 countries were felicitated by the Global CEOand the Leadership team. This was a fantastic platform to celebrate success and also helpour best performers share knowledge and experiences with each other.
3. THE COMPANY CERTIFIED AS A GREAT PLACE TO WORK
The Company aspires to become a Great Place to Work where employees trust who theywork for take pride in what they do and enjoy the company of the people they work with.We strongly believe that an engaged workforce is critical in achieving our business goalsand building a sustainable organization. With this objective UPL India and UPL Brazilpartnered with a global research and consulting firm Great Place to Work Institute toconduct an employee survey UPL Ki Zubaan analyse the results and recommend actionareas to build a more engaged workforce. As a part of the diagnostics the GPTW team alsoassessed our people practices so that we can work on strengthening it further. We are verypleased to inform you that we won the GPTW certification in both the countries in ourmaiden attempt.
PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are given in the Annexures 4 and 5 hereunder and forms part of this Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under sections 134(3)(m) of theCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 areprovided in Annexure 6 to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them the directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a) That in the preparation of the annual financial statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed alongwith properexplanation relating to material departures if any.
b) That such accounting policies as mentioned in Note 2.1 of the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2017 and of the profit of the Company for theyear ended on that date.
c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
d) That the annual financial statements have been prepared on a going concern basis.
e) That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f) That systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
Your Company and its Board has been complying with Corporate Governance practices asset out in a separate report in pursuance of requirement of para C of Schedule V of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The ManagementDiscussions and Analysis Report forms part of this Report. Auditor's certificateconfirming compliance of the Corporate Governance as stipulated under the said Regulationsis also attached to this Report.
Dealing with securities which have remained unclaimed
Members are hereby informed that as per Regulation 39(4) read with Schedule VI of theSEBI Regulations the Company is in the process of sending reminders to those Memberswhose share certificates have remained unclaimed to contact the Company immediately inthe matter. Due to change in the Registrar and Transfer Agent of the Company the processcould not be completed. The Company now after following the prescribed procedure willdematerialize unclaimed shares which are retained with the Company. These shares would beheld by the Company on behalf of the holders of such shares in an "Unclaimed SuspenseAccount" to be opened with a depository. At the end of seven years hereof theseshares shall be transferred by the Company to the IEPF. Dividends remaining unclaimed inrespect of such shares shall also be held in a separate suspense account and wouldlikewise be transferred to IEPF at the end of seven years.
Members may note that the lawful claimant in respect of these shares / dividend will beable to claim such shares dividend from the Company till such time they remain in theunclaimed suspense account as aforesaid.
BUSINESS RESPONSIBILITY REPORTING
A separate section of Business Responsibility forms part of this Annual Report asrequired under Regulation 34(2)(f) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial statements are prepared for the year 2016-2017 in compliancewith the provisions of the Companies Act applicable Accounting Standards and asprescribed under the SEBI regulations. The consolidated statements are prepared on thebasis of audited financial statements of the Company its subsidiaries associates andjoint ventures. These consolidated financial statements alongwith the Auditors Reportthereon form part of the Company's Annual Report. They are also put up on the website ofthe Company www.uplonline.com.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure 7".
REGISTRAR AND SHARE TRANSFER AGENT
During the year SEBI suspected fraud and malpractices in the conduct and operations ofSharepro Services (India) Pvt. Ltd. who were the Company's Registrar and Share TransferAgent (RTA) for a long time. After investigating the affairs of the said RTA SEBI videits order dated 22nd March. 2016 restrained Sharepro from conducting R&T activitiesand directed all the client Companies to carry out audit of the records and systemrelating to share transfer payment of dividend etc. carried out by Sharepro for thelast ten years.
Accordingly the Company appointed M/s N. L. Bhatia and Associates practicing CompanySecretaries to carry out such audit. They have certified that no irregularities orviolations with respect to transfer of securities or payment of dividend were noticed inrecords of last ten years. Subsequently as per the advisory issued by SEBI the Companyappointed M/s Link Intime India Private Limited as the new R&T Agent with effect from1st June 2016.
LISTING OF THE COMPANY'S EQUITY SHARES
The equity shares of your Company are listed on the BSE Ltd. and National StockExchange of India Ltd. There is no default in paying annual listing fees.
Your Directors are thankful to all the stakeholders and various government agencies andministries for their continued support.
Statements in the Director's Report and the Management Discussion and Analysisdescribing the Company's objectives expectations or predictions may be forward lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include: global and domestic demand and supplyconditions availability of critical materials and their cost changes in governmentpolicies and tax laws economic development of the country and other factors which arematerial to the business operations of the Company.
| ||On behalf of the Board of Directors |
|Mumbai ||Rajnikant Devidas Shroff |
|24th May 2017 ||Chairman & Managing Director |
| ||(DIN: 00180810) |
|Registered Office: || |
|3-11 G.I.D.C. Vapi || |
|Dist. Valsad Gujarat || |
|Pin: 396195. || |