To The Members
Your Directors present their Sixty-Third Annual Report and the Audited Statement ofAccounts for the year ended 31st March 2017.
1. Financial Results
Rs. in crores
| ||Standalone ||Consolidated |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Sales and Services ||5425 ||5151 ||6033 ||5720 |
|Profit for the year after meeting all expenses but before interest depreciation and exceptional items ||685 ||494 ||778 ||570 |
|Interest ||10 ||8 ||16 ||16 |
|Depreciation and amortization ||18 ||19 ||24 ||26 |
|Profit before exceptional items ||657 ||467 ||738 ||528 |
|Share of Profit/(Loss) of Joint Venture and Associates || || ||(19) ||6 |
|Exceptional items (Net) ||(6) ||21 ||1 ||29 |
|Profit before tax ||651 ||488 ||720 ||563 |
|Tax expenses ||165 ||139 ||209 ||170 |
|Profit after tax ||486 ||349 ||511 ||393 |
|Other Comprehensive Income (Net) ||87 ||(24) ||82 ||(14) |
|Total Comprehensive Income ||573 ||325 ||593 ||379 |
An amount of Rs. 50 crores was transferred to the General Reserve out of Profitavailable for appropriation.
The Company's Dividend Policy which is disclosed on the Company's website is based onthe need to balance the twin objectives of appropriately rewarding its shareholders withdividend and of conserving resources to meet its future needs. Based on Company's betterperformance the Directors recommend higher dividend of Rs. 3.50 per equity share of Rs. 1each (350%) for the year 2016-17 (2015-16: 260%).
We live in an increasingly unpredictable world - the aftermath of the US Presidentialelections Brexit and many socio economic tensions dominate newspaper headlines across theWorld. The new US administration led pronouncements the tepid economic recovery or thelack of it fragile movements in oil prices commodity swings and the debt overhang inChina have further sharpened the ambiguities. Some green shoots were visible in the USalthough economies dependent on crude oil continue to remain under pressure. The MiddleEast Countries more relevant to Voltas given its areas of operations continue tograpple with the new normal of lower crude oil prices amidst political uncertaintyespecially in Qatar. Their fiscal position remains tight and the related issues includinglonger payment periods certification delays increase in the number of commercialdisputes etc. continue to affect industry at large.
On the domestic front supported by a better monsoon in 2016-17 sentiments haveimproved and select economic indicators like inflation interest rates etc. indicate alevel of positivity. At the same time the Government continues to demonstrate seriousintent to fast forward the reform agenda as evinced by more recent developments (GSTdemonetization infrastructure spending rural electri_cation etc. to mention a few).Nevertheless capacity utilization levels remain subdued Index of Industrial Production(IIP) for capital goods is largely negative private sector spending continues to bemuted. The Indian economy is widely anticipated to grow at 6.5%-7% after considering thetemporary negative consumption shock induced by cash shortages and payment disruptionsowing to demonetization.
At Voltas the Consolidated Sales and Services was higher by 5% at Rs. 6033 crores ascompared to Rs. 5720 crores in the corresponding period last year largelycontributed by Unitary Cooling Products business. Profit before tax was higher by 28% atRs. 720 crores as compared to Rs. 563 crores last year. Net Profit for the period was alsohigher at Rs. 511 crores as compared to Rs. 393 crores last year. Earnings per Shareimproved to Rs. 15.38 as compared to Rs. 11.70 last year (Face Value per share Rs. 1).Other Comprehensive Income recognized as per Ind-AS mainly includes notionalmark-to-market gains on movement in market share price of certain strategic long termequity investments and other gains and losses. Accordingly Total Comprehensive Income wasRs. 593 crores as compared to Rs. 379 crores last year. The figures for previous periodhave been regrouped/restated wherever necessary in line with Ind-AS requirements.
The Cooling Products Industry continues to be largely weather dependent with demandespecially for AC's being closely linked to temperature movements. While the summer monthsin 2015-16 were interrupted by intermittent rains in 2016-17 the onset of sustained hotweather was brisk with exceptionally high temperatures being recorded in certain parts ofthe country. Accordingly given the weather led spurt in consumer demand the AC industrywitnessed a significant growth in volumes also assisted by the benefit of a low base.Overall the Room AC industry had an exceptional year reporting a secondary volume growthof 31% as compared to 12% last year. Ably supported by better quality cum range ofproducts wider distribution appropriately timed advertisements promotions andsensible pricing the Company's Unitary Cooling Products business fought intensecompetition from Global and Indian brands to sustain its leadership position throughoutthe year with an increased market share of 21.4% as compared to 21.1% last year.The year also saw the brand reaching the landmark figure of selling 1 million Room AirConditioners in one year a milestone for the entire Industry.
In the Domestic Projects business there has been an increase in enquiry levels andorder finalization mainly on account of public sector spending. The Company hadstrategically pursued domestic projects involving public spending and externally fundedinvestments as a sensible way of mitigating the credit risks associated with the privatesector. Accordingly the Company had focused on areas such as urban infrastructure ruralelectri_cation and water. The current order backlog of Rs. 2558 crores (as compared toRs. 2025 crores last year) consequently reflects higher quality and a betterassurance of financial recovery. However the pace of execution on certain carry-forwardprojects has unfortunately been slower than expected owing to various delays.Nevertheless on account of several internal initiatives including timely businessefficiency improvement programs there has been an improvement in margins and savings incosts.
With the international oil prices hovering around $ 50 per barrel the GCC Governmentshave responded by launching austerity drives targeted at reducing public spending. Theconsequential impact on liquidity with client led progress deferrals andcertification/payment delays continues. With an internal task force focused on optimumclosure of legacy projects the Company has accelerated settlement and commercial closureof completed projects barring a couple of projects under arbitration. As far as Sidra isconcerned the complicated arbitration between the Main Contractor and Qatar Foundation islikely to be long-drawn. With the inflow of suitably risk mitigated orders in more recenttimes and the order backlog of Rs. 1763 crores (compared to Rs. 1889 crores last year)the Company is confident of better performance by International Projects business.
The challenges in the Mining and Textile Industries in India are well known.Accordingly the Engineering Products business has recorded lower Revenue and Profit ascompared to last year. EBIT margins for this segment tend to swing depending on thecontribution of equipment sales in the overall revenue mix - compared to last yearequipment sales have been lower in the current period.
In Textile Machinery business the Company has been witness to a huge surge in price ofcotton not followed through in relative price of yarn. This has led to margin pressuresacross spinning mills with many deciding to opt for partial shut-downs. At the same timethe withdrawal of TUF for Spinning and difficulties in obtaining bank finance hasdelayed investments. While visibility of subsidy driven orders especially in Statesoffering special incentives is not clear there is some improvement in the Post Spinningside of Textile Machinery business.
On the Mining front Mozambique operations continue to drive the performance. Additionof more machinery in the scope of maintenance services continues to enhance theperformance of Mining & Construction Equipment business. However on account of thesteep depreciation in Mozambique currency (Meticals) some loss in Forex had to beaccounted during the year. Meanwhile the Mining business in India remains sluggishwith lower equipment sale as compared to last year. However over the course of the yearthe business has witnessed increased traction in the Road Construction Sector with a largeorder for crushing and screening equipment along with increased sale of parts.
Despite environmental headwinds diligent financial planning has ensured the continuedrobustness of the Company's Balance Sheet with low debt lower working capital and acomfortable cash position. The overall cash position including cash and bank balances andliquid investments has reached a new high of Rs. 2089 crores as compared to Rs. 1690crores in the previous year. Borrowings at a consolidated level specific to overseasprojects have reduced to Rs. 171 crores from Rs. 271 crores last year.
Much credit for the comfortable liquidity position goes to the Products business giventheir high ROCE cash and carry model with limited credit. However emphasis on collectionof outstandings and realization of money remains a top priority across businesses. Asmentioned earlier with settlements and financial closure of completed projects theProjects businesses have also ensured suitable improvement in cash from operations.Overall the cash surplus has been deployed in suitably lower risk Debt mutual funds.During the year the portfolio has been sensibly churned in favour of growth options ofshort and medium term funds to maximize earning from the investment portfolio. Meanwhilethere is an increased focus on developing a longer-term roadmap for utilizing thesurplus cash for scaling up and growing the business.
6. Tata Business Excellence Model (TBEM)
TBEM Assessment process brings nearly 300 Assessors and 25 Mentors from about 60 Tatagroup companies face to face with thousands of executives who manage the group'sstakeholder processes. It seeks to celebrate successes and highlights the opportunitiesahead for each company. It is an immense opportunity to take stock of the approachespractices tools and results with which we collectively represent brand Tata.Through this TBEM introspection the Company benefits from the key insights andobservations generated from the assessment team's outside-in perspectives. Moreimportantly it ensures discovery of Best Practices and deployment to other parts of thegroup thereby multiplying value and benefits.
During 2016-17 the Company participated in the external assessment based on TBEM. Aspart of the Assessment process senior executives from other Tata group companies assessedthe Company's key processes at Corporate as well at Business Units.
During the last couple of years the Company had focused on the findings of theprevious TBEM Assessments and strengthened the operational processes further. The effortstaken by the Company to move forward in business excellence have been acknowledged byadjudging the Company at higher maturity level of "Good Performance" score bandas compared to the last assessment.
Based on the outcome of the recent Assessment the Company is in the process ofdeveloping and implementing comprehensive action plans to take its Business Excellencejourney forward. In order to effectively execute these action plans the Company wouldcontinue to benchmark the processes with other companies within and outside the TataGroup. The Company has developed 50 Business Excellence champions to facilitate inseamlessly proceeding with Business Excellence journey. Ten of these champions havecontributed to External Assessments of other Tata group companies with achievements offour assessors being recognized at the Annual Tata Group Business Excellence Convention.Further the Company has initiated various continual improvement projects with anobjective of improving operational efficiencies in certain key areas critical to BusinessUnits. These projects were finalized after discussion with the Senior Management teamand were executed through cross functional teams.
Innovation is one of the key determinants of long term value creation. It is acontinual quest at the Tata group and Tata companies are supported in their efforts toachieve world-class standards in all aspects of operations through group-level processesand systems that encourage innovation.
During 2016-17 the Company also participated in Tata Innovista a Tata group levelcontest to recognise and celebrate the successes' and struggles' ofinnovation. As part of Innovista each innovation is assessed by a panel of Subject MatterExperts from within and outside the Tata group. From over 2000 applications acrossmultiple companies one of the teams from Voltas has won the Western Regional round.
7. IT Initiatives
All companies across all Industries are witnessing the advent and penetration ofDigital trends and technologies into their partner customer and competitor landscapes.The current social and business environments demand that every business be aware of andadopt Digital technologies that build the right capabilities to handle new threats andgain business advantage. Given this changed reality the Company recognised the need fordigitization and finalized its Digital Strategy early in the year.
Many initiatives were undertaken in-line with this strategy at Voltas. E-CataloguePortal for Spares Management Outstanding E-Portal MRP for Product Sales Call Monitoringand Preventive Maintenance features on Mobile with location based services and ClaimManagement for Bank Guarantee were some of the applications rolled out for the DomesticProjects business. Realizing the growing rise in Online purchases the UnitaryCooling Products business integrated with Tata Cliq and finance companies for ACsales. Bar-Code system was implemented in Commercial Refrigeration plant in Pantnagar totrack WIP and inventory real-time. The Company rolled out SAP across all majoroverseas JVs and subsidiaries to establish common business processes in Voltas managedentities. The implementation of SAP at Weathermaker a wholly-owned subsidiary inUAE included integration with the Engineering Software Camduct and Barcode fortracking WIP and enabling online dispatch. The Company also implemented the Boardvantagesolution for participants of Board/Committee Meetings. With this the Board/CommitteeMeetings of Voltas are now paperless.
One of the key projects supported by IT was Remote Monitoring of Chillers for DomesticProjects business. The solution leverages upcoming technologies like IoT Cloud andAnalytics to deliver a platform which helps the Company better serve customers throughpredictive maintenance by continuous monitoring of equipment. Voltas IT also playeda key role in GST preparedness and is well positioned to handle all requirements of GST.
To ensure high availability performance and security of the overall IT Systemmultiple enhancements were done on the IT Infrastructure front. These included adoption ofthe solutions for Network Access Control and secure Wi-Fi including change in IP Schemaredesign at all locations further enhancement of Data Backup processes for both the DataCentre and Disaster Recovery Centre with tools like Tivoli and Avamar etc.
8. Environment and Safety
Safety is a priority and of prime importance at Voltas. The Company continues toaddress matters related to Safety Health and Environment (S-H-E) through variousinitiatives. A Board Committee comprising
3 Directors including the Managing Director reviews the S-H-E performance. ASteering Committee comprising Corporate Management Group and other key membersperiodically reviews Safety performance and oversees implementation of variousinitiatives.
In order to ensure consistency and resilience of its Safety controls 51 major projectswere audited with a weighted score on the Tata Group Safety Standards compliances. Thiswas in addition to the regular Safety inspections and audit of sites Customer care premisesand offices.
The Company's manufacturing facilities certified as ISO 14001 and OHSAS 18001 undergoInternal as well as External audits and the systems and processes are continuously_ne-tuned every year. Unfortunately there was one fatal incident at DMRC project in June2016 caused due to collapse of a metallic structure.
The Company's goal continues to be to achieve Zero Fatality. Voltas believes that toattain this goal Safety Awareness is of prime importance. Accordingly a focused approachin training was developed and the Company has achieved the following in 2016-17: ?Awareness - 169162 personnel were Safety trained as compared to 81508 in previous year(multiple trainings). ? 3 day IOSH (UK) certification program 120 personnelhave been certified in the current year. ? 100% Induction training is ensured forall personnel at project sites. ? Increase in number of Safety observationsreported in 2016-17 by 70% as compared to last year.
The Company has improved the communication channels to capture SHE relatedobservations in keeping with the vision of Driving Value through Smart Engineering. AnOnline portal "SAFETY@VOLTAS" has been launched for capturing S-H-Eobservations and ensuring timely implementation of action plans to close suchobservations resulting in reduction of unsafe and adverse work conditions.
To ensure uniform communication and understanding about Safety practices and knowledgesharing the communication system has been improvised through creation of a WhatsApp groupof Safety practitioners. Sharing of the Loss Time Injury (LTI) incidents and HighPotential (HIPO) Near miss cases are done regularly in addition to sharing Safetymessages through SMS and emails. The improved communication mechanisms have helpedincrease workmen engagement in Safety meetings and trainings at project sites apart froman increase in the reporting of Safety observations LTI incidents and Near misses fromthe project sites.
National Safety week Road Safety week and Fire Service day were celebrated across thelocations and saw healthy participation of employees and subcontractor's staff acrossvarious sites. Safety recognition awards have also been instituted at project sites andmanufacturing locations. The Company has received numerous appreciation letters and awardsin recognition of the contribution towards improving the Safety standards from: ALFuttaim Carillion Oman for its Kempinski Project; TCS Indore; Tata Motors Pune; TataSteel Kalinganagar; to being honored as the Best
Safety Contractor and Safety Officer at Dhirubhai Ambani International Convention &Exhibition Centre project in BKC Mumbai LULU Grand Hyatt project in Cochin VIVA Bahriyaproject in Qatar and IIM Udaipur. CMRL project Chennai has also won the World SafetyOrganisation award in addition to the British Safety Council's International Safety Awardwith Merit.
The Company believes that incidents and risk to health and environmental impact arepreventable through continuous involvement of all stakeholders to create Zero HarmZero Illness Zero Waste and a Zero Defect work environment.
With a firm commitment to Sustainable Development the Company has adopted an approachof Engage Equip and Empower for all its CSR interventions under three key thrust areasnamely Sustainable Livelihood Community Development and National Importance. SustainableLivelihood
Sustainable Livelihood is the flagship program of Voltas. Under this thrust there is alot of emphasis on building employability amongst marginalized youth.
To take its commitment forward Voltas has commenced 18 Skill training centers inpartnership with Tata Strive and six other reputed organizations like GMR FoundationICICI Foundation Tech Mahindra Foundation Bosco Boys and Joseph Cardijn Technical Schoolacross 15 locations in the country. Out of the
18 Skill Training Centers 2 are Voltas Centers of Excellence at Thane and Jamshedpur.The training centers offer technical and non-technical courses. Currently Refrigerationand Air-conditioning (RAC) and Heating Ventilation and Air-conditioning (HVAC) are the 2skill trainings being offered under Technical training. For Non-technical training Tallyand Accounts Hospitality IT enabled services Health attendant Stitching and Tailoringare some of the courses offered.
The Company along with its partners ensures an end-to-end intervention comprisingtheoretical and practical training 'On the Job' Training Certification and Placementsupport. The key objective of this intervention is to build employability and promotesustainable livelihood. Through these training centers the Company has created a pool ofover 2500 well trained and certified technicians in 2016-17.
In 2016-17 Voltas also initiated a noteworthy project named 'Recognition of PriorLearning' (RPL). The
RPL program aims at formally training and upgrading knowledge of existing techniciansin the space of Refrigeration and Air-conditioning who were never formally trained. Thetechnicians on completing the training go through Technical knowledge Soft skills andCustomer care and Safety education. After rigorous assessments they are formallycertified by Electronic Sector Skill Council. This initiative not only equips thetechnicians with apt theoretical knowledge and improved productivity but certifies themas trained technicians to access better opportunities/emoluments. The Company has startedthis program for 1400 existing technicians from across 19 locations in the country. Sofar 846 technicians have been trained.
9. Community Development
Under this thrust area Voltas focuses on addressing priority issues expressed by thesurrounding communities around the Company's key locations Dadra Thane Pantnagar andChinchpokli. The key issues spelt out by the communities are Education Water Health andSanitation and Employability. Community project in partnership with Action For FoodProduction (AFPRO) has successfully completed 115 Household toilets at Dadra with anactive participation from Villagers and Gram Panchayat. Under water for irrigationproject the Company has formed water user groups. Hydro-geological investigation has beendone to find out 10 sites suitable for bore-well installation. Pipeline survey is underprogress. 3 Mega health camps were organized in 2016-17 and around 450 families fromacross 9 hamlets participated in the same.
In the space of Education the Company is striving to work for children frommarginalized section with focus on 3 key aspects namely capacity building of teachers toensure quality Education access to libraries and instilling quality reading practicesand teaching English to vernacular medium students from rural areas with the help ofspecially designed English course through Digital boards. In 2016-17 under qualityeducation 80 teachers from across 7 districts have been trained and about 184 childrenfrom BMC School have been supported. The library project has been of great help for over2500 students from 8 BMC and Zilla Parishad Schools. The 9 libraries established in theGovernment Schools have not only helped the children from marginalized sections with anaccess to informative and thought-provoking books but has inculcated a penchant forreading. The Company is reaching out to 7295 students from 153 Zilla Parishad Schools inThane District through its E-Teach English program. This innovative program is alsoengaging all the important village level stakeholders in the program including SchoolTeachers Parent-teachers' Associations Village youth and Gram Panchayat to make it a sustainableinitiative.
The Company also supported a project to control Pediatric Tuberculosis. 3000vulnerable children from 9 cities across the country have undergone a TB test forearly detection and treatment.
Under this thrust Voltas is focusing on the three sub-themes - DisasterManagement Afirmative Action for inclusion of socio-economically weaker sections in theprocess of development and Sanitation.
Subsequent to addressing immediate need for safe drinking water through water supply inthe perennially drought affected area of Osmanabad and Latur in 2015-16 the Company hadin 2016-17 started its long-term intervention called Participatory Ground WaterManagement for sustainable water in 5 villages. A Hydro-geological study was undertaken toidentify appropriate soil and water conservation measures and area treatment plan. Some ofthe key outcomes of the intervention are deeper understanding of the ground watermanagement increased knowledge of area treatment de-silting of public percolation tankand deepening of 3 wells. The excavated silt used by 10 farmers has led to better soilquality and fertility and 15 farmer clubs have been established. Over 3400 farmers haveinsured their crops and paid premium of Rs. 62.46 lakhs. Entitlements to differentdevelopment schemes were received by 31 needy families including Grass cutting machinefarm pond pipes Water lifting devices etc.
Swachh Bharat Abhiyaan - Under Sanitation (Swachh) Voltas in partnership withSulabh International refurbished 4 Public Toilet Complexes in Mumbai and Thane. EachToilet Complex takes care of a footfall of an average 20000 users per month. The Companyalso initiated a pilot project on solid waste management in E' Ward of Mumbai. 7sites comprising big residential complex hospital Police settlement have been selectedto work on the theme of Zero waste. At Masina Hospital which is one of the sites wastesegregation and management workshop has been done and composting pits have been built.
The Company continues to extend nutritional and educational support to Kathkari tribalchildren from a school near Panvel. In addition Voltas also introduced two moreinitiatives. ? Basic and Advanced Stitching and Tailoring skill training programfor tribal women. ? Nursing course. 18 tribal women have completed the skilltraining program.
10. Corporate Social Responsibility
Disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules2014 in prescribed form is enclosed as Annexure 1 to the Directors' Report. During2016-17 the Company has spent Rs. 8.45 crores towards various CSR activities.
11. Subsidiary/Joint Ventures/Associate Companies
The Company has 9 subsidiaries 4 joint ventures and 3 associate companies.
As per the requirement of Section 129(3) of the Companies Act 2013("Act") a statement containing salient features of the financial statements ofsubsidiaries joint venture and associate companies in prescribed Form AOC-1 isattached to the financial statements of the Company. Further pursuant to Section 136 ofthe Act the financial statements of the Company consolidated financial statements alongwith relevant documents and separate audited accounts in respect of subsidiaries areavailable on the website of the Company www.voltas.com.
There have been no material changes in the nature of the business of the subsidiariesincluding associates and joint ventures during the financial year 2016-17. During 2016-17the local joint venture partner - Sovereign International Company WLL (Sovereign)transferred their entire 51% shareholding in Voltas Qatar WLL (VQ) a joint venturecompany to a local Qatari national. As a sequel the two nominees of Sovereign on theBoard of VQ also resigned. The Board of VQ comprises four Directors all nominated by theCompany. As Voltas controls the composition of the Board of Directors VQ is a subsidiaryof the Company. Revised Memorandum of Association of VQ incorporating the aforesaidchanges in shareholding/ Directors has been registered with the local authorities inSeptember 2016.
The Company has on 23rd May 2017 entered into a Joint Venture arrangement withArelik A.S. a company incorporated in Istanbul Turkey for establishing a JointVenture Company (JVC) to tap the fast growing Consumer Durables market in India. Theproposed JVC to be incorporated in the name VoltBek Home Appliances PrivateLimited' would be engaged in the business of refrigerators washing machines microwavesand other white goods/domestic appliances in India. Arelik A.S. is part of the Kogroup which is Turkey's largest Industrial and Services group in terms of revenueexports taxes number of employees and market capitalization. The proposed JVC willleverage the strong brand presence and wide sales and distribution network of Voltas whichis the market leader for residential room airconditioners in India with over 20% marketshare. Arelik A.S. would bring to the JVC its strong R&D and manufacturing prowessin addition to a wide product range and global sourcing capabilities. Beko the globalbrand of Arelik A.S. has been the fastest growing home appliances brand in Europe forthe past 7 years. The proposed JVC would market its products under the brandVoltas-Beko'.
12. Number of Board Meetings
During 2016-17 eight Board Meetings were held on 26th April 2016; 17th May 2016; 2ndAugust 2016; 27th September 2016; 16th November 2016; 9th January 2017; 14th February2017 and 22nd March 2017.
13. Policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director
Based on the recommendation of the Nomination and Remuneration Committee (NRC) theBoard has adopted the Remuneration Policy for Directors KMP and other Employees. NRC hasformulated the criteria for determining qualifications positive attributes andindependence of an Independent Director and also the criteria for Performance evaluationof individual Directors the Board as a whole and the Committees. Evaluation of Directorswas done by the NRC at its meeting held on 22nd March 2017.
14. Evaluation of Performance of Board its Committees and of Directors
Pursuant to the provisions of the Act and Regulation 17 of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulations) the Board has carried out an evaluation of its own performanceCommittees and performance of individual Directors.
The performance of the Board as a whole Committees and individual Directors wasevaluated by seeking inputs from all Directors based on certain parameters such as: Degreeof fulfillment of key responsibilities; Board structure and composition; Establishment anddelineation of responsibilities to various Committees; Effectiveness of Board processesinformation and functioning; Board culture and dynamics and Quality of relationshipbetween the Board and the Management. The Directors also made a self-assessment of certainparameters - Attendance Contribution at Meetings and guidance/support extended to theManagement. The feedback received from the Directors was discussed and reviewed by theIndependent Directors at their annual separate Meeting and also shared with the NRC/Board.At the separate Meeting of Independent Directors performance of Non-independentdirectors including Chairman Board as a whole was discussed. The performance of theindividual Directors including Independent Directors performance and role of theBoard/Committees was also discussed at the Board Meeting.
15. Statutory Auditors
The Members had at the 60th Annual General Meeting (AGM) held on 1st September 2014approved the appointment of Deloitte Haskins and Sells LLP (DHS) as Statutory Auditors aswell as Branch Auditors of the Company to audit the accounts of the Company for threeconsecutive financial years between 2014-15 and 2016-17 from the conclusion of the 60thAnnual General Meeting (AGM) till the conclusion of 63rd
AGM of the Company to be held in the year 2017 subject to rati_cation at everyAGM. At the last AGM the Members had rati_ed their appointment for the financial year2016-17. DHS has done the Statutory audit of the financial statements of theCompany for 2016-17 and their Report does not contain any qualification reservation oradverse remarks.
Pursuant to the provisions of Section 139 of the Act read with the Companies (Auditand Auditors) Rules 2014 it is proposed to appoint S R B C & Co. LLP (SRBC) asStatutory Auditors for a term of five years from the conclusion of 63rd AGM till theconclusion of 68th AGM of the Company to be held in the year 2022 to examine andaudit the accounts of the Company for financial years between 2017-18 and 2021-22(subject to rati_cation of their appointment at every subsequent AGM if so required underthe Act). SRBC have pursuant to Section 139 of the Act furnished a certificate regardingtheir eligibility of appointment.
Resolution seeking approval of Members for appointment of SRBC as Statutory Auditors ofthe Company forms part of the Notice of AGM of the Company.
16. Cost Auditors
The Board had appointed M/s. Sagar and Associates Cost Accountants as the CostAuditors for the financial year 2016-17. M/s. Sagar and Associates Cost Accountants havebeen appointed as Cost Auditors of the Company for the financial year 2017-18 and approvalof the Members is being sought for rati_cation of their remuneration.
17. Secretarial Auditor
M/s. N L Bhatia and Associates Practicing Company Secretaries were appointed asSecretarial Auditor to undertake Secretarial Audit of the Company for the financial year2016-17. Their Secretarial Audit Report in prescribed Form No. MR-3 is annexed to theDirectors Report as Annexure V and does not contain any qualification reservation oradverse remarks.
18. Audit Committee
The Audit Committee comprises Mr. Nani Javeri (Chairman) Mr. R. N. Mukhija and Mr.Debendranath Sarangi all Independent Directors in line with the requirements of Section177 of the Act. The Board has accepted the recommendations made by the Audit Committeefrom time to time.
19. Internal Financial Controls
The Internal Financial Controls (IFCs) and its adequacy and operating effectiveness isincluded in the Management Discussion and Analysis which forms part of thisReport. The Auditors Report also includes their reporting on IFCs over FinancialReporting.
20. Risk Management
Pursuant to Section 134(3)(n) of the Act and Regulation 21 of ListingRegulations Risk Management Committee is in place comprising Mr. Nani Javeri (Chairman)Mr. R. N. Mukhija and Mr. Debendranath Sarangi. During 2016-17 two Meetings of RiskManagement Committee were held on 25th April 2016 and 10th January 2017 whereat the top10 risks identified for the Company and various mitigation measures in respect thereofwere reviewed and discussed.
21. Particular of employees
The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow: (a) The ratio of the remuneration of each director to the median remuneration ofthe employees of the Company for the financial year:
|Non-Executive Directors ||Ratio to median remuneration |
| || |
|Mr. Ishaat Hussain ||4.61 |
|Mr. Noel N. Tata ||3.67 |
|Mr. Nani Javeri ||5.68 |
|Mr. R. N. Mukhija ||4.14 |
|Mr. Vinayak Deshpande ||2.31 |
|Mr. Debendranath Sarangi ||3.25 |
|Mr. Bahram N. Vakil ||3.86 |
|Ms. Anjali Bansal ||2.69 |
|Ms. Usha Sangwan (upto 27.9.2016)* || |
|Managing Director ||Ratio to median remuneration |
|Mr. Sanjay Johri ||59.98 |
* Since this information is for part of the year the same is not comparable.
(b) The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear:
|Directors Chief Executive Officer Chief Financial Officer and Company Secretary ||% increase in remuneration in the financial year |
|Mr. Ishaat Hussain ||1 |
|Mr. Noel N. Tata ||10 |
|Mr. Nani Javeri ||12 |
|Mr. R. N. Mukhija ||7 |
|Mr. Vinayak Deshpande || |
|Mr. Debendranath Sarangi ||47 |
|Mr. Bahram N. Vakil ||* |
|Ms. Anjali Bansal ||* |
|Ms. Usha Sangwan (upto 27.9.2016) ||* |
|Mr. Sanjay Johri ||17 |
|(Managing Director) || |
|Mr. Anil George ||17 |
|(Chief Financial Officer) || |
|Mr. V. P. Malhotra || |
|(Company Secretary) || |
* Details are not given as the same are not comparable with previous year.
(c) Percentage increase in the median remuneration of employees in the financialyear: (-) 18.05% (d) Number of permanent employees on the rolls of Company:
(e) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstance for increase in managerial remuneration:
Average increase in remuneration is 3.74% for Employees other than Managerial Personneland 17% for Managerial Personnel (MD).
(f) Afirmation that the remuneration is as per the Remuneration policy of theCompany:
The Company afirms that the remuneration paid is as per the Remuneration policy ofthe Company.
(g) A statement containing names of top ten employees in terms of remuneration drawnand the particulars of employees as required under Section 197(12) of the Act read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in a separate Annexure forming part of this Report. Further the Reportand the Accounts are being sent to the members excluding the aforesaid Annexure. In termsof Section 136 of the Act the said Annexure is open for inspection at the RegisteredOffice of the Company. Any shareholder interested in obtaining a copy of the same maywrite to the Company Secretary.
22. Employee Stock Option
The Company has not issued any Employee Stock Options.
23. Conservation of energy technology absorption foreign exchange earnings and outgo
Information pursuant to Section 134(3)(m) of the Act relating to conservation ofenergy technology absorption foreign exchange earnings and outgo is given as Annexure IIto this Report.
24. Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Company's Articles of AssociationMr. Ishaat Hussain retires by rotation and does not seek re-election in view of hisretirement on 2nd September 2017 as per the retirement age policy for Directors adoptedby the Board. Mr. Ishaat Hussain is a Director of the Company since 26th April 1999 andthe Chairman of the Board of Directors since 27th January 2000.
Ms. Usha Sangwan a Director on Voltas Board representing Life Insurance Corporationof India (LIC) had resigned and ceased to be a Director of the Company with effect from27th September 2016. The Directors place on record their sincere appreciation of thevaluable guidance and support given by Ms. Usha Sangwan during her tenure on theBoard. Mr. Hemant Bhargava was appointed as an Additional Director representing LIC witheffect from 23rd May 2017. Mr. Arun Kumar Adhikari was appointed as an AdditionalDirector and Independent Director with effect from 8th June 2017 for a term of fiveyears subject to approval of shareholders at the forthcoming AGM. In accordance with theprovisions of Section 161(1) of the Act Mr. Hemant Bhargava and Mr. Arun Kumar Adhikarihold office upto the date of the forthcoming AGM and are eligible for appointment asDirectors of the Company. Notices under Section 160 of the Act have been received frommembers proposing the appointment of Mr. Hemant Bhargava and Mr. Arun KumarAdhikari respectively as Directors of the Company. The Resolutions seeking approval ofthe Members for appointment of Mr. Hemant Bhargava as a Director and Mr. Arun KumarAdhikari as an Independent Director including a brief profile of these Directorsform part of the Notice of the 63rd AGM of the Company.
None of the Directors is the Managing or Whole-time Director of any subsidiary of theCompany.
Based on the recommendation of the Nomination and Remuneration Committee the Board hasalso at its Meeting held on 8th June 2017 appointed Mr. Anil George and Mr. PradeepBakshi as Additional Directors and Executive Directors with effect from 1st September2017.
Mr. Anil George a qualified Chartered Accountant joined Voltas in July 2010 asExecutive Vice President Corporate Affairs and CFO (designate). He was appointed as theCFO of the Company in May 2011 and promoted as President (Corporate Affairs) & CFO inAugust 2013. He is entrusted with additional responsibilities of Textile Machinerybusiness Ethics Information Technology Property matters and Corporate Communication.
Mr. Pradeep Bakshi is a Science graduate from Delhi University and holds Post GraduateDiploma in Management. He has worked with various reputed Multinational and Indiancompanies in the Consumer Appliances domain before joining Voltas in November 2001.Mr. Pradeep Bakshi grew to the position of President & Chief Operating Officer Unitary Products Business Group (UPBG) in August 2013 and took additional responsibilityof Mining & Construction Equipment business with effect from 1st April 2014. Mr.Sanjay Johri (Managing Director) Mr. Anil George (Chief Financial Officer) and Mr. V. P.Malhotra (Company Secretary) are the Key Managerial Personnel (KMPs) of the Company inline with the requirements of Section 203 of the Act.
25. Declaration by Independent Directors
Pursuant to Section 149(7) of the Act the Company has received declarations from allIndependent Directors confirming that they meet the criteria of independence as specifiedin Section 149(6) of the Act and Regulation 16(b) of Listing Regulations.
26. Corporate Governance
Pursuant to Schedule V of the Listing Regulations Management Discussion and AnalysisCorporate Governance Report and Auditors' Certificate regarding compliance of conditionsof Corporate Governance form part of the Annual Report. A declaration signed by theManaging Director in regard to compliance with the Code of Conduct by the Board Membersand Senior Management personnel also forms part of the Annual Report.
27. Details of establishment of vigil mechanism for directors and employees
The Company had adopted a Whistle Blower Policy ("the Policy") as requiredunder Section 177(9) of the Act and Listing Regulations. The Policy has been formulatedwith a view to provide a mechanism for directors and employees of the Company to approachthe Ethics Counsellor/Chairman of the Audit Committee of the Company in case of anyconcern. The Whistle Blower Policy can be accessed on the Company's website at the link:http://www.voltas.com/WBP.pdf
28. Particulars of loans guarantees or investments under Section 186 during 2016-17
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the standalone financial statements (Pleaserefer to Notes 7 8 16 and 38 of the standalone financial statements).
29. Particulars of contracts or arrangements with related parties
All related party transactions during 2016-17 were in the ordinary course of businessand satisfied the test of arm's length. Information on transactions with related partiespursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014 are given in prescribed Form No. AOC-2 as Annexure III to this Report.
30. Directors' Responsibility Statement
Based on the framework and testing of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory cost_ and secretarial auditors including audit of internal financial controlsover financial reporting by the Statutory Auditors and the reviews performed by Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Company's internal financial controls were adequate and effective duringthe financial year 2016-17. Accordingly pursuant to Section 134(5) of the Act the Boardof Directors to the best of their knowledge and ability confirm that: (i) in thepreparation of the annual accounts the applicable accounting standards have been followedand that there are no material departures; (ii) they have in the selection of theaccounting policies consulted the Statutory Auditors and have applied theirrecommendations consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of financial year and of the profit of the Company for that period; (iii) they havetaken proper and sufficient care to the best of their knowledge and ability for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; (iv) they have prepared the annual accounts on a going concernbasis; (v) they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and(vi) they have devised proper system to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
31. Extract of the Annual Return
Pursuant to Sections 92(3) and 134(3)(a) of the Act read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of Annual Return inprescribed Form No. MGT-9 is given as Annexure IV to this Report.
32. Disclosure as per the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted aRespect for Gender' Policy on prevention prohibition and redressal of sexualharassment in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under. The Companyhad during 2016-17 received 3 written complaints on sexual harassment which wereinvestigated and appropriate actions were initiated.
The Notes forming part of the Accounts are self-explanatory or to the extentnecessary have been dealt with in the preceding paragraphs of the Report.
On behalf of the Board of Directors
Mumbai 8th June 2017