REPORT OF THE BOARD OF DIRECTORS
To the Members of 3M India Limited
Your Directors have pleasure in presenting the Thirty Second (32nd) AnnualReport of the Company. The Standalone and Consolidated Financial Statements of the Companyfor the financial year ended March 31 2019 are prepared in compliance with the applicableprovisions of the Companies Act 2013 including Indian Accounting Standards. The auditedstandalone and consolidated financial statements together with the Auditors' Reportthereon form part of the Annual Report.
FINANCIAL HIGHLIGHTS - Standalone and Consolidated
(Rs. in Lakhs)
|Particulars || |
| ||Year ended March 31 2019 ||Year Ended March 31 2018 ||% age increase / decrease (-) ||Year ended March 31 2019 ||Year Ended March 31 2018 ||% age increase / decrease (-) |
|Revenue from Operations ||280875.97 ||258039.60 ||8.85% ||301682.24 ||273418.82 ||10.34% |
|Of which -Export Sales ||2696.81 ||1627.92 ||65.66% ||3046.68 ||2382.43 ||27.88% |
|Other Income net ||3283.16 ||4361.54 ||-24.72% ||3683.12 ||4478.82 ||-17.77% |
|Total Income ||284159.13 ||262401.14 ||8.29% ||305365.36 ||277897.64 ||9.88% |
|Less: Expenditure ||230116.35 ||210058.45 ||9.55% ||248123.58 ||223557.68 ||10.99% |
|Profit before Interest and Depreciation ||54042.78 ||52342.69 ||3.25% ||57241.78 ||54339.96 ||5.34% |
|Less: Finance costs ||109.18 ||194.07 ||-43.74% ||112.26 ||202.92 ||-44.68% |
|Less: Depreciation and amortization expense ||4187.67 ||4180.32 ||0.18% ||4375.63 ||4350.60 ||0.58% |
|Profit before Taxation ||49745.93 ||47968.30 ||3.71% ||52753.89 ||49786.44 ||5.96% |
|Less: Tax expense ||17446.85 ||16914.74 ||3.15% ||18439.39 ||17456.34 ||5.63% |
|Profit for the year ||32299.08 ||31053.56 ||4.01% ||36617.99 ||33335.08 ||9.85% |
|Less: || || || || || || |
|Profit from discontinued operations ||- ||- ||- ||91.07 ||754.38 ||-87.93% |
|Gain on disposal of discontinued operations ||- ||- ||- ||3171.66 ||905.00 ||250.46% |
|Tax expense of discontinued operations ||- ||- ||- ||959.24 ||654.40 ||46.58% |
|Items that will not be re-classified subsequently to profit or loss ||(12.77) ||(26.25) ||-51.35% ||(6.37) ||(20.38) ||-68.74% |
|Total Comprehensive income for the year ||32286.31 ||31027.31 ||4.06% ||36611.62 ||33314.70 ||9.90% |
Your Board of Directors approved the Dividend Distribution Policy on February 9 2017in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. ThePolicy was uploaded at http://solutions.3mindia.co.in/wps/portal/3M/enIN/about- 3M/information/corporate/financial-facts/summary/ and the same is alsoannexed herewith as "Annexure J".
The Company remains invested in India and sees significant tailwinds from policy anddemand in several sectors including electronics where the Company has made its most recentinvestment through the acquisition of 3M Electro & Communication India PrivateLimited. The Company remains bullish on investments and growth expectations in India innear term as well as medium term helped by strong fundamentals in the economy and theCompany sees itself implementing several initiatives and projects to leverage the sameincluding CAPEX manpower and related infrastructure. The Company therefore has decided toconserve and retain the earnings and is not proposing a dividend or transfer of anyamounts to reserves.
Transfer of dividend to the Investor Education and Protection Fund if any: NA
TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and therefore your Boarddoes not propose to transfer any amounts to reserves.
INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES /ASSOCIATES/ JOINT VENTURE
In accordance with Section 129(3) of the Companies Act 2013 a statement containingsalient features of the financial statement of the Subsidiary Company in Form AOC-1 isprovided as "Annexure L" to this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review the revenue from operations of 3M E&C increased toRs. 20913.04 Lakhs in the financial year 2018-19 compared to Rs.15450.03 Lakhs infinancial year 2017-18. The Profit before tax for the year financial year 2018-19 is Rs.3007.96 Lakhs as against Rs. 1818.14 Lakhs in the financial year 2017-18. The Profitafter tax for the financial year 2018-19 is Rs. 4325.33 Lakhs as against Rs. 2287.41Lakhs in the financial year 2017-18.
Brief highlights of 3M E&C:
The Electrical Business ventured in the extra high voltage segment by localizingthe portfolio and leveraging technical and sales competencies. Your Company bagged severalwins from utilities and industrial projects.
Government's approach to Mobility Transformation has paved the way forAutomotive Electrification (AE). 3M is contributing to this by working with stakeholdersengaged in AE including automobile OEMs. A fully dedicated team has been set up which isworking in collaboration with Auto OEMs Design houses Regulatory Bodies BatteryManufacturers EV charger manufacturer to bring about technical advancement in this space.
In accordance with the third proviso to Section 136(1) of the Companies Act 2013 theAnnual Report and Financial Statements of the Subsidiary Company for the financial year2018-19 have also been placed on the website of the Company. http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/.
STATE OF COMPANY'S AFFAIRS
The Indian economy continues to be a bright spot in the world with strong growthmomentum and favorable indicators. The year 2018 saw several short-term headwinds in themacro economy - dipping inflation farm distress liquidity issues Banking NPAs etc.Tailwinds were seen in infrastructure retail ecommerce markets. India will continue topush the infrastructure agenda for the next several years to bridge the gap of rapidurbanization and quality of life in cities.
Your Company has continued its strong growth trajectory with consistent performanceeven in the face of short-term headwinds. The Company was able to do so because of itssharp focus on quality of business portfolio prioritization operational discipline andcontinued commitment to ethics and compliance. "Customer first" continues to beat the core of everything that the Company does. Much like the financial year 2017-18 theefforts continue to focus around and the Board is pleased to highlight that your Company:
> Geographical penetration: Has expanded presence with deeper penetration inTier B & C cities which is the real driver of demand in India.
> Government and Infrastructure initiatives: Your Company has aligned withseveral national infrastructure initiatives through focused work on regulatory helping inmany cases to set national standards in areas such as safety.
> Channel Transformation: Has introduced several steps to improve channelhealth through simplified processes professional management and rationalization.
> Market & Segment Growth: Has gained from strong performances in keygrowth market segments such as infrastructure energy and consumer reflecting positivemarket trends.
> Winning through localization: Continues to participate and drive localmanufacturing bolstered by robust new product introduction process and value addition.
The year 2018 saw the Company win several prestigious awards and garner industryrecognitions in acknowledgment to performance. Your Company continues to go after biggerand bolder opportunities and strives to be a highly valued partner for customers.
The Board of Directors at its meeting held on May 30 2018 and shareholders throughpostal ballot on July 26 2018 approved the investment in the entire equity share capitalof 3M Electro & Communication India Private Limited. The investment was completed onDecember 27 2018 for a value of Rs. 58470 Lakhs. The above business combination is acommon control transaction and accordingly has been accounted for using the pooling ofinterest method with effect from April 1 2017. 3M India Limited acquired net assets ofRs. 9188 Lakhs resulting in an adjustment of Rs. 49282 Lakhs in consolidated totalreserves. 3M Electro & Communication India Private Limited became a 100 % Subsidiaryof the Company with effect from December 27 2018.
The Company on a standalone basis registered an overall turnover growth of 8.85% at Rs.280875.97 Lakhs for the financial year ended March 31 2019 compared to Rs. 258039.60Lakhs in the previous financial year. The Profit before Interest and Depreciation is Rs.54042.78 Lakhs compared to Rs. 52342.69 for the previous financial year. Profit beforeTax is Rs. 49745.93 Lakhs compared to Rs. 47968.30 Lakhs for the previous financialyear. The operating margin for the current year is 19.02% compared to 19.95% for theprevious financial year. Total Comprehensive Income is Rs. 32286.31 Lakhs compared to Rs.31027.31 Lakhs for the previous financial year. Portfolio prioritization operationalproductivity and lower material costs increased the profitability at all levels for thefinancial year under review. Export Sales is Rs. 2696.81 Lakhs for the financial yearended March 31 2019 compared to Rs. 1627.92 Lakhs in the previous financial year anincrease of 65.66% due to increase in demand in global market.
The Industrial business grew by 4.90%; Health Care business grew by 6.60%: Safety andGraphics business grew by 7.91%; Consumer business grew by 11.22% and Energy business grewby 36.01%.
The EPS (Basic and Diluted) of the Company for the financial year 2018-19 was Rs.286.72 per Share as compared to Rs. 275.66 per Share in the previous financial year agrowth of 4.01%. Detailed analysis of the performance has been discussed in theManagement's Discussion and Analysis Section of the Annual Report.
Segment Change from April 12019:
3M's new Business group re-alignment was announced re-aligning from 5 (five) businessgroups to 4 (four). The new Business Groups are Safety and Industrial BusinessTransportation and Electronics Business Health Care Business and Consumer Business. Thiswas a key first step for the Company in advancing 3M into the future and strengthen ourability to meet the fast-moving needs of the global customers and markets. The newalignment is designed to leverage the Company's business transformation progressaccelerate growth and deliver greater operational efficiencies.
Your Company has also aligned the organization to the new Business Groups and positionthe organization for the future leading the local execution of go-to-market plansbuilding on strong relationships with customers and channel partners and representing thevoice of customer for our markets.
CONTRIBUTION TO EXCHEQUER:
During the financial year 2018-19 the Company has paid various taxes on account of itsbusiness/operation viz. VAT & CST SGST CGST IGST Direct Taxes and Customs Dutyamounting to Rs. 72938 Lakhs in aggregate.
Capital Investments during the financial year 2018-19 is Rs. 3084.21 Lakhs (Net ofcapital work-in-progress and capital advances) (201718: Rs. 1641.10 Lakhs).
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial positionof the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as "AnnexureA".
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred as "Listing Regulations") along with Certificate froma Practising Company Secretary regarding compliance to the conditions stipulated underChapter IV of the Listing Regulations is annexed as "Annexure B".
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as "Annexure C"and forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share i.e. Equity Share with a face value of Rs.10/- each. The Authorized/Issued/Subscribed and fully paid-up Share Capital as at March31 2019 is Rs. 112650700 (divided into 11265070 Equity Shares of Rs. 10/- each).
During the year under review the Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the financial year 2019-20 to NationalStock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Company's EquityShares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Based on the recommendations of the Nomination and Remuneration Committee the Board atits Meeting held on October 30 2018 appointed Ms. Sadhana Kaul (DIN: 02589934) asAdditional Director of the Company categorized as Non-Executive Non-Independent Directorwith effect from October 31 2018 and she will hold office till the Annual General Meetingto be held on August 14 2019. Accordingly a resolution seeking appointment of Ms.Sadhana as a Director of the Company is included in the Notice convening the AnnualGeneral Meeting. Details of Ms. Sadhana are exhibited in the Explanatory Statement to theNotice of the Annual General Meeting. The Board of Directors recommends her appointment asDirector of the Company. The Board once again welcomes Ms. Sadhana Kaul as a Director ofthe Company.
Mr. Albert C Wang (DIN: 05234667) Non-Executive Non-Independent Director resigned asDirector of the Company from the closing hours of August 21 2018 due to the change inglobal position and his appointment as General Counsel for Greater China. The Board placeson record its appreciation for the contributions made by Mr. Albert Wang to the progressof the Company during his tenure as Director.
Based on the recommendations of the Nomination and Remuneration Committee andperformance evaluation carried out on February 12 2019 the Board at its Meeting held onMay 28 2019 has appointed Mr. Biren Gabhawala (DIN: 03091772) as an Additional Directorfrom August 5 2019 categorized as Non-Executive Director and will hold office till theAnnual General Meeting to be held on August 14 2019.
Further Mr. Biren Gabhawala (DIN: 03091772) has also been proposed to be appointed asan Independent Director with effect from August 14 2019 for second term since his firstterm ends on August 4 2019. Accordingly a Special Resolution seeking re-appointment ofMr. Biren Gabhawala as Independent Director of the Company is included in the Noticeconvening the Annual General Meeting. Details of Mr. Biren Gabhawala are exhibited in theExplanatory Statement to the Notice of the Annual General Meeting. The Board of Directorsrecommends his appointment as Director and appointment as an Independent Director of theCompany for the second term.
Mr. Jongho Lee (DIN: 06720950) will retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. The details of Mr. Jongho Leeare exhibited in the Explanatory Statement to the Notice of the Annual General Meeting.The Board of Directors recommends his re-appointment.
Based on the recommendations of the Nomination and Remuneration Committee subject tothe requisite approvals from the Members and the Central Government the Board at itsMeeting held on May 28 2019 has appointed Mr. Ramesh Ramadurai (DIN: 07109252) Directorof the Company as Managing Director of the Company for a period from June 1 2019 toFebruary 12 2022 (till the date of his superannuation) in place of Ms. Debarati Sen. TheBoard of Directors welcomes Mr. Ramesh Ramadurai as Managing Director to the Board. Thedetails of Mr. Ramesh Ramadurai are furnished in the Explanatory Statement to the Noticeconvening the Annual General Meeting. The Board recommends his appointment. He will be aKey Managerial Personnel of the Company from June 1 2019.
Ms. Debarati Sen (DIN:07521172) shall cease to be the Managing Director of the Companyfrom the closing hours of May 31 2019 consequent upon her appointment as Vice Presidentand General Manager in Abrasives Systems Division Safety and Industrial Business Groupand will be based out of St. Paul USA. The Board expresses its deep appreciation of thevaluable contributions made by Ms. Sen during her tenure as Managing Director of theCompany to the progress of the Company. Ms. Debarati Sen will continue as Non-ExecutiveDirector of the Company from June 1 2019.
As at the financial year ended March 31 2019 Ms. Debarati Sen Managing Director Mr.B.V. Shankaranarayana Rao Whole-time Director Ms. Mamta Janak Gore Chief FinancialOfficer and Mr. V. Srinivasan Company Secretary and Compliance Officer are the KeyManagerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors of theCompany under the provisions of Section 149(7) of the Companies Act 2013 that they meetthe criteria of their Independence laid down under the provisions of Section 149(6) of theCompanies Act 2013 read with Listing Regulations. All the Independent Directors have alsoconfirmed under Regulation 16(b) of SEBI (LODR) Regulations 2015 that they are notNon-Independent Director of another Company on the Board of which any NonIndependentDirector of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE YEAR
During the financial year ended March 31 2019 four (4) Meetings of the Board wereheld. The date and number of Meetings attended by each Director / Committee Member alongwith other Committee Meetings details are furnished in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31 2019 the Audit Committee of the Companyconsisted of three (3) Non-Executive Independent Directors and one (1) Non-ExecutiveDirector and all of them have financial and accounting knowledge. The Members of theCommittee are Mr. Biren Gabhawala (Chairman) Mr. Bharat Shah Ms. Radhika Rajanand Mr. Jongho Lee. The Board has accepted all the recommendations made by the AuditCommittee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a Policy for selection and appointment of Directors Senior Management and forother employees and their remuneration. The same has been disclosed on the website at http://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/information/corporate/financial-facts/summary/. The composition criteriafor selection of Directors and the terms of reference of the Nomination and RemunerationCommittee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performance itsCommittees and Directors pursuant to the requirements of the Companies Act 2013 ListingRegulations and as per the Guidance Note issued by SEBI. Further the IndependentDirectors at their exclusive meeting held during the year reviewed the performance ofthe Board its Chairman and Non-Executive Directors and other items as stipulated underthe Listing Regulations. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed herewith as "Annexure D".
REMUNERATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARYCOMPANY
During the year under review no Commission or Remuneration was paid to the ExecutiveDirectors from Holding / Subsidiary Companies.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your 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 Financial Yearended March 31 2019 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statementshave been selected and applied consistently and judgement and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2019 and of the profit of the Company for the year ended onthat 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 operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company's Internal controls is aligned to Global 3M's internal control overfinancial reporting which are based on the framework established by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) in Internal Controls Integrated Framework (2013). The internal controls framework essentially has two elementsviz. (1) structures policies and guidelines designed to achieve efficiency andeffectiveness in operations and compliance with laws and regulations and (2) an assurancefunction provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.
The Company has in place adequate systems of internal controls commensurate with itssize and the nature of its operations. These have been designed to provide reasonableassurance with regard to recording and providing reliable financial and operationalinformation complying with applicable statutes safeguarding assets from unauthorized useor losses executing transactions with proper authorization and ensuring compliance ofcorporate policies.
The Company through its own Corporate Internal Audit Department carries out periodicaudits to cover all the offices factories and key areas of business segments based on theplan approved by the Audit Committee and bring out any deviation to internal controlsprocedures. The observations arising out of audit are periodically reviewed and complianceensured. The summary of the Internal Audit observations and status of the implementationis submitted to the Audit Committee of the Board of Directors. The status ofimplementation of the recommendations is reviewed by the Committee on a regular basis andconcerns if any are reported to the Board.
DISCLOSURE REGARDING FRAUDS
During the year under review there were no frauds reported by the Auditor to the AuditCommittee or to the Board.
During the year under review the Company has neither accepted nor renewed any depositsfrom public within the meaning of Section 73 of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the Company has not given any Loans provided anyguarantees or made any Investments covered under Section 186 of the Companies Act 2013.
RELATED PARTY TRANSACTIONS (RPTs)
All Related Party Transactions (RPTs) which were entered in to during the financialyear were on an arm's length basis and were in the ordinary course of business. All RPTsare placed before the Audit Committee for approval. Prior omnibus approval of the AuditCommittee is obtained on a yearly basis for the transactions which are foreseeable andrepetitive in nature. A statement exhibiting details of all actual RPTs versus theapproval is placed before the Audit Committee for approval on a quarterly basis. A Policyon RPTs as approved by the Board is uploaded on the Company's website at http://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/ information/corporate/financial-facts/summary/.
The Company being a part of 3M conglomerate has rights to carry out the businesswithin India and accordingly has access to Group's synergies state of the art productsand technologies competencies and "3M" brand name which are very critical andessential to carry out its business operations more efficiently in an increasinglyglobalized and competitive scenario. As a part of its regular business the Companypurchases avails/renders services from/to 3M Company USA and/or its group companies atarm's length basis.
The RPTs are necessary normal to business play a significant role in the Company'sbusiness operations and also form integral part of the Company's business. An analysis ofall the RPTs entered into / by the Company and the basis of charge was undertaken througha third-party professional firm.
The Company has already taken approval from the Shareholders for all material RPTs forthe estimated/proposed transactions for three (3) financial years starting from April 12017 to March 31 2020 at the Annual General Meeting held on August 10 2017. Form No.AOC-
2 pursuant to Section 134 (3) (h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is annexed
herewith as "Annexure E".
CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under Corporate Social Responsibility (CSR) the Company hasundertaken projects in the areas of Education
Community and Environment. These projects are in accordance with Schedule VII to theCompanies Act 2013.
School Readiness Program (Anganwadi)
The Company continued to support the School Readiness initiative in partnership withUnited Way of Bengaluru to transform Anganwadis under the ICDS program of Government ofIndia to ensure well rounded development of children under the age of 6 to be ready forschool. This is a national program covering 130 centers and is improving the lives of over11000 children below the age of 6 years. In its second year of intervention during FY2018-19 the program expanded its activities in Anganwadi centers in 7 cities - BangalorePune Chennai Delhi Kolkata and Ahmedabad and Mumbai. The second year focused onstabilizing the program at all locations with uniform interventions and projectachievements including the development of qualitative aspects such as learning outcomesand school readiness among children and community mobilization with the mothers' groups'active engagement at Anganwadi centers. This program is working towards achieving theSustainable Development Goal (SDGs) 4 which is to ensure inclusive and equitable qualityeducation and promotion of lifelong learning opportunities for all.
Project NanhiKali: Educating the Girl Child
The Company partnered with K.C. Mahindra Trust to sponsor the education of 2861 girlstudents from grades 1st to 5th in the rural district of Ambegaon inPune Kolkata and Gurgaon and secondary school students in Noida Uttar Pradesh. Theprogram targets first generation learners who attend Academic Support Centers atGovernment schools where the students improve their proficiency in English Maths and thelocal language. NanhiKalis in secondary school are provided with tablets pre-loaded withaudio-visual educational content to enhance their learning of concepts in Math andEnglish. The program works to ensure that the NanhiKalis stay in school and improve theirlearning levels as they continue their education.
3M-CII Young Innovators Challenge Awards Program
The Company is committed to building a community of young innovators who are at theearly stage of launching their next generation of sustainable solutions to solve keysocio-economic problems. The 5th edition of the Young Innovators Challenge in partnershipwith the Confederation of Indian Industry (CII) was completed with an all-time high of 500idea submissions. The four- stage selection process shortlisted 51 semi-finalists 19finalists and 7 winning ideas received grants from the Company to further theirprototypes. The winners were felicitated at the 13th CII India InnovationSummit.
Project Pahal: Skill Development of Community Healthcare Workers
In line with the Government's priorities towards preventive and promotive health theCompany partnered with various organizations including GE Healthcare and IPE Global toparticipate in a skilling initiative to empower women community health workers. 400 womenCommunity Health Workers from the Merry Gold Network were mobilized to participate in a4-day training program with curriculum and teaching aids developed by Wipro GE and 3MIndia. The training batches were conducted in 14 cities and towns across 2 northern statesin India - Rajasthan and Uttar Pradesh over 6 months. The health care workers were ontopics like Hand Hygiene Wound Management and Cleaning/ Disinfection which wereinterwoven into the course curriculum. Members of the Professional Services & salesteams volunteered their time to conduct trainings to 15 batches of 400 community healthworkers (including trainers). The Company continued to support Phase 2 of the skillingprogram which is scaling up to train up to 6000 Community Health Workers across statessuch as Orissa Uttar Pradesh Rajasthan and Assam.
3M Young Change Agents for Road Safety Pilot Program
To harness the learning of children at a young age on road safety awareness theCompany embarked on a unique and innovative initiative to educate children with essentialskills to become sensitive safer road users by-standers and safe drivers in the future.Moving away from classroom based non-interactive program the 3M Young Change Agents inRoad Safety (Y-CARS) was launched as a pilot program in three schools in Pune. The programwas introduced in partnership with the school management through a combination ofworkshops road & road behavior observation and online modules. Through the programchildren became observers of the road safety elements around their school and provided anaudit of how safe the school is through a guided process. The observations from thechildren were collated into a School Safe Zone Design which will be implemented through
road safety improvements by the Company. At the end of this program children receiveda certificate while taking a pledge as Young Change Agents for Road Safety committed tospread the learnings to their families and friends.
Kerala & Kodagu Flood Rehabilitation Program
During the unprecedented floods that affected several parts of Kerala and Kodagu theCompany responded to the natural disaster with a rehabilitation program to support thefamilies especially children who suffered great losses due to the floods. Needsassessment was carried out at 10 Anganwadi centers in Aluva block Ernakulam. Scope ofwork to refurbish these centers and bring them back to operation for children and familiesincluded interiors and exterior improvements repair works plumbing & electricalworks learning materials and mural artwork on the walls.
Water Conservation Project at Latur
Water conservation continued to be a strong theme for the Company's CSR efforts. TheCompany partnered with FIAT India Automobiles Private Limited to undertake WaterConservation program "Jalyukt Shivar Abhiyan" in drought-hit villages of LaturDistrict (Nilanga Tahsil). In this 2nd year of implementation of the projectthe Company initiated rainwater harvesting activities namely - desilting and widening ofriver tributaries and construction of cement nalla bunds at 7 sites covering 4 villages inDeoni Tahsil Milanga. The entire project involved the development of 25 sites impacting17 villages.
Rejuvenation of Lake Singasandra
To address the issue of rapid depletion of water bodies in the city of Bangalore theCompany supported the rejuvenation of one of the many lakes in the city - SingasandraLake situated in Bommanahalli Zone in Singasandra Bengaluru and spread over 11 acres.The state of the lake before the intervention was left wanting in many ways. Lakerestoration activities were taken up in partnership with United Way of Bengaluru and BBPM.The rejuvenation activities included ensuring that the lake was free from garbageeffluents and other pollutants thereby restoring water quality and the aquatic species.Solar lamps benches waste bins including e-waste bins have been installed around thelake. Over 5000 bio-diverse saplings (A mix of medicinal species and herbs such as VasakaNirgundi Turmeric Ginger Lucky Aloe Vera Mehandi etc.) were planted to increase theflora around the lake. Five full-time gardeners were deployed and are working to maintainthe lake environment. Increase in the birdlife visiting the lake has been observed. Toincrease community ownership a lake committee consisting of community members was formedwith engagement activities including a Plog Run (picking up plastic waste as one runs/jogs) Kannada Rajyotsava Kere Deepotsava and tree planting.
The Annual Report on CSR activities is annexed herewith as "AnnexureP'.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(2) & (3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014statement showing details of top ten(10) employees in terms of remuneration drawn duringthe financial year and other employees of the Company employed throughout the year andemployees employed for part of the year who were in receipt of remuneration of Rs. 1.02Crores or more per annum and Rs. 80 Lakhs or more per month respectively is annexedherewith as "AnnexureG."
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8(3) of The Companies (Accounts) Rules 2014 is annexed as "AnnexureH"'.
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy pursuant to the requirements of ListingRegulations. The details of Committee and its terms of reference are set out in theCorporate Governance Report forming part of the Board's Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the year by the Regulators/ Courts which would impact the going concern status of the Company and its futureoperations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct ConcernReporting Policy (Whistle Blower Policy) for upholding 3M's Code of Conduct. The detailsof the said Policy are stated in the Corporate Governance Report and also available on
the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/enIN/about-3M/information/corporate/financial-facts/ summary/
Messrs. BSR & Co. LLP Chartered Accountants Bengaluru (ICAI Firm Registration No.101248W/W-100022) were appointed as the Statutory Auditor of the Company at the 29thAnnual General Meeting held on August 52016 to hold office for a period of five (5) yearsfrom the conclusion of the 29th Annual General Meeting till the conclusion ofthe 34th Annual General Meeting to be held in 2021 subject to ratification of theirappointment by the members at every intervening Annual General Meeting held thereafter.
The requirement of seeking ratification of the members for continuance of theirappointment has been withdrawn consequent upon the changes made by the Companies(Amendment)Act 2017 with effect from May 7 2018. Hence the resolution seekingratification of the members for their appointment is not being placed at the ensuingAnnual General Meeting.
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 appointedMr. Vijayakrishna K.T Company Secretary in practice to undertake the Secretarial Audit ofthe Company for the financial year 2018-19. The Report of the Secretarial Audit Report isannexed herewith as "Annexure I".
SEBI vide its Circular no. CIR/CFD/CMD1/27/2019 dated February 8 2019 has mandated allthe Listed entities having its Equity Shares Listed on the Stock Exchange(s) to obtain theAnnual Secretarial Compliance Report in the prescribed format from a Practising CompanySecretary (PCS) from the financial year ended March 31 2019 onwards and the Report shouldbe submitted to the concerned Stock Exchanges within 60 days of the end of the financialyear and be included in the Annual Report. The Annual Secretarial Compliance Report fromMr. Vijayakrishna K.T is annexed herewith as "Annexure I-1" which wasfiled with the Stock exchanges within the prescribed time limit.
EXPLANATIONS IN RESPONSE TO AUDITORS' QUALIFICATIONS
During the year under review there were no qualifications reservations or adverseremarks made by the Statutory Auditors / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year 2018-19 your Company has complied with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form MGT 9 is annexedas "Annexure K"
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTIONPROHIBITION & REDRESSAL) ACT 2013
1. Number of complaints of sexual harassment received in the financial year (April 12018 to March 31 2019) : 2
2. Number of complaints disposed off during the financial year: 2
3. Number of cases pending for more than 90 days: None
4. Number of workshops or awareness programmes carried out in connection with sexualharassment: 3
5. Remedial measures taken by the Company:
- Counselling by Internal Committee to both the parties on professional code ofconduct. Warning letter given to respondent.
- Leadership behavior implication for respondent and roles change for respondent toprevent interaction with each other.
- Respondent (contingent worker) was not deputed on 3M premises and the contract agencywas briefed on the same. Counselling given to the complainant.
During the financial year the Company took many initiatives to increase organizationalcapability and productivity to be value driven and future-ready. As at March 31 2019 theCompany had employee strength of 1377 personnel.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 the cost audit records maintained by the Company inrespect of the products covered under the said rules are required to be audited by a CostAccountant. Accordingly the Board of Directors of the Company at its Meeting held on May28 2019 on the recommendation of the Audit Committee approved re-appointment of Messrs.Rao Murthy & Associates Cost Accountants Bengaluru (holding Registration No.000065) to conduct the audit of the cost records of the Company for the financial yearended March 31 2020 on a remuneration of Rs. 475000/- plus taxes as applicable and outof pocket expenses at actuals. The Audit Committee has also received a certificate fromthe Cost Auditor certifying their independence and arm's length relationship with theCompany.
As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members at the General Meeting for their ratification.Accordingly a resolution seeking ratification of the remuneration payable to Messrs. RaoMurthy & Associates Cost Accountants Bengaluru is included in the Notice conveningthe Annual General Meeting.
Disclosure on Cost Audit: For the financial year ending March 31 2018 the duedate of filing the Cost Audit Report submitted by Messrs. Rao Murthy & AssociatesCost Accountants Bengaluru was September 27 2018 and the same was filed with theMinistry of Corporate Affairs on August 23 2018 vide SRN H03455847.
During the year under review the Company:
a. has not bought its own shares nor has given any loan to the employees (includingKMPs) of the Company for purchase of the Company shares and
b. has not issued any shares to trustees for benefit of employees.
ENVIRONMENT HEALTH AND SAFETY
Global health and safety issues are prevalent in workplaces around the world. Creativeinnovation technology education and collaboration are all critical if we are to tacklethese human health and workplace safety concerns.
For decades 3M has had entire business divisions focused on creating products andservices for human health protection security and safety. The Company is committed tohelping improve the health and safety of people world-wide.
The Company also embraces this commitment for its own operations and to that end willcontinue to take steps to protect the most important asset - 3M employees.
The Company has three (3) Manufacturing Plants in operation in India and all threeplants have Environmental Management Systems certified to new ISO 14001: 2015 standard.
Your Company's Management is continuing to step up the leadership towards a moresustainable in its own operations and in solutions for the customers. Sustainability isat the core of what the Management does at 3M and is committed to improving the businessthe planet and every life.
3M's strategies for sustainable development encompass the pursuit of customersatisfaction and commercial success within a framework of environmental social andeconomic values. The Company is committed to complying with all applicable environmentalrequirements worldwide. Beyond compliance the Company continues to make significantinvestments to reduce the environmental footprint of our operations; and the products withsustainable attributes help customers reduce their environmental footprint and help tomeet their Sustainability goals. Always 3M believes environmental policy and regulationsshould be guided by science-based decision making.
Sustainability Goals which the Company is now pursuing reflect a heightened commitmentto going beyond compliance and thinking holistically about how the operations and productsaffect the world and every life in it. For the 18th consecutive year 3M was selected as amember of the Dow Jones Sustainability Index a global stock index that recognizes andtracks the performance of leading Sustainability-driven companies worldwide. And 3M IndiaPlants are contributing and meeting the targets of this global goals.
Sustainability target for the Manufacturing plants were to reduce the Waste Water andEnergy with respect to 2015 Baseline numbers:
- Waste generation reduction by 20.91%
- Water consumption reduced by 57.01%
- Energy Consumption reduced by 28.11%
- Also 2 of the manufacturing plants are utilizing 24% share of its energy consumptionthrough renewable energy.
- Waste generated at Plants is majorly sent for co processing in cement kilns therebyreducing the carbon footprint of the sites.
All plants have sewage / waste water treatment plants and the treated water is recycledfor cooling tower make and horticulture with in the facilities. The plants have alsoinstalled rain water harvesting systems to divert the rain water for ground waterrecharging. With the approval from local Pollution Control Boards plants continuedsending non-hazardous waste to cement companies to generate energy. As part of WorldEnvironmental day initiative the plants have taken up various environmental awarenessprograms including tree plantation in plants as well as public location.
Health and Safety:
The Company continues to reinforce our commitment to leadership in safety and health.All three manufacturing plants have health and safety management systems certified toOHSAS 18001: 2007. Your Company continues to forge ahead with our commitment to leadershipin safety and health. Like in the prior year 3M Corporation recognized two of ourmanufacturing facilities - Ranjangaon and Electronics city plants with the highest awardfor safety excellence - The CEO Award for consistently upholding safety standards.
Your Company strongly believe that Safety starts with every individual while thebehavior of every individual defines the culture of the organization.
> All accidents and injuries are preventable
> Everyone in organization is accountable for the safety performance
Safety and Health metrics are driven rigorously through tier level meetings whichstarts with Safety observations. Each plant has qualified Safety Officer and therepresentation of Employees at Plant safety committees includes both management andshop-floor employees and the meetings are chaired by the Plant manager. The High hazardactivities (HHA) which are carried out at sites are driven through Risk and Prioritization(RAP) review approach. Hierarchy of controls focus firstly on elimination of the hazardfollowed by substitution engineering controls and finally PPE with management along withmanagement oversight and STOP work initiates ensures the employees perform the job in thesafest possible manner. In addition to EHS risk analysis the Company has a crisis planfor every single 3M plant. Although the Company never hopes to use the Crisis ManagementPlans it is critically important that the Company has them in place keep them up todate and drill often to make sure everyone understands what to do should an emergencyoccur. The Company cares utmost about the safety of our people and communities around theworld
The 3M Global Safety and Health Plan (GSHP) which is part of 3M's EnvironmentalHealth and Safety (EHS) management system is required to be implemented by global 3Mlocations. This approach utilizes a well-developed self-assessment process that iscategorized into multiple elements addressing various areas and standards related tosafety and health. 3M utilizes a variety of tools to manage risks from hazards in theworkplace. The Company used specialized tools successfully for several years in the areasof process safety industrial hygiene and ergonomics. Each of these disciplines uses arisk management approach to categorize hazard levels and define appropriate levels ofcontrol.
The other EHS framework programs which 3M follows are Ergonomics Industrial hygieneProcess hazard management (PHM) Ventilation programs Static Management plan Safetytrainings Health and Wellness Programs which enables us to ensure better and safe workenvironment to all the employees.
All these efforts translate into the EHS metrics being achieved and notably there hasbeen no Lost Time injuries at any of the three manufacturing sites during this periodunder consideration.
The Company has led with passion and shared its expertise with the communities throughschool outreach activities with its employees' children and several awareness programswith the customers.
Supported by 3M's highly credentialed Technical trainers the Company has partneredwith industrial facilities across India to drive safety and build confidence amongst theend users through "Safety on Wheels" trucks. This program also offers varioustraining sessions that would include a various Personal Protection Equipment (PPE)demonstrations (through hands on and Videos) on a variety of safety topics.
The Safety on Wheels which also known as Audhyogik Suraksha Rath targets to train over1 million workers over next 3 years to build awareness and training about safety practicesand personal protective equipment and to spread the word about the importance of workersafety across the nation. The Audhyogik Suraksha Rath have travelled across industrialclusters in the country educating more than 95000 workers on the importance of workplacesafety.
AWARDS AND RECOGNITION
The Company was recognized by Outlook Business Outperformed a listing byOutlook Business publication of companies that have consistently delivered highperformance. 3M India Limited was recognized for the 2nd consecutive year forstock return over Sensex over the last 5 years.
The Company was amongst the Top 10 Companies in India by Earnings Per Share(EPS) trailing 12 months as per a compilation by MoneyControl.com.
Your Company was recognized as amongst Forbes India's Super 50 Companies of 2017for overall performance.
The Company's Managing Director Ms. Debarati Sen featured in Fortune India'sannual list of Top 50 Powerful Women in Business for her leadership in strengthening 3M'sposition and brand in India.
3M Car Care was awarded Franchisor of the Year Award - Consumer Services for2018 by Franchise Awards.
The Company's manufacturing facility at Ranjangaon was awarded the Gold Awardfor Manufacturing Excellence by Frost & Sullivan
The Company was recognized for Lean Six Sigma excellence at the CII 12thNational Six Sigma Competition. Two projects presented under Transaction process andDiscrete process categories respectively received special recognition.
The Company's senior women leaders were recognized for Business Leadership amongWomen at the Future Woman Leader Summit & Awards 2018.
The Company was recognized for overall performance in the areas of qualitycost delivery innovation by top customers in the automotive utilities and constructionsectors.
The Company's manufacturing facility at Electronics city received 3M Corporaterecognition for Quality achievement. This was the Company's 7th consecutive Corporate 3Mrecognition for Quality.
The Company also received several accolades for excellence in lean six sigmamarketing innovation and various support functions with several 3M Corporate and regionallevel awards.
Your Directors thank and acknowledge with gratitude the co-operation assistance andsupport received from the Central Government
State Governments of Karnataka Maharashtra and Gujarat Bankers ShareholdersDealers Vendors Promoters of the Company and
all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitudetowards the contribution made by every employee
of the Company.
| ||On behalf of the Board of Directors |
| ||Debarati Sen ||B.V. Shankaranarayana Rao |
|Place : Bengaluru ||Managing Director ||Whole-time Director |
|Date : May 28 2019 ||DIN: 07521172 ||DIN:00044840 |