To the Members of 3M India Limited
Your Directors have pleasure in presenting the Thirty Third (33rd) AnnualReport of the Company. The Standalone and Consolidated Financial Statements of the Companyfor the financial year ended March 31 2020 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.
- Standalone and Consolidated
(Rs. in Lakhs)
| ||Standalone ||Consolidated |
|Particulars ||Year ended March 31 2020 ||Year ended March 31 2019 ||% age increase / decrease (-) ||Year ended March 31 2020 ||Year ended March 31 2019 ||% age increase / decrease (-) |
|Revenue from Operations ||276487.73 ||280875.97 ||-1.56% ||298655.09 ||301682.24 ||-1.00% |
|Of which -Export Sales ||2210.14 ||2602.22 ||-15.07% ||2409.49 ||3068.18 ||-21.47% |
|Other Income net ||4158.32 ||3283.16 ||26.66% ||4589.56 ||3683.12 ||24.61% |
|Total Income ||280646.05 ||284159.13 ||-1.24% ||303244.65 ||305365.36 ||-0.69% |
|Less: Expenditure ||242506.93 ||230116.35 ||5.38% ||253688.61 ||248123.58 ||2.24% |
|Profit before Interest and Depreciation ||38139.12 ||54042.78 ||-29.43% ||49556.04 ||57241.78 ||-13.43% |
|Less: Finance costs ||361.11 ||109.18 ||230.75% ||366.21 ||112.26 ||226.22% |
|Less: Depreciation and amortization expense ||5737.70 ||4187.67 ||37.01% ||5933.25 ||4375.63 ||35.60% |
|Profit before Taxation ||32040.31 ||49745.93 ||-35.59% ||43256.58 ||52753.89 ||-18.00% |
|Less: Tax expense ||10143.06 ||17446.85 ||-41.86% ||11039.66 ||18439.39 ||-40.13% |
|Profit for the year ||21897.25 ||32299.08 ||-32.20% ||32216.92 ||34314.50 ||-6.11% |
|Less: || || || || || || |
|Profit from discontinued operations ||- ||- ||- ||- ||91.07 ||- |
|Gain on disposal of discontinued operations ||- ||- ||- ||- ||3171.66 ||- |
|Tax expense of discontinued operations ||- ||- ||- ||- ||(959.24) ||- |
|Items that will not be re-classified subsequently to profit or loss ||(374.23) ||(12.77) ||-2830.54% ||(413.22) ||(6.37) ||-6386.97% |
|Total Comprehensive income for the year ||21523.02 ||32286.31 ||-33.34% ||31803.70 ||36611.62 ||-13.13% |
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 https://www.3mindia.in/3M/en_IN/company-in/about-3m/financial-facts-local/ and the same is also annexed herewith as "Annexure J".
The Company remains invested in India and the areas of investment opportunityhighlighted in prior years continue to hold good. However this may happen with some lagas the economy gets back on the recovery trajectory after the impact of the recentCOVID-19 pandemic. We remain responsible to our shareholders in the Company to maintain astrong balance-sheet during these uncertain times. For both of these reasons the Companyhas decided to conserve and retain the earnings and is not proposing a dividend.
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.
STATE OF COMPANY'S AFFAIRS
Your Company delivered sustainable growth in a challenging economic environment withcontinued focus on quality of business portfolio prioritization fiscal prudence anddiscipline and a strong commitment to ethics and compliance. The Board is pleased tohighlight that your Company focused on the following strategies which contributed to itspositive performance.
Government and Infrastructure initiatives: Government expenditure gainedmomentum in the FY 2019-20 and your Company aligned with national infrastructureinitiatives through focused work on regulatory helping in many cases to set nationalstandards in areas such as safety and health.
Diverse Business Portfolios: Diversified business portfolios helped your Companytide through the downturn with growing coming from multiple segments such as consumerhealthcare transportation and safety.
Digital acceleration: As Indian consumers purchase online; your Company focusedseveral growth programs for e-commerce expansion with investment in consumer brands anddistribution access to Tier B and C cities.
Fiscal Management: Your Company managed a strong cash position amidst the liquiditycrisis in the country throughout the year and continued to invest in prioritized growthprograms.
During the quarter ended September 30 2019 your Company decided to opt for thereduced tax rate @25.168 % (earlier rate @34.944%) permitted under section 115BAA of theIncome Tax Act 1961 as introduced by the Taxation Laws (Amendment) Ordinance 2019.
Your Company has been responding to the CoVID-19 pandemic through prioritizingsupplies to the most critical areas working with distributors and governments to ensuresecure supply chains not increasing the respirator prices as a result of the pandemicpublished N95 respirator prices support communities through aid for relief.
The Company is continuing to adapt quickly to the current environment with afocus on mitigating the near-term impact while positioning its businesses for successcoming out of the crisis. Actions have been taken for protecting our employees andensuring business continuity.
Due to CoVID-19 all the three manufacturing plants of your Company were closedas per the directions from the Government of India and local administration from March 232020 till May 3 2020. However respirators and sanitizers lines in Ranjangaon plantcontinued its manufacturing since they were classified as essential commodities.
It is quite unfortunate and sad that CoVID-19 has caused significant healthconcerns across the Globe and resulted in multiple deaths. Social distancing being theonly and the first compulsory remedy entire World was forced to observe Lockdown. Thanksto early initiatives taken India declared Lockdowns. Your Company complied with thedirections of the Government of India the Government of Karnataka and the relevantauthorities and strictly adhered to the Lockdown in its facilities and at all Offices. The
T3 employees vendors customers outsourcing agencies Consultants and otheracquaintances had to suspend their operations
g almost fully. Considering the nature of operations of your Company Work from Homeconcept was made applicable at all facilities.
Throughout the lockdown period our committed employees in our Ranjangaon plantoperated the respirators sanitizers and certain medical products lines with very goodon-ground support from the local authorities. We are very thankful for their commitmentand contributions. During this period we were able to increase the output of ourrespirators and sanitizers significantly through various productivity measures. All thesethree factories have gradually reopened. Since late March through this time the otherparts of our business were strongly impacted due to the lockdown. The future projectionsremain uncertain and the Company has used best available internal and externalinformation for our estimates. The Actual impact of the global pandemic may be differentfrom that which has been estimated as the COVID 19 situation evolves in India andGlobally.
The Company on a standalone basis de-grew by 1.56% at Rs. 276487.73 Lakhs for thefinancial year ended March 31 2020 compared to Rs. 280875.97 Lakhs in the previousfinancial year. The Profit before Interest and Depreciation is Rs. 38139.12 Lakhscompared to Rs. 54042.78 Lakhs for the previous financial year. Profit before Tax is Rs.32040.31 Lakhs compared to Rs. 49745.93 Lakhs for the previous financial year. Theoperating margin for the current year is 13.59% compared to 19.02% for the previousfinancial year. Total Comprehensive Income is Rs. 21523.02 Lakhs compared to Rs.32286.31 Lakhs for the previous financial year. Economic slowdown affected the toplinegrowth and impairment in the carrying value of the investment in the subsidiary affectedthe bottom-line. Export Sales is Rs. 2210.14.14 Lakhs for the financial year ended March31 2020 compared to Rs. 2602.22 Lakhs in the previous financial year a decrease of15.07% due to less demand in the global market.
On a standalone basis the Safety and Industrial business de-grew by 5.82%;Transportation business de-grew by 0.24%; Health Care business grew by 1.66%; and Consumerbusiness grew by 5.33%.
The EPS (Basic and Diluted) of the Company for the financial year 2019-20 was Rs.194.38 per Share as compared to Rs. 286.72 per Share in the previous financial year adecrease of 32.20%. 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.
Your Company operates an Information Security Management System (ISMS) mainly centeredin the Head Office St. Paul USA is certified to the requirements of ISO/IEC 27001:2013and continue to meet the certification requirements since 2014. Enhancing and optimizingcybersecurity protection continue to be one of top priorities. A new SaaS securityawareness tool with advanced features was deployed. This includes monthly phishingcampaigns to all users globally and monthly security awareness communication and trainingfeatures. Yearly programme on renewing and testing the cybersecurity incident responseprocess continued to ensure currency and adequacy. NIST CSF - The National Institute ofStandards and Technologies Cybersecurity Framework: provides a common language andlifecycle approach for understanding managing and expressing cybersecurity risks. Ithelps identify and prioritize actions for reducing risk and helps align policy businessand technology approaches to managing that risk. Your Company has implemented the GlobalManaged Print Services Program (also known as Output express) which is the strategicsolution for the acquisition and use of imaging and printing hardware services andrelated accessories at 3M. It applies to office lab and manufacturing areas inadministrative buildings lab buildings plants and sites such as sales Offices. 3M IThas been able to provide best of the IT Support C during COVID-19 in the months of Marchand April 2020 across the Country by enabling Work from Home solution in terms of r
Connectivity End User support and have a seam less IT Continuity Plan withoutaffecting any business operations of the Company.
>90% fill rate for Modern trade customers; Sustenance of AOEM Scorecard anddelivering expectations of all Customers.
On Time In Full (OTIF) performance improved from 80% to 89%.
Distribution Network Rationalization - No. of warehouses reduced from 6 to 5.
Re-alignment of Supply Chain Planning structure with Asia COE; India benefitingthrough best practices deployment and regional team's support.
Contribution to Exchequer
During the financial year 2019-20 the Company has paid various taxes on account of itsbusiness/operation viz. VAT & CST SGST
CGST IGST Direct Taxes and Customs Duty amounting to Rs. 40166.74 Lakhs inaggregate.
Capital Investments during the financial year 2019-20 is Rs. 1983.52 Lakhs (Net ofcapital work-in-progress and capital advances) (2018-19: Rs. 3084.21 Lakhs).
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. 22221.45 Lakhs in the financial year 2019-20 compared to Rs. 20913.04 Lakhs infinancial year 2018-19. The Profit before tax for the year financial year 2019-20 is Rs.3226.27 Lakhs as against Rs. 3007.96 Lakhs in the financial year 2018-19. The Profitafter tax for the financial year 2019-20 is Rs. 2329.67 Lakhs as against Rs. 4318.91Lakhs in the financial year 2018-19. The Total Comprehensive Income was Rs. 2290.68 Lakhsfor the year 2019-20.
Highlights of 3M E&C:
Electric vehicles sales excluding e-rickshaws in India grew by 20% in theFY 2019-20. The Company is finding opportunity for its products in AutomotiveElectrification (AE) space with its fully dedicated team working with battery packmanufacturers start-ups in this segment fleet owners charging stations Auto OEMsRegulatory Bodies.
In the year 2019 India became the world's second largest mobile phone producer.With the increasing demand for smartphones in India and favorable government policiescoupled with the implementation of the Phased Manufacturing Program (PMP) under whichdifferential import tariffs are being imposed on mobile phone components in stages aresome of the reasons for this exponential growth of the mobile manufacturing sector inIndia. The Company has long been in the forefront as a material supplier to this segmentglobally and in India has very close engagement with all the leading OEMs and contractmanufacturers.
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 year2019-20 have also been placed on the website of the Company https://www.3mindia.in/3M/en-IN/company-in/about-3m/financial-facts-local/.
Scheme of Amalgamation between the Company and 3M E&C
The Board of Directors of the Company and 3M E&C at their Meetings held onNovember 13 2019 had approved the Scheme of Amalgamation ('the Scheme') of 3M E&C('Transferor Company') with the Company under Section 233 of the Companies Act 2013. TheAppointed Date fixed under the Scheme was April 1 2019. The Company sought approvals fromMembers and Creditors under Section 233(1)(b) of the Company's Act 2013 by SpecialResolutions through Postal Ballot notice dated January 21 2020. The results of the votingby Postal Ballot were announced on February 28 2020. As the Company did not get therequisite approvals of 90% of the total no. of Shares and 90% of the value (amount) ofCreditors the Scheme did not go through under Section 233(1)(b) of the Companies Act2013. The Company will go ahead with an alternate option under the Companies Act 2013 forthe merger going forward.
INVESTMENT IN SUBSIDIARIES
Investment in subsidiaries and joint ventures are recognised at cost as per Ind AS 27.In March 2020 the World Health Organization declared COVID 19 to be a Pandemic. TheCompany adapted measures to curb the spread of infection in order to protect the health ofits employees and ensure business continuity with minimal disruption. The Company hasevaluated the possible effects that may result from the pandemic relating to COVID-19 onthe carrying amounts of its Assets and Liabilities including investment in its subsidiaryand its internal financial controls. In performing such assessment the Company hasapplied assumptions considered internal and external information up to the date ofapproval of the financial statements. The Actual impact of the global pandemic may bedifferent from that which has been estimated as the COVID 19 situation evolves in Indiaand Globally. The Company will continue to closely monitor any material changes to futureeconomic conditions. Based on such assessment the Company does not expect material impacton its carrying value of assets and liabilities other than the write down of the carryingvalue of its investment in its subsidiary. During the quarter and year ended 31 March2020 the Company reevaluated the carrying value of its investment in its subsidiary (3MElectro & Communication India Private Limited) given the impact of the COVID 19Pandemic on the current and future operations of the subsidiary. Based on its assessmentthe Company has recorded an impairment of Rs. 7990 Lakhs to the carrying value of theinvestment in the subsidiary (please refer Note no. 6 from standalone financialstatements).
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 2020 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 2020-21 to NationalStock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Company's EquityShares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment and Re-appointment of Directors:
The following appointment and Re-appointment were made during the financial year tillthe date of the report:
Based on the recommendations of the Nomination and Remuneration Committee andperformance evaluation carried out the Board at its Meeting held on February 11 2020approved the re-appointment of Mr. Bharat Dhirajlal Shah (holding DIN: 00136969) as anNon-Executive Independent Director for a second term of five (5) years with effect fromMarch 27 2020. Mr. Bharat Shah will be attaining the age of 75 years on February 182022 during his tenure of re-appointment. The Members of the Company have approved hisreappointment by way of a Special Resolution through Postal Ballot Notice dated February11 2020. The results of the voting by Postal Ballot were announced on March 26 2020.
Mr. Amit Laroya (holding DIN: 00098933) will retire by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re- appointment. The detailsof Mr. Amit Laroya are exhibited in the Explanatory Statement to the Notice of the AnnualGeneral Meeting. The Board of Directors recommends his re-appointment.
Resignation and Retirement of Directors:
The following mentioned details are resignation and retirement were received during thefinancial year until the date of the report:
Ms. Debarati Sen (holding DIN: 05234667) Non-Executive Non-Independent Directorresigned as Director of the Company from the closing hours of March 02 2020 due to herglobal role related travel and other commitments in the United States with her engagementwith 3M Company USA. The Board places on record its appreciation for the contributionsmade by her to the progress of the Company during her tenure as Director.
Ms. Sadhana Kaul (holding DIN: 02589934) Non-Executive Non-Independent Directorresigned as Director of the Company from the closing hours of May 05 2020 as she haddecided to pursue her career outside of 3M Group. The Board places on record itsappreciation for the contributions made by her to the progress of the Company during hertenure as Director.
Mr. B.V. Shankaranarayana Rao (holding DIN:00044840) Whole-time Director of theCompany superannuated from the Company from the closing hours of May 13 2020 after a longassociation of 30 years of service with the Company. The Board places on record itsappreciation for the contributions made by him to the progress of the Company during histenure as Chief Financial Officer and as a Director.
As at the financial year ended March 31 2020 Mr. Ramesh Ramadurai Managing DirectorMr. B.V. Shankaranarayana Rao Wholetime 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 FINANCIAL YEAR
During the financial year ended March 31 2020 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 2020 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 athttps://www.3mindia.in/3M/en_IN/company-in/about-3m/financial-facts-local/. Thecomposition criteria for selection of Directors and the terms of reference of theNomination and Remuneration Committee 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 2020 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 2020 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 Internal Auditor functionally reports to the Audit Committee andadministratively to the Managing Director. The observations arising out of audit areperiodically reviewed and compliance ensured. The summary of the Internal Auditobservations and status of the implementation is submitted to the Audit Committee of theBoard of Directors. The status of implementation of the recommendations is reviewed by theCommittee on a regular basis and concerns 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 2013except for the investments made during the financial year 2018-19 for the acquisition ofall the outstanding shares of 3M Electro & Communication India Private Limited for Rs.58470 Lakhs.
RELATED PARTY TRANSACTIONS (RPTs)
All RPTs which were entered in to during the financial year were on an arm's lengthbasis and were in the ordinary course of business. All RPTs are placed before the AuditCommittee for approval. Prior omnibus approval of the Audit Committee is obtained on ayearly basis for the transactions which are foreseeable and repetitive in nature. Astatement exhibiting details of all actual RPTs versus the approval is placed before theAudit Committee for approval on a quarterly basis. A Policy on RPTs as approved by theBoard is uploaded on the Company's website athttps://www.3mindia.in/3M/en_IN/company-in/about-3m/financial-facts-local/.
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.
As per the provisions of the Companies Act 2013 and Listing Regulations all RPTsrequire approval of the members by an Ordinary Resolution. Based on past trend thetransactions for the Financial years 2020-21 2021-22 and 2022-23 are likely to exceed 10%of the annual turnover of the Company as per the last Audited Financial Statements of theCompany and may exceed the materiality threshold as prescribed under the provisions ofListing Regulations. Thus in terms of Listing Regulations these transactions wouldrequire approval of the Members.
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 proposes to seek the approval of the Members for all material RPTs for theestimated/proposed transactions for three financial years from April 1 2020 to March 312023.The estimated/proposed RPTs are in the Ordinary and normal course of business and onArms' Length basis and accordingly the Board recommends the Ordinary Resolution set forthin the Notice for the approval of the Members. Form No. AOC-2 pursuant to Section 134 (3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014is annexed herewith as "Annexure E".
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As part of its initiatives under CSR the Company has undertaken projects in the areasof Education Community and Environment. These projects are in accordance with ScheduleVII to the Companies 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 over15000 children below the age of 6 years. In its third year of intervention during FY2019-20 the program expanded its activities in Anganwadi centers in 8 cities - BangalorePune Chennai Delhi Gurgaon Kolkata and Ahmedabad and Mumbai. The third 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) and 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 and secondary schools in the rural district of Ambegaon inPune. This is the second year of intervention. The program targets first generationlearners who attend Academic Support Centers at Government schools where the studentsimprove their proficiency in English Mathematics and the local language. NanhiKalis insecondary school are provided with tablets pre-loaded with audio-visual educationalcontent to enhance their learning of concepts in Mathematics and English. The programworks to ensure that the NanhiKalis stay in school and improve their learning levels asthey 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 6th edition of the Young Innovators Challenge in partnershipwith the Confederation of Indian Industry (CII) was completed with close to 1000 ideasubmissions. The four- stage selection process shortlisted 59 semi-finalists 18 finalistsand 7 winning ideas received grants from the Company to further their prototypes. Thewinners were felicitated at the 14th CII India Innovation Summit.
School Transformation with Smart Classrooms:
The Company supported the school transformation initiative with YUVA Unstoppable in 10Government Schools in urban and semiurban areas of Bangalore. The project undertook thebuilding of new infrastructure in the schools around drinking water facilitiessanitation and hygiene (WASH) amenities to empower children. The project also includesthe setting up of the infrastructure for smart classrooms using multimedia technology.This in turn leads to improved student attendance and enrolment ratios in the schools.
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. TheCompany continued to support Phase 2 of the skilling program which scaled up to train upto 4000 Community Health Workers across Uttar Pradesh and Rajasthan. Over 3600 womenCommunity Health Workers from the Merry Gold Network were mobilized to participate in a4-day training program with curriculum and teaching aids. The training batches wereconducted in over 40 districts and towns across 2 northern states in India - Rajasthan andUttar Pradesh. The health care workers were on topics like Hand Hygiene Wound Managementand Cleaning/ Disinfection which were interwoven into the course curriculum. Members ofthe Professional Services and Sales teams volunteered their time to conduct trainings tothe master trainers of the project.
3M Young Change Agents for Road Safety Program:
To harness the learning of children at a young age on road safety awareness theCompany continued to support the initiative to educate school children with essentialskills to become sensitive safer road users in the future. The 3M Young Change Agents inRoad Safety (Y-CARS) was launched across schools in Pune Bangalore Chennai and Delhi.The program was introduced in partnership with the school management through a combinationof workshops road & road behavior observation and online modules. Through theprogram children became observers of the road safety elements around their school andprovided an audit of how safe the school is through a guided process. The observationsfrom the children were collated into a School Safe Zone Design which were implementedthrough road safety improvements to create Safe School Zones by the Company. At the end ofthis program children received a certificate while taking a pledge as Young Change Agentsfor Road Safety committed to spread the learnings to their families and friends.
Flood & Cyclone rehabilitation in Odisha and North Karnataka:
During the unprecedented floods that affected several parts of North Karnataka and thecyclone that hit districts of Odisha the Company responded to these natural disasterswith a Rehabilitation Program to support the families with shelters and strengthenhealthcare centers in the areas affected.
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 were planted to increase the flora around the lake.Plans have been put in place to set up a children's park area and an outdoor gym toencourage greater community participation.
Solar Electrification of Rural HealthCare Centers and Powering Livelihoods:
The Company supported Selco Foundation to enhance livelihoods and strengthen ruralprimary health care centers through solar electrification. Through the programme 12primary health centers or sub-centers in the states of Karnataka Tamil Nadu andMaharashtra will have access to a reliable clean energy solution. The projects can impactabout 150000 end users who will avail health services at these centers. Project willinclude the installation of solar panels batteries and energy efficient appliances basedon the requirement of the individual health center. Through the programme 100 microentrepreneurs will have access to a clean energy- based livelihood solution throughinclude energy efficient appliances like sewing machines photocopy machines milkingmachines blowers roti making machines etc. which are powered through a solar systemincluding solar panels and batteries.
The Annual Report on CSR activities is annexed herewith as "Annexure F".
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. 8.50 Lakhs or more per month respectively is annexedherewith as "Annexure G."
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 financial year by theRegulators / Courts which would impact the going concern status of the Company and itsfuture operations.
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 thewebsite of the Companyhttps://www.3mindia.in/3M/en-IN/companv-in/about-3m/financial-facts-local/.
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 5 2016 to hold office for a period of five (5)years from the conclusion of the 29th Annual General Meeting till theconclusion of the 34th Annual General Meeting to be held in the year 2021subject to ratification of their appointment by the members at every intervening AnnualGeneral 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 2019-20. 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 all the Listed entities havingits Equity Shares Listed on the Stock Exchange(s) to obtain the Annual SecretarialCompliance Report in the prescribed format from a Practising Company Secretary (PCS) fromthe financial year ended March 31 2019 onwards and the Report should be submitted to theconcerned Stock Exchanges within 60 days from the end of the financial year and beincluded in the Annual Report. The Annual Secretarial Compliance Report from Mr.Vijayakrishna K.T is annexed herewith as "Annexure I-1" which was filedwith 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 financial year 2019-20 your Company has complied with the applicableSecretarial Standards 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
The Company has in place a Policy against Sexual Harassment at workplace in line withthe requirement of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Policy is available on the website of the Companyhttps://www.3mindia.in/3M/en-IN/companv-in/about-3m/financial-facts-local/. InternalComplaints Committees (ICC) have been set up to redress complaints received regardingsexual harassment.
Status of Complaints during the FY 2019-20:
1. Number of complaints of sexual harassment received in the financial year (April 12019 to March 31 2020): None
2. Number of complaints disposed off during the financial year: NA
3. Number of cases pending for more than 90 days: NA
4. Number of workshops or awareness programmes carried out in connection with sexualharassment: 11
5. Remedial measures taken by the Company: NA
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 2020 theCompany had employee strength of 1277 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 May29 2020 on the recommendation of the Audit Committee approved re-appointment of Messrs.Rao Murthy & Associates Cost Accountants Bengaluru (holding Registration ofRs. 475000/-(Rupees Four Lakhs Seventy Five Thousand only) plus taxes as applicable andout of pocket expenses at actuals. The Audit Committee has also received a certificatefrom the 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 2019 the CostAudit Report submitted by Messrs. Rao Murthy & Associates Cost AccountantsBengaluru was filed with the Ministry of Corporate Affairs on September 9 2019 vide SRNH87887550 well within the due/extended date.
During the financial 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's Shares and
b. has not issued any Shares to trustees for benefit of employees.
ENVIRONMENT HEALTH AND SAFETY
Your Company is rooted in scientific exploration and the belief that every problem hasa solution your Company is applying technological expertise to help in solving some ofthe world's biggest challenges on raw materials water energy and climate and health andsafety. Global health and safety issues are prevalent in workplaces around the world.Creative innovation technology education and collaboration are all critical if once hasto tackle these human health and workplace safety concerns.
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. In2019-20 GEMSA 2.0 (Global Environmental Management Self-Assessment) was launched. GEMSA2.0 helps 3M personnel identify applicable requirements assess environmental performanceat 3M facilities and prioritize areas for improvement. Data so entered by site is takenand evaluated and a score card is issued for individual site level.
Sustainability is at the core of what the Management does at 3M and is committed toimproving the business the planet and every life. Looking at Sustainability in terms ofshared global needs:
The challenges that the Company tackles for a sustainable future don't always followclear rules or methods but the it knows science can help to tackle them. 3M islooking at ways to build purpose into leadership and talent development across theCompany to recognize business opportunities that help the Company grow while addressingsocietal issues. Your Company cut across industries to collaborate with supplierscustomers and communities by working together toward building a more resilient world.
As more resources are consumed by an ever-growing population it is imperative thatproduct design and manufacturing processes consider the ecological impact during life andafter end-of-life. 3M's edge begins with well-established safe ecological practices.Today this is manifest in improved raw material usage recyclable and sustainableinnovations that the Company is empowering lives with.
Global target for waste has been to reduce manufacturing waste by an additional 10%indexed to sales by 2025 compared to 2015 baseline. Efforts are made to reduce the wastegeneration at source. 3M Waste (NWI /Quality Rejections / Production Waste) are being usedas alternate fuel in cement Industry This has helped your Company to minimize theincineration process and maximize the co-processing. This has enabled your Company toreduce the carbon footprint. Waste is co-processed; it does not exist in the environmentanymore and becomes part of Cement.
Metric: 12% reduction (Kg/MT of production).
Cities without water parched fields - this stark reality is already here. Theresponsibility begins at plants - from the way the Company saves this scarce resource tostringent manufacturing processes that strive to reduce consumption. To the customersthis means products that have a smaller water footprint like clean water clean water withtechnology that increases water efficiency and quality.
Water usage is being monitored with meters and pressure gauges; the drop-in pressuregauges readings indicate water leakage which are attended immediately to prevent wastages.The treated wastewater is reused in the restrooms and in gardening. Reduced flowratenozzles are put for taps in rest rooms to ensure prudent usage of precious resource.
Metric: 53% reduction (KL/ MT of production).
Energy and Climate
Climate change is here to stay unless it drastically alters the consumption and adoptrenewable alternate sources to power the needs and answer the customers.
3M is proactively partnering with customers to understand needs and answering them byemploying 3M technology that promotes energy conservation are greener and contribute tolower emissions.
Your Company uses the green energy to power its manufacturing operations upto 25%.
Metric : 23% reduction (MMTU/ MT of production).
Metric : Renewable energy share 17% increase.
All the Plants have been able to achieve the environmental sustainability goals set forthe year. All the plants have sewage treatment facility and effluent treatment plants andthe treated water is recycled for cooling tower make and horticulture within thefacilities. The plants have also installed rainwater harvesting systems to divert therainwater for ground water recharging. With the approval from State Pollution ControlBoards plants continued sending non-hazardous waste to cement companies for co-processingthere by helping reduce the carbon footprints. As part of World Environmental Day WorldEarth Day initiative the plants have taken up various environmental awareness programsincluding tree plantation in plants as well as public location.
Health and Safety
Like most areas in 3M Environmental Health and Safety Management (EHS&M) isimplemented by a matrixed organization across the company. The Company's success dependson interactions with many functions and at many levels and a common understanding of theroles and responsibilities of all involved.
This Model is supported by the EHS&M Strategic Pillars which recognize that 3M EHSand Medical professionals play "defense" to assure compliance and riskmanagement play "offense" to drive EHS&M performance excellence and oursuccess is enabled by a leadership culture of EHS&M excellence.
The final part of EHS&M model is the depiction of entitlement. This provides thenecessary definition for 3M Manufacturing & Supply Chain's "True North" of"Operating the safest and most sustainable supply chains..." and reminds theCompany that EHS&M is about protecting our people our communities and our customers.
In an age when the Government corporations and consumers are laying an increasingemphasis on safety it is proud to say that 3M has been a safety pioneer for decades. Withentire divisions and technologies invested in the business of safety 3M is equipped todeliver solutions dedicated to human health protection security and safety.
While 3M care for others it believes safety first begins at home protecting 3M's keyassets and employees. All three manufacturing plants have health and safety managementsystems certified to OHSAS. 3M India Limited Sites have had Zero Lost Time Accidents andZero Level 2 Fires & Spills.
Practicing Safety Leadership
As safety leaders 3M exemplify the standards we seek to bring to our customers andsociety at large. It is important for us to reflect on how we bring safety into our ownlives. We prioritize our safety and the safety of our colleagues and loved ones in ourdaily lives. Practicing safety is a 24/7 responsibility - at work at home on the road.We owe it to our families and loved ones to return home safe everyday.
Your Company also deployed the EHS Cultural Excellence program rolled out by 3MCorporate. Leadership interaction and engagement with workers is a critical aspect ofenhancing the culture of an organization. Through applying the 3M Execution Model andManufacturing Excellence Principles in routine interactions with our workers the intendedoutcome is a safer healthier happier more trusting workforce. It is strongly believedthat listening to our workers focusing conversations towards high hazard activities andsituations and ensuring appropriate follow-up to concerns raised will ultimately resultin reduced significant injuries and events.
In the year 2019 all 3M Manufacturing and Distribution Centers were expected toadminister an EHS Perception Survey and develop an action plan from the survey data whichis 100% complete for India facilities. These action plans are considered living documentsand were adjusted over time as new opportunities were identified to improve the culture ofthe organization. The expectation is that these action plans are routinely reviewed by thePlant Leadership Teams to track progress and adjust as necessary to continue to advanceculture within the organization.
For the year 2020 the focus has shifted to launching and conducting high quality EHSLeadership interactions with workers capturing these discussions in the See & Acttool in EHS 360.
3M's leadership in safety extends to our communities. The Safety-on-Wheels AudhyogikSuraksha Rath initiative launched in partnership with the Ministry of Labour &Employment and DGFASLE has been expanding its footprint across industrial clusters in thecountry. Over the year under review our safety experts covered more than one lakh eightythousand workers across industries through training and education programs. Our safetymessage also covered Government schools where some of our employees conducted awarenesssessions on road safety along with local traffic police personnel.
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. To name a few activities taken up in 2019:
Safety Awareness through School outreach.
Employee Children & Industry Connect.
Over 1.3 Lakh Safety professionals reached through the Audhyogik Suraksha Rathprogram.
AWARDS AND RECOGNITION
2019 Working Mother and AVTAR Best Companies for Women in India study recognized3M India Limited as one of the Top 100 Best Companies for Women in India for commitmentto gender inclusive policies and initiatives.
The Company's manufacturing facility at Ranjangaon was awarded the Gold Awardfor Manufacturing Excellence by Frost & Sullivan for the second consecutive year.
The Company was recognized on the occasion of World Food Safety Day forcontributing to FSSAI Standards Methods & Capacity Building activities.
Infusion Nurses Society of India recognized the Company for its exemplaryadoption practices of the national intravenous policy and procedures in India.
The Company's digital marketing initiatives for Command range of productswere recognized at the National Masters' of Modern Marketing Awards hosted by mCUBE anannual awards program to recognize creative work in digital and mobile marketing.
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 for the 8th consecutive year.
The Company also received several accolades for excellence in lean six sigmamarketing technical 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 Maharashtraand Gujarat Bankers Shareholders Dealers Vendors Promoters of the Company and allother 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 || || |
| ||Ramesh Ramadurai || ||Radhika Rajan |
|Place : Bengaluru ||Managing Director ||Place : Mumbai ||Director |
|Date : May 29 2020 ||DIN:07109252 ||Date : May 29 2020 ||DIN:00499485 |