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Finolex Industries Ltd.

BSE: 500940 Sector: Industrials
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OPEN 168.90
VOLUME 50822
52-Week high 177.00
52-Week low 86.85
P/E 21.53
Mkt Cap.(Rs cr) 10,474
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 168.90
CLOSE 169.50
VOLUME 50822
52-Week high 177.00
52-Week low 86.85
P/E 21.53
Mkt Cap.(Rs cr) 10,474
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Finolex Industries Ltd. (FINPIPE) - Director Report

Company director report

To the Members

Your directors have pleasure in presenting the Thirty-ninth annual report together withthe audited financial statements (both standalone and consolidated) for the financial yearended 31st March 2020.

State of the Company's affairs:

Financial Results

(J in Crores)
Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Profit before depreciation & finance charges 478.91 645.87 503.54 658.72
Less: Finance charges 11.91 12.27 11.91 12.27
Profit before depreciation exceptional items and taxation 467.00 633.60 491.63 646.44
Less:i. Depreciation 73.81 70.08 73.81 70.08
ii. Exceptional item - 27.90 - 27.90
iii. Provision for taxation 68.99 185.82 85.17 181.22
Profit after depreciation exceptional items and taxation 324.20 349.80 332.65 367.25
Add/(Less) :
i. Retained earnings at the beginning of the year 1409.47 1212.35 1457.24 1242.91
ii. Re-measurement of defined benefit plans and income tax effect (2.53) (3.07) (2.53) (3.07)
iii. Share of Other Comprehensive - - 0.22 0.01
Income (OCI) of Associate for the year
iv. Dividend (248.20) (124.10) (248.20) (124.10)
v. Tax on dividend (51.02) (25.51) (51.21) (25.75)
vi. Share in Lease adJustments - - (0.09) -
Retained earnings at the end of the year 1431.92 1409.47 1488.09 1457.24
Earning per equity share:
Basic & Diluted (H/share) 26.13 28.19 26.81 29.59


The operational performance is summarized below:

Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Revenue from Operations 2985.98 3091.32 2985.98 3091.32
Other Income 30.84 41.57 29.91 40.41
Total Income 3016.82 3132.89 3015.89 3131.73
Profit before tax 393.19 535.62 392.26 534.46
Share of profit of associate before tax - - 25.56 14.01
Profit after tax 324.20 349.80 332.56 367.25


The total capacity of PVC pipes & fittings stands at 370000 MT p.a. The salesvolume for PVC pipes & fittings was 254958.25 MT for the financial year ended 31stMarch 2020 as against 262858.00 MT for the financial year ended 31st March 2019. Totalstandalone income from operations was at H 3016.82 Crores for the financial year ended31st March 2020 against H 3132.89 Crores for the financial year ended 31st March 2019.Profit after tax was at H 324.20 Crores for the financial year ended 31st March 2020 asagainst H 349.80 Crores for the financial year ended 31st March 2019.


During the year your Board has declared and paid an interim dividend on Equity Shares@ 100% (H 10.00 per share) for the year ended 31st March 2020. The said interim dividendwas paid to shareholders of the Company on 20th March 2020. The interim dividend onequity shares including corporate dividend tax has amounted to H 149.60 Crores. YourDirectors have recommended the payment of the said Interim Dividend as Final Dividend forthe year ended 31st March 2020. As per Regulation 43A of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has formulated a DividendDistribution Policy which has been uploaded on the Company's website investors/policies-code-of-conduct/ and is also enclosed asAnnexure-1.

Transfer to Reserves

During the year amount transferred to General Reserve was H Nil (previous year H Nil).Thus the total comprehensive Income for the year of H (299.40) Crores was transferred toReserves and Surplus of Balance Sheet.


The Company had no unpaid /unclaimed deposit(s) as on 31st March 2020.

During the year the Company has not accepted any deposits described under Chapter V ofthe Companies Act 2013.

Management discussion and analysis

Pursuant to Regulation 34 (2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a management discussion and analysis report forms part ofthis annual report.

Consolidation of financial statements

As at the end of the financial year your Company does not have any subsidiary company.However it does have two associate companies namely Finolex Plasson Industries PrivateLimited and Pawas Port Limited.

The Company has not consolidated an immaterial associate viz. Pawas Port Limited inwhich the Company holds 49.99% equity shares (H 0.05 Crores) and has not startedoperations. The consolidated financial statements as prepared pursuant to the provisionsof Section 129 of the Companies Act 2013 (the "Act") and Schedule III of theAct are annexed and form part of this annual report.

Revision in financial statements

There has been no revision in the financial statements of the Company during thefinancial year 2019 – 2020.

Subsidiary and Associate Companies

In terms of Section 129(3) of the Companies Act 2013 a statement containing salientfeatures of the financial statements of the associate or Joint venture companies in FormAOC-1 is annexed and forms part of this annual report.

Pursuant to Rule 8(1) of the Companies (Accounts) Rules 2014 the performance andfinancial position of the associate or Joint venture companies is included in theconsolidated financial statement which is annexed and forms part of this annual report.

During the financial year 2019-20 there is no change in associate companies of theCompany.

The Company has formulated the policy on material subsidiaries in alignment with theprovisions of Regulation 16 (i) (c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. As required under Regulation 46 (2) (h) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the MaterialSubsidiary Policy has been uploaded on the Company's website policies-code-of-conduct/.

Pursuant to Regulation 34(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the related party disclosures as specified in Para A ofSchedule V are given below:

Sr. In the No. accounts of Disclosure of amounts at the year end and the maximum amount of loans/advances/investments outstanding during the year
1. Holding Company • Loans and advances in the nature of loans to subsidiary by name and amount.
• Loans and advances in the nature of loans to associates by name and amount. No Holding Company.
• Loan and advances in the nature of loans to firms/companies in which directors are interested by name and amount.
2. Subsidiary Same disclosures as applicable to the parent company in the accounts of subsidiary company. No Subsidiary Company
3. Holding Company Investments by the loanee in the shares of parent company and subsidiary company when the company has made a loan or advance in the nature of loan. No Holding Company

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 your directors on the basis ofinformation and documents made available to them confirm that:

a) in the preparation of the annual financial statements for the year ended on 31stMarch 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures;

b) the directors have selected such accounting policies and applied them consistentlyand made Judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2020 and of the profitof the Company for the year ended on that period;

c) the directors have taken proper and sufficient care for 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) the directors have prepared the annual accounts on a going concern basis;

e) the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Corporate governance

A separate report on corporate governance in the compliance with corporate governancerequirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation(2) of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 along with compliance certificate dated 23rd June 2020 obtained fromM/s. SVD & Associates Practicing Company Secretaries is annexed and forms part ofthis annual report.

Material changes and commitments

Your directors confirm that there are no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company and the date of this report.

However the Company had to temporarily suspend its operations at all of manufacturingplants offices and warehouses during the lockdown imposed by the directives/ guidelinesof the Central/State Governments/ municipal authorities due to Novel COVID-19pandemic.Subsequent to receipt of permissions from the authorities the Company resumedoperations by focusing on the safety and well-being of all stakeholdej After commencementof operations the business and operations of the Company have gradually scaled up toalmost normal operating levels. The Company has adequate financial resources to meet thesituation. The Company has an adequate internal financial reporting and control mechanism.

Contracts or arrangements with related parties

The particulars of related party transactions are stated in the note no. 36 in thefinancial statements Annexures 3 4 and 6 of this report.

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business of the Company. Thereare no materially significant related party transactions made by the Company with itsPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict of interest with the Company at large. Accordingly the disclosure ofRelated Party Transactions as required under Section 134(3) (h) of the Companies Act2013 in Form AOC-2 is not applicable.

All related party transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which areof a foreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted are audited and a statement giving details of all related partytransactions is placed before the Audit Committee for its approval on a quarterly basis.

The Company has developed a Related Party Transactions Manual Standard OperatingProcedures for the purpose of identifying and monitoring such transactions.

The Related Party Transactions Policy of the Company approved by the Board of Directorsof the Company (the "Board") is uploaded on the Company's website

Risk management

During the financial year 2014-2015 your directors had constituted a Risk ManagementCommittee. The Risk Management Committee was reconstituted w.e.f. 20th September 2019.The details of Committee and its terms of reference are set out in the CorporateGovernance Report forming part of this report.

The Company has a robust risk management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business obJectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The framework has different risk models which helpin identifying risks trend exposure and potential impact analysis at a Company level asalso separately for business segments. Risk management forms an integral part of thebusiness planning and forecasting. The key business risks identified by the Company andits mitigation plans are included in the management discussion and analysis report.

Internal financial controls

Pursuant to Rule 8 (5) (viii) of the Companies (Accounts) Rules 2014 the details inrespect of adequacy of internal financial controls with reference to the financialstatements are given below: The Company has in place adequate internal control proceduresproportionate to the nature of the business and the size of operations for smooth conductof business. The systems are implemented for safeguarding the assets the prevention anddetection of fraud and errors the accuracy and completeness of the accounting records andtimely preparation of reliable financial information. The scope and authority of theinternal auditors are defined by the Audit Committee from time to time. To maintain itsobJectivity and independence the internal auditors M/s. Sharp and Tannan report theirobservations to the Audit Committee of the Board. The internal auditors monitor andevaluate the efficacy and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. Based on the report of the internal auditors process owners undertakecorrective action in their respective areas which then strengthens the controls. Auditobservations and corrective actions thereon are presented to the Audit Committee of theBoard.

Directors and Key Managerial Personnel:

The Board of your Company is duly constituted with a proper balance of executivenon-executive and independent directoj Pursuant to Section 149 (1) and 161 of theCompanies Act 2013 read with Rule 8 (5) (iii) of the Companies (Accounts) Rules 2014the details relating to directors and key managerial personnel who were appointed or haveresigned are reported as under:

Re-appointment of Director

Mr. Anil V. Whabi (DIN:00142052) Executive Director - Finance retires by rotation asDirector at the ensuing annual general meeting and being eligible offers himself forre-appointment. The Board recommends his re-appointment.

Appointment of Independent Directors

The Board of Directors has co-opted Ms. Bhumika L. Batra (DIN 03502004) Dr. Deepak R.Parikh (DIN 06504537) Mr. Pradeep R. Rathi (DIN 00018577) and Mr. Anami N. Roy (DIN01361110) as Additional Directors and also as Non-Executive Independent Directors for aterm of 5 years effective 20th September 2019. The said directors holds office ofadditional directors up to the date of the ensuing annual general meeting of the Company.A notice has been received from members of the Company proposing their appointment as anIndependent Directors of the Company. The Board is of opinion that the independentdirectors so appointed are of integrity and possess the requisite expertise and experience(including the proficiency). The Board recommends their appointment.

Key Managerial Personnel (KMP)

Mr. Devang Trivedi Company Secretary and Compliance Officer of the Company hasresigned with effect from 8th June 2020 and accordingly he ceased to be the KMP of theCompany. As on date of this report Mr. SanJay S. Math Managing Director Mr. Anil V.Whabi Director – Finance & Chief Financial Officer are KMPs of the Company.

Training and familiarization programme for directors

In compliance of the Regulation 25 (7) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has adopted the familiarization programme forindependent directors with an aim to provide them with an insight into their rolesrights responsibilities within the Company the nature of the business of the

Company and the business model of the Company. The Board members are provided withnecessary documents reports and internal policies to enable them to familiarizethemselves with the Company's procedures and practices.

With a view to sensitize the new Independent Directors the Company has organized afamiliarization program for them on 11th November 2019 giving an overview on theCompany's business products & markets financials and key attributes fairness of thefinancial statements vis--vis responsibilities of the directors and internal controlsystems & risk management. Besides periodic presentations are made at the Board andits Committee Meetings on business and performance updates of the Company the globalbusiness environment business strategy and various risks involved. The updates onrelevant statutory changes and landmark Judicial pronouncements encompassing importantlaws are regularly presented to the Directoj The details of the familiarization programmefor independent directors are available on the Company's website

Policy on directors' appointment and remuneration

The Company's Nomination and Remuneration Committee is governed by its terms ofreference. The Company's Nomination and Remuneration Policy includes directors'appointment and remuneration including the criteria for determining qualificationspositive attributes independence of a director and other details which are furnished inAnnexure-2.

The Company's Nomination and Remuneration Policy is also available on the Company'swebsite https://www.

Annual performance evaluation of the Board its committees and individual directors

The Company has devised a nomination and remuneration policy for performance evaluationof independent non-executive and executive directoj The basis for this evaluation includefulfillment of the independence criteria independence from the management qualificationpositive attributes area of expertise and the number of directorships & membershipsheld in various committees of other companies. The Board of Directors has carried out anannual evaluation of its own performance its committees and the directors individually asper the requirements of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

Remuneration of directors and key managerial personnel

Pursuant to the provisions of Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the details of remuneration of directors and key managerial personnel are furnishedin Annexure-3.

Particulars of employees

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are furnished in Annexure-4.

Auditors and Auditors' Report:

Statutory Auditors

Pursuant to Section 139 of the Companies Act 2013 and the Rules made thereunder M/s.P. G. Bhagwat Chartered Accountants Pune were appointed as the statutory auditors of theCompany in the thirty sixth Annual General Meeting (AGM) of the Company held on 11thAugust 2017 for a period of five (5) consecutive years until the conclusion of the 41stAGM to be held in the year 2022 on such remuneration as shall be decided by the Board ofDirectoj The statutory auditors have issued a certificate of eligibility pursuant toSection 141 of the Companies Act 2013 and they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

The Board at its meeting held on 23rd June 2020 has on recommendation of the AuditCommittee appointed M/s. S. R. Bhargave & Co. as cost auditors to conduct an audit ofcost accounting records of the Company for the financial year ending 31st March 2021.Pursuant to the provisions of Section 148 of the Companies Act 2013 and Rules madethereunder the ratification by the Members is necessary for the payment of remunerationto cost auditoj Your directors recommend the same.

The Cost Audit Report for the financial year 2018-19 issued by M/s. S. R. Bhargave& Co Cost Auditors in respect of the various products prescribed under Cost AuditRules was filed with the Ministry of Corporate Affairs on 6th September 2019.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed M/s. SVD & Associates Practicing Company Secretaries Pune toundertake the secretarial audit of the Company for the financial year 2019-20. Thesecretarial audit report for the financial year 2019-20 is enclosed herewith asAnnexure-5. There is no qualification made by the Secretarial Auditor in the saidSecretarial Audit Report. The observation in the said report is self-explanatory. TheCompany has complied with all applicable secretarial standards.


Your directors are pleased to furnish the following details which are required to bereported by the Company in the Director's Report pursuant to Section 134(3) (a) to (q) ofthe Companies Act 2013:

Number of meetings of the Board

During the year under review seven meetings of the Board of Directors were held. Thedetails of the meetings are provided in the corporate governance report.

Committees of directors

The details of the committee of the directors pursuant to the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and the Companies Act 2013 are describedin the corporate governance report.

Audit committee

The Audit Committee has been duly constituted as required under the provisions of theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

The required details pertaining to the composition of the Audit Committee pursuant toSection 177 (8) of the Companies Act 2013 are given in the corporate governance report.There are no instances of the Board not having accepted the recommendation of the AuditCommittee during the financial year 2019-20.

Extract of annual return

Pursuant to Section 134(3)(a) of the Companies Act 2013 read with Companies (Accounts)Rules 2014 the extract of annual return in the prescribed format MGT-9 is enclosedherewith as Annexure-6.

Vigil mechanism / Whistle blower policy

The Company has established a vigil mechanism known as the Whistle Blower Policy (the"WBP") pursuant to Section 177(9) and (10) of the Companies Act 2013 andRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 to report genuine concerns to the Chairman of the Audit Committee. The WBP providesadequate safeguards against victimization of persons who use such mechanism and ensuresdirect access to the Chairman of the Audit Committee. The details of the WBP are explainedin the corporate governance report and also posted on the Company's website. The Companyaffirms that no director or employee has been denied access to the Chairman of the AuditCommittee and that no complaints were received during the year.

Prevention of Sexual harassment policy

The Company has in place a policy for prevention of sexual harassment of its employeesat the workplace. In line with the requirements of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 an Internal

Complaints' Committee has been constituted by the Company to redress any complaintsreceived regarding sexual harassment. Your directors state that during the year underreview there was no complaint received / case filed pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.

Prohibition of Insider trading

In compliance with the provisions of the SEBI (Prohibition of Insider Trading)Regulations 2015 and to preserve the confidentiality and prevent misuse of unpublishedprice sensitive information (UPSI) the Company has adopted a Code of Conduct to RegulateMonitor and Report Trading by Insiders (‘Insider Trading Code') and a Code ofPractices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information(‘Code of Fair Disclosure').

The said Code of Conduct is intended to prevent the misuse of UPSI by insiders andconnected persons and ensure that the Directors and designated persons of the Company andtheir immediate relatives shall not derive any benefit or assist others to derive anybenefit from having access to and possession of such UPSI about the Company which is notin the public domain that is to say insider information.

The Code of Fair Disclosure ensures that the affairs of the Company are managed in afair transparent and ethical manner keeping in view the needs and interest of all thestakeholdej

Particulars of loans guarantees or investments

The details as applicable of loans given investments made or guarantees givenpursuant to Section 186 of the Companies Act 2013 are disclosed in note no. 4 to thefinancial statements for the financial year 2019-2020.

It is clarified that the Company has no loans/ advances and investments in its ownshares.

Significant and material orders passed by the regulators or courts or tribunals

Pursuant to Rule 8 (5) (vii) of the Companies (Accounts) Rules 2014 it is reportedthat no significant and material orders have been passed by the regulators or courts ortribunals impacting the going concern status of the Company and the Company's operationsin future.

Employee stock option scheme

During the year under review your directors confirm that no shares were issued by theCompany under the Finolex Industries Limited – Employee Stock Option Scheme/ Plan(ESOP) of the Company.

A statement giving complete details as at 31st March 2020 pursuant to Regulation 14of the SEBI (Share Based Employee Benefits) Regulations 2014 is available on theCompany's website https://www.

Sweat equity shares and equity shares with differential voting rights

Your directors confirm that neither sweat equity shares nor equity shares withdifferential voting rights have been issued by the Company during the year under review.

The conservation of energy technology absorption foreign exchange earnings and outgo

Your Company is committed to achieve the highest standards of environmental excellenceby adopting environmentally sustainable and effective operating systems and processes.Your Company has put in place the internationally acclaimed Environment Management Systemunder ISO 14001 certification at Ratnagiri. Your Company is in compliance with allapplicable environmental regulations in respect of air water noise hazardous wastee-waste etc. to mitigate the potential environmental impact on society. Information onconservation of energy technology absorption foreign exchange earnings and outgorequired to be given under Section 134(3) of the Companies Act 2013 read with Rule 8(3)of the Companies (Accounts) Rules 2014 is enclosed herewith as Annexure-7.

Details in respect of fraud reported by Auditors

There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee Board and/or Central Government underSection 143(12) the Companies Act 2013 and rules framed thereunder.

Business Responsibility Report:

Business Responsibility Report for the year ended 31st March 2020 as stipulated underRegulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed herewith as Annexure-8.

Corporate Social Responsibility:

The Board has constituted Corporate Social Responsibility (CSR) Committee and alsoframed the corporate social responsibility policy pursuant to Section 135 of the CompaniesAct 2013. The details of the CSR Committee are given in the corporate governance report.

The corporate social responsibility policy of the Company can be viewed on theCompany's website investors/policies-code-of-conduct/.

As a responsible corporate citizen your Company conducts CSR activities in educationhealthcare sanitation skill developments social welfare water conservation and womenempowerment with its CSR partner Mukul Madhav Foundation ("MMF"). Your Companyhas been actively contributing to the social and economic development of theunderprivileged in and around your Company's plants situated at Ratnagiri and Urse in thestate of Maharashtra and at Masar in the state of GuJarat.

The CSR activities carried out by your Company through MMF is headed by Mj Ritu P.Chhabria Managing Trustee of Mukul Madhav Foundation a driving force in accomplishingthe activities on day-to-day basis.

During the financial year 2019-20 your Company in association with MMF has incurredexpenditure on various CSR activities aggregating H 11.92 Crores against the mandatory CSRexpenses of H 9.52 Crores. The detailed report on the CSR activities is enclosed herewithas Annexure-9.

Cautionary statement

Statements in the Board of Directors' Report and the Management Discussion &Analysis describing the Company's obJectives expectations or forecasts may be within themeaning of applicable securities laws and regulations. Actual results may differmaterially from those expressed in the statement. Important factors that could influencethe Company's operations include global and domestic demand and supply conditionsaffecting the selling prices of finished goods input availability and prices changes ingovernment regulations tax laws economic developments within the country and otherfactors such as litigation and industrial relations.


Your directors take this opportunity to place on record their sense of gratitude to thebanks financial institutions central and state government departments and localauthorities for their guidance and support. Your directors are also grateful to thecustomers suppliers and business associates of the Company for their continuedco-operation and support. Your directors express their deep appreciation for thecommitment dedication and hard work put in by the employees at all levels. Lastly yourdirectors are grateful for the confidence and faith shown in them by the shareholders ofthe Company.

For and on behalf of the Board of Directors

Prakash P. Chhabria

Executive Chairman DIN :00016017

23rd June 2020 Pune

Annexure-1 to the Directors' Report

Dividend Distribution Policy

Purpose ObJectives:

The Securities and Exchange Board of India ("SEBI") vide its Notificationdated June 17 2016 published in the Gazette of India on July 08 2016 has amended theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (the"Listing Regulations") by inserting Regulation 43A relating to dividenddistribution policy which inter alia provides that the top five hundred listed entitiesbased on market capitalization (calculated as on March 31 of every financial year) shallformulate a dividend distribution policy which shall be disclosed in their annual reportsand on their websites. Finolex Industries Limited (the "Company") has formulatedthis dividend distribution policy to comply with the requirements of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

This dividend distribution policy

(i) aims to ensure that the Company makes a rational decision with regard to the amountto be distributed to the shareholders as dividend after retaining sufficient funds for theCompany's growth to meet its long-term obJective and other purposes; and (ii) lays downvarious parameters which shall be considered by the Board of Directors of the Companybefore making a recommendation for declaration of dividend to its shareholdej


The Board of Directors of the Company (the "Board") at its meeting held on4th

February 2017 has approved and adopted the dividend distribution policy [this"Policy"] of the Company.

The Policy of the Company effective from 4th February 2017 is as under:

A. Circumstances under which the shareholders of the Company may or may not expectdividend:

The shareholders of the Company may expect dividend only if the Company is havingsufficient profits and free reserves with surplus cash after providing all expensesdepreciation etc. and complying all other statutory requirements of the Companies Act2013.

The shareholders of the Company may not expect dividend in the following circumstanceswhich are inclusive but not limited subJect to the discretion of the Board: i. Proposedexpansion plans requiring higher capital allocation; ii. Business restructuring such asacquisitions amalgamation merger Joint ventures manufacture of new products etc. allof which require significant capital outflow; iii. Possibilities of alternate usage ofcash such as requirement of higher working capital for the purpose of business of theCompany; iv. Non-availability of surplus funds after providing for expenses depreciationand complying with statutory requirements under the Companies Act 2013 (the"Act") and the relevant rules made thereunder; v. Proposal for buy-back ofsecurities; vi. Loss or inadequacy of profits; vii. Operating Profit Margin; and viii.Sales Growth.

The decision regarding dividend payout is a crucial decision as it determines theamount of profit to be distributed among shareholders of the Company and the amount ofprofit to be retained in business. The decision seeks to balance the dual obJectives ofappropriately rewarding shareholders through dividends and retaining profits in order tomaintain a healthy capital adequacy ratio to support future growth. The Company has beenconsistently paying out dividends to its shareholders and can be reasonably expected tocontinue declaring in future as well unless the profits of the Company are insufficientor adversely impacted by any of the factors mentioned under paragraphs A B and C of thisPolicy.

B. The financial parameters that shall be considered while declaring dividend:

The Board shall consider the following financial parameters which are inclusive but notlimited for the purpose of recommending the declaration of dividend: i. Current year's netoperating profit and profits for any previous financial year available for distribution ofdividend as per the applicable provisions of the law; ii. Capital expenditure and workingcapital requirements; iii. Financial commitments w.r.t. the outstanding borrowings andinterest thereon; iv. Financial requirement for business expansion and/or diversificationacquisition etc. of new businesses; v. Provisioning for financial implications arising outof unforeseen events and/or contingencies; and vi. Past dividend trend.

C. Internal and external factors that shall be considered for declaration of dividend:

The Board shall consider the following internal factors which are inclusive but notlimited for the purpose of recommending the declaration of dividend:

i. Operating cash flow of the Company;

ii. Profit earned during the year;

iii. Profit available for distribution;

iv. Earnings Per Share (EPS);

v. Working capital requirements;

vi. Capital expenditure requirement;

vii. Business expansion and growth;

viii. Likelihood of crystallization of contingent liabilities if any;

ix. Additional investment in subsidiaries or associates of the company;

x. Upgradation of technology and physical infrastructure;

xi. Creation of contingency fund; xii. Acquisition of brands and business;

xiii. Cost of Borrowing;

xiv. Past dividend payout ratio / trends;

xv. Repayment need for clearing debt;

xvi. Investment opportunities available; and

xvii. Contingency Fund.

The Board shall consider the following external factors which are inclusive but notlimited for the purpose of recommendation/declaration of dividend

: i. Economic environment;

ii. Capital markets;

iii. Relevant international economic trends

; iv. Statutory provisions and guidelines;

v. Dividend payout ratio of competitors;

vi. Government policies; vii. Contractual restrictions / Restrictions in Debtcovenants; viii. Nature of Company's business affected by cyclical economic conditions;and ix. Market behavior.

D. Policy as to how the retained earnings shall be utilized:

The Board may retain its earnings in order to make better use of available funds anddeliver sustainable value to the shareholdej

The retained earnings will be utilised for: (i) Capital expenditure; (ii) Building upfree reserves; (iii) Unforeseen requirements; (iv) Long-term strategic requirements; and(v) Revenue short falls

The decision of utilization of the retained earnings of the Company shall be based onthe following factors as may be applicable:

• Market expansion plan;

• Product expansion plan;

• Increase in production capacity;

• Modernisation plan;

• Diversification of business;

• Long-term strategic plans;

• Replacement of capital assets;

• Where the cost of debt is expensive;

• Entry into Joint ventures

• Other such criteria as the Board may deem fit.

E Parameters that shall be adopted with regard to various classes of shares:

The holders of the equity shares of the Company as on the record date are entitled toreceive dividend as may be declared by the Company. Presently the issued share capital ofthe Company comprises of only one class of equity shares of H 10 each which rank paripassu with respect to all their rights. In case the Company decides to issue any otherclass(es) of shares in future it shall consider and specify the other parameters to beadopted with respect to such class(es) of shares.

F General: i. Pursuant to the provisions of section 123 of the Act the Articles ofAssociation of the Company and this

Policy the Board shall recommend the final dividend which shall be declared by theshareholders of the Company at the annual general meeting of the Company. The Board mayalso from time to time in its discretion declare interim dividend. ii. The Companyshall ensure compliance with the provisions of the Act and rules framed thereunder theListing Regulations and other applicable laws with respect to the declaration and paymentof dividend. iii. Due regard shall be given to the restrictions or covenants contained inany agreement entered into with the lenders of the Company or any other financial covenantas may be specified under any other arrangement or agreement impacting the Company or towhich the Company is a party before recommending or distributing dividend to theshareholdej

G Disclosure:

This Policy shall be disclosed by the Company in its annual report and on its website.

H Review:

The Board reserves the right to review modify amend or change any or all clauses ofthis Policy in accordance with the provisions of the Act relevant rules framedthereunder the Listing Regulations other applicable legislations governing dividends andthe Articles of Association of the Company as in force and as amended from time totime.

Annexure-2 to the Directors' Report

Nomination and Remuneration Policy

1. Preamble

1.1 Finolex Industries Limited (the ‘Company') recognizes the importance ofattracting retaining and motivating personnel of high caliber and talent for the purposeof ensuring efficiency and high standard in the conduct of its affairs and achievement ofits goals besides securing the confidence of the shareholders in the sound management ofthe Company. For the purpose of attaining these ends the Company has constituted aNomination and Remuneration Committee which is entrusted with the task of devising atransparent reasonable and fair policy of remuneration for its directors key managerialpersonnel and other employees.

1.2 The Companies Act 2013 vide Section 178 the Companies (Meetings of Board and itsPowers) Rules 2014 and Regulation 19 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended from time to time makes it mandatory for theBoard of Directors of every listed company to constitute a Nomination and RemunerationCommittee.

1.3 The obJective of the Nomination and Remuneration Committee is to assist the Boardof Directors of the Company and its controlled entities in fulfilling its responsibilitiesto shareholders by : 1.3.1. Considering the requirement of skill sets on the Boardeminent people having an independent standing in their respective field/profession and whocan effectively contribute to the Company's business and policy decisions are consideredby the Nomination and Remuneration Committee for appointment as Independent Directors onthe Board. The Committee inter alia considers qualification positive attributes areaof expertise and number of Directorships and memberships held in various committees ofother companies by such persons. The Board considers the Committee's recommendation andtakes appropriate decision.

1.3.2. ensuring that the Board of Directors is comprised of individuals who are bestable to discharge the responsibilities of directors in consonance with the Companies Act2013 and the norms of corporate governance; and

1.3.3. ensuring that the nomination processes and remuneration policies are equitableand transparent.

1.4 The responsibilities of the Committee include:

1.4.1 formulating a criteria for determining qualifications positive attributes andindependence of a director; 1.4.2 recommending to the Board of Directors a policy orrecommendation relating to the appointment and remuneration for the directors keymanagerial personnel and all remuneration in whatever form payable to Senior Management;

1.4.3 formulating a criteria/ recommendation and manner for effective evaluation ofperformance of independent directors Board of Directors and its committee(s). On thebasis of the report of performance evaluation it shall be determined whether to extend orcontinue the term of appointment of the independent director;

1.4.4 devising a policy/ recommendation on Board diversity; and

1.4.5 identifying persons who are qualified to become directors and who may beappointed as part of the ‘senior management' or core management team of the Companyin accordance with the criteria laid down and recommend to the Board of Directors theappointment and removal of such personnel.

1.5 This Nomination and Remuneration Policy has been formulated with a view to :

1.5.1 Consider selection appointment of directors including independent directors keymanagerial personnel and Senior Management in compliance of the provisions of theCompanies Act 2013 and Listing Regulations and devise a transparent system of determiningthe appropriate level of remuneration throughout all levels of employees and teams in theCompany;

1.5.2 encourage personnel to perform to their highest level;

1.5.3 provide consistency in remuneration throughout the Company; and

1.5.4 offer incentives on the premise of aligning the performance of the business withthe performance of key employees and teams within the Company.

1.6 The Nomination and Remuneration Policy elucidates the types of remuneration to beoffered by the Company and factors to be considered by the Board of

Directors of the Company Nomination and Remuneration Committee and management of theCompany.

2. Definitions

Some of the key terms used in the Nomination and Remuneration Policy are as under: 2.1‘Board' means the Board of Directors of Finolex Industries Limited or the Company.

2.2 ‘Committee' means the Nomination and Remuneration Committee constituted by theBoard of Directors of the Company in accordance with section 178 of the Companies Act2013. 2.3 ‘Director' means a director appointed on the Board of the Company includingexecutive; non-executive; and independent directoj

2.4 ‘Employee' means every employee of the Company (whether working in India orabroad) including the directors in the employment of the Company.

2.5 ‘Key managerial personnel' includes managing director or chief executiveofficer or manager and in their absence a whole-time director; company secretary; andchief financial officer. 2.6 ‘Member' means a director of the Company appointed asmember of the Committee.

2.7 ‘Nomination and Remuneration Policy' shall mean the policy of remuneration ofdirectors key managerial personnel and other employees of the Company formulated by theNomination and Remuneration Committee.

2.8 ‘Senior Management' means the personnel of the Company who are members of itscore management team excluding Board of Directors comprising all members of management whoare one level below the chief executive officer/managing director/whole timedirector/manager (including chief executive officer/manager in case they are not part ofthe Board) and shall specifically include company secretary and chief financial officer.

3. Nomination and Remuneration Committee

3.1 The Committee shall be formed by the Board of the Company. It shall consist ofthree or more non-executive directors out of which not less than one-half shall beindependent directoj The Board of the Company shall nominate directors as members of theCommittee from time to time.

3.2 The Chairman of the Committee shall be an independent director but shall not be theChairperson of the Company. He shall be present at the Annual General Meeting to answerthe shareholders' queries and may determine as to who should answer the queries.

3.3 The presently nominated members of the Committee are nominated by the Board ofDirector. The Board will nominate Directors on the Committee from time to time.

3.4 In respect of the policy on Board Diversity the Committee shall ensure that theBoard has requisite number of independent executive and other category of Directors asprescribed in the Companies Act 2013 Rules made thereunder and Listing Regulationsincluding amendments as may be applicable from time to time.

4. Letter of Engagement or Contract of Employment

4.1 Non-executive directors shall enter into a letter of engagement with the Companythe terms and conditions of which shall be approved by the Board. The letter of engagementshall set forth the terms and conditions of the engagement the performance expectationsfor the position the remuneration package the availability of the latter beingcontingent upon fulfillment of certain expectations of the Company measured by benchmarksof performance. 4.2 Executive directors key managerial personnel and senior managementemployees shall enter into a contract/ employment contract or acceptance of appointment/increment letter ("contract ofemployment")withtheCompanyclearly setting out theterms and conditions of the remuneration package for such person. The contract ofemployment shall set out the expectations for the performance the key performanceindicators measures and criteria for assessment or evaluation of performance.

4.3 The Committee and the Board must approve the contracts of employment for the seniormanagement and directoj 4.4 The Board shall disclose the terms and conditions of anycontract of employment in accordance with the law and the employment rules as applicablefrom time to time.

5. Remuneration Structure

5.1 Remuneration to Executive Directors Key Managerial Personnel and Senior ManagementThe Board shall in consultation with the Committee approve and finalize the forms ofremuneration to be offered to executive and non executive directors key managerialpersonnel senior management and other employees. The remuneration package shall becomposed of amounts that are fixed and variable and the endeavor of the Board and theCommittee shall be to strike a balance between the fixed and variable components andthereby promote sustainable value for the Company and its shareholders over time.

5.1.1 Fixed Remuneration

The contract of employment entered into by the executive directors key managerialpersonnel and senior management employees with the Company shall demarcate a fixed grossannual salary or base salary payable to the employee. The fixed remuneration or salaryshall be determined according to complexities of the position and role of the employeethe relevant laws and regulations conditions prevalent in the labour market and the scaleof the business relating to the position. The fixed remuneration will reflect the coreperformance requirements and expectations of the Company.

5.1.2 Performance based remuneration or incentive or Ex-gratia bonus based payments Theperformance or incentive or Ex-gratia bonus based payments shall form part of the variablecomponent of the salary payable to the employee. In addition to the fixed remunerationthe Company shall implement a system of bonuses and incentives reflecting short and longterm performance obJectives appropriate to the working of the Company and designed to layemphasis on the direct relationship between performance and remuneration. Performancebased remuneration shall be proportionate to and contingent upon the attainment ofspecific performance targets by employees in the Company. Incentive-based payments takeinto account factors such as performance of the employee his conduct responsibilitiesposition and role and shall be calculated as a percentage of the fixed remuneration.

5.1.3 Severance Fees or Termination Benefits

Each contract of employment entered into by the executive directors key managerialpersonnel and senior management employees with the Company shall demarcate in advance theentitlement to payment upon termination of employment for each employee or shall part ofemployee's service contract or appointment letter. Making of such payments shall beapproved by the Board and the Committee and shall be in consonance with the Nomination andRemuneration Policy of the Company.

5.1.4 Employee Benefits

The Company shall comply with all legal and industrial obligations in determining thebenefits available with employees namely short-term benefits such as salaries socialsecurity contributions bonuses post-employment benefits such as gratuity otherlong-term employee benefits.

5.2 Remuneration to Non-Executive Directors

The Nomination and Remuneration Committee and/ or Board of Directors shall carry outperformance review of each of the Director at least once a year. According to theperformance of each Director the Company shall pay remunerationtonon-executivedirectorsin such a manner so as to attract and maintain high quality members on the Board.Non-executive directors shall receive a fixed remuneration for their service.Non-executive directors shall not be entitled to any performance based incentives bonuspayments or retirement benefits. Board of Directors shall be authorized to decide anyother mode of remuneration as may be agreed upon by resolution passed by the Board at themeeting.

6. Disclosure

6.1 The Nomination and Remuneration Policy shall be disclosed in the Board's report ofthe Company prepared in accordance with sub-section (3) of section 134 of the CompaniesAct 2013. 6.2 Payments to non-executive directors shall be either disclosed in the AnnualReport of the Company and/ or put up on the website of the Company and reference drawnthereto in the Annual Report as per mandatory requirement or decided by the Key Managerialperson from time to time. Further the number of shares and convertible instruments heldby non-executive directors shall be disclosed by the Company in its Annual Report.

6.3 With regard to payment of remuneration the section on the corporate governance ofthe Annual Report of the Company shall contain the following disclosures namely :

6.3.1 All elements of remuneration package of individual directors summarized undermaJor groups such as salary benefits bonuses stock options pension etc; 6.3.2 Detailsof fixed component and performance linked incentives along with the performance criteria;6.3.3 Service contracts notice period severance fees; and 6.3.4 Stock option details ifany - and whether issued at a discount as well as the period over which accrued and overwhich exercisable.

7. Review and Implementation

7.1 The Key Managerial Person shall conduct an evaluation of performance for allemployees on an annual basis to monitor and review and if necessary revise theappropriateness of each remuneration package.

7.2 The remuneration package payable to the employees of the Company shall be approvedby the Committee or Board as may be applicable from time to time. 7.3 The Committee shallbe responsible for monitoring the implementation of the policy conducting a review of thesame from time to time and advising the Board on the mode of revision of the policy suchas inclusion of long-term incentives that would contribute towards creating a sustainablevalue for shareholders of the Company. Any amendment in the Act Rules will be applicablefrom the date of the notification. This policy will be deemed to be amended from suchdate. Chairman of the Committee shall be authorised to amend the policy from time to time.

Annexure-3 to the Directors' Report

The information required under Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are given below: i) The percentage increase in remuneration of each directorchief financial officer company secretary or manager if any in the financial year2019-20 the ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year 2019-20 and the comparison of remunerationof each Key Managerial Personnel (KMP) against the performance of the Company are asunder:

Sr. No. Name of Director/KMP and Designation Remuneration of Director/KMP for Financial year 2019-20 in J Percentage increase/ (decrease) in remuneration in the FinancialYear 2019-20 Ratio of remuneration of each Director to the median/ remuneration of employees (times)
1 Mr. Prakash P. Chhabria 85445864 -17.34% 146.94
Executive Chairman
2 Mr. SanJay K. Asher # 640000 Not Applicable* 1.10
Non- Executive Director
(upto 19.09.2019)
3 Ms.Bhumika L.Batra ## 640000 Not Applicable* 1.10
Non-Executive Director
(w.e.f. 20.09.2019)
4 Mj Ritu P. Chhabria 1280000 -16.95% 2.20
Non- Executive Director
5 Mj Kanchan U. Chitale 1280000 Not Applicable* 2.20
Non-Executive Director
(w.e.f. 01.04.2019)
6 Mr. Dara N. Damania # 640000 Not Applicable* 1.10
Non- Executive Director
(upto 19.09.2019)
7 Mr. Saurabh S. Dhanorkar 1280000 -28.14% 2.20
Non- Executive Director
8 Mr. Shrikrishna N. Inamdar # 840000 Not Applicable* 1.44
Non- Executive Director
(upto 19.09.2019)
9 Mr. Prabhakar D. Karandikar # 640000 Not Applicable* 1.10
Non- Executive Director
(upto 19.09.2019)
10 Mr. SanJay S. Math 29229471 15.57% 50.26
Managing Director (KMP)
11 Dr. Deepak R.Parikh ## 640000 Not Applicable* 1.10
Non-Executive Director
(w.e.f. 20.09.2019)
12 Dr. Sunil U. Pathak # 640000 Not Applicable* 1.10
Non- Executive Director
(upto 19.09.2019)
13 Mr.Pradeep R. Rathi ## 840000 Not Applicable* 1.44
Non-Executive Director
(w.e.f. 20.09.2019)
14 Mr. Anami N. Roy ## 640000 Not Applicable* 1.10
Non-Executive Director
(w.e.f. 20.09.2019)
15 Mr. Anil V. Whabi 23229637 20.52% 39.95
Director - Finance & CFO (KMP)
16 Mr. Devang B. Trivedi 3230007 10.28% 5.55
Company Secretary (KMP)

* Not applicable since remuneration was paid for the part of the previous year /current year. # Ceased from the Directorship w.e.f. 19th September 2019 ## Appointed asDirector w.e.f. 20th September 2019

ii) The percentage increase in the median remuneration of employees for the financialyear was 15.34%. iii) There were 1330 permanent employees on the rolls of the Company ason 31st March 2020. iv) Average percentage increase made in the salaries of employeesother than the managerial personnel in the last financial year 2019-20 was 10.51% anddecrease of 6.77% in the managerial remuneration for the same financial year. v) It ishereby affirmed that the remuneration paid to the Directors is as per the Nomination andRemuneration Policy of the Company for directors and key managerial personnel.

Annexure-4 to the Directors' Report

Information as per Section 197 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014

Sr. No. Name Designation Qualification(s) Age (yj) Total Exper- ience Date of Commencement of Employment Gross remuneration 2019-20 J Last employment held % of equity shares held Whether Employee is relative of any director if yes give name of such director
1 Mr. Prakash P. Chhabria Executive Chairman B. Sc. (Intl. Business) USA 57 35 13.03.1992 85445864 Finolex Cables Ltd. 0.138 Mj Ritu P. Chhabria
2 Mr. SanJay S. Math Managing Director B.E. (Chem.) DMS 64 45 13.12.2011 29229471 I. G. Petrochemicals Ltd. 0.002 No
3 Mr. Anil V. Whabi Director - Finance & CFO B. Sc. ACA 60 36 11.08.2014 23229637 Kotkar Energy Dynamics Pvt. Ltd. 0 No
4 Mr. Diptesh Patel Chief Information Officer B.Sc MSM 48 25 07.11.2015 11458553 JSW Steel Ltd. 0 No
5 Mr. Nitin G. Kulkarni President – Sales & Marketing B.Com MBA- Marketing 53 32 19.12.2014 8882553 HSIL Ltd. 0 No
6 Mr. Jayanta Sinha Vice President – Sales & Marketing B.Sc MBA- Marketing 53 26 01.09.2014 7213430 Elder Pharmaceuticals Ltd. 0 No
7 Mr. Shreedatta Albur Vice President (VCM-O&U) B.E. (Chem) 57 28 01.01.2018 6522965 Reliance Industries Ltd. 0 No
8 Mr. Anil Darade President – Operation Pipes & Fittings B.E. (Polymers) MBA 54 28 12.11.2018 5761820 Varroc Polymers Pvt. Ltd. 0 No
9 Mr. S. S. Mulye Vice President- PVC (O&M) B.E.-MECH 59 38 01.10.1991 5077932 Gharada Chemicals Ltd. 0 No
10 Mr. Venkat Ravi Vice President- Port Facility B.Sc. B. Tech (Chem) 60 37 24.06.1991 4806365 NOCIL Ltd. 0 No


The nature of employment of Directors mentioned as per Sr. No. 1 to 3 is contractualwhile for other employees it is permanent. During the financial year 2019-20 no employeehas received remuneration in excess of Managing Director/Whole time Directors