Your Directors have the pleasure of presenting the 33rd Annual Report andthe Audited Accounts of the Company for the Financial Year ended June 30 2017.
| || ||(Figures in Rs. Crores) |
| ||2016-17 ||2015-16 |
|Revenue from operations (continuing business) ||1788 ||1776 |
|Profit before tax (continuing business) ||374 ||306 |
|Profit after tax (continuing business) ||253 ||199 |
The Company continues to follow its Financial Year as July 1st to June 30thpursuant to the approval received from the Company Law Board in terms of Section 2 (41) ofthe Companies Act 2013.
The Directors are pleased to recommend a final dividend of Rs. 10/- per Equity Sharefor the Financial Year ended June 30 2017. During the Financial Year the Board ofDirectors declared a special interim dividend of Rs. 154/- per Equity Share out of theprofits for the current year and accumulated surplus from profits of earlier years. Thiswas to celebrate 30th anniversary of Make in India of its flagship brand Gillette.The said interim dividend was paid to the Shareholders on June 2 2017.
Your Company delivered another good year in a volatile external environment. Sales forthe Financial Year 2016-17 increased by 1% to Rs. 1788 crores from Rs. 1776 croresdriven by Company's focus on brand fundamentals and strength of product portfolio.
Profit after tax increased by 27% to Rs. 253 crores while Profit before tax increasedby 23% to Rs. 374 crores. This was behind continued focus on productivity operationalexcellence and cost optimization.
In the Men's Grooming business Gillette continues to be the market leader. Wehave put strong Go-to-market plans & made strategic portfolio choices to strengthenthe total grooming portfolio.
On Gillette Mach3 the biggest systems franchise we grew share & had doubledigit growth. This was behind our new locally created consumer communication of Strongerthan Steel Blades.
Gillette Guard the entry level system continued to grow double digit & gainshare. Gillette Guard's College Program 'Safalta Apni Muthi Mein' wasrecognized globally across multiple award forums as the Best Grooming College Programin India.
In the brand's female portfolio Venus (World's # 1 selling Women's razor) welaunched our next innovation Venus Breeze a 2 in 1 product with moisturizing gelbars. Venus continued to deliver high double-digit growth behind strong awarenessand in-store executions.
Financial Year 2016-17 was a challenging year for Oral-B with multipleexternal factors. However the brand continued to focus on the consumers and strong instore fundamentals.
Oral-B launched electric rechargeable toothbrushes. We also had several stronginnovations on manual toothbrushes like the launch of Pro-Health Anti-Bacterialtoothbrush Ultrathin Sensitive toothbrush range and Cavity Defense Black.All these innovations were received extremely well by the consumers and trade helping usto further establish our product superiority.
Oral-B further strengthened its partnership with dentists to promote oral healthawareness via the free dental checkup program. Oral-B brushes continue to be themost recommended and used toothbrush brand among dentists in India.*
CORPORATE SOCIAL RESPONSIBILITY
The only way to build a sustainable business is to improve lives
For your Company sustainability means making every day better for people through howwe innovate and how we act. Your Company's sustainability objective is to create long-termvalue for our consumers and shareholders by growing our brands and operations responsiblyto conserve resources and improve life in the communities we impact across the world. Thisstrategy has inspired an enduring CSR strategy supported by two pillars P&GShiksha and Timely Disaster Relief. While P&G Shiksha provideschildren from underprivileged backgrounds with an access to a holistic education your Company'sdisaster relief activities aim to rehabilitate and empower the victims of naturaldisasters by providing them with daily essential commodities and safe drinking water.
Your Company's signature corporate sustainability program P&G Shiksha hastill date built and supported over 1500 (+500 since last year) schools across the countrythat will impact the lives of over 1.2 million (+200000 since last year) children inpartnership with a number of NGOs like - Round Table India Pratham EducationFoundation amongst others. These partners serve as specialists lending theirexpertise to particular aspects of the education system. The NGO Round Table Indiafor example is dedicated towards constructing educational infrastructure and supportingschools across India. The Pratham has special expertise in remedial learning tohelp bring children up to speed with the learning levels in their curriculum.
Since its commencement in 2005 P&G Shiksha has also empowered consumers tocontribute towards the education of underprivileged children by making conscious brandchoices which has enabled your Company to share a part of the sales towards thismovement. P&G Shiksha has till date made a cumulative donation of over Rs. 65crores towards building new schools providing critical infrastructural amenities atexisting schools or reviving non-operational government schools.
P&G continued to impact the communities around its plants in a holistic mannerthroughout the Financial Year. At about 20 km from the Bhiwadi Plant in association with IBTADAa local NGO P&G Shiksha continues its association with a local school topromote the education of girl children in Gwalda village. The students are providedholistic support in the form of uniforms library meals infrastructure recreationalactivities & study tours. For the third consecutive year the initiative received aprestigious recognition with the Bhamashah award by the Rajasthan Government foroutstanding contribution in promoting education and creating a transformational change inthe lives of young girl children.
* Based on survey of representative dentists sample in India.
Two years ago we entered into partnership with Pratham Education Foundation aleading NGO in India in the educational space to foray into Remedial Learningthereby focusing on learning outcomes as well. P&G Shiksha partnered with Pratham'sRead India initiative that aims to bridge the existing gap between current andexisting learning levels. The results were phenomenal; we reached out to more than 500schools and 65000 children and saw the learning levels in the schools rise at the end ofthe year following our interventions. Before the intervention only 20% children in theseschools who were able to read and write as per their curriculum level which increased to70% after our intervention. Similarly there was more than a two fold increase in thepercentage of children who were able to do basic arithmetic after our intervention.
Your Company has constituted a Corporate Social Responsibility Committee. Thecomposition and terms of reference of the Corporate Social Responsibility Committee areprovided in the Corporate Governance Report annexed to this report.
Annual report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 has been appended as Annexure I to this Report.
ENVIRONMENTAL SUSTAINABILITY AND CONSERVATION OF ENERGY
Environmental sustainability is embedded in our Purpose Values Principles and ourbusiness. In order to improve lives now and for generations to come your Company ensuresthat its products packaging and operations are safe for employees consumers and theenvironment. Your Company ensures this with a focus on technologies processes andimprovements that matter for the environment. Your Company's Head Office at Mumbai reducedits annual energy consumption by over 21.2% over the last 15 years.
The Company's Bhiwadi and Baddi plants are zero waste to landfill sites which meansthat there is no manufacturing discharge into the environment. The Bhiwadi Plant isleaving no stone unturned to leverage the technology experts & employees to producebest in class footprint reduction. In last 5 years all the footprints (energy & waterusage per unit of production emissions and waste generated per units of production) havebeen reduced by more than 40% through different interventions. Our Baddi plant alsostrengthened its commitment to environmental sustainability by actively engaging with thelocal community for reducing energy consumption and carbon footprint.
For your Company sustainability inspires and guides everything we do. Moreover weensure environmental friendly practices at our sites. These include reduction in powerconsumption optimal water consumption and eliminating excess use of paper.
i. Efforts made towards technology absorption:
Continued implementation of quality control/ quality assurance procedures of productsand processes were successfully adapted on commercial scale to utilize local raw materialsand machinery; technical services for reliability quality cost savings and technologytransfer from overseas.
ii. Benefits derived like product improvement cost reduction product development orimport substitution:
All the above efforts resulted in improving process efficiencies consistent quality ofour products introduction of new products import substitution and successful absorptionof technology.
iii. Imported technology:
No technology has been imported during the last three Financial Years.
iv. Expenditure on Research & Development:
Your Company has not incurred any expenditure on research and development during theFinancial Year.
FOREIGN EXCHANGE EARNINGS & OUTGO
The details of foreign exchange earnings and outgo as required under Section 134 of theCompanies Act 2013 and Rule 8(3) of the Companies (Accounts) Rules 2014 are mentionedbelow:
| || ||Rs. in Lakhs |
| ||For the year ended June 30 2017 ||For the year ended June 30 2016 |
|Foreign Exchange earnings ||11307 ||5849 |
|Foreign Exchange outgo ||3477 ||4298 |
RELATED PARTY TRANSACTIONS
Your Company has formulated a policy on related party transactions which is alsoavailable on Company's website at http://www.pg.com/en_IN/invest/gillette/corporate_governance/policy.shtml. This policy deals with the review and approval ofrelated party transactions. All related party transactions are placed before the AuditCommittee for review and approval. Prior omnibus approval is obtained for related partytransactions which are of repetitive nature entered in the ordinary course of businessand at arm's length. All related party transactions are subjected to independent review byexternal chartered accountancy firm to confirm compliance with the requirements under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
All related party transactions entered during the Financial Year were in ordinarycourse of the business and on arm's length basis. No material related party transactionswere entered during the Financial Year by your Company. Accordingly the disclosure ofrelated party transactions as required under Section 134(3) (h) of the Companies Act 2013in Form AOC 2 is not applicable to your Company.
LOANS AND GUARANTEES GIVEN AND INVESTMENTS MADE DURING THE FINANCIAL YEAR 2016-17
Details of loans given by your Company under Section 186 of the Companies Act 2013during the Financial Year 2016-17 are as follows:
|Name of Entity ||Relation ||Amount (Rs. in Crores) ||Purpose for which the loans are proposed to be utilized |
|Procter & Gamble Home Products Pvt Ltd ||Fellow Subsidiary ||30.00 ||General business purpose |
The Company has not given any guarantees or made any investments during the FinancialYear 2016-17.
Your Company has not accepted any Public Deposits under Chapter V of the Companies Act2013 during the Financial Year.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 (Act') and Rules made thereunder yourCompany has constituted Internal Complaints Committees (ICC'). During the FinancialYear no complaints with allegations of sexual harassment were filed with the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Sections 134 (3) (c) of the Companies Act 2013 withrespect to the Directors' Responsibilities Statement it is hereby confirmed:
i. that in the preparation of the Annual Accounts for the Financial Year ended June 302017 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
ii. that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the profit or loss of the Company for the Financial Year underreview;
iii. that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv. that the Directors had prepared the accounts for the Financial Year ended June 302017 on a "going concern" basis;
v. that the Directors had laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively;and vi. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
BUSINESS RESPONSIBILITY REPORT
A separate report on Business Responsibility has been appended as Annexure II to thisReport.
A separate report on Corporate Governance along with the Auditors' Certificate on itscompliance is annexed to this report.
EXTRACT OF ANNUAL RETURN
The extract of annual return in Form MGT 9 as required under Section 92 (3) of theCompanies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules2014 is appended as Annexure III to this Report.
MANAGEMENT & PERSONNEL
The strength of business over the past few years and resilience in this particular yeardue to multiple economic headwinds in the country demonstrates the core strengths of ouremployees to stay reality based and influence the course of business. Financial Year2016-17 was a year of overall strong growth in many categories. Our productivity continuesto be best-in-class with major progress in Leadership and Talent Development.
The statement of Disclosure of Remuneration under Section 197 of the Companies Act2013 and Rule 5 (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is appended as Annexure IV to the Report.
The information as per Rule 5 (2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. As per the provisions offirst proviso to Section 136 (1) of the Companies Act 2013 the Report and FinancialStatements are being sent to the Members of the Company excluding the statement ofparticulars of employees under Rule 5 (2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014. Any Member interested in obtaining a copy of thesaid statement may write to the Company Secretary at the Registered Office of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. Karthik Natarajan ceased to be the Chief Financial Officer of theCompany effective December 31 2016. Subsequently Mr. Natarajan was appointed asWhole-time Director by the Members of the Company effective January 23 2017.
Mr. Gagan Sawhney was appointed as the Chief Financial Officer of the Company effectiveJanuary 1 2017.
Ms. Jessica Rastogi ceased to be the Company Secretary and Compliance Officer of theCompany effective August 26 2016. Ms. Flavia Machado was appointed as the CompanySecretary and Compliance Officer of the Company effective November 30 2016.
Mr. Pramod Agarwal Director retires by rotation and being eligible offershimself for re-appointment at the ensuing 33rd Annual General Meeting of theCompany.
The Independent Directors of your Company have given Certificate of Independence toyour Company stating that they meet the criteria of independence as mentioned underSection 149 (6) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The details of training and familiarization programmes and Annual Board Evaluationprocess for Directors have been provided under the Corporate Governance Report.
The policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of Directors and alsoremuneration for Key Managerial Personnel and other employees has been appended asAnnexure V to this Report. The same is also available on the website of the Company athttp://www.pg.com/en_IN/invest/gillette/ corporate_governance/policy.shtml.
Brief resume of Director proposed to be reappointed at the ensuing 33rdAnnual General Meeting and the details of the Directorships held in other companies aregiven in the Corporate Governance section of the Annual Report.
Appropriate resolution for the re-appointment of the aforesaid Director is being movedat the ensuing 33rd Annual General Meeting which the Board recommends for yourapproval.
The Report given by Deloitte Haskins & Sells LLP Statutory Auditors on thefinancial statements of the Company for Financial Year ended June 30 2017 is part of theAnnual Report. There has been no qualification reservation or adverse remark given by theAuditors in their Report.
Deloitte Haskins & Sells LLP were appointed as Statutory Auditors of your Companyat the 30th Annual General Meeting held on September 29 2014 for a term ofthree consecutive years which will be complete at the ensuing 33rd AnnualGeneral Meeting. It is proposed to appoint Kalyaniwalla & Mistry LLP CharteredAccountants as Statutory Auditors of your Company from the conclusion of the ensuing 33rdAnnual General Meeting until the conclusion of the 38th Annual General Meeting.Appropriate resolution for the said appointment is being moved at the ensuing 33rdAnnual General Meeting.
Your Company has adopted policies on related party transactions corporate socialresponsibility vigil mechanism nomination and remuneration materiality of events anddividend distribution which are available on the website of the Company athttp://www.pg.com/en_IN/invest/gillette/corporate_ governance/policy.shtml. The dividenddistribution policy has also been appended as Annexure VI to this Report.
The details of the policies are provided in the Corporate Governance Report annexed tothis Report.
Secretarial Audit was carried out by Dholakia & Associates LLP Company Secretariesfor the Financial Year 2016-17. There were no qualifications reservation oradverse remarks given by Secretarial Auditors of the Company. The Secretarial Audit reporthas been appended as Annexure VII to this Report.
During the Financial Year your Company has complied with applicable SecretarialStandards issued by the Institute of Company Secretaries of India.
The Directors wish to thank the retailers wholesalers distributors suppliers ofgoods & services clearing and forwarding agents and all other business associates andacknowledge their efficiency and continued support in promoting such healthy growthin the Company's business.
We are grateful to The Procter & Gamble Company USA and its subsidiaries for theirinvaluable support in terms of access to the latest information/knowledge in the field ofresearch & development for products ingredients and technologies; timely inputs toexceptional marketing strategies; and the goodwill of its world-renowned trademarks andsuperior brands. We are proud to acknowledge this unstinted association that has vastlybenefited the Company.
| ||On behalf of the Board of Directors |
| ||sd/- |
| ||B. S. Mehta |
| ||Chairman |
|Mumbai || |
|August 24 2017 || |