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Gillette India Ltd.

BSE: 507815 Sector: Consumer
NSE: GILLETTE ISIN Code: INE322A01010
BSE 00:00 | 18 Jan 6492.95 1.40
(0.02%)
OPEN

6499.80

HIGH

6521.05

LOW

6455.50

NSE 00:00 | 18 Jan 6493.55 -6.15
(-0.09%)
OPEN

6509.95

HIGH

6509.95

LOW

6452.10

OPEN 6499.80
PREVIOUS CLOSE 6491.55
VOLUME 47
52-Week high 7100.00
52-Week low 6200.00
P/E 91.98
Mkt Cap.(Rs cr) 21,161
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6499.80
CLOSE 6491.55
VOLUME 47
52-Week high 7100.00
52-Week low 6200.00
P/E 91.98
Mkt Cap.(Rs cr) 21,161
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gillette India Ltd. (GILLETTE) - Director Report

Company director report

Your Directors have the pleasure of presenting the 34th Annual Reportand the Audited Financial Statements of the Company for the Financial Year ended June 302018.

FINANCIAL RESULTS

(Figures in Rs. Crores)

2017-18 2016-17
Revenue from operations 1 677 1 788
Profit before tax 345 374
Profit after tax 229 253

FINANCIAL YEAR

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.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 23 per Equity Share forthe Financial Year ended June 30 2018.

BUSINESS PERFORMANCE

Your Company delivered another strong year with Sales of Rs. 1677 crores and ProfitAfter Tax (PAT) of Rs. 229 crores for the Financial Year 2017-18. Sales grew 7% versusyear ago on comparable* basis. The reported sales were down 6% versus year ago due tochanges in the treatment of indirect taxes post implementation of GST.

Both the Grooming and Oral Care businesses delivered strong comparable sales growthahead of market behind strong brand fundamentals strength of the portfolio and improvedin-store execution.

GROOMING

In the Men's Grooming business Gillette continues to be the market leader. Ourirresistible superiority on product and commercial innovations continued to add millionsof new users to the Gillette franchise.

On Gillette Mach3 India's leading premium system razor we strengthened brandfundamentals and step changed the go-to-market plans. Gillette Guard ourpioneering entry-level system registered its strongest year on value volume and sharegrowth since its launch in 2010 behind strong awareness activation and go-to-marketplans.

In the brand's female portfolio we launched a new product ‘SimplyVenus' a 3-blade disposable razor at an affordable price to cater to the groomingneeds of female consumers. As a result of key interventions across the Gilletteportfolio; this year we recorded our highest market share increase across theBlades and Razors category in a single Financial Year.

Gillette Double Edge blades continued to grow primarily led by 7-o'clock andWilkinson Sword brands.

ORAL CARE

After a challenging Financial Year 2016-17 Oral-B delivered extremely strongresults in Financial Year 2017-18 growing volume share value share and penetrationfor the brand. We had strong broad based results across different brush tiers. In thepremium tier we upgraded the packaging to establish superiority and corrected theprice of our brushes to ensure we are intentionally up-tiering consumers from entry &mid-tier. We also expanded the trial of our Electric rechargeable toothbrushesworking closely with our dentist partnership team and our e-commerce players. Inmid-tier we step changed our proposition behind meaningful innovations like CavityDefense Black and the launch of India's first Neem infused toothbrush. Theseinnovations coupled with extremely strong go-to-market execution were received extremelywell by the consumers and trade helping us to grow significantly ahead of the category.

We continued to leverage our targeted trial programs and deeper distributionplans enabling more consumers to have access to superior Oral-B brushes.

Your Company continued its partnership with dentists to promote oral health awarenessvia the free dental checkup program. Oral-B manual brushes continued to be the mostrecommended and used toothbrush brand among dentists in India (based on survey ofrepresentative dentists sample 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. As a responsible corporate citizen we have builtsustainability into the way we operate and grow our brands to conserve natural resourcesand make a difference to communities across the world. This strategy has inspired anenduring CSR strategy supported by two pillars – P&G Shiksha and TimelyDisaster Relief. While P&G Shiksha provides children from underprivilegedbackgrounds with an access to a holistic education your Company's disaster reliefactivities aim to rehabilitate and empower the victims of natural disasters by providingthem with daily essential commodities and safe drinking water.

Through your Company's signature corporate sustainability program P&G Shikshatill date we have supported over 1800 (+300 since last year) schools across the countrythat will impact the lives of over 1.4 million (+200000 since last year) children inpartnership with a number of NGOs / organizations like — Round Table India (RTI)Pratham Education Initiatives amongst others. These partners serve as specialistslending their expertise to particular aspects of the education system. For example theNGO RTI is dedicated towards constructing educational infrastructure and supportingschools across India. Pratham has special expertise in remedial learning to help bringchildren up to speed with the learning levels in their curriculum. Education Initiatives(EI) has expertise in computer assisted learning software to improve learning levels amongchildren.

Since its commencement in 2005 P&G Shiksha has also empowered consumers tocontribute towards the education of underprivileged children by making conscious brandchoices. This has enabled your Company to share a part of the sales towards this movement.P&G Shiksha has till date made a cumulative donation of over Rs. 80 crorestowards building new schools providing critical infrastructural amenities at existingschools or reviving non-operational government schools.

A key area of our intervention is Remedial Learning. We have partnered with PrathamEducation Foundation to improve the learning outcomes and bridge the existing gapbetween current and existing learning levels. The results on remedial learning werephenomenal; we reached out to more than 670 schools and over 24000 children; and saw thelearning levels in the children rise at the end of the year following our interventions.Before the intervention around 20% children in these schools were able to read and writeas per their curriculum level which increased to around 70% after our intervention.Similarly there was more than a twofold increase in the percentage of children who wereable to do basic arithmetic after our intervention.

Two years ago P&G Shiksha entered into a partnership with EducationInitiatives (EI) and Government of Rajasthan to implement Mindspark a computerbased adaptive learning solution that integrates pedagogy teacher instruction and alearning management system to help students learn better. The tool analyses the learninglevels of the students in language and mathematics by presenting them with questions inincreasing level of difficulty. On answering incorrectly the student is provided a simpleor detailed explanation or is redirected to questions that strengthen the basicunderstanding. The program was implemented in 30 government schools in Rajasthan whereover 6700 students spent over 10000 hours learning using Mindspark. Postthe intervention the learning levels among students using Mindspark improvedtwo-fold compared to the control group. The tool also provides teachers with informationon the progress and learning levels of students which is used for effective classroommanagement and instruction.

Your Company 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 withIBTADA a local NGO P&G Shiksha continues its association with a local schoolto promote 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 fourth consecutive year the program was recognizedwith the prestigious Bhamashah award by the Rajasthan Government for outstandingcontribution in promoting education and creating a transformational change in the lives ofyoung girl children.

We are encouraged by the results on our new areas of focus in 2017-18 and P&GShiksha is all set to build on and strengthen the its efforts in 2018-19. Since thegovernment has highlighted ‘quality of education' as one of the key focus areas forcountry's growth in the next decade your Company is well poised to play an active role inthe India Success Story.

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. To improve lives now and for generations to come we ensure that our productspackaging and operations are safe for employees consumers and the environment. We ensurethis with a focus on technologies processes and improvements that matter for theenvironment.

Your Company's Head Office at Mumbai reduced its annual energy consumption by over23.5% over the last 15 years. Your Company's Bhiwadi and Baddi plants are ‘zero wasteto landfill' sites which means that there is no manufacturing discharge into theenvironment. The plants are leveraging technology experts employees and renewablesources of energy to reduce our overall footprint and make our operations moresustainable. In addition to this the Bhiwadi plant took several employee engagementinitiatives to further drive an energy saving mindset. In the last 5 years all thefootprints (energy & water usage per unit of production emissions and waste generatedper units of production) have been reduced by more than 50% through differentinterventions. We also engage with employees and surrounding communities to make adifference through awareness initiatives and tree plantation drives. For your Companysustainability inspires and guides everything. Moreover we ensure environment friendlypractices at our sites. These include reduction in power consumption optimal waterconsumption and eliminating excess use of paper.

TECHNOLOGY ABSORPTION

i. Efforts made towards technology absorption:

• Usage of low pressure compressors; and

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:

• Usage of low pressure compressors resulted in cost reduction and savedelectricity consumption

• The above efforts resulted in improving process efficiencies consistent qualityof our products introduction of new products import substitution and successfulabsorption of technology.

iii. Imported technology:

a. Details of technology imported: Double pitch double edge perforation tool& bruderer press which gives double production on same speed leading to improvementin productivity & reduction in cost

b. Year of import: 2017

c. Whether the technology been fully absorbed: Yes

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 Companies (Accounts) Rules 2014 are mentioned below:

Rs. in Lakhs

For the year ended June 30 2018 For the year ended June 30 2017
Foreign Exchange earnings 27 823 15 264
Foreign Exchange outgo 50 786 40 616

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 andapproval of related party transactions. All related party transactions are placed beforethe Audit Committee for review and approval. Prior omnibus approval is obtained forrelated party transactions which are of repetitive nature entered in the ordinary courseof business and at arm's length. All related party transactions are subjected toindependent review by external chartered accountancy firm to confirm compliance with therequirements under the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

Details of material related party transaction entered into during the Financial Year2017-18 are given below:

Name of Related Party Procter & Gamble International Operations S.A. Singapore Branch
Nature of transaction Import of Finished Goods
Amount of transaction during Financial Year 2017-18 Rs. 376.33 Crores

The above transaction was approved by the Shareholders by passing an OrdinaryResolution through Postal Ballot on January 8 2018. The Promoter shareholdersabstained from voting on the said resolution.

All related party transactions entered during the Financial Year were in ordinarycourse of the business and on arm's length basis. The disclosure of related partytransactions as required under Section 134(3) (h) of the Companies Act 2013 in Form AOC 2is not applicable to your Company.

LOANS AND GUARANTEES GIVEN AND INVESTMENTS MADE

The Company has not given any loans guarantees or made any investments during theFinancial Year.

PUBLIC DEPOSITS

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 302018 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 302018 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.

CORPORATE GOVERNANCE

A separate report on Corporate Governance along with the Auditors' Certificate on itscompliance is annexed to this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12of the Companies (Management and Administration) Rules 2014 is available on the websiteof the Company at http://www.pg.com/en_IN /invest/gillette/.

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 Year2017-18 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 Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is appended as Annexure III 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 Financial Year Mr. Al Rajwani ceased to be the Director and ManagingDirector of the Company effective June 30 2018 consequent to his retirement after 37years of service with the P&G group. Subsequently Mr. Madhusudan Gopalan wasappointed as Director and Managing Director of the Company effective July 1 2018.

Ms. Sonali Dhawan Director retires by rotation and being eligible offers herselffor re-appointment at the ensuing 34th Annual General Meeting of the Company.

Ms. Flavia Machado shall cease to be the Company Secretary and Compliance Officer ofthe Company effective September 17 2018. Mr. Ghanashyam Hegde has been appointed as theCompany Secretary and Compliance Officer of the Company effective September 18 2018.

Brief resume of Ms. Dhawan being Director proposed to be reappointed at theensuing 34th Annual General Meeting and the details of the Directorshipsheld in other companies are given in the Corporate Governance section of the AnnualReport.

Appropriate resolution for the re-appointment of Ms. Dhawan is being moved atthe ensuing 34th Annual General Meeting which the Board recommends for yourapproval.

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 the SEBI (Listing Obligations andDisclosure Requirements) 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 Director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of Director and alsoremuneration for Key Managerial Personnel and other employees has been appended asAnnexure IV 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.

AUDITORS

Kalyaniwalla & Mistry LLP were appointed as Statutory Auditors of yourCompany at the 33rd Annual General Meeting held on November 15 2017 for a termof five consecutive years.

The Report given by Kalyaniwalla & Mistry LLP Statutory Auditors on the financialstatements of the Company for Financial Year ended June 30 2018 is part of the AnnualReport. There has been no qualification reservation or adverse remark given by theAuditors in their Report.

POLICIES

Your Company has adopted policies on related party transactions corporate socialresponsibility vigil mechanism nomination and remuneration materiality of events anddividend distribution policy 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 V to this Report.

The details of the policies are provided in the Corporate Governance section annexed tothis Report.

SECRETARIAL AUDIT

Secretarial Audit was carried out by Dholakia & Associates LLP Company Secretariesfor the Financial Year 2017-18. There were no qualifications reservation or adverseremarks given by Secretarial Auditors of the Company. The Secretarial Audit report hasbeen appended as Annexure VI to this Report.

SECRETARIAL STANDARDS

During the Financial Year your Company has complied with applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

TRADE RELATIONS

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 growth in theCompany's business.

ACKNOWLEDGEMENT

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 thefield of research & development for products ingredients and technologies;timely inputs to exceptional marketing strategies; and the goodwill of its world-renownedtrademarks and superior brands. We are proud to acknowledge this unstinted associationthat has vastly benefited the Company.

On behalf of the Board of Directors
B. S. Mehta
Mumbai Chairman
August 23 2018