Your Directors' are pleased to present the 72nd Annual Report along with Standalone and Consolidated Financial Statements for the year ended March 31 2019. The year gone by saw various significant achievements as a momentous milestone achieved during the year is to take your Company global by acquiring Parador - a German based leading international premium brand in Flooring Solutions having its manufacturing base in Germany Austria and exports to 80+ Countries .
Your Company believes that the acquisition of Parador is a step towards expanding HIL Brand globally. During the year under review your Company made its brand presence felt in many ways which was well received by all the stakeholders including its loyal customers and employees.
Your Company continued to maintain its market leadership in India in the relevant operating segments by expanding its brand presence and market reach and delivered profitable growth for the second consecutive year.
Your Company was recognised as a `Great Place to work' which acknowledges the efforts made by the management to carry the employees together as `One HIL'.
The financial numbers on a consolidated basis includes the transactions of the Wholly Owned Subsidiary (WOS) HIL International GmbH Germany from July 4 2018 to March 31 2019 encompassing the financials of Parador Holding GmbH Germany (Including its subsidiaries) for a period from August 27 2018 to March 31 2019.
Summary of Financial Results
|( Rs in Crores)|
|Earnings Before Interest Depreciation & Tax||222.27||170.67||281.41|
|Less : Interest||19.35||3.87||25.16|
|Profit Before Tax and Exceptional items||160.11||119.91||187.69|
|Less: Exceptional items||-||-||21.16|
|Profit before Tax||160.11||119.91||166.53|
|Less : Taxes||58.59||39.15||65.14|
|Profit for the year||101.52||80.75||101.40|
|Other Comprehensive Income - net of tax||(0.60)||(0.57)||(10.15)|
|Total Comprehensive Income for the year||100.92||80.18||91.24|
Continuing its growth trajectory your Company has once again delivered a splendid performance in both quantitative and qualitative terms in the current year. All the business verticals outperformed over the last year numbers.
During the year under review the net revenues from operations on a standalone basis has increased to H1481.94 Crores from H1326.17 Crores in the previous year - registering a growth of 12%. On a consolidated basis your Company crosses the H2000 Crores revenue for the first time to register net revenue from operations during the financial year 2018-19 of H2208.02 Crores.
As mentioned above one of the significant milestone during the year was successful acquisition of the German based leading flooring solutions company Parador the funding for which was meticulously planned by a combination of funds from internal accruals and debt through banks in India and Europe at an attractive interest rates which has helped your Company to limit the interest costs substantially.
In view of the above interest cost for the year 2018-19 has increased to H19.35 Crores on a standalone basis as against H3.87 Crores during the previous year. On a consolidated basis interest cost for the financial year 2018-19 stood at H25.16 Crores.
Profit Before Tax
During the year under review your Company achieved a standalone Profit Before Tax (PBT) of H160.11 Crores as against H119.91 Crores in the previous year thus registering a growth of 34% mainly driven by various operational cost saving initiatives and well outlined sales strategies to improve net realisations. This is after paying an interest of H14.73 Crores paid towards loan taken for acquisition of 100% shareholding of Parador Holding GmbH Germany. On a consolidated basis profit before tax for the year 2018-19 stood at H167.07 Crores.
The Standalone Net Worth as at March 31 2019 improved to H646.86 Crores as against H566.12 Crores as on March 31 2018. On a consolidated basis the Net Worth of your Company for the financial year 2018-19 stood at H637.19 Crores.
The earnings per share (basic) grew by 26% during the year i.e H135.94 per share as on March 31 2019 as against H108.21 as on March 31 2018. The book value per share as at March 31 2019 was at H853/- as against H759/- as on March 31 2018.
During the year under review your Company has borrowed H273 Crores in India to fund acquisition of 100% shareholding of Parador Holding GmbH Germany which has resulted in a substantial increase in long term debt. However owing to continuing good performance of your Company and after detailed evaluations the rating agencies have retained the long term rating at the existing levels.
The Credit Ratings assigned to various debt instruments are as below:
|1||ICRA||Long Term - Cash Credit Facilities||`ICRA AA-/ (Stable)'|
|2||ICRA||Short Term - Debt||`ICRA A1+'|
|3||ICRA||Short Term -Commercial Paper||ICRA A1+|
|4||India Ratings||Long Term - Term Loan||`IND AA-/ (Stable)'|
During the year under review the Board of Directors has declared an interim dividend of H12.50 per equity share (125% of the paid-up value). Your Directors are pleased to recommend a final dividend of H12.50 per equity share (125% of the paid-up value) for your consideration and approval at the ensuing Annual General Meeting of the Company.
With the proposed final dividend the total dividend for the year 2018-19 works out to be H25.00 per equity share (250% of the paid-up value) as against the total dividend of H22.50 per equity share (225% of the paid-up value) declared in the previous year.
The total dividend outgo would amount to H22.52 Crores (Including Corporate dividend tax) and the Company has transferred H10.00 Crores to the General Reserves out of the profits for the year.
The Company has fixed July 17 2019 as Record Date for the purpose of determining the entitlement of the shareholders to the final dividend for the financial year ended March 31 2019. The Register of Members and Share Transfer Books of the Company will remain closed from July 18 2019 to July 24 2019 both days inclusive.
The paid up Equity Share Capital as on March 31 2019 was H7.50 Crores. During the year under review the Company has issued 8780 equity shares on exercise of options by eligible employees and there are no shares with differential voting rights nor sweat equity issued by the Company.
Listing With Stock Exchanges
The Equity Shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited. The annual listing fees for financial years 2019-2020 and 2018-19 have been paid to these exchanges.
During the financial year 2018-19 the Issued and Listed Capital of the Company has increased due to allotment of Equity Shares (8780) to eligible employees on exercise of options under HIL Employee Stock Option Scheme 2015.
State of Company's Affair
Your Company continued to accelerate its business performance and gain momentum during the year under review and its focused and committed approach combined with its unique market/product based strategies helped it to grow its market share in all its product categories with better realizations.
Your Company always believes that optimizing cost and improving the operational excellence is core to maintain the profitability in the competitive environment. In line with this your Company has initiated Six Sigma and Lean Management Systems in all its manufacturing facilities aiming to achieve operational excellence with optimal cost management.
Your Company has added capacities in the growing product ranges in line with its focus on high potential geographies resulting in significant growth in revenue and profits.
Your Company retained its market leadership position owing to the deep rooted trust it enjoys from its customers backed with various market penetration dealer initiatives and brand enhancement schemes undertaken during the year and thus expanded its business reach in a competitive environment.
Charminar Asia's best consumer brand continue to enjoy its leadership owing to the legacy gained over the last 7 decades clubbed with enhanced Customer centric approach superior quality than competition better post sale customer service deep routed supply chain network and widely spread depots and dealer network. This has adequately supported the business to mitigate the headwinds faced in the industry.
Charminar Fortune a product from the in-house R&D team which was introduced last year by your Company to cater the requirement of the institutional segment has received a positive response from the customers. Our technical solutions team and sales team are constantly working to enhance the customer base by including this product into the approved catalogues of various institutions. The quality and performance of this product has positively surprised the market which has helped us install the product in prestigious locations. During the year your Company associated with Chhatrapati Shivaji Terminus which is a historic railway station and a UNESCO World Heritage Site in Mumbai Maharashtra by supplying Charminar Fortune sheets to give a new look to the station.
Your Company believes this advanced research-based green roofing solution with excellent load bearing capacity thermal resistance sound proofing fire resistance and a life of many decades will be a game changer in markets within and outside our Country and will take the Company to newer heights in the years to come.
Overall the roofing business ended the year with a growth of 4% in quantity terms over the previous year and we continue to consolidate our position in the industry.
Building Solutions business consists of Wet Walling and Dry Walling products which caters to the various requirements of customers in residential/commercial spaces. During the year the demand for these products have gone up which resulted in reporting an improved financial performence for this segment.
Various marketing activities along with selective focus on high yielding orders helped the Company to increase its sales by more than 7% during the year under review as compared to last year resulting in full capacity utilization of this business. The growth in volumes was aptly supported by on-going Government initiatives.
Your Company continued its position as a comprehensive solutions provider in the building materials category by offering all relevant products under one roof thereby retaining and enhancing its customer base. The company management's vision was to improve the operational efficiencies in this business before enhancing capacities which has been achieved in the year gone by.
Wet-Walling category consists of Fly Ash Blocks an eco-friendly building material Smart fix and Smart Plaster under the brand name Birla Aerocon. All products cohesively offer a complete range of solutions to the stakeholders in the Building Material industry.
Fly Ash Blocks - an eco-friendly building material product with unique combination of strength low weight cost-effectiveness and durability has helped your Company to gain huge market share in the Building solutions and continue its leadership position.
During the year under review Fly Ash Blocks has achieved a growth of 7% in quantity terms over the previous year which was subdued due to capacity constraints. Fly Ash Blocks along with Smart Fix and Smart Plaster continue to be a preferred choice among the builders and dealers.
Dry-Walling category consists of Panels Boards and Smart bond under the brand name Birla Aerocon. Panels & Boards continue to be the preferred choice of the Architects and designers. Technical solutions team of the Company works closely with the Architects and Designers to provide them requisite support wherever required for promoting these products. With strong sales force and better relationship with external stakeholders backed by premium brand this product category registered a growth of 14% in quantity terms during the year under review as compared to the previous year. Your Company continues to maintain its preferred position in this category as well.
Thermal Insulation business under the brand HYSIL has reported a growth of 20% in quantity terms due to enhanced sales efforts and improved demand from domestic and overseas customers for their new projects.
This vertical consists of Pipes & Fittings and Wall Putty marketed under the brand name BIRLA HIL. During the last quarter of the financial year under review the Wall Putty business was moved from Building Solutions vertical to Polymer Solutions vertical due to high synergies with Pipes & Fittings business in the retail space.
Pipes & Fittings
To further strengthen the Brand your Company has taken strategic decision to rebrand Pipes & Fittings and sell under BIRLA HIL Pipes and fittings Your Company believes that this initiative will combine the Legacy & Goodwill of BIRLA & HIL while recognising HIL's dominance in building solutions sector and helped us to create a Brand based on Reliability Quality & Trust.
During the year under review the Pipes & Fittings business registered a robust growth of 110% in revenue terms over the previous year. The said growth was mainly driven by capacity and product portfolio enhancement expanding the dealer base and augmenting well-planned marketing activities including investment in Television Commercials activities with quality centric approach. Augmentation in capacity and product portfolio has been achieved by investing a sizeable amount in establishing capacity for launching new product categories. Your Company added capacity at its Golan Plant taking total capacity at Golan to 16000 MT. In addition to this expansion was also initiated at Thimmapur plant. After completing all the above projects the aggregate capacity of your company for Pipes and Fittings will be increased to 30700 MT by end of September 2019.
With key focus on strengthening Brand your Company launched TV Commercials which were aired across all leading TV Channels in November and December 2018. Your Company believes that with these initiatives awareness of BIRLA HIL Brand with consumers will further increase and strengthen on PAN India basis. With strengthening of relationships with the trade channels plumbers influencers and builders/developers will result in improved trust which will directly influence the performance of this division going forward.
During the year Wall Putty business almost doubled as the brand awareness increased multi-fold from different territories. The Wall Putty business ended the year at H117.28 Crores in revenue terms as compared to H60.17 Crores registered in FY 2017-18 there by resulting in 94% growth over last year. In order to meet the growing demand for this product your Company expanded its manufacturing capacity from 60000 MT to 165000 MT during the year. Your Company is also committed to expand its manufacturing foot print further for this product in the Western and Southern Regions as the demand picks up which will further boost demand for this product
With the acquisition of 100% shareholding in Parador Holding GmbH Germany your Company has enhanced its global presence.
Parador - a leading international premium brand for flooring Solutions with its Made in Germany & Made in Austria quality products is a perfect blend of design and technology. Innovative and sustainable products makes it highly complementary to your Companies existing product portfolio which will enable the Company to market its widened product range across the globe.
Parador founded in Cosefeld Germany in 1977 has two manufacturing facilities one each in Cosefeld Germany and Gussing Austria with three distinct product categories namely; Engineered wooden flooring laminate flooring and resilient wooden flooring. Having international presence in 80+ Countries it continues to be the leading brand in Europe.
The above acquisition was done in all-cash consideration which was funded by a combination of internal accruals onshore & offshore debt at competitive rates.
During the year Parador has expanded its foot prints by setting up Parador (Shanghai) Trading Co. Ltd China the first ever Joint Venture of Parador GmbH Germany and opened its first world class showroom in Shanghai with its state of art digitally led distribution system for Premium flooring products. This will help your Company to expand its business aggressively in China and other parts of the Asian markets.
During the period August 27 2018 to March 31 2019 Parador Group has reported a Net Revenue of H726.08 Crores with a Profit Before Tax of H6.42 Crores after absorbing one time exceptional spend of H21.16 Crores.
Your Company commenced its brand enhancement journey in a serious way since last year and is committed to enhance its business performance and reach by continuously investing in its brands. As part of the brand promotion activity your Company has associated with the Indian Premier League (IPL) by partnering with Chennai Super Kings (CSK) for the last two years resulting in significant increase in brand recognition. There is a sense of pride amongst the channel partners and employees which reflected in their overall performance during the year under review. Company's management wanted to establish HIL as a global brand from its previous image of being a Hyderabad based company and have gone a long way towards successfully creating this image in the minds of all the stakeholders with the help of these promotions. Your Company also aimed to boost HIL brand visibility as well as its reach amongst its consumers dealers and influencers and has been successful in achieving the same.
The TV commercials released by the Company displaying its global reach and extensive portfolio of products was greatly appreciated. Your Company received several awards and accolades for all its brand led activities undertaken during the year under review.
Your Company is looking forward to benefit from similar associations in the coming years as well and believe it will lead to brand-led business growth among all the verticals. Your Company's caption HIL - Together We Build has proven to be a game-changer towards strengthening the brand's commitment and supporting its vision of building a dream nation with its innovative products. While the quality of products is a prerequisite for progressive growth for HIL it will be driven by diversification and enhancement of its products. These associations will highlight HIL as a one-stop shop solutions provider for all building requirements for modern construction.
The philosophy of Together We Build is synonymous not just with our products but also with our brand persona which is reflected in all our activities.
Great Place to Work
Your Company is proud of being certified as a Great Place To Work in its first attempt for the year 2019-20. This goes to prove the confidence of all employees have in your Company and commends on the efforts taken by the management towards building an impeccable performance-based organization.
Asia's most promising Leader of the Year
Mr. Dhirup Roy Choudhary Managing Director and CEO of your Company was conferred with the prestigious `Most Promising Business Leader in Asia Award 2018' by The Economic Times marking a significant achievement and testimony to his persistent endeavors towards strengthening an innovation-led organization and leading and shaping the business demographics of HIL India's leading and Asia's most trusted building material company.
The award was presented to a handful of business leaders of India China and other South East Asian countries in Hong Kong early this calendar year.
Golden Peacock National Quality Award 2018
Your Company bagged the Golden Peacock National Quality Award 2018 which is one of the most prestigious awards in the field of Quality Innovation and Business Excellence.
The award was presented to HIL at the 29th World Congress on Leadership for Business Excellence & Innovation - Dubai Global Convention on March 6 2019 by the UAE Minister Dr. Tayeb Kamali.
India's Best Company of the Year
Your Company is proud to have received The Best Company of the Year Award 2018 in category of building materials for the second time in a row at an awards ceremony held in Mumbai by IBC INFOMEDIA (A Division of International Brand Consulting Corporation New Jersey USA). This selection was based on overall market share innovation workplace culture leadership business ethics Governance Corporate Social Responsibility and such other factors.
ACEF Customer Engagement Forum
In an elaborate ACEF Customer Engagement Forum awards ceremony held in Mumbai on October 5 2018 your Company won 3 gold awards in the categories of Best rural activation for Sales Volume Most Effective use of Sponsorship and Event Marketing and Young Marketing Leader of the year. The awards were won for the association with CSK and brand building initiatives undertaken by your Company.
Considered as the Oscars of advertising and marketing your Company bagged two silvers and one bronze award for its Pipes & Fittings TV Commercial. This TV Commercial was also sponsored for the Cannes Festival this year.
Superbrand is the world's largest independent arbiter of branding. It pays tribute to the strongest and most valuable brands in the world. `Superbrand Status' strengthens a brand's position adds prestige and sets the brand apart from its competitors. Your Company's brands Charminar and Birla Aerocon have been recipients of this prestigious award this year as well.
Andhra Pradesh Industrial Infrastructure Corporation awarded your Company's Kondapalli unit with the best green belt award.
Asia's Most Trusted Company of the year 2018
Your Company was conferred with ASIA'S MOST TRUSTED COMPANY OF THE YEAR 2018 by IBC Infomedia Pvt. Ltd. for the second consecutive year. ASIA'S MOST TRUSTED BRANDS & COMPANIES AWARDS identify and rewards those which have maintained the highest standards of product integrity and brand development.
Iconic Brand 2018
Your Company was recognized as an ICONIC BRAND 2018 by The Economic Time Iconic Brands 2018. The Economic Time Iconic Brands 2018 is an endeavour to feature successful brand stories by outlining the DNA of the legendary brands of Indian origin who have taken a deep dive into what has made these brands stand out and what are they doing as an ongoing process to live up-to the iconic status.
Management Discussion & Analysis Report
A Report on Management Discussion & Analysis is appended as Annexure (I) to this report as per the requirements of Securities and Exchange Board of India (Listing Obligations & Disclosures Requirements) Regulations 2015.
Directors' & Key Managerial Personnel
The following were the changes to the Board of Directors of your Company:
Dr. Arvind Sahay (DIN: 03218334) was appointed as an Additional Director w.e.f February 8 2019 and was also appointed as an Independent Director for a period of 5 years i.e from February 8 2019 to February 7 2024);
Mr. V. V. Ranganathan (DIN: 00060917) was appointed as an Additional Director w.e.f March 19 2019 and was also appointed as an Independent Director for a period of 5 years i.e from March 19 2019 to March 18 2024);
Mrs. Gauri Rasgotra (DIN: 06862334) was reappointed as an Independent Director for a period of second term of 5 years i.e from May 8 2019 to May 7 2024;
Mr. Yash Paul (DIN: 00580681) Independent Director of the Company has resigned due to personal reasons from the directorship of the Company w.e.f March 19 2019. The Board places on record its deep appreciation for the valuable services rendered by him during his association of about 19 years as a Director and Independent Director of the Company.
Late Mr. P. Vaman Rao (DIN: 00069771) Independent Director of the Company has resigned due to his health reasons from the directorship of the Company w.e.f February 8 2019. The Board places on record its deep appreciation for the valuable services rendered by him during last 5 decades as a Director and Independent Director of the Company. The Company also pays homage to this great leader on his demise during the later part of the year.
As per Section 149 152 and 160 of the Companies Act 2013 Dr. Arvind Sahay and Mr. V. V. Ranganathan hold the office of Director as Additional Director until the date of the ensuing Annual General Meeting of the Company and are eligible for appointment as a Director. Keeping in view their experience and expertise the Board recommends their appointment as Director(s) and Independent Director(s) for a period of 5 years. The Resolution proposing their appointment will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the Company.
As per Section 149 of the Companies Act 2013 and keeping in view the vast expertise and experience the Board recommends the reappointment of Mrs. Gauri Rasgotra as Independent Director for a second term of 5 years. The Resolution proposing her appointment will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the Company.
In accordance to provisions of Section 152 of the Companies Act 2013 and pursuant to Articles of Association of the Company Mr. Desh Deepak Khetrapal (DIN: 02362633) Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.
For Director seeking appointment/re-appointment at the ensuing Annual General Meeting of the Company their brief resume and other details required to be disclosed in accordance with Regulation 36 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 Companies Act 2013 and Secretarial Standards is included in the notice of the ensuing Annual General Meeting forming part of this Annual Report.
Pursuant to the provisions of Section 149 & 184 of the Companies Act 2013 and under Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 Independent Directors of the Company have submitted a declaration that each of them meet the criteria of independence as prescribed in Section 149(6) of the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations 2015 and there has been no change in the circumstances which may affect their status as an Independent Director during the year.
Pursuant to the provisions of Section 203 of the Companies Act 2013 Mr. Dhirup Roy Choudhary Managing Director & CEO Mr. KR Veerappan Chief Financial Officer and Mr. G Manikandan Company Secretary & Financial Controller are the Key Managerial Personnel of the Company and during the year under review there was no change in the Key Managerial Personnel of the Company.
Board & Committees
During the year eight meetings of Board of Directors of the Company were convened and held in accordance with the provisions of the Companies Act 2013. The date(s) of the Board Meeting attendance by the directors were given in the Corporate Governance Report forming part of this annual report. The maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
Committees of The Board
As per regulatory requirements and with a view to have focused deliberation the Board has constituted following committees.
Audit Committee of the Company meets the requirements of Section 177 of the Companies Act 2013 and Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. During the year four meetings of the Committee were held the details along with the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act 2013 are given in the Corporate Governance Report which forms part of this annual report. During the year under review the Board has accepted all the recommendations of the Audit Committee.
Nomination & Remuneration Cum Compensation Committee
Nomination & Remuneration cum Compensation Committee meets the requirements of Section 178 of the Companies Act 2013 and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. During the year four meetings of the Committee were held the details of the composition of the Nomination and Remuneration cum Compensation Committee as required under the provisions of Section 178 of the Companies Act 2013 are given in the Corporate Governance Report which forms part of this annual report. During the year under review the Board has accepted all the recommendations of the Nomination & Remuneration cum Compensation Committee.
Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations 2015 the Board has carried out an annual performance evaluation of its own performance the Directors individually and the Committees of the Board. Evaluation of all Board members is performed on an annual basis. The evaluation is performed by the Board Nomination & Remuneration cum Compensation Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.Structured forms covering evaluation of Board Committees of the Board Chairperson Independent Directors and non-independent directors were circulated to all the Directors and Directors were requested to rate the same against various criteria taking into consideration the inputs received from Directors covering aspects of the Board's functioning such as adequacy of the Composition of the Board and its Committees execution and performance of specific duties obligations and governance.
A separate exercise was carried out to evaluate the performance of the Individual Directors including the Chairman of the Board. The Directors' performance was evaluated on parameters such as level of engagement and contribution in strategy and safeguarding the interest of the Company etc.
The entire Board carried out the performance evaluation of the Independent Directors. Further the Independent Directors carried out the performance evaluation of the Chairman and Non Independent Directors.
Based on the recommendation of the Nomination & Remuneration cum Compensation Committee the Board reviews the key skills/ expertise/competence of Board of Directors so that Board of Directors comprises of a diverse and multidisciplinary group of professionals with requisite skills/expertise/competence who can contribute towards providing strategic direction to the Company's management upholding the highest standards of Corporate Governance.
Further as per the Securities and Exchange Board of India (Listing Obligation & Disclosure Requirements) Regulation 2015 the following is the matrix of skills and competencies on which all Directors will be evaluated from the financial year 2019-20 onwards.
Governance and Board service
Information Technology/Accounting/Financial Experience
Strategy development and implementation
Familiarisation Programme for Directors
In addition to giving a formal appointment letter to the newly appointed Director on the Board a detailed induction plan covering the role function duties responsibilities and the details of compliance requirements expected from the director under the Companies Act 2013 and relevant Regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 are given and explained to a new Director.
During the year all new directors appointed were provided with a formal familiarisation and a detailed orientation about the Company.
Corporate Social Responsibility Committee (CSR)
Corporate Social Responsibility Committee of the Company meets the requirements of Section 135 of the Companies Act 2013. The details of the composition of the Corporate Social Responsibility Committee as required under the provisions of Section 135 of the Companies Act 2013 are given in the Corporate Governance Report which forms part of this annual report.
Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Rules made thereunder the brief outline of the Corporate Social Responsibility (`CSR') policy of the Company and the initiatives undertaken by the Company on the CSR activities during the year are given in Annexure (II) to this report in the format prescribed in the Companies (Corporate Social Responsibility) Rules 2014. The said policy is available on the Company's website http://hil.in/investors-relations/.
As per the provisions of Section 135 of the Companies Act 2013 2% of average Net Profits of the Company for the immediately preceding three financial years calculated as per Section 198 of the Companies Act 2013 works out to H1.63 Crores and the Company has spent H2.05 Crores on CSR activities in the areas of healthcare education and others.
Stakeholders' Relationship Committee (SRC)
The Stakeholders' Relationship Committee of the Company meets the requirements of Section 178 of the Companies Act 2013 and Regulation 20 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. During the year four meetings of the Committee were held the details along with the composition of the Committee as required under the provisions of Section 178 of the Companies Act 2013 are given in the Corporate Governance Report which forms part of this annual report. During the year under review the Board has accepted all the recommendations of the Committee.
Extract Of Annual Return
Pursuant to the provisions of Section 92 of the Companies Act 2013 and rules framed thereunder the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure (III) and forms part of this Report.
Directors' Responsibility Statement
Pursuant to the requirement of Section 134(3)(c) and 134(5) of the Companies Act 2013 and on the basis of compliance certificate received from the executives of the Company and subject to disclosures in the Annual Accounts as also on the basis of the discussion with the Statutory Auditors of the Company from time to time and to the best of their knowledge and information furnished the Board of Directors state that:
I. In preparation of the Annual Accounts for the year ended March 31 2019 all the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India and Companies Act 2013 have been followed and there were no material departures.
II. We have adopted such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year ended March 31 2019.
III. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
IV. The Annual Accounts for the year ended March 31 2019 has been prepared on a going concern basis.
V. Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
VI. The systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Your Company is committed to good Corporate Governance coupled with adhering best corporate practices. The report on Corporate Governance for the year ended March 31 2019 pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed herewith as Annexure (IV). The Certificate from the Auditors of the Company B S R & Associates LLP. Chartered Accountants [ICAI Firm Registration Number: 116231W/ W-100024] regarding compliance of conditions of Corporate Governance is attached to the report of Corporate Governance forming part of this annual report.
Whistle Blower Policy
Pursuant to the requirement laid down in the Companies Act 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations 2015 the Company has a Whistle Blower Policy as part of its Vigil Mechanism to deal with instance of fraud and mismanagement if any. The framework ensures that strict confidentiality is maintained whilst dealing with concerns and that no discrimination is meted out to any person for a genuinely raised concern. The designated officer/ Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud/ misconduct at whistleblower@ hil.in. A High Level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board.
The details of the same are provided in the Report on Corporate Governance forming part of this report. The Whistle Blower Policy is also posted in the Investors section of the Company's website www.hil.in on the following link http://hil.in/investors-relations/.
All the complaints received under Vigil Mechanism Policy were investigated thoroughly and detailed update including action taken if any on the same was presented to the Audit Committee and Statutory Auditors of the Company.
Nomination & Remuneration Policy (Remuneration Policy) of the Company is designed to create a high-performance culture. It enables the Company to attract retain and motivate Directors on the Board Key Managerial Personnel and the Senior Management Officers. Our Business Model promotes customer centricity and requires employee mobility to address project needs. The Remuneration Policy supports such mobility through pay models that are at par with industry standards.
The Nomination & Remuneration Policy is in accordance with Section 178 of the Companies Act 2013 and Regulation 19 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015 and the same provided in the Corporate Governance Report. The Nomination & Remuneration Policy is also posted in the Investors section of the Company's website www.hil.in on the following link http://hil.in/investors/codes-policies/.
Sexual Harassment Policy
Diversity and Inclusion is one of the major thrust of your Company this year and provides an equal opportunity to all; it has been an endeavour of the Company to support women professionals through a safe healthy and conducive working environment by creating and implementing proper policies to tackle issues relating to safe and proper working conditions. As per provisions of The Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal) Act 2013 has framed a Policy on Prohibition Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto.
During the year under review no complaint of sexual harassment was received by the Company. Details as per Section 21 and 22 of the POSH Act are as under:
|Number of cases pending at the beginning of the financial year||Nil|
|Number of complaints filed during the financial year||Nil|
|Number of cases pending at the end of the financial year||Nil|
|Details of workshops or awareness programmes against sexual harassment carried out||The Company regularly conducts necessary awareness programs for its employees and all employees are provided detailed education during the induction.|
|Nature of action taken by the employer or district officer||Not Applicable|
Related Party Transactions
The Company is having a robust process of identifying and monitoring of related party transactions. All related party transactions that were entered during the financial year under review were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions entered or transacted by the Company with Related Parties Promoters Directors Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
In line with the provisions of Section 177 of the Companies Act 2013 read with the Companies (Meetings of the Board and its Power) Rules 2014 all Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for transactions which are of repetitive in nature and / or entered in the ordinary course of business and are at arm's length with related parties.
All Related Party Transactions entered during the financial year 2018-19 were in ordinary course of business and at arm's length basis. Your Company entered no Material Related Party Transactions i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statement during the year under review.
A summary statement of the transactions entered into with the related parties pursuant to the omnibus approval so granted are reviewed and approved by the Audit Committee and the Board of Directors on quarterly basis. The requisite details of the related party transactions entered into during the financial year are provided as Annexure (V) to this report.
None of the Directors other than to the extent of their shareholding receipt of remuneration/ commission has any pecuniary relationships or transactions vis--vis the Company and None of Directors are relatives to each other.
The Company has an elaborated Risk Management framework in place which helps in identifying the risks and proper mitigation thereof and also laid down the procedure for risk assessment and its mitigation through an internal Risk Committee.
Key risks and their mitigation arising out of reviews by the Committee are assessed and reported to the Audit Committee on a periodic basis. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The Risk Management Policy details the Company's objectives and principles of Risk Management along with an overview of the Risk Management process procedures and related roles and responsibilities.
During the year the Board reviewed the elements of risk and the steps taken to mitigate the risks and in the opinion of the Board there are no major elements of risk which has the potential of threatening the existence of the Company and as an organization your Company promotes strong ethical values and high levels of integrity in all its activities which in itself is a significant risk mitigator.
The Company has also adopted the following policies as required by Companies Act 2013 and Securities and Exchange Board of India Regulations and the same are available on the website of the Company (www.hil.in/investors/ policies/)
Dissemination of Material Events Policy.
Documents Preservation Policy.
Monitoring and Reporting of Trading by Insiders.
Code of Internal Procedures and Conduct for Regulating Code of Practices and Procedures for Fair Disclosures.
Material Subsidiary Policy.
Internal Financial Controls With Reference to Financial Statements
The Company has adequate internal financial control procedures commensurate with its size and nature of business. These controls include:
1. All transactions are recorded in the ERP system SAP.
2. Well defined policies guidelines and Standard Operating Procedures (`SOPs') authorization and approval procedures.
3. The internal financial controls of the Company are adequate to ensure accuracy and completeness of the accounting records timely preparation of reliable financial information prevention and detection of frauds and errors safeguarding of the assets and that the business is conducted in an orderly and efficient manner.
4. The Company has appointed Internal Auditors to check the Internal Controls and to ensure whether the work flow of the organization is in accordance with the approved policies of the Company; and
5. Systems to ensure compliances with prevalent status and statutory compliances are in place.
Auditors Statutory Auditors
The Company's Statutory Auditors B S R & Associates LLP Chartered Accountants (ICAI Regn. No.-116231W/ W-100024) were appointed as the Statutory Auditors of the Company for a period of 5 years i.e 70th Annual General Meeting (held on July 18 2017) till the conclusion of the 75th Annual General Meeting to be held in 2022. Accordingly B S R & Associates LLP Chartered Accountants Statutory Auditors of the Company will continue till the conclusion of 75th Annual General Meeting. In this regard the Company has received a Certificate from the Auditors to the effect that their continuation as Statutory Auditors would be in accordance with the provisions of Section 141 of the Companies Act 2013
There are no qualifications reservations or adverse remarks made by B S R & Associates LLP Chartered Accountants (ICAI Regn. No. 116231W/ W-100024) Statutory Auditors in their report for the Financial Year ended March 31 2019 and during the year the Auditors had not reported any matter under Section 143 (12) of the Act therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
The Company has an in-house internal audit team which monitors the effectiveness of the internal control systems. It reports to the Managing Director and Audit Committee about the adequacy and effectiveness of the internal control system of your Company. Your Company also obtains the services of Ernst and Young LLP and other reputed professionals to audit specific locations and processes for the year 2018-19.
The recommendations of the internal audit team on improvements in the operating procedures and control systems were also presented to the Audit Committee for strengthening the operating procedures.
During the year under review the Internal Auditors have not reported any matter under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3) (ca) of the Act.
Pursuant to Section 148 of the Companies Act 2013 read with the rules framed thereunder the cost audit records maintained by the Company in respect of its specified products are required to be audited by a Cost Auditor. The Board of Directors on recommendation of the Audit Committee appointed S.S. Zanwar & Associates Cost Accountants in Practice (Registration No. 100283) Cost Auditors as Cost Auditors of the Company to conduct the audit of the cost records of the Company for the financial year ending March 31 2020 at a remuneration of H7.00 lac plus other applicable taxes and actual travel stay conveyance and other miscellaneous expenses. Members are requested to ratify the remuneration payable to the Cost Auditors for the year 2019-20 at the ensuing Annual General Meeting of the Company in accordance with Section 148 of the Companies Act 2013.
The Cost Audit report for the financial year ended March 31 2018 was duly filed with the Central Government within the due date and the Company has maintained the Cost Records/Accounts as required under Section 148 of the Companies Act 2013.
During the year under review the Cost Auditors have not reported any matter under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3) (ca) of the Act.
Particulars of Loans Guarantees or Investments
The details of Loans Guarantees Investments and Security made during the Financial Year ended March 31 2019 is given in compliance with the provisions of Section 186 of the Companies Act 2013 read with Companies (Meetings of Board and its Powers) Rules 2014 and the same is provided in the notes to financial statements.
The Company has not accepted any deposits covered under Chapter V of the Companies Act 2013 and as such no amount of principal or interest was outstanding as on March 31 2019.
Pursuant to the provisions of Section 204 of the Companies Act 2013 Regulation 24A of the Securities and Exchange Board of India (LODR) Regulations 2015 and rules framed thereunder the Board of Directors on recommendation of the Audit Committee appointed P S Rao and Associates Company Secretaries to undertake the secretarial audit of the Company.
The secretarial audit report issued by P S Rao and Associates Company Secretaries for the financial year ended March 31 2019 is given in the Annexure (VII) attached hereto and forms part of this report. The report does not contain any qualifications reservations or adverse remarks.
During the year under review the Secretarial Auditors have not reported any matter under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134 (3) (ca) of the Act.
Subsidiaries and Joint Ventures
During the year your Company has set up a Wholly Owned Subsidiary i.e HIL International GmbH Germany for acquiring 100% shareholding of Parador Holding GmbH Germany. The following is the group structure of your Company after the said acquisition:
|Sl No.||Legal name of the entity||Relationship||Country of incorporation and Date||Full address|
|1||HIL LIMITED||Holding Company||India June 23 1955||Office No. 1 & 2 Level 7 SLN Terminus Gachibowli Hyderabad 500032|
|2||HIL International GmbH||Subsidiary (Wholly Owned Subsidiary)||Germany July 4 2018||Millenkamp 7-8 48653 Coesfeld Germany|
|3||Parador Holding GmbH||Step Down Subsidiary (WOS to HIL International GmbH)||Germany June 20 2016||Millenkamp 7-8 48653 Coesfeld Germany|
|4||Parador GmbH||Step Down Subsidiary (WOS to Parador Holding GmbH)||Germany September 21 2015||Millenkamp 7-8 48653 Coesfeld Germany|
|5||Parador Parkettwerke GmbH||Step Down Subsidiary (WOS to Parador GmbH)||Austria April 10 1998||Wiener Strasse 66 7540 Gssing Austria|
|6||Parador (Shanghai) Trading Co. Ltd.||Equity Joint venture (50%) of Parador GmbH and (50%) Horgus Oriental Glamour Co. Ltd.||Republic of China August 8 2018||Room 1006 Floor 10 No 233 Taicang Road Huangpu District Shanghai Municipality the People's Republic of China|
|7||Supercor Industries Limited||Equity Joint Venture (33%)||Nigeria July 1 1974||5 Ashaka Close Industrial Estate P.O. Box 51 Bauchi Nigeria|
During the year Mr. Dhirup Roy Choudhary Managing Director & CEO of the Company has been appointed as Managing Director on the Board of it's Subsidiaries.
During the year in compliance with the requirements of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements)Regulations 2015 your Company has appointed Dr. Arvind Sahay Independent Director as Director on the Board of HIL International GmbH Germany (wholly owned subsidiary)
Supercor Industries Ltd
Your Company holds 33% of the share capital in Supercor Industries Limited (Supercor) a Company incorporated under the laws of Nigeria. The State Government of Bauchi Nigeria and other shareholders holds remaining 67% of the share capital in Supercor.
As informed earlier Supercor suspended its operations from November 2015 none of the employees of Supercor are attending office and the power connection at the offices of Supercor has also been discontinued. The winding-up petition filed by the Company in 2016 was dismissed in Nigerian Court. Interim Board has been set up by the Nigerian Government for assessing the revival of the operations. However detailed plan of action from the interim Board of Supercor is awaited. While the investment and receivables are completely provided for based on the current status the Management believes there are no obligations for the Company towards Supercor.
In view of the above Company is not in a position to obtain any information/financials from the Joint Venture entity and hence the consolidated financial statements does not include the financial performance of Supercor Industries Ltd.
As per the provisions of Section 129 of the Companies Act 2013 read with Rule 5 of Companies (Accounts) Rules 2014 a separate statement containing the salient features of the Financial Statements of the Subsidiary Companies/ Associate Companies/Joint Ventures in Form AOC-1 attached as Annexure (VII) to this report.
Consolidated Financial Statements
The Consolidated Financial Statements prepared in accordance with Indian Accounting Standards Ind AS as per the Companies (Indian Accounting Standards) Rules 2015 notified under Section 133 of the Companies Act 2013 and other relevant provisions of the Companies Act 2013. As per the provisions of Section 136 of the Companies Act 2013 the Company will also place separate Audited accounts of its Subsidiaries on its website.
Employee Stock Options
The Company has an operative Employees Stock Option Scheme 2015 (ESOS-2015) which provides for grant of Stock Options to eligible employees of the Company.
Nomination & Remuneration cum Compensation Committee of the Board of Directors inter alia administers and monitors the Employees' Stock Option Scheme of the Company in accordance with the Securities and Exchanges Board of India (Share Based Employee Benefits) Regulations 2014 (Securities and Exchange Board of India Regulations).
The details of Employee Stock Options pursuant to Section 62 of the Companies Act 2013 read with Rules made thereunder and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014 and erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 are provided in Annexure (VIII) to this report and there were no options granted to eligible employees during the period.
Certificate from B S R & Associates LLP Chartered Accountants (ICAI Firm Registration Number: 116231W/ W-100024) Statutory Auditors of the Company confirming that the scheme has been implemented in accordance with the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations 2015 will be placed at the forthcoming Annual General Meeting of the Company for inspection by the members.
Particulars of Employees
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in Annexure (IX) to this report.
Compliance With Secretarial Standards
During the year under review your Company has complied with the respective Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings General Meetings and Dividend.
Material Development after the end of the year
No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this Report.
Human Capital and Industrial Relations
Your Company believes that the quality of its employees is the key to its success and is committed to providing necessary human resource development and training opportunities to equip employees with additional skills to enable them to adapt to contemporary technological advancements and builds as a culture which encourages open fearless and transparent communication. The recruitment process is aligned to attract the best talent available and Diversity at workplace is another priority that has significant emphasis of the Company
Your Company's management firmly believes that a strong and stable industrial relation is key to the success of your organization. Over the years the management has made sincere and continued efforts for the development of an atmosphere of mutual co-operation confidence and respect duly recognizing the rights of the workers. A rigorous labour law compliance mechanism is in place to help the organization run its businesses in the most ethical and efficient manner.
The Directors wish to place on record their sincere appreciation for the co-operation received from employees/workers at all levels.
Particulars of Conservation of Energy Technology Absorption and Foreign Exchange Earnings and outgo
Particulars with respect to Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 are given in the Annexure (X) attached hereto and forms part of this report.
Significant and Material Orders Passed by the Regulators/Court
During the year under review no significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and operations of the Company.
Material Changes and Commitments
There are no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year March 31 2019 to which the financial statements relates and the date of signing of this report.
Change in the Nature of Business
There has been no change in the nature of business of the Company
Investor Education and Protection Fund (IEPF)
In terms of Section 123 124 and 125 of the Companies Act 2013 the unclaimed dividends and shares wherein the dividends are unclaimed for a period of seven consecutive years for the Final Dividend for the year 2010-11 Interim Dividend for the year 2011-12 has been transferred to the IEPF Fund/Suspense account respectively. The details of shares transferred is available in the website of the Company.
Further as per the provisions of Section 125 the share(s) wherein the dividend is unclaimed for a period of consecutive seven (07) years will be transferred to the suspense account as prescribed by the IEPF Rules therefore the shareholders whose dividends are unclaimed for consecutive seven years from 2011-12 (list of the shareholders along with the unclaimed dividend details are available on the website of the Company www.hil.in/investors are requested to claim their unclaimed dividend at the earliest.
Shareholders are requested to ensure their dividends are encashed on time. In case of non-encashment of dividends shareholders are advised to approach the Company or RTA to claim their unclaimed dividends.
The Board of Directors take this opportunity to place on record their appreciation to all the Stakeholders of the Company viz. customers investors banks regulators suppliers and other business associates for the support received from them during the year under review. The Directors also wish to place on record their deep sense of gratitude and appreciation to all the employees for their commitment and contribution towards achieving the goals of the Company.
|On behalf of the Board of Directors|
|Place: New Delhi||Chairman|
|Date : May 27 2019||(DIN: 00118473)|