Your Directors take pleasure in presenting the 73rd Annual Report along with Standalone and Consolidated Financial Statements for the year ended March 31 2020. The year under review would be remembered as a really challenging year with unfavourable macros slowdown in infrastructure activities weak market liquidity and then the final blow with the unthinkable COVID-19 pandemic which majorly disrupted the economic activities across the world.
The economic situation of the Country was adversely impacted during the mandatory lockdown period and it includes the sectors in which your Company is operating. Your Company believes that with its strong foundation and stakeholder support including its loyal customers and employees it will be able to overcome the challenges and continue to maintain its market leadership position in the relevant market segments ably supported by the various customer connect initiatives put in place by the Company.
With the above brief synopsis your Directors are pleased to present the financial performance of the Company both on standalone and consolidated basis for the year ended March 31 2020:
Summary of Financial Results
(Rs. in Crores)
|Earnings Before Interest Depreciation & Tax||175.75||222.27||271.36||281.68|
|Less : Interest||31.17||19.35||38.52||25.16|
|Profit Before Tax and Exceptional items||94.61||160.11||134.94||187.96|
|Less: Exceptional items / Profit / Income from JV||0.00||0.00||0.64||(21.43)|
|Profit before Tax||94.61||160.11||135.58||166.53|
|Less : Taxes||17.89||58.59||29.63||65.14|
|Profit for the year||76.72||101.52||105.95||101.39|
|Other Comprehensive Income - net of tax||0.11||(0.60)||18.24||(10.15)|
|Total Comprehensive Income for the year||76.83||100.92||124.19||91.24|
|Basic Earnings Per Share (EPS)||102.62||135.94||141.73||135.78|
*Consolidated comparative number for 2018-19 includes performance of HIL International GmbH Germany from July 4 2018 to March 31 2019 encompassing the financials of Parador Holdings GmbH Germany for a 7 months period from September 1 2018 to March 31 2019.
The above mentioned financial numbers includes income and profit generated from discontinuing operations.
Your Company achieved a net revenue from operations on standalone basis at Rs.1360.06 Crores as against Rs.1481.96 Crores in previous year down by 8.2% and on consolidated basis registered a net revenue from operation at Rs.2594.17 Crores as against Rs.2208.05 Crores in previous year recording a growth of 17.5%. The standalone revenue was partly impacted by national elections in the first quarter and also due to certain restriction on construction activities witnessed in parts throughout the year. Further the nationwide lockdown imposed on account of Covid-19 in the later part of March 2020 also severely impacted the sales during that period.
Your Company expects that the demand momentum will improve gradually across India as lockdown gets eased in parts by the Government.
During the year under review the interest cost increased to H31.17 Crores on a standalone basis as against H19.35 Crores during the previous year. The increase in the interest cost is on account of the term loan availed for part funding the acquisition of 100% shareholding in Parador Holdings GmbH Germany through its wholly owned subsidiary HIL International GmbH Germany during 2017-18. On a consolidated basis interest cost for the financial year 2019-20 stood at H38.52 Crores as against H25.16 Crores in the previous year.
Profit Before Tax
During the year under review your Company registered a standalone Profit Before Tax (PBT) of H94.61 Crores as against Rs.160.11 Crores in the previous year down by 41% mainly due to increase in cost of raw materials like Fiber Cement coupled with lower sales volumes for reasons cited above. In view of the better performance reported by HIL International GmbH Germany and its subsidiaries profit before tax on a consolidated basis for the year 2019-20 stood at Rs.135.58 Crores as against Rs.166.53 Crores in the previous year.
The Standalone Net Worth as at March 31 2020 improved to Rs.705.03 Crores as against Rs.646.86 Crores as on March 31 2019. On a consolidated basis the Net Worth of your Company for the financial year 2019-20 stood at Rs.742.73 Crores as against Rs.637.19 Crores previous year.
The earnings per share (basic) as on March 31 2020 stood at Rs.102.62 per share as against Rs.135.94 per share as on March 31 2019 and the book value per share as at March 31 2020 was at Rs.943/- as against H866/- as on March 31 2019.
The credit ratings on Company's long term and short term facilities have been re-affirmed by the respective credit rating agencies and the same is furnished below:
|1 ICRA||Long Term -||`ICRA AA-/|
|2 ICRA||Short Term -||`ICRA A1+'|
|3 India Ratings||Long Term -||`IND AA-/|
During the year under review the Board of Directors declared an interim dividend of H10/- per equity share (100% of the paid-up value). Your Directors are pleased to recommend a final dividend of H10/- per equity share (100% 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 2019-20 works out to be H20/- per equity share (200% of the paid-up value) as against the total dividend of H25.00 per equity share (250% of the paid-up value) declared in the previous year. As per Finance Bill 2020 the dividend declared / paid from April 1 2020 will be taxable in the hands of the shareholders and hence payment of dividend distribution tax on the final dividend if approved will not arise. Shareholders are requested to visit www.hil.in/investor-relations for the FAQs on the dividend tax.
The total dividend outgo would amount to H16.49 Crores (Including Corporate dividend tax on Interim Dividend) and the Company has transferred H10 (Ten) Crores to the General Reserves out of the profits for the year.
The Register of Members and Share Transfer Books of the Company will remain closed from Thursday July 23 2020 to Wednesday July 29 2020 both days inclusive for determining the entitlement of the shareholders for the final dividend for the financial year ended March 31 2020 and for annual book closure.
The paid up Equity Share Capital as on March 31 2020 was Rs.7.51 Crores. During the year under review the Company has issued 6960 equity shares on exercise of options by an eligible employee 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 2020-2021 and 2019-2020 have been paid to these exchanges.
During the financial year 2019-20 the Issued and Listed Capital of the Company has increased due to allotment of equity shares to eligible employee on exercise of options under HIL Employee Stock Option Scheme 2015.
State of Company's Affair
After extraordinary performance by your Company for two consecutive years the year 2019-20 started with certain unique challenges. The first quarter which has always been the most favourable period for your Company began witnessing certain challenges. It all began with staggered national elections which impacted the demand of our Fiber Roofing Sheets in rural parts of the Country. Then there was the influence of significant increase in material cost sand mining constraints liquidity constraints and crunch in the market. To add to these woes and availability of labour was also an issue. All these cumulatively had an adverse impact on the performance of your Company during a period which would otherwise have been the busy and rewarding season.
However the Board and the Management had anticipated some of these emerging challenges in the manner in which it was evolving and quickly began calibrating its responses by adopting product specific / market specific models. These timely actions abated what would otherwise have resulted in the serious erosion of business performance as these issues continued to challenge us till third quarter of this financial year
The Covid-19 a global pandemic which began its invasion during the last quarter of this year has threatened the very existence of human life across the globe. It has caused what seems to be transitory pause to most of the businesses across the globe. Your Company is no exception to these challenges and it seriously affected the business performance in all its product categories during March 2020. However our overseas operations relieved the impact of these challenges to a large extent and delivered a reasonable performance during the last quarter.
Your Company's focused and committed approach combined with its unique and timely market/product based strategies continue to augur well to safeguard its market leadership position in most of its products categories.
Your Company institutionalised Six Sigma and Lean Management Systems processes across its manufacturing units and other key enabling functions which has helped to achieve operational excellence and supported the initiative of our continuing efforts at driving the cost effectively.
Your Company continues to maintain its market leadership position in this product category mainly backed by its loyal customers and retailers. Your Company's deep brand presence coupled with market penetration and dealer / sub-dealer connect activities in addition to certain brand enhancement schemes undertaken during the year proved beneficial for the Company.
Charminar Charminar Fortune brands continue to enjoy the trust of the customers backed by your Company's enhanced Customer centric approach superior quality than competition improved post sale customer service deep routed supply chain network and widely spread depots and dealer network. This has helped the Company to manage the headwinds faced in the industry with ease.
Your Company believes Charminar Fortune an 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 due to turmoil in the economic environment as cited earlier the roofing business ended the year with a de-growth of 13% in quantity terms over the previous year. However your Company is confident of improving and consolidating its position in the industry as the current challenges slowly disappear.
Building Solutions business consists of Wet Walling and Dry Walling products which caters to the various requirements of building industries/commercial spaces. During the year the demand for these products have gone up which resulted in reporting an improved financial matrix for this segment.
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. Having achieved the maximum capacity utilisation in the previous year the Company has focussed on process efficiency and lean management principles in these factories to optimize the cost further.
Wet-Walling category consists of Fly Ash Blocks an eco-friendly building material Smart fix Smart Plaster and Tile-Adhesive under the brand name Birla Aerocon. All products cohesively offer a complete range of solutions to the stakeholders in the Building Material industry. Tile-Adhesive is a new addition to this family and will be a compliment to other products in this category.
Fly Ash Blocks - an eco-friendly building material product with unique combination of strength low weight cost-effectiveness and durability has helped your Company gain market share in the Building solutions segment and maintain its leadership position.
During the year under review Fly Ash Blocks registered a de-growth of 4% in quantity terms over the previous year due to challenges faced during the first quarter. Fly Ash Blocks with the various adhesives offered under the said brand continue to be the preferred choice among the builders and dealers.
Dry-Walling category consists of Panels and Boards 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 continue to work closely with various Architects and Designers to provide them requisite support by creating awareness about the properties of these products and its advantages and they continue to promote these products. During the year the Panels and Boards division registered a decline of 6% in quantity terms 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 de-growth of 6% in quantity terms due to the slowdown seen in the industry during early part of the year mainly from industrial domestic and overseas customers for their new projects.
During the year the Company has entered into a Business Transfer Agreement for Sale and transfer of this business to Calderys India Refractories Limited through a slump sale arrangement on a going concern basis for an overall consideration of H80 Crores subject to adjustments set out in the said Business Transfer Agreement. The said transaction is expected to be completed within the mutually agreed time lines.
This vertical consists of Pipes & Fittings and Wall Putty marketed under the brand name Birla HIL. The Brand Birla HIL gained momentum since its launch last year and is becoming a preferred choice among its consumers.
Pipes & Fittings
The Company's facility at Golan (Gujarat) has started operating at a moderate capacity and primarily servicing its customers in the Western markets. During the year your Company has expanded its capacity at its Thimmapur facility which would help to service Southern Markets more effectively. Your Company is confident that with its rich heritage & Goodwill of HIL coupled with superior quality of its plumbing solutions products it will attract more customers thereby increasing its presence and market share. The pipes business vertical witnessed a growth of 11% during the year.
During the year Wall Putty business continued its momentum by enhancing its presence in newer markets and territories. The Wall Putty business ended the year at a moderate growth of 4% in quantity terms as compared to previous year. In order to service the growing demand across various regions and to improve the profitability your Company is in the process of setting up a manufacturing facility in Golan in the state of Gujarat which will further help to improve the business for this product.
With the acquisition of 100% shareholding in Parador Holdings GmbH Germany your Company's has expanded it's 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. Parador's Innovative and sustainable products make it highly complementary to the existing product portfolio which will enable the Company to market its widened product range across the globe.
Your Company has helped Parador to adopt Lean Six-Sigma and Lean manufacturing practices in its manufacturing facilities in Germany and Austria. Focussed approach by your Company along with the Parador Management team coupled with the above techniques has helped Parador to achieve better operating parameters and improved profitability during the year. With an international presence in 80+ countries your Company will be able to improve the composition of its overseas sales which will further enhance its capacity utilisation and profitability. The Joint Venture of Parador with a Chinese partner is in the process of stabilisation.
During the year under review Parador Group has reported a Net Revenue of Rs.1234.11 Crores with a Profit Before Tax of Rs.40.96 Crores.
The Company strengthened its efforts this year to enhance the premium association in the minds of the consumer and dealer vis--vis its key brands.
The Company also implemented a number of marketing and branding activities to engage with its customers influencers and channel partners. Its extensive engagement with the plumbers and the channel partners with a focus on building a strong digital platform offering its entire range of products including the polymer products have fortified the efforts. The Company has identified and distinguished markets based on attractiveness on various parameters with a view to deploying its marketing campaigns brand promotion activities and technical service offerings in a more targeted manner. Your Company's past association with the Indian Premier League (IPL) by partnering with Chennai Super Kings (CSK) has resulted in significant increase in brand recall. There is a sense of pride and nostalgia amongst the channel partners and employees with such associations.
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 its business verticals. 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 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.
EFFIE Award 2020
Your Company has been recipient of the prestigious EFFIE award for Birla HIL TVC done last year. The Effie Awards are considered by advertisers and agencies globally as the pre-eminent award in the industry and recognize all forms of marketing initiatives that contribute to a brand's success.
Technology Senate Award 2019
Your Company has been recipient of the Technology Senate Award for innovative use of a particular technology or a combination of technologies for distinct benefits to a stakeholder.
Great Place to Work 2020
Your Company is proud of being certified as a Great Place To Work for the second time in a row 2020-21. 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. Also your Company was in top 30 in the manufacturing segment this year.
Asia's most promising Leader of the Year 2020
Mr. Dhirup Roy Choudhary Managing Director and CEO of your Company was conferred with the prestigious `Most Promising Business Leader in Asia Award 2019' by The Economic Times for a second time in a row 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 Asia's most trusted building material Company.
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.
Asia's Most Trusted Company of The Year 2019
Your Company was conferred with ASIA'S MOST TRUSTED COMPANY OF THE YEAR 2019 by IBC Infomedia Pvt. Ltd. for the third 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.
Management Discussion & Analysis Report
A Report on Management Discussion & Analysis is appended as Annexure (I) to this report as per the requirements of SEBI (Listing Obligations & Disclosures Requirements) Regulations 2015.
Directors' & Key Managerial Personnel
During the period under review there were no changes to the Board of Directors of your Company. Pursuant to the provisions of Section 149 & 184 of the Companies Act 2013 and under Regulation 25 of SEBI (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 SEBI Regulations and there has been no change in the circumstances which may affect their status as an Independent Director during the year.
In accordance to provisions of Section 152 of the Companies Act 2013 and pursuant to Articles of Association of the Company Mr. CK Birla (DIN:00118473) Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The brief 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 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 has been no change in the Key Managerial Personnel of the Company.
Board & Committees
The Company has a professional Board with an optimum combination of executive non-executive and independent directors (including one woman director) who bring to the table the right mix of knowledge skills and expertise. The Board provides strategic guidance and direction to the Company in achieving its business objectives and protecting the interest of the stakeholders.
During the year Seven (7) 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 are 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Independence of the Board
The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation/ disclosures received from the Directors and on evaluation of the relationships disclosed the following Non-Executive Directors are Independent in terms of Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 149(6) of the Act:
|1. Mr. V V Ranganathan|
|2. Dr. Arvind Sahay|
|3. Ms. Gauri Rasgotra|
All the Directors have registered themselves with the Independent Directors' Data Bank.
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 SEBI (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 and Remuneration Cum Compensation Committee
Nomination and Remuneration cum Compensation Committee meets the requirements of Section 178 of the Companies Act 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. During the year three 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 and Remuneration cum Compensation Committee.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 a formal evaluation of the performance of the Board its Committees the Chairman and the individual directors was carried out for the financial year 2019-20.
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 such as composition of Board receipt of regular inputs and information functioning performance and structure of Board Committees skill set knowledge and expertise of directors preparation and contribution at Board meetings leadership etc. The performance evaluation of the respective Committees and that of independent and non-independent directors was done by the Board excluding the director being evaluated.
Evaluation of all Board members is performed on an annual basis. The evaluation is performed by the Board with specific focus on the performance and effective functioning of the Board and Individual Directors and the same is taken note of by the Nomination and Remuneration Cum Compensation Committee.
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 the Non-Independent Directors.
Based on the recommendation of the Nomination and 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 SEBI (Listing Obligation & Disclosure Requirements) Regulations 2015 the following is the matrix of skills and competencies on which all Directors are evaluated:
Governance and Board service
Information Technology/ Accounting/Financial Experience
Strategy development and implementation
Disclosures as required are forming part of the Corporate Governance Report enclosed herewith
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 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are given and explained to a new Director.
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 https://hil.in/ investor-relations/policies/CSR Policy.
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 H2.23 Crores and the Company has spent H2.26 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 SEBI (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.
Risk Management Committee
In terms of the provisions of the Listing Regulations your Company has voluntarily constituted a Risk Management Committee comprising of all the members of the Audit Committee along with the Managing Director & CEO Chief Financial Officer and Head - Internal Audit of the Company. The Risk Management Committee is mandated to review the risk management process of your Company. The Company Secretary acts as the Secretary to the Committee.
The Company has an elaborate 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 Risk Management Committee Audit Committee and the Board has reviewed the elements of risk and the steps taken to mitigate the said risks. In their opinion 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.
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 2020 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 2020.
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 2020 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 and best corporate practices. The report on Corporate Governance for the year ended March 31 2020 pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed herewith as Annexure (IV). The Certificate from the Auditors of the Company M/s. B S R & Associates LLP.
Chartered Accountants [ICAI Firm Registration Number: 116231W/ W-100034] regarding compliance of conditions of Corporate Governance is attached to the report of Corporate Governance forming part of this annual report.
Pursuant to the requirement laid down in the Companies Act 2013 and the SEBI (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 Vigil Mechanism framework ensures that strict confidentiality is maintained whilst dealing with reported concerns and that no discrimination whatsoever is allowed to be practiced against any person who has genuinely raised a concern. The designated officer/ Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud/ misconduct at email@example.com. 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 https://hil.in/investor-relations/ policies/
The complaints received under Vigil Mechanism Policy will be investigated thoroughly and detailed update including action taken if any on the same will be presented to the Audit Committee and Statutory Auditors of the Company. During the year the Company has received one compliant and the same has been investigated and closed accordingly.
Nomination and 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 SEBI (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 https://hil.in/investor-relations/policies/
Sexual Harassment Policy
Diversity and Inclusion is one of the major thrusts of your Company enabling 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 appropriate working conditions. As per provisions of The Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal) Act 2013 the Company 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 as on the beginning of the financial year||Nil|
|Number of complaints filed during the financial year||Nil|
|Number of cases pending as on the end of the financial year||Nil|
|Number of workshops or awareness programs against sexual harassment carried out||The Company regularly conducts necessary awareness programs for its employees and all employees are provided with 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 into 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 Powers) Rules 2014 all Related Party Transactions are placed before the Audit Committee for review and approval the Board and shareholders wherever such approval is required as per the provisions of Section 188 of the Act rules made thereunder Regulation 23 of the Listing Regulations and applicable Accounting Standards. Prior omnibus approval is obtained for Related Party Transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm's length.
All Related Party Transactions entered during the financial year 2019-20 were in ordinary course of business and at arm's length basis. Your Company did not enter into 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 also adopted the following policies as required by Companies Act 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 and the same are available on the website of the Company (https://hil.in/investor-relations/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|
|Your Company has in place adequate internal control systems commensurate with the size of its operations. Internal control systems comprising of policies and procedures are designed to ensure sound management of your Company's operations safekeeping of its assets optimal utilisation of resources reliability of its financial information and compliance. Clearly defined roles and responsibilities have been institutionalised. Systems processes and procedures are periodically reviewed and appropriately revised to strengthen them to mitigate emerging risks associated with the growing size and complexity of your Company's operations.|
|The Company's Statutory Auditors M/s. B S R and 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 M/s. B S R and 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 confirmation 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 M/s. B S R & Associates LLP Chartered Accountants (ICAI Regn. No. 116231W/W-100024) who are the statutory auditors of the Company in their report for the Financial Year ended March 31|
2020 and during the year the Auditors had not reported any matter under Section 143 (12) of the Act and therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
The Company has an effective fulltime in-house and professionally competent internal audit team which regularly monitors the effectiveness of the internal control systems. This function reports to the Audit Committee and the Managing Director about the adequacy and effectiveness of the internal control systems of your Company as well as the periodical results of its review of the Company's operations as per an approved internal audit plan duly approved by the Audit Committee. The in-house internal audit team works in tandem with M/s. Ernst and Young LLP whose professional services have been availed by the Company to audit specific locations and processes as per the Internal Audit plan approved by the Audit Committee. Together they provide a robust framework.
The recommendations of the internal audit teams on improvements in the operating procedures and control systems for strengthening the operating procedures were also presented periodically to the Audit Committee.
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 M/s. S.S. Zanwar & Associates as Cost Auditors of the Company to conduct the audit of the cost records of the Company for the financial year ending March 31 2021 at a remuneration of H6 Lacs. Members are requested to ratify the remuneration payable to the Cost Auditors for the year 2020-21 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 2019 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 Security provided and Investments made during the Financial Year ended March 31 2020 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 2020.
Pursuant to the provisions of Section 204 of the Companies Act 2013 Regulation 24A of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 and rules framed thereunder the Board of Directors on recommendation of the Audit Committee appointed M/s. P.S. Rao and Associates Company Secretaries to undertake the secretarial audit of the Company.
The secretarial audit report issued by M/s. P.S. Rao & Associates Company Secretaries for the financial year ended March 31 2020 is given in Annexure (VI) 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
The following is the group structure of your Company:
|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|
|2 HIL International GmbH||Subsidiary (Wholly Owned Subsidiary)||Germany July 3 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|
In compliance with the requirements of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 your Company has re-appointed Dr. Arvind Sahay Independent Director as a Director on the Board of HIL International GmbH Germany (wholly owned subsidiary) during the year. Dr. Arvind Sahay will hold office as a Director in HIL International GmbH Germany upto March 31 2022.
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 hold the remaining 67% of the share capital in Supercor.
During the year there is no significant development at Supercor Industries Limited. As informed earlier the Company has suspended its operations due to cashflow crisis. Your Company has already informed the Board of Supercor Industries Limited about its intention to sell its stake and has not been participating in any of the discussions of the Board / Management for last 3 years. The Interim Board set up by the Nigerian Government is still evaluating various options to revive the Company by infusing additional funds required for the operations. Your Company is awaiting the proposal from the Board of Supercor Industries Limited for deciding further course of action.
In view of the above your 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 is attached as Annexure (VII) to this report.
Consolidated Financial Statements
The Consolidated Financial Statements has been 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 two operative Employees Stock Option Schemes i.e HIL Limited Employees Stock Option Scheme 2015 and HIL Limited Employees Stock Option Scheme 2019 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(s) of the Company in accordance with the Securities and Exchanges Board of India (Share Based Employee Benefits) Regulations 2014 (SEBI Regulations).
As per the new HIL Employee Stock Option Scheme 2019 the Nomination & Remuneration cum Compensation Committee has granted 105049 options to eligible employees of the Company during the year.
The details of Employee Stock Options pursuant to Section 62 of the Companies Act 2013 read with Rules made thereunder and SEBI (Share Based Employee Benefits) Regulations 2014 and erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 are provided in Annexure (VIII) to this report.
Certificate from M/s. 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 SEBI Regulations 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.
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 new skills to enable them to adapt to contemporary technological advancements and promotes 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 cooperation 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.
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.
Business Responsibility Report
In terms of Regulation 34(2)(f) of the Listing Regulations a Business Responsibility Report forms part of the Annual 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 2020 to which the financial statements relate 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
Other Statutory Disclosures
Your Directors state that no disclosure or reporting is required with respect to the following items as there were no transactions related to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issues of sweat equity shares.
3. Provision of money for purchase of its own shares by employees or by trustees for the benefit of employees.
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 relating to the Final Dividend for the year 2011-12 Interim Dividend for the year 2012-13 have 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 2012-13 (list of the shareholders along with the unclaimed dividend details are available on the website of the Company https://hil.in/investor-relations/unclaimed-divided-shares-due-to-transfer-to-iepf/ 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.
Your Directors take this opportunity to thank all the stakeholders of the Company for their continued support.
Your Directors express their sense of gratitude to the customers vendors banks financial institutions channel partners business associates Central and State Governments for their co-operation and look forward to their continued support in future. Your Directors wish to place on record their sincere appreciation for the contribution made by the employees at all levels and applaud them for their superior levels of competence dedication and commitment towards your Company.
|On behalf of the Board of Directors|
|Place: New Delhi||Chairman|
|Date : May 25 2020||(DIN No. 00118473)|