Your Directors have pleasure in presenting the 70th Annual Report along with theAudited Statements of Accounts for the year ended December 31 2019.
Your Company's financial performance during the year was as under :
(Rs. in Lakhs)
|Particulars ||2019 ||2018 |
|Net Sales ||254767 ||233211 |
|Profit before Tax & Exceptional Item ||20158 ||11357 |
|Profit before Tax ||20158 ||11357 |
|Less: Provision for Current Tax ||3253 ||7916 |
|Provision for Deferred Tax ||(99) ||(47) |
|Profit after Tax ||17004 ||3488 |
|Add: Balance of profit for earlier years ||37897 ||39065 |
|Profit available for appropriation ||54901 ||42553 |
|Transfer to General Reserve ||- ||- |
|Transfer to Debenture Redemption Reserve ||Nil ||1925 |
|Dividend on Equity Shares & Dividend Tax thereon ||2731 ||2731 |
|Balance Carried forward ||52170 ||37897 |
Your Directors are pleased to recommend a dividend of Rs. 5/- (Rupees Five only)$ perequity share (250%)$ having face value of Rs. 2/- each for the year ended December 312019. The said dividend will absorb an amount of 'Rs.3777 lakhs.
The Dividend Distribution Policy of the Company is annexed to this Report as Annexure 1and is also available on Company's website at https://www.huhtamaki.com/en-in/flexible-packaging/investors/corporate-governance-and- policies/policies/
The Company did not invite or accept deposits covered under Chapter V of the CompaniesAct 2013 and there are no deposits outstanding with the Company.
Transfer to Reserves:
The Debenture Redemption Reserve amounting to Rs. 7700 lakhs has been transferred toGeneral Reserve pursuant to redemption of Non-Convertible Debentures of the Company onDecember 20 2019.
The Company acquired the business of Mohan Mutha Polytech Private Limited on 10January 2020 by way of a slump sale for an enterprise value of Rs. 7411 lakhs on acash free debt free basis. By this acquisition the Company will be better positioned tocater to customer demand especially in Southern India.
Redemption of Non-Convertible Debentures (NCDs)
The Company has pursuant to exercise of call option redeemed 7% - 3850Non-Convertible Debentures aggregating to Rs. 38500 lakhs along with the interest thereonamounting to Rs. 1095.92 lakhs (amount net of tax) on December 20 2019.
Subsidiary Companies and Financial Statements:
Your Company does not have any subsidiaries and hence Form AOC-1 is not applicable.
In accordance with the provisions of Section 136 of the Companies Act 2013 theaudited financial statements and related information of the Company are available on thewebsite of the Company - www.huhtamaki.com. These documents will be made available to theMembers for inspection at the Registered Office of the Company on all working days between10.00 a.m. to 12.00 noon upto the date of 70th Annual General Meetings.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:
Information pursuant to the provisions of Section 134 of the Companies Act 2013 andthe rules framed thereunder relating to conservation of energy technology absorptionforeign exchange earnings and outgo forms part of this Report and is given at Annexure 2.
Corporate Governance Report:
The Report on Corporate Governance and the Certificate of the Auditors of the Companyregarding compliance of the conditions of Corporate Governance as stipulated in Part C ofSchedule V of the Listing Regulations 2015 are enclosed as a separate section and formspart of this Report. A declaration signed by the Executive Director/CEO in regard tocompliance with the Code of Conduct by the members of the Board and Senior ManagementPersonnel also forms part of this Report.
Management Discussion and Analysis:
A detailed review of the operations performance and future outlook of the Company andits businesses are given in the Management Discussion and Analysis and forms a part ofthis Report.
Directors & Key Managerial Personnel:
Changes in Directorate and Key Managerial Personnel*:
Mr. Murali Sivaraman was appointed as Non-executive Independent Chairman of the Companyfor a period of 5 years w.e.f. January 1 2019.
Mr. Ranjeev Lodha was appointed as Chief Financial Officer of the Company w.e.f May 72019. Further he was appointed as an Additional Director of the Company w.e.f August 82019 and re-designated as Executive Director & Chief Financial Officer of the Company.Further his appointment as Whole-time Director w.e.f. August 8 2019 is for a period of 5years subject to approval of shareholders at the ensuing General Meeting.
Ms. Seema Modi has been appointed as an Additional Independent Director of the Companyw.e.f. January 1 2020 for a period of five years subject to approval of shareholders atthe ensuing General Meeting.
Dr. Arup Basu was elevated as President - Flexible Business and Member of GlobalExecutive Team of Huhtamaki Oyj effective February 1 2020. Accordingly Dr. ArupBasu ceased to be the Managing Director effective January 31 2020 and occupied theposition as Executive Director effective February 1 2020.
Mr. Ashok Kumar Barat has been appointed as an Additional Independent Director of theCompany w.e.f April 1 2020 for a period of five years subject to approval ofshareholders at the ensuing General Meeting.
Mr. Arunkumar Gandhi Independent Director of the Company stepped down from the Boardw.e.f March 31 2019 since he had surpassed the age of 75 years. Mr. S. K. Palekar and Mr.Nripjit Singh Chawla Independent Directors of the Company resigned w.e.f May 9 2019 dueto personal reasons. Mr. Jukka Moisio Non-executive Director of the Company stepped downfrom the Board w.e.f March 26 2019 consequent to his decision to step down as CEO ofHuhtamaki Group.
Mr. Olli Koponen Non-executive Director of the Company stepped down from the positionof President - Flexible Packaging Huhtamaki Oyj w.e.f. January 31 2020 consequent tohis appointment as Senior VP - Total Productive Manufacturing (TPM) at Huhtamaki Oyj.Accordingly he stepped down from the Board of the Company as a Nonexecutive director ofthe Company w.e.f. January 31 2020.
The Board wishes to place on record its sincere appreciation for the contribution &guidance given to the Board by Directors who ceased to be the Director of the Companyduring the year.
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. SamiPauni retires by rotation and being eligible offers himself for re-appointment in theensuing 70th Annual General Meeting.
The details of the proposed appointment/re-appointment of Directors are mentioned inthe Explanatory Statement under Section 102 of the Companies Act 2013 of the Notice ofthe 70th Annual General Meeting (AGM) of your Company.
Declaration by Independent Directors:
The Company has received necessary declarations from all the Independent Directors ofthe Company confirming that they meet the criteria of independence laid down in Section149(6) of the Companies Act 2013 and Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations 2015) andthe same has been noted by the Board of Directors.
Evaluation of Performance of Board its Committees and of Directors:
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations 2015 theBoard of Directors has undertaken an annual evaluation of its own performance its variousCommittees and individual directors. The manner in which the performance evaluation hasbeen carried out has been given in detail in the Corporate Governance Report annexed tothis Report.
The Company has in place a policy for appointment & remuneration of Directors andKey Managerial Personnel encompassing the criteria for determining qualificationspositive attributes independence of a director and other matters provided under Section178(3) of the Act and Part D of Schedule II of the Listing Regulations appended asAnnexure 3 to the Directors' Report. The above policy along with the criteria forselection is available on the Company's website at https://www.huhtamaki.com/en-in/flexible-packaging/investors/corporate-governance-and- policies/policies/
Business Responsibility Report:
As per Regulation 34 of Listing Regulations 2015 Business Responsibility Report formspart of this Report and is annexed hereto.
In line with the green initiative Business Responsibility Report of the Company forthe year ended December 31 2019 is available on the website of the Company https://www.huhtamaki.com/en-in/flexible-packaging/investors/financials/ annual-reports/ and formspart of this Report and is kept at the registered office of the Company for inspection. Acopy of the aforesaid report shall be made available to such shareholders who are desirousof and interested in perusing them upon receipt of a written request from them.
Familiarisation Programme for Independent Directors:
Your Company has put in place a Familiarisation Programme for Independent Directors tofamiliarise them with their roles rights responsibilities nature of the IndustryCompany's strategy business plan operations markets products etc. The details of theCompany's Familiarisation Programme is available on the Company's website - web link:https://www.huhtamaki. com/en-in/flexible-packaging/investors/corporate-governance-and-policies/policies/
Meetings of the Board:
During the year nine meetings of the Board of Directors were held particulars ofattendance of directors at the said meetings are given in the report on CorporateGovernance Report which forms part of this Report.
Auditors and Auditors' Report:
Pursuant to the provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 M/s. S R B C & Co. LLP CharteredAccountants (SRBC) were appointed as Statutory Auditors of your Company for a term of fiveyears from the conclusion of the 65th Annual General Meeting held on May 7 2015 till theconclusion of the 70th Annual General Meeting subject to ratification by members at everysubsequent Annual General Meeting.
As per the provisions of Section 139 of the Companies Act 2013 the term of office ofS R B C & CO. LLP Chartered Accountants as Statutory Auditors of your Company willexpire from the close of the 70th Annual General Meeting.
The Board of Directors places on record its appreciation for the services rendered by SR B C & CO. LLP Chartered Accountants (SRBC) during their term as the StatutoryAuditors of the Company.
Subject to the approval of shareholders the Board of Directors of your Company haverecommended the appointment of BSR & Co. LLP Chartered Accountants (Firm RegistrationNumber 101248W/W-100022) as Statutory Auditors of your Company pursuant to the provisionsof Section 139 of the Companies Act 2013 to hold office from the conclusion of the 70thAnnual General Meeting until the conclusion of the 75th Annual General Meeting BSR &Co. LLP Chartered Accountants have confirmed their eligibility and willingness for theirappointment as Statutory Auditors. A resolution seeking their appointment has beenincluded in the Notice convening the 70th Annual General Meeting of your Company.
The Auditors' Report to the Members on the Accounts of the Company for the year endedDecember 31 2019 is a part of the Annual Report. The said Audit Report does not containany qualification reservation or adverse remark.
During the year 2019 the Auditors had not reported any matter under Section 143 (12)of the Act therefore no details is required to be disclosed under Section 134(3)(ca) ofthe Act.
Cost accounts and Cost Auditors:
In terms of the Section 148 of the Companies Act 2013 ('the Act') read with Rule 8 ofthe Companies (Accounts) Rules 2014 it is stated that the cost accounts and records aremade and maintained by the Company as specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013.
The Board of Directors of your Company on the recommendation of Audit Committee hasappointed M/s. R. Nanabhoy & Co. Cost Accountants as the Cost Auditors of the Companyto conduct the Cost Audit for the Financial year 2020. Pursuant to the provisions ofSection 148 of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014 members of the Company are required to ratify the remuneration to be paid to theCost Auditors. Accordingly Members approval is being sought for ratification of theirremuneration as Cost Auditors of the Company for the Financial Year 2020. M/s. R. Nanabhoy& Co. have confirmed of their independent status and that they are free from anydisqualifications as specified under Section 141(3) and proviso to Section 148(3) readwith Section 141(4) of the Companies Act 2013.
The Board of Directors of your Company has appointed M/s. S.N. Ananthasubramanian &Co. Company Secretaries to conduct Secretarial Audit for the Financial year 2019pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014. The Secretarial AuditReport in prescribed format is annexed as Annexure 4 to this Report.
During the Year 2019 your Company has complied with the applicable SecretarialStandards issued by the Institute of Companies Secretaries of India.
Annual Secretarial Compliance Report:
The Company has undertaken an audit for the financial year 2019 for all applicablecompliances as per Securities and Exchange Board of India Regulations andCirculars/Guidelines issued thereunder.
The Annual Secretarial Compliance Report has been submitted to the stock exchangeswithin 60 days of the end of the financial year.
Particulars of Contracts and Arrangements with Related Parties:
Your Company has formulated a policy on related party transactions which is alsoavailable on Company's website at https://www.huhtamaki.com/en-in/flexible-packaging/investors/corporate-governance-and-policies/policies/. This policy deals with the reviewand approval of related party transactions. The Board of Directors of the Company hasapproved the criteria for making omnibus approval by the Audit Committee within theoverall framework of the policy on related party transactions. Prior omnibus approval isobtained for related party transactions which are of repetitive nature and entered in theordinary course of business and on arm's length basis. All related party transactions areplaced before the Audit Committee for review and approval.
All related party transactions entered during the Year 2019 were in ordinary course ofthe business and on arm's length basis. During the year the Company had not entered intoany contract/ arrangement/ transaction with related parties which could be consideredmaterial in accordance with the policy of the Company on materiality of related partytransactions. Hence there were no transactions that were required to be reported in FormAOC 2 as required under Section 134(3)(h) of the Companies Act 2013. However members mayrefer to Notes to the financial statement which sets out related party disclosurespursuant to the Accounting Standards.
None of the Directors and the Key Managerial Personnel have any pecuniary relationshipor transactions vis-a-vis the Company.
Particulars of Loans Guarantees or Investments:
The Company has not granted any loans guarantees and investments covered under Section186 of the Companies Act 2013 during the financial year ended December 31 2019.
Corporate Social Responsibility:
Your Company is committed to Corporate Social Responsibility (CSR) and stronglybelieves that the business objectives of the Company must be in congruence with thelegitimate development needs of the society in which it operates. During the year underreview the Company incurred a CSR Expenditure of Rs. 147.19 lakhs which was lower than thestatutory limits. The reason for lower CSR Expenditure has been mentioned in the detailedreport on CSR activities is given in Annexure 7 which forms part of this Report.
The CSR projects of the Company mainly focused in the areas of Promotion of Education& Skill Development Social Welfare & Rural Development and Providing DrinkingWater Sanitation Facilities and Hygiene.
The Company has formed a Trust by the name 'Huhtamaki Foundation' to work in the areaof environmental sustainability recyclability and to set up Sustainability facilities forpost consumer use flexible packaging material. The Trust has been registered with theCharity Commissioner's office at Mumbai on February 27 2020.
The CSR Policy of your Company is in alignment with the requirements of the CompaniesAct 2013. Pursuant to the provisions of the Section 135 of the Companies Act 2013 (theAct) your Company has constituted a CSR Committee to monitor the CSR activities of theCompany details of which are provided in the Corporate Governance Report forming part ofthis Report.
Vigil Mechanism/ Whistle-Blower Policy:
Your Company has over the years established a reputation for conducting business withintegrity and displays zero tolerance for any unethical behaviour. The Company has inplace a Whistleblower Policy with a view to provide a mechanism for itsdirectors/employees to approach the Chairman of the Audit Committee in case of anygrievances or concern. The Audit Committee of the Board oversees the functioning of thispolicy. Protected disclosures can be made by a whistle-blower through several channels toreport actual or suspected frauds and violation of Company's Code of Conduct and/or EthicsPolicy. The Whistleblower Policy can be accessed on the Company's websitehttps://www.huhtamaki.com/en-in/flexible-packaging/investors/corporate-governance-and-policies/policies/. During the year the Companyreached out to employees through e-learning modules and face to face training sessions forcreating greater awareness on anti-bribery anti-corruption and code of conductformulated by Company/Group.
Huhtamaki Speak Up channel is a new web-based system where any employee can report anysuspected violations of any of the Company policies Code of Conduct or any laws orregulations.
During the year the Company received one complaint under Whistle Blower/Vigilmechanism which is under investigation.
Risk Management & Internal Financial Controls:
The Company has in place mechanism to inform Board Members about the RiskAssessment and Minimisation procedures which are periodically reviewed to ensure that riskis controlled by the Executive Management.
The Company has also formulated Risk Management Policy to review and control risk. TheCompany has also constituted a Risk Management Committee at its meeting held on February17 2020 which oversees and monitor implementation of Risk Management Policy validate theprocess and procedure of Risk Management and Risk Mitigation and periodically review andevaluate the Company's Risk Management Policy.
Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are given in the Management's Discussion and Analysis which formspart of this Report.
Internal Financial Controls and their Adequacy:
The Directors have laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. The Audit Committee evaluates the internal financialcontrol system periodically.
At the beginning of each Financial Year annual audit plan is rolled out after the sameis approved by the Audit Committee. The Audit Plan is aimed at evaluation of the efficacyand adequacy of internal control system and compliance thereof robustness of internalprocesses policies and accounting procedure and compliance with laws and regulations.
The respective Process Owners take the requisite corrective action based on internalaudit reports/findings. Further the Internal Auditors place their significant auditobservations & corrective actions thereon are presented to the Audit Committee fortheir review.
The Extracts of the annual return of the Company has been placed on the website of theCompany and can be accessed at link https://www.huhtamaki.com/en-in/flexible-packaging/investors/financials/annual-reports/
Directors' Responsibility Statement:
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134 of the Act:
a) that in the preparation of the annual financial statements for the year endedDecember 31 2019 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;
b) that such accounting policies as mentioned in Note 2 of the Notes to the Accountshave been selected and applied consistently and judgement and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as on December 31 2019 and of the profit of the Company for the yearended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls have been laid down to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) that the proper systems to ensure compliance with the provisions of all applicablelaws are in place and were adequate and operating effectively.
Human Resources & Particulars of Employees:
Your Company considers people as its biggest assets.
The Company has been providing continuous skill upgradation and learning opportunitiesthrough structured career discussions and individual development plans. A detailed note onHuman Resources is mentioned in the Management & Discussion Analysis (MDA) section.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this Report as Annexure 6.
The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report. Further thereport and the financial statements are being sent to the members excluding the aforesaidstatement. Further in terms of provisions of Section 136(1) of the Act the Annual Reportexcluding the aforesaid information is being sent to the members of the Company.
The said information is open for inspection at the Registered Office of the Companyduring business hours on working days of the Company up to the date of the ensuing AnnualGeneral Meeting and any member interested in obtaining such information may write to theCompany Secretary at the Registered Office of the Company and the same will be furnishedon request.1
Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company is an equal opportunity provider and continuously strives to build a workculture which promotes the respect and dignity of all employees across the organisation.In order to provide women employees a safe working environment at workplace and also incompliance with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and Rules framed thereunder the Company hasformulated a well-defined policy on prevention prohibition and redressal of complaintsrelating to sexual harassment of women at workplace. All women who are associated with theCompany either as permanent employees or temporary employees or contractual personsincluding service providers at company sites are covered under the above policy. The saidpolicy has been uploaded on the website of Company for information of all employees. YourCompany has zero tolerance sexual harassment policy at workplace. As per the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal)Act 2013 ('Act') and Rules made thereunder the Company has constituted an InternalComplaints Committees (ICC).
The Company conducts awareness programmes at its units to sensitise the employees touphold the dignity of their female colleagues at workplace. During the year the Companyreceived two complaints and the same was dealt with as per the POSH Regulations.
Your Directors state that no disclosure and/or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
Issue of equity shares with differential rights as to dividend voting orotherwise;
Issue of shares (including sweat equity shares) to employees of the Companyunder any scheme;
Neither the Executive Director nor the Whole-time Directors of the Companyreceive remuneration or commission from any of its subsidiaries;
No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future;
Other than acquisition of flexible packaging business of Mohan Mutha PolytechPrivate Limited (MMPPL) which was completed on January 10 2020 there havebeen no material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the Financial Year of the Company to whichthe Financial Statements relate and the date of this Report.
Appreciation & Acknowledgements:
The Board wishes to place on record its gratitude for the assistance and co-operationreceived from Banks Government Authorities Customers Vendors and all its shareholdersfor the trust and confidence reposed in the Company. The Board further wishes to recordits sincere appreciation for the significant contributions made by employees at all levelsfor their commitment dedication and contribution towards the operations of the Company.
|By Order of the Board |
|For Huhtamaki PPL Ltd. |
|Murali Sivaraman |
|(DIN No. 1461231) |
|March 18 2020 |