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Huhtamaki PPL Ltd.
|BSE: 509820||Sector: Industrials|
|NSE: PAPERPROD||ISIN Code: INE275B01026|
|BSE 09:53 | 16 Sep||223.20||
|NSE 09:44 | 16 Sep||224.00||
|Mkt Cap.(Rs cr)||1,685|
|Mkt Cap.(Rs cr)||1685.16|
Huhtamaki PPL Ltd. (PAPERPROD) - Director Report
Company director report
Your Directors have pleasure in presenting the 69th Annual Report of the Company alongwith the Audited Financial Statements for the year ended December 31 2018.
Your Company's financial performance during the year was as under:
*Provision for Current Tax includes provisions for disputed Income tax matter ofearlier years amounting to ' 2107 Lakh (Refer Note 42 of Notes to Account)
Your Directors are pleased to recommend a dividend of ' 3/- (Rupees Three only) perequity share (150%) having face value of ' 2/- each for the year ended December 31 2018.The said dividend will absorb an amount of ' 2731 Lakh including the dividenddistribution tax and cess thereon.
The Dividend Distribution Policy of the Company is annexed to this Report as Annexure 1and is also available on the Company's website at -
The Company did not invite or accept any deposits covered under Chapter V of theCompanies Act 2013 during the year under review and there are no deposits pending withthe Company.
Transfer to Reserves:
Debenture Redemption Reserve is created to the extent of 25% of the Non-ConvertibleDebentures (NCDs) equally over the period till maturity of the NCDs as per therequirements of applicable laws. There has been no transfer to reserve during the year.
Acquisition of Business:
During the year under review the Company acquired the entire business of M/s AjantaPackaging (India) as a going concern on slump sale basis for a net consideration of '9078.46 Lakh effective June 1 2018.
This strategic move adds excellent asset to the Company's existing strong portfolio inPressure Sensitive Label Business and also creates new opportunities for growth.
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.ppl.huhtamaki.com.
These documents will be made available to the Members for inspection at the RegisteredOffice of the Company on all working days between 10.00 a.m. to 12.00 noon up to the dateof 69th Annual General Meeting.
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 Managing Director in regard to compliancewith
the Code of Conduct by the members of the Board and Senior Management Personnel alsoforms 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:
Mr Murali Sivaraman was appointed as Non-Executive Independent Chairman of the Companyfor a period of 5 (Five) years w.e.f. January 1 2019 in place of Mr Suresh GuptaExecutive Chairman who stepped down from Board of Directors of the Company on expiry ofhis term w.e.f. December 31 2018. The Board has placed on record its deep gratitude andappreciation for the leadership and direction provided by Mr Suresh Gupta over the last 3decades.
Mr Arunkumar Gandhi will cease to be an Independent Director of the Company effectiveMarch 31 2019 close of business hours pursuant to the provisions of Regulation 17(1A)of SEBI (Listing Obligations and Disclosures Requirements) Regulations 2018. The Board ofDirectors places on record its sincere appreciation & gratitude for the vitalcontributions made by Mr Arunkumar Gandhi during his tenure as Independent Director.
Mr Jukka Moisio has decided to step down from the position as CEO of Huhtamaki Groupand accordingly tendered his resignation from the position of Non-Executive Director ofthe Company w.e.f. March 26 2019. The Board places on record its appreciation for thecontribution made by Mr Moisio during his association with the Company.
Mr Sami Pauni who was Alternate Director to Mr Jukka Moisio (Non-Executive) Directorresigned as Alternate Director and has been appointed as Additional Director(Non-Executive) of the Company w.e.f. February 18 2019.
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr OlliKoponen retires by rotation and being eligible offers himself for re-appointment.
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 of69th Annual General Meeting (AGM) of your Company.
Mr Parag Vyavahare Chief Financial Officer of the Company and Key ManagerialPersonnel resigned from the services of the Company w.e.f. January 18 2019.
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
Section 149(6) of the Companies Act 2013 and SEBI Listing Regulations 2015.
Evaluation of Performance of Board Its Committees and of Directors:
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations 2015 theBoard carried out annual performance evaluation of its own performance its committees andindividual directors. The manner in which the performance evaluation was carried out isgiven in detail in the Corporate Governance Report annexed to this 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 -
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 the Company's Familiarisation Programme is available on the Company'swebsite -https://www2.huhtamaki.com/web/flexible-packaging-india/policies
Meetings of the Board:
During the year six 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 provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 S R B C & CO. LLP Chartered Accountants(SRBC) were appointed as Statutory Auditors for a term of five years to hold office fromthe conclusion of 65th Annual General Meeting up to the conclusion of the 70th AnnualGeneral Meeting subject to ratification at every Annual General Meeting.
The requirement of seeking ratification of the members for continuance of StatutoryAuditors appointment has been withdrawn consequent upon the changes made by the Companies(Amendment) Act 2017 w.e.f. May 7 2018.
Hence the resolution seeking ratification of the members for their appointment is notbeing placed at the ensuing Annual General Meeting.
The Auditors' Report to the Members on the Accounts of the Company for the year endedDecember 31 2018 is a part of the Annual Report. The said Audit Report does not containany qualification reservation or adverse remark. During the year 2018 the Auditors hadnot reported any matter under Section 143(12) of the Act therefore no detail is requiredto be disclosed under Section 134(3)(ca) of the Act.
Cost Accounts and Cost Auditors:
In terms of the Section 148 of the Companies Act 2013 (the Act') read with Rule8 of the Companies (Accounts) Rules 2014 it is stated that the cost accounts and recordsare made and maintained by the Company as specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013.
The Board has appointed M/s R Nanabhoy & Co. Cost Accountants as the Cost Auditorsof the Company to conduct the Cost Audit for the Financial year 2019. Members approval isbeing sought for ratification of their remuneration as Cost Auditors of the Company forthe Financial Year 2019.
M/s R Nanabhoy & Co. have confirmed that they are free from any disqualificationas specified under the Act and of their Independent Status.
The Board has appointed M/s S N Ananthasubramanian & Co. Practicing CompanySecretaries to conduct Secretarial Audit for the Financial year 2018. The SecretarialAudit Report in prescribed format is annexed as Annexure 4 to this Report.
During the Year 2018 your Company has complied with the applicable SecretarialStandards issued by the Institute of Companies Secretaries of India.
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://www2.huhtamaki.com/web/flexible-packaging-india/policies . This policy deals with the review and approval of related partytransactions. The Board of Directors of the Company has approved the criteria for makingomnibus approval by the Audit Committee within the overall framework of the policy onrelated party transactions. Prior omnibus approval is obtained for related partytransactions which are of repetitive nature and entered in the ordinary course of businessand on arm's length basis. All related party transactions are placed before the AuditCommittee for review and approval.
All related party transactions entered during the Financial Year 2018 were in ordinarycourse of the business and on arm's length basis. During the year the Company had notentered into any contract/ arrangement/ transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions. Accordingly the disclosure of related party transactions as requiredunder Section 134(3)(h) of the Companies Act 2013 in Form AOC 2 is not applicable to yourCompany. However members may refer to Notes to the financial statement which sets outrelated party disclosures pursuant to the Accounting Standards.
None of the Directors and the Key Managerial Personnel has any pecuniary relationshipor transactions vis-avis 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 2018.
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 under review the Company incurred a CSR Expenditure of ' 238.26 Lakhwhich was higher than the statutory limits. The CSR projects of the Company mainly focusedin the areas of promotion of education & skill development social Welfare & ruraldevelopment and providing drinking water sanitation facilities and hygiene.
A detailed report on CSR activities is given in Annexure 5 forming part of thisReport.
Pursuant to the provisions of the Section 135 of the Companies Act 2013 (the Act)your Company has constituted a CSR Committee to monitor the CSR activities of the Companydetails of which are provided in the Corporate Governance Report forming part of thisReport.
Vigil Mechanism/Whistle-Blower Policy:
The Company has in place a Whistle-blower Policy with a view to provide a mechanism forits directors/employees to approach the Chairman of the Audit Committee in case of anygrievances or concern. The Whistle-blower Policy can be accessed on the Company's website-https://www2. huhtamaki.com/web/flexible-packaging-india/policies.
During the year the Company reached out to employees through e-learning modules andface-to-face training sessions for creating greater awareness on anti-bribery and code ofconduct policies formulated by the 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.
Risk Management & Internal Financial Controls:
The Company has in place a mechanism to inform Board Members about the Risk Assessmentand Minimisation procedures which are periodically reviewed to ensure that risk iscontrolled by the Executive Management. The Company has also formulated Risk ManagementPolicy to review and control risk.
Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are given in the Management Discussion and Analysis which forms partof 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 an annual Internal audit plan is rolled outafter it has been approved by the Audit Committee. The Audit Plan is aimed at evaluationof the efficacy and adequacy of internal control system and compliance robustness ofinternal processes policies and accounting procedures and compliance with laws andregulations. The respective Process Owners take the requisite corrective action based oninternal audit reports/findings. Further the Internal Auditors place their significantaudit observation & corrective actions thereon are presented to the Audit Committeefor their 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://www2.huhtamaki.com/web/
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 2018 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 2018 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 laid down were followed by the Company andsuch internal financial controls are adequate and were operating effectively; and
f) that proper systems to ensure compliance with the provisions of all applicable lawshave been devised and such systems were adequate and were 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 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 working hours and any member interested in obtaining such information may write tothe Company Secretary at the Registered Office and the same will be furnished on request.
Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:
Your Company has zero tolerance sexual harassment policy at workplace. As per therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013 (Act') and Rules made thereunder the Company has constitutedan Internal Complaints 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 one Complaint of harassment and same has been disposed off after inquiry byInternal Complaints Committee by taking requisite disciplinary action against guiltyemployees.
Material Order Passed by the Regulators or Courts: MPCB Matter
The Company in relation to its Thane manufacturing facility had received a closurenotice on November 20 2018 from Maharashtra Pollution Control Board (MPCB')pursuant to the provisions of Water & Air Pollution Act against which the Companyfiled an appeal with the National Green Tribunal (NGT'). The Company submitteddocumentary evidence of requisite compliance under the Plastic Waste Management Rules2016 (PWM Rules) to MPCB and on December 14 2018 withdrew its appeal before the NGTwith liberty to file appeal which has been accepted by NGT. On January 3 2019 theCentral Pollution Control Board (CPCB') certified the Company as Producer' asper the PWM Rules notified under the Environmental (Protection) Act 1986 covering allits manufacturing sites. The Company is awaiting formal withdrawal of the closure noticeby MPCB.
Rudrapur Tax Matter
The Hon'ble Supreme Court vide its Order dated August 20 2018 concerning otherassesses had given a ruling in favour of the Income Tax Department wherein it had heldthat 100% deduction under Section 80-IC of the Income Tax Act 1961 cannot be claimedbeyond 5 years even if substantial expansion" is undertaken after the initialperiod of 5 years.
As a result of the above ruling in relation to the substantial expansion undertaken atits Rudrapur Unit the Company recognised a provision for income tax of ' 2107 Lakh andinterest thereon amounting to ' 1000 Lakh in the Financial year ended December 31 2018.
Further the Hon'ble Supreme Court by its Order dated February 20 2019 recalled itsearlier judgement dated August 20 2018 by passing a ruling in favour of the assesses. Inlight of the above ruling the Company is examining the impact on the tax provisions madeby the Company.
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;
The Managing Director of the Company receive remuneration or commission from anyof its subsidiaries;
There have been no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the Financial Year of theCompany to which the Financial Statements relate and the date of this Report except asstated above.
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.
For and on behalf of the Board of Directors
Murali Sivaraman Chairman
March 26 2019