Your Directors have pleasure in presenting their report and the Company's auditedfinancial statements for the financial year ended March 312017.
1. FINANCIAL HIGHLIGHTS
|Particulars ||FY 2016-17 ||FY 2015-16 |
|Revenue from Operations ||2382.94 ||2197.34 |
|Other Income ||35.82 ||34.86 |
|Profit Before Interest Depreciation and Tax ||586.35 ||464.24 |
|Interest ||7.20 ||9.60 |
|Depreciation ||72.68 ||53.74 |
|Profit before Tax & Exceptional items ||506.47 ||400.90 |
|Current Tax inclusive of earlier year Tax ||102.43 ||90.46 |
|Deferred Tax Asset/Liability ||(53.32) ||0.78 |
|Profit after Tax ||457.36 ||309.66 |
|Other Comprehensive Income ||4.93 ||2.49 |
|Total Comprehensive Income ||462.29 ||312.15 |
|Balance of retained earning brought forward from previous year ||806.97 ||601.00 |
|- Profit for the year ||457.36 ||309.66 |
|- Other Comprehensive Income (OCI) for the year ||(4.40) ||0.17) |
|Appropriations:- || || |
|Interim Dividend on Equity Shares ||20.64 ||42.51 |
|Income Tax on Interim Dividend ||4.20 ||8.63 |
|Transfer to General Reserve ||45.74 ||31.33 |
|Final Dividend on Equity Shares ||- ||17.76 |
|Income Tax on Final Dividend on Equity shares ||- ||3.63 |
|Balance Profit / (-) Loss carried forward ||1189.35 ||806.97 |
ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)
Pursuant to the notification dated February 16 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from April 1 2016. Financial statements for the year ended March 31 2016 havebeen restated to conform to Ind AS. Note no.43 to the Standalone financial statementsprovide further explanation on the transition to Ind AS.
2. KEY HIGHLIGHTS
Your company's Revenue from Operations for the year grew to ' 2382.94 crores from '2197.34 crores last year registering a growth of 8.45 % YoY. The Operating Profit for theyear grew to ' 550.53 crores from ' 429.38 crores last year i.e. an increase of 28.22%YoY. The Net Profit for the year on stand-alone basis grew to ' 457.36 crores from '309.66 crores in the previous year i.e. an increase of 47.70 % YoY.
EBIDTA margin improved 356 basis points to 23.10 % in 2016-17 over 2015-16 and PATmargin strengthened 510 basis points to 19.19 % in 2016-17 over 2015-16.
Your Company proposes to transfer an amount of '45.74 crores to the General Reserves.
Your Company's Net Profit on a consolidated basis increased to ' 459.44 crores duringthe year as compared to ' 311.55 crores in the previous year a growth of 47.47 % YoY.
The Earnings per share (EPS) for the year stood at ' 33.31 per share an increase of47.19 % compared to ' 22.63 per share for the previous year.
During the year your Company launched a new product "LEGACEE" a riceherbicide. Your Company commercialized four new molecules for custom synthesis exportswhich are expected to gain traction over the next few years.
Your Company entered into a Joint-venture agreement with Mitsui Chemical Agro Inc.Japan (MCAG) on May
30 2016 for providing the registration services for MCAG's proprietary agro-chemicalsthrough its associate company Solinnos Agro Sciences Pvt Ltd in which PI subsidiarynamely PI Life Science Research Ltd. holds 49% equity and remaining 51% share is held byMCAG.
Your company invested ' 141.79 crores in fixed assets for expansion of manufacturingand Research & Development capacities.
3. PERFORMANCE REVIEW
After two consecutive years of draught India had a favourable agricultural environmentin FY 16 -17. Rainfall for South West monsoon season was at 97% of its Long Period Average(LPA). The agricultural acreage sowing and output went up during the year compared toprior year. Khariff season witnessed a delayed monsoon and insufficient rainfall incatchment areas coupled with low pest infestation. Rainfall during Rabi season wassignificantly delayed and had a deficit of 60% resulting in several districts declared asdraught prone in the southern part of the country. Demonetization initiated by CentralGovt. in November 2016 also had impacted liquidity position in the agri market.
In a year that had a mixed bag for agro-chemical industry your company registered anoverall revenue growth of 8.45% YOY basis and outperformed the industry.
Brand sales continued to be strong during the year. Nominee Gold a flag ship productof the company faced generic competition during the year. Your company's proactivemarketing efforts coupled with strong brand recall for the product resulted in growing themolecule YoY. Other key products of the company like Biovita Osheen Keefun VibrantForatox Rocket continued to grow during the year. Legacee a rice herbicide wasintroduced during the year to compliment with other key products in the portfolio and hasbeen well accepted in the market. Your company has a rich pipeline of products that arebeing evaluated to add to the diverse product portfolio and propel sustainable growth inmid and long term. To match the increasing demand of domestic agri products new agriformulation facilities were built at Panoli 2nd site.
Your company's exports grew by 11% during the year despite a slowdown in the globalagro-chemical industry. During the year your company has successfully commercialized fournew molecules. FY 17 marked the first full year of operations for the 2 new plantscommissioned in Jambusar SEZ. New products commercialized along with the enhancedutilization of multi-purpose plants at Jambusar SEZ is expected to provide further growthmomentum to the exports in the coming years.
During the year your company undertook several measures to improve the operatingeffectiveness safety and environmental compliances. Your company's manufacturing sites'Emergency Control Center (ECC) was equipped with online dispersion modelling software forbetter understanding predictability and control of dispersion phenomenon. A PLC basedautomation of bromine plant & fire hydrant system along with emergency transferfacility for bromine at both locations have been implemented. Online VOC sensors wereinstalled at Panoli location on boundary with online display at ECC.
Truly being in the forefront of science-led opportunities your Company has implementedvarious digitalization initiatives to drive efficiencies. Laboratory InformationManagement System (LIMS) and Alarm Information Management System (AIMS) were implementedat both the manufacturing sites. LIMS will enable to quickly analyse quality samplesleading in shorter turn-around-time of quality data resulting into quicker and betterdecision making at the Operations. In the future analytics from LIMS could be used todetermine golden batch parameter.
Your company has won numerous awards and received much recognition. Panolimanufacturing site has won Golden Peacock Quality Award 2016 Golden Peacock EnvironmentAward 2016 and Silver Certificate of Merit (Suraksha Puraskar) from National SafetyCouncil. Jambusar manufacturing site has won Golden Peacock Quality Award 2017 andCertificate of Appreciation from National Safety Council. These awards are a testimony toyour company's commitment to maintaining high standards of quality environment andsafety.
Research & Development (R&D)
You will be glad to know that during the year your company completed the second phaseof expansion of R&D set up by constructing the second and third floors of the State ofthe Art R&D centre and setting up the green house facilities for biological testing.This new infrastructure would further support to increase R&D projects under variousdisciplines of chemistry library synthesis molecule design lead optimization routesynthesis biological & green house testing and joint research assignments with globalinnovator partners.
Your company's research strategy and implementation are well supported by a strong teamcomprising of more than 250 research scientists having expertise and experience inchemistry analytical techniques IP management and basic & detailed processengineering. During the year R&D undertook development work on 25 new projectscovering different sectors i.e. Agro Pharma and Electronic chemical applications. In thecustom synthesis area eleven new molecules progressed to the next stage and fourmolecules were commercialized during the year. You will be further glad to know that yourcompany has identified patentable processes and has initiated the patent evaluationprocess.
Your company aims to pursue cost leadership in which R&D team also worked onprocess innovations for several existing products to identify cost improvementopportunities and at the same time maintaining highest standards of Quality HealthSafety and Environment (QHSE). In this context the R&D and manufacturing team areconstantly working together to reduce environmental load enhance safety and reduce cost.
Your Company continued to focus on managing cash efficiently and ensured that it hadadequate liquidity and back up lines of credit. Net Cash from operations for the yearstood at ' 336.80 crores. Your Company follows a prudent financial policy and aims atmaintaining an optimum financial gearing. The Company's Debt to Equity Ratio was 0.05 ason March 312017.
Your Company has been credit rated by CRISIL Limited. The Company's credit rating forlong term was upgraded from AA-/Positive to AA/Stable for long term loans and for shortterm loans rating was reaffirmed at CRISIL A1+'. This reflects a very high degree ofsafety regarding timely servicing of financial obligations and also a vote of confidencereposed in your Company's financials.
During the year the Board of your Company has declared an interim dividend of ' 1.50per equity share of ' 1/- each in its Board Meeting on October 25 2016. The Directors arepleased to recommend a final dividend of ' 2.50 per equity share of 1/- each. This willtake the total dividend for the year to ' 4/- per equity share of ' 1/- each. Thedividend if approved at the ensuing Annual General Meeting will be paid to thoseshareholders whose names appear on the register of members of the Company as on the recorddate i.e. September 012017.
DIVIDEND DISTRIBUTION POLICY
SEBI vide its notification dated July 08 2016 has introduced a new Regulation 43Aunder SEBI(LODR) Regulations
2015 requiring top 500 listed companies based on market capitalisation calculated ason March 31 of every financial year to formulate a Dividend Distribution Policy anddisclosure of the same in their Annual Reports and on the company website. Since yourcompany forms part of top 500 listed companies based on market capitalisation as on March31
2016 the Board of the Company has adopted a Dividend Distribution Policy which can beaccessed at http://www. piindustries.com/Media/Documents/Dividend%20Policy%20 (f).pdf
6. SUBSIDIARY & ASSOCIATE COMPANIES
Your Company has three (3) Wholly-owned Subsidiary Companies and one (1) AssociateCompany as on March 312017. The key highlights of these subsidiary and associatecompanies are as under:
(i) PI Life Science Research Ltd.
During the year the Company posted a profit of ' 181 Lacs earned on account of variousR&D activities for developing new products.
(ii) PI Japan Co. Ltd.
The Company posted a net profit of JPY 19.92 lacs during the year. Due to the size ofoperations and local laws the annual accounts of this Company are not required to beaudited. The same have been certified by the Management of the Company.
(iii) PILL Finance and Investments Ltd.
The Company posted a profit of ' 23.39 lacs during the year.
Solinnos Agro Sciences Pvt. Ltd
The Company holds 49% equity in Solinnos Agro Sciences Pvt. Ltd through its subsidiarycompany namely M/s PI Life Science Research Limited and hence an associate company. TheCompany posted a loss of ' 18.89 lacs during the year ended March 312017.
A statement containing salient features of the financial statements of the SubsidiaryCompanies and Associate Company is given in form AOC-1. Refer Annexure A' to thisReport.
The company does not have any material listed subsidiary company. In accordance withthe provisions of Section 136 of the Companies Act 2013 the Annual Report of theCompany containing the Standalone and the Consolidated Financial Statements along withthe Audited Annual Accounts of each Subsidiary Company have been placed on the website ofthe Company i.e. www. piindustries.com.
7. RISK MANAGEMENT POLICY AND INTERNAL CONTROLS
Your company processes are inbuilt to enable risks to be identified assessed andmitigated appropriately. Major risks identified by the business and functions aresystematically addressed through mitigating actions on continuing basis. The InternalAudit Function regularly reviews various risks and places the report before the AuditCommittee of your Company from time to time.
Your Company's Internal Control Systems are commensurate with the nature and size ofits business and in view of the complexity of its business operations these are designedto meet the challenges. The control system comprises of continuous audit and compliance byin-house internal audit team supplemented by internal audit checks by M/s KPMG India LLP.Internal Auditors of the Company. M/s PKF Sridhar & Santhanam have been engaged as theDepot Auditors to perform the internal audit function assess the internal controls andstatutory compliances in various areas and also provide suggestions for improvement.
The Internal Auditors independently evaluate the adequacy of internal controls andconcurrently audit the financial transactions and review the various business processes.Internal Auditor reports are periodically placed before the Audit Committee of the Board.Independence of internal auditors is ensured through direct reporting to Audit Committee.
8. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY
The Company has in place an adequate Internal Financial Controls with reference tofinancial statements. The Company has identified and documented all key internal financialcontrols as part of its Internal Financial Control reporting framework. The Company haslaid down policies and procedures for all critical processes across company's plantoffices wherein financial transactions are undertaken. The policies and procedures coverthe key risks and controls in all the processes identified to respective process owner. Inaddition the Company has a well-defined financial delegation of authority which ensuresapproval of financial transaction by appropriate personnel. The Company uses SAP ERP toprocess financial transactions and maintain its books of accounts to ensure its adequacyintegrity and reliability.
The financial controls are evaluated for operating effectiveness through Management'songoing monitoring and review process and independently by Internal Auditors.
In our view the Internal Financial Controls over Financial Reporting are adequate andare operating effectively as on March 312017.
9. RELATED PARTY TRANSACTIONS
All Related party transactions that were entered during the financial year as stated inthe financial statements were on an arm's length basis and in ordinary course of businessin compliance with the applicable provisions of the Companies Act 2013 and the ListingRegulations 2015. There were no materially significant Related Party Transactions made bythe Company during the year that would have required shareholder approval under theListing regulations/Companies Act 2013.
Prior omnibus approval of Audit Committee is obtained for the transactions which areforeseen and repetitive in nature. A statement of all Related Party Transactions ispresented before the Audit Committee for its review on a quarterly basis specifying thenature value and terms and conditions of the transactions.
The Related Party Transactions Policy as approved by Board on recommendation of theAudit Committee is uploaded on the Company's website at the following weblink:
Your Company does not have any contracts or arrangements with its related partiesfalling under Section 188(1) of the Companies Act 2013. Hence the details of suchcontracts or arrangements with its related parties are not disclosed in Form AOC-2 asprescribed under the Companies Act 2013 and the Rules framed thereunder. Your Directorsdraw attention of the Shareholders to Note No. 36 of the standalone financial statementswhich set out related party disclosures.
Statutory Auditors and Auditor's Report
As per Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the term of M/s. S.S. Kothari Mehta & Co. (Firm RegistrationNo. 000756N) Chartered Accountants New Delhi as the Statutory Auditors of the Companyexpires at the conclusion of the ensuing Annual General Meeting of the Company. TheAuditors' Report given by M/s. S.S. Kothari Mehta & Co. Statutory Auditors on thefinancial statements of the Company for the year ended March 312017 is part of the AnnualReport. The Auditors' Report does not contain any qualification reservation or adverseremark. During the year under review the Auditors had not reported any matter underSection 143 (12) of the Act therefore no detail is required to be disclosed under Section134 (3)(ca) of the Act. The Board places on record its appreciation for the servicesrendered by M/s. S.S Kothari Mehta & Co. Chartered Accountants as the StatutoryAuditors of the Company during their tenure.
The Board of Directors of the Company at their meeting held on May 16 2017 on therecommendation of the Audit Committee have made its recommendation for appointment ofM/s. Price Waterhouse LLP Chartered Accountants (ICAI Registration No-012754N/N500016)as the Statutory Auditors of the Company by the Members at the forthcoming Annual GeneralMeeting of the Company for an initial term of 5 years. Accordingly a resolution
proposing appointment of M/s. Price Waterhouse LLP Chartered Accountants as theStatutory Auditors of the Company for a term of five consecutive years i.e. from theconclusion of 70th Annual General Meeting till the conclusion of 75th Annual GeneralMeeting of the Company pursuant to Section 139 of the Companies Act 2013 forms part ofthe Notice of the 70th Annual General Meeting of the Company. The Company has receivedtheir written consent and a certificate that they satisfy the criteria provided underSection 141 of the Act and that the appointment if made shall be in accordance with theapplicable provisions of the Act and rules framed thereunder.
Pursuant to the directives issued by the Central Government an audit of the costrecords relating to Insecticides (Technical grade and formulations) manufactured by theCompany is required to be conducted by an auditor with the requisite qualifications asprescribed under Section 148 of the Companies Act 2013. Your Board has appointed M/s K.G.Goyal & Co. Cost Accountants Jaipur as Cost Auditors based on the recommendation ofthe Audit Committee for the conduct of the audit of cost records of Insecticides(Technical grade and formulations) for the year ending March 312018.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Rules madethereunder Members are requested to consider the ratification of the remuneration payableto M/s K.G. Goyal & Co. Cost Accountants.
The Board had appointed Mr. R.S. Bhatia (CP No.2514) practicing Company Secretary tocarry out Secretarial Audit in accordance with the provisions of Section 204 of theCompanies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 for the financial year ended March 31 2017. The Secretarial AuditReport for the financial year ended March 312017 has been obtained and does not containany qualification which requires any comments from the Board. The Secretarial AuditReport for financial year ended March 312017 is annexed to this report as AnnexureB'.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Your Company has not made any investment during the year under the provisions ofSection 186 of the Companies Act 2013. The details of loans and guarantees covered underthe aforesaid provisions are mentioned in Note No. 8c forming part of the Notes to thefinancial statements.
Your Company has not accepted any public deposits during the financial year 2016-17 andas such no amount of principal or interest was outstanding as on March 312017.
13. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
During the year there was no dividend that remained unclaimed or unpaid for more thanseven years that would need to be transferred to the Investor Education and ProtectionFund. Pursuant to the provisions of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with Companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company ason September 09 2016 (date of last Annual General Meeting) on the Company's website andon the website of the Ministry of Corporate Affairs. The details can be viewed atcompany's website at following link:
14. BOARD AND COMMITTEES
a) Board of Directors
Your Company is managed and controlled by a Board comprising an optimum blend ofExecutive and NonExecutive Professional Directors. The Chairman of the Board is aNon-Executive Independent Director. As on March 31 2017 the Board of Directors consistsof seven (7) Directors consisting of Managing Director & CEO Whole-time Director andfive (5) Non-executive Directors out of which four (4) are Independent Directorsincluding one Woman Director. The composition of the Board is in conformity withRegulation 17 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 and the relevant provisions of the Companies Act 2013. All the Directors possessrequisite qualifications and experience in general corporate management strategyfinance banking and other allied fields which enable them to contribute effectively tothe Company in their capacity as Directors of the Company.
Declaration from all Independent Directors has been received confirming that they meetthe criteria of independence as prescribed both under the Companies Act 2013 and theListing Regulations 2015.
After serving the company's Board for more than four decades Mr. Salil SinghalChairman & Managing Director stepped down from the board of the company on attainingthe age of 70 years. Under his leadership the Company transformed in to the fastestgrowing highest value creating entity by establishing long standing relationships acrossits wide spectrum of stakeholders with a reputation for trust ethical standards andpassion for growth. The Board of Directors places on record their deep appreciation forthe enormous contributions made by Mr. Salil Singhal during his association with thecompany. At the unanimous request of your company's Board Mr. Salil Singhal accepted tobe designated as Chairman Emeritus'.
Owing to his deep business insight relationships with global majors involvement inpolicy making and key positions that he holds in various industry forums Boardrecommended the appointment of Mr Salil Singhal as an Advisor to the Company which wasduly approved by shareholders vide postal ballot the result of which were declared on May04 2017.
Due to his pre-occupation Dr Venkatrao S. Sohoni resigned from the Board of theCompany w.e.f September 14 2016. The Board places on record the appreciation of theservices rendered by him during his association with the Company.
Mr. Narayan K. Seshadri has been appointed as a Non-Executive Chairman on the Board ofthe Company w.e.f October 05 2016 as duly approved by Board in its meeting held onOctober 05 2016. Mr. Narayan K. Seshadri has an extensive experience in the field ofcorporate finance corporate governance policy formulation corporate strategyorganization restructuring and transformation. He has provided valuable business insightsby advising the Board of various companies in the areas of banking financial servicesagrochemical health care and IT. His keen business acumen is invaluable for the businessgrowth of the Company.
In order to strengthen the Board Mr. Arvind Singhal has been inducted as an AdditionalDirector on the Board of the Company w.e.f October 05 2016 and Dr T.S. Balganesh has beenappointed as an Additional Director on the Board of the Company w.e.f May 16 2017 on thebasis of the recommendation of Nomination and Remuneration Committee. They hold theirrespective offices up to the conclusion of forthcoming Annual General Meeting. The Companyis in receipt of notice from the shareholder(s) proposing their appointment as Director atforthcoming Annual General Meeting. The Board recommends their appointment for approval ofthe members in the forthcoming Annual General Meeting.
Based on the recommendations of the Nomination and Remuneration Committee and Board ofDirectors Mr. Ravi Narain was appointed as Independent Director by shareholders at itslast Annual General Meeting held on September 09 2016 for a period of 3 years.
The tenure of appointment of Mr. Narayan K. Seshadri Ms. Ramni Nirula and Mr. PravinK. Laheri as an Independent Directors on the Board of the Company shall expire at theconclusion of the forthcoming Annual General Meeting. In accordance with the provisions ofsec 149 of the Companies Act 2013 read with relevant rules made thereunder Boardrecommends their re-appointment as Independent Director for another term of 5 years at theforthcoming Annual General Meeting.
In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Mr. Rajnish Sarna shall retire by rotation at the forthcomingAnnual general Meeting and being eligible offers himself for re-appointment. The Boardrecommends his re-appointment for the approval of the members at the forthcoming AnnualGeneral Meeting.
b) Evaluation of the Board's Performance
In compliance with the Companies Act 2013 and Regulation 17 (10) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anevaluation of its own performance Committees and performance of individual Directorsduring the year under review. The evaluation framework for assessing the performance ofDirectors comprised of criteria like quality of contribution to the Board deliberationsstrategic perspective or inputs regarding future growth of Company and its performanceattendance of Board Meetings and Committee Meetings and commitment to shareholder andother stakeholder interests. The evaluation involves Self-Evaluation by the Board Membersand subsequent assessment by the Board. A member of the Board does not participate in thediscussion of his/her evaluation.
c) Number of Board Meetings conducted during the year under review
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year Board of Directors met five (5) times. The details of the Board meetings andattendance of the Directors are provided in the Corporate Governance Report.
d) Composition of Audit Committee
The Board has a duly constituted Audit Committee which comprises of Mr. Narayan K.Seshadri as the Chairman Mr. Rajnish Sarna and Ms. Ramni Nirula as the members. Detailson the Committee are given in the Corporate Governance Report.
e) Directors Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submits its responsibility statement:-
(a) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards had been followed;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 312017 and of the profit ofthe Company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively ensuring the orderly and efficient conduct of its business including adherenceto Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information and
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
15. CHANGES IN KEY MANAGERIAL PERSONNEL
During the year Mr. Salil Singhal Chairman & Managing Director stepped down fromthe Board of the Company after attaining the age of 70 years. There has been no change inany other Key Managerial Personnel of the Company during the year.
16. EXTRACT OF ANNUAL RETURN
Pursuant to Sec 92(3) of the Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT -9is attached as Annexure C'.
a) Remuneration policy of the Company
The Remuneration policy of your Company comprising the appointment and remuneration ofthe Directors Key Managerial Personnel and Senior Executives of the Company including thecriteria for determining qualifications positive attributes independence of a Directorand other related matters have been provided in the Corporate Governance Report whichforms a part of this report.
b) Human Resources and Trade Relations
Acquisition and retention of right talent is critical to maintain desired operationalstandards. The success of any organization is driven by its people and your Companybelieves that its employees are one of its biggest assets. Various Training &Development programmes are organized to harness the skills of company employees. Lot ofefforts are put in Talent Management Strong Performance Management learning and traininginitiatives in order to ensure that your Company consistently develops strong inspiringand credible leadership at various levels of the organization.
During 2016-17 your Company continued to have cordial relationship with all itsemployees and maintained healthy cordial and harmonious industrial relations at alllevels.
Total workforce of your Company stood at 2013 as on March 312017.
c) Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace
Your Company has a Policy on Prohibition Prevention and Redressal of Sexual Harassmentof Women at Workplace and matters connected therewith or incidental thereto covering allthe aspects as required under the "The Sexual Harassment of Women at Workplace(Prohibition Prevention and Redressal) Act 2013". The Company has constitutedInternal Complaints Committee (ICC) known as Prevention of Sexual Harassment (POSH)Committee to enquire in to complaints of Sexual Harassment and recommend appropriateaction. The Company has not received any complaint of sexual harassment during thefinancial year 2016-17.
d) Particulars of Employees and related disclosures
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 forms part of this Report and annexed as Annexure D'. However as per firstproviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Report andFinancial Statements are being sent to the Members of the Company excluding the statementof particulars of employees under Rule 5(2). However they are available for inspectionduring business hours upto the date of the next annual general meeting at the registeredoffice of the Company. Any member interested in obtaining a copy of the said statement maywrite to the Company Secretary at the Registered Office of the Company.
Your Directors place on record their appreciation of the valuable contribution made bythe employees of your Company.
e) Employee Stock Option Plan / Scheme
During the year your Company granted 457864 performance options to eligibleemployees under PII- ESOP Scheme 2010 as per the criteria laid down by Nomination &Remuneration Committee of the Board. The aforesaid options shall vest after a lock inperiod of one year from the date of grant. The vesting period of aforesaid options is four(4) years. The exercise price of options granted have been arrived by giving discount tothe closing market price of the equity share on National Stock Exchange India Limited oneday prior to the date of grant of option. Voting rights on the shares issued to employeesunder the ESOP Scheme are either exercised by them or through their appointed proxy. Noemployee has been issued share options during the year equal to or exceeding 1% of theissued capital of the Company at the time of grant. Details of options as required underSEBI regulations is given in Annexure E'.
18. VIGIL MECHANISM - WHISTLE BLOWER POLICY
Your Company has established a vigil mechanism for Directors and employees to reporttheir genuine concerns as approved by the Board on the recommendation of the AuditCommittee. The Whistle Blower Policy of the Company is formulated and uploaded on theCompany's website at the following weblink: http://www.piindustries.com/Media/Documents/Whistle%20Blower%20Policy(r).pdf
The Policy provides for adequate safeguards against victimization of employees whoavail of the mechanism and also provides for direct access to the Chairman of the AuditCommittee. It is affirmed that no personnel of the Company has been denied access to theAudit Committee.
19. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in AnnexureF' attached to this report.
20. CORPORATE SOCIAL RESPONSIBILITY ("CSR") AND RELATED MATTERS
In accordance with the requirements of Section 135 of the Companies Act 2013 yourCompany has a CSR Committee comprising four members with Mr. Pravin K. Laheri as Chairmanand Mr. Mayank Singhal Mr. Rajnish Sarna and Ms. Ramni Nirula as Members. Your Companyalso has formulated a Corporate Social Responsibility Policy (CSR Policy) which isavailable on the website of the Company at http://www.piindustries.com/sustainability/CSR/CSR-Policy
Your Company carried out the CSR activities through PI Foundation a Trust set up by PIIndustries Ltd During the year PI Foundation undertook several CSR initiatives under thefollowing few categories::
- Education and Talent Nurturing
- Hygiene & Sanitation
- Livelihood Enhancement
- Sustainable Agriculture
- Skill Development
- Employee Engagement through CSR
During the financial year 2016-17 the Company has contributed an amount of ' 6.95 cr.to PI Foundation aggregating to 2% of its average net profits for preceding 3 financialyears. However PI Foundation has been able to spent an amount of ' 5.33 cr. during thefinancial year 201617 since few projects considered are ongoing and spread over 2 to 3years and would thus require a continuous outflow in respect of the same.
The details of CSR activities undertaken by the Company are highlighted in the reportformat provided under the Companies (Corporate Social Responsibility Policy) Rules 2014in Annexure G' which is attached to this report.
21. CORPORATE GOVERNANCE
Your Company takes pride in its Corporate Governance structure and strives to maintainthe highest possible standards. A detailed report on the Corporate Governance code andpractices of the Company along with a certificate from the auditors of the Companyregarding compliance of the conditions of Corporate Governance as stipulated underRegulation 34 of SEBI (LODR) Regulations 2015 are given in separate section of annualreport.
22. MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on the Management Discussion and Analysis is provided separately inthis Annual Report.
23. BUSINESS RESPONSIBILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 requires top500 listed companies by Market capitalisation to give Business Responsibility Report intheir Annual Report effective from financial year starting April 012016.
Your Company falls under the top 500 Listed Companies by market capitalisation.Accordingly a Business Responsibility Report describing initiatives taken by the Companyfrom an environmental social and governance perspective forms part of this Report.
24. CHANGES IN SHARE CAPITAL
During the year your Company had issued 459402 Equity Shares of '1/- each which wereallotted to PII ESOP Trust (Trust) set up to administer PII Employee Stock Option Plan-2010. The Trust allocates these shares to the employees of the Company and itssubsidiaries on exercise of stock options from time to time under the aforesaid Scheme. Asa result of this allotment the paid-up equity share capital of your Company increased to'13.76 cr. (comprising of 137586624 Equity Shares of '1/- each as on March 31 2017)from '13.71 cr. (comprising of 137127222 Equity Shares of '1 each as on March 312016).
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year underreview:-
a) Issue of equity shares with differential rights as to dividend voting or otherwise.
b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme saved and except issued under ESOP Scheme as referred to in this Report.
c) Neither the Managing Directors nor the Whole-time Director of the Company receivedany remuneration or commission from any of its subsidiaries
d) 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.
Further there have been no material changes and commitments if any affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company to which the financial statements are related and the date of thereport.
Your Directors wish to express their grateful appreciation for the valuable support andco-operation received from bankers business associates lenders financial institutionsshareholders various departments of the Government of India as well as the StateGovernments of Rajasthan & Gujarat the farming community and all our otherstakeholders.
The Board places on record its sincere appreciation towards the Company's valuedcustomers in India and abroad for the support and confidence reposed by them in theorganization and looks forward to the continuance of this supportive relationship in thefuture.
Your Directors proudly acknowledge the contribution and hard work of the employees ofthe Company and its subsidiaries at all levels who through their competence hard worksolidarity and commitment have enabled the Company to achieve consistent growth.
| ||On behalf of the Board of Director |
| ||For PI Industries Ltd. |
| ||Sd/- |
| ||Narayan K. Seshadri |
|Place: Gurugram ||Chairman |
|Date: May 16 2017 ||DIN: 00053563 |