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P I Industries Ltd.

BSE: 523642 Sector: Agri and agri inputs
NSE: PIIND ISIN Code: INE603J01030
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OPEN 900.00
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VOLUME 3445
52-Week high 930.00
52-Week low 691.80
P/E 31.68
Mkt Cap.(Rs cr) 12,316
Buy Price 888.05
Buy Qty 10.00
Sell Price 892.45
Sell Qty 96.00
OPEN 900.00
CLOSE 900.45
VOLUME 3445
52-Week high 930.00
52-Week low 691.80
P/E 31.68
Mkt Cap.(Rs cr) 12,316
Buy Price 888.05
Buy Qty 10.00
Sell Price 892.45
Sell Qty 96.00

P I Industries Ltd. (PIIND) - Director Report

Company director report

Dear Members Your Directors are pleased to present the Seventy-First Annual Report onthe business and operations of the Company together with the Audited Financial Statementsfor the financial year ended March 31 2018.

1. FINANCIAL HIGHLIGHTS

(Rs.in Cr.)
Particulars FY 2017-18 FY 2016-17
Revenue from Operations 2308.72 2382.94
Other Income 59.98 35.82
Profit Before Interest Depreciation and Tax 552.04 586.35
Interest 5.88 7.20
Depreciation 82.57 72.67
Profit before Tax & Exceptional items 463.59 506.47
Less: Current Tax inclusive of earlier year Tax 99.55 102.43
Deferred Tax Asset/Liability (2.50) (53.32)
Profit after Tax 366.54 457.36
Other Comprehensive 7.44 4.93
Income
Total Comprehensive Income 359.10 462.30
Balance of retained earning brought forward from previous year 1189.35 806.96
- Profit for the year 366.54 457.36
- Other Comprehensive Income (OCI) for the year 1.13 (4.40)
Appropriations:-
Final Dividend on Equity Shares 2016-17 34.40 -
Interim Dividend on Equity 20.64 20.64
Shares 2017-18
Dividend Distribution Tax on Equity Shares 11.20 4.20
Transfer to General Reserve 36.65 45.74
Balance Profit / (-) Loss carried forward 1454.13 1189.35
Earning Per Share (EPS) (Rs.) 26.62 33.31

Basic & Diluted (`) 26.55 33.08

2. KEY HIGHLIGHTS

Your company's Revenue from Operations for the year stood at Rs.2308.72 crores ascompared to Rs.2382.94 crores last year registering a decline of 3.11 % YoY. The Operating

Profit for the year declined to Rs.492.06 crores from Rs.550.53 crores last year i.e. adecrease of 10.62% YoY. The Net

Profit for the year on stand-alone basis stood at `366.54 as compared to Rs.457.36crores in the previous year i.e. a decline of 19.86% YoY on account of higher effectivetax rates during the year under review.

EBIDTA margin decreased 179 basis points to 21.31 % in 2017-18 over 2016-17 and PATmargin declined 331 basis points to 15.88% in 2017-18 over 2016-17.

Your Company proposes to transfer an amount of Rs.36.65 crores to the General Reserves.

Your Company's Net Profit on a consolidated basis stood at Rs.367.63 crores during theyear as compared to Rs.459.44 crores in the previous year a decline of 19.98 %YoY.

The Earnings per share (EPS) for the year stood at `26.62 per share a decline of 20.08% as compared to Rs.33.31 per share for the previous year.

Your company launched five (5) new products in domestic segment namely Header FenderVisma Humesol and Elite all of which received good reviews and expected to grow in comingyears. Your company also commercialized four (4) new products for export market.

Your Company entered into a Joint-venture agreement with Kumiai Chemical Industry Co.Ltd. Japan on 22nd June 2017 to manufacture and distribute Bispyribac Sodium one of theflagship agrochemical products of Kumiai in India to achieve operational efficiencies andfurther growth. In this joint- venture PI subsidiary namely PI Life Science ResearchLtd. holds 50% equity and remaining 50% share is held by Kumiai Chemical Industry Co.Ltd. Japan. This joint venture shall help PI to bring superior innovative solutions inIndia to enhance farm productivity and also leverage manufacturing efficiencies of Indiaunder "Make in India" initiative".

Your company invested `169.58 crores in fixed assets for expansion of manufacturing andResearch & Development capacities.

3. PERFORMANCE REVIEW

The company revenues were flat as compared to last year(net of excise). Domesticrevenues are moderated due to erratic and uneven rainfalls and channel de-stocking onaccount of GST transition. However business continued to enhance its focus on the productspectrum and widen the exisitng portfolio of crop protection through a strategic tie upwith BASF for introduction of novel products in the country. PI introduced some of themost advanced fungicides namely Header Fender and Visma which helps strengthen thefungicide portfolio of the company. PI added 3 new co-marketing partners for Dinotefuranwhile achieving more than 100% growth in their own brand Osheen. Despite facing fiercecompetition from generics Nominee Gold expanded its customer base. The successfulintroduction of Humesol helped PI in increasing its presence in a rapidly growing biostimulant market. The introduction of new innovative products strengthening of existingpartnerships & forging of new ones channel expansion and focus on customer connectare some of the key strategic initiatives expected to drive the growth in coming years.Your company's exports grew marginally by 1.2 % during the year despite a slowdown in theglobal market situation and challenge in availability of raw material especially fromChina. In order to reduce its dependency on Chinese raw material suppliers the companyhas developed 6-7 alternate vendors in India for 6-7 key raw materials that shall help thecompany in the coming years. Commercialisation of 4 new molecules during the year alongwith the enhanced utilization of multi-purpose plants at Jambusar SEZ is expected toprovide further growth momentum to the exports in the coming years.

Your company has won numerous awards and received much recognition. Panolimanufacturing site has won National Safety Council award Company also won prestigiousGlobal Sourcing – Outstanding Performance Award the only award recognised under theglobal outsourcing category at annual award ceremony organised by Bayer held on December15 2017. Your Company was once again recognised for outstanding exports performance as itbagged ‘Trishul award' from Chemexcil for outstanding exports performance during theyear 2017. For its CSR initiatives your Company was honoured with ‘Social ChangeAward 2017'.

Your Company was also rated by ECOVADIS in ‘GOLD' category for Company's qualityin integrating the principles of CSR into their business (Environment Labor/ Social Fairbusiness/Ethics and Supply Chain.

Research & Development (R&D)

During the year under review the Research & Development team successfully carriedout synthesis of 48 new development molecules. Out of these 13 molecules were scaled upsuccessfully for their next stage of development and 4 molecules were commercialisedduring the year. Apart from synthesis and scale up of new products the

Research & Development team also undertook process improvements for 17 projects inorder to identify cost improvement opportunities and then implement 15 such projectimprovements at the plant level. Environment Health and Safety (EHS) considerations weregiven the usual special emphasis in the process development work.

You company has state of art R&D set up with green house facilities for biologicaltesting which support to increase

R&D projects under various disciplines of chemistry library synthesis moleculedesign lead optimization route synthesis biological & green house testing and jointresearch assignments with global innovator partners.

Your company's research strategy and implementation are well supported by a strong teamcomprising of more than 300 research scientists having expertise and experience inchemistry analytical techniques IP management and basic & detailed processengineering. During the year R&D undertook development work on various new projectscovering different sectors i.e. Agro Pharma and Electronic chemical applications. Youwill be further glad to know that your company has identified patentable processes and hasinitiated the patent evaluation process.

Your company continues to pursue cost leadership in which R&D team played vitalrole on process innovations for several existing products to identify cost improvementopportunities and at the same time maintaining highest standards of Quality HealthSafety and Environment (QHSE). The company's R&D and manufacturing team are constantlyworking together to reduce environmental load enhance safety and reduce cost.

4. FINANCE

Your Company continued to focus on managing cash adequate liquidity efficiently andback up lines of credit. Net Cash from operations for the year stood at Rs.314.47 crores.Your Company follows a prudent financial policy and aims at maintaining an optimumfinancial gearing. The Company's Debt to Equity Ratio was 0.04 as on March 31 2018.

Your Company has been credit rated by CRISIL Limited. The Company's credit rating forlong term was reaffirmedat AA/Stable and for short term loans rating was reaffirmed atCRISIL A1+'. This reflects a very high degree of safety regarding timely servicing offinancial obligations and also a vote of confidence reposed in your Company's financials.

. DIVIDEND

During the year the Board of your Company has declared an interim dividend of Rs.1.50per equity share of Rs.1/- each in its Board Meeting on October 25 2017.

The Directors are pleased to recommend a final dividend of Rs.2.50 per equity share ofRs.1/- each. This will take the total dividend for the year to Rs.4/- per equity share ofRs.1/- each. The dividend if approved at the ensuing Annual General Meeting will bepaid to those shareholders whose names appear on the register of members of the Company ason the record date i.e. August 01 2018.

DIVIDEND DISTRIBUTION POLICY

PI believes in maintaining a fair balance between cash retention and dividenddistribution. Cash retention is required to finance acquisitions and future growth andalso as a means to meet any unforeseen contingency.

PI Dividend Policy specifies the financial parameters that will be considered whendeclaring dividends internal and external factors that would be considered for declaringdividends. The Policy has been put up on the website of the Company athttp://www.piindustries.com/Media/ Documents/Dividend%20Policy%20(f).pdf

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 marketcapitalisation calculated as on March 31 of every financial year to formulate a Dividend

Distribution Policy and disclosure of the same in their Annual Reports and on thecompany website. Since your company forms part of top 500 listed companies based on marketcapitalisation as on March 31 2016 the Board of the Company has adopted a DividendDistribution Policy which can be accessed at following weblinkhttp://www.piindustries.com/Media/Documents/ Dividend%20Policy%20(f).pdf

. SUBSIDIARIES & JOINT-VENTURES

As on March 31 2018 the Company had three (3) Wholly-owned Subsidiaries and two (2)Associate Companies. In accordance with Section 129(3) of the Companies Act 2013 theCompany has prepared a consolidated financial statement of the Company and all itssubsidiary companies.

The key highlights of these subsidiary and joint-ventures are as under:

SUBSIDIARY COMPANIES

(i) PI Life Science Research Ltd.

During the year the Company posted a profit of Rs.136.96 Lacs earned on account ofvarious R&D activities for developing new products.

(ii) PI Japan Co. Ltd.

The Company posted a net profit of JPY 30.99 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 Rs.24.34 lacs during the year. JOINT-VENTURES

Solinnos Agro Sciences Pvt. Ltd

The Company holds 49% equity in Solinnos Agro Sciences Pvt. Ltd through its subsidiarycompany namely PI Life Science Research Limited and hence an Associate Company. TheCompany posted a net profit ofRs.30.35 lacs during the year ended March 31 2018.

PI Kumai Pvt. Ltd

The Company holds 50% equity in PI Kumai Pvt. Ltd through its subsidiary company namelyPI Life Science Research Ltd and hence an associate company The Company posted a loss ofRs.0.21 lacs on account of establishment expenses since the company has not commenced itsoperations during the period ended March 31 2018.

Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014a statement containing salient features of the financial statementsof the Subsidiary and Associate Companies is given in form AOC-1. Refer Annexure‘A' to this Report. The company does not have any material listed subsidiarycompany. In accordance with the provisions of Section 136 of the Companies Act 2013 theAnnual Report of the Company containing the Standalone and Consolidated FinancialStatements along with the Audited Annual Accounts of each Subsidiary Company have beenplaced on the website of the Company quantumi.e. www.piindustries.com.of related party

7. RISK MANAGEMENT POLICY AND INTERNAL CONTROLS

Your company processes are inbuilt to enable risks to be appropriately. Major risksidentified identified by the business and functions are systematically addressed throughmitigating actions on continuing basis. Risk assessment is conducted periodically and theCompany has a mechanism to identify assess mitigate and monitor various risks to keybusiness objectives. The Internal Audit Function regularly reviews various risks andplaces the report before the Audit Committee of your Company from time to time.

TheBoardhasadoptedpoliciesandproceduresforensuring orderly and efficient conduct of itsbusiness including adherence to the Company's policies safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords and timely preparation of reliable financial disclosures.

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 Audit 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 to financial statements. The Company has identifiedand documented all key internal financial controls as part of its Internal FinancialControl reporting framework. The Company has laid down policies and procedures for allcritical processes across company's plant offices wherein financial transactions areundertaken. The policies and procedures cover the key risks and controls in all theprocesses identified to respective process owner. In addition the Company has awell-defined financial delegation of authority which ensures approval of financialtransaction by appropriate personnel. The Company uses SAP ERP to process financialtransactions and maintain its books of accounts to ensure its adequacy integrity andreliability.

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 31 2018.

9. RELATED PARTY TRANSACTIONS

A significant undertaken by the Company is with its subsidiary companies engaged inbusiness development activities. All Related party transactions that were entered duringthe financial year as stated in the financial statements were on an arm's length basis andin ordinary course of business in compliance with the applicable provisions of theCompanies Act 2013 and the Listing Regulations Related Party 2015. There were nomaterially significant

Transactions made by the Company during the year that would have required shareholderapproval under the Listing 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:http://www.piindustries.com/Media/Documents/Related%20Party%20Transactions%20Policy(r).pdf Your Company does not have any contracts orarrangements with its related parties falling under Section Annual Report 2017-18 188(1)of the Companies Act 2013. Hence the details of such contracts or arrangements with itsrelated parties are not disclosed in Form AOC-2 as prescribed under the Companies Act2013 and the Rules framed thereunder. Your Directors draw attention of the Shareholders toNote No. 34 of the standalone financial statements which set out related partydisclosures.

10. AUDITORS

Statutory Auditors and Auditor's Report

The shareholders of the Company at last AGM held on September 06 2017 had appointedM/s. Price Waterhouse Chartered Accountants LLP (ICAI Registration No-012754N/N500016)as the Statutory Auditors of the Company for an initial term of 5 years subject toratification by members at every AGM if required under the provisions of the CompaniesAct 2013. However the Companies Amendment Act 2017 has removed the requirement ofratification of statutory auditors and accordingly they hold their office till theconclusion of Annual General Meeting to be held in 2022.

Cost Auditor

PursuanttothedirectivesissuedbytheCentralGovernment an audit of the cost recordsrelating to Insecticides (Technical grade and formulations) manufactured by the Company isrequired to be conducted by an auditor with the requisite qualifications as prescribedunder 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 therecommendation of the Audit Committee for the conduct of the audit of cost records ofInsecticides (Technical grade and formulations) for the year ending March 31 2019.

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.

Secretarial Auditor

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 2018. The Secretarial AuditReport for the financial year ended March 31 2018 has been obtained and does not containany qualification which requires any comments from the Board. The Secretarial AuditReport for financial year ended March 31 2018 is annexed to this report as Annexure‘B'.

11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The details of investments loans and guarantees provided by the company are mentionedin Note No. 7 (b) and 7(c) forming part of the Notes to the financial statements.

12. DEPOSITS

Your Company has not accepted any public deposits during the financial year 2017-18 andas such no amount of principal or interest was outstanding as on March 31 2018.

13. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTIONFUND(IEPF)

During the year company had transferred an amount of Rs.90782/- towardsunclaimed or unpaid for more than seven years to IEPF Account. Pursuant to the provisionsof Investor Education and Protection Fund (Uploading of information regarding unpaid andunclaimed amounts lying with Companies) Rules 2012 the Company has uploaded the detailsof unpaid and unclaimed amounts lying with the Company as on September 06 2017 (date oflast Annual General Meeting) on the Company's website and on the website of the Ministryof Corporate Affairs. The details can be viewed at company's website at followinglink: http://www.piindustries.com/sites/default/files/Copy%20of%20Unpaid%20Div%2015%209%2015%20all.pdf Pursuant to the provisions of the Companies Act2013 read with IEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 theCompany is required to transfer equity shares in respect of which dividends have not beenclaimed for a period of seven years continuously to IEPF. Your Company has furthertransferred 169835 equity shares pertaining to shareholders in respect of which dividendwas unclaimed for seven consecutive years to IEPF demat account through NSDL corporateaction pursuant to the provisions as contained in Sec 124(6) of the Companies Act 2013and rules made thereunder.

14. BOARD AND COMMITTEES a) Board of Directors

Your Company is managed and controlled by a Board comprising an optimum blend ofExecutive and Non-Executive Professional Directors. The Chairman of the Board is aNon-Executive Independent Director. As on March 31 2018 the Board of Directors consistsof eight (8) Directors consisting of Managing Director & CEO Whole-time Director andsix (6) Non-executive Directors out of which five (5) are Independent Directors includingone Woman Director. The composition of the Board is in conformity with Regulation 17 ofthe SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 and therelevant provisions of the Companies Act 2013. All the Directors possess requisitequalifications and experience in general corporate management strategy finance bankingand other allied fields which enable them to contribute effectively to the Company intheir 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.

In order to strengthen the Board Dr T.S. Balganesh was appointed as an AdditionalDirector on the Board of the Company w.e.f May 16 2017 on the basis of the recommendationof Nomination and Remuneration Committee. Shareholders in its meeting held on September06 2017 approved the appointment of Dr T.S. Balganesh as Independent Director on theBoard for a period of 3 years from the date of aforesaid AGM. Further Mr. Narayan K.Seshadri Mr. Pravin K. Laheri Mrs. Ramni Nirula were reappointed as

Independent Directors to hold their office for another term of 5 years from the date ofaforesaid AGM. In accordance with the provisions of the Companies Act 2013 and Articlesof Association of the Company Mr. Arvind Singhal shall retire by rotation at theforthcoming Annual general Meeting and being eligible offers himself for re-appointment.The Board recommends his re-appointment for the approval of the members at the forthcomingAnnual General 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 Ms. Ramni Nirula and Mr. Ravi Narain as themembers. Details on 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 annualaccounts for the year ended March 31 2018 the applicable accounting standards had beenfollowed; (b) the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company as at March 31 2018 andof the profit of the

Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate

Corporate Management Financial Overview Reports Statements accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; (d) the directors hadprepared 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. Subhash Anand was appointed as

Chief Financial Officer w.e.f October 25 2017 in place of Ms. Jayashree Satagopan whohad relinquished her office on October 20 2017. There has been no change in any other KeyManagerial Personnel of the Company during the year.

16. 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-9 isattached as Annexure ‘C'.

17. EMPLOYEES

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

In the area of Human Capital considerable progress has been achieved in theinitiatives begun last year. Your company campus relationship building exercise whichcommenced last year has paid rich dividends. Company participated in the placementprocesses of premier campuses and made offers to nine candidates all of whom have sincejoined us.

A Talent Review process was put in place as a pilot in one part of our business andwill be replicated throughout the company in the coming year. The objective of the processis to segment our talent according to performance and potential and to develop customizedtraining careers and retention plans for them. Recognising that the provision of basicservices matters the most to the vast majority of any workforce and is a key driver ofemployee satisfaction company rolled out an Employee Bill of

Rights which documents and communicates service levels our employees can hold us toaccount against. This is supported by a HR Service Management tool to enable to us totrack HR performance against the promised service levels. A healthy workforce is aproductive and engaged workforce. During the last quarter of the year company launched aWellness Program a multi-dimensional initiative aimed at increasing employees' awarenessof the need for a healthy lifestyle and preventive healthcare. The program's focusincludes diet exercise stress management and disease prevention.Yourcompanytechnologyfocuscontinuedunabated as company implemented the RecruitmentOnboarding and Off-boarding modules of Success Factors and upgraded our time andattendance management system for enhanced linkage with SAP as well as data access andreporting".

During 2017-18 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 2070 as on March 31 2018.

c) Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace

Your Company has a zero tolerance for any abuse against Women at Workplace. Policy onProhibition Prevention and Redressal of Sexual Harassment of Women at Workplace andmatters connected therewith or incidental thereto covering all the aspects as requiredunder the "The Sexual Harassment of Women at Workplace (Prohibition Prevention andRedressal) Act 2013". The Company has constituted Internal Complaints Committee(ICC) known as Prevention of Sexual Harassment (POSH) Committee to enquire in tocomplaints of Sexual Harassment and recommend appropriate action. The Company has notreceived any complaint of sexual harassment during the financial year 2017-18.

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 perfirst proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Reportand Financial Statements are being sent to the Members of the Company excluding thestatement of particulars of employees under Rule 5(2). However they are available forinspection during business hours upto the date of the next annual general meeting at theregistered office of the Company. Any member interested in obtaining a copy of the saidstatement may write 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 discontinued grant of stock options under PII-ESOPScheme 2010 as per the recommendation of Nomination & Remuneration Committee of theBoard. The stock options already granted would vest as per the conditions contained in thegrant letter. As per the ESOP scheme stock options shall vest after a lock in period ofone year from the date of grant. The stock options vest in graded manner over a vestingperiod of four (4) years. The exercise price of stock options granted have been arrived bygiving discount to the closing market price of the equity share on National Stock ExchangeIndia Limited one day prior to the date of grant of option. Voting rights on the equityshares issued to employees under the ESOP Scheme are either exercised by them or throughtheir appointed proxy. No employee has been issued stock options equal to or exceeding 1%of the issued capital of the Company at the time of grant. Details of options as requiredunder SEBI 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 adequatesafeguards against victimization of employees who avail of the mechanism and also providesfor direct access to the Chairman of the Audit Committee. It is affirmed that no personnelof the Company has been denied access to the Audit 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 Annexure‘F' 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 athttp://www.piindustries.com/sustainability/CSR/CSR-Policy Your Company carried out the CSRactivities through PI Foundation a Trust set up by PI Industries Ltd During the year PIFoundation undertook several CSR initiatives under the following few categories:

- Water

- Education and Talent Nurturing

- Healthcare

- Hygiene & Sanitation

- Livelihood Enhancement

- Sustainable Agriculture

- Skill Development

- Employee Engagement through CSR

During the financial year 2017-18 the Company has contributed an amount of Rs.8.58 cr.to PI Foundation aggregating to 2% of its average net profits for preceding 3 financialyears. However PI Foundation hasbeenable or material orders were to spent an amount ofRs.6.87 cr. during the financial year 2017-18 since few projects considered are ongoingand spread over 2 to 3 years and would thus require a continuous outflow in respect of thesame.

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

Company regarding certificate compliance of the conditions of Corporate Governance asstipulated under Regulation 34 of SEBI (LODR) Regulations 2015 forms part of the reportand given in separate section of Annual Report.

22. MANAGEMENT DISCUSSION AND ANALYSIS

A detailed report on the Management Discussion and Analysis is provided separatelyforms part of the Annual Report.

23. BUSINESS RESPONSIBILITY REPORT

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 requires top500 listed companies by Market capitalisation to provide Business Responsibility Report intheir Annual Report.

Your Company falls under the top 500 Listed Companies by market capitalisation andaccordingly a Business Responsibility Report describing the initiatives taken by theCompany from an environmental social and governance perspective forms part of thisReport.

24. CHANGES IN SHARE CAPITAL

During the year your Company had issued 320694 Equity Shares of Rs.1/- each whichwere allotted to PII ESOP Trust (Trust) set up to administer PII Employee Stock OptionPlan-2010. The Trust allocates these shares to the employees of the Company and itssubsidiaries upon exercise of stock options from time to time under the aforesaid Scheme.As a result of this allotment the paid-up equity share capital of your Company increasedto Rs.13.79 cr. (comprising of 137907318 Equity Shares of `1/- each as on March 312018) from Rs.13.76 cr. (comprising of 137586624 Equity Shares of Rs.1/- each as onMarch 31 2017).

25. GENERAL

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 orotherwise. b) Issue of shares (including sweat equity shares) to employees of the Companyunder any 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 received anyremuneration or commission from any of its subsidiaries by the d) No significantRegulators or Courts or Tribunals which impact the going concern status and Company'soperations 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.

26. ACKNOWLEDGEMENTS

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 alongwith its joint venture partners for the support andconfidence reposed by them in the organization and looks forward to the continuance ofthis supportive relationship in the future.

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 Directors
For PI Industries Ltd.
Sd/-
Narayan K. Seshadri
Place: Gurugram Chairman
Date: May 15 2018 DIN: 00053563

Annexure - A Form AOC-I

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014) Statement containing salient features of the financialstatement of subsidiaries/associate companies/joint ventures

Part "A": Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in `)

Name of the subsidiaries

Particulars PI Life Science PILL Finance and PI Japan Co. Ltd

Research Ltd Investments Ltd

1. The date since when subsidiary was acquired 9th December 2004 17th August 199223rd May 2007

2. Reporting period for the subsidiary concerned if NA NA NA different from theholding company's reporting period

3. Reporting currency and Exchange rate as on the INR INR JPY;1 = .615050 last date ofthe relevant Financial year in the case of foreign subsidiaries

4. Share capital 94.50 36.00 30.75

5. Reserves & surplus 1537.81 364.58 116.98

6. Total assets 1680.58 403.17 183.26

7. Total Liabilities 48.27 2.59 35.53

8. Investments 56.45 53.07 -

9. Turnover 337.02 17.07 490.90 10. Profit before taxation 211.47 25.04 23.41 11.Provision for taxation 74.51 0.70 5.40 12. Profit after taxation 136.96 24.34 18.01 13.Proposed Dividend - - -14. Extent of shareholding (In percentage) 100% 100% 100%

Notes: The following information shall be furnished at the end of the statement:

1. Names of subsidiaries which are yet to commence operations Nil

2. Names of subsidiaries which have been liquidated or sold during the year. Nil

On behalf of the Board of Directors
For PI Industries Ltd.
Sd/-
Narayan K. Seshadri
Place: Gurugram Chairman
Date: May 15 2018 DIN: 00053563

Part "B": Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures

(Rs.in Lacs)

Name of Associate Entity Solinnos Agro Sciences Pvt. Ltd PI Kumiai Private Ltd
1. Latest audited Balance Sheet Date 31st March 2018 31st March 2018
2. Date on which the Associate was associated 2nd May 2016 4th July 2017
3. Shares of Associate held by the company on the year end 514500 equity shares of 50000 equity shares of
No. of shares Rs.10/- each. Rs.10/- each.
Amount of Investment in Associates (Rs.in Lacs) 51.45 5.00
Extend of Holding (In percentage) 49% 50 %
4. Description of how there is significant influence PI Life Science Research Ltd (wholly owned subsidiary company of PI Industries Ltd.) holds 49% equity in Solinnos Agro Sciences Pvt. Ltd and 50% in PI Kumiai Private Ltd and accordingly able to participate in financial and operating policy decision making of the Company.
5. Reason why the associate/Joint venture is not consolidated In case of Solinnos control is with Mitsui Chemicals Agro Inc. Japan which holds 51% equity in the Company. In case of PI Kumiai PI Life Science Research Ltd. hold 50% equity and 50% equity is held by Kumiai Chemical Industry Co. Ltd. Hence same is not consolidated line by line and is accounted on equity basis only.
6. Net worth attributable to shareholding as per latest audited 116.46 9.79
Balance Sheet
7. Profit/(Loss) for the year 30.35 (0.21)
i. Considered in Consolidation - -
ii. Not Considered in Consolidation 30.35 (0.21)
1. Names of associates or joint ventures which are yet to commence operations. Nil
2. Names of associates or joint ventures which have been liquidated or sold during the year. Nil

Annexure - D

Statement of Disclosure of Remuneration under Section 197 of Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014

1. The ratio of the remuneration of each Director to the median remuneration ofthe Employees of the Company for the financial year 2017-18 as well as the percentageincrease in remuneration of each Directors as under:

(Explanation: (i) the expression "median" means the numerical valueseparating the higher half of a population from the lower half and the median of a finitelist of numbers may be found by arranging all the observations from lowest value tohighest value and picking the middle one; (ii) if there is an even number of observationsthe median shall be the average of the two middle values)

Name of Director Ratio to Median Remuneration % increase in remuneration over previous year
Non-Executive
Director
Mr. Narayan K. 5.47:1 -2.16
Seshadri
Mr. Pravin K. Laheri 3.52:1 -4.91
Ms Ramni Nirula 3.51:1 -10.94
Mr. Ravi Narain 3.44:1 -1.75
Mr. Arvind Singhal 3.16:1 82.51
Dr. T.S. Balganesh@ 2.44:1
Executive Director
Mr. Mayank 126.43:1 -5.96
Singhal Mg.
Director & CEO

that the remuneration is as per the

Mr. Rajnish Sarna 77.68:1 -4.72
Whole-time
Director

Notes: @ Dr Balganesh was inducted as member of Board on May 16 2017.

Remuneration to Non-Executive Director comprises of Sitting fees and Commission.

2. The percentage increase in median remuneration of employees in Financial Year2017-18: 11%

3. The number of permanent employees on the rolls of Company as on March 312018:1867.

4. Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration:

% change in remuneration
Average increase in salary of employees (other than managerial personnel) 11%
Average increase in salary of managerial personnel Nil

The increment given to each individual employee is based on the employees' potentialexperience performance and contribution to the Company's progress over a period of timeand also benchmarked against a comparable basket of relevant companies in India. It mayhowever be noted that Executive Directors are also entitled to commission which is decidedby Board on the basis of the recommendation(s) received from Nomination & RemunerationCommittee. Further stock options have been granted to Whole-time Director and CompanySecretary. Hence the same is strictly not comparable to percentile increase in salary ofother employees. It is clarified here that value of stock option has not been taken in toaccount for computing this increase.

5. Affirmation Policy of the Company.

It is affirmed that the remuneration paid is as per the

Remuneration Policy for Directors Key Managerial Personnel and other employeesadopted by the Company.

On behalf of the Board of Directors
For PI Industries Ltd.
Sd/-
Narayan K. Seshadri
Place: Gurugram Chairman
Date: May 15 2018 DIN: 00053563

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

[Pursuant to section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of theCompanies (Accounts) Rules 2014]

(A) CONSERVATION OF ENERGY

(i) Steps Taken or Impact on Conservation of Energy:

The Company continued its efforts to improve energy efficiencyand conservation at itsmanufacturing units and R&D centre. As part of energy conservation and managementsystem continuous monitoring of energy generation distribution utilization andconservation was carried out for effective utilization of energy.

Steps taken during the year (2017-18) to conserve energy include:

• ISO 50001:2011 Energy Management System

(EnMS) Certification for Jambusar site.

• Rain water harvesting by collecting rain water from roof of plants and trenchesto use natural resource and conserve surface water runoff & reduce soil erosion.

• Low Sulphur fuel selected for Boiler to improve the stack emission qualityresults into carbon foot print.

• Drip Irrigation as alternate method to surface irrigation was incorporated ingarden to conserve water and nutrients by allowing water to drive slowly to roots.

• Cooling tower cycle of concentration and blow down optimized by improving themakeup water quality result into saving in water consumption.

• Pressurised De aerator was installed in Boiler for removal of dissolve oxygenand hence reduction in chemical consumption.

• Variable frequency drive were configure with pressure transmitter to regulateand maintain the constant pressure in secondary pump of chilled water & cooling waterfor energy conservation.

• Steam trap system and condensate recovery system optimized to improve thecondensate recovery and heat recovery from waste steam.

• Automatic load controllers were installed in chiller & brine unit tooptimize the power consumption.

• Hot air generation from low pressure Root blower in place of High pressurecompressor for energy conservation.

• Installed shell and tube heat exchanger condenser in place of PHE in chilledwater system to improve the heat transfer and reduce the power consumption of thecompress. Good saving realised by this initiative in 2017-18 due to reduce the gasketchange over and decontamination cost.

(ii) Steps taken for utilization of Alternate sources of Energy:

As part of its long term sustainability plan the Company has initiated various stepstowards utilizing alternate sources/ renewable source of energy. Some of the keyinitiatives implemented by the Company are:

• 250 KWP roof top solar power plant was installed

• Replaced 125W HPMV Lights in plant area with 45 W LED Lights to reduce energyconsumption.

• Replaced conventional tube light rods with LED rods in administrative office forenergy consumption reduction

Plans for the year 2018-19

• Installation of Micro turbine in place of PRV to generate Power by pressurereduction of Steam from 8.5 to 3.5 Kg/Cm2.

• Fuel emulsification system to improve the combustion efficiency in the Boiler.Vendor will be given guarantee through financial term for ensuring benefit once the systemis installed.

• Online auto tube cleaning system for Chiller condenser to improve the chillerperformance and hence specific power consumption.

• Artic Master for Direct expansion chiller units for AHU for energy conservation

(B) TECHNOLOGY ABSORPTION

1. Efforts made towards technology absorption

To enhance technological capabilities various new technologies are being consideredand developmental work both at R&D and scale up stage is initiated on the followingareas:

• Full fledge flow-chemistry lab is under establishment at R&D centre toprovide facility for trial on various molecules to improve productivity reduce risk andplant footprint.

• High pressure air oxidation technology is successfully commercialised atJambusar site.

• Scale up facility is strengthen by incorporating various new specialisedequipments like automated jacketed reactors parallel synthesizer reaction calorimeterwith FBRM etc.

• Planning to develop expertise in New chemistry areas like FluorinationPhosgenation Carboxylation etc.

New state of art facilities for R&D at second floor of PPSRC is operational atUdaipur which has enhanced capabilities and productivity. Process innovation team is nowfully engaged on new age chemistry for the synthesis of molecules in the fields ofAgrochemicals Fine Chemicals Speciality Chemicals and Photographic chemicals forimproving efficiencies.

Continuous improvement of the commercial production processes have been made possiblethrough technology absorption methods which include:-

• Regular training programs including internal technical training across groupstroubleshooting and cost reduction sessions for our scientists chemists &technologists to equip them to cope with new scientific and technical challenges.

• Interaction with National Laboratories IITs CSIR Institutions andUniversities R&D laboratories of various MNCs for upgradation of knowledge andcoordinating with them for development of new products and training of scientists.

2. Benefits derived like product improvement cost reduction productdevelopment or import substitution:

• Development of indigenous technology has led to cost reduction use ofenvironment friendly synthesis routes and conservation of foreign exchange.

• IP generation in the name of company through new technology development byinnovative solutions.

• Developmental processes have been initiated at lab scale. This will convert fewbatch processes into continuous uninterrupted processes which will ultimately result intoconsistency of the product under manufacture.

• Training sessions among different groups of R&D have resulted in effectiveand innovative solutions.

• Improvement in manufacturing processes for existing molecules and development ofnew products for exports have led to wider knowledge base and capability enhancement ofthe R &D staff.

• Replacement of hazardous and toxic reagents with less hazardous environmentfriendly substitutes has helped in pollution abatement and odour control. Thus the Companyhas been successful in adapting the national norms and working towards protecting theenvironment along with other industries.

3. Imported Technology:

(a) The details of technology imported:

Mono methyl Hydrazene synthesis

(b) The year of import: 2017-2018

(c) Whether the technology has been fully absorbed: Under progress

(d) If not fully absorbed areas where absorption has not taken place and the reasonthereof: Not Applicable

4. Expenditure on R&D
(Rs.in Cr.)
Particulars Current year Previous year
2017-18 2016-17
a. Capital Expenditure 16.65 53.04
b. Revenue Expenditure 56.37 34.61
c. Total 73.02 87.65
d. Total R&D expenditure as percentage of Revenue from Operations
3.16% 3.68%

(C). FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of total foreign exchange used and earned have been provided below:-

(Rs.in Cr.)
Particulars Current year Previous year
2017-18 2016-17
Foreign Exchange Earned 1382.52 1384.04
Outgo of Foreign Exchange 506.38 593.72

 

On behalf of the Board of Directors
For PI Industries Ltd.
Sd/-
Narayan K. Seshadri
Place: Gurugram Chairman
Date: May 15 2018 DIN: 00053563