Your Directors take pleasure in presenting the Fifty-Second Annual Report together withAudited Financial Statements for the year ended 31st March 2021.
Financial Results (Standalone)
| || |
(Rs in crores )
| ||2020-21 ||2019-20 |
|Sales ||6186.67 ||6290.43 |
|Operating Profit ||1623.30 ||1637.28 |
|Finance Costs ||(16.99) ||(13.40) |
|Depreciation Amortisation and Impairment Expense ||(147.10) ||(125.79) |
|Net Foreign Exchange Loss ||(2.13) ||(1.86) |
|Profit Before Exceptional Items and Tax ||1457.08 ||1496.23 |
|Exceptional Items ||(0.45) ||(59.28) |
|Profit Before Tax ||1456.63 ||1436.95 |
|Current Year's Tax ||(375.05) ||(368.65) |
|Profit After Current Year's Tax ||1081.58 ||1068.30 |
|Deferred Tax ||(0.12) ||33.32 |
|Profit After Tax ||1081.46 ||1101.62 |
|Profit Brought Forward ||3042.74 ||2779.09 |
|Other Comprehensive Income Included in Retained Earnings (Net of tax) ||(0.71) ||(11.20) |
|Profit Available for Appropriation ||4123.49 ||3869.50 |
|Appropriations || || |
|Dividend Paid ||- ||(330.18) # |
|Interim Dividend Paid ||- ||(355.61) |
|Tax on Dividend ||- ||(140.97) |
|Total ||- ||(826.76) |
|Closing Balance of Retained Earnings ||4123.49 ||3042.74 |
# Pertaining to dividend for FY 2018-19
The dividend payout is in accordance with the Dividend Distribution Policy which isavailable on the website of the Company www.pidilite.com.
Comments on Financial Performance are included in Management Discussion and Analysissection.
Your Directors recommend a dividend of Rs 8.50 per equity share of Rs 1/- each(previous year interim dividend considered as final dividend of Rs 7/- per equity share ofRs 1/- each) out of the current year's profit on Rs 50.82 crores equity capitalamounting to Rs 431.93 crores (previous year Rs 355.61 crores on equity capital of Rs50.81 crores). The dividend payout amount has grown at a CAGR of 15.40% during the last 5years.
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve.
The Company has no outstanding term loans (previous year NIL).
The total capital expenditure during the year was Rs 336.69 crores (previous year Rs369.03 crores) primarily spent on fixed assets for various manufacturing units officeslaboratories warehouses and on information technology.
The Company has not accepted any deposits covered under Chapter V of the Companies Act2013 during the financial year 2020-21 (previous year NIL).
Investment in Subsidiaries
During the year investment of Rs 2333.82 crores (previous year Rs 146.18 crores) wasmade in subsidiaries. Of this Rs 2323.04 crores (including contingent consideration) wasinvested in domestic subsidiaries and Rs 10.78 crores in overseas subsidiaries.
The investments in domestic subsidiaries were in Madhumala Ventures Pvt Ltd (Rs 10.51crores)
Nina Percept Pvt Ltd (Rs 4.82 crores) Pidilite Litokol Pvt Ltd (Rs 14.28 crores)Pidilite Grupo Puma Manufacturing Ltd (Rs 11.71 crores) Pidilite C-Techos Walling Ltd (Rs0.60 crores) and in the newly acquired subsidiaries Tenax Pidilite India Pvt Ltd (formerlyknown as Tenax India Stone Products Pvt Ltd) (Rs 84.66 crores) and Pidilite Adhesives PvtLtd (formerly known as Huntsman Advanced Materials Solutions Pvt. Ltd.) (Rs 2196.46crores).
The investments in overseas subsidiaries were in Pidilite Middle East Ltd (Rs 10.33Crores) and Pidilite Chemical PLC (Rs 0.45 crores).
During the year
a. The Company acquired 100% share capital of Huntsman Advanced Materials SolutionsPvt. Ltd. for cash consideration of Rs 2196.46 crores. The acquisiton process wascompleted on
3rd November 2020. The name of the said subsidiary has been changed to PidiliteAdhesives Pvt. Ltd. with effect from 13th January 2021.
b. The Company acquired the balance 30% stake in its subsidiary namely Cipy PolyUrethanes Pvt. Ltd. (CIPY) by purchasing 28249 equity shares from certain othershareholders of CIPY for a cash consideration of Rs 60.49 crores (excluding certaincontingent payment). The acquisition process was completed on 22nd April 2021. Consequentto this CIPY became a wholly owned subsidiary of the Company.
c. The Company has completed the acquisition of the business of wholly owned entity
M/s. Nitin Enterprise (a partnership firm having two partners both of which arewholly owned subsidiaries of the Company).
Performance of Major Domestic and Overseas Subsidiaries
|Name of Subsidiary ||Sales ||Sales ||% Growth ||EBITDA ||EBITDA ||% Growth |
| ||2020-21 ||2019-20 || ||2020-21 ||2019-20 || |
|Nina Percept Pvt Ltd ||176.63 ||267.76 ||(34.0%) ||(26.93) ||11.50 ||(333.9%) |
|ICA Pidilite Pvt Ltd ||178.21 ||185.83 ||(4.1%) ||25.19 ||24.13 ||4.5% |
|CIPY Poly Urethanes Pvt Ltd ||89.68 ||121.38 ||(26.1%) ||1.63 ||15.38 ||(89.4%) |
|Pidilite Adhesives Pvt Ltd* ||168.32 ||- ||- ||60.32 ||- ||- |
|Pidilite Speciality Chemicals Bangladesh Pvt Ltd ||111.10 ||124.50 ||(10.8%) ||17.09 ||19.19 ||(11.0%) |
|Pidilite Lanka (Pvt) Ltd ||45.43 ||41.34 ||9.9% ||6.95 ||2.90 ||139.7% |
|Pidilite USA Inc ||140.70 ||119.14 ||18.1% ||18.53 ||(0.45) ||4262.8% |
|Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda ||103.84 ||70.14 ||48.0% ||23.29 ||1.58 ||1378.7% |
|Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company ||36.73 ||37.93 ||(3.2%) ||(1.00) ||(0.08) ||(1133.9%) |
|Pidilite Bamco Ltd includes Bamco Supply and Services Ltd (Thailand) ||65.41 ||63.37 ||3.2% ||9.18 ||5.38 ||70.8% |
|Pidilite MEA Chemicals LLC (UAE) ||109.81 ||114.69 ||(4.3%) ||(3.12) ||(4.33) ||28.0% |
Overseas subsidiaries figures are at constant currency.
* Figures are for the period from 4 th November 2020 to 31st March 2021
Performance of domestic subsidiaries was impacted due to nationwide lock-down in thecountry. Performance improved during second half of the year with good sales achievementby ICA Pidilite and Pidilite Adhesives.
Performance of subsidiaries in Bangladesh Middle East and Egypt was impacted due tolockdowns.
Pidilite Lanka continues to perform well despite challenging business environment andposted a significant increase in EBITDA margin owing to lower material costs and localmanufacturing.
Pidilite USA sales and profit grew well due to higher demand of hobby & craftproducts during the pandemic and increased focus on e-commerce.
Pidilite Brazil reported good sales and profit growth due to operational improvementsand higher economic growth due to fiscal stimulus.
The subsidiaries in Thailand reported marginal sales growth driven by project business.EBITDA improved due to softer input costs and controlled spends.
Consolidated Financial Statements
In accordance with the provisions of Companies Act 2013 (hereinafter referred to asthe Act') Regulation 33 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements)
Regulations 2015 (hereinafter referred to as Listing Regulations') andapplicable Accounting Standards the Audited Consolidated Financial Statements of theCompany for the financial year 2020-21 together with the Auditor's Report forms part ofthis Annual Report. A statement containing the salient features of the Company'ssubsidiaries associate and joint venture company in the prescribed Form AOC- 1 are setout in Note No. 59 to the Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of auditedfinancial statements of the Company its subsidiaries associate Companies and jointventure as approved by their respective Board of Directors except Pulvitec Do BrazilIndustria e Comercio de Colas e Adesivos Ltda which has been approved by the localadministrator and Plus Call Technical Services LLC Dubai for which the financialstatements has been approved by the management. The requisite applications have been filedwith Ministry of Corporate Affairs for striking off the names of Pidilite C-Techos Pvt.Ltd. and Pidilite Grupo Puma Pvt. Ltd. in absence of any business since theirincorporation.
The accounts of the subsidiaries are also uploaded on the website of the Companywww.pidilite.com.
Directors and Key Managerial Personnel
The Board of Directors on the recommendation of Nomination and Remuneration Committeehas recommended to the Members the re-appointment of Shri Vinod Dasari as an IndependentDirector of the Company for a second consecutive term commencing from the conclusion of52nd AGM upto 31st August 2025.
Shri Rajeev Vasudeva was appointed as an Additional Director (Independent) of theCompany by the Board on the recommendation of Nomination and Remuneration Committee witheffect from 10th September 2020. Members' approval is sought for his appointment as anIndependent Director of the Company for a period of 5 consecutive years i.e upto 9thSeptember 2025.
In accordance with the Act and the Articles of Association of the Company Shri A NParekh and Shri Debabrata Gupta Directors of the Company retire by rotation and beingeligible offers themselves for re-appointment.
Policy on Directors' Remuneration
The policy on Directors' remuneration is available on the website of the Companywww.pidilite.com. The remuneration paid to the Directors is as per the terms laid out inthe said policy.
Directors' Responsibility Statement
Your Directors confirm that:
in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year ended 31stMarch 2021 and of the profit of the Company for that period;
they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and are operating effectively; and
they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
Annual Evaluation by the Board of its own performance its Committees and individualDirectors
The Board has put in place a mechanism for evaluation of its own performance andperformance of its Committees and individual Directors. The evaluation of the BoardCommittees Directors and Chairman of the Board was conducted based on the evaluationparameters such as Board composition and structure effectiveness of the Boardparticipation at meetings domain knowledge awareness and observance of governance etc.For further details please refer to the Report on Corporate Governance which forms apart of this Annual Report.
The Company has put in place an induction and familiarisation programme for all itsDirectors including the Independent Directors.
The familiarisation programme for Independent Directors in terms of provisions ofRegulation 46(2)(i) of the Listing Regulations is uploaded on the website of the Company.
Number of Meetings of Board of Directors
Seven meetings of the Board of Directors of the Company were held during the financialyear 2020-21. For further details please refer to the Report on Corporate Governancewhich forms a part of this Annual Report.
Statement of Declaration on Independence given by Independent Directors
All the Independent Directors of the Company have given declarations that:
a. they meet the criteria of independence as laid down under the Act and the ListingRegulations; and
b. they have registered their names in the Independent Directors' Databank.
The Company is committed to good corporate governance practices. The Report onCorporate Governance as stipulated under Listing Regulations forms an integral part ofthis Annual Report. The requisite certificate from M/s M. M. Sheth & Co. PractisingCompany Secretaries is attached to the Report on Corporate Governance which forms a partof this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review as stipulatedunder the Listing Regulations is presented in a section forming part of this AnnualReport. For the sake of brevity the items covered in this Report are not repeated in theManagement Discussion and Analysis Report.
Committees of the Board
The following are the statutory Committees constituted by the Board and they functionaccording to their respective roles and defined scope:
Nomination and Remuneration Committee
Corporate Social Responsibility Committee
Stakeholders Relationship Committee
Risk Management Committee
Details of composition terms of reference and number of meetings held for respectiveCommittees are given in the Report on Corporate Governance which forms a part of thisAnnual Report. Further during the year under review all recommendations made by theAudit Committee have been accepted by the Board.
Corporate Social Responsibility (CSR) Report and Policy
The CSR Report as per Section 135 of the Act read with Companies (Corporate SocialResponsibility Policy) Rules 2014 and amendments thereto is attached as Annexure 1 tothis Report. The details of CSR Initiatives forms part of Social & Community ServiceInitiatives section of this Annual Report.
CSR Policy can be accessed on website of the Company www.pidilite.com.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for itsDirectors and
employees.The said policy has been communicated to the Directors and employees of theCompany and is also posted on the website of the Company.
For further details please refer to the Report on Corporate Governance which forms apart of this Annual Report.
Policy relating to Prevention of Sexual Harassment
The Company has formulated a Prevention of Sexual Harassment Policy and has formedInternal Complaints Committees as per statutory requirements. For further details pleaserefer to the Report on Corporate Governance which forms a part of this Annual Report.
In accordance with the provisions of the Act
M/s Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No117366W/ W-100018) have been appointed as the Statutory Auditors of the Company for aperiod of five years i.e. upto the conclusion of 54th AGM to be held for the adoption ofaccounts for the year ending 31st March 2023. Auditors have confirmed that they are notdisqualified from continuing as Auditors of the Company.
There is no qualification or adverse remark in Auditor's Report. There is no incidentof fraud requiring reporting by the Auditors under Section 143(12) of the Act.
The Company has maintained cost records as specified by Central Government u/s 148(1)of the Act. M/s. V J Talati & Co. Cost Accountants were appointed as the CostAuditor for the financial year 2020-21 to conduct the audit of the cost records of theCompany and they have been reappointed as the Cost Auditor for the financial year 2021-22.In terms of the provisions of Section 148(3) of the Act read with the Companies (Auditand Auditors) Rules 2014 as amended the remuneration payable to the Cost Auditor has tobe ratified by the Members of the Company. Accordingly at the ensuing AGM the Boardseeks ratification of the remuneration payable to the Cost Auditor for the financial year2021-22.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration
of Managerial Personnel) Rules 2014 the Company has appointed M/s M. M. Sheth &Co. Practising Company Secretaries to undertake the Secretarial Audit of the Company forthe financial year 2020-21. The Report of the Secretarial Auditor is attached as Annexure2 to this Report. There is no qualification or adverse remark in their Report.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars under Section 134 of the Act read with the Companies (Accounts) Rules2014 are attached as Annexure 3 to this Report.
In compliance with Regulation 21 of the Listing Regulations a Risk ManagementCommittee has been constituted by the Board. The Risk Management Committee also known asRisk Management Oversight Committee is entrusted with roles and powers which includes (a)Review and approval of risk management plan (b) Review progress on the risk managementplan (c) Propose methodology on risk classification and measurement.
The Company has laid out a risk management plan for identification and mitigation ofrisks. The Company has also constituted a Management Risk Committee which is chaired bythe Managing Director and has Senior Leadership of the Company as its members. TheManagement Risk Committee identifies the key risks for the Company develops andimplements the risk mitigation plan reviews and monitors the risks and correspondingmitigation plans on a regular basis and prioritises the risks if required depending uponthe effect on the business/ reputation.
The other details in this regard are provided in the Report on Corporate Governancewhich forms a part of this Annual Report.
Contracts and Arrangements with Related Parties
All contracts/arrangements entered into by the Company during the financial year underreview with related parties (as defined in the Act and Listing Regulations) were in theordinary course of business and on an arm's length basis. During the year the Company didnot enter into any contract/ arrangement/transaction with related parties which could beconsidered as material in accordance with the Policy of the Company on Materiality ofRelated Party Transactions (RPT Policy) or which is required to be reported in Form No.AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of theCompanies (Accounts) Rules 2014.
The RPT Policy as approved by the Board is available on the Company's website:www.pidilite.com.
Disclosure of related party transactions with the promoter(s)/promoter(s) group whichindividually hold 10% or more shareholding of the Company as per the Indian AccountingStandards are set out in Note No. 44 of the Standalone Financial Statements of theCompany.
Particulars of Loans Guarantees or Investments
Details of loans guarantees or investments covered under the provisions of Section 186of the Act are given in the Notes to the Financial Statements.
Employees Stock Option Scheme
The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based EmployeeBenefits) Regulations 2014 (SBEB Regulations).
The certificate of Auditors regarding implementation of the Scheme is available forinspection of Members in electronic mode.
The applicable disclosure as stipulated under the SBEB Regulations as on 31st March2021 with regard to Scheme is provided in Annexure 4 to this Report.
Extract of Annual Return
Extract of Annual Return of the Company is available on the website of the Company viz.www.pidilite.com.
Business Responsibility Report
A Business Responsibility Report as per Regulation 34 of the Listing Regulationsdetailing the various initiatives taken by the Company on the environmental social andgovernance front forms an integral part of this Report.
Internal Control Systems and their Adequacy
The Company has adequate internal financial control procedures commensurate with itssize and nature of business.
The Company has appointed Internal Auditors who periodically audit the adequacy andeffectiveness of the internal controls laid down by the management and suggestimprovements.
The Audit Committee of the Board of Directors approves the annual internal audit planand periodically reviews the progress of audits as per approved audit plans along withcritical internal audit findings presented by internal auditors status of implementationof audit recommendations if any and adequacy of internal controls.
Significant/Material Orders Passed by the Regulators
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future.
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as Annexure 5 to this Report.
Details of employee remuneration as required under provisions of Section 197 of theAct and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any modifications thereof) shall be made available to anyshareholder on request.
The Company has neither issued equity shares with differential rights nor any sweatequity shares.
There have been no material changes and commitments affecting the financial position ofthe Company between the end of financial year and the date of this Report.
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Meetings of the Board of Directors and General Meetings.
Your Directors wish to place on record their appreciation of the contribution made bythe employees at all levels to the continued growth and prosperity of your Company. YourDirectors also wish to place on record their appreciation to the shareholders dealersdistributors consumers banks and other financial institutions for their continuedsupport.
FOR AND ON BEHALF OF THE BOARD
|Mumbai ||M B Parekh |
|Date : 12th May 2021 ||Executive Chairman |