DIRECTORS’ REPORT Your Directors have pleasure in presenting the 66th Annual Report along with the Audited Statements of Accounts for the year 31st December, 2015. PERFORMANCE DURING THE YEAR (STANDALONE): Your Company’s performance during the year is summarized During the year under review, the net sales grew by 1.5%. PBT margin, excluding extraordinary items dropped from 6.68% to 6.00% due to increase in interest cost on account of acquisition of Positive Packaging Industries Limited. PBT margin including extraordinary item was 7.23% in the previous year. After providing for Income Tax of Rs. 1,937 lacs, Net Profit after Tax & Extraordinary Items was Rs. 4,911 lacs. After transferring an amount of Rs. 492 lacs to General Reserve and Rs. 1,925 lacs to Debenture Redemption Reserve, the amount available for appropriation was Rs. 26,250 lacs including amount brought forward of Rs. 23,756 lacs of previous year. The Earning per Equity Share (EPS) was Rs. 6.75. DIVIDEND: Your Directors recommend a dividend of Rs. 2.80 per equity share (@140%) having face value of Rs. 2/- each for the year ended 31st December, 2015. The said dividend will absorb an amount of Rs. 2,450 lacs, including the dividend distribution tax and cess thereon. FIXED DEPOSITS: The Company did not invite or accept deposits covered under Section 73 of the Companies Act, 2013 and there are no deposits pending with the Company. TRANSFER TO RESERVES: Debenture Redemption Reserve is created to the extent of 25% of the Non Convertible Debentures (NCDs) equally, over the period of maturity of the NCDs, as per the requirements of applicable laws. Further, an amount of Rs. 4,92,00,000/- (Rupees Four Crores Ninety Two Lakhs) has been transferred to General Reserves. DEBENTURES: The Company has issued and allotted 3850, Non-Convertible Debentures (NCD’s) of face value Rs. 10,00,000/- each at face value, aggregating upto R 385,00,00,000 (Rupees Three Hundred Eighty Five Crores) to Huhtalux S.á r.l. The said NCD’s are issued for a period of 5 years @ 7% interest, per annum. The proceeds of said Debentures have been utilized towards acquisition of Positive Packaging Industries Limited. MERGER: The Board of Directors in their meeting held on 14th September, 2015 approved merger of Webtech Labels Private Limited (51% Subsidiary of the Company) and Positive Packaging Industries Limited (Wholly Owned Subsidiary of the Company) with the Company, under two separate schemes. The details of said schemes are available on website of the Company http://www. pplpack.com/investor-info.html. The Company has received No Objection letters from National Stock Exchange of India Ltd and BSE Ltd. for the said mergers, and the said schemes have been filed with Hon’ble Bombay High Court for its approval. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS: In accordance with the Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Information of the Subsidiary Companies. These Consolidated Financial Statements provide financial information about your Company and its subsidiaries after elimination of minority interest, as a single entity. A summary of the financial performance of each of the Subsidiary companies in the prescribed Form AOC-1 is appended as Annexure 1 to the Financial Statements of the Company. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of the subsidiaries of the Company are available on the website of the Company - www.pplpack.com. These documents will be made available to the Members for inspection at the Registered Office of the Company upto the date of the ensuing Annual General Meeting. The Company’s Policy for Determining Material Subsidiaries may be accessed on the Company’s website at the link http:// www.pplpack.com/assets/hppl_policy_for_determining_materiality.pdf AUDITORS AND AUDITORS’ REPORT: Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, S R B C & CO LLP, Chartered Accountants (SRBC) were appointed as Statutory Auditors for a term of five years to hold office from the conclusion of 65th Annual General Meeting to conclusion of 70th Annual General Meeting, subject to ratification at every Annual General Meeting. The approval of members is being sought for ratification of appointment of SRBC as Statutory Auditors of the Company to examine & audit the accounts of the Company for the Financial Year 2016. The Auditors’ Report to the Members on the Accounts of the Company for the year ended 31st December, 2015 does not contain any qualification, reservation or adverse remark. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: Information pursuant to the provisions of Section 134 of the Companies Act, 2013 and the rules framed thereunder, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, forms part of this Report and is given at Annexure 2. CORPORATE GOVERNANCE: Your Company complies with all mandatory requirements as stipulated under Regulation 34 (3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). The Report on Corporate Governance along with the Auditors’ Certificate on its compliance forms part of this Report and is annexed hereto. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board members and Senior Management Personnel also forms part of this Report. A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management’s Discussion and Analysis, also forms part of this Report. DIRECTORS & KEY MANAGERIAL PERSONNEL: In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Jukka Moisio, retires by rotation and being eligible, offers himself for re-appointment. Mr. Arunkumar Gandhi, Mr. Ramesh K. Dhir, Mr. S. K. Palekar and Mr. Nripjit Singh Chawla, were re-appointed as Non-Executive Independent Directors for a period of two years w.e.f. 31st March, 2015. Ms. Sukanya Kripalu was appointed as Additional Director (Non- Executive Independent) on 17th March, 2015 and was re-appointed at the Annual General Meeting held on 7th May, 2015 for a period of two years w.e.f. 7th May, 2015. Mr. P V Narayanan, Independent Director resigned from the Board w.e.f. 13th April, 2015. The Board places on record its appreciation for the guidance and support provided by Mr. Narayanan during his tenure as Director of the Company. Mr. A. Venkatrangan who was appointed as Managing Director – Designate was re-designated as Managing Director w.e.f 10th June, 2015. The Parent Company, Huhtavefa B V, has nominated Mr. Olli Koponen for the position of Director of the Company, in place of Mr. Shashank Sinha who resigned from the Board w.e.f. 4th November, 2015. Accordingly, the Board appointed Mr. Olli Koponen as an Additional Director on 17th December, 2015 to hold office upto the ensuing Annual General Meeting. The Company has received requisite notice from a member proposing the appointment of Mr. Olli Koponen as Director of the Company. Brief resume of the Directors seeking appointment /re-appointment, as stipulated under Regulation 36 of the Listing Regulations are given in the section on Corporate Governance, which forms part of this Annual Report. Mr. D V Iyer has been appointed as the Company Secretary and Compliance Offi cer of the Company w.e.f. 6th August, 2015, consequent to his appointment, Mr. Rohan Naik, stepped down from position of Acting Company Secretary. EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEE AND OF DIRECTORS: Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board of Directors has undertaken an evaluation of its own performance along with performance evaluation of Independent Directors, Executive Directors, Non-Executive Directors, Chairman, Committees of Board and Secretarial Department of the Company, based on various parameters such as: Board/ Committee structure and composition, Frequency of Board Meetings, monitoring effectiveness of companies governance practices, Execution & Performance of specific duties of the Board of Directors, review of compliance process on an ongoing basis, review of Board & its culture, review of boards competency, experience, contribution, etc. The feedback received from the Directors was discussed and reviewed by the Independent Directors at their separate meeting and performance of non-independent directors, performance of the Board as a whole and performance of the Chairman of the Company was evaluated. The policy of the Company on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Act, and Part D of Schedule II of the Listing Regulations, adopted by the Board is appended as Annexure 3 to the Directors’ Report. We affirm that the remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS: The Company organises visits to its/subsidiary company’s plants to familiarise the Independent Directors with the Company’s business, production process, operations & products of the Company. Presentations are made at the Board/Committees and separate meetings of the Board on Company’s strategy, business plan, operations, Company’s performance, markets, products, finance, budget & control process, risk management framework, global business environment and other relevant areas by the respective Business Heads of the Company/subsidiaries. The details about the Company’s Familiarisation Programme is uploaded on the Company’s website and is accessible at the web link: http://www.pplpack.com/assets/hppl_policy_for_familiarisation_programme.pdf . DECLARATION BY INDEPENDENT DIRECTORS: The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Listing Regulations. MEETINGS OF THE BOARD: During the year, fourteen meetings of the Board were held, the details of which are given in the report on Corporate Governance. RESPONSIBILITY STATEMENT: Pursuant to the provisions of Section 134 of the Companies Act 2013, your Directors state that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with no material departures; b. appropriate accounting policies have been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st December, 2015 and of the profit/loss of the Company for the year ended on that date; c. proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. annual accounts have been prepared on a going concern basis; e. proper internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f. proper systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively. COST AUDITORS: The Board has appointed M/s. R. Nanabhoy & Co., Cost Accountants as the Cost Auditors of the Company to conduct the Cost Audit for the Financial year 2015. Members approval is being sought for ratification of their remuneration as Cost Auditors of the Company for the Financial Year 2016. SECRETARIAL AUDITOR: The Board has appointed M/s. S.N. Ananthasubramanian & Co, Practicing Company Secretaries, to conduct Secretarial Audit for the Financial year 2015. Their Secretarial Audit Report in prescribed format is annexed to this Report as Annexure 4. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. PARTICULARS OF EMPLOYEES: Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure 5. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. Further, the report and the financial statements are being sent to the members excluding the aforesaid statement. Further, in terms of provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is open for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. Further the Annual Report including the aforesaid information is also available on the Company’s website. PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES: During the year, the Company had entered into material related party transaction with Huhtalux S.à r.l, in terms of Regulation 23 of the Listing Regulations, whereby the Company allotted 3850, Non-Convertible Debentures (NCD’s) of face value R10,00,000/- each, at face value aggregating to R385,00,00,000 (Rupees Three Hundred Eighty Five Crores). The said transaction was approved by the shareholders at the Extra-Ordinary General Meeting held on 29th December, 2014, by way of a Special resolution, and the related parties abstained from voting. All transactions with related parties were in the ordinary course of business and satisfied the test of arm’s length. The Company’s Policy on Related Party Transactions can be accessed on the Company’s website at the link http://www.pplpack.com/assets/hppl_policy_relpartytrans.pdf The details of related party transactions are set out in the prescribed Form AOC-2, appended as Annexure 6 to this Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: Particulars of loans, guarantees given, securities provided and investments covered under Section 186 of the Companies Act, 2013 are given in the notes to the standalone financial statements. CORPORATE SOCIAL RESPONSIBILITY: Your Company is committed to Corporate Social Responsibility (CSR) and strongly believes that the business objectives of the Company must be in congruence with the legitimate development needs of the society in which it operates. Pursuant to the provisions of the Section 135 of the Companies Act, 2013 (the Act), your Company has constituted a CSR Committee to monitor the CSR activities of the Company. The details relating to the CSR Committee are described in the Corporate Governance Report forming part of Annual Report. The CSR Policy of the Company may be accessed on the Company’s website at the link http://www.pplpack.com/assets/ hppl_policy_csr.pdf The report on CSR is provided at Annexure 7 to the Directors’ Report. EXTRACT OF ANNUAL RETURN: Extract of Annual Return of the Company in prescribed format is annexed herewith as Annexure 8 to this Report. RISK MANAGEMENT & INTERNAL FINANCIAL CONTROLS: The Company has in place mechanism to inform Board Members about the Risk Assessment and Minimization procedures which is periodically reviewed to ensure that risk is controlled by the Executive Management. Details in respect of adequacy of internal financial controls with reference to the Financial Statements are given in the Management’s Discussion and Analysis, which forms part of this Report. WHISTLE BLOWER POLICY: The Company has in place a Whistle Blower Policy with a view to provide a mechanism for its directors/employees to approach the Chairman of the Audit Committee, in case of any grievances or concern. The Whistle Blower Policy can be accessed on the Company’s website http://www.pplpack.com/assets/hppl_policy_whistleblower.pdf PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE: As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made thereunder, your Company has adopted a policy for prevention of sexual harassment at work place and has constituted an Internal Complaints Committee. During the year, the Company has not received any complaints on sexual harassment under the said Act. HUMAN RESOURCES (HR): The Company’s HR policies and procedures are designed to recruit and retain the best talent to support the operations of your Company and to align the interests of all employees with the long term organisational goals. OTHER DISCLOSURES/REPORTING: Your Directors state that no disclosure and/or reporting is required in respect of the following items as there were no transactions on these items during the year under review: • Issue of equity shares with differential rights as to dividend, voting or otherwise. • Issue of shares (including sweat equity shares) to employees of the Company under any scheme. • Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. • No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future. • There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report. • There have been no instances of fraud reported by Statutory Auditors under Section 143 of Companies Act, 2013 and rules framed thereunder either to the Company or to the Central Government. APPRECIATION & ACKNOWLEDGEMENTS: The Board wishes to place on record its gratitude for the assistance and co-operation received from Banks, Government Authorities, Customers, Vendors and finally to all its members for the trust and confidence reposed in the Company. The Board further wishes to record its sincere appreciation for the significant contributions made by employees at all levels for their competence, dedication and contribution towards the operations of the Company. By Order of the Board For Huhtamaki PPL Ltd. Suresh Gupta Chairman (DIN No.: 00235354) Place : Mumbai Date: 22nd March, 2016 |