DIRECTORS' REPORT DEAR MEMBERS, Your Directors have pleasure in presenting the 30th Annual Report on the business and operations of your Company together with the Audited Financial Statements for the year ended March 31, 2015. Dividend Your directors are pleased to recommend a dividend of Rs. 6/- per Equity Shares (i.e.60%) on 2,34,38,636 Equity Shares of Rs. 10/- each for the year ended March 31, 2015 aggregating to Rs. 168.75 millions including Corporate Dividend Tax of Rs. 28.12 millions as compared to Rs. 136.20 millions (including Corporate Dividend Tax of Rs. 19.01 millions) in the previous year. The proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company. The dividend would be payable to all Shareholders whose names appear in the Register of Members as on the Book Closure Date. Transfer to Reserves The company proposes to transfer Rs. 65.00 millions to the General Reserve out of amount available for appropriations and an amount of Rs. 2,527.76 millions is proposed to be retained in the Profit and Loss Account during the financial year 2014-15. Overview A significant improvement has been achieved by the company during the current Financial Year. The company has achieved many new landmarks, in terms of capacity utilization, sales volume and branding. The overall performance of Steel Tubes and Pipe Industry was adversely affected by falling steel prices globally. The overall economic conditions of the country, though improving, remains under strain and roadmap of development will take shape in the coming years, consequent to the successful implementation of government projects and other initiatives undertaken for growth. The company has achieved many new landmarks in this fiscal, in terms of capacity utilization, sales volume and branding. The strategy and steps taken by the Company in designing new products in steel tubes and pipes segment by innovative means has succeeded in a big way with the production and launch products like color coated pipes for the first time in India and window / door frames which have been designed and patented by the company will further boost the sales of the company as demand for these products is expected to grow significantly in rural and semi-urban areas of the country. The launch of color coated pipes is seen as a testimony to the company's strength and abilities in the Steel Tubes and Pipe segment. The company continues to focus on reducing cost of raw materials by procuring through imports, improving, efficiencies, reducing cost of borrowings, increasing penetration particularly in Tier II cities, developing new product sizes, finding new markets etc. We extended our geographical reach to the end users, strengthened our presence in Tier II and Tier III cities either via own warehouse cum branches or through dealer-distribution network. An additional warehouse-cum branch was opened at Chandigarh to cater to the burgeoning demand for our products, across various industrial applications, thereby, strengthening the APL Apollo brand. Due to the above measures being taken, the company managed to maintain its performance despite a hostile industry environment. The company has also increased its capacities by adding new mills and adopting latest technologies across all the plants. To create demands for its diversified products the Company is focussing on creating and spreading the Company's popular Brand APL Apollo across the targeted markets. With this the company expects to maintain the growth momentum and improve margins During the Financial Year 2014-15, the Company has recorded the highest ever volume, despite the adverse conditions across the globe. To maintain the market share, we have adopted a conscious strategy of keeping our margin at the lower end so that we do not lose our large customers. Credit Rating During the year, M/s ICRA Limited has upgraded the long-term rating from "[ICRA] A-" to "[ICRA] A" and has reaffirmed the short-term rating of "[ICRA] A1" to the Company. The outlook on the long-term rating is stable. Management's Discussion and Analysis Report Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. Consolidated Financial Statements The consolidated Financial Statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. The audited Consolidated Financial Statements and the Auditor's Report thereon form part of this annual report. Subsidiary Companies, Joint Ventures and Associates The Company has three wholly-owned subsidiaries namely, Shri Lakshmi Metal Udyog Limited, Lloyds Line Pipes Limited and Apollo Metalex Private Limited. A report on the performance and financial position of each of the subsidiaries and associates companies as per the Companies Act, 2013 is provided as Annexure "C" to the Consolidated Financial Statements and hence not repeated for the sake of brevity. Further, in order to take the benefit of economy of scale and reduce the administration expenses, the Board of Directors in its Meeting held on June 13, 2015 has also approved the Scheme of Amalgamation of Lloyds Line Pipes Limited (wholly owned subsidiary) with the Company. The above said amalgamation would enable consolidation and further expansion of the Company. This will contribute in furthering and fulfilling the objectives and business strategies of both the companies thereby accelerating growth, expansion and development of the business. The audited financial statement and related information of the subsidiaries, where applicable, will be available for inspection during regular business hours at the company's Registered Office at 37, Hargobind Enclave, Vikas Marg, Delhi-110 092 and the same are also available at our website i.e. www.aplapollo.com as prescribed in Section 136 of the Companies Act, 2013. Names of Companies which have become or ceased to be its subsidiaries, joint ventures or associate companiesduring the year During the financial year ended March 31, 2015 no entity became or ceased to be the subsidiary, joint venture or associate of the company. Deposits Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Accordingly, there are no unclaimed or unpaid deposits lying with the Company for the year under review. Details of significant and Material Orders passed by the Regulators, Courts and Tribunal No significant and material order has been passed by the Regulators, Courts and Tribunals impacting the going concern status and Company's operations in future. Change in the nature of business, if any There was no Change in the nature of business of the Company during the Financial Year ended March 31, 2015. 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 the report There are no material changes and commitments, affecting the financial position of the Company occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report other than those disclosed in the financial statements. Further, the Board of Directors in its Meeting held on June 13, 2015 approved the issue of Equity Shares to the Employees of the Company pursuant to APL Apollo Employee Stock Option Scheme-2015 up to 7,50,000 Equity Shares, subject to the approval of shareholders. The Employees Stock Option Scheme -2015 (ESOS-2015) was also approved by the shareholders vide a special resolution passed through Postal Ballot on July 27, 2015. Nomination and Remuneration Committee of the Company in its meeting held on July 28, 2015, has granted 7,24,000 Employees Stock Options under APL Apollo Employees Stock Option Scheme-2015. The following are the terms of Plan:- 1. Each Option will entitle the holder to 1 (one)Equity Share of the company, i.e. 7,24,000 Equity Shares in aggregate; 2. These option will vest in the eligible employees over a period of 1 2 months from the date of Grant: 3. Vesting is based on performance and employees continuity in the company; and 4. The options shall be exercisable within 5 years from the date of grant. Thereafter, the Board of Directors in its meeting held on July 28, 2015 has taken on record and approved the grant of 7,24,000 options under APL Apollo Employees Stock Options Scheme-2015. Directors' Responsibility Statement Pursuant to Section 134 (3) ( c ) of the Companies Act, 2013, the Directors to the best of their knowledge hereby state and confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures. (b) The directors had selected such accounting policies 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 at the end of the financial year and of the profit of the company for the period; (c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) The directors had prepared the annual accounts on a going concern basis; (e) The internal financial controls to be followed by the Company were laid down and such internal financial controls were adequate and were operating effectively; and (f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Corporate Governance Your Company upholds the standards of governance and is compliant with the Corporate Governance stipulated in Clause 49 of the Listing Agreement in both letter and spirit during the period under review. Your Company lays strong emphasis on transparency, disclosure and independent supervision to increase various stakeholders' value. The Company has complied with the Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges. A separate section on Corporate Governance, along with certificate from Statutory Auditors confirming compliance with the requirements of Clause 49 of the Listing Agreement with National Stock Exchange of India Limited and the BSE Limited (BSE), are annexed as Annexure "H" and forming part of the Annual Report. Particulars of Contracts and Arrangements with Related Parties Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of all contracts / arrangements / transactions entered into by the Company with related parties during the financial year are in the ordinary course of business and on arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on related party transactions and materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://aplapollo.com/pdf/rpt-policy>. pdf Your Directors draw attention of the members to Note 32 to the Financial Statement which sets out related party disclosures. The particulars of contracts and arrangements entered into by the company with related parties referred to in Section 188 in Form AOC-2 is attached herewith as Annexure-D Corporate Social Responsibility (CSR) In line with the provisions of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) policy for development of programmes and projects for the benefit of weaker sections of the society and the same has been approved by Corporate Social Responsibility Committee (CSR Committee) and the Board of Directors of the Company. The Corporate Social Responsibility (CSR) policy of the Company provides a road map for its CSR activities. The CSR Policy has been uploaded on the Company's website and may be accessed at the link: <http://aplapollo.com/pdf/csr-policy.pdf> The Annual Report on CSR activities is annexed herewith as Annexure "B". Risk Management Policy During the year, the Board of Directors, in its Meeting held on February 18, 2015, has also adopted a formal Risk Management Policy for the Company, whereby, risks are broadly categorized into Strategic, Operational, Compliance, and Financial & Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business objectives. The Risk Management Policy has been uploaded on the Company's website and may be accessed at the link: <http://aplapollo.com/pdf/rmp.pdf> Details in respect of adequacy of Internal Financial Controls with reference to the Financial Statements. The Company has a robust and comprehensive Internal Financial Control System commensurate with the size, scale and complexity of its operations. The objective of these procedures is to ensure efficient use and protection of the Company's resources, accuracy in financial reporting and due compliance of statues and corporate policies and procedures. The system encompasses the major processes to ensure reliability of financial reporting, compliance with the policies, procedures, laws and regulations safeguarding assets and economical and efficient use of resources. The policies and procedures adopted by the company ensure the orderly and efficient conduct of its business and adherence to the company's policies, prevention and detection of frauds and errors, accuracy and completeness of the records and timely preparation of reliable financial information. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the Chairman and Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. Directors and Key Managerial Personnel In accordance with the provisions of Section 1 52 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Sameer Gupta retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for reappointment. The Board in its Meeting held on March 24, 2015 by circular resolution, appointed Ms. Neeru Abrol, as an Additional Director and Independent Women Director on the Board, she holds office up to the date of this AGM. The requirement under Section 149 of the Companies Act, 2013 read with Rule 3 of Companies (Appointment of Directors) Rules, 2014 and Clause 49 of the Listing Agreement also stands complied with this appointment. The Company has received a Notice in writing under the provisions of Section 160 of the Companies Act, 2013, proposing her candidature for the office of the Director. The Company has received consent in writing to act as Director in Form DIR-2 and intimation in Form DIR-8 to the effect that she is not disqualified under Section 164 (2) to act as Director. The company has also received declaration from her that she meets the criteria of independence as prescribed under Section of 149 (6) of the Companies Act, 2013. In the opinion of the Board, she fulfills the condition for appointment as Independent Director on the Board. She is eligible to be appointed as Director of the Company and her appointment requires the approval of the members at the ensuing Annual General Meeting. Mr. Aniq Husain has resigned from directorship of the company w.e.f. May 9, 2015. Your Directors place on record their deep appreciation of valuable services rendered by Mr. Aniq Husain during his tenure as Director of the Company. Further, in Compliance with requirements of Section 203 of the Companies Act 2013 Mr. Deepak Goyal was appointed as Chief Financial Officer of the company with effect from February 18, 2015. The details of directors being recommended for appointment / re-appointment as required in clause 49 of the Listing Agreement are contained in the Notice convening the ensuing Annual General Meeting of the Company. Appropriate resolution(s) seeking your approval to the appointment / re-appointment of Directors are also included in the Notice. Declaration by Independent Director(s) All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149 (6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, the Directors individually as well as the evaluation of the working of various Committees. The Independent Directors also carried out the evaluation of the Chairman and the Non-Independent Directors, the details of which covered in the Corporate Governance Report. Criteria for Evaluation of Directors For the purpose of proper evaluation, the Directors of the Company have been divided in 3 (three) categories i.e. Independent, Non-Independent and Non-Executive and Executive. The criteria for evaluation includes factors such as engagement, strategic planning and vision, team spirit and consensus building, effective leadership, domain knowledge, management qualities, team work abilities, result/achievements, understanding and awareness, motivation/ commitment/ diligence, integrity/ ethics/ value and openness/ receptivity. Number of meetings of the Board of Directors A calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 201415, the Board of Directors of the Company met 5 (Five) times on 30th May 2014, 4th August 2014, 12th November 2014, 4 February 2015 and 18 February 2015. During the Financial Year 2014-15, Meeting of the Audit th th Committee were held on 30 May 2014, 4 August 2014, 12 November 2014, 4 February 2015 and 18th February, 2015. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Audit Committee The Audit Committee comprises three Directors, of which two are Non-Executive and Independent Directors. The Chairman of the committee is a Non-Executive Independent Director. The composition of the Audit Committee as on March 31, 2015 is as under: Nomination and Remuneration Policy of Directors, Key Managerial Personnel and other Employees In adherence of Section 178(1) of the Companies Act, 2013, the Board of Directors of the Company in its Meeting held on February 18, 2015, approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in Section 178 (3) of the Companies Act, 2013, based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are- Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Key Managerial Personnel (other than Managing / Whole Time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees. Nomination and Remuneration Policy has been uploaded on the company's website and may be accessed at the link: <http://aplapollo.com/pdf/nomination->policy. pdf The Company's Policy relating to appointment of Directors, payment of Managerial Remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178 (3) of the Companies Act, 2013 is furnished and forms part of this Report. Details of establishment of Vigil Mechanism for Directors and Employees In compliance with the provisions of Section 177 (9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has framed a Vigil Mechanism / Whistle Blower Policy to deal with unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. A high level Committee under the chairmanship of Mr. Anil Kumar Bansal has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board. The Vigil Mechanism / Whistle Blower Policy have also been uploaded on the website of the Company and may be accessed at the link: <http://aplapollo.com/pdf/whistle->blowing-policy.pdf Auditors and Auditors' Report A. Statutory Auditors - Audit Committee of the Company in its meeting held on July 29, 2015 has recommended the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Gurgaon as the Statutory Auditors of the Company in place of M/s VAPS & Co., Chartered accountants, whose term expires at the conclusion of the ensuing Annual General Meeting and they have expressed their unwillingness for re-appointment. Thereafter, the Board of Directors have also ratified the decision of the Audit Committee subject to approval of shareholders in the ensuing Annual General Meeting. M/s. Deloitte Haskins & Sells LLP, Chartered Accountants eligible to hold the office from the conclusion of this Annual General Meeting (AGM) until the conclusion of the Thirty Fifth AGM of the Company to be held in the year 2020 (subject to ratification of their appointment at every AGM), to examine and audit the accounts of the Company. The certificate to the effect that if appointed would be within the prescribed limit under Section 141 of the Companies Act, 2013 has been obtained from them. The observations of Statutory Auditors in their reports on standalone and consolidated financials are self-explanatory and therefore, do not call for any further comments under Section 134 of the Companies Act, 2013. B. Cost Auditors - Pursuant to the provisions of Section 148 of the Companies Act, 2013 and Rules made there under, the board of directors on the recommendation of the Audit Committee appointed M/s. R. J. Goel & Co., Cost Accountants, (Registration No.000026) as the Cost Auditor of the Company for the year ended March 31, 2015. The appointment and remuneration proposed to be paid to the Cost Auditor requires ratification of the shareholders of the Company. In view of this, your ratification for appointment and payment of remuneration to the Cost Auditor is being sought at the ensuing Annual General Meeting. The Cost Auditor has confirmed that their appointment is within the limits of the Section 139 of the Companies Act, 2013 and has certified that their firm is free from any disqualification specified under Section 148 (5) and all other applicable provisions of Companies Act, 2013.In terms of the requirements of the Companies (Cost Accounting Records) Rules, 2011. The Cost Audit Report for the year ended on March 31, 2015, shall be submitted within the time stipulated in the aforesaid rules. C. Secretarial Auditors - Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board had appointed M/s Anjali Yadav & Associates, Company Secretaries, to conduct Secretarial Audit for the Financial Year 2014-15. The Secretarial Audit Report for the Financial Year ended March 31, 2015 is annexed herewith marked as Annexure "E" to this Report. The Secretarial Audit Report is self-explanatory and therefore, do not call for any further comments. Particulars of Loans, Guarantees or Investments under section 186 The company has given Loans, corporate guarantee or investments to its wholly owned 100% subsidiaries under Section 186 of the Companies Act, 2013 during the financial year 2014-15 which are given under the respective head and the same is furnished in the notes to the financial statements. Share Capital The paid up equity capital as on March 31, 2015 was Rs. 234,386,360. The company has not issued shares with differential voting rights nor granted stock options nor sweat equity or bonus shares. Extract of the Annual Return The details forming part of the extract of the Annual Return in Form no. MGT-9 as required under Section 92 of the Companies Act, 2013 is annexed hereto as Annexure-"A" and forms part of the Director's Report. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3) (m) of Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 2014, is annexed hereto as Annexure "G", forming part of this Report. Particulars of Employees and related disclosures Details pursuant to Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Annual Report and annexed herewith as Annexure "F". Disclosure as per Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. No complaint has been received for sexual harassment of women at work place by the Company during the financial year 2014-15 Transfer to Investor Education and Protection Fund Pursuant to the provisions of Section 125 (2) ( c ) of the Companies Act, 2013, your company has transferred Rs. 76,639/- during the financial year 2014-15 to the Investor Education and Protection Fund. This amount lying in the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 which was lying unclaimed/ unpaid with the Company for a period of seven years after declaration of Dividend for the financial year ended 2006-07. Acknowledgements The Board places on record its appreciation for the continued co-operation and support extended to the Company by customers, vendors, bankers, rating agencies, stock exchanges, depositories, auditors, legal advisors, consultants business associates, state government, local bodies and all the employees with whose help, cooperation and hard work the Company is able to achieve the results. for and on behalf of the Board Sanjay Gupta Chairman Ashok K. Gupta Managing Director Vinay Gupta Director place : Delh Dated : 29th July, 2015 Regd. Office : 37, Hargobind Enclave, Vikas Marg, Delhi - 1 10092 |