Mar 31, 2023
It gives me great pleasure to share with you the performance of your Company along with audited accounts for the financial year ended March 31, 2023. In compliance with the applicable provisions of Companies Act, 2013, ("the Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year from April 1, 2022 to March 31, 2023.
During the year under review, the demand environment continued to remain challenging with the FMCG sector impacted by an unprecedented inflation leading to rural slowdown, liquidity pressure and subdued consumer sentiment.
The year also witnessed significant corrections in two categories - pain management and Healthcare - that enjoyed a high revenue base during the pandemic year. This, along with high input costs and favourable portfolio mix last year impacted margins.
Further, a warmer winter season impacted the sales of winter portfolio in Q3FY23 and unseasonal rains across the country impacted the loading of summer products in Q4FY23. In the given macroeconomic environment, the Company posted Revenues of Rs. 3,406 cr. which was 7% higher than the previous year.
Most of the Company''s major brands increased their household penetration levels during the year under review. Sustained interventions and marketing efforts ensured that they further cemented their leadership positions in their respective categories. Major brands like Navratna grew by 6%, Male Grooming range grew by 4%, 7 Oils in One grew by 10% and BoroPlus and Kesh King grew by 1% respectively.
Pain Management range and Healthcare range, being COVID contextual categories witnessed corrections during the year, however on a 4 year CAGR basis, Pain Management range grew by 6% and Healthcare range grew by 8%.
During the year under review, the newly acquired brand Dermicool was integrated from April 1,2022 and Helios Lifestyle which operates under the brand "The Man Company" became the Company''s subsidiary with effect from July 1,2022
Further, the Company launched more than 20 products in FY23, with a majority being digital first launches on its D2C portal Zanducare.
The Company''s Modern Trade and E-Commerce channels continued to grow strongly during the year. While Modern Trade grew by 37%, it increased its contribution to domestic business by 220 bps to 9.3%. E-Commerce sales also increased by 82% increasing its contribution to domestic business by 400 bps to 9.3%.
Over the past 2 years, the Company embarked on a journey under "Project KHOJ" to double its rural coverage adding ~ 20,000 rural towns & villages, taking its overall footprint to 52,000 such rural villages. In FY24, the Company plans to add further 8,000 villages to reach its target of 60,000 villages. This rural expansion is getting digitized and geocoded at the same time giving the organization a wealth of rural retail level behaviour and buying patterns to ensure higher service levels.
The Company''s International business continued its stellar performance growing by 20% in FY23 despite of high inflation and several key markets facing challenges like currency depreciation in Bangladesh, economic crisis in Sri Lanka, forex & liquidity crisis in Nepal and ongoing political conflict in CIS countries etc. This was made possible only on account of strong brand building activities across key geographies.
During the financial year, Gross Margins at 64.7% declined by 160 bps on account of higher input costs and favourable portfolio mix in the base year. EBIDTA margins excluding strategic investments at 26.7% are close to pre-COVID levels and including strategic investments, they stand at 25.2%. PAT before MAT credit entitlement of earlier years at Rs. 627 Cr grew by 4% over previous year and by 20% on a 4 year CAGR basis.
Financial results |
(Rs. lacs) |
|||
Particulars |
Standalone |
Consolidated |
||
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|
Operating income |
2,90,683 |
2,86,687 |
3,40,573 |
3,19,203 |
Profit before interest, depreciation and taxation |
82,544 |
1,02,012 |
93,168 |
1,04,762 |
Interest |
373 |
345 |
739 |
507 |
Depreciation and amortisation |
21,538 |
32,761 |
24,725 |
33,478 |
Profit Before Tax and Exceptional Items |
60,633 |
68,906 |
67,704 |
70,777 |
Exceptional Items |
- |
- |
- |
518 |
Profit before taxation |
60,633 |
68,906 |
67,704 |
70,259 |
Less: Provision for taxation |
||||
- Current tax |
11,077 |
12,209 |
12,678 |
13,539 |
- Deferred tax ( net ) |
760 |
438 |
90 |
404 |
-MAT credit entitlement |
(8,554) |
(28,809) |
(8,554) |
(28,809) |
Profit after taxation |
57,350 |
85,068 |
63,490 |
85,125 |
Non-controlling interest |
- |
- |
(1216) |
(232) |
Profit after minority interest |
57,350 |
85,068 |
64,706 |
85,357 |
Share of profit/(loss) of associate |
- |
- |
(750) |
(1,458) |
Profit for the year |
57,350 |
85,068 |
63,956 |
83,899 |
Balance brought forward |
1,16,684 |
67,182 |
1,15,830 |
67,646 |
Profit available for appropriation |
1,74,034 |
1,52,250 |
1,79,786 |
1,51,545 |
Appropriation |
||||
Effects of adoption of new accounting standard , i.e, Ind AS 115 |
- |
- |
||
Interim dividend |
35,292 |
35,561 |
35,292 |
35,561 |
Corporate dividend tax |
- |
- |
||
Re-measurement of net defined benefit plans (net of tax) |
72 |
5 |
-29 |
154 |
Acquisition of Non-controlling interests |
- |
- |
515 |
- |
Balance carried forward |
1,38,670 |
1,16,684 |
1,44,008 |
1,15,830 |
Total |
1,74,034 |
1,52,250 |
1,79,786 |
1,51,545 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the Company during the financial year 2022-2023.
During the year under review, the Company has paid two Interim Dividends aggregating to Rs. 8/-per share of Re. 1/- each. The two interim dividends so paid will be placed for confirmation by the members at the ensuing AGM. The total dividend outgo for the financial year ended March 31, 2023 amounted to Rs. 35,292 lacs and dividend pay-out ratio works out to 55.17%. The dividend pay-out is in accordance with the Company''s Dividend Distribution Policy. The Policy is available on the Company''s website www.emamiltd.in.
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
The Board of Directors at its Meeting held on March 24, 2023 approved the Buyback of equity shares from its shareholders/beneficial owners (other than those who are promoters, members of the promoter group or persons in control), from the open market through stock exchange mechanism for an aggregate amount not exceeding INR 18,600
lacs (Rupees Eighteen Thousand Six Hundred Lakh Only) which represented 9.94% and 9.99% of the aggregate of the total paid-up capital and free reserves of the Company based on the audited standalone and consolidated financial statements of the Company respectively as at March 31, 2022.
The Buyback process commenced on April 13,2023 and would tentatively close on July 19, 2023. The Company has bought back 17,26,508 equity shares till May 24, 2023 pursuant to the buyback offer by utilizing a sum of Rs. 65,59,44,574 (Rupees Sixty-Five Crores Fifty-Nine Lakhs Forty-Four Thousand Five Hundred and Seventy-Four Only) which represents 35.26% of the Maximum Buyback Size. The Company has completed the process of extinguishment of 7,41,881 Equity Shares bought back under the Buyback Process so far.
7. Share Capital
As on March 31, 2023 the authorised share capital of the company is 50,00,00,000 equity shares of Re. 1 each and the issued, subscribed and fully paid-up share capital of the company is 44,11,50,000 equity shares of Re. 1 each. There has been no change in the Capital during the year.
8. Internal control systems and their adequacy
Your Company has in place an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Company''s in-house internal audit department alongwith other audit firms carries out internal audits at all manufacturing locations, offices and sales depots across the country and overseas. The objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and corporate policies.
Your Company''s internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000:2018 certifications, respectively.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time.
Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
9. Subsidiary companies, joint ventures and associate companies
Subsidiary companies
Pursuant to Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the report on performance and financial position of subsidiaries is included in the Consolidated Financial Statements of the Company. The Company has a policy for determining the materiality of a subsidiary, which is available at www.emamiltd.in/investor-info/pdf/Policy-for-Determining-Materiality-of subsidiaries.pdf. As of March 31, 2023, your Company had the following subsidiary companies:
i) Emami Bangladesh Ltd., Bangladesh, wholly-owned subsidiary of Emami Limited;
ii) Emami Lanka (Pvt.) Ltd., Sri Lanka., wholly-owned subsidiary of Emami Limited;
iii) Emami International FZE, UAE, wholly-owned subsidiary of Emami Limited;
iv) Creme 21, GmbH, wholly-owned subsidiary of Emami International FZE;
v) Emami International Personal Care Trading LLC- Dubai, a wholly-owned subsidiary of Emami international FZE;
vi) Emami Rus (LLC), Russia, a 99.99% subsidiary of Emami International FZE;
vii) Emami Overseas FZE, UAE., wholly-owned subsidiary of Emami International FZE;
viii) Pharma Derm SAE Co, Egypt, a 90.60% subsidiary of Emami Overseas FZE;
ix) Brillare Science Pvt. Ltd., an 82.92% subsidiary of Emami Ltd;
x) Helios Lifestyle Private Limited, a 50.40% subsidiary of Emami Limited.
In compliance with IND - AS -110, your Company has prepared its consolidated financial statements, which forms part of this Annual Report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a separate statement containing the salient features of the
subsidiary companies in the prescribed form (AOC-1) is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www. emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financial and operational details of the subsidiary companies are provided hereunder:
Emami Bangladesh Ltd., Bangladesh
Emami Bangladesh Ltd., was incorporated on November 25, 2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its unit in Dhaka. During the financial year ended March 31, 2023, the Company clocked revenues worth Rs. 17,824 lacs (previous year Rs. 15,501 lacs) and profit after tax of Rs. 3,875 lacs (previous year Rs. 2,597 lacs).
Emami Lanka (Pvt) Ltd., Sri Lanka
Emami Lanka (Pvt) Ltd., Sri Lanka was incorporated on June 27, 2017, with an objective of tapping the potential of the local market. It started manufacturing locally through a contract manufacturer. During the financial year 2021-2022 name of the Company had been changed from Emami Indo Lanka (Pvt) Ltd. to Emami Lanka (Pvt) Ltd.
During the period ended March 31, 2023, the Company earned revenues of Rs. 852 lacs (previous year Rs. 1,785 lacs) and Profit/(loss) after tax of Rs. (53) Lacs {previous year Rs. (174) lacs}.
Emami International FZE
Emami International FZE, was incorporated on November 12, 2005 in the Hamriyah Free Zone, Sharjah, UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31, 2023, the Company clocked revenues worth Rs. 23,479 lacs (previous year Rs. 21,450 lacs) and profit/loss after tax of Rs. 1,465 lacs (previous year Rs. 1,079 lacs).
Creme 21, GmbH (Formerly Known as Fentus 113. GmbH)
Fentus 113 GmbH. Germany, was incorporated on January 3, 2019. It is engaged in the business of manufacturing skin care products.
During the period ended March 31, 2023, the Company earned revenues of Rs 80 lacs [previous year Rs. 985 lacs] and Profit after tax of Rs. (17) Lacs [previous year Rs. (1) lacs].
Emami International Personal Care Trading LLC- UAE
Emami International Personal Care Trading LLC-UAE, was incorporated on January 28, 2022. It has become the Wholly Owned Subsidiary of Emami international FZE w.e.f. February 15, 2022. It is enaged in the trading business of FMCG products.
During the period ended March 31, 2023, the Company earned revenues of Rs. 3,588 lacs (previous year Rs. Nil) and Profit/(loss) after tax of Rs. (677) Lacs [previous year Rs. (4) lacs].
Emami (RUS) LLC
Emami (RUS) LLC was incorporated on August 14, 2018 with an objective of trading of Perfumery products, Cosmetics and Pharma products.
During the period ended March 31, 2023, the Company earned revenues of Rs. 6,254 lacs [previous year Rs. 3,415 lacs] and Profit/(loss) after tax of Rs. 699 lacs [previous year Rs. (758) Lacs ]
Emami Overseas FZE
Emami Overseas FZE was incorporated on November 25, 2010. It is the holding company of Pharma Derm S. A. E. Co. in Egypt.
During the financial year ended March 31, 2023, the Company recorded nil revenues and Pro fit/(loss) after tax of Rs. (2) lacs [previous year profit of Rs. (8) lac].
Pharma Derm S. A. E. Co.
Pharma Derm S. A. E. Co. was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was acquired to manufacture pharmaceuticals, disinfectants, cosmetics, chemicals, among others as a subsidiary of Emami Overseas FZE in FY 2010-11. The Company has not yet commenced operations.
During the financial year ended March 31, 2023, the Company recorded nil revenues (previous year Rs. NIL) and profit/ (loss) after tax of Rs. (836) lacs [previous year Rs. (225) lacs].
Brillare Science Private Limited
Brillare Science Private Limited has become a subsidiary of Emami Limited w.e.f. October 1, 2021.
It is engaged in the manufacturing of professional salon products and during the financial year ended
March 31, 2023, the Company earned revenues worth Rs. 1,958 lacs (previous year Rs. 1,772 lac) and Profit/(loss) after tax of Rs. (1,133) Lacs [previous year Rs. (495) lacs].
Helios Lifestyle Private Limited
Helios Lifestyle Private Limited has become a subsidiary of Emami Limited w.e.f 1st July, 2022.
It is engaged in online male grooming sector and during the financial year ended March 31, 2023, earned revenues worth Rs. 11,500 lacs (previous year Rs. 8,278 lacs) and a profit/(loss) after tax of Rs. (2,204) lacs {previous year Rs. (2,701) lacs}.
Associate companies
Tru Native F&B Pvt Ltd.
The Company made strategic investment in Tru Native F&B Pvt Ltd on March 5, 2022. The current strategic investment in Tru Native F & B Pvt. Ltd., is equivalent to 20.65% of its paid up capital on fully diluted basis. Tru Native is a smart nutrition company dedicated to empowering health and fitness enthusiasts with affordable and healthy food & nutrition options.
During the financial year ended March 31, 2023, the Company earned revenues worth Rs 324 lacs (Previous year Rs. 62 lacs) and a profit/(loss) after tax of Rs. (421) lacs (previous year Rs. (117) lacs).
Cannis Lupus Services India Pvt Ltd.
The Company has made strategic investment in Cannis Lupus Services India Pvt Ltd on 21st July, 2022. The current strategic investment in Cannis Lupus Services India Pvt. Ltd. is equivalent to 30% of its paid up capital on fully diluted basis. Cannis Lupus is a pet-care start- up offering Ayurvedic / herbal remedies for pets under the brand "Fur Ball Story".
During the financial year ended March 31, 2023, the Company earned revenues worth Rs 46 lacs (Previous year Rs, 22 lacs) and a profit/(loss) after tax of Rs. (123) lacs (previous year Rs. 5 lacs).
The Company has not accepted any public deposits covered under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
11. Non-convertible debentures
The Company did not issue any non-convertible debentures during the financial year 2022-23.
12. Consolidated financial statements
The consolidated financial statements, prepared in accordance with (Ind AS 110) consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31, 2023, stood at Rs. 2,30,280 lacs as against Rs. 2,07,659 lacs at the end of the previous year.
13. Compliance with Secretarial Standards of ICSI
The Ministry of Corporate Affairs has mandated SS-1 and SS-2 with respect to board meetings and general meetings respectively. The Company has ensured compliance with the same.
14. Transfer of Unclaimed Dividend and Unclaimed shares
The details relating to unclaimed dividend and unclaimed shares forms part of the Corporate Governance Report forming part of this report.
15. Auditors and Auditors'' Reports Statutory auditor
Your Company''s Statutory Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (FRN :301003E/E300005), were re-appointed as the Statutory Auditors of the Company for a second term of consecutive five years from the conclusion of 39th Annual General meeting till the conclusion of 44th Annual General Meeting.
The Auditor''s report on the standalone & consolidated financial statement of the Company for the financial year ended on March 31, 2023 does not contain any qualification, reservation or adverse remark or disclaimer.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s MKB & Associates, Practicing Company Secretaries (FRN: P2010WB042700) as its secretarial auditor to undertake the Secretarial Audit for FY 2022-2023.
The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualifications, reservations or adverse remarks. Furthermore, the Secretarial Auditor M/s MKB & Associates, Practicing Company Secretaries,
have also certified the compliance as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same has been intimated to the stock exchanges within the stipulated time.
Cost Auditor
The Company''s Cost Auditors, M/s. V.K. Jain & Co. (FRN: 00049), were appointed by the Board of Directors at its meeting held on May 13, 2022 to audit the cost accounting records, as may be applicable to the Company for FY 2022-23 and their remuneration was approved during the previous Annual General Meeting.
As per the requirements of section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost accounts and records in respect of the applicable products for the year ended March 31, 2023.
M/s V. K. Jain & Co has been re-appointed as cost auditors for FY 2023-24 by the Board of Directors in its meeting held on May 25, 2023 and the remuneration payable to the cost auditors is required to be placed before the members in the ensuing Annual General Meeting for their ratification. M/s V. K. Jain & Co. have given their consent to act as Cost Auditors and confirmed that their appointment is within the limits of the section 139 of the Companies Act, 2013.
Accordingly, a resolution seeking members'' ratification for the remuneration payable to the Cost Auditor is included in the notice convening the Annual General Meeting. The Board recommends the same for approval by members at the ensuing Annual General Meeting.
Pursuant to Companies (Cost Records and Audit) Rules, 2014, the Cost Audit Report for the financial year March 31, 2022 was filed with the Ministry of Corporate Affairs within prescribed time.
16. Conservation of energy, technology and exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II).
In terms of Section 92(3) the Companies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014, a copy of the Annual Return of the Company for the financial year ended on March 31, 2023 is available on the website of the Company at the link http://www.emamiltd.in/ investor-info/index.php#Compliance
18. Corporate Social Responsibility
Corporate social responsibility forms an integral part of your Company''s business activities. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy, which is available at: http:// www.emamiitd.in/holisticlivina/pdf/CorporateSocial Responsibility Policy of EmamiLtd.pdf
The Report on CSR expenditures during the FY 202223 is annexed herewith and forms part of this report (Annexure III).
The Company spent Rs. 1059.20 lacs on CSR activities during the year against obligation of Rs. 1023.93 lacs including Rs. 40 lacs which has been deposited into separate bank account towards its on-going project. Also, there is an excess spent of Rs. 7.07 lacs during the year under review which is available for set off in the succeeding Financial Year.
19. Directors and Key Managerial Personnel
In accordance with provisions of Section 152 of the Companies Act 2013 read with Rules made thereunder, Shri Sushil Kumar Goenka (DIN: 00149916), Shri Harsha Vardhan Agarwal (DIN: 00150089) and Shri Aditya Vardhan Agarwal (DIN: 00149717) are liable to retire by rotation at the 40th Annual General Meeting and being eligible, offer themselves for re-appointment.
The first term of appointment of Smt. Mamta Binani & Shri Debabrata Sarkar as Independent Directors of the Company will also be completed on October 28, 2023 and on February 20, 2024 respectively. Considering their skills, expertise and contribution and based on the recommendation of the Nomination and Remuneration Committee, the Board has proposed their re-appointment for a second term of five consecutive years commencing from October 29, 2023 and February 21, 2024 respectively based on the approval of the Shareholders by way of Special Resolution at the ensuing Annual General Meeting.
The above proposed re-appointment of Independent Directors is as per the Board Diversity Policy of the Company.
Pursuant to section 149 of the Companies Act, 2013 (as amended) and Regulation 25(8) of SEBI Listing Regulations, 2015 the Company has received declarations from all the Independent Directors that they have met the criteria of Independence.
None of the Directors of the Company is disqualified for being appointed/re-appointed as Director, as specified under section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be reappointed is provided in the Notice of the Annual General Meeting forming part of the Annual report.
The existing Company Secretary, Shri A.K. Joshi''s term is going to complete at the end of closing hours of May 31, 2023 (on his retirement). Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors has appointed Shri Sandeep Kumar Sultania as Company Secretary & Compliance Officer of the Company with effect from June 01, 2023.
20. Business Responsibility and Sustainability Report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility and Sustainability Report of the Company for the financial year ended March 31, 2023 is attached as part of the Annual Report.
21. Dividend Distribution Policy
The Company has formulated a Dividend Distribution Policy, which has been displayed on the website of the Company, http://www.emamiltd.in/ investor-info/pdf /Dividend Distribution Policy Emamiltd.pdf.
22. Board induction, training and familiarisation programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends him/her a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The role, functions, and responsibilities of the Director are also explained in detail and informed about the various compliances required from him/ her as a Director under the various provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and financials of the Company. They are also provided presentations
about the business and operations of the Company from time to time.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarisation programme for the Independent Directors can be accessed at: http : //www. emamiltd. in/investorinfo/ pdf/EmamiLtdFamiliarisationProgramme ForIndependentDirectors.pdf
23. Performance evaluation
Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made thereunder, Regulation 17(10) of the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy.
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as a whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per the criteria laid down by the Nomination & Remuneration Committee.
24. Number of meetings of the Board
The Board of Directors held five meetings during the year on May 13, 2022, July 29, 2022, November 11,2022, February 3, 2023 and March 24, 2023. The maximum gap between any two meetings was less than 120 days, as stipulated under SEBI''s Listing Regulations, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
25. Committees of the Board
The Company has constituted/reconstituted various Board-level committees in accordance with the requirements of the Companies Act, 2013 and SEBI Listing Regulations, 2015. The Board has the following committees as under:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management committee
IX. Shares Buy-back Committee
Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this Report.
26. Separate meeting of Independent Directors
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this Report.
The Company has established an effective Whistleblower policy (Vigil mechanism) and procedures for its Directors and employees. The details of the same are provided in the Corporate Governance Report, which forms part of the Annual Report. The vigil mechanism of the Company provides for adequate safeguards against victimization of Directors, employees and third parties who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.
The policy on vigil mechanism may be accessed on the Company''s website at: http://www.emamiltd.in/ investor-info/pdf/WhistleBlowerPolicyEmami.pdf.
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and Board levels. The remuneration policy seeks to employ people who not only fulfill the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy seeks to provide well-balanced and performance-related compensation packages, taking into account industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the ''pay-for-performance'' principle.
The Company''s policy on remuneration and appointment of Board members as mentioned in
the Remuneration Policy have been disclosed on the Company''s website: http://www.emamiltd.in/ investor-info/index.php#Compliance
29. Related party transactions
All related party transactions entered into by the Company during the financial year were conducted in the normal course of business on an arm''s length basis. No material contracts or arrangements with related parties were entered into during the year under review.
Accordingly, disclosure of Related Party Transaction as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in form AOC-2 is not applicable.
During the year, the Audit Committee had granted an omnibus approval for transactions, which were repetitive in nature for one financial year. All such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
Your Company''s policy for transactions with the related party which was reviewed by the Audit Committee and approved by the Board, can be accessed at: http://www.emamiltd.in/investor-info/ pdf/PolicyforTransactionswithRelatedParties.pdf.
30. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act, 2013 are given in the notes to financial statements. The Company has granted loans, provided guarantee and made investment in its wholly owned subsidiary(ies) / associate(s) and other body corporate for their business purpose. The Company also holds securities of other body corporates as strategic investor.
31. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this Report. (Annexure IV)
32. Management discussion and analysis and Corporate Governance Report
As per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Company''s auditors confirming compliance of conditions of Corporate Governance are an integral part of this Report.
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. The system also complies with the requirements laid down under the ISO 31000: 2018 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.
34. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
As per the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), your Company has established a policy to prevent sexual harassment of its women employees. The policy allows every employee to freely report any such act with the assurance of prompt action to be taken thereon. The policy lays down severe punishment for any such act. The Company has complied with provisions relating to the constitution of internal complaints committee under POSH. During the year under review, the company has received one complaint under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 and it has been resolved. There is no pending case at any of the business places of the Company.
Several initiatives were undertaken during the year to demonstrate the Company''s zero tolerance
philosophy against discrimination and sexual harassment including awareness programme, which included creation and dissemination of comprehensive and easy-to-understand training and communication material.
35. Details of significant and material orders passed by regulators/courts/ tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
During the year under review, the Company filed an application before the Hon''ble National Company Law Tribunal, Mumbai Bench (NCLT) to initiate corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (Code) against Future Retail Limited, C.P (IB) No. 638 of 2022 for recovery of dues which is pending as on 31st March, 2023. Further, there are no instances of one-time settlement with any Bank or Financial Institutions.
37. Directors'' Responsibility Statement
Pursuant to the requirements laid down under Section 134(5) of the Companies Act, 2013, with respect to the Directors'' Responsibility Statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards have been followed and no material departures have been made;
II. The Directors have 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 as on March 31, 2023, and of the profit of the Company for the year ended on that date;
III. The Directors have taken 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;
IV. The annual accounts were prepared on a going concern basis;
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the Company and ensured that such internal financial controls were adequate and operating effectively;
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and that the same are adequate and operating effectively
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the unstinted support received from them during
the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
For and on behalf of the Board R.S. Goenka
Place: Kolkata Chairman
Date: May 25, 2023 (DIN - 00152880)
Mar 31, 2022
It gives me great pleasure to share with you the performance of your Company along with audited accounts for the financial year ended March 31, 2022. In compliance with the applicable provisions of the Companies Act, 2013. ("the Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year from April 1,2021 to March 31,2022
In FY22, the Company posted Revenues of H3192 cr. which was 10.8% higher than the previous year. The Company delivered EBIDTA of H952 cr. and Profit after tax of H837 cr which was higher by 84% over the previous year, adjusted profit after tax instead of cash profit at H854 cr also grew by 18% over previous year.
The Company''s domestic business grew by 11% over previous year despite challenges like the pandemic, high cost of raw materials, loss of jobs, sluggish rural demand, and reduction in discretionary spending etc. affecting business across the
sector. Major brands like Pain Management Range grew by 18%, Kesh King grew by 11%, Healthcare range grew by 9%, Male Grooming grew by 16% and 7 Oils in One grew by 29%. During the year Boro Plus grew by just 5% due to high incidence of hygiene sales in previous year and Navratna grew by just 5% on account of loss of sales during peak season in the midst of the 2nd wave of the pandemic.
The Company''s international business grew by 5% despite geopolitical challenges and high base of hygiene range in the previous year. Growth in the International business was led by key geographies like Bangladesh & Sri Lanka in SAARC. The Company''s Institutional business also grew by 26% over previous year.
In March 2022, the Company acquired "Dermicool", one of the leading brands in Prickly Heat and Cool Talc Segment from Reckitt Benckiser Healthcare India Pvt Ltd for a total consideration of H432 crore excluding taxes & duties. With this acquisition, the Company will become leader in this niche category which would also help realise synergetic benefits and optimize costs.
(H lacs) |
||||
Particulars |
Standalone |
Consolidated |
||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Operating income |
2,86,687 |
2,58,228 |
3,19,203 |
2,88,053 |
Profit before interest, depreciation and taxation |
1,02,012 |
94,737 |
1,04,762 |
95,332 |
Interest |
345 |
1,201 |
507 |
1,327 |
Depreciation and amortisation |
32,761 |
36,114 |
33,478 |
36,695 |
Profit Before Tax and Exceptional Items |
68,906 |
57,422 |
70,777 |
57,310 |
Exceptional Items |
- |
- |
518 |
- |
Profit before taxation |
68,906 |
57,422 |
70,259 |
57,310 |
Less: Provision for taxation |
||||
- Current tax |
12,209 |
10,034 |
13,539 |
11,474 |
- Deferred tax ( net ) |
438 |
(125) |
404 |
(53) |
- MAT credit entitlement |
(28,809) |
- |
(28,809) |
- |
Profit after taxation |
85,068 |
47,513 |
85,125 |
48,889 |
Non-controlling interest |
- |
- |
(232) |
1 |
Profit after minority interest |
85,068 |
47,513 |
85,357 |
45,888 |
Share of profit/(loss) of associate |
- |
- |
(1,458) |
418 |
Profit for the year |
85,068 |
47,513 |
83,899 |
45,470 |
Balance brought forward |
67,182 |
55,105 |
67,646 |
57,618 |
Profit available for appropriation |
1,52,250 |
1,02,618 |
1,51,545 |
1,03,088 |
(H lacs) |
||||
Particulars |
Standalone |
Consolidated |
||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Appropriation |
||||
Effects of adoption of new accounting standard , i.e, Ind AS 115 |
- |
- |
||
Interim dividend |
35,561 |
35,561 |
35,561 |
35,561 |
Corporate dividend tax |
- |
|||
Re-measurement of net defined benefit plans (net of tax) |
5 |
(125) |
154 |
(120) |
Balance carried forward |
1,16,684 |
67,182 |
1,15,830 |
67,646 |
Total |
1,52,250 |
1,02,618 |
1,51,545 |
1,03,088 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the Company during the financial year 2021-2022.
During the year under review the Company has paid two interim Dividends aggregating to Rs 8/- per share of Re 1/-each. The two interim dividends so paid will be placed for confirmation by the members at the ensuing AGM. The total dividend outgo for the financial year ended March 31, 2022 amounted to H35,561.10 lacs and dividend pay-out ratio works out to 42.4%. The dividend pay-out is in accordance with the Company''s Dividend Distribution Policy. The Policy is available on the Company''s website www.emamiltd.in.
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
The Board of Directors at its Meeting held on February 3, 2022 approved the Buyback of equity shares from its shareholders/ beneficial owners (other than those who are promoters, members of the promoter group or persons in control), from the open market through stock exchange mechanism for an aggregate amount not exceeding INR 16,200 lacs (Rupees Sixteen Thousand Two Hundred Lacs Only) which represented 9.98% and 9.94% of the aggregate of the total paid-up capital and free reserves of the Company based on the audited standalone and consolidated financial statements of the Company respectively as at March 31,2021.
The Buyback process commenced on February 9, 2022 and closed on March 21, 2022. The Company has bought back 33,63,740 equity shares pursuant to the buyback offer by
utilizing a sum of H16,121.45 lacs (Rupees Sixteen Thousand One Hundred and Twenty One Lacs Forty Five Thousand Only) which represents 99.52% of the Maximum Buyback Size. The Company has completed the process of extinguishment of the entire 33,63,740 Equity Shares bought back under the Buyback Process.
As on 31st March, 2022 the authorised, issued, subscribed and fully paid-up share capital comprises of: Authorised Capital: 50,00,00,000 equity shares of Re. 1/ each; Issued, Subscribed and Fully paid up: 44,11,50,000 equity shares of Re. 1 each after extinguishment of 33,63,740 equity shares bought back under the Buyback process during FY 2021-2022.
8. Internal control systems and their adequacy
Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Company''s in-house internal audit department carries out internal audits at all manufacturing locations, offices and sales depots across the country. The objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 and corporate policies.
Your Company''s internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000:2018 certifications, respectively.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time.
point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www.emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financial and operational details of the subsidiary companies are provided hereunder:
Emami Bangladesh Ltd., Bangladesh
Emami Bangladesh Ltd., was incorporated on November 25,
2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its manufacturing unit in Dhaka. During the financial year ended March 31, 2022, the Company clocked revenues worth H15,501 lacs (previous year H12,658 lacs) and profit after tax of H2,597 lacs (previous year H1,631 lacs).
Emami Lanka (Pvt) Ltd., Sri Lanka
Emami Lanka (Pvt) Ltd., Sri Lanka was incorporated on 27th June 2017, with an objective of tapping the potential of the local market, it started manufacturing locally through a contract manufacturer. During the financial year name of the Company has been changed from Emami Indo Lanka (Pvt) Ltd. to Emami Lanka (Pvt) Ltd.
During the period ended March 31, 2022, the Company earned revenues of H1,785 lacs (previous year H1,201 lacs) and Profit/(loss) after tax of H(174) Lacs, (previous year H14 lacs).
Emami International FZE, UAE
Emami International FZE, was incorporated on November 12,
2005 in the Hamriyah Free Zone, Sharjah, UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31,2022, the Company clocked revenues worth H21,450 lacs (previous year H22,983 lacs) and profit/loss after tax of H1,079 lacs [previous year H869 lacs].
Creme 21, GmbH (Formerly Known as Fentus 113. GmbH)
Fentus 113 GmbH. Germany, was incorporated on 3rd January, 2019.
During the period ended March 31, 2022, the Company earned revenues of H985 lacs [previous year H1,808 lacs] and Profit after tax of H(1) Lacs [previous year H67 lacs].
Emami International Personal Care Trading LLC- Dubai
Emami International Personal Care Trading LLC, UAE, was incorporated on 28th January, 2022. It has become the Wholly Owned Subsidiary of Emami International FZE w.e.f February 15, 2022.
During the period ended March 31, 2022, the Company earned revenues of Rs Nil lacs and Profit after tax of H(4) Lacs.
Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
9. Subsidiary companies, joint ventures and associate companies Subsidiary companies
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies (Accounts) Rules 2014, the report on performance and financial position of subsidiaries is included in the Consolidated Financial Statements of the Company. The Company has a policy for determining the materiality of a subsidiary, which is available at www.emamiltd.in/investor-info/pdf/Policy-for-Determining-Materiality-of-Subsidiaries. pdf. As of March 31, 2022, your Company had the following subsidiary companies:
i) Emami Bangladesh Ltd., Bangladesh, wholly-owned subsidiary of Emami Limited
ii) Emami Lanka (Pvt.) Ltd., Sri Lanka., wholly-owned subsidiary of Emami Limited
iii) Emami International FZE, UAE, wholly-owned subsidiary of Emami Limited
iv) Creme 21, GmbH Wholly owned subsidiary of Emami International FZE
v) Emami International Personal Care Trading LLC- Dubai, a wholly-owned subsidiary of Emami international FZE.
vi) Emami Rus (LLC), Russia, subsidiary of Emami International FZE
vii) Emami Overseas FZE, UAE. , wholly-owned subsidiary of Emami International FZE.
viii) Pharma Derm SAE Co, Egypt, subsidiary of Emami Overseas FZE.
ix) Brillare Science Pvt Ltd, Indian subsidiary of Emami Limited
In compliance with IND-AS-110, your Company has prepared its consolidated financial statements, which forms part of this Annual Report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a separate statement containing the salient features of the subsidiary companies in the prescribed form (AOC#1) is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any
Emami (RUS) LLC
Emami (RUS) LLC was incorporated on 14th August, 2018 with an objective of trading of Perfumery products, Cosmetics and Pharma products.
During the period ended March 31, 2022, the Company earned revenues of H3,415 lacs [previous year H3,213 lacs] and Profit after tax of H(764) Lacs [previous year H(207) Lacs]
Emami Overseas FZE, UAE
Emami Overseas FZE was incorporated on November 25, 2010. It is the holding company of Pharma Derm S. A. E. Co. in Egypt.
During the financial year ended March 31,2022, the Company recorded revenues worth H Nil (previous year: nil) and profit after tax of H(8) lacs [previous year profit of H(7) Lacs].
Pharma Derm S. A. E. Co., Egypt
Pharma Derm S. A. E. Co. was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was acquired to manufacture pharmaceuticals, disinfectants, cosmetics, chemicals, among others as a subsidiary of Emami Overseas FZE in FY 2010-11. The Company has not yet commenced operations.
During the financial year ended March 31,2022, the Company recorded revenues worth H NIL Lacs (previous year H NIL Lacs) and profit/ loss after tax of H(495) lacs [previous year H10 lacs].
Brillare Science Private Limited, India
Brillare Science Private Limited has become a subsidiary of Emami Limited w.e.f. 1st October, 2021. It is engaged in the manufacturing of professional saloon products and during the financial year ended March 31, 2022, the Company earned revenues worth H1772 Lacs (previous year H971 lac) and Profit/(loss) after tax of H(495) lacs [previous year H(203) lacs].
Associate companies
Helios Life Style Private Limited, India
Helios is engaged in online male grooming sector and during the financial year ended March 31, 2022, earned revenues worth H8278 lacs (previous year H4,286 lacs) and a profit/(loss) after tax of H(2701) lacs (previous year H(1,047) lacs).
Tru Native F&B Pvt Ltd, India
During the year under review, the Company has made strategic investment in Tru Native F & B Pvt Ltd, equivalent to 20.65% of its paid up capital on fully diluted basis. TruNativ is smart nutrition company dedicated to empowering health and fitness enthusiasts with affordable and healthy food & nutrition options. During the financial year ended March 31, 2022, the Company earned revenues worth H62 lacs (Previous year H18 lacs) and previous year H18 lacs a profit/ (loss) after tax of H(117) lacs (previous year H(1) lacs).
The Company has not accepted any public deposits covered under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
11. Non-convertible debentures
The Company did not issue any non-convertible debentures during the financial year 2021-22.
12. Consolidated financial statements
The consolidated financial statements, prepared in accordance with IND-AS 110- consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31,2022, stood at H2,07,659 lacs as against H1,76,265 lacs at the end of the previous year.
13. Secretarial Standards of ICSI
The Ministry of Corporate Affairs has mandated SS-1 and SS-2 with respect to board meetings and general meetings respectively. The Company has ensured compliance with the same.
14. Transfer of Unclaimed Dividend and Unclaimed shares
The details relating to unclaimed dividend and unclaimed shares forms part of the Corporate Governance Report forming part of this report.
15. Auditors and Auditors'' Reports Statutory auditor
Your Company''s Statutory Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (firm registration number 301003E/E300005), were appointed as the Statutory Auditors from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting of the Company. The Audit Committee considering the performance and reputation of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants recommended for its reappointment in compliance of Section 139 of the Companies Act 2013.
Based on recommendation of Audit Committee, the Board has proposed for reappointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants for the second term of five consecutive years commencing from the conclusion of 39th Annual General Meeting up to the conclusion of 44th Annual General Meeting of the Company for approval of the shareholders at the ensuing AGM.
M/s. S. R. Batliboi & Co. LLP have consented to the said reappointment, and confirmed that their re-appointment, if made, would be within the limits mentioned under Section 141(3) (g) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.
The Auditor''s report to the shareholders on the standalone & consolidated financial statement of the Company for the financial year ended on 31st March 2022 does not contain any qualification, reservation or adverse remark or disclaimer.
Secretarial auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s MKB & Associates, Practicing Company Secretaries, as its secretarial auditor to undertake the Secretarial Audit for FY2021-2022.
The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualifications, reservations or adverse remarks. Furthermore, the Secretarial Auditor M/s MKB & Associates, Practicing Company Secretaries, have also certified the compliance as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and same has been intimated to the stock exchanges within the stipulated time.
Cost Auditor
The Company''s cost auditors, M/s. V. K. Jain & Co. (firm registration number 00049), were appointed by the Board of Directors at its meeting held on May 25, 2021 to audit the cost accounting records, as may be applicable to the Company for FY 2021-22, and their remuneration was approved during the previous Annual General Meeting.
As per the requirements of section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost accounts and records in respect of the applicable products for the year ended March 31, 2022.
M/s V. K. Jain & Co, were reappointed as cost auditors for FY 2022-23 by the Board of Directors in its meeting held on 13th May, 2022 and the remuneration payable to the cost auditors is required to be placed before the members in the ensuing Annual General Meeting for their ratification. M/s V. K. Jain & Co. have given their consent to act as Cost Auditors and confirmed that their appointment is within the limits of the section 139 of the Companies Act, 2013.
Accordingly, a resolution seeking members'' ratification for the remuneration payable to them is included in the notice convening the Annual General Meeting. The Board recommends the same for approval by members at the ensuing Annual General Meeting.
Pursuant to Companies (Cost Records and Audit) Rules, 2014, the Cost Audit Report for the financial year March 31, 2021 was filed with the Ministry of Corporate Affairs within prescribed time.
16. Conservation of energy, technology and exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II)
In terms of Section 92(3) the Companies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014, the Draft Annual Return of the Company for the financial year ended on 31st March 2022 is available on the website of the Company at the link http://www.emamiltd.in/ investor-info/index.php#Compliance
18. Corporate Social Responsibility
Corporate social responsibility forms an integral part of your Company''s business activities. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy, which is available at: http://www.emamiltd.in/holisticliving/pdf/ Corporate Social Responsibility Policy of EmamiLtd.pdf
The Annual Report on CSR expenditures for the FY 2021-22 is annexed herewith and forms part of this report (Annexure III).
The Company spent H908.33 Lacs on CSR activities during the year against obligation of H882.25 Lacs including H75 lacs which has been deposited into separate Bank account towards its on-going projects.
The Company has spent H28.2 Lacs over and above the CSR obligations for the FY 2021-22, hence this amount will be carried forward for set-off against CSR expenditure in the next financial year.
19. Directors and Key Managerial Personnel
In accordance with provisions of Section 152 of the Companies Act 2013 read with Rules made thereunder, Smt. Priti A. Sureka (DIN 00319256), Shri Prashant Goenka (DIN 00703389) and Shri Mohan Goenka (DIN 00150034) are liable to retire by rotation at the 39th Annual General Meeting and being eligible, offer themselves for reappointment.
During the year under review, upon recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors and Shareholders, following changes have been effected-
Shri R. S. Agarwal and Shri R. S. Goenka founders of the company have not opted to continue their executive positions after completion of their respective terms on March 31, 2022. The Board of the Directors recognized and appreciated their immense contribution in building and growing the organization as founders and noted their desire to step down from their Executive positions while continuing on the Board. Accordingly, the Board unanimously decided to appoint Shri R.S. Agarwal as Chairman Emeritus and Shri R.S. Goenka as Non-Executive Chairman effective 1st April, 2022.
The Board also acceded to Shri Sushil Kumar Goenka''s desire to step down from his current position as the Managing Director of Emami Ltd as part of the transition process and has re-appointed him as a Whole-Time Director with the specific responsibility of operations, procurement & packaging of the Company effective 1st April,2022.
Consequently, the Board elevated Shri Harsha V Agarwal and Shri Mohan Goenka, Whole-Time Directors of Emami Limited as Vice Chairman-cum-Managing Director and Vice Chairman-cum-Whole Time Director, respectively, effective 1st April, 2022 to steer the organisation forward.
Independent Directors
With effect from close of business hours of 2nd August, 2021, Smt. Rama Bijapurkar, (Woman Independent Director) resigned from the Board of the Company in view of the changes she wanted to make with respect to her portfolio of professional work and time. The Board put on records its appreciation for valuable guidance rendered by her during her tenure as an Independent Director of the Company.
Smt. Mamta Binani was appointed by the Board and approved by the Shareholders as an Independent Director (Woman Independent Director) of the Company for a period of two years with effect from 29th October, 2021.
The second term of five Independent Directors of the Company, namely Dr Y. P. Trivedi, Dr K. N. Memani, Shri P. K. Khaitan, Shri S.B. Ganguly and Shri Amit Kiran Deb will be completed on 1st August 2022.
The first term of appointment of Shri C. K. Dhanuka as an Independent Director of the Company will also be completed on 1st August, 2022. On the recommendation of the Nomination and Remuneration Committee, the Board has proposed his re-appointment for the second term of five consecutive years commencing from 2nd August, 2022 subject to approval of the Shareholders.
The above proposed re-appointment of Independent Director is as per the Board Diversity Policy of the Company.
Pursuant to section 149 of The Companies Act, 2013 (as amended) and Regulation 25(8) of SEBI Listing Regulations,
2015 the Company has received declarations from all the Independent Directors that they have met the criteria of independence.
None of the Directors of the Company is disqualified for being appointed/re-appointed as Director, as specified under section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be appointed/ reappointed, is provided in the Notice of the Annual General Meeting forming part of the Annual report.
20. Business responsibility report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility Report of the Company for the financial year ended March 31,2022 is attached as part of the Annual Report.
21. Dividend Distribution Policy
The Company has formulated a Dividend Distribution Policy, which has been displayed on the website of the Company, http://www.emamiltd.in/investor-info/pdf/Dividend_ Distribution_Policy_Emamiltd.pdf.
22. Board induction, training and familiarisation programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends him/her a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The role, functions, and responsibilities of the Director are also explained in detail and informed about the various compliances required from him/her as a Director under the various provisions of the Companies Act, 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and financials of the Company. They are also provided presentations about the business and operations of the Company from time to time.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities
as Directors. The details of the Board familiarisation programme for the Independent Directors can be accessed at: http://www.emamiltd.in/investorinfo/pdf/ EmamiLtdFamiliarisationProgrammeForIndependentDirectors. pdf.
Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made thereunder, Regulation 17(10) of the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy.
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per the criteria laid down by the NR Committee. The Board members were satisfied with the evaluation process.
24. Number of meetings of the Board
The Board of Directors held six meetings during the year on 25th May 2021, 2nd August 2021, 25th August 2021, 29th October 2021, 3rd February 2022 and 21st March 2022. The maximum gap between any two meetings was less than 120 days, as stipulated under SEBI''s Listing Regulations, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
The Company has constituted/reconstituted various Board-level committees in accordance with the requirements of Companies Act 2013 and SEBI (LODR) Regulations, 2015. The Board has the following committees as under:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management committee
IX. Buy back Committee (Formed on 3rd February 2022 for the purpose of Buyback of equity shares of the company during FY 2021-22)
Details of all the above Committees along with composition and meetings held during the year under review are provided
in the Report on Corporate Governance forming part of this Report.
26. Separate meeting of Independent Directors
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance, forming part of this Report.
The Company has established an effective Whistle-blower policy (Vigil mechanism) and procedures for its Directors and employees. The details of the same are provided in the Corporate Governance Report, which forms part of the Annual Report. The policy on vigil mechanism may be accessed on the Company''s website at: http://www.emamiltd.in/investor-info/pdf/WhistleBlowerPolicyEmami.pdf.
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and Board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy seeks to provide well-balanced and performance-related compensation packages, taking into account industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the ''pay-for-performance'' principle.
The Company''s policy on remuneration and appointment of Board members as mentioned in the Remuneration Policy have been disclosed on the Company''s website: http://www. emamiltd.in/investor-info/index.php#Compliance
29. Related party transactions
All related party transactions entered into by the Company during the financial year were conducted at an arm''s length basis. No material contracts or arrangements with related parties were entered into during the year under review.
Accordingly, disclosure of Related Party Transaction as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in form AOC-2 is not applicable.
During the year, the Audit Committee had granted an omnibus approval for transactions, which were repetitive in nature for one financial year. All such omnibus approvals were reviewed
by the Audit Committee on a quarterly basis. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
Your Company''s policy for transactions with the related party which was reviewed by the Audit Committee and approved by the Board, can be accessed at: http://www.emamiltd.in/ investor-info/pdf/PolicyforTransactionswithRelatedParties. pdf.
30. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act, 2013 are given in the notes to financial statements. The Company has granted loans, provided guarantee and made investment in its wholly owned subsidiary(ies) / associate(s) and other body corporate for their business purpose. The Company also hold securities of other bodies corporate as strategic investors.
31. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this Report. (Annexure IV)
32. Management discussion and analysis and Corporate Governance Report
As per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Company''s auditors confirming compliance of conditions of Corporate Governance are an integral part of this Report.
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. The system also complies with the requirements laid down under the ISO 31000: 2018 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by
the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.
34. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
As per the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), your Company has established a policy to prevent sexual harassment of its women employees. The policy allows every employee to freely report any such act with the assurance of prompt action to be taken thereon. The policy lays down severe punishment for any such act. The Company has complied with provisions relating to the constitution of internal complaints committee under POSH. During the year under review, the company has not received any Complaint.
Several initiatives were undertaken during the year to demonstrate the Company''s zero tolerance philosophy against discrimination and sexual harassment including awareness programme, which included creation and dissemination of comprehensive and easy-to-understand training and communication material.
35. Details of significant and material orders passed by regulators/courts/tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
36. Directors'' Responsibility Statement
Pursuant to the requirements laid down under Section 134(5) of the Companies Act, 2013, with respect to the Directors'' Responsibility Statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards have been followed and no material departures have been made.
II. The Directors have 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 as on March 31, 2022, and of the profit of the Company for the year ended on that date.
III. The Directors have taken 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.
IV. The annual accounts were prepared on a going concern basis.
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the Company and ensured that such internal financial controls were adequate and operating effectively.
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and that the same are adequate and operating effectively.
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the unstinted support received from them during the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
For and on behalf of the Board
Place: Kolkata R.S. Goenka
Date: 13th May, 2022 Chairman
Mar 31, 2021
It gives me great pleasure to share with you the performance of your Company along with audited accounts for the financial year ended March 31,2021.
The financial year under review continued to remain challenging. While, the industry had just recovered from the ripple effects of GST implementation and demonetisation, it faced a daunting task of not only trying to overcome an extended liquidity crunch but an unprecedented and unexpected onslaught of Covid-19 led pandemic across the world, resulting in a complete lockdown across the country in the first quarter of FY21.
Company''s operations until the first fortnight of April witnessed significant disruptions affecting the pre-season sale of the Company''s summer products, thereby impacting the overall business. Further, a decline in consumption was also witnessed due to rising unemployment which in turn led to a significant drop in demand from low-income groups. This led to a consumer shift towards more essential products like food and groceries, affecting the sale of niche and discretionary products manufactured by the Company.
To ensure safety of employees, the Company implemented "Work from Home" policy and temporarily suspended manufacturing operations at the units. However, production later commenced in phased manner in accordance with Government''s advisory for Industrial operations with limited manpower maintaining covid safety protocols such as social distancing.
Despite the severe impact of the unprecedented nation-wide lockdown on the offtakes in April, which led to disruptions in the supply chain, the Company faced the challenges head-on
and tweaked their strategies to suit the dynamic environment in order to ensure that the sales improved and grew on a Y-o-Y basis June onwards. Thereafter the company bounced back strongly and closed the year with a 8% growth in revenues (despite a 26% decline in Q1FY21).
During the year, the Company''s major brands like Zandu Healthcare range grew by 45%, Pain Management brands grew by 23%, Kesh King range grew by 15%, BoroPlus range grew by 15% and 7 Oils in One grew by 10%. However, Navratna declined by 8% on account of loss of sales during peak season in the midst of nationwide lockdown.
The company''s leading male grooming brand, Fair and Handsome had not performed well in the last financial year due to liquidity crunch, lower disposable incomes and increased preference for facial hair within the age group of 20 to 29 years (moderating surface application area by 25-30%). The company undertook corrective actions and relaunched the brand in Q3FY21 around a new re-positioning strategy comprising revamped formulation, packaging and communication. The products were renamed as Fair and Handsome Radiance Cream and Fair and Handsome Instant Radiance Face Wash and a new differentiated packaging design was introduced for Fair and Handsome Facewash in line with Men''s Face Wash category codes. The result is that although Fair and Handsome declined by 19% in FY21, the brand reported attractive growth of 18% in H2FY21.
The pandemic also highlighted the necessity & importance of health and hygiene which the consumer trend reflected based on buying patterns. The company took cognizance of the same and introduced more than 50 new products and variants, majorly in the health and hygiene categories during the year. BoroPlus, with its nation-wide strong brand equity
for its antiseptic and germ protection properties introduced a personal hygiene range consisting ofHand Sanitizer, Antiseptic Soap, Antiseptic Handwash, Hygiene Liquid and Body wash which received a very encouraging market response. Under the Zandu Healthcare range, the company introduced Zandu Ayurvedic Sanitizer, Zandu Ortho Vedic Pain relief oil, Zandu Ayush Kwath Powder, Zandu Single herbs range, Zandu Immu Soft Chews, Zandu Health Juices, Zandu Tulsi and Haldi Drops, among others. The company also forayed into the home hygiene category and launched a new brand "EMASOL" which offers a complete range of home hygiene products, with the unique proposition of 24 hr protection. The Emasol range included a Disinfectant Floor Cleaner, Disinfectant Toilet Cleaner, Disinfectant Bathroom Cleaner, Antibacterial Dish Wash Gel and an All Purpose Sanitizer. The initial consumer response to the just launched brand looks promising.
The current Pandemic also brought heightened awareness and relevance of Ayurvedic immunity boosters like Chyavanprash, Honey, etc. which led to increased consumer household penetration & consumption of the products. The company also launched "Immune India offer" to make Zandu Immunity boosters affordable to a large section of Indians and help them build their immunity levels in the COVID pandemic environment. The Zandu Immunity booster range registered a robust 113% growth during the year.
During the year, all the sales channels posted convincing growth. New age channels like Modern Trade grew by 15% and e-commerce channel grew by more than 3 times during the year and increased its contribution by 190bps to 2.9% of domestic business in FY21. Modern Trade independent stores, also known as Standalone self-service stores grew very well post COVID. The Company created a separate organization structure and activation programmes to drive offtakes of new launches as well as higher margin on larger packs. The company also launched its very own e-commerce portal www.zanducare.com, as a brand store for Zandu Healthcare products. The portal caters to the e-commerce audience with existing as well as newly launched and digital first multiple e-commerce specific products and offers free doctor consultation facility for consumers. Within a short span of its launch, the portal received wide acceptance and appreciation by the consumers and has been ranked as #1 portal in India in the health and alternative health and remedy category by Similarweb.
During the year, the company roped in Bollywood superstar Salman Khan to endorse Navratna and Fair and Handsome. The new commercials with Salman Khan generated good consumer traction for the brands. The company also roped in Indian cricketer Shikhar Dhawan to endorse EMASOL range of home hygiene products and Bollywood stars Juhi Chawla and Ayushmann Khurrana to endorse BoroPlus range of hygiene products. The Company also launched a digital campaign with Salman Khan for Navratna Oil, which was a run-away success garnering an overall 5.8 million videos created by the participants, with video views of 4.6 billion. Further, digital campaigns for Zandu Balms, BoroPlus Hand Sanitizer and Zandu Healthcare range on various social media platforms also garnered very encouraging consumer response.
To augment the current distribution strength, the company outlined a clear strategy to drive growth aggressively in the rural market. Digitalisation of Rural Salesforce (Launch of Rural SFA) was completed successfully during the year, enabling the Rural sales team to capture all market orders digitally & manage sub stockist inventories. The company has also embarked on a focussed rural expansion drive under Project Khoj through expansion of rural footprint in the top 4 potential rural contributing States.
The company''s international business on net sales reported an impressive growth of 12.1%, driven by strong performance across key markets and introduction of the hygiene range. Further, the strategy of identifying & tapping opportunities in markets that has high hair oil usage, with brands like Kesh King & 7 Oils in One paid off well in International markets. During the year, 7 Oils in One became one of the largest selling brands in the International markets after the Company launched 7 new variants under the brand and initiated a media campaign with a Bangladesh based celebrity, Ms. Bidya Sinha (Mim). The recently acquired German brand, Creme 21 was extended to North America, Bangladesh, Sri Lanka and other international markets performing exceptionally well during the year.
During the year, the company significantly improved its profitability and margins due to benign raw material costs and strict cost controls. The Company strengthened process efficiency through a cost saving project called WoW (War on Waste) across functions like media, raw material procurement, production, packaging and supply chain. In FY21, Gross Margins at 67.7% grew by 70bps. EBIDTA at H883.1 crore, grew by 27.9% and EBIDTA margins which are at an all-time high of 30.7% grew by 470 bps. Profit after Tax at H458.9 crore grew by 48.8% with margins at 15.9% increasing by 430 bps and Cash Profits at H821.7 crore also grew by 28.5% times with margins at 28.5% increasing by 440 bps.
The company rewarded its shareholders handsomely during the year by announcing dividends amounting to H8/- per share. The Company also completed a buyback acquiring 94.2 lacs shares for H192 crore in FY21. Post buyback, the promoter stake now stands at 53.86%. The Company''s performance was also reflected in the stock price, which grew by nearly 3 times during the year.
The Company continued to be a responsible FMCG player growing sustainably. The company supported community building and worked on reducing consumption of natural resources. The company spent H7.8 crore on CSR, touching the lives of 33,718 individuals. The company also undertook initiatives that helped to moderate use of fossil fuel, reduce carbon footprint, recycle water in its manufacturing process.
The company believes that its evolved business model will be more relevant in a new world facing the challenge of COVID-19 as the pandemic has driven the consumers to shift focus towards hygiene, healthcare and wellness.
Financial results |
(H in Lacs) |
|||
Particulars |
Standalone |
Consolidated |
||
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|
Operating income |
2,58,228 |
2,38,992 |
2,88,053 |
2,65,488 |
Profit before interest, depreciation and taxation |
94,737 |
68,612 |
95,332 |
74,762 |
Interest |
1,201 |
1,890 |
1,327 |
2,101 |
Depreciation and amortisation |
36,114 |
32,610 |
36,695 |
33,633 |
Profit Before Tax and Exceptional Items |
57,422 |
34,111 |
57,310 |
39,027 |
Exceptional Items |
- |
326 |
- |
1,068 |
Profit before taxation |
57,422 |
33,786 |
57,310 |
37,959 |
Less: Provision for taxation |
||||
- Current tax |
10,034 |
6,427 |
11,474 |
7,984 |
- Deferred tax (net) |
(125) |
(1,553) |
(53) |
(857) |
-MAT credit entitlement |
- |
- |
- |
- |
Profit after taxation |
47,513 |
28,912 |
48,889 |
30,832 |
Share of minority interest |
- |
- |
1 |
(61) |
Profit after minority interest |
47,513 |
28,912 |
45,888 |
30,893 |
Share of profit/(loss) of associate |
- |
418 |
(602) |
|
Profit for the year |
47,513 |
28,912 |
45,470 |
30,291 |
Cash profit |
83,627 |
61,522 |
82,165 |
63,924 |
Balance brought forward |
55,105 |
69,964 |
57,618 |
71,121 |
Profit available for appropriation |
1,02,618 |
98,876 |
1,03,088 |
1,01,413 |
Appropriation |
||||
Effects of adoption of new accounting standard, i.e, Ind AS 115 ## |
- |
- |
- |
- |
Final dividend |
35,561 |
36,315 |
35,561 |
36,315 |
Corporate dividend tax |
- |
7,465 |
- |
7,465 |
Re-measurement of net defined benefit plans (net of tax) |
(125) |
(8) |
(120) |
16 |
Balance carried forward |
67,182 |
55,104 |
67,646 |
57,617 |
Total |
1,02,618 |
98,876 |
1,03,088 |
1,01,413 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the Company during the financial year 2020-21.
During the year under review the Company has paid two interim Dividends aggregating to H8/- per share of HI/- each. The interim dividends so paid will be placed for approval by the members at the ensuing AGM in adherence with Dividend Distribution Policy.
The total dividend outgo for the financial year ended March 31, 2021 amounted to H35,561.10 lacs. The dividend payout ratio works out to 74.85%.
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
The authorised, issued, subscribed and fully paid-up share capital comprises of: Authorised Capital: 50,00,00,000 equity shares of H1/- each (as on 31st March, 2021) Issued, Subscribed and Fully paid up: 44,45,13,740 equity shares of H1/- each (as on 31st March, 2021).
In line with achieving the overall shareholders'' value, efficient utilization of surplus Fund, increase Earnings per share and increase in the return on capital & return on net worth, the Board of Directors at its Meeting held on March 19, 2020 approved the Buyback of fully paid-up equity shares of the
face value of H1/- (Indian Rupees One Only) of the Company, each from its shareholders/beneficial owners (other than those who are promoters, members of the promoter group or persons in control), from the open market through stock exchange mechanism for an aggregate amount not exceeding H19,199.43 lacs (One ninety one crore ninety nine lacs and forty three thousand only) which represents 10% and 9.94% of the aggregate of the total paid-up capital and free reserves of the Company based on the audited standalone and consolidated financial statements of the Company respectively as at March 31,2019.
The Company bought back 94,21,498 equity shares pursuant to the buyback offer in dematerialized form from open market by utilizing a sum of H19,198.73 lacs (Rupees One ninety one crore ninety eight lacs and seventy three thousand) which represents 99.9963% of the Maximum Buyback Size, the Buy back process was closed on 9th July, 2020.
8. Internal control systems and their adequacy
Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Company''s in-house internal audit department carries out internal audits at all manufacturing locations, offices and sales depots across the country. The objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 and corporate policies.
Your Company''s internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000:2009 certifications, respectively.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time.
Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
9. Subsidiary and associate companies
A. Subsidiary companies
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies (Accounts) Rules 2014, the report on
performance and financial position of subsidiaries is included in the Consolidated Financial Statements of the Company. The Company has a policy for determining the materiality of a subsidiary, which is available at www.emamiltd.in/investor-info/pdf/Policy-for-Determining-Materiality-of-Subsidiaries. pdf. As of March 31, 2021, your Company had the following subsidiary companies:
i) Emami Bangladesh Ltd., wholly-owned subsidiary of Emami Limited
ii) Emami Indo Lanka (Pvt.) Ltd., wholly-owned subsidiary of Emami Limited
iii) Emami International FZE, wholly-owned subsidiary of Emami Limited
iv) Emami Overseas FZE, UAE, wholly-owned subsidiary of Emami International FZE.
v) Creme 21 (Formerly Known as Fentus 113. GmbH, Germany), wholly-owned subsidiary of Emami International FZE
vi) Emami Rus (LLC), Russia, subsidiary ofEmami International
FZE
vii) Pharma Derm SAE Co, Egypt, subsidiary of Emami Overseas FZE.
*Fravin Pty. Ltd., Abache Pty. Ltd. and Diamond Bio-tech Laboratories Pty. Ltd. ceased to be the Subsidiaries of the Company with effect from 16th December
2020.
In compliance with IND-AS-110, your Company has prepared its consolidated financial statements, which forms part of this Annual Report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a separate statement containing the salient features of the subsidiary companies in the prescribed form (AOC#1) is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www.emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financial and operational details of the subsidiary companies are provided hereunder:
Emami Bangladesh Ltd.
Emami Bangladesh Ltd., was incorporated on November 25,
2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its manufacturing unit in Dhaka. During the financial year ended March 31, 2021, the Company clocked revenues worth H12,658 lacs (previous year H14,105 lacs) and profit after tax of H1,631 lacs (previous year H2, 634 lacs).
Emami International FZE
Emami International FZE, was incorporated on November 12,
2005 in the Hamriyah Free Zone, Sharjah, UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31,2021, the Company clocked revenues worth H22,983 lacs (previous year H17,517 lacs) and profit/loss after tax of H869 lacs [previous year H(4,251) lacs].
Emami Overseas FZE
Emami Overseas FZE was incorporated on November 25, 2010. It is the holding company of Pharma Derm S. A. E. Co. in Egypt.
During the financial year ended March 31,2021, the Company recorded revenues worth HNil (previous year: nil) and profit after tax of H(7) lacs [previous year profit of H(9) lacs].
Pharma Derm S. A. E. Co.
Pharma Derm S. A. E. Co. was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was acquired to manufacture pharmaceuticals, disinfectants, cosmetics, chemicals, among others as a subsidiary of Emami Overseas FZE in FY 2010-11. The Company has not yet commenced operations.
During the financial year ended March 31,2021, the Company recorded revenues worth HNIL lacs (previous year H126 lacs) and profit/ loss after tax of H10 lacs [previous year H27 lacs].
Emami Indo Lanka (Pvt) Ltd.
Emami Indo Lanka (Pvt) Ltd., Sri Lanka was incorporated on 27th June 2017, with an objective of tapping the potential of the local market, it started manufacturing locally through a contract manufacturer.
During the period ended March 31, 2021, the Company earned revenues of H 1,201 lacs (previous year H1,019 lacs) and Profit/(loss) after tax of H14 lacs, (previous year H(20) lacs).
Emami (RUS) LLC
Emami (RUS) LLC was incorporated on 14th August, 2018 with an objective of dealing of Perfumery, Cosmetics and Pharma products.
During the period ended March 31, 2021, the Company earned revenues of H3,213 lacs [previous year H3,310 lacs] and Profit after tax of H(207)[previous year H23 lacs]
Creme 21 (Formerly Known as Fentus 113. GmbH, Germany)
Fentus 113 GmbH. Germany, was incorporated on 3rd January, 2019.
During the period ended March 31, 2021, the Company earned revenues of H1,808 lacs [previous year H1,073 lacs] and Profit / loss after tax of H67 lacs [previous year H(37) lacs].
B. Associate companies
Helios Life Style Private Limited
Helios is engaged in online male grooming sector and during the financial year ended March 31, 2021, earned revenues worth H4,286 lacs (previous year H3,923 lacs) and a profit/(loss) after tax of H(1,047) lacs (previous year H(1,474) lacs).
Brillare Science Private Limited
Brillare is engaged in manufacturing of professional saloon products and during the financial year ended March 31,2021, the Company earned revenues worth H971 lacs (previous year H441 lacs) and Profit/(loss) after tax of H(203) lacs [previous year H(356) lacs].
The Company has not accepted any public deposits covered under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
11. Non-convertible debentures
The Company did not issue any non-convertible debentures during the financial year 2020-21.
12. Consolidated financial statements
The consolidated financial statements, prepared in accordance with IND-AS 110- consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31,2021, stood at H1,76,265 lacs as against H1,82,375 lacs at the end of the previous year.
13. Secretarial Standards of ICSI
The Ministry of Corporate Affairs has mandated SS-1 and SS-2 with respect to board meetings and general meetings respectively. The Company has ensured compliance with the same.
14. Auditors and Auditors'' Reports
Statutory audit
Your Company''s Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (firm registration number 301003E/E300005), were appointed as the Statutory Auditors from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting of the Company. The Auditors report to the shareholders on the financial statement of the Company for the financial year ended on 31st March 2021 does not contain any qualification, reservation or adverse remark or disclaimer.
Secretarial audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s MKB & Associates, Practicing Company Secretaries, as its secretarial auditor to undertake the Secretarial Audit for FY2020-21. The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualifications, reservations or adverse remarks. Furthermore, the Secretarial Auditor M/s MKB & Associates, Practicing Company Secretaries, have also certified the compliance as per the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 and same has been intimated to the stock exchanges within the stipulated time.
at the 38th Annual General Meeting and being eligible, offer themselves for reappointment.
During the year under review Shri Mohan Goenka (DIN 00150034) and Shri H. V. Agarwal (DIN 00150089), were reappointed as Whole-time Directors of the Company and Shri Sushil Kumar Goenka (DIN 00149916) was reappointed as Managing Director of upon completion of their present terms for a further period of 5 (five) years subject to approval of the members in the ensuing Annual General Meeting.
The Company has received declarations from all the Independent Directors that they have met the criteria of independence as prescribed in the Companies Act, 2013 and SEBI Listing Regulations, 2015.
None of the Directors of the Company is disqualified for being appointed as Director, as specified under section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be reappointed, is provided in the Notice of the Annual General Meeting forming part of the Annual report.
19. Business responsibility report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility Report of the Company for the financial year ended March 31, 2021 is attached as part of the Annual Report.
20. Dividend Distribution Policy
The Company has formulated a Dividend Distribution Policy, which is disclosed in (Annexure IV). The same is also displayed on the website of the Company, http://www.emamiltd.in/ investor-info/pdf/Dividend_Distribution_Policy_Emamiltd. pdf
21. Board induction, training and familiarisation programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends him/her a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The role, functions, and responsibilities of the Director are also explained in detail and informed about the various compliances required from him/her as a Director under the various provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and financials of the Company. They are also provided
Cost Auditor
Your Company''s cost accountants, M/s. V.K. Jain & Co. (firm registration number 00049), were appointed by the Board of Directors at its meeting held on June 26, 2020 to audit the cost accounting records, as may be applicable to the Company for FY2020-21, and their remuneration was approved during the previous Annual General Meeting.
M/s V. K. Jain & Co, were reappointed as cost auditors for FY2021-22 by the Board of Directors in its meeting held on 25th May, 2021 and the remuneration payable to the cost auditors is required to be placed before the members in the ensuing Annual General Meeting for their ratification. Accordingly, a resolution seeking members'' ratification for the remuneration payable to them is included in the notice convening the Annual General Meeting. The Board recommends the same for approval by members at the ensuing Annual General Meeting.
15. Conservation of energy, technology and exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II)
In terms of Section 92(3) the Companies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014, the extract of annual return of the Company is available on the website of the Company at the link http://www. emamiltd.in/investor-info/index.php#Compliance
17. Corporate social responsibility
Corporate social responsibility forms an integral part of your Company''s business activities. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy, which is available at: http://www.emamiltd.in/holisticliving/pdf/ Corporate Social Responsibility Policy of EmamiLtd.pdf
The Annual Report on CSR expenditures for the FY 2020-21 is annexed herewith and forms part of this report (Annexure III).
The Company spent H781.11 lacs on CSR activities during the year against obligation of H778.99 lacs.
18. Directors and key managerial personnel
I n accordance with provisions of Section 152 ofThe Companies Act 2013 read with Rules made thereunder, Shri H. V. Agarwal (DIN 00150089), Shri A. V. Agarwal (DIN 00149717) and Shri R. S. Goenka (DIN 00152880) are liable to retire by rotation
presentations about the business and operations of the Company from time to time.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarisation programme for the Independent Directors can be accessed at http://www.emamiltd.in/investorinfo/pdf/EmamiLtd FamiliarisationProgrammeForIndependentDirectors.pdf
22. Performance evaluation
Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made thereunder, Regulation 17(10) of the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy.
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per the criteria laid down by the NR Committee. The Board members were satisfied with the evaluation process.
23. Number of meetings of the Board
The Board of Directors held four meetings during the year on 26th June 2020, 7th August 2020, 5th November 2020 and 27th January 2021. The maximum gap between any two meetings was less than 120 days, as stipulated under SEBI''s Listing Requirements, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
24. Committees of the Board
The Company has constituted/reconstituted various Board-level committees in accordance with the requirements of Companies Act 2013 and SEBI (LODR) Regulations, 2015. The Board has the following committees as under:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management committee
IX. Buy back Committee (Dissolved on 5th November, 2020)
Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this Report.
25. Separate meeting of Independent Directors
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this Report.
The Company has established an effective Whistle-blower policy (Vigil mechanism) and procedures for its Directors and employees. The details of the same are provided in the Report on Corporate Governance, which forms part of this Report. The policy on vigil mechanism may be accessed on the Company''s website at: http://www.emamiltd.in/investor-info/pdf/WhistleBlowerPolicyEmami.pdf.
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and Board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy seeks to provide well-balanced and performance-related compensation packages, taking into account industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the ''pay-for-performance'' principle.
The Company''s policy on remuneration and appointment of Board members as mentioned in the Remuneration Policy have been disclosed on the Company''s website: http://www. emamiltd.in/investor-info/pdf/Remuneration-Policy-Emami-Ltd.pdf and annexed the Directors'' Report which forms part of the Annual Report (Annexure V)
28. Related party transactions
All related party transactions entered into by the Company during the financial year were conducted at an arm''s length basis. No material contracts or arrangements with related parties were entered into during the year under review.
Accordingly, disclosure of Related Party Transaction as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in form AOC-2 is not applicable.
During the year, the Audit Committee had granted an omnibus approval for transactions, which were repetitive in nature for one financial year. All such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
Your Company''s policy for transactions with the related party which was reviewed by the Audit Committee and approved by the Board, can be accessed at: http://www.emamiltd.in/ investor-info/pdf/PolicyforTransactionswithRelatedParties. pdf.
29. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act 2013 are given in the notes to financial statements. The Company has granted loans, provided guarantee and made investment in its wholly owned subsidiary(ies) / associate(s) and other body corporate for their business purpose. The Company also holds securities of other bodies corporate as strategic investors.
30. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this Report. (Annexure VI)
31. Management discussion and analysis and Corporate Governance Report
As per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Company''s auditors confirming compliance of conditions of Corporate Governance are an integral part of this Report.
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. The system also complies with the requirements laid down under the ISO 31000: 2009 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.
33. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
As per the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), your Company has established a policy to prevent sexual harassment of its women employees. The policy allows every employee to freely report any such act with the assurance of prompt action to be taken thereon. The policy lays down severe punishment for any such act. The Company has complied with provisions relating to the constitution of internal complaints committee under POSH. During the year under review, the company has received one complaint which has been redressed as per policy and law.
Several initiatives were undertaken during the year to demonstrate the Company''s zero tolerance philosophy against discrimination and sexual harassment including awareness programme, which included creation and dissemination of comprehensive and easy-to-understand training and communication material.
34. Details of significant and material orders passed by regulators/courts/tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
35. Directors'' Responsibility Statement
Pursuant to the requirements laid down under Section 134(5) of the Companies Act, 2013, with respect to the Directors'' Responsibility Statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2021, the applicable accounting standards have been followed and no material departures have been made.
II. The Directors have 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 as on March 31, 2021, and of the profit of the Company for the year ended on that date.
III. The Directors have taken 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.
IV. The annual accounts were prepared on a going concern basis.
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the Company and ensured that such internal financial controls were adequate and operating effectively.
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and that the same are adequate and operating effectively.
unstinted support received from them during the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the
For and on behalf of the Board
Place: Kolkata R.S. Agarwal
Date: 25th May, 2021 DIN : 00152996
Chairman
Mar 31, 2019
It gives me great pleasure to share with you the performance of your Company along with audited accounts for the financial year ended March 31, 2019.
1. Performance highlights
FY2018-19 witnessed the industry recovering from the impacts of GST implementation. The sectoral scenario slowly improved and came back to normalcy, which also helped brighten growth prospects. Hence, despite the challenges, the Company reported a commendable performance. Your Company earned revenues worth RS.2,69,294 Lacs during FY2018-19, reporting a growth of 6%over FY2017-18. It also reported an EBIDTA of RS.72,553 Lacs, a growth of 1% over FY2017-18.
In the past few years, the Company has taken a host of measures for brands like Kesh King, Fair and Handsome as well as the international business to drive growth. The efforts have started paying off dividends. The international business reported a growth of 12% in FY2018-19 over FY2017-18 while the newly-relaunched Kesh King reported a growth of 13%.
The Pacharia plant saw its first full-year of operations backed by superior procedural efficiency and cutting-edge technology. The Company also saw significant savings in costs. The Company continued to invest in branding and communication and roped in a number of celebrities. The Company strengthened its presence in the modern trade channel by making its products available across major online platforms.
During the year under review, the Company has acquired a leading personal care brand, Creme 21, a German brand with strong roots & brand recall. The brand has a strong presence in Middle East and other focus markets offering skin care and body care products such as creams and lotions, shower gels, sun care range, menâs range, etc. The acquisition is expected to boost and complement Emamiâs international business & portfolio particularly in MENA, SAARC and Russian markets.
Financial Results
(Rs. lacs)
Particulars |
Standalone |
Consolidated |
||
2018-19 |
2017-18 |
2018-19 |
2017-18 |
|
Revenue from Operations |
248327 |
2,36,427 |
269294 |
2,54,083 |
Profit before interest, depreciation and taxation |
74363 |
72,772 |
76212 |
73,894 |
Interest |
1929 |
3,317 |
2140 |
3,431 |
Depreciation and amortisation |
31804 |
30,531 |
32531 |
31,086 |
Profit Before Tax and Exceptional Items |
40629 |
38924 |
41541 |
39377 |
Exceptional Items |
980 |
- |
980 |
- |
Profit before taxation |
39650 |
38,924 |
40561 |
39,377 |
Less: Provision for taxation |
||||
- Current tax |
8637 |
6,565 |
9723 |
7,275 |
- Deferred tax ( net ) |
488 |
7 |
366 |
(49) |
- MAT credit entitlement |
- |
1,400 |
- |
1,400 |
Profit after taxation |
30524 |
30,952 |
30473 |
30,751 |
Share of minority interest |
- |
- |
(70) |
(84) |
Profit after minority interest |
30524 |
30,952 |
30543 |
30,835 |
Share of profit/(loss) of associate |
- |
- |
(220) |
(121) |
Profit for the year |
30524 |
30952 |
30323 |
30714 |
Cash profit |
62328 |
61,482 |
62854 |
61,800 |
Balance brought forward |
59082 |
42,148 |
63077 |
46,404 |
Profit available for appropriation |
89606 |
73100 |
93400 |
77,118 |
Appropriation |
||||
Effects of adoption of new accounting standard , i.e, Ind AS 115 |
977 |
- |
3552 |
- |
Final dividend |
15888 |
11,916 |
15888 |
11,916 |
Corporate dividend tax |
3133 |
2,298 |
3133 |
2,298 |
Re-measurement of net defined benefit plans (net of tax) |
(356) |
(196) |
(294) |
(173) |
Balance carried forward |
69964 |
59,082 |
71121 |
63,077 |
Total |
89606 |
73,100 |
93400 |
77,118 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the Company during the financial year 2018-19.
3. Dividend
Your Directors are pleased to recommend a dividend of RS.4/- per share (400% of the Companyâs share capital) in adherence with Dividend Distribution Policy. The dividend is subject to approval of shareholders at the ensuing Annual General Meeting. The dividend, if approved, will be paid to members whose names appear in the Register of Members as on 1st August 2019. With respect to the shares held in dematerialised form, it would be paid to the members whose names are furnished by National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd ( CDSL) as owners on the said date. The total dividend outgo for the financial year ended March 31, 2019 amounted to RS.21889/- lacs including the dividend distribution tax of RS.3732 lacs. The dividend payout ratio works out to 72.2%.
4. Transfer to reserve
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
6. Share capital
During the year under review, the Authorised Share capital of the Company was increased from RS.25,00,00,000/- to RS.50,00,00,000/- divided into 50,00,00,000 equity shares of face value of RS.1 each. The Company issued 22,69,67,619 bonus shares of face value of RS.1 each as fully credited on 25th June , 2018 in a ratio of 1:1 (i.e. one equity share for every one equity share already held) to the Members of the Company. With this allotment, the total issued and paid-up capital of the Company has stood to RS.45,39,35,238 comprising 45,39,35,238 equity shares of face value of RS.1 each.
7. Internal control systems and their adequacy
Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Companyâs in-house internal audit department carries out internal audits at all manufacturing locations, offices and sales depots across the country. The objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 and corporate policies.
Your Companyâs internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000:2009 certifications, respectively.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time.
8. Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
9. Subsidiary and Associate companies
A. Subsidiary Companies
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies (Accounts) Rules 2014, the report on performance and financial position of subsidiaries is included in the Consolidated Financial Statements of the Company. The Company has a policy for determining the materiality of a subsidiary, which is available at www.emamiltd.in/investor-info/pdf/Policy-for-Determining-Materiality-of-Subsidiaries. pdf As of March 31, 2019, your Company had the following subsidiary companies:
i) Emami Bangladesh Ltd., wholly-owned subsidiary of Emami Limited
ii) Emami International FZE, wholly-owned subsidiary of Emami Limited
iii) Emami Indo Lanka (Pvt.) Ltd., Sri Lanka a wholly-owned subsidiary of Emami Limited
iv) Emami Rus (LLC), Russia, 99.99% subsidiary of Emami International FZE
v) Emami Overseas FZE, UAE, wholly-owned subsidiary of Emami International FZE
vi) Pharma Derm S A E Co, Egypt, 90.60% subsidiary of Emami Overseas FZE
vii) Fravin Pty. Ltd., Australia, 85% subsidiary of Emami International FZE
viii) Greenlab Organics Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
ix) Diamond Bio-tech Laboratories Pty. Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
x) Abache Pty Ltd, Australia, a subsidiary of Diamond Bio-tech Laboratories Pty. Ltd.
xi) Fentus 113. GmbH, Germany, Wholly owned subsidiary of Emami International FZE
In compliance with IND-AS-110, your Company has prepared its consolidated financial statements, which forms part of this Annual Report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a separate statement containing the salient features of the subsidiary companies in the prescribed form (AOC#1) is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www.emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financial and operational details of the subsidiary companies are provided hereunder:
Emami Bangladesh Ltd.
Emami Bangladesh Ltd., a wholly-owned subsidiary of Emami Limited, was incorporated on November 25, 2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its manufacturing unit in Dhaka. During the financial year ended March 31, 2019, the Company clocked revenues worth RS.11,136 lacs (previous year RS.8,884 lacs) and profit after tax of RS.2,021 lacs (previous year RS.1,265 lacs).
Emami International FZE
Emami International FZE, a wholly-owned subsidiary of Emami Limited, was incorporated on November 12, 2005 in the Hamriyah Free Zone, Sharjah, UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31, 2019, the Company clocked revenues worth RS.16,873 lacs (previous year RS.17.430 lacs) and profit after tax of RS.(673) lacs [previous year RS.(316) lacs ].
Emami Indo Lanka (Pvt) Ltd.
Emami Indo Lanka (Pvt) Ltd., Sri Lanka, which was incorporated on 27th June 2017, is a wholly-owned subsidiary (WOS) of Emami Limited. With an objective of tapping the potential of the local market, it started manufacturing locally in FY 2017-18 through a contract manufacturer.
During the period ended March 31, 2019, the Company earned revenues of RS.752 lacs (previous year RS.402 lacs) and Profit after tax of RS.(59) lacs, (previous year RS.(35) lacs).
Emami (RUS) LLC
Emami (RUS) LLC, a subsidiary of Emami International FZE, UAE, was incorporated on 14th August, 2018 with an objective of trading of Perfumery products, Cosmetics products and Pharma products.
During the period ended March 31, 2019, the Company earned Nil revenues and Profit after tax of RS.(12) Lacs.
Emami Overseas FZE
Emami Overseas FZE, a wholly-owned subsidiary of Emami International FZE, was incorporated on November 25, 2010. It is the holding company of Pharma Derm S. A. E. Co. in Egypt.
During the financial year ended March 31, 2019, the Company recorded revenues worth Nil (previous year: nil) and profit after tax of RS.(8) lacs (previous year profit of RS.804 lacs).
Pharma Derm S. A. E. Co.
Pharma Derm S. A. E. Co. is a 90.60% subsidiary of Emami Overseas FZE and was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was acquired to manufacture pharmaceuticals, disinfectants, cosmetics, chemicals, among others in FY 2010-11. The Company has not yet commenced operations due to volatile political and economic conditions in Egypt.
During the financial year ended March 31, 2019, the Company recorded revenues worth RS.(67) lacs (previous year RS.326 lacs) and profit after tax of RS.(331) lacs (previous year RS.(529) lacs).
Fravin Pty. Ltd.
Fravin Pty. Ltd. (Australia based subsidiary) is an 85%of Emami International FZE. It was acquired in FY 2014-15. It had major strength in research, development and manufacture of natural and organic personal care products. Fravin is a recipient of various prestigious awards in recognition of its qualitative excellence. Fravin, together with its group companies, manufactures a full range of hair care and skin care products certified by various certification bodies in Australia and United states such as the Australian Certified Organic and the United States Department of Agriculture, to name a few.
During the financial year ended March 31, 2019, the Company clocked revenues worth RS.53 lacs (previous year: RS.147 lacs) and a Profit after tax of RS.(246) lacs (previous year loss of RS.(199) lacs).
Greenlab Organics Limited
Greenlab Organics Limited UK, a UK-based subsidiary of Fravin Pty. Ltd., is involved in registration of brands and related activities. However, it is yet to commence operations.
Diamond Bio Tech Laboratories Pty. Ltd.
Diamond Bio Tech Laboratories Pty. Ltd., an Australia-based subsidiary of Fravin, is involved in the export of organic products.
During the financial year ended March 31, 2019, the Company recorded Nil revenues (previous year: nil) and a Profit after tax of RS.(4) lacs (previous year RS.(15) lacs).
Abache Pty. Ltd.
Abache Pty. Ltd., a subsidiary of Diamond Bio-Tech Laboratories Pty. Ltd., Abache has several personal care products in its portfolio. Abache was awarded the first place in the âGreen Formulationsâ category at the Sustainable Beauty Awards 2014 held in Paris.
During the financial year ended March 31, 2019, the Company earned Nil revenues (previous year Nil) and Profit after tax of RS.(8) lacs (previous year RS.(17) lacs).
Fentus 113. GmbH, Germany
Fentus 113 GmbH. Germany a wholly owned subsidiary (WOS) of Emami International FZE, UAE, was incorporated on 3rd Jan, 2019.
The Company is in the process of completing the licence & regulatory requirements before commencing the business.
B. Associate companies
Helios Life Style Private Limited
Helios is engaged in online male grooming sector and during the financial year ended March 31, 2019, earned revenues worth RS.2020 lacs (previous year RS.1201 lacs) and a profit after tax of RS.(707) lacs (previous year RS.(544) lacs).
Brillare Science Private Limited
The Company made strategic investment by way of subscribing Compulsory Convertible Preference shares (CCPS) in Brillare, which is engaged in manufacturing of professional saloon products. The said CCPS have been converted into equity shares and the company subsequently holds 34.70% of voting rights of Brillare which has become Associate of the company with effect from 22nd April 2019.
10. Deposits
The Company has not accepted any public deposits covered under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
11. Non-convertible debentures
The Company did not issue any non-convertible debentures during the financial year 2018-19.
12. Consolidated financial statements
The consolidated financial statements, prepared in accordance with IND-AS 110 consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31, 2019, stood at RS.207,606 lacs as against RS.201,361 lacs at the end of the previous year.
13. Secretarial Standards of ICSI
The Ministry of Corporate Affairs has mandated SS-1 and SS-2 with respect to board meetings and general meetings respectively. The Company has ensured compliance with the same.
14. Auditors and Auditor Report Statutory auditor
Your Companyâs Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (firm registration number 301003E/E300005), were appointed as the Statutory Auditors from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting of the Company.
The Auditors report to the shareholders on the financial statement of the Company for the financial year ended on 31st March 2019 does not contain any qualification, reservation or adverse remark or disclaimer.
Secretarial auditor
Pursuant to the provisions of Section 204 of the Companies Act 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s MKB & Associates, Practicing Company Secretaries, as its secretarial auditor to undertake the secretarial audit for FY2018-19. The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualification, reservation or adverse remarks. Furthermore, the Secretarial Auditor M/s MKB & Associates, Practicing Company Secretaries, have also certified the compliance as per the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 and same has been intimated to the stock exchanges within the stipulated time.
Cost auditor
Your Companyâs cost accountants, M/s. V.K. Jain & Co. (firm registration number 00049), were appointed by the Board of Directors at its meeting held on May 3, 2018 to audit the cost accounting records, as may be applicable to the Company for FY2018-19, and their remuneration was approved during the previous Annual General Meeting.
M/s V. K. Jain & Co, were reappointed as cost auditors for FY2019-20 and the remuneration payable to the cost auditors is required to be placed before the members in the ensuing Annual General Meeting for their ratification. Accordingly, a resolution seeking membersâ ratification for the remuneration payable to them is included in the notice convening the Annual General Meeting. The Board recommends the same for approval by members at the ensuing Annual General Meeting.
15. Conservation energy, technology and foreign exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II)
16. Extract of Annual Return
The extracts of the annual return in form MGT 9 in terms of provisions of Section 92, of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is attached herewith and form part of this report,as (Annexure-III) and the same can be accessed from the website of the Company by clicking on the following link http://www.emamiltd.in
17. Corporate social responsibility
Corporate social responsibility forms an integral part of your Companyâs business activities. Your Company is a responsible corporate citizen, supporting activities which benefit the society as a whole and has fulfilled its CSR obligations for FY 2018-19. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy, which is available at: http://www.emamiltd.in/holistic-living/pdf/ CorporateSocialResponsibilityPolicyofEmamiLtd.pdf
The Annual Report on CSR expenditures for the FY 2018-19 is annexed herewith and forms part of this report (Annexure IV).
18. Directors and key managerial personnels
In accordance with provisions of Section 152 of the Companies Act, 2013 read with Rules made thereunder, Shri A.V Agarwal (DIN 00149717), Shri R.S. Goenka (DIN 00152880) and Shri. S.K. Goenka (DIN 00149916) are liable to retire by rotation at the 36th Annual General Meeting and being eligible, offer themselves for reappointment.
The Board of Directors reappointed Shri Prashant Goenka, as Whole-time Director of the Company upon completion of his present term on 19th January 2019 for a period of 5 (five) years w.e.f 20th January 2019 subject to approval of the members in the ensuing Annual General Meeting.
Late Shri M. D. Mallya, ceased to be Director effective from 25th November 2018 due to his sudden demise. The Board puts on record its appreciation for the valuable guidance provided by him during his tenure as an Independent Director of the Company.
Shri Debabrata Sarkar was appointed as an Additional-cum-Independent Director of the Company with effect from February 21, 2019 for a term of 5 (five) years, by the Board of Directors subject to the approval of shareholders at the 36th Annual General Meeting of the Company.
The Company has received declarations from all the Independent Directors that they meet the criteria of independence as prescribed in the Companies Act, 2013 and SEBI Listing Regulations, 2015.
None of the Directors of the Company is disqualified for being appointed as Director, as specified under Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be reappointed, is provided in the Notice of the Annual General Meeting forming part of the Annual report.
19. Business responsibility report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility Report of the Company for the financial year ended March 31, 2019 is attached as part of the Annual Report.
20. Dividend Distribution Policy
The Company has formulated a Dividend Distribution Policy, which is disclosed in (Annexure V). The same is also displayed on the website of the Company, http://www.emamiltd. in/investor-info/pdf/Dividend_Distribution_Policy_ Emamiltd.pdf
21. Board induction, training and familiarization programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The role, functions, and responsibilities of the Director are also explained in detail and informed about the various compliances required from him/her as a Director under the various provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and financials of the Company. They are also provided presentations about the business and operations of the Company from time to time.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarisation programme for the Independent Directors can be accessed at: http //www.emamiltd in/investor-info/pdf/EmamiLtdFamiliarizationProgramme ForIndependentDirectors.pdf
22. Performance evaluation
Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made thereunder, Regulation 17(10) of the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy.
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per the criteria laid down by the NR Committee. The Board members were satisfied with evaluation process.
23. Number of meetings of the Board
The Board of Directors held four meetings during the year on 3rd May 2018, 1st August 2018, 30th October 2018 and 31st January 2019. The maximum gap between any two meetings was less than 120 days, as stipulated under SEBIâs Listing Requirements, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
24. Committees of the Board
The Company has constituted various Board-level committees in accordance with the requirements of Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Board has the following committees as under:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management Committee
Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this Report.
25. Separate meeting of Independent Directors
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this Report.
26. Whistleblower policy
The Company has established an effective Whistleblower policy (Vigil mechanism) and procedures for its Directors and employees. The details of the same are provided in the Report on Corporate Governance, which forms part of this Report. The policy on vigil mechanism may be accessed on the Companyâs website at: http://www.emamiltd.in/ investor-info/pdf/WhistleBlowerPolicyEmami.pdf
27. Remuneration policy
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and Board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy seeks to provide well-balanced and performance-related compensation packages, taking into account industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the âpay-for-performanceâ principle.
The Companyâs policy on remuneration and appointment of Board members as mentioned in the Remuneration Policy have been disclosed on the Companyâs website: http://www.emamiltd.in/ investor-info/pdf/Remuneration-Policy-Emami-Ltd.pdf and annexed the Directorsâ Report which forms part of the Annual Report (Annexure VI)
28. Related party transactions
All related party transactions entered into by the Company during the financial year were conducted at an armâs length basis. No material contracts or arrangements with related parties were entered into during the year under review. During the year, the Audit Committee had granted an omnibus approval for transactions, which were repetitive in nature for one financial year. All such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. Your Companyâs policy for transactions with the related party was reviewed by the Audit Committee and approved by the Board, can be accessed at: http://www.emamiltd.in/investor-info/pdf/PolicyforTransactionswithRelatedParties. pdf Accordingly, disclosure of Related party Transaction as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in form AOC-2 is not applicable.
The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
29. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act 2013 are given in the notes to financial statements. During the year, the Company has granted loans, provided guarantee and made investment in its wholly owned subsidiary (ies) for their business purpose. The Company has also subscribed to securities of other bodies corporate as strategic investors and the said bodies corporate have issued the said securities for their business purposes. Details of loans granted, guarantee provided and investment made are provided in the notes to the accounts.
30. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this Report. (Annexure VII)
31. Management discussion and analysis and Corporate Governance Report
As per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Companyâs auditors confirming compliance of conditions of Corporate Governance are an integral part of this Report.
32. Risk management system
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. The system also complies with the requirements laid down under the ISO 31000: 2009 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.
33. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
As per the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), your Company has established a policy to prevent sexual harassment of its women employees. The policy allows every employee to freely report any such act with the assurance of prompt action to be taken thereon. The policy lays down severe punishment for any such act. The Company has complied with provisions relating to the constitution of internal complaints committee under POSH. During the year under review, the company has received two complaints which were redressed as per policy and law.
Several initiatives were undertaken during the year to demonstrate the Companyâs zero tolerance philosophy against discrimination and sexual harassment including awareness programme, which included creation and dissemination of comprehensive and easy-to-understand training and communication material.
34. Details of significant and material orders passed by regulators/courts/tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
35. Directorsâ Responsibility Statement
Pursuant to the requirements laid down under Section 134(5) of the Companies Act, 2013, with respect to the Directorsâ Responsibility Statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed and no material departures have been made.
II. The Directors have 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 as on March 31, 2019, and of the profit of the Company for the year ended on that date.
III. The Directors have taken 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.
IV. The annual accounts were prepared on a going concern basis.
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the Company and ensured that such internal financial controls were adequate and operating effectively.
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and that the same are adequate and operating effectively.
36. Acknowledgements
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the unstinted support received from them during the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
For and on behalf of the Board
Place: Kolkata R.S. Agarwal
Date: May 27, 2019 Chairman
Mar 31, 2018
Directors'' Report
It gives me great pleasure to share with you the performance of your company along with audited accounts for the financial year ended March 31, 2018.
1. Performance highlights
It was yet another difficult year for the company. Domestic demand continued to be sluggish in the first half due to trade disruption followed by GST implementation which has recovered gradually and is improving consistently. Subdued growth and geo-political uncertainties also impacted the global business. The year 2017-18 was therefore marked with volatility and disruptions. Your company however continued to perform consistently well in these challenging times and deliver better results. With sales at RS,2541 crores , Emami has registered an overall growth of 0.5 %in the turnover. EBIDTA at RS,719.4 Crores has also grown by -5.2% over previous year.
While all the power brands have performed satisfactorily, new Launches viz. Fair & Handsome facewash, 7 oils in 1, HE Deodorant, Emami Diamond Shine hair colour etc. have also performed well. In order to strengthen its market, the company continued to spend aggressively on advertisements and brand building. Steps have also been taken to improve the distribution and increase rural reach. Besides, efficiency improvement and cost optimization have been followed vigorously across all the functions of the organization. Further, manufacturing capacity has been augmented by setting up a state of the art mega project at Pachoria in Guwahati, Assam at the planned outlay of around RS,300 Crores over a period of last 18 months The unit has already commenced operations in February, 2017.
With implementation of GST and regularization of formal economy coupled with initiatives taken by the government to improve infrastructure, agriculture and industry across all segments, significant consumer growth is expected in the times to come. Emami is poised to take full benefit of this emerging opportunity.
Financial Results
(RS, lac)
Particulars |
Standalone |
Consolidated |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Operating income |
2,36,427 |
2,34,128 |
2,54,083 |
2,52,774 |
Profit before interest, depreciation and taxation |
72,772 |
78,420 |
73,894 |
79,021 |
Interest |
3,317 |
5,762 |
3,431 |
5,801 |
Depreciation and amortization |
30,531 |
30,467 |
31,086 |
30,858 |
Profit before taxation |
38,924 |
42,191 |
39,377 |
42,362 |
Less: Provision for taxation |
||||
- Current tax |
6,565 |
7,524 |
7,275 |
8,394 |
- Deferred tax ( net ) |
7 |
1,363 |
-49 |
1,299 |
- Provision for taxation of earlier years |
- |
68 |
- |
68 |
- MAT Credit Entitlement |
1400 |
-1,400 |
1400 |
-1,400 |
Profit after taxation |
30,952 |
34,637 |
30,751 |
34,001 |
Share of minority interest |
- |
- |
-84 |
-41 |
Profit after minority interest |
30,952 |
34,637 |
30,835 |
34,042 |
Share of Profit/(loss) of associate |
- |
- |
-121 |
- |
Cash profit |
61,482 |
65,104 |
61,800 |
64,900 |
Balance brought forward |
42,148 |
30,996 |
46,404 |
35,986 |
Profit available for appropriation |
73100 |
65,633 |
77,118 |
70,028 |
Appropriation |
||||
Debenture redemption reserve |
- |
- |
- |
- |
General reserve |
- |
- |
- |
- |
Interim dividend |
- |
3,972 |
- |
3,972 |
Final dividend |
11,916 |
15,888 |
11,916 |
15,887 |
Corporate dividend tax |
2,298 |
3,683 |
2,298 |
3,683 |
Adjustment on account of change in Non controlling Interest |
- |
- |
- |
140 |
Remeasurement of net defined benefit plans (net of tax) |
(196) |
(58) |
(173) |
(58) |
Balance carried forward |
59,082 |
42,148 |
63,077 |
46,404 |
73,100 |
65,633 |
77,118 |
70,028 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the Company during the financial year 2017-18.
3. Dividend
Your Directors are pleased to recommend a dividend of H7 per share (700% on the Company''s share capital). The dividend is subject to approval of shareholders at the ensuing Annual General Meeting. The dividend, if approved, will be paid to members whose names appear in the Register of Members on the record date to be fixed by Share Transfer Committee as authorized by the Board. With respect to the shares held in dematerialized form, it would be paid to the members whose names are furnished by NSDL and CDSL as owners on the said date. The total dividend outgo for the financial year ended March 31, 2018 would amount to RS,191.54 crore including the dividend distribution tax. The dividend payout ratio works out to 61.90%. The Dividend is recommended as per Dividend Distribution Policy of the company.
4. Transfer to reserve
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
6. Share capital
During the year under review the Company has not altered its share capital.
7. Bonus
The Board of Directors of your Company has recommended in its meeting held on 3rd May, 2018 the issue of bonus shares in ratio of 1:1, i.e., one equity share for every 1 existing equity shares subject to the approval of members. The approval of the members is being sought through a postal ballot process. The bonus shares shall be allotted to the members as on the record date to be announced after the approval of bonus issue by members. The bonus shares shall be eligible for dividend that may be declared for the financial year 2018-19 and thereafter.
8. Internal control systems and their adequacy
Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Company''s in-house internal audit department carries out internal audits at all manufacturing locations, offices and sales depots across all locations of the country. Their objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 (SEBI Listing Regulations, 2015) and corporate policies.
Shri Manoj Agarwal, Chief Risk Officer and Senior Vice President - Audit &Controls, acts as the Internal Auditor of the Company under Section 138 of the Companies Act, 2013.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time. Your Company''s internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000:2009 certifications, respectively.
9. Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
10. Subsidiary companies, joint ventures and associate companies
A. Subsidiary Companies
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies (Accounts) Rules 2014, the report on performance and financial position of subsidiaries included in the Consolidated Financial Statements of the Company . The Company is having a policy on determining materiality of subsidiary which is available at www.emamiltd.in/investor-
info/pdf/Policy-for-Determining-Materiality-of-Subsidiaries.pdf. As of March 31, 2018, your Company has the following subsidiary companies:
i) Emami Bangladesh Ltd., wholly-owned subsidiary of Emami Limited
ii) Emami International FZE, wholly-owned subsidiary of Emami Limited
iii) Emami Overseas FZE, UAE, wholly-owned subsidiary of Emami International FZE
iv) Pharma Derm S A E Co, Egypt, 90.60% subsidiary of Emami Overseas FZE
v) Fravin Pty. Ltd., Australia, 85% subsidiary of Emami International FZE
vi) Greenlab Organics Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
vii) Diamond Bio-tech Laboratories Pty. Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
viii) Abache Pty Ltd, Australia, a subsidiary of Diamond Bio-tech Laboratories Pty. Ltd.
ix) Emami Indo Lanka (Pvt) Ltd., Sri Lanka a wholly-owned subsidiary of Emami Limited (w.e.f. 03.07.2017)
In compliance with IND-AS-110, your Company has prepared its consolidated financial statements, which forms part of this annual report. Pursuant to the provisions of Section 129(3) of Companies Act, 2013, a separate statement containing the salient features of the subsidiary companies in the prescribed form AOC#1 is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www.emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financials and operations of subsidiary companies are given hereunder:
Emami Bangladesh Ltd.
Emami Bangladesh Ltd., a wholly-owned subsidiary of Emami Limited, was incorporated on November 25, 2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its manufacturing unit in Dhaka. During the financial year ended March 31, 2018, the Company clocked revenues worth H8884 lacs (previous year H10710 lacs) and profit after tax of H1265 lacs (previous year H1548 lacs).
Emami International FZE
Emami International FZE, a wholly-owned subsidiary of Emami Limited, was incorporated on November 12, 2005 in the Hamriyah Free Zone, Sharjah, the UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31, 2018, the Company clocked revenues worth H17430 lacs (previous year H14971 lacs) and profit after tax of H(339) lacs (previous year H(198) lacs).
Emami Overseas FZE
Emami Overseas FZE, a wholly-owned subsidiary of Emami International FZE, was incorporated on November 25, 2010. It is the holding company of Pharma Derm S. A. E. Co. in Egypt.
During the financial year ended March 31, 2018, the Company recorded revenues worth Nil (previous year: nil) but due to other income the profit of the company is H804 lacs (previous year loss of H10 lacs).
Pharma Derm S. A. E. Co.
Pharma Derm S. A. E. Co. is a 90.60%subsidiary of Emami Overseas FZE and was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was set up so as to manufacture pharmaceuticals, disinfectants, cosmetics, chemicals, among others. The management of the Company was taken over by Emami Overseas FZE in FY2010-11 and the Company has not yet commenced operations due to volatile market conditions.
During the financial year ended March 31, 2018, the Company has business activities and recorded revenues worth H326 Lacs (previous year H164 Lacs) and profit after tax of H(529) lacs (previous year H(0.40) lacs).
Fravin Pty. Ltd.
Fravin Pty. Ltd. (Australia based subsidiary) is a 85%of Emami International FZE, was promoted by leading trichologist and internationally-renowned coiffeur, Peter Francis. With major strengths in research, development and manufacture of natural and organic personal care products, Fravin is a recipient of various prestigious awards in recognition of its qualitative excellence. Fravin, together with its group companies, manufactures a full range of hair care and skin care products certified by various certification bodies in Australia and United states such as the Australian Certified Organic and the United States Department of Agriculture, to name a few.
During the financial year ended March 31, 2018, the Company clocked revenues worth H147 lacs (previous year: H140 lacs) and Profit/ (loss) after tax of H(251) lacs (previous year loss of H(324) lacs).
Diamond Bio Tech Laboratories Pty. Ltd.
Diamond Bio Tech Laboratories Pty. Ltd., an Australia-based subsidiary of Fravin, is involved in the export of organic products.
During the financial year ended March 31, 2018, the Company recorded Nil revenues (previous year: nil) and Profit after tax of H(20) lacs (previous year loss of H(31) lacs).
Greenlab Organics Limited
Greenlab Organics Limited UK, a UK-based subsidiary of Fravin Pty. Ltd., is involved in registration of brands and related activities. However, it is yet to commence operations.
Abache Pty. Ltd.
Abache Pty. Ltd., a subsidiary of Diamond BioTech Laboratories Pty. Ltd., Abache has several personal care products in its portfolio. Abache was awarded the first place in the ''Green Formulations'' category at the Sustainable Beauty Awards 2014 held in Paris.
During the financial year ended March 31, 2018, the Company earned Nil revenues (previous year H39 lacs) and Profit after tax of H(12) lacs (previous year loss of H(35) lacs).
Emami Indo Lanka (Pvt) Ltd.
Emami Indo Lanka (Pvt) Ltd., Sri Lanka a wholly-owned subsidiary (WOS) of Emami Limited. Sri Lanka is a potential FMCG market. With an objective of having third-party manufacturing
facility there for launching of some of the company''s products, a WOS company has been established on 3rd July 2017.
During the period ended March 31, 2018, the Company earned revenues of H402 Lacs and Profit/(loss) after tax of H(35) Lacs.
B. Joint ventures and associate companies
The Company has made strategic investment in Helios Life Style Private Limited (Helios), a company engaged in online male grooming segment. The Company has subscribed equity shares representing 20.45% of the share capital of Helios during the year under review.
During the Financial year ended March 31, 2018, the Helios has earned revenues of RS,172 Lacs and Profit/(loss) after tax of RS,(121) Lacs.
11. Deposits
The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014.
12. Non-convertible debentures
The Company issued, listed redeemable nonconvertible debentures worth RS,300 crore and same have been redeemed during the financial year 2017-18.
13. Consolidated financial statements
The consolidated financial statements, prepared in accordance with IND AS 110- consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31, 2018, stood at RS,201362 lacs as against RS,175469 lacs at the end of the previous year.
14. Secretarial Standards of ICSI
The Ministry of Corporate Affairs has mandated SS- 1, SS-2 and SS-3 with respect to board meetings, general meetings and payment of dividend respectively. The Company is in compliance with the same.
15. Auditors and Auditors'' Reports Statutory audit
Your Company''s Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (Firm registration No 301003E/E300005), were appointed as the Statutory Auditors from the conclusion of this 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting of the Company subject to ratification by members every year. The Company has received a certificate from the Auditor under section 141 of the Companies Act 2013 to the effect that they are eligible to continue as Statutory Auditors of the Company.
Secretarial audit
Pursuant to the provisions of Section 204 of the Companies Act 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s MKB & Associates, Practicing Company Secretaries, as its secretarial auditor to undertake the secretarial audit for FY 2017-18. The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualifications, reservations or adverse remarks.
Cost auditor
Your Company''s cost accountants, M/s. V.K. Jain & Co., were appointed by the Board of Directors at its meeting held on May 4, 2017 to audit the cost accounting records, as may be applicable to the Company for the FY 2017-18 and their remuneration has been approved at the previous Annual General Meeting.
M./S V. K. Jain & Co, have been reappointed as cost auditors for the financial year 2018-19 as required under the Companies Act 2013 and the remuneration payable to the cost auditors is required to be placed before the members in the ensuing annual general meeting (AGM) for their ratification. Accordingly, a resolution seeking members'' ratification for the remuneration payable to them is included in the notice convening the AGM. The Board recommends the same for approval by members at the ensuing AGM.
16. Conservation energy, technology and foreign exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II)
17. Extract of Annual Returns
In terms of provisions of Section 92, 134(3)(a) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the annual return in form MGT 9 is annexed herewith and forms part of this Report. (Annexure III)
18. Corporate social responsibility
Corporate social responsibility forms an integral part of your Company''s business activities. Your Company is a responsible corporate citizen, supporting activities which benefit the society as a whole. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India. The Company has duly fulfilled its CSR obligations for FY 2017-18.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy which is available at: http:// www.emamiltd.in/ holisticliving/pdf / Corporate Social Responsibility Policy of EmamiLtd. pdf
The Annual Report on CSR expenditures for the FY 2017-18 is annexed herewith and forms part of this report. (Annexure IV).
19. Directors and key managerial personnel
In accordance with provisions of Section 152 of the Act read with Rules made there under, Shri H.V Agarwal (DIN 00150089), Smt. Priti A Sureka (DIN 00319256) and Shri Prashant Goenka (00703389) are liable to retire by rotation at the 35th AGM and being eligible, offer them selves for reappointment.
At the 34th Annual General Meeting of the Company held on 2nd August 2017, the Shareholders have reappointed Shri R.S. Agarwal as an Executive Chairman of the Company for a period of five years w.e.f. April 1, 2017 and Shri R.S. Goenka, as Whole time Director of the Company upon completion of his existing term on November 7, 2017 for a period there from till March 31, 2022.
Independent Directors namely, Shri K. N. Memani, Shri Y. P Trivedi, Shri M. D. Mallya, Shri S. B. Ganguly, Shri PK. Khaitan and Shri Amit Kiran Deb were reappointed as Independent Directors of the Company for the another term of five years effective from the 34th Annual General Meeting of the Company.
Shri C. K. Dhanuka was appointed as an Independent Director of the Company for a term of five years at the 34th AGM of the Company.
Shri Sajjan Bhajanka, ceased to be Director effective from 2nd August 2017 upon completion of his term of appointment as an Independent Director.
The Company has received declarations from all the Independent Directors that they meet the criteria of independence as prescribed in the Companies Act and SEBI Listing Regulations, 2015.
None of the Directors of the Company is disqualified for being appointed as Director, as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be reappointed, is provided in the Notice of the Annual General Meeting forming part of the Annual report.
20. Business responsibility report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility Report of the Company for the financial year ended March 31, 2018 is attached as part of the Annual Report.
21. Dividend Distribution Policy
The company has formulated a Dividend Distribution Policy which is disclosed in Annexure VI. The same is also displayed on the website of the Company, www.emamiltd.in/ investor-info/pdf/Dividend_Distribution_Policy_ Emamiltd.pdf.
22. Board induction, training and familiarization programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The Director is also explained in detail about the various compliances required from him/ her as a Director under the various provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarize the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and Financials of the Company. They are also provided presentations/booklets about the business and operations of the Company.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarization programme for the Independent Directors can be accessed at: http://www.emamiltd.in/investor-info/pdf/Emami LtdFamiliarizationProgrammeForIndependent Directors.pdf
23. Performance evaluation
Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made there under, Regulation 17(10) of and the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy, they include:
- Attendance
- Preparedness for the meeting
- Staying updated on developments
- Active participation in meetings
- Constructive contributions/positive attributes
- Engaging with and challenging management team without being confrontational or obstructive
- Protection of stakeholder interests
- Contribution to strategic planning
- Carrying out responsibilities as per the code of conduct
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per criteria suggested by SEBI vide circular dated 5th January 2017.
24. Number of meetings of the Board
The Board of Directors held four meetings during the year on May 4, 2017, August 2, 2018, October 25, 2017 and January 29, 2018. The maximum time gap between any two meetings was less than 120 days as stipulated under SEBI''s Listing Requirements, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
25. Separate meeting of Independent Directors
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this report.
26. Committees of the Board
The Company has constituted/reconstituted various Board level committees in accordance with the requirements of Companies Act 2013. The Board has the following committees as under:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management committee
Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this report.
27. Whistleblower policy
The Company has established an effective whistle blower policy (vigil mechanism) and procedures for its Directors and employees; details of which are provided in the Report on Corporate Governance which forms part of this report. The policy on vigil mechanism may be accessed on the Company''s website at: http://www.emamiltd.in/investor-info/ pdf/WhistleBlowerPolicyEmami.pdf.
28. Remuneration policy
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and at the board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy also seeks to provide well-balanced and performance-related compensation packages, taking into account shareholder interests, industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the ''pay-for-performance'' principle.
The Company''s policy on remuneration and appointment of Board members as mentioned in the Remuneration Policy have been disclosed at the company''s website http://www.emamiltd. in/investor-info/index.php# Compliance and annexed the Directors'' Report which forms part of the Annual Report (Annexure VII).
29. Related party transactions
All related party transactions entered into by the Company during the financial year were at arm''s length. During the year the Audit Committee had granted an omnibus approval for transactions which were repetitive in nature for one financial year and all such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. No material contracts or arrangements with related parties were entered into during the year under review. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. Your Company''s policy on related party transactions, as approved by the Board, can be accessed at: http://www.emamiltd.in/investorinfo/ pdf/
The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
30. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to section 186 of the Companies Act 2013 are given in the notes to financial statements. During the year, the company has granted loans, guarantee and investment in its wholly owned subsidiary(ies) for their business purpose. The company has also subscribed securities of other bodies corporate as strategic investors and the said bodies corporate have issued the said securities for their business purpose.
31. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this report.(Annexure V)
32. Management discussion and analysis and Corporate Governance Report
As per Regulation 34(3) read with schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Company''s auditors confirming compliance of conditions of Corporate Governance are an integral part of this report.
33. Risk management system
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. Such system also complies with the requirements of ISO 31000: 2015 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimize adverse impacts of risk to key business objectives.
34. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
The Company has established a policy against sexual harassment for its employees. The policy allows every employee to freely report any such act and prompt action will be taken thereon. The policy lays down severe punishment for any such act. Further, your Directors state that during the year under review, there were no cases of sexual harassment reported to the Company pursuant to the sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
35. Details of significant and material orders passed by regulators/courts/tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
36. Directors'' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to Directors'' Responsibility statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed and no material departures have been made there from.
II. The Directors have 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 as at March 31, 2018 and of the profit of the Company for the year ended on that date.
III. The Directors have taken 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.
IV. The annual accounts were prepared on a going concern basis.
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the company and that such internal financial controls were adequate and operating effectively.
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and the same are adequate and operating effectively.
37. Awards and accolades
During the year under review, the Company has witnessed many successes, some of which are listed as under:
Corporate Awards and Rankings
- Ranked as the 94th MOST VALUABLE COMPANIES in the BT 500 list of 2017.
- Proud recipient of "MODI- Making of Developed India" Award for achieving excellence in export under the category of "Excellence in Global Reach Company of the Year", presented by ET NOW.
- 6th edition of ET Bengal Corporate Awards (ETBCA) awarded ''BEST FINANCIAL PERFORMANCE - 2018'' in the H1000 crore category.
- ET 500 2017 featured the company among the companies that turned out to be multi baggers in the past decade, those that generated the highest return on equity and had the best cash flows.
Brands and Marketing awards
- Boroplus and Zandu have been ranked 49th and 90th position, up from the 54th and 100th ranks of last year, in the "Top 100 Most Trusted Brands" of the Brand Equity Survey 2017 of The Economic Times.
- Boroplus has bagged the 11th position in the Personal Care sub-category, notching up from last year''s rank of 14th.
- The Survey has also featured ZANDU in the 90th rank which bettered its position by 10 ranks in the overall ranking and has been featured in 8th in the sub category of OTC brands.
- HE Flying Basin Campaign was awarded Bronze in the Digital Category for the Best Social Media Campaign (Co-Creation / Crowd Sourcing / Response) at the Prestigious -ABBY AWARDS, the highest award in Indian Advertising.
- Navratna is the proud recipient of Silver Trophy for Special Categories - Activation at "Outdoor Advertising Awards - 2017" for its "Sukun Ka Safar" brand activation at Ujjain Kumbh Mela.
- Brand Navratna wins 2 prestigious awards ''FLAME AWARDS ASIA 2017 - GOLD AND SILVER TROPHY'' in two categories of ''Promotion & Activation Campaign'' and ''Integrated & Social Development'' respectively for its " Navratna Oil - Sukun Ka Safar'' at Ujjain Kumbh Mela".
Individual recognitions
- Forbes India 2017 ranks Shri. R. S. Agarwal and Shri. R. S. Goenka at the 90th position in its Top 100 Rich List.
- Shri. N H Bhansali, CEO - Finance, Strategy & Business Development and CFO, awarded the Best CFO Award for Sustained Wealth Creation in Mid-Cap segment by the YES Bank- BW Business world CFO Awards 2017.
38. Acknowledgements
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the excellent support received from them during the year under review. Your Directors recognize and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
For and on behalf of the Board
Place: Kolkata R.S. Agarwal
Date: May 3, 2018 Chairman
Mar 31, 2017
Dear Shareholderâs
Itâs with immense pleasure that the Directors present their report on the business and operations of the Company and audited accounts for the financial year ended March 31, 2017.
1. Performance highlights
The country is passing through interesting phase of economy. While the governance & transparency are improving, ways of working are being changed which is temporarily adding stress for unlocking future growth potential. During the year, domestic market was significantly impacted by demonetization, lower industrial growth & lower disposal income, resulting in lower off-takes. The global environment was also very challenging. Currency volatility, political instability & depressed market conditions added further woes. The year 2016-17 was therefore marked with many disruptions. Your company however continued to perform consistently well in these challenging times and deliver better results than most of its peers. With sales at RS.2533 Crores, Emami has registered an overall growth of 5.6% in the turnover. EBIDTA at RS.759 Crores has also grown by 10.5% over previous year.
While all the power brands have performed well, new Launches viz. Fair & Handsome facewash, 7 oils in 1, HE Deodorant etc. have also performed satisfactorily. In order to strengthen its market, the company continued to spend aggressively on advertisements and brand building. Steps have also been taken to improve the distribution and increase rural reach. Besides, efficiency improvement and cost optimisation have been followed vigorously across all the functions of the organisation. Further, manufacturing capacity has been augmented by setting up a state of the art mega project at Pacharia in Guwahati, Assam at the planned outlay of RS.300 Crores. The unit has already commenced operations on 23rd February, 2017.
With implementation of GST and regularization of formal economy coupled with initiatives taken by the government to improve infrastructure, agriculture and industry across all segments, significant consumer growth is expected in the times to come. Emami is poised to take full benefit of this emerging opportunity.
Financial results (Rs. lacs)
Particulars |
Standalone |
Consolidated |
||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Operating income |
2,34,075 |
2,18,913 |
2,53,261 |
2,39,755 |
Profit before interest, depreciation and taxation |
78,420 |
69,328 |
79,021 |
73,173 |
Interest |
5,762 |
5,375 |
5,801 |
5,403 |
Depreciation and amortisation |
30,467 |
25,213 |
30,858 |
25,493 |
Profit before taxation |
42,191 |
38,740 |
42,362 |
42,277 |
Less: Provision for taxation |
||||
- Current tax |
7,524 |
6,738 |
8,394 |
7,220 |
- Provision for taxation of earlier years |
68 |
5 |
68 |
5 |
- Deferred tax (net) |
1,362 |
(1,218) |
1,299 |
(1,254) |
- MAT Credit Entitlement |
(1,400) |
- |
(1,400) |
- |
Profit after taxation |
34,636 |
33,215 |
34,001 |
36,306 |
Add/Less; Share of minority interest |
- |
- |
(41) |
(46) |
Profit after minority interest |
34,637 |
33,215 |
34,042 |
36,352 |
Cash profit |
65,104 |
58,428 |
64,900 |
61,845 |
Balance brought forward |
31,349 |
13,829 |
36,339 |
15,682 |
Profit available for appropriation |
65,986 |
47,044 |
70,381 |
52,034 |
Appropriation |
||||
Debenture redemption reserve |
- |
7,500 |
- |
7,500 |
General reserve |
- |
- |
- |
- |
Interim dividend |
3,972 |
- |
3,972 |
- |
Proposed dividend |
15,888 |
6,809 |
15,888 |
6,809 |
Corporate dividend tax |
3,683 |
1,386 |
3,683 |
1,386 |
Adjustment on account of change in Non controlling Interest |
- |
- |
140 |
- |
Balance carried forward |
42,443 |
31,349 |
46,698 |
36,339 |
65,986 |
47,044 |
70,381 |
52,034 |
2. Changes in the nature of business, if any
There has been no change in the nature of business of the company during the financial year 2016-17.
3. Dividend
The Company has paid an interim dividend of 175%, being RS.1.75 per share of Re. 1 each for the financial year 2016-17 to the shareholders as on its record date i.e. March 15, 2017. Your Directors are pleased to recommend the final dividend of RS.5.25 per share (525% on the Companyâs share capital) apart from interim dividend of RS.1.75 for FY 2016-17. The final dividend is subject to approval of shareholders at the ensuing Annual General Meeting. The final dividend, if approved, will be paid to members whose names appear in the Register of Members as on 27th July 2017. With respect to the shares held in dematerialised form, it would be paid to the members whose names are furnished by NSDL and CDSL as owners on the said date. The total dividend outgo for the financial year ended March 31, 2017 amounted RS.191.23 crore including the dividend distribution tax. The dividend payout ratio works out to 55.21%. The dividend is in accordance with the dividend distribution Policy of the Company.
4. Transfer to reserve
Your Directors do not propose to transfer any amount to the general reserve.
5. Material changes and commitments
No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.
6. Share capital
During the year under review the Company has not altered its share capital.
7. Internal control systems and their adequacy
Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.
Your Companyâs in-house internal audit department carries out internal audits at all manufacturing locations, offices and sales depots across all locations of the country. Their objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 and corporate policies.
Shri Manoj Agarwal, Chief Risk Officer and Senior Vice President -Audit & Controls, acts as the Internal Auditor of the Company under Section 138 of the Companies Act, 2013.
A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time. Your Companyâs internal audit department and risk management system have been accredited with ISO 9001:2015 and ISO 31000: 2009 certifications, respectively.
8. Internal financial controls
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
9. Subsidiary companies, joint ventures and associate companies
A. Subsidiary Companies
Pursuant to Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules 2014, the report on performance and financial position of subsidiaries included in the Consolidated Financial Statements of the Company. As at March 31, 2017, your Company has the following subsidiary companies:
i. Emami Bangladesh Ltd., wholly-owned subsidiary of Emami Limited
ii. Emami International FZE, wholly-owned subsidiary of Emami Limited
iii. Emami Overseas FZE, UAE, wholly-owned subsidiary of Emami International FZE
iv. Pharma Derm S A E Co, Egypt, 90.60% subsidiary of Emami Overseas FZE
v. Fravin Pty. Ltd., Australia, 85% subsidiary of Emami International FZE
vi. Greenlab Organics Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
vii. Diamond Bio-tech Laboratories Pty. Ltd., Australia, a subsidiary of Fravin Pty. Ltd.
viii. Abache Pty Ltd, Australia, a subsidiary of Diamond Biotech Laboratories Pty. Ltd.
In compliance with IND-AS-110, your Company has prepared its consolidated financial statements, which forms part of this annual report. Pursuant to the provisions of Section 129(3) of Companies Act, 2013, a separate statement containing the salient features of the subsidiary companies in the prescribed form AOC#1 is a part of the consolidated financial statements. The accounts of the subsidiary companies will be available to any member seeking such information at any point of time. The financial statements of the Company along with the accounts of the subsidiaries will be available at the website of the Company, www.emamiltd.in, and kept open for inspection at the registered office of the Company.
Brief financials and operation of subsidiary companies are given hereunder:
Emami Bangladesh Ltd.
Emami Bangladesh Ltd., a wholly-owned subsidiary of Emami Limited, was incorporated on November 25, 2004 under the Companies Act of Bangladesh. It is engaged in the manufacture, import and sale of cosmetics and ayurvedic medicines from its manufacturing unit in Dhaka. During the financial year ended March 31, 2017, the Company clocked revenues worth RS.10710 lacs (previous year RS.9762 lacs) and profit after tax of RS.1548 lacs (previous year RS.875 lacs). During the year the Company has paid a sum of RS.676 lacs as dividend to its Holding Company for the FY 2015-16.
Emami International FZE
Emami International FZE, a wholly-owned subsidiary of Emami Limited, was incorporated on November 12, 2005 in the Hamriyah Free Zone, Sharjah, the UAE and is governed by the rules and regulations laid down by the Hamriyah Free Zone Authority. It is engaged in the business of purchasing and selling cosmetics and ayurvedic medicines.
During the financial year ended March 31, 2017, the Company clocked revenues worth RS.14971 lacs (previous year RS.20540 lacs) and profit after tax of H(198) lacs (previous year RS.2,358 lacs). During the year the Company has paid a sum of RS.1004 lacs as dividend to its Holding Company for the FY 2015-16.
Emami Overseas FZE
Emami Overseas FZE, a wholly-owned subsidiary of Emami International FZE, was incorporated on November 25, 2010. It is the holding company of Pharma Derm
S. A. E. Co. in Egypt.
During the financial year ended March 31, 2017, the Company recorded revenues worth nil (previous year: nil) and a loss of RS.10 lacs (previous year loss of RS.3 lacs).
Pharma Derm S. A. E. Co.
Pharma Derm S. A. E. Co. is a 90.60% subsidiary of Emami Overseas FZE and was registered on September 6, 1998 under the relevant Companies Act of Egypt.
The Company was set up so as to manufacture pharmaceuticals, chemicals, disinfectants, cosmetics, a mong others. The ma nagement of the Company was taken over by Emami Overseas FZE in FY2010-11 and the Company has not yet commenced manufacturing operations due to volatile market conditions.
During the financial year ended March 31, 2017, the Company has business activities and recorded revenues worth RS.164 lacs (previous year Nil) and loss of RS.33 lacs due to operational expenses.
Fravin Pty. Ltd.
Fravin Pty. Ltd. (Australia based subsidiary) is a 85% (previous year 66.67%) of Emami International FZE, was promoted by leading trichologist and internationally-renowned coiffeur, Peter Francis. With major strengths in research, development and manufacture of natural and organic personal care products, Fravin is a recipient of various prestigious awards in recognition of its qualitative excellence. Fravin, together with its group companies, manufactures a full range of hair care and skin care products certified by various certification bodies in Australia and United states such as the Australian Certified Organic and the United States Department of Agriculture, to name a few.
During the financial year ended March 31, 2017, the Company clocked revenues worth RS.140 lacs (previous year: RS.223 lacs) and a loss of RS.228 lacs (previous year loss of RS.63 lacs).
Diamond BioTech Laboratories Pty. Ltd.
Diamond Bio Tech Laboratories Pty. Ltd., an Australia-based subsidiary of Fravin, is involved in the export of organic products.
During the financial year ended March 31, 2017, the Company recorded Nil revenues (previous year: nil) and a loss of RS.22 lacs (previous year loss of RS.32 lacs) due to operation expenses.
Greenlab Organics Limited
Greenlab Organics Ltd. UK, a UK-based subsidiary of Fravin Pty. Ltd., is involved in registration of brands and related activities. However, it is yet to commence operations.
Abache Pty. Ltd.
Abache Pty. Ltd., a subsidiary of Diamond Bio-Tech Laboratories Pty. Ltd. has several personal care products in its portfolio. Abache was awarded the first place in the âGreen Formulationsâ category at the Sustainable Beauty Awards 2014 held in Paris.
During the financial year ended March 31, 2017, the Company earned revenues worth RS.39 lacs (previous year RS.199 lacs) and incurred loss of RS.24 lacs (previous year loss of RS.36 lacs).
B. Joint ventures and associate companies
Your Company does not have any joint ventures or associate companies as per the norms laid down under the Companies Act, 2013.
10. Deposits
Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.
11. Non-convertible debentures
The Company issued, listed redeemable non-convertible debentures worth RS.300 crore and the redemption of the same is due during the financial year 201718. The Company had created a Debenture Redemption Reserve of RS.75 crore in terms of the provisions laid down under the Companies Act, 2013 and has also deposited/ invested a sum of RS.45 crore, i.e 15% of the debentures maturing during the financial year 2017-18 as per prescribed rules.
12. Consolidated financial statements
The consolidated financial statements, prepared in accordance with IND AS 110-consolidated financial statements, form part of this Report. The net worth of the consolidated entity as on March 31, 2017, stood at RS.175469 lacs as against RS.161161 lacs at the end of the previous year.
13. Auditors and Auditorsâ Reports
Statutory audit
Your Companyâs statutory auditors, M/s S. K. Agrawal & Co., Chartered Accountants, were appointed as statutory auditors at the 31st Annual General Meeting of the Company for a period of three years i.e. till the conclusion of the ensuring Annual General Meeting. The term of appointment of M/s. S. K. Agrawal & Co., Chartered Accountants will complete at the conclusion of the forthcoming AGM. The Board took on record its appreciation of service rendered by them during their tenure as Statutory Auditors of the Company.
M/s S. R. Batliboi & Co LLP, Chartered Accountants have been proposed to be appointed as statutory auditors of the Company at the ensuing Annual General Meeting for a period of five years from the conclusion of the ensuing 34th AGM till the conclusion of 39th AGM of the Company. The said firm has given its consent and declared that they are not disqualified to be appointed as statutory auditors.
Report of M/s S. K. Agrawal & Co., Chartered Accountants, and statutory auditorâs Report does not contain any qualifications, reservations or adverse remarks.
Secretarial audit
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 has appointed M/s MKB & Associates, practicing company secretaries, as its secretarial auditor to undertake the secretarial audit for FY 2016-17. The secretarial audit report in the specified form MR-3 is annexed herewith and forms part of this report (Annexure I). The secretarial audit report does not contain any qualifications, reservations or adverse remarks.
Cost audit
Your Companyâs cost accountants,
M/s. V.K. Jain & Co., were appointed by the Board of Directors at its meeting held on May 13, 2016 to audit the cost accounting records, as may be applicable to the Company for the FY 2016-17 and their remuneration has been approved at the previous Annual General Meeting.
M./S V. K. Jain & Co, have been reappointed as cost auditors for the financial year 2017-18. The remuneration payable to the cost auditors is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking membersâ ratification for the remuneration payable to them is included in the notice convening the AGM. The Board recommends the same for approval by members at the ensuing AGM.
14. Conservation of energy, technology and foreign exchange outgo
The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith and forms part of this Report. (Annexure II)
15. Extract of Annual Returns
In terms of provisions of Section 92, 134(3)(a) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the annual return in form MGT 9 is annexed herewith and forms part of this Report. (Annexure III)
16. Corporate social responsibility
Corporate social responsibility forms an integral part of your Companyâs business activities. Your Company is a responsible corporate citizen, supporting activities which benefit the society as a whole. The Company carries out its corporate social responsibility initiatives not just in letter but also in spirit and thus has touched thousands of lives across India.
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy which is available at: http://www.emamiltd.in/holisticliving/pdf / Corporate Social Responsibility Policy of Emami Ltd. pdf
The Annual Report on CSR expenditures for the FY 2016-17 is annexed herewith and forms part of this report. (Annexure IV). A sum of RS.191.65 lacs remained underspend mainly due to extraneous factors and also due to better planning and negotiations which resulted in savings despite carrying the activities as envisaged. Besides, some projects are of multiyear projects and so expenditure can be done in stages / year wise which may result in lower / higher expenditure in a particular year.
17. Directors and key managerial personnel
Upon recommendation of the Nomination and Remuneration Committee and subject to the approval of shareholders by way of special resolutions, the Board of Directors at its meeting held on January 30, 2017 re-appointed Shri R.S. Agarwal as an Executive Chairman of the Company for a period of five years w.e.f. April 1, 2017 and Shri R.S. Goenka, as Whole-time Director of the Company upon completion of his existing term from November 8, 2017 till March 31, 2022.
Shri R. S. Goenka, Shri Mohan Goenka and Shri S. K. Goenka, Directors would retire by rotation at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment.
The term of appointment of Shri K. N. Memani, Shri Y. P. Trivedi, Shri M. D. Mallya, Shri S. B. Ganguly, Shri P.K. Khaitan and Shri Amit Kiran Deb as Independent Directors of the Company is completing at the conclusion of the ensuing AGM of the Company. In the ensuing Annual General Meeting, the Board on recommendation of the Nomination and Remuneration Committee, has proposed their reappointment for another term of 5 (five) years with effect from conclusion of 34th Annual General Meeting through special resolutions. The term of appointment of Shri Sajjan Bhajjanka as Independent Director of the Company is also ending on the conclusion of ensuing AGM of the Company and he has expressed his unwillingness to be further considered for reappointment due to his preoccupation in other business. The Board places on record its appreciation for the guidance received by it from Shri Sajjan Bhajanka during his tenure as Independent Director.
In the ensuing Annual General Meeting, the Board on recommendation of the Nomination and Remuneration Committee, has proposed appointment of Shri C. K. Dhanuka as an Independent Director for a period of 5 (five) years from date of the 34th Annual General Meeting of the Company.
The Company has received declarations from all the Independent Directors that they meet the criteria of independence as prescribed in the Companies Act, 2013 and SEBI Listing Regulations, 2015.
None of the Directors of the Company are disqualified for being appointed as Directors, as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
A brief resume of the Directors proposed to be appointed/ reappointed, is provided in the Notice of the 34th Annual General Meeting of the Company.
18. Business responsibility report
As required under Regulation 34 of SEBI Listing Regulations 2015, the Business Responsibility Report of the Company for the financial year ended March 31, 2017 is attached as part of the Annual Report.
19. Board induction, training and familiarisation programme for Independent Directors
Prior to the appointment of an Independent Director, the Company sends a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The Director is also explained in detail about the various compliances required from him/her as a Director under the provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.
A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the Financials of the Company and new product launches. They are also provided presentations/booklets about the business and operations of the Company.
The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarisation programme for the Independent Directors can be accessed at: http:// www.emamiltd.in/investorinfo/pdf/amiLtdFamiliarizationProgramme ForIndependentDirectors.pdf.
20. Annual evaluation
Pursuant to the provisions of Section 178 of the Companies Act, 2013 and the SEBI Listing Regulations, 2015 the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy, they include:
- Attendance
- Preparedness for the meeting Staying updated on developments
- Active participation in meetings
- Constructive contributions/ positive attributes
- Engaging with and challenging management team without being confrontational or obstructive
- Protection of stakeholder interests
- Contribution to strategic planning
- Carrying out responsibilities as per the code of conduct
The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per criteria suggested by SEBI vide circular dated 5th January 2017.
21. Number of meetings of the Board
The Board of Directors held five meetings during the year on May 5, 2016, August 3, 2016, October 27, 2016, January 30, 2017 and on March 6, 2017. The maximum time gap between any two meetings was less than 120 days as stipulated under SEBIâs Listing Requirements, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.
22. Separate meeting of Independent Directors
A separate meeting of the Independent Directors was held on January 30, 2017. Shri Y. P Trivedi, the Lead Independent Director presided the meeting. The Independent Directors at said meeting reviewed the performance of the Non- Independent Directors, the Board as a whole and the Executive Chairman of the Company.
Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this report.
23. Committees of the Board
The Company has constituted/ reconstituted various Board level committees in accordance with the requirements of Companies Act 2013. The Board has the following committees:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Share Transfer Committee
IV. Stakeholders Relationship Committee
V. Finance Committee
VI. Corporate Governance Committee
VII. Corporate Social Responsibility Committee
VIII. Risk Management committee Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this report.
24. Whistleblower policy
The Company has established an effective whistleblower policy (vigil mechanism) and procedures for its Directors and employees; details of which are provided in the Report on Corporate Governance which forms part of this report. The policy on vigil mechanism may be accessed on the Companyâs website at: http:// www.emamiltd.in/investor-info/ pdf/Whistle Blower Policy Emami. pdf.
25. Remuneration policy
The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and at the board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy also seeks to provide well-balanced and performance-related compensation packages, taking into account shareholder interests, industry standards and relevant regulations.
The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long- term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the âpay-for-performanceâ principle.
26. Related party transactions
All related party transactions entered into by the Company during the financial year were at armâs length. During the year the Audit Committee had granted an omnibus approval for transactions which were repetitive in nature for one financial year and all such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. No material contracts or arrangements with related parties were entered into during the year under review. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. Your Companyâs policy on related party transactions, as approved by the Board, can be accessed at: http://www.emamiltd. in/investorinfo/pdf/
The Company has developed and adopted relevant SOPs for the purpose of monitoring and controlling such transactions.
27. Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments made by the Company pursuant to section 186 of the Companies Act, 2013 are given in the notes to financial statements.
28. Particulars of employees and managerial remuneration
The information of employees and managerial remuneration, as required under Section 197(2) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this report. (Annexure V)
29. Management discussion and analysis and Corporate Governance Report
Regulation 34(3) read with schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Companyâs auditors confirming compliance of conditions of Corporate Governance are an integral part of this report.
30. Risk management system
The Company has developed and implemented a risk management policy which is periodically reviewed by the management. Such system also complies with the requirements of ISO 31000: 2015 norms.
In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Risk Management Committee, Audit Committee and the Board on a quarterly basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.
31. Prevention of sexual harassment at workplace
Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.
The Company has established a policy against sexual harassment for its employees. The policy allows every employee to freely report any such act and prompt action will be taken thereon. The policy lays down severe punishment for any such act. Further, your Directors state that during the year under review, there were no cases of sexual harassment reported to the Company pursuant to the sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
32. Details of significant and material orders passed by regulators/courts/ tribunals
There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.
33. Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to Directorsâ Responsibility Statement, the Directors confirm that:
I. In the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards have been followed and no material departures have been made therefrom.
II. The Directors have 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 as at March 31, 2017 and of the profit of the Company for the year ended on that date.
III. The Directors have taken 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.
IV. The annual accounts were prepared on a going concern basis.
V. The Directors have laid down effective internal financial controls to consistently monitor the affairs of the company that such internal financial controls were adequate and operating effectively.
VI. The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and the same are adequate and operating effectively.
34. Awards and accolades
During the year under review, the Company saw many successes, some of which are listed as under:
- Ranked among the âSuper 50â by Forbes India for the second consecutive year and the 87th âMost Valuable Companiesâ in the BT 500 list of 2016.
- Adjudged as the Winner of Golden Peacock Innovation Management Award for the year 2016.
- Ranked 342nd (previous year: 423rd) in BW Real 500, a ranking of Indiaâs largest companies conducted by Businessworld. The ranking has been done on basis of their combined total assets and total income. In the market cap subsector, Emami ranked 65th among the 70 companies featured.
- Award for CSR Leadership in the âSupport & Improvement in Quality of Educationâ category.
- Ranked 349th in the FE 1000 2016 rankings and 90th in terms of market cap.
- Ranked 291st in BS Super 1000 (previous year: 326th) and secured the 14th position in the âConsumer Staplesâ segment among 38 companies.
Marketing awards
- Navratna won the âSilverâ award at the WOW Awards 2016 in the âRural Activation of the Year for Sales Volumeâ category.
- HE Deo won a prestigious IndIAA award for âBest Campaign in Personal Careâ category. The brand won the same award for the âHE Respectâ campaign, which featured Vir Das and Hrithik Roshan, which was aired digitally in May 2016.
- BoroPlus jumped 30 ranks to occupy the 54th position in the âTop 100 Most Trusted Brandsâ of the ET Brand Equity Survey 2016 from the 84th rank of the last year. The survey also featured another power brand, Zandu, at the 100th position in the overall rankings and sixth in the OTC brands sub-category.
Individual recognitions
- Shri R.S. Agarwal and Shri R.S. Goenka were ranked 30th in the BS Billionaire Club; they were conferred with Super Icon Awards 2017 by Society for being business visionaries and with a D.Litt. degree (honoris causa) by KIIT University, Bhubaneswar for their multifaceted contribution to business and society.
- FORBES INDIA - Collectorâs Edition (issue dated 21st December, 2016) featured Shri R. S. Agarwal and Shri R. S. Goenka on THE 100 RICHEST INDIANS, ranking them at the 84th position.
- In a special issue of Business Today, Shri R. S. Agarwal was featured fifth in an annual list of âIndiaâs Top 100 Best CEOsâ.
- Emami features at #30 as âRadheshyam Agarwal & Familyâ - comprising the market cap of Emami Ltd., Emami Infra, Emami Paper and Zandu Realty Indiaâs Super Rich 2016 by Businessworld.
- Shri H. V. Agarwal selected as one of the winners of the prestigious âForty under 40â list of 2016 in Indiaâs top-40 under 40 list, put together by Spencer Stuart in collaboration with The Economic Times.
- Shri N. H. Bhansali, CEO - Finance, Strategy & Business Development and CFO, was selected as CFO Indiaâs 7th Annual CFO100 Roll of Honour; won the award as the CFO in the category of âMergers & Acquisitionsâ; Best CFO Award for âConsistent Liquidity Management in Mid-Cap segmentâ and special jury award of being the âOverall Champion CFOâ by the YES Bank-Businessworld CFO Awards 2016.
35. Acknowledgements
Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders, Regulators, shareholders, bankers, dealers, vendors and other business partners for the excellent support received from them during the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.
For and on behalf of the Board
Place: Kolkata R.S. Agarwal
Date: May 4, 2017 Chairman
Mar 31, 2014
Dear Members,
The Directors have the pleasure of presenting their report on the
business and operations of the Company and audited accounts for the
year ended March 31, 2014.
Performance Highlights
The Indian FMCG sector was affected by a number of issues including
inflation, decelerated GDP growth, climatic unpredictability, high
interest rates, higher deficit and forex volatility. The country also
witnessed a brief summer and a briefer winter still, affecting Emami''s
performance. The Company''s focus shifted internally on keeping the
micro factors under control and thereby improving profitability. The
result was that even when Emami registered a 7.2% growth in
consolidated revenues to reach H1,821 crore compared to H1,699 crore in
2012- 13, consolidated profit after tax increased by a strong 27.9% to
H402 crore as against H315 crore in 2012-13. Standalone turnover
increased by 4.8% to reach H1,705 crore and profit after tax increased
by 23% to H398 crore.
Financial results (standalone) (Rs.in lacs)
Particulars 2013-14 2012-13
Operating income 1,70,508 1,62,709
Profit before interest, depreciation,
taxation and exceptional items 49,278 40,403
Interest 389 610
Depreciation and amortisation 9,380 12,329
Transferred from general reserve (6098) (10,209)
Profit before taxation and exceptional
items 45,607 37,673
Exceptional items 428 -
Profit before taxation 45,179 37,673
Less : Provision for taxation
- Current tax 7,981 5,500
- Deferred tax ( net ) (889) (82)
- Provision for taxation of earlier years (1736) (122)
Profit after taxation 39,823 32,377
Balance brought forward 2,177 4,171
Profit available for appropriation 42,000 36,548
Appropriation
General reserve 16,097 20,209
Interim dividend 6809 -
Proposed dividend 9,079 12,105
Corporate dividend tax 2,700 2,057
Balance carried forward 7,315 2,177
42,000 36,548
Dividend
The Board of Directors had paid an interim dividend of Rs.3 per share
(300% on the Company''s share capital) at its meeting held on 20th
January, 2014 and proposed a final dividend of H4 per share (400% on
the Company''s share capital) for the financial year ended March 31,
2014 for its members, subject to approval of shareholders at the
ensuing Annual General Meeting. The aforesaid dividend, if approved,
will be paid to members whose names appear in the register of members
as on Monday, 4th August, 2014. With respect to the shares held in
dematerialised form, it would be paid to the members whose names are
furnished by NSDL and CDSL as beneficial owners as on that date. The
total dividend outgo for the current year amounted to H18,588 lac,
including the dividend distribution tax. The dividend payout ratio
worked out to 46%.
Operations
FY 2013-14 had its sets of challenges viz. a steady fall in GDP
growth, climatic unpredictability, inflation, high interest rates,
forex volatility among others. In this market environment, Emami
strengthened its market share in key categories, conserved resources
and delivered good profits despite low offtakes. During the year under
review, the Company strengthened its existing brands on one hand and
continued to launch new products on other.
It was an splendid year for the international business which recorded a
growth of 23% over 2012-13. Emami performed admirably well in the MENAP
countries as well as in Bangladesh where the manufacturing unit has
already commenced operations. Emami maintained its leadership position
for various products in Russia, Nepal, Bangladesh and the Middle
Eastern countries.
Raw materials were purchased judiciously and advance raw material
bookings were made. The price of mentha oil also remained favourable
during the entire year.
Because of the climatic vagaries, the A&P spending was rationalised and
stood at 15.2% of consolidated revenue in 2013-14 as against 16.4% in
2012-13. Cost optimisation measures were implemented to achieve higher
efficiency which allowed Emami to deliver strong results in challenging
times.
Corporate Social Responsibility
At Emami, Corporate Social Responsibility (CSR) forms an integral part
of the Company''s business activities. It is not merely following the
letter of the law but purely voluntary. Your Company does it beyond any
statutory requirements or obligations.
Your Company is a responsible corporate citizen in supporting
activities related to the welfare of its employees and society. Emami
undertakes CSR activities through Emami Foundation and other charitable
organisations. Medical services, education, community development,
women empowerment and poverty alleviation, among others fall under the
Company''s domain of CSR. An organising committee was set up to
formulate CSR guidelines, evaluate and monitor activities and plan
macro-level CSR initiatives. Under this organising committee,
sub-committees were created to ensure enhanced attention in the areas
of medical services, education and disaster relief, among others.
Ethical corporate behaviour forms the basis of Emami''s CSR initiatives.
Hunger, disease and ignorance are still the burning issues of modern
times; despite remarkable growth in scientific research, government
budgetary resources have proved to be inadequate to lessen the
suffering. The corporate world cannot afford to remain a passive
onlooker when people all around remain afflicted with hunger and
malnutrition, diseases and physical infirmity, illiteracy and
ignorance. Emami has a long tradition in the area of philanthropic
activities with a professional outlook. An exercise has been made
underway to integrate all such activities across healthcare, education,
community development, women empowerment, livelihood creation and
environment management segments.
As per Companies Act, 2013, provisions relating to CSR are applicable
to the Company w.e.f. 1st April, 2014, accordingly the Company has
constituted a CSR Committee consisting of Executive Directors and an
Independent Director.
Issue of Bonus Shares
The Company issued 7,56,55,873 bonus shares of face value of H1 each on
June 28, 2013 at a ratio of 1:2 (i.e. one Equity Share for every two
Equity Shares already held) to the Members of the Company. With this
allotment, the total issued and paid-up capital of the Company has
increased to H22,69,67,619 comprising of 22,69,67,619 Equity Shares of
face value of H1 each.
Listing
The Company''s Equity Shares are listed on the National Stock Exchange
Limited, the BSE Limited. and the Calcutta Stock Exchange Limited. The
listing fees up to the financial year 2014-15 have been paid.
Subsidiary Companies
As of 31st March, 2014, the Company included the following subsidiary
companies:
1. Emami UK Ltd
2. Emami Bangladesh Ltd
3. Emami International FZE
4. Emami Overseas FZE
5. PharmaDerm S A E Co.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to subsidiary companies, is attached to the accounts.
In terms of general exemption granted by the Ministry of Corporate
Affairs, the Balance Sheet and Profit and Loss Account of the
subsidiary companies are not attached with the Balance Sheet of the
Company.
The following information in aggregate for each subsidiary is also
being enclosed
(a) Capital (b) Reserves (c) Total assets (d) Total liabilities (e)
Details of investment (except in the case of investment in
subsidiaries) (f) Turnover (g) Profit before taxation (h) Provision for
taxation (i) Profit after taxation and (j) Proposed dividend.
In compliance with Accounting Standard 21 of the Consolidated Financial
Statements, notified in Companies (Accounting Standards) Rules 2006,
your Company has prepared its consolidated financial statements, which
forms part of this annual report. The accounts of the subsidiary
companies will be available to any member seeking such information at
any point of time. These accounts will be available on the website of
the Company - www.emamiltd. in and kept open for inspection at the
registered office of the Company.
Directors
During the year, the Board of Directors appointed Shri Pradip Kr.
Khaitan and Shri M.D. Mallya as Independent Directors of the Company on
24th June 2013 and 20th January 2014 respectively. Shri Prashant Goenka
was appointed as a Wholetime Director of the Company on 20th January
2014, for a period of five years subject to the approval of the members
of the Company.
Shri M.D. Mallya and Shri Prashant Goenka have been appointed as
Additional Directors and in respect of them the Company has received
notices from shareholders for their appointment as Directors in the
ensuing Annual General Meeting.
In terms of Section 149 of the Companies Act, 2013, the Board proposes
appointment of Shri Y.P. Trivedi, Shri K.N. Memani, Vaidya Suresh
Chaturvedi, Shri Sajjan Bhajanka, Shri S.B. Ganguly, Shri Amit Kiran
Deb, Shri M.D. Mallya and Shri P.K. Khaitan who are Independent
Directors as Non-rotational Directors for a period of three years at
the ensuing Annual General Meeting. The Company has also received
notices from shareholders for their appointment as Independent
Directors at the ensuing Annual General Meeting.
Shri A. V. Agarwal and Shri R.S. Goenka would retire by rotation at the
ensuing Annual General Meeting and, being eligible, offer themselves
for reappointment.
A brief resume of the Directors proposed to be appointed/reappointed as
required under Clause 49 of the Listing Agreement, is provided in the
Notice of the Annual General Meeting forming part of the Annual Report.
Internal Control Systems and their Adequacy
The Company has in place an adequate system of internal controls
commensurate with its size, requirements and the nature of operations.
These systems are designed, keeping in view the nature of activities
carried out at each location and the various business operations.
The Company''s in-house internal audit department in collaboration with
reputed audit firms carries out internal audit at all manufacturing
locations, offices and sales depots situated across the country. Their
objective is to assess the existence and operation of financial and
operating controls set up by the Company and also to ensure compliance
of applicable statutes and corporate policies.
A summary of all audit reports containing significant findings by the
audit department along with the follow-up actions thereafter is placed
before the Audit Committee for review. The Audit Committee reviews the
comprehensiveness and effectiveness of the report and provides valuable
suggestions and keeps the Board of Directors informed of its major
observations from time to time. Internal audit methodology, process and
coverage have been evaluated by M/s Ernst &Young leading to enhanced
capacity building and efficiency. Emami''s Internal Audit Department has
been accredited 9001:2008 certification.
Directors'' Responsibility statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' responsibility statement, the
Directors confirm that:
i) In the preparation of the annual accounts for the year ended 31st
March, 2014, the applicable accounting standards have been followed and
no material departures have been made for the same.
ii) The Directors have 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 as at March 31, 2014 and of the profit of the Company
for the year ended on that date.
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) The annual accounts were prepared on a going concern basis
Further, there has been no change in the accounting policy in the
preparation of annual accounts for the year under review.
Audit and Accounts
The Company''s Auditors M/s. S.K. Agrawal & Co, Chartered Accountants,
who retire at the ensuing Annual General Meeting are eligible for
appointment for a term of three years. They have confirmed their
eligibility under Section 141 of the Companies Act, 2013 for
appointment as auditors of the Company.
Based on the recommendation of Audit Committee the Board of Directors
at its meeting held on 5th May, 2014 have reappointed M/s. V.K. Jain &
Co, Cost Accountants to audit the cost accounting records as may be
applicable to the Company for the FY 2013-14.
Auditors'' Report
The observations made in the Auditors'' report are self-explanatory and
require no further explanation.
Management Discussion & Analysis and Corporate Governance Report
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Management Discussion & Analysis and Corporate
Governance practices followed by the Company, together with a
certificate from the Company''s auditors confirming compliance, is set
out in the annexure forming part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements prepared in accordance with
Accounting Standard 21 - Consolidated Financial Statements form part of
this Report. The networth of the consolidated entity as on 31st March,
2014 is H932 crore as against H777 crore, as at the end of the previous
year.
Energy, Technology and Foreign Exchange
The particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1) (e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, are annexed and form a part of this Annual
Report.
Personnel
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975 as amended, names and other particulars of the employees
are set out in the Annexure to the Directors'' Report.
Although in accordance with the provisions of Section 219(1) (b) (iv)
of the Companies Act, 1956, such information has been excluded from the
report and accounts sent to the members, however if any member desirous
of obtaining this information may write to the Company Secretary at the
registered office of the Company.
Acknowledgement
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders  shareholders, banks,
dealers, vendors and other business partners for the wholehearted
support received from them during the year. The Directors recognise and
appreciate the efforts and hard work of all the employees of the
Company and their continued contribution to its progress.
For and on behalf of the Board
Kolkata R.S. AGARWAL
5th May, 2014 Chairman
Mar 31, 2013
The Directors have the pleasure of presenting their report on the
business and operations of the Company as well as audited accounts for
the year ended March 31, 2013. The Management''s Discussion and Analysis
is also incorporated in this report.
Indian FMCG industry
The urban consumer spent less in India, Asia''s third largest economy,
in FY 2012- 13 due to high inflation, subdued salary hikes and
decelerated economic growth that affected real wages and sentiment. In
turn, this slowdown affected the FMCG sector and going ahead, sectoral
growth is expected to come from rural dwellers with higher incomes from
the direct cash transfer scheme.
Drivers
Population: India with a vast population of around 1.27 bn and annual
growth rate of around 1.58% provides a large consumption base with
growing potential.
Income: India''s per capita income increased by 11.7% from Rs. 61,564 in
2011-12 to Rs. 68,747, reflecting higher purchasing capability in the
hands of Indians. Around 50% of India''s households earn more than
US$3,300 translating into double-digit sectoral growth in the past
couple of years. While the mean household income of urban India
declined by 3%, it increased by 6%0 in rural India. [Source: Credit
Suisse]
Rural market: Rural India comprises around 70%0 of the total Indian
population, 40%0 of the country''s FMCG market and few organised
players. With changing lifestyles and increasing consumer demand,
India''s FMCG market is expected to grow to US$80 billion by 2016 in
towns with population of less than 10 lakh [Source: Dinodia Research].
Rural spending was significantly higher at Rs. 3, 75, 000 crore (US$
69.44 billion) than urban consumption levels which stood at Rs. 2, 99,
400 crore (US$ 55.44 billion) between 2009-10 and 2011-12; rural
consumption per person outpaced that of its urban counterpart by 2 per
cent (Source: National Sample Survey Organisation).
Urbanisation: About 30 per cent of India is urban, accounting for about
11 per cent of the world''s urban population. India''s urban population
is projected to be 600 million in the next few years and an estimated
700 million by 2030, growing the market for FMCG companies in India
[Source: IBEF]
Formats: Modern retail formats have catalysed the growth of the FMCG
sector, capitalising on marketing, advertising, packaging and
distribution.
Youth: India''s workforce (between 15 and 64) is expected to rise from
64 percent of its population in 2009 to 67 percent in 2020 and 250
million people are set to join India''s workforce by 2030 with a
proportionate increase in disposable incomes and conspicuous
consumption.
Low penetration: India''s FMCG penetration is low compared to other
countries and its rural penetration even lower than urban even as the
rural population is higher, resulting in a large untapped FMCG
potential.
Optimism
India''s FMCG sector is expected to continue reporting attractive
growth, riding a growing market relatively unaffected by recession,
inflation or currency devaluation. The Indian government''s
agricultural support will drive long-term consumption growth and as a
result, the FMCG industry is expected to report 18% growth annually
over the next few years. It is expected that this sector will grow to a
projected USD 33 billion by 2015 and USD 100 billion by 2025, emerging
as the biggest consumer expenditure component by the end of the Twelfth
Five Year Plan (source: ASSOCHAM).
Performance highlights
The Indian FMCG sector was affected by inflation, slower GDP growth,
policy delays, high interest rates, higher deficit and forex
volatility. An intensely hot summer and prolonged winter strengthened
FMCG offtake. The result was that your Company registered attractive
growth: standalone 2012-13 revenues grew 17.1% to Rs. 1,627 crore over
Rs. 1,390 crore ub 2011-12; standalone profit after tax increase 26.1%
to Rs. 324 crore despite surge in key input costs; consolidated 2012-13
turnover increased 16.9% to Rs. 1,699 crore compared to Rs. 1,454 crore
in 2011-12; consolidated profit after tax was Rs. 315 crore as against
Rs. 259 crore in 2011-12, an increase of 21.6%.
Financial Results (standalone) Rs. in lakh
Particulars 2012-13 2011-12
Operating income 1,62,709 1,38,982
Profit before interest, depreciation
& taxation 40,403 33,034
Interest 610 1,555
Depreciation & Amortisation 12,329 12,075
Transferred from general reserve (10,209) (10,209)
Profit before taxation 37,673 29,613
Less : Provision for taxation
- Current tax 5,500 3,872
- Deferred tax (net) (82) 80
- Provision for taxation of earlier years (122) (20)
Profit after taxation 32,377 25,681
Balance brought forward 4,171 2,747
Profit available for appropriation 36,548 28,428
Appropriation
General reserve 20,209 10,209
Proposed dividend 12,105 12,105
Corporate dividend tax 2,057 1,943
Balance carried forward 2,177 4,171
36,548 28,428
The business reported multi-brand growth: all power brands (Boroplus,
Zandu Balm & Methoplus Balm, Navratna and Fair and Handsome) increased
market shares in 2012-13. The Company''s international business was
marginally down due to lower offtake in the CIS, Russian and African
markets coupled with inventory correction among distributors (leading
to prospective restructuring). During 2012-13, the Company fortified
its direct rural reach across 600,000 outlets. The Bangladesh unit
became operational.
Your Company''s strong portfolio addressed various consumer needs,
making it possible to capitalise on opportunities, a trend it is likely
to sustain through innovation, execution, focus and distribution
competencies translating into a superior value-for-money proposition.
Dividend
The Board of Directors recommended a dividend of Rs. 8 per share (800%
on the Company''s share capital) for the financial year ended March 31,
2013, pending members approval. The dividend, if approved, will be paid
to the eligible members. The total dividend outgo for the current year
amounts to Rs. 14,162 lakh, including the dividend distribution tax.
The dividend payout ratio works out to 45%0.
Countering the challenges
Introduced a performance-linked variable pay system where a part of the
salary is linked to individual and corporate performance.
Completed 2,600 man-days of training in 2012-13 ; identified training
needs through a structured need identification process aided by
performance appraisals.
The HR team and functional managers formulated a robust training
calendar to address this issue holistically.
Initiated a special training programme directed specifically towards
the sales and distribution team for productivity improvement.
Initiated employee engagement programmes (family picnic day, annual
quiz contest and interdepartmental cricket matches, among others).
Initiated a SAP-based HR management programme; started the HR intranet
initiative called Sampark.
Road ahead
Human Resource is an integral part of the Company''s future growth. In
order to gear up to unforseen challenges, leadership and critical
resources development would be the key HR initiatives. The company
would also lay strong emphasis on performance driven culture linking
organizational and individual goals.
Corporate Social Responsibility
CSR builds a dynamic relationship between a company on one hand and the
society and environment on the other. Though still a voluntary
activity,
CSR is traditionally driven by a moral obligation and philanthropic
spirit. Over time it has become an integral part of business. It is so
with Emami. Along with charities and philanthropic activities
Emami is engaged in a number of sustainable activities. The key aim is
to fight against hunger, ignorance, and disease, apart from addressing
environmental concerns.
Education
Education support is a priority at Emami Foundation, reflected in the
following ways:
- Providing financial assistance to help poor students at the school
and college level and higher education.
Donation of computers, furniture and fixtures to schools.
Providing necessary infrastructure to schools and colleges, including
supply of drinking water, construction of toilets (especially for girl
students).
- Granting funds to schools and colleges for building construction
and renovation.
- Donation of textbooks and stationeries to school students.
On a long-term basis, Emami plans to introduce scholarships for
meritorious students and a book-lending scheme for underprivileged
students.
- Health care
- Emami''s initiative in the health care sector included regular
healthcare services through two clinics (Burrabazar and Aradhanadham).
Subsidised cataract surgery was organised with M P Birla Eye Hospital
and AMRI Hospital.
Medical assistance was provided to patients and senior citizens
suffering from chronic diseases. A homeopathy clinic operated once a
fortnight from the corporate office.
In the area of preventive health education, Emami organised Saaol heart
camps all over India with the participation of the renowned
cardiologist Dr. Bimal Chajjer. The camp educated patients in the
prevention of heart diseases through non- invasive methods (medication,
yoga and zero-oil cooking).
Women empowerment
As a long-term measure, Emami plans to introduce women empowerment
programmes (livelihood, training and mentoring). Udayan Care (West
Bengal) implemented a programme to mentor girl children from
under-privileged sections. Emami sponsored 30 girl students (2007-08
to 2012-13) in the Udayan Shalini programme.
Natural calamities
Emami believes that true social service lies in being beside people
during natural calamities and accidents. Last year, the Company stood
by the flood-affected people of Guwahati. The Company provided disaster
relief through employee volunteering, supply of construction materials
(including temporary roofing materials, medical and food supplies,
clothes and relief material).
Community welfare programmes
The Community Marriage Programme is a unique effort in relieving poor
families of the financial burden involved in arranging marriages. The
couples were chosen from inaccessible areas like the Sunderbans and
other rural areas, giving Emami the opportunity to reach out to the
rural poor in initiating socio-economic development. On a recent
occasion, the married couples were given gifts like a solar powered
device, ideal in rural areas.
Miscellaneous activities
Emami believes in sarvalokahitam, which indicates the well-being of all
stakeholders. Following the teachings of the vedas and Upanishads,
Emami undertook charitable programmes through its Food for Poor
programme and the Community Marriage Programme. It undertook
initiatives in sport and culture activities as well.
Food for poor programme: Emami''s Food for Poor programme was
operational in the vicinity of its factories at BT Road, Kolkata,
Guwahati, Panthnagar, Masat, Dongari and Vapi.
House construction for the needy: Emami provided funds for the
construction of 44 houses for the rural poor in 2012-13.
Animal care programme: Emami contributed to organisations dedicated to
animal care and protection.
Bonus Issue
The Board of Directors of your Company recommend the issue of bonus
shares in ratio of 1:2, i.e., one equity share for every two existing
equity shares subject to the approval of members. The approval of the
members is being sought through a postal ballot process. The bonus
shares shall be allotted to the members as on the record date to be
announced after the approval of bonus issue by members. The bonus
shares shall be eligible for dividend that may be declared for the
financial year 2013-14 and thereafter.
Increase in Authorised Share Capital
The Company has sought approval from members through a postal ballot
process to increase its authorised share capital from Rs. 20 crore to
Rs. 25 crore by further creation of five crore equity shares of Re. 1
each to accommodate issue of bonus shares.
Listing
The Company''s Equity Shares are listed on the National Stock Exchange,
the Bombay Stock Exchange and the Calcutta Stock Exchange. The listing
fees for the financial year 2013-14 were paid.
Subsidiary companies
As of 31st March, 2013, the Company included the following subsidiary
companies:
1. Emami UK Ltd
2. Emami Bangladesh Ltd
3. Emami International FZE
4. Emami Overseas FZE
5. Pharma Derm S A E Co, Egypt
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to subsidiary companies, is attached to the accounts.
In terms of the general exemption granted by the Ministry of Corporate
Affairs, the Balance Sheets and Profit and Loss Accounts of the
subsidiary companies are not attached with the Balance Sheet of the
Company.
The following information in aggregate for each subsidiary is also
being enclosed (a) Capital (b) Reserves (c) T otal assets (d) Total
liabilities (e) Details of investment (except in the case of investment
in subsidiaries) (f) Turnover (g) Profit before taxation (h) Provision
for taxation (i) Profit after taxation and (j) Proposed dividend.
In compliance with Accounting Standard 21 of the consolidated financial
statements, notified in Companies (Accounting Standards) Rules 2006,
your Company has prepared its consolidated financial statements, which
forms part of this annual report.
The accounts of the subsidiary companies will be available to any
member seeking such information at any point of time.
These accounts will be available at the website of the Company namely
www. emamiltd.in and kept open for inspection at the registered office
of the Company.
Directors
The Board expresses its profound grief on the sudden demise of Shri
Viren J Shah on 9th March 2013. The Board places on record its deep
appreciation for the valuable contribution made by Shri Viren J Shah
during his tenure as an Independent Director on the Board of the
Company. During the year, the Board of Directors appointed Shri R. S.
Goenka as Whole Time Director of the Company, for a period of five
years subject to the approval of members of the Company.
Shri Amit Kiran Deb, Shri Y. P. Trivedi, Smt. Priti A Sureka and Shri
H. V. Agarwal would retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for reappointment.
A brief resume of the Directors proposed to be appointed/ reappointed
as required under Clause 49 of the Listing Agreement, is provided in
the Notice of the Annual General Meeting forming part of the Annual
report.
Internal control systems and their adequacy
The Company has in place adequate system of internal controls
commensurate with its size, requirements and the nature of operations.
These systems are designed, keeping in view the nature of activities
carried out at each location and the various business operations.
The Company''s in-house internal audit department in collaboration with
reputed audit firms carries out internal audits at all its
manufacturing locations, offices and sales depots situated across the
country. Their objective is to assess the existence and operation of
financial and operating controls set up by the Company and also to
ensure compliance of applicable statutes and corporate policies.
A summary of all audit reports containing significant findings by the
audit department along with the follow-up actions thereafter is placed
before the Audit Committee for review. The Audit Committee reviews the
comprehensiveness and effectiveness of the report and provides valuable
suggestions and keeps the Board of Directors informed of its major
observations from time to time. Internal audit methodology, process and
coverage have been evaluated by M/s Ernst & Young leading to enhanced
capacity building and efficiency.
Risk management
The Company has institutionalised its risk management system and is
complying with the requirement of the ISO 31000: 2009 norms regarding
the risk management initiatives undertaken by the Company.
Industry Risk
The Company''s offtake may be adversely impacted owing to slowdown in
consumer demand.
Risk mitigation
The Indian FMCG sector is the fourth largest in the Indian economy with
a market size of $13.1 billion.
A growing per capita income (Rs. 68,747 in 2012-13 from Rs. 61,564 in
2011-12) is expected to drive consumer spending.
Rural consumers spend of around USD 9 billion on FMCG products in
India.
With a big demand push from rural India, the FMCG industry is expected
to witness a robust growth of 18% over the next four to five years. The
sector is expected to grow to a USD 33 billion by 2015 and to a
whopping USD 100 billion by the year 2025.
Raw material risk
An inability to procure the right raw materials at the right price
could impact operations.
Risk mitigation
The Company hedged inflation through advance order modules for key raw
materials like menthol, waxes, mercury, liquid paraffin among others.
The Company resorted to judicious advance bookings for menthol when the
price rose sharply during the year.
The Company did a significant part of booking done during the non-peak
season in order to cash in on the low prices.
The Company developed a multiple vendor base to secure a continuous
supply of raw materials.
Distribution risk
Unavailability of products due to a weak distribution channel could
lead to a loss of sale.
Risk mitigation
The Company created a robust distribution network with 3,000
distributors, 5,600 sub-distributors and direct reach to six lakh
retail outlets across the country.
This was supported by four branch marketing offices, 32 depots and a
strong sales force of over 2,000 members.
Besides, the Company extended product availability to more than 40 lakh
retail outlets.
The Company initiated Project Swadesh and covered villages and towns
across the country with populations of less than 10,000 people.
Product acceptance risk
The Company''s products may not be accepted by the potential consumers.
Risk mitigation
The Company pioneered the Indian FMCG industry through niche product
segments like men''s fairness cream among others.
The Company was the market leader in four products across the country.
Communication risk
The Company may not be able to generate consumer awareness about its
products owing to lack of marketing activities.
Risk mitigation
Emami was one of the highest spenders in advertisement and promotions.
in its sector in 2012-13. The Company spent around 16.4% of its
revenues in promotional and advertisement campaigns in 2012-2013.
The Company roped famous film stars from Bollywood and regional film
industries to promote products. Besides, the Company also engaged
famous sportspersons and eminent personalities from the field of arts
and culture including kathak maestro Pt Birju Maharaj among its brand
ambassadors.
The Company undertook various promotional events in colleges, malls and
social media websites to promote its products.
The Company participated in fairs (the Kumbh mela, Sonepur mela) and
undertook in-film branding initiatives as well as via folk theatre
forms like jatras (in West Bengal) to promote products.
Counterfeit risk
Counterfeit products may impact the reputation of the Company.
Risk mitigation
The Company switched from a single- blow mould to multi-cavity
moulding, an expensive system, but difficult to counterfeit.
The Company invested extensively in imported dual colour moulding
technology from an Italian company to counter duplication; it extended
this technology to Zandu Balm and Mentho Plus Balm.
A dedicated cell was created to continuously monitor and mitigate the
risk of counterfeit products in the market.
Quality risk
Improper product quality could affect product offtake and mar the
Company''s reputation.
Risk mitigation
All manufacturing units of the Company were ISO 9001: 2000 compliant;
the BT Road unit, Kolkata received stringent WHO GMP certification for
five ayurvedic products. All units other than the BT Road unit, Kolkata
are accredited with ISO 14001:
2004 and ISO 18001 : 2007 certifications. The Company implemented
Total Production Maintenance (TPM) across all its production units.
In 2012-13, the manufacturing units received 11 national/regional
awards in the area of manufacturing excellence, quality, safety and
environment. A robust R&D department spearheaded by Padma Shree Vaidya
S Chaturvedi and supported by eminent Indian and international experts
helps in maintaining stringent product quality.
The Company''s R&D team, Himani Ayurveda Science Foundation and Zandu
Foundation for healthcare deliver innovative and effective products.
Competition risk
Increased competition could impact the Company''s profitability.
Risk mitigation
The Company created a wide product portfolio comprising skin care,
personal care and healthcare segment products.
The Company invested aggressively in advertisement and promotional
campaigns to create greater product visibility.
The Company continuously introduced new products to stay ahead of
competitors.
The Company focused on enhancing internal efficiencies to augment its
bottomline.
Shareholders'' return
Emami''s constant endeavour is to enhance returns for its shareholders.
The Company works relentlessly towards manufacturing innovative
products and process improvisation which can translate into higher
returns for its shareholders.
Year EVA EVA as a %
(Rs. in Lakh) of Capital Employed
2009-10 13019 15.9%
2010-11 13979 15.5%
2011-12 16652 18.6%
2012-13 22040 24.2%
Directors'' responsibility statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act
1956 with respect to Directors'' responsibility statement, the Directors
confirm that:
i) In the preparation of the annual accounts for the year ended 31st
March, 2013, the applicable accounting standards have been followed and
no material departures have been made from the same.
ii) The Directors have 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 as at March 31, 2013 and of the profit of the Company
for the year ended on that date.
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) The annual accounts were prepared on a ''going concern'' basis.
Furthermore, there has been no change in the accounting policy in the
preparation of annual accounts for the year under review.
Audit and accounts
The Company''s Statutory Auditors M/s. S.K. Agrawal & Co, Chartered
Accountants, who retire at the ensuing Annual General Meeting are
eligible for reappointment. They have confirmed their eligibility
under Section 224(1B) of the Companies Act, 1956 for reappointment as
auditors of the Company.
M/s. V.K. Jain & Co, Cost Accountants have been appointed as cost
auditors for the financial year 2013-14 subject to approval of the
Central Government.
Auditors'' Report
The observations made in the Auditors'' Report are self-explanatory and
no qualification is reported by them. Hence, this does not necessitate
any further comments.
Corporate Governance
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance practices followed by the
Company, together with a certificate from the Company''s auditors
confirming compliance, is set out in the Annexure forming part of this
report.
Consolidated financial statements
The Consolidated Financial Statements prepared in accordance with
Accounting Standard AS21 - Consolidated Financial Statements of the
Group form part of this report.
The networth of the consolidated entity as on 31st March, 2013 is Rs.
777 crore as against Rs. 707 crore, as at the end of the previous year.
Energy, technology and foreign exchange
The particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1) (e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, are annexed and form a part of this annual
report.
Personnel
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975 as amended, names and other particulars of the employees
are set out in the Annexure to the Directors'' Report.
Although in accordance with the provisions of Section 219(1) (b) (iv)
of the Companies Act, 1956, such information has been excluded from the
report and accounts sent to the members, any member desirous of
obtaining this information may write to the Company Secretary at the
Registered Office of the Company.
Acknowledgement
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders - shareholders, banks,
dealers, vendors and other business partners for the excellent support
received from them during the year. Your Directors recognise and
appreciate the efforts and hard work of all the employees of the
Company and their continued contribution in its progress.
Cautionary statement
Statements in the Directors'' Report and the Management Discussion &
Analysis describing the Company''s objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations.
Actual results may differ materially from those expressed in the
statement.
Important factors that could influence the Company''s operations include
global and domestic demand and supply conditions affecting selling
prices of finished goods, input availability and prices, changes in
government regulations, tax laws, economic developments within the
country and other factors such as litigation and industrial relations.
For and on behalf of the Board
R.S. AGARWAL
Chairman
May 6, 2013
Kolkata
Mar 31, 2012
To The Members,
The Company possesses a strong brand portfolio catering to various
consumer needs. We are positioned to capitalise on opportunities in a
growing Indian market. We will continue to strengthen this advantage
with innovation excellence, faster execution, sharper focus on consumer
needs and improved distribution reach.
During 2011-12, we increased our direct rural reach. Our direct retail
coverage increased to 5 lac outlets. We initiated our Bangladesh and
Egypt units which are expected to become operational in FY 2012-13.
At a time when input costs remain high while price and forex volatility
pose additional challenges, we continue to focus on the best value for
our customers and vendors through innovation and cost- efficiency.
Financial results (standalone) (Rs. in lacs)
Particulars 2011-12 2010-11
Operating income 1,38,981 1,20,238
Profit before interest, depreciation
and taxation 33,034 29,692
Interest 1,555 1,549
Depreciation and amortisation 12,075 11,603
Transfer from general reserve (10,209) (10,209)
Profit before taxation 29,613 26,749
Less : Provision for taxation
- Current tax 3,872 3,300
- Deferred tax (net) 80 674
- Provision for taxation of earlier years (20) 26
Profit after taxation 25,681 22,749
Balance brought forward 2,747 1,383
Profit available for appropriation 28,428 24,132
Appropriation
General reserve 10,209 15,209
Proposed dividend 12,105 5,296
Corporate dividend tax 1,943 880
Balance carried forward 4,171 2,747
Dividend
The Board of Directors recommends a dividend of Rs. 4 per share (400% on
the Company's share capital). Considering the strong financial position
and available liquidity, an additional dividend of Rs. 4 per share (400%
on the share capital of the Company) is being recommended as a special
dividend for the financial year ended March 31, 2012 for its members,
pending their approval. The total dividend for the year ended March
31, 2012 would accordingly be Rs. 8 per equity share as against the total
dividend of Rs. 3.5 per equity share for the year ended March 31, 2011.
The dividend, if approved, will be paid to members whose names appear
in the Register i of Members as on August 3, 2012; with respect to the
shares held in dematerialised form, it would be paid to members whose
names are furnished by NSDL and CDSL as beneficial owners as on that
date. The total dividend outgo for the current year amounts to Rs.
14,048 lacs, including the dividend distribution tax. The dividend
payout ratio works out to 54.7%.
Strength beyond limitation
Raw material management
The year under review experienced a steep escalation in the cost of
major inputs, especially menthol, vegetable and crude oil-based items
along with an increase in minimum wages.
Countering the challenges
The Company responded to these challenges through the following
initiatives:
- Changed the oil mix by introducing vegetable oil without impacting
product quality to counter the steep hike in crude oil prices and
fluctuation in dollar value.
- Hedged inflation through advance order module for key raw materials
like menthol, waxes, mercury, liquid parrafin among others
- Started advance booking for menthol when the price rose sharply
during the year.
- Backward integration of menthol plantation
- Developed a multiple vendor base for most products to enjoy price
benefits.
- Enhanced storage capacity with respect to key inputs, which
experienced a substantial price rise during the year in review. The
Company maximised the purchase of material from tax-exempted zones
(North-east, Uttaranchal and Himachal Pradesh) for cost-effective
purchases.
Vision
- The Company expects to explore the possibility of importing raw
materials like micro crystalline wax, methyl salicylates, soap noodles,
lumino peptide and ozokerite wax and paraffin wax, among others.
Operations
Maintaining operational efficiency is imperative to produce quality
products. Besides efficiency, cost optimisation is another key factor
to strengthen profitability. Emami has a strong operations team, which
enhances process efficiency and ensures quality.
Countering challenges
The Company strengthened its operations through the following
initiatives -
- Received awards across all manufacturing locations for manufacturing
excellence.
- Upgraded the ayurvedic manufacturing facility at the BT Road unit as
per WHO guidelines.
- Completed capacity expansion at the Pantnagar unit.
- Started equipment efficiency monitoring and improvement programme
across all units.
- Standardised and streamlined SOPs for the manufacturing units.
- Created a zonal quality control team for the eastern, western and
northern region for better control and accountability.
- Assembled a cross-functional team to facilitate product transfer from
R&D to plants.
- Established cGMP, TPM and WCM processes across all manufacturing
units.
- Incentivised plant employees to ensure higher retention.
Vision
- Undertake a new manufacturing project in Assam.
- Upgrade Zandu plants in the western region.
- Initiate SAP integration of more processes previously not covered for
better control and resources utilisation.
Sales and distribution
Sales and distribution plays an important role in FMCG companies,
ensuring that consumers enjoy access to products 24X7. Emami has a
strong sales and distribution team ensuring an anytime product
availability.
Highlights, 2011-12
- Recorded 18% revenue growth in India despite sales getting affected
due to weak seasons.
- Zandu health care business grew by 34%.
- Classified a new segment - rural - covering towns/villages with a
population of less than 50,000 under Project Swadesh. The Company
adopted a hub-and-spoke model in these areas by appointing super-
stockists and sub-stockists. As of the end of the year, the Company had
160 super stockists and 4000 sub- stockists. Around 24% of the
business was recorded directly through this model.
- A separate team handled the modern trade accounts across the country
which grew 64% during the year.
- Increased direct retail coverage from 450,000 outlets in 2010-11 to
500,000 outlets.
- Our indirect reach is over 3.6 million retail outlets. (Source: AC
Nielsen)
Countering the challenges
- Opened a new depot at Agartala to service the growing demand from
north-eastern states.
- Completed integration of the southern distribution channel of Zandu
with Emami.
- Created structured sales force for the rural channel with its own
dedicated team of more than 225 people in the states of Uttar Pradesh,
Andhra Pradesh, West Bengal, Bihar, Madhya Pradesh and Rajasthan
- Enhanced focus on the marketing activities of healthcare products of
Zandu. Aired an advertisement for Zandu Pancharishta with MS Dhoni and
Pt Birju Maharaj as brand ambassadors clocking a growth in product
sales during 2011-12.
- Increased trade marketing activities by enhancing the number of
dealer meets, wholesalers loyalty programme and distributor meets,
among others.
Vision
- Continue investment in the distribution infrastructure and increase
direct reach
- Formulate a structured training programme for the sales team under
the Gurukul programme initiated by the Company
- Implement distributor connectivity to provide live data for speedy
decision-making
- Undertake an IT project - eStar - to enable the sales officers post
secondary sales figures online for faster analysis and actions thereof.
Information technology
Emami is wired on SAP ECC 5.0, a state-of-the-art enterprise resource
planning (ERP) software. Its business processes are integrated and
connects processes such as order-to- cash, procure-to-pay, production
planning, quality management, sales and distribution, among others.
The Company has a dedicated IT team under the CIO which executes a
number of projects across locations.
Countering the challenges
- SAP, our core ERP business system, is now implemented in overseas
subsidiaries. SAP went live at Bangladesh in November 2011, the first
overseas implementation by Emami's IT team. Emami FZE International
(UAE) is scheduled to go live in June 2012.
- Implemented a 3PSCM (Third Party Supply Chain Management) system
successfully at one 3P unit for better control across the contract
manufacturing units. The Company expects to roll this at nine third
party units across the country.
- Implemented a web-based HR Intranet 'Sampark' which includes all
critical HR functions like travel management, leave and other self-
service applications based on the workflow and business escalation
matrix.
- Migrated 48 WAN connectivity links across all locations in India from
multiple service providers to MPLS VPN circuits through Sify and
Reliance.
- Evaluated various data warehousing and business intelligence systems
from leading IT and consulting companies. The implementation is
expected to commence in June 2012. Implemented the material
requirement planning (MRP) module across all factories Maintained 99.5%
uptime of IT systems (hardware, software and SAP), ensuring
uninterrupted business operations.
Vision
Going ahead, the Company's IT department expects to achieve the
following:
- Implement budgeting, business planning and consolidation.
- Implement business intelligence system
- Implement and integrate export documentation modules in SAP
- Enhance information security by implementing high-end firewalls and
upgrading the data centre.
- Run SAP optimisation for continuous improvement and enhanced system
efficiency
International marketing division
The global FMCG market has been growing and also maturing with
increasing competition. While local brands also grew stronger,
international players also entered newer geographies, invested in brand
building and increasing distribution. They also acquired brands
overseas to get a larger market share.
Worldwide presence: As an international branded consumer goods company,
Emami is present in more than 60 countries, focusing on Russia&the CIS,
SAARC, South East Asia, Middle Eastl and Africa.
Wide product portfolio : The international division offers a wide
product portfolio ranging from skin care to hair care and healthcare.
Export revenue increased 13% from Rs.165 crore in 2010-11 to Rs.187 crore
in 2011-12 contributing about 13%to the Company's revenue. The Company
maintained market leadership position for Fair & Handsome in
Bangladesh, Nepal and UAE and for Boroplus in Russia and Nepal.
Countering the challenges
Maintaining growth in challenging environment in the face of crisis in
North African markets and Eurozone was a major challenge.
The Company revised its prices during the year and worked closely with
distributors and dealers in the international market to maintain off
takes despite a price hike.
Currency volatility remained a key concern in the international market.
The Company evaluated the credit policies and opted for bank guarantees
and LC.
The Egypt manufacturing project has slowed due to political unrest in
the country.
Vision
Going ahead, the Company will concentrate more on the focus countries
and its key brands. It is also increasing its sales force in Russia,
Bangladesh and Nepal to gain further market share. It also expects to
commence operations of the Bangladesh and Egypt plant from 2012-13.
Logistics
The year was a challenging one owing to a 10% hike in fuel cost, 20%
hike in tyre cost and around 15-20% hike in toll taxes. There was also
a shortage of truck drivers, resulting in lower availability of trucks.
Countering the challenges
- Increased containerisation: Around 80% of the output from Guwahati
and 60% from Pantnagar was transported through containers, ensuring
higher product security.
- Established new mother warehouses in Indore, Kolkata, Ambala and
Hyderabad, taking the total warehousing storage capacity to 2.78 lac
sq. ft.
- Ensured adequate risk management by insisting on bank guarantees from
vendors
- Monitored transition time and lead time stringently
- Improved stock demand forecasting through regular sales and operation
meetings
Vision
- Reduce transit time
- Increase containerisation from other units
- Establish mother warehouses in Nagpur (25,000 sq. ft), Ahmedabad
(25,000 sq. ft) and New Delhi (50,000 sq. ft)
Research and development
The Company competes in an industry characterised by rapid advances.
The Company's ability to compete successfully is dependent on its
ability to ensure timely flow of competitive products and technologies.
The Company continues to develop new products and intellectual property
through licensing and third-party business and technology acquisitions.
Mission à healthcare
Extensive research and innovation facilitates Emami's success in the
health and personal care industry. In the Consumer Products Division,
we are committed to meet the unmet needs of consumers and develop
innovative products that meet consumer needs.
Research and innovation centre
Emami's Research & Innovation Centre is a science-driven,
consumer-centric and business aligned power house, comprising
structurally-sound, intellectually- strong and a wealth of creative
talent, all supporting Emami's leadership in personal care, health and
wellness and ayurveda. Our products are the result of understanding
consumers' needs, through pathbreaking technology. We combine years of
practical experience with a continuous influx of new knowledge. For
decades, we worked in partnership with universities, start-ups and
suppliers. These relationships are now richer and more productive than
ever.
Emami's future
The Research and Innovation Centre was reorganised to align itself with
Emami's dynamic business strategy. The Group now encompasses a
competitive intelligence cell, which monitors the effectiveness of
current operations, competitors' perception, competitor capabilities,
and medium-to-long-term prospects. The same is done under the
strategic, tactical and counter intelligence sub- sections. The Centre
is also keenly strengthening its presence in global markets and taking
active part in tapping consumer habits, attitudes and newer insights
for product development. With regulations getting tougher globally for
products, which offer cosmetic and functional benefit, Emami Research
and Innovation Centre is reinforcing teams responsible for defending
the scientific validity of its brands with international and local
authorities. The regulatory team supports the innovation process,
helping brands enjoy an access to markets for which they are
responsible, while guaranteeing compliance with operating regulations.
Infrastructure
A state-of-the-art, high-end multi- storey Research and Innovation
Centre, spanning more than 30,000 sq. ft, was created in Kolkata. The
Centre encompasses product innovation development, product processing
science, competitive intelligence cell, analytical development,
perfumery science, quality assurance, packaging and development.
Technology direction
The Research and Innovation team comprises more than 55 scientists,
with multi-dimensional backgrounds and industry experience. These
professionals are geared towards the development of high-end, targeted
products that deliver higher performance, tapping the latest global
technologies while appealing to the global consumer.
The strong in-house innovation team of collaborative projects with
modern technology centers, resulting in co-development of novel
products in the home and personal care category. Emami Research and
Innovation Group strengthened its capability through innovation
partnerships at each stage of the product development process - from
early stage collaborations with start-up and biotech companies to
late-stage partnerships with key suppliers. Emami brings to consumers,
products of the highest quality and safety. Its R&D ensures regulatory
compliance of all Emami's international products. This enables Emami to
launch new products quickly and efficiently in countries worldwide, by
integrating regulatory affairs in its R&D activities from start to
finish. The Research and Innovation team developed in-house strengths
in focusing on basic science areas including ayurvedic science.
Vision
We believe Emami's future will be exceptional, fashioned around our
ability to deliver innovative growth in our businesses and value to
stakeholders. The shared values we generate will extend beyond our
consumers and shareholders, benefiting partners, clients, suppliers and
raw material manufacturers.
We are constantly aspiring for cutting-edge science and technology,
deploying this in our products, packages and services. Hence, we
undertake an ever- increasing number of clinical trials, proving
scientifically that our innovations fulfill promises.
Human resource management
In a business where it is imperative to introduce products with varied
features that position them differently in order to attain market
leadership, there is an ongoing need to retain competent human
resources and develop their capabilities.
Countering the challenges
- Performance-driven organisation: Strengthened the performance
management system with rewards and recognition based around them.
- Learning and development: Completed 2,000 person-days of training
during the year under review. Training needs were identified through
performance appraisals. The HR team structured a training calendar.
The employees were given a recap after 90 days of training and the
training effectiveness was measured. Initiated various employee
engagement programmes like family picnic day, annual quiz contest and
inter-departmental cricket matches among others.
- Employee branding: Introduced
an extensive nine-month graduate training programme customised for
Emami in collaboration with an institute. On successful completion, the
students will be absorbed in Emami. Around 15 students participated
successfully in this programme in 2011-12.
- Recruited MBAs from A'-rated business schools who were provided
cross-functional training for eight months and posted in key roles.
Vision
- Create a resource development programme to identify and develop
leaders in the organisation
- Systematise the HR process by introducing software integrated with
SAP
- Focus on the leadership team for high-end training programmes.
- Launch the newly created intranet platform in the current year. The
platform shares organisational information and is a knowledge
repository. It is a two-way communication portal. The employees can
also stay in touch through the chat platform
- Emphasise the creation of a learning organisation through systematic
HR, learning and development initiatives. Target at least two man-days
of training to each employee
Quality management
In a business where personal care and healthcare is imperative, Emami
invests extensively to meet international quality standards. The
following are the points comprising quality policy:
- SOPs are defined
- Measurement procedures are defined
- All critical quality parameters are aligned in a unified system and
documented for reference
- Quality is defined at different levels like before-process, in-
process and after-process quality checks
- After a product is launched, a stability study is conducted on
control samples continuously across the product's lifespan
- Even the smallest quality complaints are addressed immediately
Recognition
All the units are cGMP and ISO: 9001:2008 certified. Abhoypur,
Amingaon, Pantnagar and Dongri units are accredited with ISO 14001:2004
and ISO 18001:2007, abiding by highest Environmental and Occupational
health & safety standards.
Corporate social responsibility
At Emami, Corporate Social Responsibility (CSR) forms an integral part
of the Company's business activities. It is not philanthropy but purely
voluntary -- your Company does it beyond any statutory requirements or
obligations.
Your Company is a responsible corporate citizen, supporting activities
related to the welfare of its employees and society. The Emami Group is
involved in corporate social responsibility through Emami Foundation
and other charitable organisations. The Company's CSR approach
comprises medical services, education, community development, women
empowerment and poverty alleviation, among others. An organising
committee formulated CSR guidelines, evaluated and monitored activities
and planned macro-level CSR initiatives. Under this organising
committee, sub- committees were created for enhanced attention to
medical services, education and disaster relief, among others. At
Emami, CSR extends beyond statutory obligations to sustainable
socio-economic development. Ethical corporate behaviour forms the basis
of our CSR initiative. Hunger, diseases and ignorance are still the
burning issues of modern times; despite growth in science, government
budgetary resources are inadequate to mitigate suffering. The corporate
world cannot afford to remain a mere observer when people are afflicted
with hunger and malnutrition, diseases and physical infirmity,
illiteracy and ignorance. Emami has a long tradition in conducting
philanthropic activities, supported by a professional outlook. An
exercise is underway to integrate all such activities across the
healthcare, education, community development, women empowerment,
livelihood creation and environment management segments.
Education
Recognising the vital role that education plays in ushering socio-
economic change, Emami's CSR activities comprise innovative programmes.
Apart from providing financial support to various educational and
academic institutions, Emami Foundation supports poor meritorious
students through scholarships, exercise books and computers, among
others. Stipends are provided to poor and physically challenged
students; coaching is offered to students at the primary education
level. Emami Foundation and units also provide funds for school
renovation and maintenance.
Health
Financially supported by Emami, Magan Shankar Foundation conducts eye
camps, ayurvedic and homeopathic clinics, allopathic and dental camps
at various locations (Aradhanadham at Haripal and in Kolkata). Magan
Shankar Foundation organises eye, ear and hernia operations and medical
treatment camps. Emami Foundation conducts free/subsidised camps for
the reversal of heart disease under the supervision of renowned heart
specialist Dr. Bimal Chajjer. Donations are made to various healthcare
organisations. Blood donation camps are organised by various Emami
factories.
Women empowerment
Emami Limited partnered with an NGO to sponsor 40 underprivileged girls
from various parts of rural West Bengal. The fellowship programme
enables them to rise to their potential through higher education and
personalised guidance.
A fund was set up years ago to render financial assistance for the
marriage of the underprivileged. During the year under review, the
Company supported the weddings of 22 underprivileged girls. Besides,
the Company helped with the initial setting up of their homes and
provided funds for meeting household expenses for the first month.
Environment
Emami uses environment-friendly technologies and processes. Recycling,
reuse of by-products are stressed upon; emissions are controlled.
Research and development of cow dung and cow urine as well as the
maintenance of goshalas were adopted.
Listing
The Company's equity shares are listed on the National Stock Exchange,
the Bombay Stock Exchange and the Calcutta Stock Exchange. The listing
fees for the financial year 2012-13 were paid.
Subsidiary companies
As of 31st March, 2012, the Company included the following subsidiary
companies:
1. Emami UK Ltd
2. Emami Bangladesh Ltd
3. Emami International FZE
4. Emami Overseas FZE
5. Pharma Derm S A E Co, Egypt
A statement pursuant to Section 212 of the Companies Act 1956, relating
to subsidiary companies, is attached to the accounts.
In terms of general exemption granted by Ministry of Corporate Affairs,
the Balance Sheet and Profit and Loss Account of the subsidiary
companies are not attached with the Balance Sheet of the Company.
The following information in aggregate for each subsidiary is also
being enclosed (a) Capital (b) Reserves (c) Total assets (d) Total
liabilities (e) Details of investment (except in the case of investment
in subsidiaries) (f) Turnover (g) Profit before taxation (h) Provision
for taxation (i) Profit after taxation and (j) Proposed dividend.
In compliance with Accounting Standard 21 of the consolidated financial
statements, notified in Companies (Accounting Standards)
Rules 2006, your Company has prepared its consolidated financial
statements, which forms part of this annual report.
The accounts of the subsidiary companies will be available to any
member seeking such information at any point of time. These accounts
will be available at the website of the Company namely
www.emamigroup.com and kept open for inspection at the registered
office of the Company.
Directors
Vaidya Suresh Chaturvedi, Shri Mohan Goenka, Shri S. K. Goenka, and
Shri S. B. Ganguly, Directors of the Company, retire by rotation and
being eligible, offer themselves for reappointment. Shri S. K. Todi
also retires by rotation but has not offered himself for reappointment.
The Board wishes to place on record its sincere appreciation for the
valuable guidance rendered by him during his tenure as an Independent
Director of the Company.
Shri Sajjan Bhajanka was appointed as an Additional Director
(Independent Director) of the Company by the Board of Directors at its
meeting held on 8th May, 2012 and pursuant to provisions of Section 260
of the Companies Act, 1956 (the Act), he holds office upto the date of
the forthcoming Annual General Meeting of the Company.
The Company has received a notice in writing under Section 257 of the
Act from a member proposing his candidature for the office of Director.
During the year, the Board of Directors reappointed Shri R S
Agarwal as Executive Chairman of the Company, for a period of five
years after completing his present term subject to the approval of
members of the Company.
A brief resume of the Directors proposed to be appointed/ reappointed
as required under Clause 49 of the Listing Agreement, is provided in
the Notice of the Annual General Meeting forming part of the Annual
report.
Shareholders' returns
Emami's constant endeavour is to enhance returns for its shareholders.
The Company works relentlessly towards innovative products and process
improvisation which can be translated into higher returns for its
shareholders.
Directors' responsibity statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act
1956 with respect to Directors' responsibility statement, the Directors
confirm that:
i) In the preparation of the annual accounts for the year ended 31st
March, 2012, the applicable accounting standards have been followed
along with proper explanation relating to material departures
ii) The Directors have selected such accounting policies and applied
them consistently and made judgements 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 March 31, 2012 and of the profit of the Company
for that year ended on that date
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities
iv) The annual accounts were prepared on a 'going concern' basis
Further, there has been no change in the accounting policy in the
preparation of annual accounts for the year under review.
Audit and accounts
The Company's Auditors M/s. S.K. Agrawal & Co, Chartered Accountants,
who retire at the ensuing Annual General Meeting are eligible for
reappointment. They have confirmed their eligibility under Section
224(1B) of the Companies Act, 1956 for reappointment as auditors of the
Company.
M/s. V.K. Jain & Co, Cost Accountants have been appointed as cost
auditors for the financial year 2012-13 subject to approval of Central
Government.
Auditors' Report
The observations made in the Auditors' report are self explanatory and
no qualification is reported by them. Hence this does not necessitate
any further comments.
Corporate Governance
As per Clause 49 of the Listing Agreement with the stock exchanges, a
separate section on Corporate Governance practices followed by the
Company, together with a certificate from the Company's auditors
confirming compliance, is set out in the Annexure forming part of this
- report.
Consolidated financial statements
The Consolidated Financial Statements prepared in accordance with
Accounting Standard AS21 - Consolidated Financial Statements of the
Group form part of this report.
The networth of the consolidated entity as on 31st March, 2012 is Rs. 707
crore as against Rs. 690 crore, as at the end of the previous year.
Energy, technology and foreign exchange
The particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is annexed and forms a part of this annual
report.
Personnel
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975 as amended, names and other particulars of the employees are
set out in the Annexure to the Directors' Report. Although in
accordance with the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, such information has been excluded from the report
and accounts sent to the members, any member desirous of obtaining this
information may write to the Company Secretary at the Registered Office
of the Company.
Acknowledgement
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders - shareholders, banks,
dealers, vendors and other business partners for the excellent support
received from them during the year. Your Directors recognise and
appreciate the efforts and hard work of all the employees of the
Company and their continued contribution to its progress.
For and on behalf of the Board
Kolkata R.S. AGARWAL
May 8, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors are pleased to present their report on the business and
operations of the Company and audited accounts for the year ended March
31, 2011. The Management Discussion and Analysis has also been
incorporated in this report.
FMCG industry, 2010
The Rs. 130-bn FMCG sector, the fourth-largest in India, was affected by
surging input costs in 2010-11. The sector grew 11% year-on-year over
the last decade, tripling in from around Rs.47,000 crore in 2000-01 to Rs.
1,30,000 crore in 2010-11 (2.2% of GDP).
The Indian FMCG sector grew 11.4% and 11% in the first and second
quarters of 2010-11, compared with the overall 12% in 2009-10, owing to
rising input costs (petroleum products and packaging materials) and
food, among others.
Performance highlights
Your Company delivered another year of remarkable performance during a
challenging economic period. While the economy grew attractively during
the year, unprecedented volatility in input prices, driven by
fluctuations in crude petroleum prices and agricultural crops, needed
careful management.
- Standalone revenue for 2010-11 was Rs.1,221 crore, a growth of 21.3 %,
over Rs.1,007 crore in 2009-10
- Despite a sharp increase in input costs by 33.8%, there was an
increase of 37.5% in profit after tax to Rs.227 crore (standalone)
- Consolidated turnover for 2010-11 was Rs.1,278 crore, registering an
increase of 23.1%, compared with Rs.1,038 crore in 2009-10
- Consolidated profit after tax for 2010-11 was Rs.229 crore as against
Rs.170 crore in 2009-10, an increase of 34.8%
This performance during an unfavourable industry situation was possible
due to strong business accretive initiatives like aggressive marketing,
innovative R&D, distinctive new launches, expansion of the distribution
system, cost optimisation and financial management initiatives.
The Company continues to focus on two objectives: Firstly, develop
effective and innovative products based on the natural science of
ayurveda using modern laboratory practices and marketing them
aggressively; secondly, keep costs in control, which helped in the
Company's growing business profitably.
A superior management team, aggressive branding strategies, strong R&D
capabilities and striving for innovation are expected to reinforce the
Company's industry position graduating to the next level of growth
Financial results (standalone) (Rs. in Lacs)
Particulars 2010-11 2009-10
Operating Income 1,22,115 1,00,686
Profit before interest,
depreciation & taxation 26,962 24,905
Interest (1,181) 2,095
Depreciation &
Amortisation 11,603 11,749
Less: Transferred from
general reserve 10,209 1,394 10,209 1,540
Profit Before Exceptional
Items & Taxation 26,749 21,271
Exceptional Items:-
- VRS compensation - 726
- Share Issue Expenses - 487
Profit Before Taxation 26,749 20,058
Less : Provision for taxation
- Current tax (including FBT) 3,300 3,440
- Deferred Tax (net) 674 100
- Provision for taxation
of earlier years 26 -22
Profit after taxation 22,749 16,540
Balance brought forward 1,383 2,463
Profit available for appropriation 24,132 19,003
Appropriation
General reserve 15,209 12,309
Proposed dividend 5,296 4,539
Corporate dividend tax 880 772
Balance carried forward 2,747 1,383
24,132 19,003
Dividend
The Board of Directors recommended a dividend of Rs. 3.50 per share (i.e.
350% on the share capital of the Company) for the financial year ended
March 31, 2011 for its members, pending their approval. The dividend,
if approved, will be paid to members whose names appear in the register
of members as on August 8, 2011; with respect to the shares held in
dematerialisation form, which will be paid to the members whose names
are furnished by NSDL and CDSL as beneficial owners as on that date.
The total dividend for the year amounts to Rs. 6,175 lacs, including the
dividend distribution tax .The dividend payout ratio works out to 27.1%
Economy, 2010
The Indian economy rebounded from the global financial crisis, chiefly
owing to strong domestic demand with a growth in excess of 8%
year-on-year in real terms. Merchandise exports (15% of GDP) returned
to pre-financial crisis levels. Industrial expansion and high food
prices, resulting from the combined effects of the weak 2009 monsoon
and an inefficient food distribution system, drove inflation to a peak
of 11% in the first half of the year, but gradually eased to single
digit following a series of central bank interest rate hikes.
Driven by a nominal annual growth rate of 13%, India's economy is set
to increase four-fold by 2020, with gross domestic product (GDP)
surging to over USD4 trillion (about Rs. 205 lac crore) and per capita
income rising to USD 3,213 from USD1,017. Annual incremental savings
are also expected to increase four-fold to Rs. 72 lac crore [Source:
Edelweiss Capital].
Concerns, 2011
Inflation: High inflation is likely to persist in 2011-12.
Fiscal deficit: India's public debt was placed at over 76% of GDP,
exceeding expectations. Fiscal deficit was Rs. 3.69 trillion ($81.9
billion), equivalent to 4.7% of India's GDP
(Source: Reuters). The Union Budget emphasised the government's
commitment to fiscal consolidation by budgeting a lower fiscal deficit
(4.6% of GDP in 2011-12 compared with 5.1% in 2010-11). The revenue
deficit-to-GDP ratio is estimated to remain unchanged at 3.4% in
2011-12. Current account deficit is expected to increase, supported by
a depreciation of the Indian Rupee, owing to high inflation and
interest rates.
FMCG industry outlook
India's FMCG segment is expected to grow at least 12% annually to Rs.
4,00,000 crore by 2020 and could rise to as high as 17% should GDP
growth accelerate, leading to an overall industry size of Rs. 6,20,000
crore by 2020. The skin care segment is expected to report a compounded
annual growth rate of nearly 13% through 2012, reaching USD365 million
[Source: Bloomberg].
Low penetration of major segments indicates long- term growth story
Concerns, 2011
The year 2010 was mixed for the Indian FMCG sector. It witnessed steady
growth despite raw material inflation, affecting profitability. Prices
of commodities like palm oil and other agricultural commodities rose
sharply. Even as realisations are expected to remain range-bound, raw
material costs will remain a concern, potentially reducing margins.
Year of building organisational capabilities
Raw material management
The previous year witnessed a significant increase in input costs,
largely owing to ever-increasing crude oil prices, surging inflation,
bad commodity markets and increase in minimum wages.
Rise in price of key inputs
At Emami, principal raw material comprises petroleum-based LLP. Its
price increased owing to a price rise in crude oil from USD85 per
barrel in April 2010 to USD105 per barrel in
March 2011. Besides, there was a growing price pressure in commodity
items like menthol, camphor and metals (gold and silver, among others).
The cost of gold rose sharply from 16,390/10 gm to Rs. 20,700/10 gm and
silver rose sharply from Rs. 27,600/kg to Rs. 51,600/kg in 2010-11. As a
result, the cost of goods sold increased by 4.2% of sales.
Cost management
As opposed to an ad hoc and arbitrary response to raw material cost
movements, the Company institutionalised its cost management. The
result was a deep scrutiny of existing cost influences, leading to
proactive alterations and adaptations in raw material sizes and
specifications. This was reflected in the prudent use of input
substitutes without affecting product yield or quality.
For instance, the Company graduated to the use of alternative plastic
grades used in packaging, which are easily available and reasonably
priced. It switched from a single blow mould to multi-cavity moulding,
resulting in improved productivity with higher bottle production
changeover flexibility.
Purchasing policy
As a deliberate strategy, the Company procured its raw material from
vendors in non-excisable areas à Guwahati (Assam), Baddi (Himachal
Pradesh) Ã at cost-effective prices. It also imported inputs like
micro crystalline wax, methyl salicylates, soap noodles, lumino peptide
and ozokerite wax.
Vendor relationships
The Company adopted stringent policies for selecting vendors, based on
plant proximity, appropriate quality certifications, financial
stability and product quality, among others.
Operations
In a business marked by competitive margins, there was an increasing
need to leverage operational efficiency and circumvent rising costs.
Highlights, 2010-11
- Acquired infrastructure in Egypt to establish a manufacturing
facility
- Commenced operations for setting up a manufacturing facility in
Bangladesh
- Revamped the BT Road factory to comply with WHO GMP
- Dedicated units at Dongri and BT Road for exports
Initiatives, 2010-11
- Imported spout machines from Spain to design new packages for
Boroplus Antiseptic Cream and Fair and Handsome
- Rationalised GSM of laminates and boards to compensate for increased
raw material costs
- Introduced automation in Boroplus lotion, balm and Malai Kesar
- Used multi-cavity moulds (IBM - Injection blow mould and EBM -
Extrusion Blow Mould) which helps increase output and simultaneously
reduce cost per unit
- Started using the unique bi-colour cube technology, the first to do
so in India; this technology enabled Emami to change Zandu Balm and
Mentho Plus packaging to counter spurious products. Currently, both
products are available in bi-colour packaging, reducing duplication to
a great extent.
- Trained the floor staff in WHO GMP, WCM (World Class Manufacturing)
and TPM (Total Plant Management) practices
- Started the trial project for contract manufacture of menthol,
switching from buying the product directly from the market,
consequently reducing costs
- Initiated cost-effective purchases through the e-auction route. Ernst
& Young (E&Y) thoroughly scrutinised and reviewed the portal's purchase
system.
- Conducted various audits at every quarter - technical and SHE
(Safety, Health & Environment), among others Road ahead
- Expand the Pantnagar unit for the manufacture of Boroplus Antiseptic
Cream, Himani Fast Relief, Navratan Oil and Mentho Plus Balm
- Revamp the two Zandu units in Vapi and Masat in line with WHO GMP
certification
- Establish a new plant for manufacturing Boroplus cream at BT Road,
Kolkata
- Establish a new R&D facility and a packaging unit at BT Road, Kolkata
- Change the packaging of Zandu products
Logistics
In a business where products are manufactured at different locations
and consumers live all across the country, it is imperative to ensure
the availability of the right product at the right place at the right
time at an optimal cost. Hence, efficient planning and cost play an
effective role in the execution of finished goods and logistics
planning, leading to a potent business strategy.
The year 2010-11 was challenging as the Company encountered a severe
pricing pressure. Between March and July 2010, fuel rates spiralled
14%. During the year, we also noticed increase in the cost of
consumables like lubricants, spares and tyres by about 20%. Toll taxes
also increased. The Company, however, managed it efficiently.
Highlights, 2010-11
- Improved risk management initiatives in logistics, leading to a
substantial reduction in transit losses
- Commissioned two warehouses (Bhagalpur in East Bihar and Hubli in
North Karnataka)
- Reduced the number of transportation vendors to leverage economies of
scale
- Integrated S&OP process for Zandu products with the existing Emami
distribution channel
- Sustained S&OP meets, which improved forecasting and stock
availability as per demand
- The Company moved about 90% of its products by road
- The Company possessed 33 pan-
India warehouses with a cumulative space of 3 lac sq. ft *The Company
turned its inventory 12 times during the year under review
- The Company leveraged the use of centralised IT in planning.
Initiatives
- To mitigate transit losses, the Company strengthened its contractual
terms and conditions with transportation service providers, quarterly
review mechanism introduced to monitor transporter SLA
- By using the right vehicle for the right product - voluminous
products in large containers and dense/heavy products in open trucks -
the Company reduced logistics cost.
- By mapping lead times precisely from our diverse manufacturing points
to various depots, we ensured timely delivery.
- We encouraged vendors to participate in reverse auctions, leading to
superior value for all.
Road ahead
- Establish own warehouses in Indore (25,000 sq. ft), Kolkata (35,000
sq. ft), Ambala (1,00,000 sq. ft), Hyderabad (30,000 sq. ft) and Patna
(20,000 sq. ft) for the following benefits: Rental saving, use of
warehouses customised as per needs, smooth product movement, energy
savings through the green warehousing concept (low energy turbo-
ventilators instead of energy- guzzling exhaust fans, maximising sky
lighting and water harvesting)
- Widen the hub-and-spoke distribution (in addition to one in South
India) to West, North (with one warehouse each in Ambala and Delhi) and
East India with the following benefits: Quicker response to demand
upturns in the hinterland.
- Implement Optisuite
(an add-on to SAP) to track statutory documentation utilised in
transportation
- Automate supply chain planning process
Sales and distribution
In the FMCG industry, it is imperative to reach products to locations
enjoying consumer presence and demand, enhancing sale prospects.
Highlights, 2010-11
Witnessed an increase in consolidated revenue to Rs.1,278 crores from
RS. 1,038 crores in 2009-10
- Registered a 20.2% growth in the domestic sector and an overall
growth of 23.1%
Rs. Added 100 super stockists, catering to 3,000 sub-stockists in remote
locations with populations below 50,000
* Increased direct retail outlets by 25,000 to 4,50,000
- Initiated two new depots (Bhagalpur and Hubli) to cater to emerging
needs in Bihar and North Karnataka
Initiatives
Integrated the distribution network of Zandu balm in North, East and
West India with Emami
- Segregated sales in two leading states - UP and Andhra Pradesh -
across the urban and rural population, leveraging their brand and
enhancing accountability and transparency
- Identified 84 districts across eight states, covering 3,000 villages
for direct network in rural India
- Embarked on a project called
'Swadesh', where Emami through its field staff covered rural markets
directly through a dedicated organisation structure for rural operation
- Implemented standard distributor billing software, covering 235 key
distributors (constituting 50-55% of the entire sales) to track,
measure and maintain transparency in secondary sales
Road ahead
- Focus on the rural business and cover eight more states for direct
networking
- Increase manpower for modern trade and rural business at the direct
and indirect sales levels
- Cover 84 districts under 'Project Swadesh' by November, 2011
- Reorganise the sales team, decentralise the organisational structure
towards regional heads, accelerate decision-making and add
organisational value
- Add 100,000-odd outlets into direct coverage in urban and rural India
Information technology
Emami's business runs on SAP ECC 5.0, which manages and connects
various organisational arms like material handling, production
planning, sales / distribution, finance and quality checks, among
others.
Highlights, 2010-11
- Commenced two key projects - SAP Human Capital Management (SAP HCM)
and Form Tracking module
-SAP Human Capital Management (SAP HCM): This four-module software
(personnel administration, organisation management, employee
information system and leave, travel and payroll management) will
Clean, organised and safe manufacturing facility rationalise
structures, decentralise payroll, eliminate paperwork, enhance
transparency and strengthen workflow efficiency. The same portal will
serve as an intranet for information sharing. The Company expects to
integrate leave application with the time-punching system and SAP
payroll. Deloitte partnered the Company in this project implementation.
* Form tracking module: This software facilitates the management and
tracking of various taxation forms issued by authorities for
purchase/receipt of materials as well as transportation permits. The
Company implemented a non-SAP (but SAP-certified) software, helping
locate all forms across all units, eliminating the risk of
misplacement.
- Installed a pilot project - desktop virtulisation solution - in the
training room, saving costs by a fourth and will be progressively
implemented
- Implemented SAP material requirement planning across all factories,
improving raw material and packaging material procurement
Road ahead
* Implement business intelligence and analytic applications
- Undertake IT projects in Bangladesh, Dubai and Egypt subsidiaries
* Implement Phase-II of HCM (performance management, training and
development)
* Implement Information security at the physical, network and
application levels
- WAN link migration - complete
change of existing VPN connectivity at all Emami locations by phasing
out VSATs, implement advanced technology communication products (VSAT
to MPLS), ensuring improved services, uptime and efficiency.
Research and development
The Company competes in an industry characterised by rapid
technological advances. Hence, the Company's ability to compete
successfully is heavily dependent upon its ability to ensure a
continual and timely flow of competitive products and technologies to
the market place. The Company continues to develop new products and
technologies and enhance existing products that expand the range of its
product offerings and intellectual property through licensing and
third- party business and technology acquisitions.
Mission - healthcare With a mission of contributing to healthy and
beautiful skin, hair and lifestyles, extensive research and
groundbreaking innovation is one of the keys to Emami's success in the
health and personal care industry. In the Consumer Products Division,
we are committed to meet the unmet needs of consumers and develop
forward- looking products that are tailored to meet consumer need gaps
and offer excellent quality.
Research and innovation centre Emami's Research & Innovation centre is
a science-driven, consumer-centric and business aligned power house,
comprising structurally-sound, intellectually-strong and with a wealth
of creative talent, all supporting Emami's leadership in personal care,
health & wellness and ayurveda.
Our products are the result of understanding consumers' unmet needs,
through a pathbreaking technology. We combine generations of practical
experience with a continuous flow of new knowledge. For decades, we
worked in partnership with universities, startups and suppliers. These
relationships are now richer and more productive than ever. The
constant innovation stream we deliver is founded in our past and
created in the present to strengthen Emami's future.
The Centre was reorganised to align itself with Emami's dynamic
business strategy. The Group now encompasses a Competitive Intelligence
cell, which monitors the effectiveness of current operations,
competitors' perceptions, competitor capabilities, and medium to
long-term market prospects. The same is done under the strategic,
tactical and counter intelligence sub-sections.
The Centre is also keenly focused on strengthening its presence in
global markets and hence is taking active part in tapping the consumer
habits, attitudes and newer insights for product development. With
regulations getting tougher all over the world for products which offer
cosmetic and functional benefit, Emami Research & Innovation Centre is
reinforcing the teams responsible for defending the scientific validity
of our brands with both international and local authorities. The
Regulatory team supports the innovation process, helping brands get
access to markets for which they are responsible, while guaranteeing
that they will conform with operating regulations.
Infrastructure
A state-of-the-art, high-end multi- storey Research & Innovation
Centre, spanning more than 30,000 sq. ft, was created in Kolkata. The
Centre encompasses product innovation development, product processing
science, competitive intelligence cell, analytical development,
perfumery science, quality assurance and packaging and development.
Future technology directions The Research & Innovation team comprises
more than 55 scientists, with multi-dimensional backgrounds and
industry experience. These are geared towards the development of
high-end, targeted products that deliver higher performance, tapping
the latest technologies around the world while appealing to the global
consumer.
The strong in-house innovation team also formed collaborative projects
with modern technology centres, enabling co-development of novel
products in the home and personal care category.
Emami Research & Innovation Group strengthened its capability through
innovation partnerships at each stage of the product development
process à from early stage collaborations with start up and biotech
companies to late stage partnerships with its key suppliers. Above all,
Emami brings to consumers, products that are of the highest quality and
safety and is non-negotiable. R&D is also critical in ensuring
regulatory compliance of all Emami International products. This enables
Emami to launch new products quickly and efficiently, in countries all
over the world, by integrating regulatory affairs in its R&D
activities, from start to finish. The Research & Innovation team also
developed in-house strengths in focusing on basic science areas
including ayurvedic science.
Road ahead
We believe Emami's future will be exceptional, fashioned on our ability
to deliver innovative growth in our businesses and value to all
stakeholders. The shared values we generate will reach beyond our
consumers and shareholders, benefitting our partners, clients,
suppliers and raw material manufacturers.
We are constantly at the cutting-edge of science and technology;
deploying this in our products, packages and services. Hence, we
undertake an ever-increasing number of clinical trials, proving
scientifically that our innovations fulfil promises.
Quality management
In a business where personal care and healthcare is imperative, Emami
invests extensively to meet international quality standards. The
following are the points comprising quality policy:
- SOPs are defined.
- Measurement procedures are defined.
- All critical quality parameters are aligned in a unified system and
documented for reference.
- Quality is defined at different levels like before-process, in-
process and after-process quality checks.
- After a product is launched, a stability study is conducted on
control samples continuously across the product's lifespan.
- The smallest quality complaints are taken seriously and addressed
immediately.
Recognitions
- Majority of the units are cGMP and ISO 9000-certified.
Units abide by highest safety and environmental protection standards.
Overseas business
The global FMCG industry entered into a consolidation mode during
2010-11. Companies either increased their focus on certain market
segments or consolidated their business portfolios. As a result, there
were a number of mergers and acquisitions in the industry. Developing
nations, especially Africa, emerged as regions with potential.
Consequently, the Company doubled sales in Africa and the SAARC region.
Emami exports cosmetics, toiletries and ayurvedic products to over 65
countries across the globe, with a large presence in Africa, SAARC, the
Middle East and the CIS.
Highlights
Exports constituted about 13.6% of the Company's total revenue, up from
13.1% during 2009-10
- Exports grew 27.6% from X 137 crore in 2009-10 to X 174 crore in
2010-11
- Africa and SAARC were the key growth markets for international
business
- Completed the acquisition of Pharmaderm in Egypt in December, 2010,
through a step-down subsidiary in Dubai
- Commenced the construction of a manufacturing facility in Bangladesh
in March, 2011.
Challenges
Along with the opportunities in the industry, there were also
challenges. The major challenges were competition from larger FMCG
companies, the threat of spurious products in some of the international
markets and a political upheaval in North Africa.
Despite these challenges, Emami retained or increased its market share
in most countries through aggressive advertising and branding
activities. The Company's initiatives against spurious products
continued through legal recourse, innovative packaging and consumer
awareness, among others. Owing to the political unrest in North Africa,
the Company decided to tread cautiously and wait until matters
improved.
Modernisation/expansion/ new projects Emami Bangladesh Ltd, a
wholly-owned subsidiary company, took initiatives for setting up
manufacturing facilities at Dhaka, Bangladesh.
Emami Overseas FZE, a step-down, wholly-owned subsidiary of Emami
International FZE, was incorporated in 2010-11. Emami Overseas FZE
acquired 90.6% equity share capital of Pharma Derm SAE Co, Egypt.
Consequently, the said company is now a subsidiary of the Company.
Pharma Derm SAE Co has manufacturing infrastructure in Borg Al Arab,
which is proposed to be utilised for setting up a manufacturing unit.
Outlook
With increasing disposable incomes in developing countries, there is
greater awareness and demand for grooming and wellness products,
helping the industry grow at a good pace.
To capitalise on this opportunity and fuel the Company's ambitious
plans, it intends to acquire companies and brands which will increase
its product portfolio, as well as its market presence. Besides, the
Company plans to launch a new range of products, as well as strengthen
the sales force and brand team to promote the Company, the brand and
the products effectively.
Human resources
In a business where it is imperative to introduce products with
differentiated features and position them differently to attain market
leadership, there is an ongoing need to attract and retain competent
human resources and develop their capabilities, thereby enabling them
to meet business challenges for sustained growth
Highlights and initiatives 2010-11
- The Company focused on training across all management and worker
levels.
- The Company organised employee engagement events like family picnics,
sit and draw competition for employee wards, sports and cultural
activities, among others.
- The Company established processes to strengthen HR delivery and
services for the benefit of internal customers.
- The Company strengthened the HR team by restructuring (number and
capability) and capability development.
- The Company formed a training committee comprising external members
and senior management.
- The Company created a training calendar with a focus on functional
and behavioural training.
- The Company conducted training in the areas dealing with time
management, personal effectiveness, managerial effectiveness, effective
execution and problem-solving workshops to name a few.
- The Company dovetailed recruitment with a nine-month comprehensive
and customised management programme for graduates, leading to
on-the-job absorption on successful completion of their training.
- The Company identified high-potential employees with the objective of
accelerating their development and creating the next rung of leaders.
Road ahead
- The Company intends to add SAP HR modules to strengthen the HR
processes across recruitment, training, performance management, among
others.
- The Company intends to focus on training around cost- effectiveness,
leadership and business growth, among others to carry forward the
momentum gained.
- The Company intends to strengthen the performance management process
further, which will create a high performance orientation.
Corporate social responsibility
Your Company is a responsible corporate citizen, supporting activities
related to the welfare of its employees and society.
The Emami Group is involved in corporate social responsibility through
Emami Foundation and other charitable organisations. The Company's CSR
approach comprises medical services, education, community development,
women empowerment and poverty alleviation, among others. An organising
committee evolved CSR guidelines, evaluated and monitored activities
and planned macro-level CSR initiatives. Under this Organising
Committee, sub-committees were created for enhanced attention to
medical services, education and disaster relief, among others.
At Emami, CSR extends beyond statutory obligations to sustainable
socio-economic development. Ethical corporate behaviour forms the basis
of our CSR initiative. Hunger, diseases and ignorance are still the
burning issues of modern times, despite growth in science; government
budgetary resources are inadequate to mitigate suffering. The corporate
world cannot afford to remain a mere onlooker when people are afflicted
with hunger and malnutrition, diseases and physical infirmity,
illiteracy and ignorance.
Emami has a long tradition in conducting philanthropic activities,
supported by a professional outlook. An exercise is underway to
integrate all such activities of Emami Limited Group companies and
Emami Foundation across the healthcare, education, community
development, women empowerment, livelihood creation and environment
management segments.
Education
Recognising the vital role that education plays in ushering
socio-economic change, Emami's CSR activities comprise innovative
programmes. Apart from providing financial support to various
educational and academic institutions, Emami Foundation supports poor
meritorious students through scholarships, exercise books and
computers, among others. Stipends are provided to poor and physically-
challenged students; coaching is offered to students at the primary
education level. Emami Foundation and units also provide funds for
school renovation and maintenance.
Health
Financially supported by Emami, Magan Shankar Foundation conducts eye
camps, ayurvedic and homeopathic clinics, allopathic and dental camps
at various locations (Aradhanadham at Haripal and in Kolkata). Magan
Shankar
Foundation organises eye, ear and hernia operations and medical
treatment camps. Emami Foundation conducts free/subsidised camps for
the reversal of heart disease under the supervision of the renowned
heart specialist Dr. Bimal Chajjer. Donations are made to various
healthcare organisations. Blood donation camps are organised by various
Emami production units.
Women empowerment
Emami Limited partnered with an NGO to sponsor 40 underprivileged girls
from various parts of rural West Bengal. The fellowship programme
enables them to rise to their potential through higher education and
personalised guidance.
For the past many years, a fund has been set for rendering financial
assistance for the marriage of the underprivileged section of the
society. During the year under review, the Company supported marriages
of 22 underprivileged girls. Besides, the Company helped in initial
set up of their homes and provided funds for meeting household expenses
for the first month.
Environment
Emami uses environment-friendly technologies and processes. Recycling,
re-use of by-products are stressed; emissions are controlled. Research
and development into cow dung and cow urine as well as the maintenance
of goshalas were adopted.
Listing
The equity shares of your Company are listed on the National Stock
Exchange, the Bombay Stock Exchange and the Calcutta Stock Exchange.
The listing fees for the financial year 2011-12 were paid.
Share capital
Consequent to the approval of shareholders on 13th July 2010, face
value of equity shares of the Company was changed from Rs. 2 per share to
Rs. 1 per share and new shares were credited/issued accordingly.
Subsidiary companies
As on March 31, 2011, the Company includes following subsidiary
companies.
1. Emami UK Ltd
2. Emami Bangladesh Ltd
3. Emami International FZE
4. Emami Overseas FZE
5. Pharma Derm S A E Co, Egypt
A statement pursuant to Section 212 of the Companies Act 1956, relating
to subsidiary companies, is attached to the accounts.
In terms of general exemption granted by Ministry of Corporate Affairs,
the Balance Sheet, Profit & Loss Account of the subsidiary companies
are not attached with the Balance Sheet of the Company.
The following information in aggregate for each subsidiary is also
being enclosed (a) Capital (b) Reserves (c) Total assets (d) Total
liabilities (e) Details of Investment (except in the case of investment
in subsidiaries) (f) Turnover (g) Profit before taxation (h) Provision
for taxation (i) Profit after taxation and (j) Proposed dividend.
In compliance with the Accounting Standard 21 of the consolidated
financial statements, notified in Companies (Accounting Standards)
Rules 2006, your Company has prepared its consolidated financial
statements, which forms part of this Annual report.
The accounts of the subsidiary companies will be available to any
member seeking such information at any point of time. These accounts
will be available at the website of the Company viz. www.emamiltd.in
and kept open for inspection at the registered office of the Company.
Directors
Shri R.S. Goenka, Shri K.N. Memani, Shri A.V. Agarwal and Shri H.V.
Agarwal, Directors of the Company, retire by rotation and being
eligible, offer themselves for reappointment.
During the year the Board of Directors have reappointed Shri S.K.
Goenka, Managing Director, Shri Mohan Goenka, Shri A.V. Agarwal, Shri
H.V. Agarwal, Executive Directors of the Company, for a period of five
years after completion of their present term subject to the approval of
members of the Company.
A brief resume of the Directors proposed to be appointed/reappointed as
required under Clause 49 of the Listing Agreement, is provided in the
Notice of the Annual General Meeting forming part of the Annual Report.
Internal control systems and their adequacy
The Company has in place adequate systems of internal controls
commensurate with its size, requirements and the nature of operations.
These systems were designed, keeping in view the nature of activities
carried out at each location and the various business operations. The
Company's in-house internal audit department carries out internal audit
at all manufacturing locations, head offices and sales depots situated
across the country through its internal team and reputed internal audit
firms. Their objective is to assess the existence and operation of
financial and operating controls set up by the Company and also to
ensure compliance of applicable statutes and corporate policies. A
summary of all audit reports containing significant findings by the
audit departments along with the follow-up actions thereafter, is
placed before the Audit Committee for review. The Audit Committee
reviews the comprehensiveness and effectiveness of the report and
provides valuable suggestions and keeps the Board of Directors informed
of its major observations from time to time.
The Company appointed Ernst & Young, an eminent consultancy firm for
capacity building of the Company's Internal Audit Department.
Risk management
The following is an analysis of the Company's key business risks and
mitigation plans:
Industry risk
An industry slowdown could affect business sustainability.
Mitigation
- The FMCG industry is expected to grow at least 12% annually to X
400,000 crore by 2020.
- India's per capita income is projected to grow significantly from
USD1,017 to USD3,213 in 2020.
- Rural consumers spend about USD9 billion per annum on FMCG and
product categories; they account for more than half the sales in some
large FMCG categories.
- The rural FMCG market growth at 18% exceeded that of urban markets at
12%. While the rural market comprise only 34% of the total FMCG market,
given the current growth, its share is expected to increase to 45-50%
by 2020.
Raw material risk
Soaring raw material costs could result in product inflation; raw
material non-availability could affect operations
Mitigation
- The Company procures raw materials (menthol, micro crystal wax, hard
paraffin, stearic acid and methyl salicylate) through imports and
forward contracts, booking them in advance proactively and ensuring
timely availability.
- The Company procured raw materials from local vendors and vendors in
non-excisable areas - Guwahati (Assam), Baddi (Himachal Pradesh)- at
cost-effective prices.
- The Company implemented value engineering projects for cost control
Climatic risk
Inadequate monsoons could affect rural incomes.
Mitigation
- India's south-west monsoon is likely to be normal in 2011 as per
meteorological forecasts.
- India's per capita rural income increased significantly from the 2001
levels to reach X 16,327 in 2009-10 and is poised to rise in the coming
years owing to various income- generating initiatives undertaken by the
government.
Launch failure risk
Any delay in launching new products could affect earnings
Mitigation
- The Company invests heavily in R&D, introduces new products in a
timely way and markets products aggressively, leading to a strong
marketplace presence.
- The Company conceives and tests products with the plan of a
prospective launch.
Quality risk
Declining product quality could affect Emami's brand and profitability
Mitigation
- The Company implemented Total Production Maintenance (TPM) across all
its production units.
- The Company's units received ISO 9001, ISO 14001 and WHO GMP
certifications.
- The Company established protocols to standardise herb quality and
procurement.
- Emami's R&D team, Himani Ayurvedic Science Foundation and Zandu
Foundation for healthcare work to deliver innovative and effective
products.
Brand risk
Growing competition could affect market share.
Mitigation
- The Company enjoys a pan-India presence and brand recall owing to
effective and innovative products, ayurvedic positioning and a
value-for-money proposition.
- The Company invested extensively in advertisements and celebrity
product endorsements to enhance brand recall
- The Company created contemporary commercials and innovative packaging
to attract consumer attention.
- The Company's units are located in tax-exempted zones (accounting for
over 80% per cent of turnover).
Counterfeit risk
Product imitation could dent profitability.
Mitigation
- The Company switched from a single blow mould to multi- cavity
moulding, improving product quality.
- The Company invested extensively in imported moulding technology
(dual colour moulding) from an Italian company to counter duplication;
it extended this technology to Zandu Balm and Mentho Plus Balm.
Shareholder returns
The Company continues to work toward two objectives: Firstly, to
develop effective and innovative products, based on the natural science
of ayurveda using modern laboratory practices and market them
aggressively; secondly, to grow the business aggressively while keeping
costs under control.
Directors' responsibilities
Pursuant to the requirement under section 217(2AA) of the Companies Act
1956 with respect to Directors' responsibility statement, the Directors
confirm that:
i) In the preparation of the annual accounts for the year ended March
31, 2011, the applicable accounting standards have been followed along
with proper explanation relating to material departures;
ii) The Directors have selected such accounting policies and applied
them consistently and made judgements 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 March 31, 2011 and of the profit of the Company
for that year ended on that date;
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) The annual accounts were prepared on a 'going concern' basis.
Further, there has been no change in the accounting policy in the
preparation of annual accounts for the year under review.
Audit & accounts
The Company's Auditors M/s. S. K. Agrawal & Co, Chartered
Accountants, who retire at the ensuing Annual General Meeting are
eligible for reappointment. They have confirmed their eligibility under
Sec. 224 of the Companies Act, 1956 for reappointment as auditors of
the Company.
M/S V.K. Jain & Co, Cost Accountants have been appointed as Cost
Auditors for the financial year 2011-12 subject to approval of Central
Government.
Auditors' report
The observations made in the Auditors' report are self- explanatory and
no qualification is reported by them, hence do not call for any further
comments.
Corporate governance
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance practices followed by the
Company, together with a certificate from the Company's Auditors
confirming compliance, is set out in the Annexure forming part of this
report.
Consolidated financial statements
The Consolidated Financial Statements prepared in accordance with
Accounting Standard AS21 Ã Consolidated Financial Statements of the
Group form part of this report. The net worth of the Group as on March
31st, 2011 is Rs. 690 crore as against Rs. 625 crore, as at the end of the
previous year.
Energy, technology & foreign exchange
The particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Sec 217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is annexed and forms a part of this annual report.
Personnel
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975 as amended, names and other particulars of the employees are
set out in the Annexure to the Directors Report. Although in accordance
with the provisions of Section 219(1)(b)(iv) of the Companies Act,1956,
such information has been excluded from the Report and Accounts sent to
the Members, any member desirous of obtaining this information may
write to the Company Secretary at the Registered Office of the Company.
Group for inter se transfer of shares
Pursuant to intimation from the Promoters, the names of the persons and
entities comprising Ãgroupà is annexed to the Directors' Report for the
purpose of SEBI (substantial acquisition of shares and takeovers)
Regulations 1997.
Acknowledgement
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders à shareholders, banks,
dealers, vendors and other business partners for the excellent support
received from them during the year. Your Directors recognise and
appreciate the efforts and hard work of all the employees of the
Company and their continued contribution to its progress.
Cautionary statement
Statements in the Directors' Report and the Management Discussion and
Analysis describing the Company's objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company's operations include global and domestic demand and supply
conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations
For and on behalf of the Board
Kolkata R.S. AGARWAL
19th May, 2011 Chairman
Mar 31, 2009
The Directors have pleasure in presenting their report on the business
and operations of the Company and audited accounts for the year ended
March 31, 2009.
Financial results
Consequent to the acquisition of 68.9% stake in The Zandu
Pharmaceutical Works Limited (Zandu) in November, 2008, Zandus FMCG
business was demerged into Emami Limited. Simultaneously, real estate
undertaking of Emami comprising of Emamis interest into Emami Realty
Ltd and Zandus non-core business comprising real estate was demerged
into Emami Infrastructure Ltd w.e.f. November 05, 2008.
Audited accounts therefore include and exclude performances of Zandus
FMCG business and Emamis realty business respectively w.e.f. November
05, 2008. Previous years figures are therefore not comparable with the
current years figures.
Financial results are summarised below: (Rs. in Lacs)
Particulars 2008-09 2007-08
Operating Income 72,235 57,282
Profit before interest,
depreciation & taxation 12,964 9,867
Interest 1,963 (1,353)
Depreciation & Amortisation 1,789 728
Less: Transferred from
general reserve* 964 825 - 728
Profit before taxation 10,176 10,492
Less : Provision for taxation
- Current tax (including FBT ) 1,200 1,240
- Deferred Tax ( net ) 250 (22)
- Provision for taxation of
earlier years (26) -
Profit after taxation 8,752 9,274
Balance brought forward 1,648 1,190
Profit available for appropriation 10,400 10,464
Appropriation
General reserve 3,953 5,545
Proposed dividend 3,405 2,797
Corporate dividend tax 579 475
Balance carried forward 2,463 1,647
10,400 10,464
Dividend
The Board of Directors has recommended a dividend of Rs. 4.50 per share
(i.e., 225%) to the members for their approval. The dividend, if
approved, will be paid to the members including the new members who
will be allotted shares on demerger of Zandu FMCG undertaking in terms
of clause 6.5 of Part III of the Scheme of Arrangement under Sections
391 to 394 of the Companies Act, 1956. The total dividend for the year
including dividend distribution tax amounts to Rs. 3,983.11 lacs and
dividend pay out ratio works out at 45.51%.
Review of Operations
With a view to achieve inorganic growth through acquisition that
provide significant cost and revenue synergies and enhance market
position, the Company acquired 68.9% stake in The Zandu Pharmaceutical
Works Ltd. (Zandu), a century old leading ayurvedic company at Rs. 713
crores. The Company believes that this acquisition will open up many
more areas of growth and will be highly EPS accretive.
During the year under review, the turnover of the Company grew to Rs.
722.35 crores representing an overall increase of 26.11% (including
inorganic growth of 13.51%). However, EBIDTA of the Company rose to Rs.
129.64 crores showing an increase of 31.39% over last year and after
considering interest cost of Rs. 19.63 crores, due to utilisation of
fund in acquisition, against income of Rs. 13.53 crores in previous
year, profit after tax is arrived at Rs. 87.52 crores. Consolidated
turnover of the Company, however grew to Rs. 747.46 crores representing
an overall increase of 29.12% (including inorganic growth of 13.38%)
over last year. And consolidated EBIDTA and profit after tax after
minority interest of the Company at Rs. 135.23 crores and Rs. 91.86
crores grew by 36% and 2% respectively.
Despite sluggish economic and recessionary market conditions, your
Company has posted one of its strongest performances. Emami continued
to offer innovative, effective and value- added products based on
traditional ayurvedic science with adoption of modern manufacturing
technology. The Company focused on further strengthening brand equity
through innovative ideas and differentiated offerings. It also
increased the depth and breadth of distribution networks for robust
sustainable growth.
Emami capitalised on every available opportunity. It acquired Zandu,
consolidated its operations, undertook strategic initiatives coupled
with a robust marketing strategy to exploit the full industry
potential. Besides, Emami made efforts towards cost reduction and
improved efficiency at all the levels. The margin improvement and cost
reduction measures undertaken at Zandu yielded satisfactory results.
On a strategic front, the FMCG business of Emami and Zandu was
Consolidated into Emami and the realty business into Emami
Infrastructure Ltd through a scheme of arrangement sanctioned by the
Honble High Court at Kolkata. The Company has also raised Rs. 310
crores by issuing new shares to the qualified institutional bidders in
July 2009, thereby further strengthening the Companys financial
position.
With strong brand equity, penetrative distribution network, innovative
R&D, a dynamic management team and aggressive business approach, your
Company looks to the future with determination and confidence.
Internal control system and information technology
Internal control systems, established by your Company throughout the
organisation are in operation and working properly. These systems have
been designed keeping in view the nature of activities carried out at
each location and the various business operations. The Companys
in-house internal audit department carries out the internal audit at
all manufacturing locations, head office and sales depots situated
across the country. Their objective is to assess the existence and
operation of financial and operating control set up by the Company. A
summary of all audit reports containing significant findings by the
audit departments along with the follow-up action thereon, is placed
before the Audit Committee for review. The Audit Committee reviews the
comprehensiveness and effectiveness of the report and provides valuable
suggestions.
Listing
The equity shares of your Company are listed on the National Stock
Exchange of India Limited, Bombay Stock Exchange Limited and the
Calcutta Stock Exchange Association Limited. The listing fees for the
financial year 2008-09 have been paid.
Subsidiary Companies
As on March 31, 2009, the Company includes following wholly
owned overseas subsidiary Companies;
Emami UK Ltd
Emami Bangladesh Ltd.
Emami International FZE
A statement pursuant to Section 212 of the Companies Act 1956, relating
to subsidiary Companies, is attached to the accounts.
In terms of the approval granted by the Central Government under
Section 212(8) of the Companies Act 1956, the Audited Statements of
account of the subsidiary companies and the Auditors Reports thereon,
for the year ended March 31, 2009, along with the report of the Board
of Directors, have not been attached. The Company will make the
documents available upon request by any member interested in obtaining
the same.
However, in compliance with the Accounting Standard 21 on Consolidated
Financial Statements, notified in Companies (Accounting Standards)
Rules 2006, your Company has prepared its consolidated financial
statements, which forms part of this Annual Report.
The following information in aggregate for each subsidiary is also
being enclosed (a) Capital (b) Reserves (c) Total Assets (d) Total
Liabilities (e) Detail of Investments (except in the case of investment
in subsidiaries) (f) Turnover (g) Profit Before Taxation (h) Provision
for taxation (i) Profit after Taxation and (j) Proposed Dividend.
Issue of shares to QIBs
In the month of July 2009, the Company has raised a sum of Rs. 310
crores through offer and issue of 1,00,00,000 equity shares of Rs. 2/
each at a premium of Rs. 308/- per share. Proceeds of the issue were
used for repayment of debt outstanding in the books for acquisition of
controlling stake in The Zandu Pharmaceutical Works Ltd.
Scheme of Arrangement
Upon approval at the court convened meeting, the scheme of arrangement
for consolidation of FMCG business of Zandu with Emami Ltd and realty
business into Emami Infrastructure Ltd was
submitted before the Honble High Court at Kolkata for its approval.
The Honble Court has approved the said scheme and consequently the
Zandus FMCG business was demerged and transferred to and vested into
Emami Limited, on a going concern basis. Simultaneously, real estate
undertaking of Emami comprising Emamis interest in Emami Realty Ltd
and Zandus non-core business comprising real estate was transferred
into Emami Infrastructure Ltd w.e.f. November 05, 2008. Certified copy
of the order was filed with the Registrar of Companies, West Bengal on
December 02, 2009 to make the scheme effective.
Consolidation of FMCG business will deliver business, cost and margin
synergies, improve research & development base and provide a bigger
basket of power brands and opportunity of entry into new segments in
time to come.
Board of Directors
The Board of Directors have re-appointed Shri R S Agarwal as Executive
Chairman of the Company with effect from April 01, 2009 subject to the
approval of shareholders at the ensuing Annual General Meeting.
Shri R S Goenka, Shri K N Memani, Shri K K Khemka and Padmashree Vaidya
Suresh Chaturvedi, Directors of the Company, retire by rotation and
being eligible, offer themselves for reappointment. A brief resume of
the Directors, proposed to be re-appointed as required under Clause 49
of the Listing Agreement, is provided in the Notice of the Annual
General Meeting forming part of the Annual Report.
Auditors report
The observations made in the Auditors report are self- explanatory and
therefore, do not call for any further comments.
Auditors
The auditors, M/s. S K Agrawal & Co, chartered accountants, retire at
the forthcoming Annual General Meeting and being eligible offer
themselves for reappointment.
M/s V Parekh and Associates, Chartered Accountants, auditors for the
Units at Vapi, Talasari, Masat and Uttrakhand of FMCG undertaking of
The Zandu Pharmaceutical Works Ltd offers themselves for reappointment
as auditors of the aforesaid units
for the financial year 2009-2010 under section 228 of the Companies Act
1956.
Responsibility statement
Pursuant to the requirement under section 217(2AA) of the Companies Act
1956 with respect to Directors responsibility statement , the
Directors confirm that:
i) In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) The Directors have selected such accounting policies and applied
them consistently and made judgements 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 that period;
iii) The Directors have 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;
iv) The annual accounts were prepared on a going concern basis.
Considering the substance over the legal form, and with the approval of
the shareholders of the transferor and transferee entities, the Company
has obtained specific approval of the High Court of Kolkata and the
consent of Regional Director, Ministry of Corporate Affairs, and has
accounted for the transactions relating to acquisition of FMCG business
of Zandu, under AS 14 (Accounting for Amalgamations).
Corporate Governance
The information pursuant to the provisions of Corporate Governance as
stipulated in Clause 49 of the Listing Agreement are hereby presented
in a separate report and annexed along with this report.
Group for inter se transfer of shares
As required under Clause 3(1) (e) of the Securities and Exchange
Board of India (Substantial Acquisitions of Shares and Takeovers)
Regulation, 1997, persons constituting ÃGroupà (within the meaning as
defined in the Monopolies and Restrictive Trade Practice Act, 1969) for
the purpose of availing exemption from applicability of the provisions
of Regulation 10 to 12 of the aforesaid regulations, are given in the
separate annexure attached herewith and forms part of this Annual
Report.
Energy, technology and foreign exchange
Information pursuant to Section 217 (1)(e) of the Companies Act, 1956,
in respect of the conservation of energy, technology absorption and the
foreign exchange earning, is annexed and forms part of this Annual
Report.
Personnel
Information pursuant to Section 217(2A) of the Act read with the
Companies (Particulars of Employees) Rules, 1975, as amended by the
Companies (Particulars of Employees) Amendment Rules 1999 forms part of
this Report. Although in accordance with the provisions of Section
219(1)(b)(iv) of the Act such information has been excluded from the
Report and Accounts sent to the Members, any member desirous of
obtaining this information may write to the Company Secretary at the
Registered Office of the Company.
Acknowledgement
Your Directors wish to appreciate the dedication and commitment
displayed by the employees of the Company including its subsidiary
companies at all levels and also express their sincere thanks and
appreciation to financial institutions, banks, government authorities,
business associates, distributors, retailers, stakeholders and the
consumers of its products, for their continued support.
For and on behalf of the Board
Kolkata R S Agarwal
December 03, 2009 Chairman