REPORT OF THE DIRECTORS
Your Directors have the pleasure of presenting the 48th Annual Report and the AuditedAccounts of the Company for the Financial Year ended June 30, 2012.
(Figures in Rs crores)
| ||2011/12 ||2010/11 |
|Sales including Excise ||1301 ||1037 |
|Net Sales (less excise duty) ||1295 ||1000 |
|Profit before tax ||223 ||177 |
|Profit after tax ||181 ||151 |
|Proposed Dividend plus tax thereon ||85 ||85 |
|Transfer to General Reserve ||18 ||15 |
|Balance carried forward ||407 ||329 |
The Indian macroeconomic environment has looked turbulent during the past year. After apromising start to the decade in 2010-11, with achievements like maintaining GDP growthrate around 8%, bringing down fiscal deficit to 4.8% of GDP as well as containing currentaccount deficit to 2.6%, the fiscal year 2011-12 has been challenging for the IndianEconomy. The year started on a note of optimism through impressive growth in exports andhigh levels of foreign exchange inflows, only to moderate as the year progressed throughcontinued monetary tightening in response to the untamed inflationary pressures.Gradually, high levels of inflation gave way to a slow-down in the growth. Additionally,as fiscal conditions worsened over the year, export numbers were revised in light of datadiscrepancies leading to a widening of trade deficit. In light of a perceivably weakmacroeconomic environment, a well-planned economic revival policy from the Government'spart is required to get back the Indian Economy on the path to stable and prosperousgrowth. Fall of rupee against major currencies, new norms of standard-size packaging,increase in raw material costs due to upward spiraling interest rates and inflation,together might adversely impact the performance of the FMCG products. India needssustained capital inflows to finance its growing current-account deficit. Althougheconomic reforms appear to have slowed down, it appears that FIIs are continuing to investin India. However, it is also an undeniable fact that the Government continues to facechallenges in attracting foreign direct investment (FDI). As per World Bank's reporttitled 'Global Economic Prospects' the Indian economy will grow by 6.9% in this FinancialYear (2012-13) notwithstanding problems like policy uncertainties, fiscal deficit andinflation.
Your Company's strong performance continued in the Financial Year 2011-12, despitedifficult economic conditions, new competitive entrants and inflationary marketconditions. With a focus on balancing needs of the consumer, the customer and the members,we are delighted to report very strong financial results for your Company. Your Companyachieved a healthy double-digit sales growth during the Financial Year 2011-12. Sales forthe Financial Year increased by 25% at Rs 1,301 crore as against Rs 1,037 crore during theprevious year. Earnings after tax increased by 20% at Rs 181 crore as against Rs 151 croreduring the previous year.
Feminine Hygiene Business
Feminine Hygiene business has been a major growth driver for the Financial Year withbusiness up strong double digits with the various variants of Whisper Sanitary Napkinsshowing consistent growth. Your Company continues to deliver amongst the sales and sharegrowth for P&G across the globe, with Whisper increasing its market share and WhisperUltra being the largest value share brand in the market behind strategic initiatives. Thisgrowth is driven both by increase in penetration among non-users and consumption amongusers.
During the Financial Year under review, a number of initiatives were designed to meetthe consumers' needs across segments. All these initiatives led to the Whisper sharecrossing its all time national high of 54.1 with growth across all major Brands.
The Company's Healthcare sales posted a double digit growth this Financial Year acrossVicks VapoRub, Vicks Cough Drops, Vicks Action 500 and Vicks Inhaler. This growth wasdriven by a combination of product initiatives and increased investment behind provenequity advertising. Vicks VapoRub had a record year posting the highest ever market share.The Vicks Cough Drops business was the fastest growing in the Vicks franchise. Vicks willcontinue to innovate to ensure it stays the most trusted cough and cold care solution inIndia. The Healthcare business further strengthened Vicks equity as one of the mosttrusted Brand in India driven by the launch of Vicks VapoCool, a premium throat drop withthe dual-benefit of soothing the throat and giving relief from blocked nose.
Overall, the Company continued to focus on driving consumer meaningful innovationsbacked by distribution expansion and strong advertising support thereby recording aconsistent growth across all areas of business. Earnings have also benefited from focus onmix, pricing and cost control.
Cash generation continued to be strong arising from significant improvements in thebusiness performance, efficiencies and cost savings across the organization and acontinued efficient collection system. Your Company managed investments prudently bydeployment of the surplus funds after ensuring that such investments satisfied theCompany's criteria of safety and security.
Strong results have been possible due to several key initiatives which focused onconsumers, retail customers with a stronger focus on innovation, greater effectiveness andefficiency across all costs, while strengthening organizational leadership.
The Directors are pleased to recommend a dividend of Rs 22.50 for each Equity Share ofRs10/- each for the Financial Year ended June 30, 2012.
CORPORATE SOCIAL RESPONSIBILITY
Shiksha reaches out to more children, in more parts of India, more completely P&G'sfocus on purpose-inspired growth drives us to not only serve our consumers with superiorproduct propositions, but also truly touch and improve the lives of more consumers, morecompletely by contributing towards the communities we operate in. This commitment is thepurpose behind our Corporate Social Responsibility initiatives 'Shiksha' and the 'WhisperSchool Program,' that enables children from lesser-privileged background access theirright to health and education.
P&G's flagship Corporate Social Responsibility Program ' Shiksha' is an integralpart of our global philanthropy program - Live, Learn & Thrive, which currentlyreaches out to over 50 million children annually. Now in its 8th year, Shiksha enabledover 385,000 lesser-privileged children with access to good quality education bysupporting sustainable and critical assets of schools. Shiksha will be supporting over 200schools by interventions such as reactivating defunct government schools, building newschools or enhancing education infrastructure at existing schools.
This year, Shiksha introduced various new amenities, educational aids and health andhygiene programs to contribute to the overall growth and development of the childrenstudying at Shiksha schools. During 2011-2012, P&G's Shiksha initiative hasfacilitated the addition of a digital library and distance learning programme at theGovernment High School, Lodhimajra, Himachal Pradesh. This initiative allows experts fromother cities to conduct online lectures and sessions on various topics directly with thestudents. Shiksha has also partnered with project Ekta, Government of Rajasthan and NGOIBTADA, to adopt a girls' school 'Mewat Balika Vidyalayd with the mutual goal of helpinggirls in rural Rajasthan access quality education.
P&G's National Parivartan Program, is a decade-old program that reaches 2.5 milliongirls across India every year to provide them with timely menstrual education and productsamples. The program will now be conducted on a yearly basis to empower girl students withbetter health and hygiene, so that they do not skip school.
Since its inception in 2005, the P&G Group (India) has through Shiksha made acumulative donation of over Rs 27 crores towards helping children on the path to bettereducation. This is a result of the support from our consumers who participated in theShiksha movement by buying P&G brands in the months of January, February & March2012 and enabling P&G to contribute a part of the sales towards the cause. During theFinancial Year ended June 30, 2012, alone, P&G Group (India) closed Shiksha with acontribution of Rs 5.6 crores in association with its partner NGOs, namely Save theChildren India, Army Wives Welfare Association (AWWA), Round Table India (RTI), Navy WivesWelfare Association (NWWA), Air Force Wives Welfare Association (AFWWA) amongst others.Each of Shiksha's NGO partners focuses on a critical approach towards education, with NGORound Table India specializing in building educational infrastructure and supportingschools across India,
NGO Save the Children laying emphasis on the girl child via supporting the Government'sKasturba Gandhi Balika Vidhyalayas and the NGOs AWWA, NWWA & AFWWA serving the uniqueeducational needs of differently-abled children of Naval, Air force and Army Officers'families. These activities together help Shiksha further its motto ' $is<u if yeni$is<ii' and help us touch and improve the lives of our consumers.
Our Whisper School Program is now two decades old and it has protected millions ofadolescent girls in India from getting trapped in traditional practices of usingunhygienic cloth for sanitary protection. Through a sustained outreach program in privateand government schools across the Country, P&G has been educating over 5 millionadolescent girls in good Feminine Hygiene.
Environmental sustainability is embedded in our Purpose, Values, Principles, and ourbusiness. In order to improve lives, now and for generations to come, we ensure that ourproducts, packaging and operations are safe for employees, the consumers and theenvironment. We ensure this with a focus on technologies, processes and improvements thatmatter for the environment. The manufacturing technologies we use are low emission andgenerate almost 60% less emission than the local norms.
We aim at reducing waste at every step of the supply chain, with a robust system thattargets zero waste, including product shelf life. We seek to develop sustainable products,with an improved environmental profile.
Moreover, we ensure environmental friendly practices at our sites. These includereduction in power consumption, optimal water consumption and eliminating excess use ofpaper by increasing the use of scanning. A good example is the hydro-electric energy beingused at our Plant in Baddi with efforts underway for extending this to other sites
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, withrespect to the Directors' Responsibility Statement, it is hereby confirmed:
(i) that in the preparation of the Annual Accounts for the Financial Year ended June30, 2012, the applicable accounting standards had been followed along with properexplanation relating to material departures;
(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the profit or loss of the Company for the Financial Year underreview;
(iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate 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 andother irregularities.
(iv) that the Directors had prepared the accounts for the Financial Year ended June 30,2012, on a "going concern" basis.
A separate report on Corporate Governance along with the Auditors' Certificate on itscompliance is annexed to this Report.
MANAGEMENT & PERSONNEL
The Company's growth over the past few years demonstrates the core strengths of ouremployees to stay reality-based, embrace change and proactively influence the course ofbusiness. In a diverse organization & competitive environment, the efforts of ourorganization, strong capability plans and HR innovation accelerated our growth. Ourproductivity continues to be best-in-class with major progress in Leadership and TalentDevelopment. We ended the year being recognized No.2 in the FMCG category in India in the'Great Place to Work Survey 2012'.
The information as per Section 217(2A) of the Companies Act, 1956 ('Act'), read withthe Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per theprovisions of Section 219(1) (b) (iv) of the Act, the Report and Accounts are being sentto the Members of the Company excluding the statement of particulars of employees underSection 217(2A) of the Act. Any Member interested in obtaining a copy of the saidstatement may write to the Secretarial Department at the Registered Office of the Company.
Mr. R. A. Shah, Director, retires by rotation and, being eligible, offers himself forre-appointment. The Directors recommend his re-appointment.
Mr. Shantanu Khosla has been re-appointed as the Managing Director of the Company bythe Board of Directors for a period of five years w.e.f. June 1, 2012, subject to theapproval of the Members of the Company.
Ms. Deborah Ann Henretta resigned from the Directorship of the Company with effect fromAugust 1, 2012.
As a consequence to the cessation of Ms. Deborah Henretta from the Directorship of theCompany, Mr. Pramod Agarwal ceased to be an Alternate Director with effect from August 1,2012.
Mr. Pramod Agarwal was appointed as an Additional Director of the Company with effectfrom August 13, 2012 and holds office upto the date of the ensuing 48th Annual GeneralMeeting of the Company. A notice under Section 257 of the Companies Act, 1956 has beenreceived from a Member proposing his candidature as a Director of the Company, liable toretire by rotation.
Mr. Amit Vyas was appointed as an Additional Director of the Company with effect fromDecember 22, 2011 and holds office upto the date of the ensuing 48th Annual GeneralMeeting of the Company. A notice under Section 257 of the Companies Act, 1956 has beenreceived from a Member proposing his candidature as a Director of the Company, liable toretire by rotation.
The brief resumes of the Directors and the details of the Directorships held by them inother companies are given in the "Corporate Governance" section of the AnnualReport.
Appropriate Resolutions for the appointment/ re-appointment of the aforesaid Directorsare being moved at the ensuing 48th Annual General Meeting, which the Board recommends foryour approval.
The Auditors, M/s. Deloitte Haskins & Sells, Mumbai, Chartered Accountants(Registration No. 117366W) retire and offer themselves for re-appointment.
Your Company has re-appointed M/s. Ashwin Solanki & Associates, Cost Accountants,to conduct the cost audit of cost accounts/record of ''Formulations'' manufactured by theCompany, for the year ending June 30, 2013. The Company has received the necessaryapproval of the Central Government for the re-appointment of the Cost Auditor.
CONSERVATION OF ENERGY ETC. INFORMATION
The information, in accordance with the provisions of Section 217(i)(e) of theCompanies Act, 1956, read with the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988, regarding conservation of energy, technology absorptionand foreign exchange earnings and outgoings, are attached as Annexure to this Report.
The Directors wish to thank the Retailers, Wholesalers, Distributors, Suppliers ofGoods & Services, Clearing and Forwarding Agents and all other business associates andacknowledge their efficiency and continued support in promoting such healthy growth in theCompany's business.
We are grateful to The Procter & Gamble Company USA and Procter & Gamble AsiaPte Limited Singapore for their invaluable support in terms of access to the latestinformation/knowledge in the field of Research & Development for products, ingredientsand technologies; timely inputs to exceptional marketing strategies; and the goodwill ofits world-renowned Trademarks and superior brands. We are proud to acknowledge thisunstinted association that has vastly benefited the Company.
On behalf of the Board of Directors
|Mumbai ||R. A. Shah |
|August 23, 2012 ||Chairman |
ANNEXURE TO THE REPORT OF THE DIRECTORS
A. Power & Fuel Consumption
|Particulars ||2011-12 ||2010-11 |
|1. Electricity || || |
|(a) Purchased: || || |
|Units (KWH) ||76 87 530 ||84 27 060 |
|Total Amount (Rs) ||3 08 62 772 ||3 30 44 214 |
|Rate/Unit (Rs) ||4.00 ||4.00 |
|(b) Own Generation: || || |
|(i) Through Diesel Generator || || |
|Unit (KWH) ||23 37 010 ||3 87 030 |
|Unit Per Its. of Diesel Oil ||2.85 ||3.06 |
|Cost/Unit (Rs) ||13.66 ||12.75 |
|(ii) Through Steam || || |
|Turbine/Generator ||N.A. ||N.A. |
|2. Coal (Specify Quality and where used) || || |
|3. Furnace Oil ||N.A. ||N.A. |
|4. Others/Internal Generation ||N.A. ||N.A. |
B. Consumption Per Unit of Production
|Particulars ||2011-12 ||2010-11 |
|Other Products ||544 ||546 |
Since Company's operations involve low energy consumption, the Company has no commentsto offer under para Assignment (a) to (c) of Rule 2 of the Companies (Disclosure ofparticulars in the Report of Board of Directors) Rules, 1988.
I. RESEARCH & DEVELOPMENT:
1. Specific areas in which R&D was carried out by the Company:
During the Financial Year, the Company continued its Research and Development thrustfor improvement of its existing products, process and import substitution. Research workis also being done for the development of new products.
2. Benefits derived as a result of the above R&D:
R&D efforts have helped bringing about an improvement in processes and haveresulted in cost reduction and import substitution.
3. Future Plan of Action:
Emphasis will continue to be laid on the existing products and new products.
4. Expenditure on R&D:
| || || ||Rs Lakhs |
| || ||2011-12 ||2010-11 |
|(a) ||Capital || || |
|(b) ||Recurring ||258.73 ||4.93 |
|(c) ||Total ||258.73 ||4.93 |
|(d) ||Total R&D expenditure as a percentage of total turnover || || |
II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. Efforts, in brief, made towards technology absorption, adaption and innovation:Continued implementation of Quality Control/Quality Assurance procedures of naturalproducts, new products and processes were successfully adapted on commercial scale toutilize local, raw materials and machinery; Technical Services for reliability, quality,cost savings and technology transfer from overseas.
2. Benefits derived as a result of above efforts e.g. product improvement, costreduction, product development, import substitution etc.: All the above efforts resultedin improving process efficiencies, consistent quality of our products, introduction of newproducts and import substitution and successful absorption of technology.
3. Imported Technology: The Company has the advantage of availing advanced technologyand continuous upgradation thereof from The Procter & Gamble Company, USA and itssubsidiaries. This is an unmatched competitive advantage that helps the Company deliverstrong business results.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Activities relating to exports; initiatives taken to increase exports; development ofnew export markets for products and services; and export plans:
The particulars of foreign exchange earned/ utilized during the Financial Year aregiven in Note Nos. 30 & 31 respectively forming part of the Financial Statements.
For and on behalf of the Board
|Mumbai ||R. A. Shah |
|August 23, 2012 ||Chairman |