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REPORT OF THE BOARD OF DIRECTORS
To the Members of 3M India Limited,
Your Directors have pleasure in presenting the Thirty Second (32nd) Annual Report of the Company. The Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2019 are prepared in compliance with the applicable provisions of the Companies Act, 2013 including Indian Accounting Standards. The audited standalone and consolidated financial statements together with the Auditors Report thereon form part of the Annual Report.
FINANCIAL HIGHLIGHTS - Standalone and Consolidated
(Rs. in Lakhs)
|Year ended March 31, 2019||Year Ended March 31, 2018||% age increase / decrease (-)||Year ended March 31, 2019||Year Ended March 31, 2018||% age increase / decrease (-)|
|Revenue from Operations||280,875.97||258,039.60||8.85%||301,682.24||273,418.82||10.34%|
|Of which -Export Sales||2,696.81||1,627.92||65.66%||3,046.68||2,382.43||27.88%|
|Other Income, net||3,283.16||4,361.54||-24.72%||3,683.12||4,478.82||-17.77%|
|Profit before Interest and Depreciation||54,042.78||52,342.69||3.25%||57,241.78||54,339.96||5.34%|
|Less: Finance costs||109.18||194.07||-43.74%||112.26||202.92||-44.68%|
|Less: Depreciation and amortization expense||4,187.67||4,180.32||0.18%||4,375.63||4,350.60||0.58%|
|Profit before Taxation||49,745.93||47,968.30||3.71%||52,753.89||49,786.44||5.96%|
|Less: Tax expense||17,446.85||16,914.74||3.15%||18,439.39||17,456.34||5.63%|
|Profit for the year||32,299.08||31,053.56||4.01%||36,617.99||33,335.08||9.85%|
|Profit from discontinued operations||-||-||-||91.07||754.38||-87.93%|
|Gain on disposal of discontinued operations||-||-||-||3,171.66||905.00||250.46%|
|Tax expense of discontinued operations||-||-||-||959.24||654.40||46.58%|
|Items that will not be re-classified subsequently to profit or loss||(12.77)||(26.25)||-51.35%||(6.37)||(20.38)||-68.74%|
|Total Comprehensive income for the year||32,286.31||31,027.31||4.06%||36,611.62||33,314.70||9.90%|
Your Board of Directors approved the Dividend Distribution Policy on February 9, 2017 in terms of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The Policy was uploaded at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about- 3M/information/corporate/financial-facts/summary/ and the same is also annexed herewith as "Annexure J".
The Company remains invested in India and sees significant tailwinds from policy and demand in several sectors including electronics where the Company has made its most recent investment through the acquisition of 3M Electro & Communication India Private Limited. The Company remains bullish on investments and growth expectations in India in near term as well as medium term helped by strong fundamentals in the economy and the Company sees itself implementing several initiatives and projects to leverage the same including CAPEX, manpower and related infrastructure. The Company therefore has decided to conserve and retain the earnings and is not proposing a dividend or transfer of any amounts to reserves.
Transfer of dividend to the Investor Education and Protection Fund, if any: NA
TRANSFER TO RESERVES
As it has been decided to conserve and retain the earnings and, therefore, your Board does not propose to transfer any amounts to reserves.
INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURE
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statement of the Subsidiary Company in Form AOC-1 is provided as "Annexure L" to this report.
3M Electro & Communication India Private Limited (3M E&C)
During the year under review, the revenue from operations of 3M E&C increased to Rs. 20,913.04 Lakhs in the financial year 2018-19 compared to Rs.15,450.03 Lakhs in financial year 2017-18. The Profit before tax for the year financial year 2018-19 is Rs. 3,007.96 Lakhs as against Rs. 1,818.14 Lakhs in the financial year 2017-18. The Profit after tax for the financial year 2018-19 is Rs. 4,325.33 Lakhs as against Rs. 2,287.41 Lakhs in the financial year 2017-18.
Brief highlights of 3M E&C:
The Electrical Business ventured in the extra high voltage segment by localizing the portfolio and leveraging technical and sales competencies. Your Company bagged several wins from utilities and industrial projects.
Governments approach to Mobility Transformation has paved the way for Automotive Electrification (AE). 3M is contributing to this by working with stakeholders engaged in AE, including automobile OEMs. A fully dedicated team has been set up which is working in collaboration with Auto OEMs, Design houses, Regulatory Bodies, Battery Manufacturers, EV charger manufacturer to bring about technical advancement in this space.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and Financial Statements of the Subsidiary Company for the financial year 2018-19 have also been placed on the website of the Company. http://solutions.3mindia. co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/.
STATE OF COMPANYS AFFAIRS
The Indian economy continues to be a bright spot in the world with strong growth momentum and favorable indicators. The year 2018 saw several short-term headwinds in the macro economy - dipping inflation, farm distress, liquidity issues, Banking NPAs, etc. Tailwinds were seen in infrastructure, retail, ecommerce markets. India will continue to push the infrastructure agenda for the next several years to bridge the gap of rapid urbanization and quality of life in cities.
Your Company has continued its strong growth trajectory with consistent performance even in the face of short-term headwinds. The Company was able to do so because of its sharp focus on quality of business, portfolio prioritization, operational discipline and continued commitment to ethics and compliance. "Customer first" continues to be at the core of everything that the Company does. Much like the financial year 2017-18, the efforts continue to focus around, and the Board is pleased to highlight that your Company:
> Geographical penetration: Has expanded presence with deeper penetration in Tier B & C cities which is the real driver of demand in India.
> Government and Infrastructure initiatives: Your Company has aligned with several national infrastructure initiatives through focused work on regulatory, helping in many cases to set national standards in areas such as safety.
> Channel Transformation: Has introduced several steps to improve channel health through simplified processes, professional management and rationalization.
> Market & Segment Growth: Has gained from strong performances in key growth market segments such as infrastructure, energy and consumer reflecting positive market trends.
> Winning through localization: Continues to participate and drive local manufacturing bolstered by robust new product introduction process and value addition.
The year 2018 saw the Company win several prestigious awards and garner industry recognitions in acknowledgment to performance. Your Company continues to go after bigger and bolder opportunities and strives to be a highly valued partner for customers.
The Board of Directors at its meeting held on May 30, 2018 and shareholders through postal ballot on July 26, 2018 approved the investment in the entire equity share capital of 3M Electro & Communication India Private Limited. The investment was completed on December 27, 2018 for a value of Rs. 58,470 Lakhs. The above business combination is a common control transaction and accordingly has been accounted for using the pooling of interest method with effect from April 1, 2017. 3M India Limited acquired net assets of Rs. 9,188 Lakhs resulting in an adjustment of Rs. 49,282 Lakhs in consolidated total reserves. 3M Electro & Communication India Private Limited became a 100 % Subsidiary of the Company with effect from December 27, 2018.
The Company on a standalone basis registered an overall turnover growth of 8.85% at Rs. 280,875.97 Lakhs for the financial year ended March 31, 2019 compared to Rs. 258,039.60 Lakhs in the previous financial year. The Profit before Interest and Depreciation is Rs. 54,042.78 Lakhs compared to Rs. 52,342.69 for the previous financial year. Profit before Tax is Rs. 49,745.93 Lakhs compared to Rs. 47,968.30 Lakhs for the previous financial year. The operating margin for the current year is 19.02% compared to 19.95% for the previous financial year. Total Comprehensive Income is Rs. 32,286.31 Lakhs compared to Rs. 31,027.31 Lakhs for the previous financial year. Portfolio prioritization, operational productivity and lower material costs increased the profitability at all levels for the financial year under review. Export Sales is Rs. 2,696.81 Lakhs for the financial year ended March 31, 2019 compared to Rs. 1,627.92 Lakhs in the previous financial year, an increase of 65.66%, due to increase in demand in global market.
The Industrial business grew by 4.90%; Health Care business grew by 6.60%: Safety and Graphics business grew by 7.91%; Consumer business grew by 11.22% and Energy business grew by 36.01%.
The EPS (Basic and Diluted) of the Company for the financial year 2018-19 was Rs. 286.72 per Share as compared to Rs. 275.66 per Share in the previous financial year, a growth of 4.01%. Detailed analysis of the performance has been discussed in the Managements Discussion and Analysis Section of the Annual Report.
Segment Change from April 1,2019:
3Ms new Business group re-alignment was announced re-aligning from 5 (five) business groups to 4 (four). The new Business Groups are Safety and Industrial Business, Transportation and Electronics Business, Health Care Business and Consumer Business. This was a key first step for the Company in advancing 3M into the future and strengthen our ability to meet the fast-moving needs of the global customers and markets. The new alignment is designed to leverage the Companys business transformation progress, accelerate growth and deliver greater operational efficiencies.
Your Company has also aligned the organization to the new Business Groups and position the organization for the future leading the local execution of go-to-market plans, building on strong relationships with customers and channel partners and representing the voice of customer for our markets.
CONTRIBUTION TO EXCHEQUER:
During the financial year 2018-19, the Company has paid various taxes on account of its business/operation viz., VAT & CST, SGST, CGST, IGST, Direct Taxes and Customs Duty amounting to Rs. 72,938 Lakhs in aggregate.
Capital Investments during the financial year 2018-19 is Rs. 3,084.21 Lakhs (Net of capital work-in-progress and capital advances) (201718: Rs. 1,641.10 Lakhs).
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and/or commitments affecting the financial position of the Company since the close of the financial year and till the date of this report.
CHANGE IN THE NATURE OF BUSINESS
There were no changes in the nature of business during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is annexed herewith as "Annexure A".
CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION
A separate Report on Corporate Governance in terms of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as "Listing Regulations") along with Certificate from a Practising Company Secretary regarding compliance to the conditions stipulated under Chapter IV of the Listing Regulations is annexed as "Annexure B".
BUSINESS RESPONSIBILITY REPORT
A separate Section on Business Responsibility is annexed as "Annexure C" and forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015.
EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS
The Company has only one class of Share, i.e. Equity Share with a face value of Rs. 10/- each. The Authorized/Issued/Subscribed and fully paid-up Share Capital as at March 31, 2019 is Rs. 11,26,50,700 (divided into 1,12,65,070 Equity Shares of Rs. 10/- each).
During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.
LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the financial year 2019-20 to National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) where the Companys Equity Shares are listed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Based on the recommendations of the Nomination and Remuneration Committee, the Board at its Meeting held on October 30, 2018 appointed Ms. Sadhana Kaul (DIN: 02589934) as Additional Director of the Company categorized as Non-Executive Non-Independent Director with effect from October 31, 2018 and she will hold office till the Annual General Meeting to be held on August 14, 2019. Accordingly, a resolution seeking appointment of Ms. Sadhana as a Director of the Company is included in the Notice convening the Annual General Meeting. Details of Ms. Sadhana are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends her appointment as Director of the Company. The Board once again welcomes Ms. Sadhana Kaul as a Director of the Company.
Mr. Albert C Wang (DIN: 05234667), Non-Executive Non-Independent Director resigned as Director of the Company from the closing hours of August 21, 2018 due to the change in global position and his appointment as General Counsel for Greater China. The Board places on record its appreciation for the contributions made by Mr. Albert Wang to the progress of the Company during his tenure as Director.
Based on the recommendations of the Nomination and Remuneration Committee and performance evaluation carried out on February 12, 2019, the Board at its Meeting held on May 28, 2019 has appointed Mr. Biren Gabhawala (DIN: 03091772) as an Additional Director from August 5, 2019 categorized as Non-Executive Director and will hold office till the Annual General Meeting to be held on August 14, 2019.
Further, Mr. Biren Gabhawala (DIN: 03091772) has also been proposed to be appointed as an Independent Director with effect from August 14, 2019 for second term since his first term ends on August 4, 2019. Accordingly, a Special Resolution seeking re-appointment of Mr. Biren Gabhawala as Independent Director of the Company is included in the Notice convening the Annual General Meeting. Details of Mr. Biren Gabhawala are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his appointment as Director and appointment as an Independent Director of the Company for the second term.
Mr. Jongho Lee (DIN: 06720950) will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. The details of Mr. Jongho Lee are exhibited in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment.
Based on the recommendations of the Nomination and Remuneration Committee, subject to the requisite approvals from the Members and the Central Government, the Board at its Meeting held on May 28, 2019 has appointed Mr. Ramesh Ramadurai (DIN: 07109252), Director of the Company, as Managing Director of the Company for a period from June 1, 2019 to February 12, 2022 (till the date of his superannuation) in place of Ms. Debarati Sen. The Board of Directors welcomes Mr. Ramesh Ramadurai as Managing Director to the Board. The details of Mr. Ramesh Ramadurai are furnished in the Explanatory Statement to the Notice convening the Annual General Meeting. The Board recommends his appointment. He will be a Key Managerial Personnel of the Company from June 1, 2019.
Ms. Debarati Sen (DIN:07521172) shall cease to be the Managing Director of the Company from the closing hours of May 31, 2019 consequent upon her appointment as Vice President and General Manager in Abrasives Systems Division, Safety and Industrial Business Group and will be based out of St. Paul, USA. The Board expresses its deep appreciation of the valuable contributions made by Ms. Sen during her tenure as Managing Director of the Company to the progress of the Company. Ms. Debarati Sen will continue as Non-Executive Director of the Company from June 1, 2019.
As at the financial year ended March 31, 2019, Ms. Debarati Sen, Managing Director, Mr. B.V. Shankaranarayana Rao, Whole-time Director, Ms. Mamta Janak Gore, Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors of the Company under the provisions of Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down under the provisions of Section 149(6) of the Companies Act, 2013 read with Listing Regulations. All the Independent Directors have also confirmed under Regulation 16(b) of SEBI (LODR) Regulations, 2015 that they are not Non-Independent Director of another Company on the Board of which any NonIndependent Director of the listed entity is an Independent Director.
DETAILS OF BOARD AND COMMITTEE MEETINGS DURING THE YEAR
During the financial year ended March 31, 2019, four (4) Meetings of the Board were held. The date and number of Meetings attended by each Director / Committee Member along with other Committee Meetings details are furnished in the Corporate Governance Report.
COMPOSITION OF AUDIT COMMITTEE
As on the financial year ended March 31, 2019, the Audit Committee of the Company consisted of three (3) Non-Executive Independent Directors and one (1) Non-Executive Director and all of them have financial and accounting knowledge. The Members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. Bharat Shah, Ms. Radhika Rajan, and Mr. Jongho Lee. The Board has accepted all the recommendations made by the Audit Committee during the year under review.
NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed on the website at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/summary/. The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report.
ANNUAL BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Companies Act, 2013, Listing Regulations and as per the Guidance Note issued by SEBI. Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DETAILS OF REMUNERATION OF DIRECTORS
Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as "Annexure D".
REMUNERATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY
During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding / Subsidiary Companies.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
(a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made 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, 2019 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Companys Internal controls is aligned to Global 3Ms internal control over financial reporting which are based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Controls Integrated Framework (2013). The internal controls framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit.
The Directors have laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal controls procedures. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
DISCLOSURE REGARDING FRAUDS
During the year under review, there were no frauds reported by the Auditor to the Audit Committee or to the Board.
During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loans, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013.
RELATED PARTY TRANSACTIONS (RPTs)
All Related Party Transactions (RPTs) which were entered in to, during the financial year were on an arms length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseeable and repetitive in nature. A statement exhibiting details of all actual RPTs versus the approval is placed before the Audit Committee for approval on a quarterly basis. A Policy on RPTs as approved by the Board is uploaded on the Companys website at http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/ information/corporate/financial-facts/summary/.
The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Groups synergies, state of the art products and technologies, competencies and "3M" brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA and/or its group companies at arms length basis.
The RPTs are necessary, normal to business, play a significant role in the Companys business operations and also form integral part of the Companys business. An analysis of all the RPTs entered into / by the Company and the basis of charge was undertaken through a third-party professional firm.
The Company has already taken approval from the Shareholders for all material RPTs for the estimated/proposed transactions for three (3) financial years starting from April 1, 2017 to March 31, 2020 at the Annual General Meeting held on August 10, 2017. Form No. AOC-
2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed
herewith as "Annexure E".
CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education,
Community and Environment. These projects are in accordance with Schedule VII to the Companies Act, 2013.
School Readiness Program (Anganwadi)
The Company continued to support the School Readiness initiative in partnership with United Way of Bengaluru to transform Anganwadis under the ICDS program of Government of India to ensure well rounded development of children under the age of 6, to be ready for school. This is a national program covering 130 centers and is improving the lives of over 11,000 children below the age of 6 years. In its second year of intervention, during FY 2018-19, the program expanded its activities in Anganwadi centers in 7 cities - Bangalore, Pune, Chennai, Delhi, Kolkata and Ahmedabad and Mumbai. The second year focused on stabilizing the program at all locations with uniform interventions and project achievements including the development of qualitative aspects such as learning outcomes and school readiness among children and community mobilization with the mothers groups active engagement at Anganwadi centers. This program is working towards achieving the Sustainable Development Goal (SDGs) 4 which is to ensure inclusive and equitable quality education and promotion of lifelong learning opportunities for all.
Project NanhiKali: Educating the Girl Child
The Company partnered with K.C. Mahindra Trust to sponsor the education of 2861 girl students from grades 1st to 5th in the rural district of Ambegaon in Pune, Kolkata and Gurgaon and secondary school students in Noida, Uttar Pradesh. The program targets first generation learners who attend Academic Support Centers at Government schools where the students improve their proficiency in English, Maths and the local language. NanhiKalis in secondary school are provided with tablets pre-loaded with audio-visual educational content to enhance their learning of concepts in Math and English. The program works to ensure that the NanhiKalis stay in school and improve their learning levels as they continue their education.
3M-CII Young Innovators Challenge Awards Program
The Company is committed to building a community of young innovators who are at the early stage of launching their next generation of sustainable solutions to solve key socio-economic problems. The 5th edition of the Young Innovators Challenge in partnership with the Confederation of Indian Industry (CII) was completed with an all-time high of 500 idea submissions. The four- stage selection process shortlisted 51 semi-finalists, 19 finalists and 7 winning ideas received grants from the Company to further their prototypes. The winners were felicitated at the 13th CII India Innovation Summit.
Project Pahal: Skill Development of Community Healthcare Workers
In line with the Governments priorities towards preventive and promotive health, the Company partnered with various organizations including GE Healthcare and IPE Global to participate in a skilling initiative to empower women community health workers. 400 women Community Health Workers from the Merry Gold Network were mobilized to participate in a 4-day training program with curriculum and teaching aids developed by Wipro GE and 3M India. The training batches were conducted in 14 cities and towns across 2 northern states in India - Rajasthan and Uttar Pradesh, over 6 months. The health care workers were on topics like Hand Hygiene, Wound Management and Cleaning/ Disinfection which were interwoven into the course curriculum. Members of the Professional Services & sales teams volunteered their time to conduct trainings to 15 batches of 400 community health workers (including trainers). The Company continued to support Phase 2 of the skilling program which is scaling up to train up to 6000 Community Health Workers across states such as Orissa, Uttar Pradesh, Rajasthan and Assam.
3M Young Change Agents for Road Safety Pilot Program
To harness the learning of children at a young age on road safety awareness, the Company embarked on a unique and innovative initiative to educate children with essential skills to become sensitive, safer road users, by-standers and safe drivers in the future. Moving away from classroom based, non-interactive program, the 3M Young Change Agents in Road Safety (Y-CARS) was launched as a pilot program in three schools in Pune. The program was introduced in partnership with the school management through a combination of workshops, road & road behavior observation and online modules. Through the program, children became observers of the road safety elements around their school and provided an audit of how safe the school is, through a guided process. The observations from the children were collated into a School Safe Zone Design which will be implemented through
road safety improvements by the Company. At the end of this program, children received a certificate while taking a pledge as Young Change Agents for Road Safety committed to spread the learnings to their families and friends.
Kerala & Kodagu Flood Rehabilitation Program
During the unprecedented floods that affected several parts of Kerala and Kodagu, the Company responded to the natural disaster with a rehabilitation program to support the families, especially children who suffered great losses due to the floods. Needs assessment was carried out at 10 Anganwadi centers in Aluva block, Ernakulam. Scope of work to refurbish these centers and bring them back to operation for children and families included interiors and exterior improvements, repair works, plumbing & electrical works, learning materials and mural artwork on the walls.
Water Conservation Project at Latur
Water conservation continued to be a strong theme for the Companys CSR efforts. The Company partnered with FIAT India Automobiles Private Limited to undertake Water Conservation program "Jalyukt Shivar Abhiyan" in drought-hit villages of Latur District (Nilanga Tahsil). In this 2nd year of implementation of the project, the Company initiated rainwater harvesting activities namely - desilting and widening of river tributaries and construction of cement nalla bunds at 7 sites covering 4 villages in Deoni, Tahsil, Milanga. The entire project involved the development of 25 sites impacting 17 villages.
Rejuvenation of Lake Singasandra
To address the issue of rapid depletion of water bodies in the city of Bangalore, the Company supported the rejuvenation of one of the many lakes in the city - Singasandra Lake, situated in Bommanahalli Zone, in Singasandra, Bengaluru and spread over 11 acres. The state of the lake, before the intervention was left wanting in many ways. Lake restoration activities were taken up in partnership with United Way of Bengaluru and BBPM. The rejuvenation activities included ensuring that the lake was free from garbage, effluents and other pollutants, thereby restoring water quality and the aquatic species. Solar lamps, benches, waste bins including e-waste bins have been installed around the lake. Over 5000 bio-diverse saplings (A mix of medicinal species and herbs such as Vasaka, Nirgundi, Turmeric, Ginger, Lucky, Aloe Vera, Mehandi, etc.) were planted to increase the flora around the lake. Five full-time gardeners were deployed and are working to maintain the lake environment. Increase in the birdlife visiting the lake has been observed. To increase community ownership, a lake committee consisting of community members was formed with engagement activities including a Plog Run (picking up plastic waste as one runs/ jogs), Kannada Rajyotsava, Kere Deepotsava and tree planting.
The Annual Report on CSR activities is annexed herewith as "AnnexureP.
DETAILS OF REMUNERATION OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing details of top ten(10) employees in terms of remuneration drawn during the financial year and other employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 1.02 Crores or more per annum and Rs. 80 Lakhs or more per month respectively is annexed herewith as "AnnexureG."
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is annexed as "AnnexureH".
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed during the year by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistle Blower Policy) for upholding 3Ms Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available on
the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/en IN/about-3M/information/corporate/financial-facts/ summary/
Messrs. BSR & Co. LLP, Chartered Accountants, Bengaluru (ICAI Firm Registration No. 101248W/W-100022) were appointed as the Statutory Auditor of the Company at the 29th Annual General Meeting held on August 5,2016 to hold office for a period of five (5) years from the conclusion of the 29th Annual General Meeting till the conclusion of the 34th Annual General Meeting to be held in 2021, subject to ratification of their appointment by the members at every intervening Annual General Meeting held thereafter.
The requirement of seeking ratification of the members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment)Act, 2017 with effect from May 7, 2018. Hence the resolution seeking ratification of the members for their appointment is not being placed at the ensuing Annual General Meeting.
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 Mr. Vijayakrishna K.T, Company Secretary in practice to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Report of the Secretarial Audit Report is annexed herewith as "Annexure I".
SEBI vide its Circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019 has mandated all the Listed entities having its Equity Shares Listed on the Stock Exchange(s) to obtain the Annual Secretarial Compliance Report in the prescribed format from a Practising Company Secretary (PCS) from the financial year ended March 31, 2019 onwards and the Report should be submitted to the concerned Stock Exchanges within 60 days of the end of the financial year and be included in the Annual Report. The Annual Secretarial Compliance Report from Mr. Vijayakrishna K.T is annexed herewith as "Annexure I-1" which was filed with the Stock exchanges within the prescribed time limit.
EXPLANATIONS IN RESPONSE TO AUDITORS QUALIFICATIONS
During the year under review, there were no qualifications, reservations or adverse remarks made by the Statutory Auditors / Secretarial Auditor in their respective Reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year 2018-19, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form MGT 9 is annexed as "Annexure K"
DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
1. Number of complaints of sexual harassment received in the financial year (April 1, 2018 to March 31, 2019) : 2
2. Number of complaints disposed off during the financial year: 2
3. Number of cases pending for more than 90 days: None
4. Number of workshops or awareness programmes carried out in connection with sexual harassment: 3
5. Remedial measures taken by the Company:
- Counselling by Internal Committee to both the parties on professional code of conduct. Warning letter given to respondent.
- Leadership behavior implication for respondent and roles change for respondent to prevent interaction with each other.
- Respondent (contingent worker) was not deputed on 3M premises and the contract agency was briefed on the same. Counselling given to the complainant.
During the financial year, the Company took many initiatives to increase organizational capability and productivity to be value driven and future-ready. As at March 31, 2019, the Company had employee strength of 1377 personnel.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its Meeting held on May 28, 2019 on the recommendation of the Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2020 on a remuneration of Rs. 475,000/- plus taxes as applicable and out of pocket expenses at actuals. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arms length relationship with the Company.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members at the General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting.
Disclosure on Cost Audit: For the financial year ending March 31, 2018, the due date of filing the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was September 27, 2018 and the same was filed with the Ministry of Corporate Affairs on August 23, 2018 vide SRN H03455847.
During the year under review, the Company:
a. has not bought its own shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Company shares, and,
b. has not issued any shares to trustees for benefit of employees.
ENVIRONMENT, HEALTH AND SAFETY
Global health and safety issues are prevalent in workplaces around the world. Creative innovation, technology, education, and collaboration are all critical if we are to tackle these human health and workplace safety concerns.
For decades, 3M has had entire business divisions focused on creating products and services for human health, protection, security, and safety. The Company is committed to helping improve the health and safety of people world-wide.
The Company also embraces this commitment for its own operations, and to that end, will continue to take steps to protect the most important asset - 3M employees.
The Company has three (3) Manufacturing Plants in operation in India and all three plants have Environmental Management Systems certified to new ISO 14001: 2015 standard.
Your Companys Management is continuing to step up the leadership towards a more sustainable in its own operations, and in solutions for the customers. Sustainability is at the core of what the Management does at 3M and is committed to improving the business, the planet and every life.
3Ms strategies for sustainable development encompass the pursuit of customer satisfaction and commercial success within a framework of environmental, social, and economic values. The Company is committed to complying with all applicable environmental requirements worldwide. Beyond compliance, the Company continues to make significant investments to reduce the environmental footprint of our operations; and the products with sustainable attributes help customers reduce their environmental footprint and help to meet their Sustainability goals. Always, 3M believes environmental policy and regulations should be guided by science-based decision making.
Sustainability Goals which the Company is now pursuing reflect a heightened commitment to going beyond compliance and thinking holistically about how the operations and products affect the world and every life in it. For the 18th consecutive year, 3M was selected as a member of the Dow Jones Sustainability Index, a global stock index that recognizes and tracks the performance of leading Sustainability-driven companies worldwide. And 3M India Plants are contributing and meeting the targets of this global goals.
Sustainability target for the Manufacturing plants were to reduce the Waste, Water and Energy with respect to 2015 Baseline numbers:
- Waste generation reduction by 20.91%
- Water consumption reduced by 57.01%
- Energy Consumption reduced by 28.11%
- Also 2 of the manufacturing plants are utilizing 24% share of its energy consumption through renewable energy.
- Waste generated at Plants is majorly sent for co processing in cement kilns thereby reducing the carbon footprint of the sites.
All plants have sewage / waste water treatment plants and the treated water is recycled for cooling tower make and horticulture with in the facilities. The plants have also installed rain water harvesting systems to divert the rain water for ground water recharging. With the approval from local Pollution Control Boards, plants continued sending non-hazardous waste to cement companies to generate energy. As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public location.
Health and Safety:
The Company continues to reinforce our commitment to leadership in safety and health. All three manufacturing plants have health and safety management systems certified to OHSAS 18001: 2007. Your Company continues to forge ahead with our commitment to leadership in safety and health. Like in the prior year, 3M Corporation recognized two of our manufacturing facilities - Ranjangaon and Electronics city plants, with the highest award for safety excellence - The CEO Award, for consistently upholding safety standards.
Your Company strongly believe that, Safety starts with every individual, while the behavior of every individual defines the culture of the organization.
> All accidents and injuries are preventable
> Everyone in organization is accountable for the safety performance
Safety and Health metrics are driven rigorously through tier level meetings which starts with Safety observations. Each plant has qualified Safety Officer and the representation of Employees at Plant safety committees includes both management and shop-floor employees and the meetings are chaired by the Plant manager. The High hazard activities (HHA) which are carried out at sites are driven through Risk and Prioritization (RAP) review approach. Hierarchy of controls focus firstly on elimination of the hazard followed by substitution, engineering controls and finally PPE with management along with management oversight and STOP work initiates ensures the employees perform the job in the safest possible manner. In addition to EHS risk analysis, the Company has a crisis plan for every single 3M plant. Although the Company never hopes to use the Crisis Management Plans, it is critically important that the Company has them in place, keep them up to date, and drill often to make sure everyone understands what to do should an emergency occur. The Company cares utmost about the safety of our people and communities around the world
The 3M Global Safety and Health Plan (GSHP), which is part of 3Ms Environmental, Health, and Safety (EHS) management system, is required to be implemented by global 3M locations. This approach utilizes a well-developed self-assessment process that is categorized into multiple elements addressing various areas and standards related to safety and health. 3M utilizes a variety of tools to manage risks from hazards in the workplace. The Company used specialized tools successfully for several years in the areas of process safety, industrial hygiene, and ergonomics. Each of these disciplines uses a risk management approach to categorize hazard levels and define appropriate levels of control.
The other EHS framework programs which 3M follows are Ergonomics, Industrial hygiene, Process hazard management (PHM), Ventilation programs, Static Management plan, Safety trainings, Health and Wellness Programs which enables us to ensure better and safe work environment to all the employees.
All these efforts translate into the EHS metrics being achieved and notably there has been no Lost Time injuries at any of the three manufacturing sites during this period under consideration.
The Company has led with passion and shared its expertise with the communities, through school outreach, activities with its employees children and several awareness programs with the customers.
Supported by 3Ms highly credentialed Technical trainers, the Company has partnered with industrial facilities across India to drive safety and build confidence amongst the end users through "Safety on Wheels" trucks. This program also offers various training sessions that would include a various Personal Protection Equipment (PPE) demonstrations (through hands on and Videos) on a variety of safety topics.
The Safety on Wheels which also known as Audhyogik Suraksha Rath targets to train over 1 million workers over next 3 years to build awareness and training about safety practices and personal protective equipment and to spread the word about the importance of worker safety across the nation. The Audhyogik Suraksha Rath have travelled across industrial clusters in the country educating more than 95,000 workers on the importance of workplace safety.
AWARDS AND RECOGNITION
The Company was recognized by Outlook Business Outperformed, a listing by Outlook Business publication, of companies that have consistently delivered high performance. 3M India Limited was recognized for the 2nd consecutive year for stock return over Sensex over the last 5 years.
The Company was amongst the Top 10 Companies in India by Earnings Per Share (EPS) trailing 12 months as per a compilation by MoneyControl.com.
Your Company was recognized as amongst Forbes Indias Super 50 Companies of 2017 for overall performance.
The Companys Managing Director, Ms. Debarati Sen featured in Fortune Indias annual list of Top 50 Powerful Women in Business for her leadership in strengthening 3Ms position and brand in India.
3M Car Care was awarded Franchisor of the Year Award - Consumer Services for 2018 by Franchise Awards.
The Companys manufacturing facility at Ranjangaon was awarded the Gold Award for Manufacturing Excellence by Frost & Sullivan
The Company was recognized for Lean Six Sigma excellence at the CII 12th National Six Sigma Competition. Two projects presented under Transaction process and Discrete process categories respectively received special recognition.
The Companys senior women leaders were recognized for Business Leadership among Women at the Future Woman Leader Summit & Awards 2018.
The Company was recognized for overall performance in the areas of quality, cost, delivery, innovation by top customers in the automotive, utilities and construction sectors.
The Companys manufacturing facility at Electronics city received 3M Corporate recognition for Quality achievement. This was the Companys 7th consecutive Corporate 3M recognition for Quality.
The Company also received several accolades for excellence in lean six sigma, marketing, innovation and various support functions with several 3M Corporate and regional level awards.
Your Directors thank and acknowledge with gratitude the co-operation, assistance and support received from the Central Government,
State Governments of Karnataka, Maharashtra and Gujarat, Bankers, Shareholders, Dealers, Vendors, Promoters of the Company and
all other Stake holders.
The Directors also wish to place on record their sincere appreciation and gratitude towards the contribution made by every employee
of the Company.
|On behalf of the Board of Directors|
|Debarati Sen||B.V. Shankaranarayana Rao|
|Place : Bengaluru||Managing Director||Whole-time Director|
|Date : May 28, 2019||DIN: 07521172||DIN:00044840|