To the members of
APL Apollo Tubes Limited,
Your Directors have pleasure in presenting the Thirty Seventh (37th) Annual Report on the business and operations of your company together with the Standalone and Consolidated Audited Financial Statements for the financial year ended March 31,2022.
The Companys financial performance for the year under review along with the previous years figures is given hereunder:
(Rs. in crores)
FY 2020-21 1
|Add : Other income||
|Profit before Depreciation, Finance Costs and Tax Expense||
|Less : Depreciation and amortisation||
|Less : Finance cost||
|Profit before tax (PBT)||
|Less : Tax expense||
|Profit after tax for the year (PAT)||
The Companys consolidated gross turnover in financial year 2021-22 increased significantly by 53.69 % from Rs.8499.75 crores to Rs.13063.32 crores. The EBIDTA has been increased by 37.94 % from Rs.714.65 crores to Rs.985.76 crores for the year under review. The net profit of the Company has also increased by 51.82 % from Rs.407.70 crores to Rs.618.98 crores during the year under review.
The Board of Directors of the Company is pleased to recommend a dividend @175% (3.5 per share) as final dividend on the equity shares for the year 2021-22 subject to declaration of the same by the members at the ensuing annual general meeting. The payment of dividend will be subject to deduction of applicable taxes and shall be paid for the full year on the shares held as on the record date irrespective of the date of issue of the shares during the year.
Pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended), the Company has Dividend Distribution policy. During the year, there have been no changes to the policy. Hence, the same is not annexed to this report, as the same is available on our website at : https://aplapollo.com/policies/#policies
TRANSFER TO RESERVES
The Board of Directors has decided to retain the entire amount of profit in the profit and loss account. Accordingly, the Company has not transferred any amount to the Reserves for the year ended March 31, 2022.
The Financial Year 2021-22 was a year when the Indian economy reported a sharp turnaround in fortunes as the GDP grew by 8.7% (against a contraction of 6.6% in FY21). Notwithstanding the more intense second wave of Covid-19, resilient India and Indians worked untiringly to strengthen the momentum of the economys wheels. The sharp recovery of the industrial and services segments resulted in an appreciable spike in Government revenue. Further, exports touched a new pinnacle even as imports continued to climb. As a result, Indias fiscal deficit remained reigned in below the budgeted number. Favourable government policies and an accommodative fiscal environment buoyed investments by the private sector. This ushered in robust demand for steel and steel products. APL Apollo being the dominant player in the structural steel products space was able to capitalise on the resurgence to report its best performance in its business journey this far.
The Company continued to up its performance as it breached all previous performance records. Sales volumes increased by 7% as demand for the product gained traction. More importantly, the share of value-added products increased appreciably over the previous year. Revenue from operations grew by 53.69% from Rs.8,499.75 crores in FY21 to Rs.13,063.62 crores in FY22 and EBITDA improved from Rs.714.65 crores to Rs.985.76 crores over the same period.
From a business perspective, it was a satisfying year as the Company successfully implemented important initiatives that hold the promise to catapult its growth into a new orbit. The most important among them is the launch of the tubular technology for constructing high-rise buildings.
The Company received the contract for supplying its high- strength columns for creating the super structure for six large multi-speciality medical building in India. The other pathbreaking initiative was the launch of the Aalishaan App which is a B-2-C tech connect that will enable the Company to come closer to the ultimate consumer. This App has received an overwhelming response from the masses and promises to be a game-changer for the Company over the medium term.
APL Apollo continued to invest in its Raipur facility, the jewel in its crown, which will manufacture pioneering products that will significantly widen the market size and strengthen its dominance in the structural tube business space. While trial production of Apollo Columns commenced during the year under review, the first phase of this project is expected to commence in the current year.
POSSIBILITIES AND PROSPECTS
The Government is focused on positioning India as a global manufacturing hub. Towards this end, it is ardently focused on developing world-class infrastructure and announcing policies that would spur the private sector to make fresh investments. These realities promise to open interesting growth opportunities for the Companys products.
The commissioning of the Raipur unit (initial phase) should help the Company in strengthening its presence in the market in the eastern part of India. The Company is also planning to make strategic investments towards exploring its manufacturing footprint beyond the Indian shores. It is also investing in new technologies which should considerably optimise operating costs.
These investments will increase sales volumes and optimise cost of operations - it would make the overall business more profitable and sustainable.
PROJECT AND EXPANSION PLANS
The company targets to increase its installed capacity to 4 million ton by FY23 from 2.6 million ton last year.
The entire planned new capacity at Raipur of 1.5 million ton is in value added category. In addition, the management has identified two new product lines 1) 500x500 mm sq diameter tubes under heavy structural tubes segment and, 2) color coated tubes under home decor segment both of which will be launched in India for the first time in line with companys strategy to create new market for structural steel tubes in the long term. The project is being implemented in new greenfield Raipur facility in the state of Chhattisgarh. The total capex for the New Raipur project is around C800 crores, which is planned to be funded through a combination of internal accruals and external borrowings.
INTERNAL FINANCIAL CONTROL
The Company has in place adequate internal financial controls as referred in Section 134(5)(e) of the Companies Act, 2013. For the year ended March 31,2022 the Board is of the opinion that the Company had sound Internal Financial Controls commensurate with the size and nature of its operations and are operating effectively and no reportable material weakness was observed in the system during the year.
Based on annual Internal Audit programme as approved by Audit Committee of the Board, regular internal audits are conducted covering all offices, factories and key areas of the business. The findings of the internal auditors are placed before Audit Committee, which reviews and discusses the actions taken with the management. The Audit Committee also reviews the effectiveness of companys internal controls and regularly monitors implementation of audit recommendations.
There are existing internal policies and procedures for ensuring the orderly and efficient conduct of business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.
In accordance with the provisions of Section 134 (3)(a) of the Companies Act, 2013, the Annual Return, as required under Section 92 of the Act for the financial year 2021-22, is available on the Companys website at https://aplapollo. com/financial/#AplApollo
SUBSIDIARY COMPANIES, JOINT VENTURES AND ASSOCIATES
The Company had six wholly-owned subsidiaries as on March 31,2022, namely Shri Lakshmi Metal Udyog Limited (SLMUL), Apollo Metalex Private Limited (AMPL), Blue Ocean Projects Private Limited, APL Apollo Building Products Private Limited, APL Apollo Mart Limited and APL Apollo Tubes FZE. Further the Company has one step down subsidiary named Apollo Tricoat Tubes Limited (ATTL), subsidiary of SLMUL.
A report on the performance and financial position of each of the subsidiaries in form AOC-1 is annexed hereto as Annexure A and forms part of this report.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the audited financial statements and related information of the subsidiaries, where applicable, will be available for inspection during regular business hours at the companys corporate office at 36, Kaushambi, Near Anand Vihar Terminal, Uttar Pradesh -201010 and the same are also available at our website i.e. www.aplapollo.com.
In March 2022, the company through its newly incorporated subsidiary named APL Apollo Mart Limited had bought 10,00,000 equity shares of Rs.10 each (4.38% of the total paid up capital) of Shankara Building Products Limited (Shankara) at a price of Rs.755 per share. Further, Shankara has approved issuance of 14,00,000 convertible warrants at a price of Rs.750/- per warrant (5.77% of fully diluted capital upon conversion) to APL Apollo Mart Limited. Accordingly, upon the issue of warrants as above, the total holding of APL Apollo Mart in Shankara, on a fully diluted basis, will be 9.90%.
Subsequent to the close of the financial year, the company jointly with 5 of its subsidiaries and group companies has promoted a Section 8 Company named APL Apollo Foundation for undertaking CSR activities for and on behalf of the promoter companies.
The Company has no associates or joint ventures.
Your Company neither accepted nor renewed and/or was not having any outstanding public deposits within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014, during the year under report.
As on March 31, 2022 the authorized capital of the Company stood increased from Rs.45 crore to Rs.75 crore divided into 37,50,00,000 equity shares of Rs.2 each, pursuant to the approval granted by the members on September 9, 2021.
During the financial year under review, the Company allotted 4,88,500 equity shares of Rs.10 each at a price of Rs.143.855 (including premium of Rs.133.855), pursuant to APL Apollo Employees Stock Option Scheme (ESOS-2015) to eligible employees of the Company and of its subsidiaries.
During the financial year under review, the Company (on September 20, 2021) allotted 12,48,96,000 equity shares of face value of Rs.2/- each as fully-paid up bonus equity shares, in the ratio of One equity share of Rs.2/- each for every One existing equity share of Rs.2/- each.
Pursuant to abovesaid allotments of Equity shares, the paid up capital of the Company stands increased from Rs.24.98 Cr to Rs.50.06Cr comprising of 25,02,80,500 equity shares of Rs.2 each.
The Company has neither issued shares with differential voting rights nor has issued any sweat equity shares.
The Company has received the credit ratings from credit rating agencies - ICRA and CRISL as under -
a. ICRA A1+ assigned to Rs.300 crore Commercial Paper programme of the Company.
b. CRISIL A1+ assigned to Rs.500 crore Commercial Paper Programme of the Company.
During the year the Company has issued Commercial papers ("CP") for the purpose of raising short term funds in nature ranging between one to three months. Further, as on March 31, 2022, no CP was outstanding.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of Articles of Association of the Company, Shri Vinay Gupta will retire at the ensuing Annual General Meeting (AGM) and being eligible, offer himself for reappointment.
The shareholders in its meeting held on July 23, 2021 had granted approval the continuation of appointment of Shri Virendra Singh Jain beyond July 24, 2021 (on attaining 75 years of age) till January 27, 2022 and also for fresh appointment for the second term from January 28, 2022 to September 30, 2024 pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and the applicable provisions of companies Act, 2013.
During the year under review, (i) Shri Ameet Gupta was appointed as Non-Executive Independent Director of the Company w.e.f. 6th August, 2021 for a period of five consecutive years (ii) Shri Rahul Gupta was appointed as NonExecutive Director of the Company w.e.f. 6th August, 2021.
The requisite resolutions for both the appointments were approved by the Shareholders through postal ballot on September 9, 2021.
All Independent Directors of the Company have given declarations that they meet the criteria of independence as provided in Section 149(6) read with schedule IV of the Companies Act, 2013 and also Regulation 16(I)(b) of the Listing Regulations.
PARTICULARS OF REMUNERATION
Disclosure of ratio of the remuneration of the Executive Director to the median remuneration of the employees of the Company and other requisite details 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 as amended, is annexed to this report as Annexure B.
Further, particulars of employees pursuant to Rule 5(2) & 5(3) of the above Rules form part of this report. However, in terms of provisions of section 136 of the said Act, the report and accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the registered office of the Company during working days of the Company up to the date of the ensuing annual general meeting.
AUDITORS AND AUDITORS REPORT
A. Statutory Auditors
In terms of provisions of the Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Gurugram, (FRN117366W/W-100018), had been appointed as Statutory Auditors of the Company in the 35th Annual General Meeting held on September 29, 2020 to hold the office from the conclusion of the said Annual General Meeting until the conclusion of the 40th Annual General Meeting to be held in year 2025.
The reports the Auditors on the standalone and consolidated financial statements for the FY 2021-22 do not contain any qualification, reservation or adverse remark requiring any explanation on the part of the Board. The observations given therein read with the relevant notes are self-explanatory.
There are no frauds reported by the Auditors under section 143(12) of the Act.
B. Cost Auditors
In terms of Section 148 of the Act, the Company is required to get the audit of its cost records conducted by a Cost Accountant. In this connection, the Board of Directors of the Company in its meeting held on May 13, 2022 had, on the recommendation of the Audit Committee, approved the appointment of M/s R.J. Goel & Co., Cost Accountants (FRN: 000026) as the cost auditors of the Company for the year ending March 31, 2023.
In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the members of the Company. Accordingly, appropriate resolution will form part of the Notice convening the AGM. The approval of the members is sought for the proposed remuneration payable to the Cost Auditors for the Financial Year ending March 31, 2023. M/s R.J. Goel & Co., have vast experience in the field of cost audit and have been conducting the audit of the cost records of the Company for the past several years. The Cost Audit Report of the Company for the Financial Year ended March 31, 2022 will be filed with the MCA after its noting by the Board. The Company has maintained accounts and records as specified under sub-section (1) of 148 of the Act.
C. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed M/s Parikh & Associates, Company Secretaries in practice as Secretarial Auditors to carry out the Secretarial Audit of the Company for the financial year 2021-22. The report given by them for the said financial year in the prescribed format is annexed to this report as Annexure C. The Secretarial Audit Report is self- explanatory and does not contain any qualification, reservation or adverse remark. Further, the Board has appointed the said firm for conducting the secretarial audit for the financial year 2022-23 also.
RELATED PARTY TRANSACTIONS
During the financial year ended March 31, 2022, all the contracts or arrangements or transactions entered into by the Company with the related parties were in the ordinary course of business and on arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013 read with Regulation 23 of SEBI (LODR), 2015.
Further, the Company has not entered into any contract or arrangement or transaction with the related parties which were not on arms length basis or could be considered material in accordance with the policy of the Company on materiality of related party transactions. In view of the above, it is not required to provide the specific disclosure of related party transaction in Form AOC-2.
Your Directors draw attention of the members to Note No. 40 to the Standalone Financial Statement which sets out related party disclosures.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
The Company, under the APL Apollo Employee Stock Option Scheme- 2015 ("ESOS-2015), approved by the shareholders vide postal ballot resolutions on July 27, 2015 and December 22, 2015, grants share-based benefits to eligible employees of the Company and employees of subsidiaries with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company objectives, and promoting increased participation by them in the growth of the Company. The total number of equity shares to be allotted pursuant to the exercise of the stock incentives under the ESOS-2015 to the employees of the Company and its subsidiaries shall not exceed 7,50,000 equity shares. The following disclosures are being made under Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 and the said disclosure is also available on the website of the Company at www.aplapollo.com:
|S. No.||Particulars (During the financial year ended March 31, 2022)||APL Apollo ESOS-2015|
|4||Total number of shares arising as a result of exercise of option||4,88,500|
|6||Exercise price||The Exercise price of the shares will be the Market Price of the shares one day before the date of grant of options. Suitable discount will be provided on that price, as deemed fit by the Nomination & Remuneration Committee ("committee"). Further, the Committee has power to reprice the grants in future if the price of the company falls continuously for a period of 3 months.|
|7||Variation of terms of options||The Shares issued pursuant to the exercise of an Option will not be subject to any lock-in period|
|8||Money realized by exercise of options (H)||7,02,73,167.50|
|9||Total number of options in force||3,87,500|
|10||Employee wise details of options granted to;-|
|(i) Key managerial personnel;|
|(ii) Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year.|
|(iii) Identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;||Nil|
The Certificate from the Secretarial Auditors of the Company certifying that the ESOS 2015 is being implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolution passed by the Members, would be placed at the Annual General Meeting for inspection by Members.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 134 sub-section 3(c) and sub-section 5 of the Companies Act, 2013, your Directors to the best of their knowledge hereby state and confirm that:
a. In the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanations relating to material departures.
b. Such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent to give a true and fair view of the Companys state of affairs as at March 31, 2022 and of the Companys profit for the year ended on that date.
c. 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. The annual financial statements have been prepared on a going concern basis.
e. The internal financial controls were laid down to be followed that and such internal financial controls were adequate and were operating effectively.
f. Proper systems were devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In line with the provisions of Section 135, Schedule VII of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) policy for development of programmes and projects for the benefit of weaker sections of the society and the same has been approved by Corporate Social Responsibility Committee (CSR Committee) and the Board of Directors of the Company. The Corporate Social Responsibility (CSR) policy of the Company provides a road map for its CSR activities.
During the year under review, the Company has made contribution of Rs.3.07 Cr for various CSR purposes in compliance to the provisions of Companies Act, 2013 relating to Corporate Social Responsibility.
The Annual Report on CSR activities is annexed herewith as Annexure D. The CSR Policy has been uploaded on the Companys website and may be accessed at the link: https:// aplapollo.com/policies/#policies
SCHEME OF AMALGAMATION AND ARRANGEMENT
As the members are aware of, the Board of Directors of Company at its meeting held on February 27, 2021, had approved a scheme of amalgamation of Shri Lakshmi Metal Udyog Limited and Apollo Tricoat Tubes Limited with the Company and their respective shareholders and creditors, under Sections 230 to 232 of the Companies Act, 2013. Subsequently BSE Limited and National Stock Exchange of India Limited had given their NOC to the Scheme.
Further, the shareholders, the secured creditors and the unsecured creditors of Company, at their separate meetings held on February 8, 2022, had approved the said scheme of amalgamation.
Similar approvals have been received by the transferor companies also. The Scheme is now subject to sanction of the Honble NCLT, Delhi. NCLT has fixed May 27, 2022 as the final date of hearing for considering the sanctioning of the Scheme. The Scheme related details are available on the website of the Company at https:// aplapollo.com/announcements/#Mergers.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
In terms of Section 186 of the Companies Act, 2013 and rules framed thereunder, details of Loans, Guarantees given and Investments made have been disclosed in the Notes to the financial statements for the year ended March 31,2022.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3)(m) of Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 2014, is furnished as Annexure E, forming part of this Report.
Your company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Corporate Governance Report is annexed to this report (Annexure F).
The Corporate Governance Report which forms part of this report, also covers the following:
a) Particulars of the Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS
During the period under review, the Company has duly complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has complied with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has in place a Policy on Prevention of Sexual Harassment at the Workplace in line with the provisions of the said Act and an Internal Complaint Committee has also been set up to redress complaints received regarding Sexual Harassment.
No complaint of sexual harassment was received during the financial year 2021-22.
OTHER DISCLOSURES AND REPORTING
Your Directors state that no disclosure or reporting is required with respect to the following items as there were no transactions on these items during the year under review :
1. Change in the nature of business of the Company.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Any remuneration or commission received by Managing Director of the Company, from any of its subsidiary.
4. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this report.
5. Significant or material orders passed by the regulators or courts or tribunal which impacts the going concern status and companys operations in future.
6. Details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government
7. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year.
8. The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
Yours Directors take this opportunity to express their appreciation for the co-operation received from the customers, vendors, bankers, stock exchanges, depositories, auditors, legal advisors, consultants, stakeholders, debenture-holders, business associates, Government of India, State Governments, Regulators and local bodies during the period under review. The Directors also wish to place on record their appreciation of the devoted and dedicated services rendered by the employees of the Company.
|For and on behalf of Board of Directors|
|Place: Ghaziabad||Chairman & Managing Director|
|Date: May 13, 2022||(DIN: 00233188)|