To the Members,
Your directors have pleasure in presenting the forty-first annual report together with the audited financial statements (both standalone and consolidated) for the financial year ended March 31, 2022.
State of the Company?s affairs Financial Results
(Rs in Crores)
|Profit before depreciation, exceptional items & finance charges||1,106.90||1,061.79||1,104.50||1,077.05|
|Less: Finance charges||14.09||7.27||14.09||7.27|
|Profit before depreciation, exceptional items and taxation||1,092.81||1,054.52||1,090.41||1,069.78|
|Less: i. Depreciation||83.40||77.72||83.40||77.72|
|ii. Exceptional items (gain)/loss||(376.06)||-||(376.06)||-|
|iii. Provision for taxation||332.00||248.78||331.73||254.27|
|Profit after depreciation, exceptional items and taxation||1,053.47||728.02||1,051.34||737.79|
|i. Retained earnings at the beginning of the year||2,160.17||1,431.92||2,226.25||1,488.09|
|ii. Re-measurement of defined benefit plans and income tax effect||(0.24)||0.23||(0.24)||0.23|
|iii. Share of Other Comprehensive Income (OCI) of Associate for the year||-||-||0.09||0.14|
|Retained earnings at the end of the year||2,965.21||2,160.17||3,029.25||2,226.25|
|Earnings per equity share||16.98||11.73||16.94||11.89|
The operational performance is summarized below:
(Rs in Crores)
|Revenue from operations||4,647.32||3,462.27||4,647.32||3,462.27|
|Profit before tax (before exceptional item)||1,009.41||976.80||1,008.48||975.87|
|Exceptional item gain/(loss)||376.06||-||376.06||-|
|Profit before tax (after exceptional item)||1,385.47||976.80||1,384.54||975.87|
|Share of profit of associate before tax||-||-||(1.47)||16.19|
|Profit after tax||1,053.47||728.02||1,051.33||737.79|
|PVC Pipes and Fittings|
|Production in MTs||230,847||212,706||230,847||212,706|
|Sale in MTs||236,895||212,059||236,895||212,059|
|Sale in Crores||3,852.67||2,634.75||3,852.67||2,634.75|
(Rs in Crores)
|Production in MTs||214,186||225,035||214,186||225,035|
|Sale in MTs (including inter divisional)||224,923||236,085||224,923||236,085|
|Sale in Crores (including inter divisional)||2,962.10||2,273.31||2,962.10||2,273.31|
The total production capacity of PVC pipes & fittings stands at 3,70,000 MT p.a. The sales volume for PVC pipes & fittings was 2,36,895 MT for the financial year ended March 31, 2022 as against 2,12,059 MT for the financial year ended March 31, 2021. Total standalone income was at Rs 4,730.48 Crores for the financial year ended March 31, 2022 against Rs 3,534.75 Crores for the financial year ended March 31, 2021. Profit after tax was at Rs 1,053.47 Crores for the financial year ended March 31, 2022 as against Rs 728.02 Crores for the financial year ended March 31, 2021.
The financial year 2021-22 began with the pandemic situation caused by second wave spread by the COVID-19 all over the world. Consequent to the emergence of second & third wave of the COVID-19 pandemic, driven by the highly transmissible Delta and Omicron COVID variants respectively, your Company undertook timely and essential measures to ensure the safety and well-being of its employees & stakeholders at all its plant locations and offices & complied with Government and Health authorities? advisory. In these circumstances, your Company has worked tirelessly to address the challenges and implemented necessary changes commensurate with the Company?s business requirements and your Company provided the required support to the workforce. These measures are monitored on a regular basis to ensure a progressive return to the desired growth rates. The employee support in terms of adherence to our benchmark COVID SOP?s and ensuring timely vaccination, has helped in minimizing its impact on our operations.
Consequent to the approval of the Board of Directors at their meeting held on September 15, 2021, the Company has transferred leasehold rights of approx. 34.88 acres of land (out of approx. 70 acres) post completion of necessary regulatory approvals and formalities. The Company has accordingly, recognised _376.06 crores net gain, disclosed as exceptional item during Q4 FY 2021-22.
The Board of Directors has recommended dividend at 200% i.e. final dividend at 100 % i.e. Rs 2 per equity share and a special dividend at 100% i.e. Rs 2 per equity share (subject to deduction of tax at source). The dividend on equity shares, if approved by the Members, will absorb Rs 248.19 Crores. As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, ("Listing Regulations") the Company has formulated a Dividend Distribution Policy which has been uploaded on the Company?s website https:// www.finolexpipes.com/site/assets/files/12927/dividend distribution policy.pdf.
Transfer to Reserves
During the year, amount transferred to General Reserve was Nil (previous year Nil). Thus, the total comprehensive Income for the year of Rs 1,039.07 Crores [Previous year Rs 1,143.07 Crores] was transferred to Reserves and Surplus of Balance Sheet.
During the year, the Company has not accepted any deposits from public, as described under Chapter V of the Companies Act, 2013 and as such no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
The Company had no unpaid /unclaimed deposit(s) as on March 31, 2022.
Management discussion and analysis
Pursuant to Regulation 34 (2) of the Listing Regulations, a Management Discussion and Analysis Report forms part of this annual report.
Consolidation of financial statements
As at the end of the financial year, your Company does not have any subsidiary Company. However, it does have two associate companies namely ‘Finolex Plasson Industries Private Limited? and ‘Pawas Port Limited?.
The Company has consolidated financials of Finolex Plasson Industries Private Limited. The Company has not consolidated financials of an immaterial associate viz. ‘Pawas Port Limited?, in which the Company holds 49.99% equity shares (_0.05 Crores) and has not started operations.
The consolidated financial statements as prepared pursuant to the provisions of Section 129 of the Companies Act, 2013 (the "Act") and Schedule III of the Act, are annexed and form part of this annual report.
Revision in financial statements
There has been no revision in the financial statements of the Company during the financial year 2021-22.
Subsidiary and Associate Companies
In terms of Section 129(3) of the Act a statement containing salient features of the financial statements of the associate or joint venture companies in Form AOC-1, is annexed and forms part of this annual report.
Pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014, the performance and financial position of the associate or joint venture companies is included in the consolidated financial statements which is annexed and forms part of this annual report.
During the financial year 2021-22, there is no change in associate company(ies) of the Company.
The Company has formulated the policy on material subsidiaries in alignment with the provisions of Regulation 16 (i) (c) of the Listing Regulations. As required under Regulation 46 (2)(h) of the Listing Regulations, the Material Subsidiary Policy has been uploaded on the Company?s website https://www.finolexpipes.com/site/ assets/files/12930/policy on material subsidiary-1.pdf. Pursuant to Regulation 34(3) of the Listing Regulations, the related party disclosures as specified in Para A of Schedule V are given below:
|Sr. No.||In the accounts of||Disclosure of amount at the year end and the maximum amount of loans/ advances/investments outstanding during the year||Remarks|
|1.||Holding Company||Loans and advances in the nature of loans to subsidiary by name and amount.||No Holding Company.|
|Loans and advances in the nature of loans to associates by name and amount.|
|Loan and advances in the nature of loans to firms/companies in which directors are interested by name and amount.|
|2.||Subsidiary||Same disclosures as applicable to the parent company in the accounts of subsidiary company.||No Subsidiary Company|
|3.||Holding Company||Investments by the loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan.||No Holding Company|
There are no transactions made by the Company with any person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the Company.
A separate report on corporate governance in the compliance with corporate governance requirements specified in Regulations 17 to 27 and clauses (b) to (i) and (t) of sub-regulation (2) of Regulation 46 and para C, D and E of Schedule V of the Listing Regulations along with compliance certificate dated May 18, 2022 obtained from M/s. SVD & Associates, Practicing Company Secretaries, is annexed and forms part of this annual report.
Material changes and commitments
Your directors confirm that there are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of this report.
Contracts or arrangements with related parties
The particulars of related party transactions are stated in the note no. 37 in the financial statements and Annexure-2 of this report.
None of the transactions with related parties falls under the scope of Section 188(1) of the Act. All related party transactions that were entered into during the financial year were on an arm?s length basis and were in the ordinary course of business of the Company. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict of interest with the Company at large. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Act, in Form AOC-2, is not applicable and hence does not form part of this report. All related party transactions are placed before the Audit Committee for approval. The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for the purpose of identifying and monitoring such transactions.
In line with the requirements of the applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Company has formulated a policy on Related Party Transactions and the same is available on website of the Company at https://www.finolexpipes.com/site/assets/ files/12932/related party transactions policy.pdf.
During the financial year 2014-2015, your directors had constituted a Risk Management Committee. The Risk Management Committee was reconstituted with effect from 20th September, 2019. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of this report.
The Company has a robust risk management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company?s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. Risk management forms an integral part of the business planning and forecasting. The key business risks identified by the Company and its mitigation plans are included in the management discussion and analysis report.
Internal financial controls
Pursuant to Rule 8 (5) (viii) of the Companies (Accounts) Rules, 2014, the details in respect of adequacy of internal financial controls with reference to the financial statements are given below:
The Company has in place adequate internal control procedures, proportionate to the nature of the business and the size of operations, for smooth conduct of business. The systems are implemented for safeguarding the assets, the prevention and detection of fraud and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial information.
The scope and authority of the internal auditors are defined by the Audit Committee from time to time. To maintain its objectivity and independence, the internal auditors M/s. Ernst & Young, LLP report their observations to the Audit Committee of the Board. The internal auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of the internal auditors, process owners undertake corrective action in their respective areas which then strengthens the controls. Audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Based on the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management, the Board is of the opinion that the Company?s internal financial controls were adequate and effective during FY 2021-22.
Directors and Key Managerial Personnel
The Board of your Company is duly constituted with a proper balance of executive, non-executive and independent directors.
Pursuant to Section 149 (1) and 161 of the Companies Act, 2013 read with Rule 8 (5) (iii) of the Companies (Accounts) Rules, 2014, the details relating to directors and key managerial personnel who were appointed or resigned are reported as under:
1. Appointment and re-appointment of Directors:
Earlier the Board of Directors at its meeting held on May 21, 2016 based on the recommendation of the Nomination and Remuneration Committee had re-appointed Mr. Prakash P. Chhabria (DIN 00016017) as Whole-time Director designated as Executive Chairman and Mr. Sanjay S. Math (DIN 01874086) as Managing Director, for a period of five years from the December 1, 2016 respectively. The said re-appointments of Mr. Prakash P. Chhabria and Mr. Sanjay S. Math were approved by the Members at 35th Annual General Meeting held on August 11, 2016. Earlier, the Board of Directors at its meeting held on August 26, 2016 based on the recommendation of the Nomination and Remuneration Committee had appointed Mr. Anil V. Whabi (DIN 00142052) as Whole-time Director designated as Director - Finance for a period of five years from August 26, 2016. The said appointment of Mr. Anil V. Whabi was approved by the Members at 36th Annual General Meeting held on August 11, 2017. The tenure of Mr. Whabi as Whole-time director designated as Director (Finance) of the Company was completed on close of business hours of August 25, 2021 and accordingly he ceased to be director of the Company.
The Board of Directors at its meeting held on November 27, 2021 based on the recommendation of the Nomination and Remuneration Committee and subject to approval of members at the ensuing Annual General Meeting re-appointed Mr. Prakash P. Chhabria, Chairman of the Company, as whole-time director designated as Executive Director, Mr. Sanjay S. Math, as Managing Director and appointed Mr. Anil V. Whabi as an additional
& Whole-time Director designated as Director
– Finance with effect from December 1, 2021 for the tenure as mentioned in the respective business item(s) relating to their appointment/ re-appointment of the annexed AGM notice and Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013.
Mr. Sanjay S. Math, Managing Director of the Company will retire with effect from the close of business hours of May 31, 2022. The Board of Directors at its meeting held on May 18, 2022, redesignated and appointed Mr. Anil V. Whabi as Managing Director of the Company with effect from June 1, 2022 for a period of one year subject to approval of the Members of the Company.
The Board of Directors at its meeting held on May 18, 2022 based on the recommendation of the Nomination and Remuneration Committee appointed Mr. Saumya S. Chakrabarti (DIN 09594036) as an additional & Whole-time Director designated as Director - Technical effective from June 1, 2022 subject to approval of Members at the ensuing Annual General Meeting.
Mr. Anil V. Whabi and Mr. Saumya S. Chakrabarti were appointed as additional Directors on the Board of the Company with effect from December
1, 2021 and June 1, 2022 respectively, till the conclusion of ensuing Annual General Meeting.
A notice under Section 160 of the Act, has been received nominating the candidature of Mr. Anil V. Whabi and Mr. Saumya S. Chakrabarti for their appointment as Directors of the Company.
The period of appointment/ re-appointment of the said Directors are as mentioned below:
1. Mr. Prakash P. Chhabria, Chairman of the Company, re-appointed as Whole-time Director designated as Executive Director for a period of five years from December 1, 2021 to November 30, 2026.
2. Mr. Sanjay S. Math, re-appointed as Managing Director of the Company for a period of six months from December 1, 2021 to May 31, 2022.
3. Mr. Anil V. Whabi, appointed as Whole-time Director of the Company designated as Director – Finance for a period of six months from December 1, 2021 to May 31, 2022 and re-designated and appointed as Managing Director of the Company from June 1, 2022 to May 31, 2023.
4. Mr. Saumya S. Chakrabarti, appointed as Whole-time Director of the Company designated and appointed as Director - Technical for a period of five years from June 1, 2022 to May 31, 2027.
The resolutions for the aforesaid respective appointment(s) / re-appointment(s) including payment of their remuneration and details of their brief resume, nature of expertise in specific functional areas, disclosure of relationship between directors inter-se, names of the listed entities in which the person also holds the directorship and the membership of the Committee of the Board of directors and shareholding in the Company as required pursuant to Listing Regulations and the Secretarial Standards on General Meetings (SS-2) are contained in the notice of the ensuing annual general meeting.
The Board recommends the appointment and re-appointment of Whole-time Directors and Managing Director as stated above and payment of their remuneration.
2. Retirement of Mr. Sanjay S. Math, Managing Director
Mr. Sanjay S. Math will retire as Managing Director of the Company with effect from close of business hours of May 31, 2022 after rendering more than 14 years of dedicated service to the Company. The Board of Directors at its meeting held on May 18, 2022 has considered and approved the retirement of Mr. Sanjay S. Math, Managing Director and also Key Managerial Personnel with effect from the end of the current term of appointment on close of business hours of May 31, 2022.
The Board places on record its deep sense of appreciation for the valuable contributions made by him during his tenure.
3. Re-appointment of Director
Mrs. Ritu P. Chhabria (DIN 00062144), Non-Executive & Non-Independent Director will retire by rotation as Director at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The Board recommends her re-appointment.
4. Independent Directors
Ms. Bhumika L. Batra (DIN 03502004), Mrs. Kanchan U. Chitale (DIN 00007267), Dr. Deepak R. Parikh (DIN 06504537), Mr. Pradeep R. Rathi (DIN 00018577) and Mr. Anami N. Roy (DIN 01361110) are Non-Executive Independent Directors of the Company. Pursuant to Section 149 (7) of the Act, all Independent Directors have submitted declaration that:
A) Eachofthemmeetthecriteriaofindependence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations;
B) They are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence pursuant to Regulation 25 of the Listing Regulations and there has been no change in the circumstances affecting their status as independent directors of the Company;
C) They have complied with the requirement of inclusion of their name in the data bank maintained by Indian Institute of Corporate Affairs as envisaged under Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, as applicable and they hold valid registration certificate with Data Bank of Independent Directors.
The Board is of the opinion that the independent directors are of integrity and possess the requisite expertise and experience (including the proficiency).
5. Key Managerial Personnel (KMP)
Pursuant to the provisions of Section 203 of the Companies Act, 2013 Mr. Sanjay S. Math, Managing Director, Mr. Anil V. Whabi, Director – Finance & Chief Financial Officer and Mr. Ashutosh B. Kulkarni, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2022.
The Board of Directors on recommendation of Nomination and Remuneration Committee and Audit Committee, at its meeting held on May 18, 2022 appointed Mr. Niraj Kedia, as Chief Financial Officer and Key Managerial Personnel with effect from May 20, 2022. Consequently Mr. Anil V. Whabi will cease to be Chief Financial Officer with effect from end of business hours of May 19, 2022.
Mr. Sanjay S. Math Managing Director of the Company will retire with effect from close of business hours of May 31, 2022 and accordingly he will cease to be Key Managerial Personnel of the Company with effect from June 1, 2022.
Training and familiarization programme for directors
In compliance of the Regulation 25 (7) of the Listing Regulations, the Company has conducted the familiarization programme for independent directors with an aim to provide them with an insight into their roles, rights, responsibilities within the Company, the nature of the business of the Company and the business model of the Company. The Board members are provided with necessary documents, reports and internal policies to enable them to familiarize themselves with the Company?s procedures and practices.
Periodic presentations are made at the Board and its Committee Meetings, on business and performance updates of the Company, the global business environment, business strategy and various risks involved.
The updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly presented to the Directors.
The details of the familiarization programme for independent directors are available on the Company?s website https://www.finolexpipes.com/ site/assets/files/13104/familiarization_programmes_for_ independent_directors_fy_2021-22.pdf.
Policy on directors? appointment and remuneration
The Company?s Nomination and Remuneration Committee is governed by its terms of reference. The Company?s Nomination and Remuneration Policy includes directors? appointment and remuneration including the criteria for determining qualifications, positive attributes, independence of a director and other details are furnished in Annexure-1.
The Company?s Nomination and Remuneration Policy is available on the Company?s website https://www. finolexpipes.com/site/assets/files/12928/nomination_ and_remunaration_policy.pdf.
Annual performance evaluation of the Board, its committees and individual directors
The Company has devised a nomination and remuneration policy for performance evaluation of independent, non-executive and executive directors. The basis for this evaluation include fulfillment of the independence criteria, independence from the management, qualification, positive attributes, area of expertise and the number of directorships & memberships held in various committees of other companies.
The Board of Directors has carried out an annual evaluation of its own performance, its committees and the directors individually as per the requirements of the Companies Act, 2013 and the Listing Regulations.
In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings. At the board meeting, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
Remuneration of directors and key managerial personnel
Pursuant to the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration of directors and key managerial personnel are furnished in
Particulars of employees
In accordance with the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136(1) of the Act, any Member, who is interested in obtaining these, may write to the Company Secretary at email@example.com. The same is also open for inspection during working hours at the Registered Office of the Company.
Auditors and Auditors? Report
In the 36th Annual General Meeting held on August 11, 2017, M/s P.G. Bhagwat LLP, Chartered Accountants (ICAI Firm Registration No. 116231W/W-100024), was re-appointed as Statutory Auditors of the Company to hold office for five consecutive years starting from the conclusion of the thirty sixth Annual General Meeting held on August 11, 2017 until the conclusion of the forty-first AGM of the Company. M/s P.G. Bhagwat LLP tenure of 5 years as Statutory Auditors concludes at this ensuing Annual General Meeting (‘AGM?).
The report of the Statutory Auditors on the Standalone and the Consolidated Financial Statements for the financial year ended March 31, 2022 is enclosed to this Report and does not contain any qualification, reservation or adverse remark requiring any explanations / comments by the Board of Directors.
The Board of Directors of the Company has on the recommendation of the Audit Committee at its meeting held on May 18, 2022 and as per Section 139 of the Companies Act, 2013 proposed to appoint M/s. Walker Chandiok & Co. LLP (Firm Registration No. 001076N/ N500013), Chartered Accountants, as the Statutory Auditors of the Company for a tenure of 5 consecutive years, to hold the office from the conclusion of the forty-first AGM until the conclusion of the forty-sixth AGM of the Company to be held in year 2027. The appropriate resolution seeking your approval for the appointment and remuneration of M/s. Walker Chandiok & Co. LLP as the Statutory Auditors forms part of the Notice convening the 41st AGM of the Company.
Further, M/s. Walker Chandiok & Co. LLP have under Section 139(1) of the Companies Act, 2013 and the Rules framed thereunder, furnished a certificate of their eligibility and consent for the appointment. They have further confirmed that the said appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for the appointment and hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Board commend to seek consent of its Members on appointment of Walker Chandiok & Co. LLP as Statutory Auditors for tenure of 5 consecutive years, to examine and audit the accounts of the Company during the said period.
Your Company has maintained cost accounting records as specified by the Central Government under Section 148(1) of the Companies Act, 2013. For the financial year 2021-22, M/s. S. R. Bhargave & Co. Cost Accountants (Firm Registration No. 000218) have conducted the audit of the cost records of the Company.
The Board at its meeting held on May 18, 2022 has, on recommendation of the Audit Committee, appointed M/s. S. R. Bhargave & Co. as Cost Auditors to conduct an audit of cost accounting records of the Company for the financial year ending March 31, 2023. Pursuant to the provisions of Section 148 of the Companies Act, 2013 and Rules made thereunder, the ratification by the Members is necessary for the payment of remuneration to the cost auditors. Your directors recommend the same.
The Cost Audit Report for the financial year 2020-21, issued by M/s. S. R. Bhargave & Co., Cost Auditors, in respect of the various products prescribed under Cost Audit Rules was filed with the Ministry of Corporate Affairs on October 4, 2021.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. SVD & Associates, Practicing Company Secretaries, Pune (Peer Review No: P2013MH075200) to undertake the secretarial audit of the Company for the financial year 2021-22. The secretarial audit report for the financial year 2021-22, is enclosed as Annexure-3.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
The statutory auditor?s report and the secretarial auditor?s report do not contain any qualifications, reservations, or adverse remarks or disclaimer.
Your directors are pleased to furnish the following details which are required to be reported by the Company in the Director?s Report pursuant to Section 134(3) (a) to (q) of the Act.
Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, the annual return of the Company for the financial year March 31, 2022 is available on the website of the Company and can be accessed at https://www.finolexpipes.com/investors/compliance-report/.
Number of meetings of the Board
During the year under review, nine meetings of the Board of Directors were held. The details of the meetings are provided in the Corporate Governance Report.
Committees of directors
The details of the committees of the directors pursuant to the Listing Regulations and the Companies Act, 2013, are described in the Corporate Governance Report.
The Audit Committee has been duly constituted as required under the provisions of the Companies Act, 2013 and the Listing Regulations.
The required details pertaining to the composition of the Audit Committee, pursuant to Section 177 (8) of the Companies Act, 2013, are given in the corporate governance report. There are no instances of the Board not having accepted the recommendation of the Audit Committee during the financial year 2021-22.
Directors? Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your directors, on the basis of information and documents made available to them, confirm that: a) in the preparation of the annual financial statements for the year ended on March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for the year ended in that period;
c) the directors have taken proper and sufficient care for 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 directors have prepared the annual accounts on a going concern basis;
e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Details in respect of fraud reported by Auditors
During the year under review, the statutory auditors or the secretarial auditors or the cost auditors have not reported to the audit committee/ Board and/or Central Government, under Section 143 (12) of the Companies Act, 2013 read with rules framed thereunder, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board?s report.
Vigil mechanism / Whistle blower policy
The Company has established a vigil mechanism known as the Whistle Blower Policy (the "WBP") pursuant to Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the Listing Obligations, to report genuine concerns to the Chairman of the Audit Committee. The WBP provides adequate safeguards against victimization of persons who use such mechanism and ensures direct access to the Chairman of the Audit Committee. The details of the WBP are explained in the Corporate Governance Report and also posted on the Company?s website.
The Company affirms that no director or employee has been denied access to the Chairman of the Audit
Committee and that no complaint was received during the year.
Prevention of Sexual harassment policy
The Company has in place a policy for prevention of sexual harassment of its employees at the workplace. In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, an Internal Complaints? Committee has been constituted by the Company to redress any complaints received regarding sexual harassment.
Your directors state that during the year under review, there was no complaint received / case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Prohibition of Insider trading
In compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and to preserve the confidentiality and prevent misuse of unpublished price sensitive information (UPSI), the Company has adopted a Code of Conduct to Regulate, Monitor and Report Trading by Insiders (‘Insider Trading Code?) and a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (‘Code of Fair Disclosure?). The Company has in place the digital structured database to monitor the insider trading activities.
The said Code of Conduct is intended to prevent the misuse of UPSI by insiders and connected persons and ensure that the Directors and designated persons of the Company and their immediate relatives shall not derive any benefit or assist others to derive any benefit from having access to and possession of such UPSI about the Company which is not in the public domain, viz. insider information.
The Code of Fair Disclosure ensures that the affairs of the Company are managed in a fair, transparent and ethical manner keeping in view the needs and interest of all the stakeholders.
Particulars of loans, guarantees or investments
The details, as applicable, of loans given, investments made or guarantees given pursuant to Section 186 of the Companies Act, 2013, are disclosed in note no. 04 to the financial statements for the financial year 2021-22.
It is clarified that the Company has no loans/ advances and investments in its own shares.
Significant and material orders passed by the regulators or courts or tribunals
Pursuant to Rule 8 (5) (vii) of the Companies (Accounts) Rules, 2014, it is reported that no significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the Company and the Company?s operations in future.
There are no application made or proceeding pending under the Insolvency and Bankruptcy Code, 2016 as at the end of the financial year, nor has the Company done any one time settlement with any Bank or Financial Institutions.
Employee stock option scheme
During the year under review, your directors confirm that no shares were issued by the Company under the Finolex Industries Limited – Employee Stock Option Scheme/ Plan (ESOP) of the Company.
Details pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is available on the Company?s website https://www. finolexpipes.com/site/assets/files/13346/disclosure under sebi regulations on esop 2021-22.pdf.
The Company has obtained certificate from SVD
& Associates, secretarial auditors of the Company pursuant to Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
Sweat equity shares and equity shares with differential voting rights
Your directors confirm that neither sweat equity shares nor equity shares with differential voting rights have been issued by the Company during the year under review.
The conservation of energy, technology absorption, foreign exchange earnings and outgo
Your Company is committed to achieve the highest standards of environmental excellence by adopting environmentally sustainable and effective operating systems and processes. Your Company has put in place the internationally acclaimed Environment Management System under ISO 14001 certification at Ratnagiri. Your Company, is in compliance with all applicable environmental regulations in respect of air, water, noise, hazardous waste, e-waste etc. to mitigate the potential environmental impact on society.
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo required to be given under Section 134(3) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-4.
Business Responsibility Report
Business Responsibility Report for the year ended March 31, 2022 as stipulated under Regulation 34(2) (f) of the Listing Regulations, is enclosed as Annexure-5.
Corporate Social Responsibility
The Board has constituted a Corporate Social Responsibility (CSR) Committee and also framed the corporate social responsibility policy pursuant to Section 135 of the Companies Act, 2013. The required details pertaining to the composition of the CSR Committee are given in the corporate governance report.
The corporate social responsibility policy of the Company can be viewed on the Company?s website https://www. finolexpipes.com/site/assets/files/12926/corporate responsibility policy.pdf.
As a responsible corporate citizen, your Company conducts CSR activities in education, healthcare, sanitation, skill developments, social welfare, water conservation and women empowerment through its CSR partner, Mukul Madhav Foundation ("MMF"). Your Company has been actively contributing to the social and economic development of the underprivileged mainly in and around your Company?s plants situated at Ratnagiri and Urse in the state of Maharashtra and at Masar in the state of Gujarat. During the financial year 2021-22, the Company?s CSR efforts included COVID-19 relief in multiple states.
The CSR activities carried out by your Company through MMF is headed by Mrs. Ritu P. Chhabria, Managing Trustee of Mukul Madhav Foundation, a driving force in accomplishing the activities on day-to-day basis.
During the financial year 2021-22, your Company in association with MMF has incurred expenditure on various CSR activities aggregating Rs 19.00 Crores against the mandatory CSR expenses of Rs 12.38 Crores.
The Annual report on the CSR activities is enclosed as
Statements in the Board of Directors? Report and the Management Discussion & Analysis describing the Company?s objectives, expectations or forecasts may be within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company?s operations include global and domestic demand and supply conditions affecting the selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
Your directors take this opportunity to place on record their sense of gratitude to the banks, financial institutions, central and state government departments and local authorities for their guidance and support. Your directors are also grateful to the customers, suppliers and business associates of the Company for their continued co-operation and support. Your directors express their deep appreciation for the commitment, dedication and hard work put in by the employees at all levels. Lastly, your directors are grateful for the confidence and faith shown in them by the shareholders of the Company.
|For and on behalf of the Board of Directors|
|Prakash P. Chhabria|
|May 18, 2022||Executive Chairman|
|Place: London||DIN : 00016017|