UPL Ltd Directors Report.
The members of
Your Directors have pleasure in presenting their report and audited accounts for the year ended on 31st March 2019.
(H in crore)
|Current Year||Previous Year||Current Year||Previous Year|
|Earnings before interest, tax, depreciation, amortisation, exceptionals, prior period adjustments and minority interest||4053||3919||1,398||1,384|
|Profit/(Loss) from Associates||14||(93)|
|Profit before tax||1,684||2,305||486||576|
|Provision for taxation|
|Adjustments of tax relating to earlier years||(4)||(79)||(3)||(83)|
|Profit after tax|
|Net profit for the year||1,447||2,022||404||548|
a) The Company ended the year with growth in revenues of 14%. This growth comprised of 7% growth in volumes, 4% growth in price and favorable exchange impact of 3%. Performance highlights by region are as follows:-In India the growth in sale of crop protection products was 4%. Rainfall in India during last year was below average (91% of long term average) and less than the forecast made. The country experienced fifth straight year of less than normal rains.
Apart from deficit in rainfall the problems for farm sector were aggravated on account of erratic rains. In some parts of the country there were heavy floods resulting in loss of life, crops and property. The affected states were mainly Madhya Pradesh, Uttar Pradesh, Bihar and Jharkhand.
With less rains, the rabi season was also not very encouraging. In spite of such difficult situation in the country, the Company has achieved revenue growth of 4%. The growth was observed in key insecticides and herbicides.
The Company launched a few non-selective herbicides during the year. The Companys initiative of Adarsh Kisan Centre expanded to more areas and the farming community appreciated the same.
In Latin America, the Companys revenue grew by 25%, while the crop protection industry grew by 11% in CY2018. This is a significant achievement, considering that Brazil and some of the other Latin American countries faced political and economic uncertainties. The growth was across all key product segments, notably Sperto and Unizeb line of products of the Company. These products are very well accepted in these countries.
In North America the herbicide portfolio recorded good growth and has been successful in addressing the issue of weed-resistance. The market sentiment was adversely impacted due to trade war between China and USA. The Companys efforts to improve sales is now bearing fruit after good rains returned last year in USA.
As indicated in the last Annual Report the European market has begun improving. Southern Europe witnessed wet weather resulting in growth in sale of fungicides. Also, the sugar beet season has been good, and this has driven sales of herbicides and fungicides.
As regards rest of the world, the revenue growth has been 6%. Africa and South East Asia countries have been the growth drivers in this region. The herbicide sales are improving in these markets. However, in Australia the extended drought impacted sales.
ACQUISITION OF ARYSTA LIFESCIENCE
During the year the Company through its subsidiary, UPL CorporationLimitedinMauritius,acquiredArystaLifeScience.
Arysta had a turnover close to US$ 2 billion. It too is a global provider of innovative crop protection solutions, including bio-solutions and seed treatment. Further, there is minimal overlap in the product portfolios of UPL and Arysta. The product portfolios of both companies are complementary, leading to significant cross-selling opportunities. In terms of regional presence, Arystas stronger presence in Africa and Eastern Europe means that the combined entity will be able to offer a wide basket of solutions for various raw crops and specialty crops across a broad swathe of countries. This will comprise of crop protection products, bio-solutions and seed treatment products. This will encompass all aspects of crop life cycle, starting from seed up to post harvest. This acquisition will result in enhanced R&D capabilities for the group.
The acquisition was made for US$ 4.2 billion. This was funded through a combination of fresh equity and debt at UPL Corporation level. The debt of US$ 3 billion was provided by a syndicate of banks. The Company obtained all the regulatory approvals necessary to complete the acquisition in a period of six months.
With this acquisition the Company will be among top five global crop protection product companies.
We expect the global crop protection industry to generate higher volumes in 2019, supported by improvement in prices. UPL is ideally positioned to take advantage of these upsides. The acquisition of Arysta LifeScience is opportune in that sense. Arysta brings with it a vast marketing network, multiple distribution channels, access to newer markets, a much wider and complementary product portfolio, making the future of the combined Company very bright. Arystas strong presence in fast growing segments like bio-solutions and seed treatment will ensure that the Company is future ready. The Company has established its brand image in the market as a trusted supplier, which guarantees quality products at competitive prices. The Company devises its marketing strategies in a manner that ensures a win-win scenario for all stakeholders at all times. Overall a very bright and promising future is expected for the Company.
Your Directors have recommended dividend of 400% i.e. H8 per Equity Share of H2 each for the financial year ended 31st March, 2019, which if approved at the forthcoming Annual General Meeting, will be paid to all those Equity Shareholders of the Company whose names appear in the Register of Members as on 29th May, 2019 and whose names appear as beneficial owners as per the beneficiary list furnished for the purpose by National Securities Depository Limited and Central Depository Services (India) Limited.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR") the Company has formulated its Dividend Distribution Policy and the same is uploaded on the website of the Company which can be accessed at https://www.upl-ltd.com/policies-compliances-announcements.
To mark the golden jubilee of the Company, your Directors have announced issue of Bonus Shares in the ratio of one bonus share for every two shares held by the member. The same will be subject to the approval of the members and for this a separate Extra Ordinary General Meeting will be held. On approval by the members, the Bonus Shares will be issued to those members whose names appear in the register of members as on the record date which will be announced after the said Extra Ordinary General Meeting and to those members whose names appear as beneficial owners as per the beneficiary list furnished for the purpose by National Securities Depository Limited and Central Depositary Services (India) Limited.
(a) Fixed Deposits
The Company has not accepted fixed deposits during the year. There are no fixed deposits outstanding as at 31st March, 2019.
(b) Particulars of Loans, Guarantees or Investments
The details of Loans, Guarantees or Investments are given in the notes to the Financial Statements.
(c) Changes in Paid-up Share Capital
During the year the Company has issued and allotted the following shares: (i) 9,589 equity shares of H2 each to Employees under Employee Stock Option Plan of the Company.
The Company has a good reputation for prudent financial management and ability to meet its financial commitments. The Companys credit facilities in India have been rated by CARE as CARE AA+(Negative) for long term facilities and CARE A1+ for short term facilities and by CRISIL as CRISIL AA+(Negative) for long term facilities and CRISIL A1+ for short term facilities. Companys commercial paper are rated by CARE as CARE A1+ and by CRISIL as CRISIL A1+. Companys non-convertible debentures are rated by CARE as CARE AA+ (Negative) and by Brickwork Ratings as BWR AA+(Stable).
The international bonds issued by UPL Corporation Ltd, a subsidiary of the Company, have been rated by S&P as BBB-(Stable), Moodys Baa3 (Positive) & Fitch BBB-(Negative). It has issued 5 year US$ 500 mn US$ denominated Senior Notes under 144A/Reg S in October 2016 and a 10 year US$ 300 mn US$ denominated Senior Notes under Reg S in February/March 2018.
The details as required to be disclosed under the SEBI (Share Based Employee Benefits) Regulation, 2014 are put on the Companys website at the link https://www.upl-ltd. com/policies-compliances-announcements
SAFETY AND ENVIRONMENT
Safety and well-being of each and every one working for and on behalf of the Company remains to be of top priority for the Company. Your company has taken some significant steps in order to enhance its overall safety performance as part of business continuity process, to take it to the next level eventually to meet its vision of being best in class and installed a unique engagement initiative "Safety First" for making safety a way of life.
Initiatives like Zero Leak Programme, Mistake proofing thuman ough Poka-yoke, Safety Abnormality reporting, 5S have helped sustain our safety performance.
Capability Building through level 0, 1 & 2 training and employee engagement initiatives are continuously being strengthened. Level 0, 1 & 2 trainings are training for safety and functional capability building, an employee can take charge only after he/she has successfully passed the assessment. Your company has a system of internal & external safety audit and average compliances of 2nd and 3rd party audit have been a significant 95+%. "Safety First" is a unique engagement Initiative to bring about interdependent culture, which focuses on enhanced safety Leadership through communication, engagement, horizontally deploying best practices and corrective/ preventive actions management, enhancing effectiveness of plant safety representatives and leadership involvement. Our company engaged services of overseas reputed consultants for imparting training on Safety Leadership on doing things differently making the same initiatives more impactful.
For the current year, our company had a LTIFR : 0.117 per 200 thousand hours worked. Company strongly focuses on the reporting of Safety Abnormalities, Man Machine and Man-Chemical interfaces and closure of the same through mistake proofing. 8 plants of the Company globally worked without any recordable incidents. Company made substantial improvement in execution of Green Field projects.
The Company has initiated a process of Activity based risk assessment and developing health and fire index as an additional measure for well being of the people employed as well as asset protection.
The motto remains: Everyone working for and on behalf of UPL - "Doing Safer is Doing Better".
At the Company, sustainability is driven by smarter innovation and profitable growth. We believe that a business can be profitable by adopting sustainable practices ensuring harmony with the society and environment. We are constantly working to reduce our environmental footprint and find innovative product solutions that benefit the society. Our commitment to environmental protection extends beyond the scope of legal requirements. We are committed to the chemical industrys Responsible Care initiative and have set out the basic principles of this commitment in our Global Environmental Footprint Reduction Plan. Certified HSEQ management systems control its operational implementation.
This year company has released its second Sustainability Report as per GRI standards in accordance with comprehensive option. The Companys Sustainable Development Plan is fully aligned with UN Sustainable Development Goals. and that the financial controls were adequate and were operating effectively.
f) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Corporate Governance Report
Your Company and its Board has been complying with Corporate Governance practices as set out in a separate report, in pursuance of requirement of para C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Management Discussions and Analysis Report forms part of this Report. Auditors certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations is also attached to this Report.
Dealing with securities which have remained unclaimed Members are hereby informed that as per Regulation 39(4) read with Schedule VI of the SEBI Regulations, the Company is in the process of sending reminders to those Members whose share certificates have remained unclaimed, to contact the Company immediately in the matter. The Registrar and Transfer Agent M/s Link Intime India Pvt. Ltd. is in the process of compiling the data for unclaimed shares. The Company, now after following the prescribed procedure will dematerialize unclaimed shares which are retained with the Company. These shares would be held by the Company on behalf of the holders of such shares in an "Unclaimed Suspense Account" to be opened with a depository. At the end of seven years, hereof, these shares shall be transferred by the Company to the IEPF. Dividends remaining unclaimed in respect of such shares shall also be held in a separate suspense account and would likewise be transferred to IEPF at the end of seven years. Members may note that the lawful claimant in respect of these shares / dividend will be able to claim such shares dividend from the Company till such time they remain in the unclaimed suspense account as aforesaid.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India relating to the meetings of the Board and General Meetings.
BUSINESS RESPONSIBILITY REPORTING
A separate section of Business Responsibility forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial statements are prepared for the year 2018-19 in compliance with the provisions of the Companies Act, applicable Accounting Standards and as prescribed under the SEBI regulations. The consolidated statements are prepared on the basis of audited financial statements of the Company, its subsidiaries, associates and joint ventures. These consolidated financial statements along with the Auditors Report thereon form part of the Companys Annual Report. They are also put up on the website of the Company https://www.upl-ltd.com/ policies-compliances-announcements.
COPY OF THE ANNUAL RETURN
Pursuant to the Section 92(3) of the Companies Act, 2013 a copy of Annual Return has been placed on the website of the Company and the web link of such Annual Return is https:// www.upl-ltd.com/ policies-compliances-announcements
LISTING OF THE COMPANYS EQUITY SHARES
The equity shares of the Company are listed on the BSE Ltd. and National Stock Exchange of India Ltd. There is no default in paying annual listing fees.
The Directors are thankful to all the stakeholders and various government agencies and ministries for their continued support.
Statements in the Directors Report and the Management Discussion and Analysis describing the Companys objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include: global and domestic demand and supply conditions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company. that the Company has
|Mumbai||On behalf of the Board of Directors|
|17th May 2019|
|3-11, G.I.D.C., Vapi||Rajnikant Devidas Shroff|
|Dist. Valsad, Gujarat||Chairman & Managing Director|
|Pin: 396195||(DIN: 00180810)|