UPL Ltd
Directors Reports
To,
The members of
UPL Limited
Your Directors have pleasure in presenting their report and audited
accounts for the year ended on 31st March, 2018.
| FINANCIAL RESULTS |
|
|
|
(H In crores) |
|
Consolidated |
Standalone |
|
Current Year |
Previous Year |
Current Year |
Previous Year |
| Total Revenue |
17920 |
17124 |
7809 |
7602 |
| Earnings before interest, tax, depreciation, amortisation, |
3919 |
3429 |
1384 |
1268 |
| exceptionals, prior period adjustments and minority interest |
|
|
|
|
| Depreciation/amortisation |
675 |
672 |
666 |
655 |
| Finance Cost |
783 |
735 |
135 |
149 |
| Exceptional items |
63 |
81 |
7 |
46 |
| Loss from Associates |
93 |
19 |
- |
- |
| Profit before tax |
2305 |
1922 |
576 |
418 |
| Provision for taxation |
|
|
|
|
| Current tax |
311 |
293 |
180 |
89 |
| Adjustments of tax relating to earlier years |
(79) |
5 |
(83) |
- |
| Deferred tax |
43 |
(109) |
(69) |
84 |
| Profit after tax |
2030 |
1733 |
548 |
245 |
| Minority interest |
8 |
6 |
- |
- |
| Net profit for the year |
2022 |
1727 |
548 |
245 |
OPERATIONAL PERFORMANCE
The Company had another year recording satisfactory results. While most
of the peers in the industry had a negative growth, the Company recorded a decent growth
of about 7%.
Some of the highlights of the Company's global performance are as
under: A. Revenue from operations increased by 5% to H 17,506 crores. B. EBIDTA improved
by 14% to H 3,919 crores.
C. Profit before taxes have gone up by 20% to H 2,305 crores. D. Profit
after taxes have gone up by 17% to H 2,029 crores.
Region wise performance highlights are as under:
In India, the market for agrochemicals was fairly flat and grew by just
7%. During the year, the country recorded below normal rainfall of about 95% of long
period average. In the months of June and July, there were exceptionally good spells of
rain in most parts of country. But subsequently, prolonged dry spells across the country
were seen. This resulted in decline in sale of fungicides. The southern states suffered
from deficit rains and received good rains only at the end of the season. Worst floods
were witnessed in Gujarat, Rajasthan and Mumbai. There were heavy floods in Assam, Bihar,
Uttar Pradesh and Odisha. The rabi season was not very encouraging for agrochemicals, due
to low temperatures and higher humidity, making the crops resistant to pest attacks. At
the beginning of the year, the introduction of GST and confusion in the market prevailing
due to this had significantly adverse effect on Company's sales. The channel stopped
fresh purchases and old inventory was returned. Subsequently, the market has adjusted to
this new tax regime and it is expected that in coming years, higher sales can be expected.
During the year, some of the key brands of the Company did good
business. Significant growth was noticed in business of new fungicides launched in the
earlier year. The Company launched new speciality/ biological products successfully. Some
of the initiatives like Adarsh Kisan centres taken by the Company in earlier years were
well appreciated by farming community and this helped the Company to improve its sales.
In North America, some of the herbicides of the Company recorded very
good growth. The western states came out of spells of dry weather and had bountiful rains.
The sale of fungicides for potato and vegetable market grew. Sale of insecticides also
went up as the cotton planted area increased. However, the commodity prices remained
subdued. The situation is likely to improve in future.
In Latin America, including Brazil, the new insecticide launched got a
very encouraging response. The fungicide business continued to grow and more areas were
treated with Company's fungicides. At the beginning of the year, there were delayed
rains in north Brazil and dry season in south Cone and Argentina.
The European market has started improving. Summer heatwaves prevailed
across Southern Europe. Though overall market scenario was not so favorable, the
Company's performance showed lot of improvement. It is expected that in coming years,
the Company's business will continue to grow in Europe. During the year, herbicides
sales grew in sugar beet farming. The Company introduced new herbicides and fungicides in
the market. Business in Germany rebounded with higher growth. However, due to low disease
pressure in dry weather of Italy and Spain, usage of fungicides reduced there.
As regards rest of the world, double digit growth was recorded in
Africa and some of the South East Asian countries. In turkey, new herbicides were
successfully launched. The Company continues to introduce new products in different
countries. Business has improved in China. In Australia, severe summer heat and drought
conditions continue to prevail resulting in low usage of agrochemicals.
FUTURE OUTLOOK
This year, normal monsoons are predicted in India. Onset of timely
monsoon will result in on time sowing thereby ensuring increase in overall planting
acreages in Kharif crops like Rice, Cotton, Soybean and Corn. This will fuel economic
growth by enhancing the farm productivity. The growth in farm sector income will
affirmatively trigger the usage of Agrochemicals.
The special focus of Union Budget on Indian Agriculture is further
expected to accelerate the growth in the farming sector. The announcements of various
favorable policies like linking MSP to production costs, e-NAM (Online Market Place), 100%
Tax deduction on profits to Farmers Producers Organizations (FPO) with a turnover below
INR 100 crores and increase in the Agricultural Credit target by 10 % to INR 11 Lakh
Crores will spur the economic growth of farmers. Focused impetus for Crop Insurance,
Micro-irrigation, Food Processing and Agricultural exports will further lead to progress
in the sector with a vision towards achieving the Government mandate of doubling farm
Income by 2022. These policies will result in increasing the purchasing power of growers
to go for higher investments anticipating better yields.
The global acceptability and demand of Company's products is
increasing at a fair pace due to the growing need and innovation driven products providing
solutions in crop protection. Overall Agrochemical markets in Europe seems to be stable
for this year without any drastic fluctuation. Markets in US and North America are showing
signs of growth in terms of better value realization. With reduction in surfeit of
inventory and rising commodity prices, Latin America could potentially see growth in 2018.
Inroads of the Company portfolio into smaller markets of Africa and South East Asia with
the help of stronger distribution will support further growth in these untapped markets.
Company is building portfolio and investing in manufacturing to insulate itself from the
growing crisis of crunch in supply and production in China because of policy changes. With
the Company growing faster than the market, it augurs possibility of an overall promising
year ahead.
DIVIDEND
Your Directors have recommended dividend of 400% i.e. H 8 per Equity
Share of H 2 each for the financial year ended 31st March, 2018, 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 23rd August, 2018 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 Distribution Policy and the same has been uploaded on the website of the Company which
can be accessed at https://www.uplonline.com/policies-compliances-announcements.
FINANCE
(a) Fixed Deposits
The Company has not accepted fixed deposits during the year. There are
no fixed deposits outstanding as at 31st March, 2018.
(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) 22,24,287 equity shares of H 2 each on conversion of
Convertible Preference Shares and
(ii) 91,676 equity shares of H 2 each to Employees under
Employee Stock Option Plan of the Company.
CREDIT RATING
The Company enjoys a good reputation for its sound financial management
and ability to meet its financial commitments. Company's bank facilities have been
rated by CARE as CARE AA+ (Stable) for long term facilities and CARE A1+ for short term
facilities and by CRISIL as CRISIL AA+ (Stable) for long term facilities and CRISIL A1+
for short term facilities. Company's Commercial papers are rated by CARE as CARE A1+
and by CRISIL as CRISIL A1+. Company's Non-Convertible Debentures are rated by CARE
as CARE AA+ (Stable) and by Brickwork Ratings as BWR AA+ (Stable).
UPL Corporation Ltd., a wholly owned subsidiary of the Company, has
been rated by S&P as BBB- (Positive), Moody's Baa3 (Positive) & Fitch BBB-
(Stable). It has issued 5 year USD 500 mn USD Denominated Senior Notes under 144A / Reg S
in October 2016 and issued a 10 year USD 300 mn USD Denominated Senior Notes under Reg S
in February / March 18.
ESOP
The details as required to be disclosed under the SEBI (Share Based
Employee Benefits) Regulation, 2014 has been uploaded on the Company's website at the
link https://www.uplonline.com/policies-compliances-announcements
SAFETY AND ENVIRONMENT
Health and Safety
Health and safety remains to be a core area of importance for the
Company with a motto of each person working for and on behalf of the Company "Alive
and Well at the end of the Day". Your Company has improved its safety performance in
terms of the TRFR reduction by 42%, Lost Time Injuries by 42%, Process Safety Incidents by
60%, and Severity Index by 40%. However, this is not the end and The Company continues to
work in pursuit of Achieving UPL Safety Vision – "To become one of the Best and
Safest Chemical Manufacturing Companies in the world and achieve best in class in Safety
by making Safety a way of Life". It will be heartening to note eleven units of the
Company were incident free for the year 2017-18. Your Company has heavily invested in the
infrastructure investment in its old plants to ensure the structural safety of the plants.
Company has achieved marked improvements in its green field and brown field projects
through various new initiatives under Construction and Contractor Safety Management
System. While New initiatives like Zero Leak Programme, Mistake proofing through
Poka-yoke, Safety Abnormality reporting, 5S relaunch have helped safety performance
improvement immensely, the Process Safety Management, Capacity Building through level 0,
1 & 2 training and several employee engagement initiatives are
continuously being strengthened. Level 0, 1 & 2 trainings are training for safety and
functional capacity 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 on 2nd and 3rd party audit have been a significant
94+%. The testimony of performance reflects through several awards in EHS performance from
reputed institutions like OSHAI, Frost & Sullivan, CII Green Business Centre, IGMC,
FICCI, Golden Peacock to name a few. All the Indian units have been accredited with ISO
14001-2015 standard.
Transport Safety Management System: Since the Company receives and
dispatches large number of Chemical Consignments either in Tankers or Trucks, the Company
is pursuing to undertake risk assessment in this area. Company is working at a very
advance stages with a third party expert to design the entire scheme for handling
hazardous chemicals transport management system for the Company. The Company believes that
Sustainability is the best opportunity for business to drive smarter innovation and
profitable growth. Sustainability ensure a fair society, living within environmental
limits and creating a sustainable profitable business. The Company is constantly working
to reduce environmental footprint and find innovative product solutions that benefit the
environment. The Company's environmental standards apply worldwide.
The Company's commitment to environmental protection extends beyond the
scope of legal requirements. The Company is committed to the chemical industry's
Responsible Care™ initiative and have set out the basic principles of this commitment
in the Company's Global Environmental Footprint Reduction Plan. Certified HSEQ management
systems control its operational implementation.
This year Company has released Sustainability Report as per GRI
guidelines. UPL Sustainable Development Plan is fully aligned with UN Sustainable
Development Goals.
Reducing Environmental Impact
The target is to reduce 30% environmental footprint in our
manufacturing plants by 2020 compared to 2015-16.
| Water Consumption |
Carbon Emissions |
Waste Disposal |
Wastewater Discharge |
| Target |
Target |
Target |
Target |
| 30% reduction in specific water consumption in our
manufacturing plants by 2020. |
30% reduction in specific plants by 2020. |
CO2 30% reduction in specific waste 30% reduction
in specific emissions in our manufacturing disposal in our manufacturing wastewater
discharge in our |
|
|
plants by 2020. |
manufacturing plants by 2020. |
| Performance |
Performance |
Performance |
Performance |
| In 2017-18, water consumption |
In 2017-18, CO2 emissions |
per In 2017-18, waste disposal |
per In 2017-18, wastewater discharge |
| per tonne of production in the Company's manufacturing plants |
tonne of production in Company's manufacturing plants |
the tonne of production in Company's manufacturing plants |
the per tonne of production in the Company's manufacturing
plants |
| reduced by 20% compared to |
reduced by 30% compared to reduced by 25%
compared to reduced by 38% compared to |
| 2015-16. |
2015-16. |
2015-16. |
2015-16. |
The Company has taken following initiatives this year to make our
operating plant sustainable:
Speci_c Water Reduction Initiatives
Sustainable industrial water management plays a vital role in achieving
future water security in a world where water stress will increase. The optimum
utilization of all natural resources is an integral part of the Company's commitment to
sustainable development. Aiming to decrease abstracted water demand in our operating
plants, following initiatives has been taken this year:
Reduced the water consumption in ALP Red Phosphorus production in Vapi
Unit 0.
Reduced the water consumption in Clomazone, Devrinol production in
Ankleshwar Unit 2.
Utilized the hot water bath water in drum detoxification in
Ankleshwar Unit 3.
Enhanced the RO water utilization by 57% in last two years at
Jhagadia Unit 5.
Implemented water efficient equipment in manufacturing processes.
Implemented metering, monitoring & targeting (MMT) to ensure the
efficient performance of system.
Dedicated technology group worked to reduce water demand.
Specific Carbon Emissions Reduction Initiatives
Greenhouse gases trap heat and make the planet warmer. Human activities
are responsible for almost all of the increase in greenhouse gases in the atmosphere.
Climate change due to greenhouse gas emissions will have a growing impact on business.
Aiming to decrease carbon emissions in the Company's operating plants, following
initiatives has been taken this year:
Reduced 30 % CO2 emissions by changing energy mix and by reducing
specific energy consumption as compared to baseline 2015-16.
Implemented energy efficient equipment in manufacturing processes.
Implemented metering, monitoring & targeting (MMT) to ensure the
efficient performance of system.
Dedicated technology group worked to reduce energy consumption as well
as CO2 emissions.
Speci_c Waste Reduction Initiatives
The Company has taken special care to reduce, recycle and eliminate
hazardous as well as non-hazardous solid waste. Aiming to decrease waste disposal from the
Company's operating plants, following initiatives has been taken this year:
Reduced 25 % specific waste disposal as compared to baseline
2015-16 from the Company's operating plants by operational excellency.
Converted the process waste of Pendimethalin and Glufocinate plant into
sellable by-products in Jhagadia Unit 5.
Reduced specific waste disposal by increasing the yield of PMP and UPH
production in Vapi Unit 0.
Implemented waste segregation practices for efficient waste management
Implemented the practices of 4R (reduce, recycle, reuse, reprocess)
concept in Hazardous waste management
Recovered value added products from waste.
Specific Wastewater Reduction Initiatives
Aiming to decrease wastewater discharge from our operating plants,
following initiatives has been taken this year:
Reduced 38% specific wastewater discharge from 2015-16 baseline by
operational excellency.
Reduction of effluent discharge in Unit 05 at Jhagadia by way of
segregation and better recycling of different effluent streams. This is expected to result
in better effluent management specially during the monsoon seasons.
Adopted new technologies which use continuous manufacturing processes
as against the current batch mode of manufacturing reactions. This not just reduces the
footprint and consequent capex spends of the plant but also results in significant
reduction in the quantity of effluent generated.
Commercialised the volute technology for efficient dewatering of
sludge. This will help us in efficient management of sludge generated from our wastewater
treatment plants.
Implemented metering, monitoring & targeting (MMT) to ensure the
efficient performance of system.
Dedicated technology group worked to enhance the environmental
compliances and management standards thereby resulting in reduction of the utility and
environmental footprint.
RESEARCH AND DEVELOPMENT
In order to fulfil the vision and the mission, Company has created
multiple Research and Development Centres which are located in different countries spread
across the Globe to provide services to the farmers at a pace which is required to
overcome the problems faced by them. These Research and Development Centres are very
effective in providing solutions to the regional as well as Global pest management issues.
The Research and Development Centres are equipped with state-of art
facilities and highly qualified scientists. Company is engaged in developing technical
products in a highly cost effective way and in providing pre-mix formulations which are
more effective and economical to the farmer, safe to handle and environment friendly.
Every year Company introduces many new products in the market which are
the result of the tireless work by the skilled scientists who develop these products. The
products are designed following Green Chemistry Principles and desired safety
considerations.
Company is very innovative in introducing pre-mix combinations of two
or more active ingredients as effective pest-management and resistance management
solutions. Scientists working on the projects develop these products at a fast pace to
make the projects successful and quick market introduction of the products.
The formulations are tested extensively for bio-efficacy at the
development stage before going to the market launch. Care is taken to develop safe, easy
to handle and environmentally friendly formulations keeping in the mind "The Farmer
First" motto of Company.
The Research and Development Centres also work on the existing products
and processes been commercialized to make them more cost-effective or to improve the
quality.
Company respects Intellectual Property of others and creates its own
Intellectual property for the products and processes developed by the Research and
Development Centres. Patents are obtained in the countries of interest and appropriate
measures are taken to safeguard the IP.
Technical and formulation registration requires data generation like
chemical composition, physico-chemical properties, toxicity and impurity profile,
bio-efficacy, residue and packaging and so on. The required data is generated at Research
and Development Centres and then gets the products tested at GLP laboratory to generate
the data for submission to the regulatory authority in various countries.
Company is also giving importance to for Speciality and Industrial
Chemicals for which the industrial processes are developed in the Research and Development
Centres. R&D scientists are able to provide safe and economical processes which are
successfully implemented for commercial production.
CORPORATE SOCIAL RESPONSIBILITY
‘Doing Things Better' is core to the Company's DNA. Three
simple words, which lie at the heart of the Company's philosophy have been the guiding
force in all community interventions. All of the Company's CSR programs are driven by the
belief that humankind is one community, where each member is responsible for the wellbeing
of the other. Hence the Company's interventions are not restricted to the development of
the neighboring communities alone, but the Company works on programs that cater to the
wider national interest too! Though the Company's CSR efforts are focused in Gujarat, they
have also touched lives in many other states including but not restricted to Maharashtra,
West Bengal, Kashmir, Tamil Nadu and Himachal Pradesh.
In neighborhoods the Company's focus is to work on the needs, strengths
and growth priorities of the community. Hence in Dang district which is primarily an
agricultural economy, the main focus is on providing sustainable livelihood from improved
agricultural practices. Multiple interventions have been designed and implemented with the
support of farmers groups at the village level. UPL Centre for Agricultural Excellence
provides the much needed training support to the farmers. AKRSP SRI, Dang Paddy
Development Program, BoriBagicha, use of mini drip irrigation, animal husbandry, providing
water harvesting structure like dams and wells etc. have improved the productivity of the
land thereby making agriculture more sustainable and profitable for more than 15,000
farmers.
The need assessment survey of the Company had brought out the fact that
the per capita availability of land was small which led to disguised unemployment. Many
youth and women in the region were not productively employed. The Company's employment and
entrepreneurship initiatives are focused on providing this segment with knowledge, skills
and the motivation to take up entrepreneurship as an income generating opportunity. Skill
based entrepreneurship development program provides training to start both farm and
non-farm based enterprises. Four UPL Niyojaniy Kendra's are providing training to
youth in the region on industrial skills like welding, fitting, electrical etc. Once
trained these youth get gainfully employed in the neighboring industries. UPL Udyamita
with more than 1300 women members is another intervention that focuses on making women
financially independent through self- help groups.
Another focus area for the Company is the conservation and preservation
of flora and fauna. UPL Social Forestry aims at afforestation and rehabilitating the
degraded forest and common lands with active support from the community. Under UPL Social
Forestry a total 71,351 plants were planted and is being properly maintained at different
community sites which covers 163.73 acres of community land. The Company has also planted
1,20,000 Mangrove plants spread across 60 acres of land in the coastal belt in Vagra
block, DAHEJ. Innovatively, the Company adopted different participatory approach to
execute the UPL Social Forestry that has led to sustain the plantation and project.
Sarus Conservation project has made some impressive progress since inception 3 years back.
Sarus protection groups are actively working towards protection of nests, eggs and
juvenile Sarus. Around 80 Eco Clubs have made thousands of children aware about the
importance of nature preservation.
The Company has built 36 toilet blocks in community school/public
places under UPL School Sanitation Project and are driving hygenic behavior through toilet
blocks. Girls safety, Home safety, Industrial safety and Road safety programs make the
target population (more than 10,000 till date) aware of the safety measures to avoid
untoward incidents.
UPL Unnati program has been taken up to help community based
organizations of Mumbai to improve their capabilities and thereby work with the community
in a better way. The Company is supporting Global Parli project (Maharashtra) which is
working to make Parli tehsil a model for others to follow. Vandri cluster development
program is another initiative that is working towards improving the quality of life of
villagers in Vandri which is a very remote village in Gujarat not equipped with basic
facilities.
The Company also support the relief efforts of the government in times
of natural disasters. Last year the Company provided food packets to the flood affected
people in Banaskantha district of Gujarat. Similarly the Company donated INR 25 lacs for
rehabilitation of flood victims in Assam.
The Company's international subsidiaries and sister concerns share
development ethos. UPL Brazil works on a complimentary education program empowering the
local youth to lead meaningful lives. UPL
Colombia is responding to surrounding communities "whole life
cycle" need by promoting the social and economic development through education,
entrepreneurship and the conservation of the environment. UPL Argentina has establishing
Social Security office at plant for every neighbour community (in the past they need to
travel 46 km to have access to social security office). UPL Mexico has been collecting and
distributing winter clothing to the poorest of the poor since 2015. UPL Tanzania has been
supporting small farmers who are totally dependent on Sunflower farming for their
existence.
The Annual Report on CSR activities is annexed to this report as
"Annexure 1".
VIGIL MECHANISM / WHISTLEBLOWER POLICY
The Company has in place whistleblower policy to deal with any fraud,
irregularity, or mismanagement in the Company. The Company has posted this policy on its
website and the link is https:// www.uplonline.com/policies-compliances-announcements.
The Chairman of the Audit Committee oversees this policy. As per the
policy, any employee or director can directly communicate with the Chairman of the Audit
Committee to report any actual/ suspected fraud or non-compliance.
In earlier year, the Company made all efforts to create awareness among
the employees about the Policy. The Company also made all efforts to create awareness
about the policy among the employees, who have joined during the year. The policy ensures
complete protection and no victimization or discrimination to the whistleblower. Total
confidentiality of the proceedings of the policy is maintained.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company has implemented a policy as required under the Sexual
Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 and
the Rules framed thereunder. This policy covers all women-permanent, temporary or
contractual workers. The policy is very strictly enforced by the Company. The Policy is
communicated to all the employees by placing it on the website of the Company and all the
employees have confirmed their abidance.
During the year, the workshops were arranged, conducted by an esteemed
agency, to educate the employees, who have joined during the year, across the Company to
uphold dignity of their colleagues at the workplace and prevent sexual harassment.
An internal committee, consisting of mainly women staff and one woman
from an NGO, is formed to attend and redress complaints relating to sexual harassment. At
each unit of the Company, subcommittees are formed to receive any such complaints and
address and redress the same, in consultation with the main committee.
Strict implementation of the policy is to ensure women staff to work
with dignity in a safe environment free from sexual harassment at the workplace and
provide equality in working conditions. During the year, the Company has not received any
complaint of sexual harassment.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has robust systems for internal audit, risk assessment and
mitigation and has an independent Internal Audit Department with well-established internal
control and risk management processes both at the business and corporate levels.
Internal Audit function plays a key role in providing to both the
operating management and to the Audit Committee of the Board, an objective view and
re-assurance of the overall internal control systems and effectiveness of the Risk
Management processes and the status of compliances with operating systems, internal
policies and regulatory requirements across the company including its subsidiaries.
Internal Audit also assesses opportunities for improvement in business processes, systems
and controls and provides recommendations designed to add value to the operations.
The scope and authority of the Internal Audit Department is derived
from the Annual Audit Plan approved by the Audit Committee at the beginning of the year.
Internal Audits are performed by an in-house team of qualified professionals on the basis
of comprehensive risk-based audit plan. Every quarter, the Audit Committee is presented
with key internal controls issues/audit observations and action taken update on the
internal controls issues/audit observations highlighted in the previous Audit Committee
presentations.
Internal Controls over Financial Reporting:
Exercise for evaluating the adequacy of Internal Financial Controls and
their Operating Effectiveness is carried out every year. This activity includes
understanding and testing of Internal Financial Controls and evaluating their operating
effectiveness based on the assessed risk factors. During the year, the effectiveness of
the controls was validated. No reportable material weaknesses in design and effectiveness
was observed.
From time to time, the Company's systems of internal controls
covering financial, operational, compliance, IT applications, etc. are reviewed by
external experts too. Presentations are made to the Audit Committee on the findings of
such reviews.
RISK MANAGEMENT FRAMEWORK
The Company has a robust Risk Management Framework to identify and
evaluate various business risks faced by the Company. Pursuant to Regulation 21 of the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Risk
Management Committee is appointed, consisting of three Executive/Promoter Directors of the
Company. Regular Committee meetings are held every quarter. Inputs are taken from senior
executives and thereafter various risks are identified and mitigating plans are developed
to resolve such risks.
Some of the key business risks viz., Industry Risks, R&D Risk,
Currency Fluctuation Risk and their mitigation plans were included in the Directors'
Report of 2016-17. Some of the additional key business risks identified during the year
and their mitigation plans are as under:
Liquidity Risks: The Company requires very sound base of working
capital. During the off-season the Company cannot afford to have huge inventory and
receivables as this will result into delayed payment to the creditors. It is very
important that the Company enjoys a fair amount of liquidity of funds. Liquidity risks
could impact the debt repayment capabilities of the Company and thereby the Company's
name in the market will be affected. To mitigate this risk, the Company's business
enjoys adequate liquidity. It has a very comfortable debt equity position. The Company is
earning cash profit of more than H 2500 crores. The working capital management is also
very sound and at present the Company's net working capital stands at 90 days of
turnover. Considering all this, the Company does not expect liquidity to be a major
concern.
HR Risks: The Company has a huge workforce. Globally it employs around
5000 people who are from diverse nationalities, geographies and varied culture. The
function of HR therefore becomes very important. A poor HR policy could impact
productivity and profitability of the Company. To mitigate this risk, the present HR
strategy has fostered cross functional coordination across all countries. Even though
large number of workforce is employed in different countries they all follow the same
corporate culture of the Company. The senior management team is visiting various plants
and offices of the Company regularly and relations at all these places is very cordial and
tension free. In fact, the Company is certified as a "Great Place to Work" in
India as well as in Brazil. The Company will continue to put in more efforts and see that
HR functions are carried out properly and professionally.
Cyber Security Risks: In the hyper connected world the Company has
provided its employees mobiles, laptops and tablets to enable them to perform their
functions effectively. However there are lots of security threats to the data of the
Company and the confidential data may go to unauthorized persons by way of hacking of
mobile, laptops and tablets. It is pointed out there is no such thing as perfect
protection. The bigger the organization and more complex in nature, it becomes a target
for data security risks. It is necessary to provide for preventive measures to ensure
lower risks, early detection of risks and cost effective data security systems. The goal
is to build a sustainable cyber security program that governs protection and ensures
enablement to employees and others in right proportion. To mitigate this risk, the control
measures taken by the Company include continuous monitoring of data security systems,
providing access only to required staff, security incidents and event monitoring and
prevention of loss of data. Continuous risk assessment and monitoring is necessary. The
various layered security controls have been established.
Recently there have been cyber threats all over the world. Ransomware
had affected some of the global organizations, however there was no impact on the Company.
This was because of the mitigating steps taken by the Company such as blocking vulnerable
ports and services, communicating throughout the organization by sending awareness mailers
etc.
Reputation Risks: Due to a large organization set up and employing many
people across the globe as also non-observance of the policies and pre-determined
procedures and SOPs can result at times into risk of damage to the reputation of the
Company. The Company deals with various stakeholders and if they are not attended properly
and are not provided with quality products and services, Company's image will get
spoilt. If suppliers are not paid in time or the employees who are leaving the
organization do not get their dues in time the Company suffers the risk of reputation. To
mitigate this risk, the finance department and the HR department take care to see that the
suppliers are paid in time and all government dues are cleared on time. The collection are
made in time and there is no overtrading. All the employees of the Company are required to
sign integrity policy when they join. This ensures that there are no chances of corruption
or favoritism against any employee. The Company follows this policy diligently. The
Company's share department along with Registrar and Transfer Agents ensure that
quality services are provided to the shareholders and all their genuine complaints are
attended properly.
The Company carries out lots of social activities, contributes to
various NGO's and educates the farmers continuously. The Company is conscious of the
fact about the negative image of the Agro Chemical industry in the society and to
safeguard the interest of the Company the Company takes various awareness measures and
makes timely representations to various authorities. The Company ensures that all its
products are of the right quality. The Company ensures that at all plants there is no
pollution and environment protection assurance is the top most priority. If required, the
Company legally fights against some motivated NGO's to see that there are no false
allegations against the Company and its reputation does not get damaged.
SUBSIDIARY COMPANIES / ASSOCIATE COMPANIES Shro_s United Chemicals
Limited:
This is engaged in trading activities in a very limited way.
SWAL Corporation Limited:
SWAL Corporation limited is engaged in distribution and marketing of
agro chemical formulations and organic fertilizers in India. The Sales Turnover for the
year is H 666 Cr and the Profit before tax is H 44 Cr.
Optima Farm Solutions Ltd:
Optima farm solutions ltd is engaged in the manufacture of
agrochemicals in Jammu. The Company has made sales of H 174 Cr in the current year.
UPL Europe Ltd.:
UPL Europe is engaged in the production and distribution of
Agrochemicals in UK & Europe. The company has a formulation production site at
Sandbach, UK and a sales office at Warrington, UK. The Turnover for the year ended 31st
March 2018 is H 866 Cr and the Profit before tax is H 67 Cr.
UPL Deutschland GmbH:
UPL Deutschland GmbH is engaged in the distribution of formulated
products in Germany & Austria. The Turnover for the year is H 331 Cr and the Profit
before tax is H 10 Cr.
UPL Polska Sp z o o:
UPL Polska is engaged in the sales and marketing of formulated products
in Poland. The business in this Company has been on a very low scale.
UPL Benelux B.V.:
UPL Benelux BV is engaged in the distribution of formulated products in
Benelux and Switzerland. The Turnover for the year is H 336 Cr and the Profit before tax
is H 23 Cr.
Cerexagri B.V. – Netherlands:
Cerexagri BV is a manufacturing entity specializing in EBDC based
fungicides. It has a technical and formulation facility based in Rotterdam. The Sales
Turnover for the year ended 31st March 2018 is H 975 Cr and the Profit before tax is H 27
Cr.
Blue star BV:
Blue Star BV is the Holding company for Neo Fog SA.
United Phosphorus Holdings Cooperatief U.A.:
United Phosphorus Holdings Cooperatief U.A. is the holding company for
United Phosphorus Holdings B V Netherlands.
United Phosphorus Holdings B.V, Netherlands:
United Phosphorus Holdings BV is the holding company for entities in
Europe & Rest of the world.
United Phosphorus Switzerland Limited:
United Phosphorus Switzerland is providing management services and
holding investments and registrations for the Company's products.
Decco Worldwide Post-Harvest Holdings Cooperatief U.A.:
Decca Worldwide Post-harvest Holdings Coperatief UA is the holding
company for Decco Worldwide Post-Harvest Holdings BV.
United Phosphorus Holding, Brazil B.V. (Formerly known as Regentstreet
B.V.):
United Phosphorus Holdings Cooperatief U.A. is the holding company in
Brazil.
UPL Italia S.R.L.:
UPL Italia S.R.L is engaged in the distribution of formulated products
in Italy. The Turnover is H 329 Cr and the Profit before tax for the year ended 31st March
2018 is H 14 Cr.
UPL IBERIA, SOCIEDAD ANONIMA:
UPL Iberia is engaged in the distribution of formulated products in
Spain & Portugal. The Turnover is H 145 Cr and the Profit before tax is H 7 Cr.
Decco Worldwide Post-Harvest Holdings B.V.:
This is the holding company for other Decco entities, and holds
registrations for these entities.
Transterra Invest, S. L. U. Spain:
Transterra Invest, S L is the holding company for group entities in
Spain and Latin America.
Cerexagri S.A.S. :
Cerexagri SAS is a supply chain company for the group with 3 key
production facilities in France involved in the production of Copper & Sulphur based
fungicides. It has a formulation facility at Bassens to formulate herbicides and
insecticides. The Sales Turnover for the year ended 31st March 2018 is H 451 Cr and the
Profit before tax is H 27 Cr.
Neo-Fog S.A.:
Neo-Fog S.A is engaged in the distribution of Anti-sprouting herbicides
in the French domestic market. The Turnover for the year ended 31st March 2018 is H 38 Cr
and the Profit before tax is H 6 Cr.
UPL France:
UPL France SAS is engaged in the distribution of formulated products in
France. Products are sourced from UPL's manufacturing facilities in Europe and India, as
well as locally formulated in toll manufacturing facilities. The Turnover is H 403 Cr and
the Profit before tax is H 32 Cr.
UPL Corporation Limited, Mauritius:
UPL Corporation does trading business and also holds investments for
the group. The Turnover is H 2386 Cr and the Profit before tax is H 197 Cr.
Decco Iberica Postcosecha, S.A.U., Spain:
Decco Iberica is involved in fabrication & commercialization of
chemical products, waxes & fungicides, as well as the machinery used for their
application. The Turnover is H 117 Cr and the Profit before tax is H 15 Cr.
Limited Liability Company UPL:
Limited Liability Company UPL is engaged in the distribution of
technical and formulated products in Russia and other CIS countries. The Turnover for the
year ended 31st March 2018 is H 28 Cr and the Profit before tax is H 2 Cr.
United Phosphorus Inc., U.S.A.:
United Phosphorus Inc is engaged in the distribution of AI's as well as
formulated products in the United States and Canada. UPI also provides technologies for
pest management, aquatics, Turf & Ornamental as well as fumigants for grain storage.
The Turnover is H 2,883 Cr and the Profit before tax is H 55 Cr.
Canegrass:
Canegrass is Company for the distribution of Asulam (Sugarcane
Herbicide) in the USA.
RiceCo LLC:
RiceCo LLC is dedicated to meet specific technology needs of rice
farmers in the USA. Its turnover during the year is H 242 Cr and Profit before tax is H 11
Cr.
Decco US Post Harvest Inc, USA:
Decco US Post Harvest Inc is engaged in the production and selling of
post harvest products and fumigants for use in the treatment of fresh agricultural
produce. It has manufacturing facilities in Monrovia, CA and Yakima WA. Turnover for the
year is H 247 Cr and Profit Before Tax is H 8 Cr.
RiceCo International, Inc. Bahamas:
RiceCo International is a rice focused company operating mainly in Asia
and Latin America. The Turnover for the year is H 249 Cr and the Profit before tax is H 29
Cr.
UPL Limited, MAURITIUS:
UPL Mauritius does Trading business. The Turnover for the year is H 960
Cr and the Profit before tax is H 306 Cr.
UPL LIMITED, Gibraltar:
UPL Limited Gibraltar does Trading operations. The Turnover for the
year is H 2969 Cr and the Profit before tax is H 299 Cr.
United Phosphorus Cayman Limited:
United Phosphorus Cayman Ltd, is a holding Company. The Turnover for
the year is H 300 Cr and the Profit before tax is H 8 Cr.
UPL Agro SA DE CV:
UPL Agro SA DE CV is engaged in sales and marketing of branded
formulations in Mexico. This entity received the ESR award on parameters of business
ethics, environment and community engagement. The Turnover for the year is H 436 Cr and
the Profit before tax for the year is H – 3 Cr.
Decco Jifkins Mexico Sapi:
Decco Jifkins Mexico, SAPI De CV is primarily engaged in purchase,
sale, distribution and import of goods and service in post harvest for fruits and
vegetables in Mexico. The Turnover for the year is H 9 Cr. and the Profit before tax for
the year is H – 2.
Uniphos Industria e Comercio de Produtos Quimicos Ltda:
This is a holding company of UPL Do Brasil-Industria e Comercio de
Insumos Agropecuarios S.A..
UPL Do Brasil - Industria e Comrcio de Insumos Agropecurios S.A.:
United Phosphorus do Brazil Ltda has a strong distribution network in
Brazil for its AI's as well as formulated sales. It is located in Campinas and also has a
manufacturing facility in Ituverava. The Sales Turnover for the year is H 3,594 Cr and the
Profit before tax for the year is H 52 Cr.
UPL Costa Rica S.A.:
UPL Costa Rica SA is engaged in marketing and distribution of Agro
chemicals in Costa Rica. It also provides value added services such as contract spraying.
The Turnover for the year is H 330 Cr and the Profit before tax for the year is H -10 Cr.
UPL Bolivia S.R.L:
UPL Bolivia is engaged in the sales and marketing of agro chemicals in
Bolivia. The Turnover for the year is H 37 Cr and the Profit before tax for the year is H
5 Cr.
Icona Sanluis S A – Argentina:
Icona Sanluis SA is a manufacturing and marketing company for selling
formulated products in Argentina. It has a manufacturing plant in San Luis, Argentina. The
Turnover for the year is H Nil and the Profit before tax for the year is H -4 Cr.
DVA Technology Argentina S.A.:
DVA Technology Argentina holds registrations in Argentina.
UPL Argentina S A:
The company is a manufacturing and marketing company for selling
formulated products in Argentina. It has a manufacturing facility in Abott, Argentina. The
Turnover for the year is H 393 Cr and the Profit before tax for the year is H -90 Cr.
Decco Chile SpA:
Decco Chile SpA provides post harvest solutions to maintain the quality
of fresh fruits and vegetables. The Turnover for the year is H 44 Cr and the Profit before
tax for the year is H 8 Cr.
UPL Colombia SAS:
UPL Colombia is engaged in sales and marketing of agro chemicals for
the Andean markets - Venezuela, Ecuador, Peru and Colombia. The Turnover for the year is H
143 Cr and the Profit before tax for the year is H -10 Cr.
UP Aviation Limited, Cayman Island:
UP Aviation Ltd owns the aircraft for Business purposes.
UPL Management DMCC:
UPL Management DMCC provides management services. The Turnover for the
year is H 96 Cr and the Profit before tax for the year is H 26 Cr.
UPL Australia Limited:
UPL Australia is engaged in sales and marketing of branded agro
chemicals in Australia. It holds the registrations as well as inventory for prompt supply
of material to service local demand. The Turnover for the year is H 143 Cr and the Profit
before tax for the year is H 10 Cr.
UPL New Zealand Limited:
UPL New Zealand is engaged in distribution of Agro Chemicals in New
Zealand. It holds the registrations as well as inventory for prompt supply of material to
service local demand. The Turnover for the year is H 7 Cr and the Profit before tax for
the year is H 1 Cr.
UPL Shanghai Ltd:
UPL Shanghai is engaged in distribution of Company's products in
China. It has purchased office in Shanghai and is engaged in purchase of actives and
intermediates required by manufacturing facilities globally.
UPL Limited Korea:
UPL Korea was formed to grow UPL's agro chemical and fumigation
business in Korea. The Turnover for the year is H 3 Cr and the Profit before tax for the
year is H 1 Cr.
PT.UPL Indonesia:
UPL Indonesia is doing business in Indonesia. It mainly caters to the
requirements of strategic partners like Nufarm, FMC ad other top local companies as well
as semi-government organization. The Turnover for the year is H 87 Cr and the Profit
before tax for the year is H 6 Cr.
PT Catur Agrodaya Mandiri, Indonesia:
The major business is branding and distribution of formulated products
through a network of distributors in Indonesia. The company holds 50 plus registrations
and has successfully commercialized most of these. The Turnover for the year is H 49 Cr
and the Profit before tax for the year is H -2 Cr.
UPL Limited, Hong Kong:
UPL Hong Kong is engaged in the sales and marketing of agro chemicals
in Hong Kong. It also acts as a supply source of raw material purchases of the
manufacturing facilities. The Turnover 31st March 2018 is H 555 Cr and the Profit before
tax is H 21 Cr.
UPL Philippines Inc.:
UPL Philippines is engaged in the distribution of agro chemicals in
Philippines. It holds registrations and inventory for servicing domestic demand. It also
provides value added services to plantation business in Philippines. The Turnover is H 93
Cr and the Profit before tax is H 1 Cr.
UPL Vietnam Co. Ltd.:
UPL Vietnam is engaged in the manufacturing and marketing of branded
agro chemical formulations in Vietnam. It also exports its production to Australia, South
East Asia and few African countries as well, other than catering to local demand.The
Turnover is H 185 Cr and the Profit before tax is H 27 Cr.
UPL Limited, Japan:
This entity is for registering and selling UPL products in Japan. The
local presence in Japan has boosted access to Japanese technology and expertise, and built
relations with other Japanese companies. UPL Japan sells both AI's as well as branded
products which are formulated and repacked locally. It has a JV with Hodogaya Chemical Co
Ltd with headquarters in Tokyo and research laboratory center at Tsukuba. The Turnover is
H 196 Cr and the Profit before tax is H 3 Cr.
Anning Decco Fine Chemical Co. Limited, China:
Anning Decco is a joint venture in China. The company is engaged in the
production and distribution of Shellac. The Turnover for the year is H 23 Cr and the
Profit before tax is H Nil.
UPL Ziraat Ve Kimya Sanayi Ve Ticaret Limited Sirketi:
The Company has a strong distribution network as well as brand presence
in Turkey (mainly western region). The Turnover is H 157 Cr and the Profit before tax is H
-20 Cr.
UPL Agromed Tohumculuk Sa,Turkey:
UPL Agromed has a strong marketing presence in the eastern part of
Turkey. It also has a manufacturing and repacking facility in Turkey. The Turnover is H
110 Cr and the Profit before tax is H -4 Cr.
Safepack Products Limited, Israel:
Safepack is engaged in the production and distribution of Post-Harvest
Products in Israel and export to neighboring countries. The Turnover is H 36 Cr and the
Profit before tax is H -4 Cr.
Citrashine (Pty) Ltd, South Africa:
Citrashine is engaged in the manufacturing and distribution of
chemicals and waxes for the post harvest treatment of fruits and vegetables and operates
primarily in South Africa. The Turnover is H 32 Cr and the Profit before tax is H -1 Cr.
Decco Portugal Post Harvest, Unipessoal LDA (formerly known as UPL
Portugal Unipessoal LDA):
Decco Portugal Unipessoal LDA is a new entity which will start
operations shortly.
Decco Italia SRL, Italy:
Decco Italia SRL is engaged in the production and selling of
post-harvest products and fumigants for use in the treatment of fresh agricultural
produce. The Turnover is H 43 Cr and the Profit before tax is H 5 Cr.
UPL Paraguay S.A.:
UPL Paraguay is engaged in the sales and marketing of agro chemicals in
Paraguay. The Turnover is H 29 Cr and the Profit before tax is H -5 Cr.
UPL Africa SARL:
UPL Africa is established for sales in African region. It holds
registration for sales in CILSS countries in Africa.
Advanta Seeds International, Mauritius:
Advanta Seeds International is engaged in distribution and marketing of
seeds in the various countries. The Sales Turnover for the year is H 697 Cr and the Profit
before tax is H 75 Cr.
Advanta Seeds DMCC (formerly known as Advanta Seeds JLT):
Advanta Seeds DMCC is engaged in distribution and marketing of seeds in
the UAE. The Sales Turnover for the year is H 34 Cr and the Profit before tax is H -9 Cr.
PT Advanta Seeds, Indonesia:
PT Advanta Seeds is engaged in distribution and marketing of field Corn
and Sweet Corn seeds in Indonesia. The Sales Turnover for the year is H 70 Cr and the
Profit before tax is H 16 Cr.
Advanta Holdings B.V., Netherlands:
Advanta Holdings B.V. is engaged in distribution and marketing of seeds
in Europe. The Sales Turnover for the year is H Nil and the Profit before tax is H -17 Cr.
Advanta Semillas SAIC:
Advanta Semillas is engaged in distribution and marketing of Sorghum
corn sunflower seeds in Argentina. The Sales Turnover for the year is H 193 Cr and the
Profit before tax is H -37 Cr
Advanta Netherlands Holding B.V.:
Advanta Netherlands Holding B.V. is engaged in distribution and
marketing of and research and technical solutions to farmers & breeders into seeds in
the Netherlands and Europe. The Sales Turnover for the year is H 32 Cr and the Profit
before tax is H -6 Cr,
Paci_c Seeds Holdings (Thailand) Limited:
Pacific Seeds Holdings is holding Company. The Profit before tax is H
Nil, largely contributed by other income.
Paci_c Seeds (Thai) Limited:
Pacific Seeds (Thai) is engaged in distribution and marketing of seeds
in Thailand. The Sales Turnover for the year is H 360 Cr and the Profit before tax is H
110 Cr
Advanta Comercio De Sementas Ltda.:
Advanta Comercio is engaged in distribution and marketing of Sorghum
Soyabean Canola Corn seeds in Brazil. The Sales Turnover for the year is H 89 Cr and the
Profit before tax is H-92 Cr.
Advanta Seeds Pty Ltd (Formerly, Paci_c Seeds Pty Ltd):
Advanta Seeds Pty Ltd is engaged in distribution and marketing of
Sorghum, Corn and Canola seeds in Australia. The Sales Turnover for the year is H 253 Cr
and the Profit before tax is H 23 Cr.
Advanta US LLC (formerly known as Advanta US Inc):
Advanta US LLC is engaged in distribution and marketing of Hybrids of
Corn, forage sorghum,Grain sorghum seeds in the US and Mexico. The Sales Turnover for the
year is H 137 Cr and the Profit before tax is H -57 Cr.
Details of companies which have become or ceased to be its
subsidiaries, joint ventures or associate companies during the year:
a) New subsidiaries:
1. UPL Jiangsu Limited
2. UPL Agro Limited Mauritius
3. Riceco International Bangladesh Ltd
4. Uniphos Malaysia Sdn Bhd
b) New associate:
1. Serra Bonita Sementes S.A.
c) Cessation of subsidiaries:
1. UPL Africa SARL
2. UPL Limited Mauritius
MATERIAL SUBSIDIARY
The Company does not have any material subsidiary as per the parameters
laid down by the Companies Act, 2013.
RELATED PARTY TRANSACTIONS
All Related Party Transactions entered into during the year were on
arm's length basis and were in the ordinary course of business. There are no
materially significant related party transactions made by the Company with Promoters,
Directors, Key Managerial Personnel or other designated persons which may have a potential
conflict with the interest of the Company at large.
All Related Party Transactions are approved by the Audit Committee.
Prior omnibus approval is obtained from the Audit Committee in respect of the transactions
which are repetitive in nature. The transactions entered into pursuant to the omnibus
approval so granted are reviewed on a quarterly basis by the audit committee.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company's website. The same can be accessed on
https://www.uplonline.com/ policies-compliances-announcements.
INSURANCE
All the properties and operations of the Company have been adequately
insured.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material order passed by the Regulators or
Courts.
AUDITORS
a) Statutory Auditors
At the 33rd Annual General Meeting of the Company held on 8th July,
2017, the Members of the Company have approved the appointment of B S R & Co. LLP,
Chartered Accountants (ICAI Firm Registration Number 101248W/W-100022) as the Statutory
Auditors of the Company pursuant to Section 139 of the Companies Act, 2013 for a term of 5
(five) years from the Company's financial year 2017-18, to hold office from the
conclusion of 33rd Annual General Meeting of the Company (subject to ratification of their
appointment at every Annual General Meeting, if required under the Act).
However, pursuant to the Companies Amendment Act, 2017 which was
notified on May 7, 2018, the provision related to ratification of appointment of auditors
by Members at every Annual General Meeting has been done away with.
The report of the Statutory Auditors along with the Notes to Schedules
forms part of the Annual Report and contains an Unmodified Opinion without any
qualification, reservation or adverse remark.
b) Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The
Companies (Cost Records and Audit) Amendment Rules, 2014, the cost account records
maintained by the Company are required to be audited. Your Directors had, on the
recommendation of the Audit Committee, appointed Messrs RA & Co., Cost Accountants to
audit the cost accounts of the Company for the financial year 2018-19 on a remuneration of
H 7.00 lakhs. The Cost Auditors have submitted a certificate of their eligibility for such
appointment. As required under the Companies Act, 2013, the remuneration payable to the
cost auditor is required to be placed before the Members in a general meeting for their
ratification. Accordingly, a Resolution seeking Member's ratification for the
remuneration payable to Messrs RA & Co., Cost Auditors is included at Item No. 5 of
the Notice convening the Annual General Meeting.
For the year 2017-18, the due date for filing the Cost Audit Report is
27th September, 2018 and the same will be filed in due course. The Cost Audit Report for
the year 2016-17 was filed on 28th August, 2017.
c) Secretarial Auditors
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 has appointed Messrs N.L. Bhatia & Associates, a
firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company.
The Secretarial Audit Report is annexed herewith as "Annexure 2".
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified
under section 143 (12) of the Companies Act, 2013.
DEPOSITORY SYSTEM
98.91% of the total paid-up equity shares of the Company are
dematerialised as on 31st March, 2018.
DIRECTORS
In accordance with the provisions of section 152 of the Companies Act,
2013, and Articles of Association of the Company, Mr. Vikram Rajnikant Shroff (DIN:
00191472) and Mr. Arun Chandrasen Ashar (DIN: 00192088), Directors of the Company, retire
by rotation at the forthcoming Annual General Meeting of the Company and being eligible,
offer themselves for re-appointment.
The earlier appointments of Mr. Rajnikant Devidas Shroff (DIN:
00180810) as Chairman and Managing Director of the Company and Mr. Arun Chandrasen Ashar
(DIN: 00192088) as Whole-time Director designated as Director-Finance expire on 30th
September, 2018. The Board of Directors has re-appointed Mr. Rajnikant Devidas Shroff
(DIN: 00180810) as Managing Director and Mr. Arun Chandrasen Ashar (DIN: 00192088) as
Whole-time Director designated as Director-Finance for further period of 5 (five) years,
with effect from 1st October, 2018 and subject to the approval of the Members and upon the
terms and conditions as set out in the notice convening the 34th Annual General Meeting of
the Company.
The special resolutions seeking approval of the Members of the Company
for the re-appointment of Mr. Rajnikant Devidas Shroff and Mr. Arun Chandrasen Ashar have
been incorporated in the notice of the 34th Annual General Meeting of the Company along
with brief details about them.
The information of Directors seeking re-appointment as required
pursuant to Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is provided in the notice convening the Annual General Meeting of the
Company.
During the year, Mr. Pradip Madhavji (DIN: 00549826), Independent
Director has resigned from the Board of Directors of the Company with effect from 27th
April, 2018 for personal reasons. During his tenure, he was Lead Independent Director and
was Chairman of Audit Committee and Stakeholders Relationship Committee. The Board wishes
to place on record its appreciation for his valuable advice and efficient discharge of his
duties during the period of almost last fifteen years. The Company acknowledges his
pragmatic approach and immense contribution in handling various issues diligently.
All the independent directors have given declaration that they meet the
criteria of independence laid down under the Companies Act, 2013 and SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
EVALUATION OF THE BOARD'S PERFORMANCE
Pursuant to the provisions of the Companies Act, 2013 and Regulations
17 (10) and 25(4)(a) of the Listing Regulations, the evaluation process for performance of
the Board, various committees and directors was carried out. Each director was provided a
questionnaire to be filled up, providing feedback on the overall functioning of the Board
and the committees. The questionnaire covered various parameters such as composition,
execution of specific duties, quality and timeliness of flow of information, discussions
and deliberations of different items of agenda, independence of judgments, etc. The
directors were also asked to provide their suggestions for areas of improvement to ensure
higher degree of engagement with the management.
Evaluation of individual director was also carried out and parameters
such as contribution, attendance, expertise, decision making and other related factors
were considered in this exercise.
The Independent Directors held a meeting on 25th January, 2018 to
review the performance of evaluation of the Non-independent/Non-promoter Directors and the
entire Board including the Chairman. The Independent Directors expressed complete
satisfaction of the professionally managed overall functioning of the Board, various
committees as well as all the directors of the Company. They appreciated the knowledge and
expertise of the Chairman and his exemplary leadership qualities which demonstrate
positive attributes in following the highest standards of corporate values and culture of
the Company.
REMUNERATION POLICY
The Board has on the recommendation of the Nomination and Remuneration
Committee framed and adopted the Policy for selection and appointment of directors, senior
management and their remuneration. The Board recognizes that the various Committees of the
Board have very important role to play to ensure highest standards of corporate
governance. The Chairman of the Board and other Executive Directors form broad policies
and ensure their implementation in the best interests of the Company.
The Criteria for selection of directors and senior management are
mainly qualifications, experience, integrity, independence of the directors, etc.
The remuneration to Non-executive Directors consists of sitting fees
for attending Board/Committee meetings, commission and other reimbursements. As per the
approval given by the members, the said commission shall not exceed 1% of the net profits
of the Company. All the Non-executive, Non-Promoter Directors are paid commission on
uniform basis. The Independent directors are not entitled to any stock options under the
Stock Option Scheme of the Company.
The remuneration to the Managing Director and other Executive Directors
consist of monthly salary, allowances, perquisites, commission and other retirement
benefits. The remuneration payable to them is subject to the approval of the members of
the Company. The overall managerial remuneration payable to them shall not exceed 10% of
the net profits of the Company.
In respect of senior management, the remuneration is based on the
performance, company's performance, targets achieved, industry benchmark and
compensation trends in the industry. Their remuneration consists of monthly salary, bonus,
perquisites, KPI and other retirement benefits.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
Pursuant to the SEBI regulations the Company has worked out a
Familiarization programme for the Independent Directors, with a view to familiarize them
with their role, rights and responsibilities in the Company, nature of Industry in which
the Company operates, business model of the Company, etc.
Through the Familiarization programme, the Company apprises the
independent directors about the business model, corporate strategy, business plans and
operations of the Company. These directors are also informed about the financial
performance, annual budgets, internal control system, statutory compliances etc. They are
also familiarized with Company's vision, core values, ethics and corporate governance
practices.
At the time of appointment of independent director, a formal letter of
appointment is given to him, which explains his role, responsibility and rights in the
Company.
Subsequently they are appraised of the Company's policies on CSR,
nomination and remuneration, plant safety, HR, succession policy for directors and senior
management. They are updated with global business scenario, marketing strategies,
legislative changes etc. Factory visits are arranged to appraise them of various
operational and safety aspects of the plants to get complete understanding of the
activities of the Company. Eminent personalities are invited to educate the independent
directors about the latest happenings relevant to the duties, rights and responsibilities
of the independent directors.
Details of Familiarization programme of Independent Directors with the
Company are available on the website of the Company https:// www.uplonline.com/
policies-compliances-announcements.
PERSONNEL
As on 31st March, 2018, the Company has 3865 employees in India, and
4784 employees globally.
The Company has always believed that its people are its biggest asset.
The year 2017-18 saw several key initiatives to nurture on our core values.
The initiatives taken during the year
1. SUPPLY CHAIN ACADEMY
The Supply Chain Academy launched in the year 2016 saw a tremendous
response. Total 1263 employees were covered under this training initiative where the
employees were given training in Safety, Skill Upgradation and other behaviour aspects.
2. SAKSHAM PRPJECT
Saksham Project launched for conducting Development Centres for the
Sales Workforce. 497 employees. The aim was to impart Functional and Technical
Competencies to the Sales Workforce and building capability
3. GLOBAL LEADERSHIP PROGRAM
Global Leadership Program – Winning in the Market Place launched
for the Global Leaders who have potential to grow along with the organization. The aim is
to enable identified individuals to unlock their full potential and be effective leaders
and contribute in building the strategy.
PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act,
2013 read with Rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are given in the Annexures 3 and 4 hereunder and forms
part of this Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The particulars relating to energy conservation, technology absorption,
foreign exchange earnings and outgo, as required to be disclosed under sections 134(3)(m)
of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are
provided in Annexure 5 to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, the 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
year ended 31st March, 2018, the applicable accounting standards have been followed
alongwith proper explanation relating to material departures, if any.
the Company till such time they remain in the unclaimed suspense
account as aforesaid.
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 2017-18 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 Company's Annual Report. They are also put up on the website
of the Company https:// www.uplonline.com/upl-financial-reports.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as "Annexure 6".
LISTING OF THE COMPANY'S EQUITY SHARES
The equity shares of your Company are listed on the BSE Ltd. and
National Stock Exchange of India Ltd. There is no default in paying annual listing fees.
ACKNOWLEDGEMENT
Your Directors are thankful to all the stakeholders and various
government agencies and ministries for their continued support.
CAUTIONARY STATEMENT
Statements in the Director's Report and the Management Discussion
and Analysis describing the Company's 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 Company's 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.
| Mumbai |
On behalf of the Board of Directors |
| 27th April, 2018 |
|
| Registered O_ce: |
|
| 3-11, G.I.D.C., Vapi |
Rajnikant Devidas Shro_ |
| Dist. Valsad, Gujarat |
Chairman & Managing Director |
| Pin: 396195. |
(DIN: 00180810) |
  Â