UPL Ltd
Directors Reports
Dear Members,
Your Directors have pleasure in presenting their report and audited financial
statements (consolidated and standalone) for the year ended March 31, 2020.
FINANCIAL RESULTS
Rs in crore
| Particulars |
Consolidated |
Standalone |
|
2019-20 |
2018-19 |
2019-20 |
2108-19 |
| Total Income |
35,860 |
22,077 |
10,147 |
9,220 |
| Earnings before interest, tax, depreciation, amortisation, exceptional, prior period
adjustments and minority interest |
6,877 |
4,053 |
1,711 |
1,399 |
| Depreciation/amortisation |
2,012 |
880 |
891 |
724 |
| Finance Cost |
1,481 |
963 |
272 |
185 |
| Exceptional items |
623 |
451 |
10 |
4 |
| Profit/(Loss) from Associates |
3 |
14 |
- |
- |
| Profit before tax |
2,764 |
1,773 |
538 |
486 |
| Provision for taxation |
|
|
|
|
| Current tax |
759 |
442 |
55 |
83 |
| Adjustments of tax relating to earlier years |
8 |
(4) |
- |
(3) |
| Deferred tax |
(181) |
(240) |
22 |
1 |
| Profit after tax |
2,178 |
1,575 |
461 |
405 |
| Minority interest |
402 |
84 |
- |
- |
| Net profit for the year |
1,776 |
1,491 |
461 |
405 |
DIVIDEND
Your Directors have recommended dividend of 300% i.e. Rs 6/- per equity share of
Rs 2/- each for the financial year ended March 31, 2020, which if approved at the
forthcoming Annual General Meeting ("AGM"), will be paid to all those equity
shareholders of the Company whose name appear in the Register of Members and whose name
appear as beneficial owners as per the beneficiary list furnished for the purpose by
National Securities Depository Limited and Central Depository Services (India) Limited.
The total dividend pay-out will amount to approx. Rs 458 crore resulting in pay-out of
99.41% on standalone profit after tax of the Company and 25.79% on consolidated profit
after tax of the Company.
The dividend recommended is in line with the dividend distribution policy of the
Company. The policy is available on the website of the Company under Investors section at
https://www.upl-ltd.com/investors.
OPERATIONAL PERFORMANCE
FY2020 was a significant year for the Group as it was celebrating its 50th
anniversary year and also completed integration for the landmark Arysta acquisition.
The Company reported strong financial and operating performance for FY2020. During the
year, consolidated revenue from operations grew by 13% to Rs 35,756 crore from Rs 31,616
crore and EBITDA increased by 18% to Rs 7,452 crore from Rs 6,312 crore in FY2019. The
EBITDA margin stood at 21% in FY2020 (20% in FY2019). For details of financial performance
please refer to Management Discussion and Analysis Report. The region-wise highlights of
FY2020 were as under:
• The Company witnessed 24% growth in terms of revenue in Latin America. The
Company achieved 4th position in Brazil and first position in Mexico and
Columbia. The customers are awarding UPL higher shares of wallet after integration. The
Company has a complete portfolio in this region in soy, corn, sugarcane and cotton which
are driving sales.
• The Company witnessed 13% growth in terms of revenue in North America
despite floods driving market decline. The Company shared growth in major product lines
and a strong growth in Canada, thanks to synergies in combined portfolio. The China-USA
tariff war was a tailwind to UPL by helping customers hedge risk.
• In Europe, dry conditions and forex impacted revenue by 7% year-on-year. The
dry-hot weather conditions impacted crop yields in western and eastern Europe.
• In India, the revenue on a consolidated basis grew by 11% in FY2020 over
FY2019. There was a growth in Herbicide volumes driven by Glufosinate. Also, ProNutiva
package solution and service offering helped to create better value for farmers.
• As regards rest of the world, revenue grew by 12% with gains in South East Asia
and Japan. There were synergies in Japan thanks to broader customer base and partnerships.
There was strong business growth in South East Asia, thanks to return of rains and
synergies. The gain was slightly offset by adverse impact from forex in Africa and
drought/wild fire in Australia.
COMPLETION OF INTEGRATION OF ARYSTA
In FY18-19, the Company through its subsidiary UPL Corporation Limited in Mauritius had
acquired Arysta LifeScience for USD 4.2 billion. Integration of Arysta was achieved ahead
of the target. The integration will go a long way in achieving the synergy in the form of
(i) Optimising manufacturing footprint;
(ii) Increasing procurement efficiency;
(iii) Insourcing R&D activities to boost efficiency and expanded bandwidth to
access new technology;
(iv) Consolidation into one shared IT platform and reduction of IT infrastructure cost
and
(v) Consolidation of support functions.
In terms of revenue, the major levers were (i) Complementary portfolios (solution
selling) which enabled meeting grower/channel needs through complimentary AI portfolio and
access to new crops with a broader base of generic and proprietary products; and (ii)
Cross sell through expanded geographic reach which held both companies to expand sales by
leveraging each other's complementary geographic presence
Further detailed analysis of the performance and operations of the Company in FY19-20
and future outlook have been covered in the Management Discussion and
Analysis Report and other sections of the Annual Report.
COVID-19 PANDEMIC RESPONSE
We as an entity do not operate in isolation, rather we are inextricably linked to the
society we live in. Our success is also dependent on how well we respond to needs of
society in times of crisis. The COVID-19 crisis is one of the toughest challenges the
world has ever faced.
As a responsible organisation, we are doing our bit for India's COVID-19 pandemic
response. The Company contributed Rs 75 crore to PM-CARES Fund, Rs 1 crore to Mumbai
Police Foundation assisting the Government to fight against COVID-19. The Company is also
continuously providing large numbers of masks, personal protection equipment (PPE) units
to help with the safety of India's frontline heroes in healthcare and sanitisation who are
relentlessly fighting the battle against novel corona virus.
The Company has provided more than 9,000 litres of hand sanitiser free of cost to the
agencies across cities involved in fight against India's COVID-19 pandemic response.
The Company also provided approx. 54 lac litres of Sodium Hypochlorite (1% solution) to
sanitise various municipalities, government offices, villages etc. The Company also
sanitised streets, hospitals, police stations through UPL's Falcon sprayers covering
various states.
Similar social initiatives were also undertaken at our international operations both
directly and also in collaboration with local associations covering various regions -
Brazil, Mexico, Cuba, Colombia, Europe, North America, Canada, Vietnam, Cambodia, Ivory
Coast and Costa Rica. Examples of some initiatives included distribution of medical
supplies, food packets, sanitisers, masks and PPE's, 24 hours helplines, conducting
awareness and educational programs etc.
FINANCE
(a) Deposits
During FY2020, the Company did not accept any deposit within the meaning of Chapter V
of the Companies Act, 2013.
(b) Particulars of Loans, Guarantees or Investments
The details of Loans, Guarantees or Investments are given in the notes no. 5,6 and 36
to the standalone financial statement.
(c) Changes in Paid-up Share Capital
During the year, the Company issued and allotted shares in the following manner:
(i) 25,46,71,335 fully paid up equity shares of Rs 2 each were issued as Bonus shares.
(ii) 31,451 equity shares of Rs 2 each were issued to Employees under Employee Stock
Option Plan of the Company.
The equity shares issued during the year rank pari-passu with the existing
equity shares of the Company.
The paid-up share capital of the Company as at March 31, 2020 was 76,40,45,456 equity
shares of face value Rs 2/- each.
(d) The Company do not propose to transfer any amount to the reserves as provision
for proposed dividend.
EMPLOYEE STOCK OPTION PLANS
The Company has two active Employee Stock Option Plans ("Advanta ESOP Plans")
as at March 31, 2020 viz. Advanta India Limited Employees Stock Option and Shares Plan
2006 and Advanta Employee Stock Option Plan 2013. During the year, the Company closed the
UPL Limited Employee Stock Option Plan 2017 ("ESOP 2017") as there was no plan
to make any further grants under ESOP 2017 and the option grantees communicated their
intention not to participate in ESOP 2017 in future. All the plans are administered by the
Nomination and Remuneration Committee of the Board.
There were no changes in the ESOP Plans during the financial year under review. The
ESOP Plans are in compliance with the Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 [SEBI (SBEB) Regulations, 2014]. In compliance with
the same, a certificate from auditor, confirming implementation of ESOP Plans in
accordance with the said regulations and shareholder's resolution, will be placed at the
ensuing AGM of the Company.
The requisite disclosures under the SEBI (SBEB) Regulations, 2014 as on March 31, 2020
are uploaded on the Company's website under Investors section. Details of the ESOP Plans
have also been provided in the notes to the standalone financial statement.
SAFETY AND ENVIRONMENT
"Doing things Safer is Doing things Better" is the mantra as part of our
operating philosophy and business continuity. Safety and well-being of everyone working
for and on behalf of the Company continues to be of top priority for the Company.
Following significant success of the "Safety First" initiative last year
which was largely shop floor engagement driven, your extended the same with inclusion of
process safety, focusing on the design aspects of the processes, activity-based risk
assessments of all manual operations, in order to enhance its overall safety performance
and take it to the next level and to meet UPL vision of "Being Best in Class"
by making "Safety a way of Life".
We also believe that the dynamic natural environment presents both opportunities and
challenges to our business. We have developed strategies to ensure the resilience of our
operations to current and upcoming environmental risks. While effective management is
imperative, we strongly believe that the global transition to a more sustainable future
provides immense opportunities to our business. Aligned to our legacy, we are constantly
working to reduce our environmental footprint and find innovative product solutions that
benefit the society. Given our innovation driven growth strategy we envision to deliver
inventive and novel products for the global food system in a manner that is sensitive to
the current global environmental landscape and the needs of the future generations.
This year your Company has released its third Sustainability
Report as per GRI standards. Some of major achievement in this year are summarised
below:
• 61% Dow Jones Sustainability Index (DJSI) score improved in FY2020
compared to FY2019.
• Scored higher international sustainability rating (DJSI & FTSE) in
all three dimension (environment, social & governance) from industry average.
• Achieved Zero Liquid Discharge in 60% of our operating plants globally.
• Harvested and recycled approximately 440 tankers rain water in our
operating plants Unit 0, 1, 2 & 4.
• Obtained environmental clearances (ECs) from MoEF&CC to enhance
production capacity 4 times for our operating plants Unit 0, 1, 2 & 10.
• Implemented FO Technology as first among chemical companies in the world
to treat high TDS & high COD wastewater in Unit 1, Ankleshwar.
• Implemented Stream Identification & Segregation for better wastewater
management & treatment.
• Reduced 7.64% specific water consumption, reduced 7.32% specific carbon
emissions and reduced 2.7% specific wastewater generation as compared to last year.
• 17% energy comes from renewable sources in our largest two manufacturing plants.
At UPL, 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.
Our major future sustainability initiatives by 2025 are summarised below:
1. Reduce 30% environmental footprint from baseline 2019-20. has
2. Source 80% raw material from sustainable sources.
3. Zero dependency on tanker & ground water.
4. Enhancing world food security.
RESEARCH AND DEVELOPMENT
The Company has multiple Research and Development Centres which are in almost all the
continents. These centres play a very crucial role in accomplishing the Company's mission
of manufacturing and supplying crop risk protection and specialty chemicals to the
end users worldwide.
Qualified and talented scientific personnel and state-of-the-art facilities at the
Research and Development Centres are the biggest assets for the Company. The centres are
dedicated to the development of products and processes that are cost-effective and
environmentally friendly keeping in mind the affordability and safety of the end user.
The products and processes developed by the Research and Development Centres are based
on the principles of Green Chemistry and Atom Economy amongst others.
The products and the processes are rigorously evaluated for hazard and safety at all
the stages of development.
To combat the pest in the world, and for effective pest management, Research and
Development Centres develop innovative combination products. The developed products are
tested for chemical properties, toxicity, impurity profile, bio-efficacy, residue and
packaging and so on. The required data is generated at Research and Development Centres
and then get the products tested at GLP laboratory to generate the data for submission to
the regulatory authority of the country.
Specialty Chemicals and Industrial Chemicals are areas in which the Company has planned
to come up in a big way. For this, Research and Development Centres are developing the
processes which are industrially viable and safe at the large-scale production.
The Company is committed to creation of Intellectual Property (IP) for the innovative
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. At the same time, IP of others is respected.
CORPORATE SOCIAL RESPONSIBILITY
At UPL, we believe in all-inclusive and sustainable growth of society. This philosophy
has always been the guiding force in all our community interventions. Not only all our CSR
initiatives are determined with the trust that humankind is one community, where each
member is responsible for the wellbeing of the other, but also our core businesses are all
about connecting with people, in a human way, showing respect, demonstrating trust,
celebrating diversity, favoring warmth over cool. We see the value in human connectivity
and how it creates new opportunities for everyone.
At present, two core UPL values "Always Human" and "Open
Hearts" are guiding force of our CSR initiatives. Hence our interventions are not
restricted to the development of our neighboring communities only, as we work on
initiatives that cater to the wider national interest.
Our commitment and interventions cater all the segment of the society and have been
classified in 4 focus areas viz. (a) Institution of excellence; (b) Sustainable
Livelihood; (c) Nature Conservation and (d) Local and National Need.
UPL's CSR initiatives are being undertaken in 11 countries (including India) and
implementing and supporting more than 80 development interventions benefiting more than 70
communities across continents.
• 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 Colombia continued to give its important contribution in the program
"Education for Competitiveness", in alliance with the National Federation of
Coffee Growers, acting through the Committee of Coffee Growers of the Department of Caldas
in Colombia.
• UPL Argentina has established Social Security office at plant for every neighbor
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 Kenya is working with Mr. Patric Kilonzo Mwalua Wildlife Trust for
Conservation of wildlife at Tsavo West National Park by minimising man-animal conflict
through promotion of Sunflower Farming in a sustainable, ecologically responsible way
• UPL Belgium works with charities in the Liege region. Also works with
neighborhood children's association for the St Nicolas party.
• UPL UK had the Sandbach anniversary at the local cricket club, they had the
inflatable assault course and zorbs on site.
• UPL Cote d'Ivoire started project on improving cardiovascular health outcomes in
rural Cote d'Ivoire" (Ivory coast) with Dr. David Lulu/The Heart Fund and Kenya.
• UPL has signed a MOU with Oxford India Centre for Sustainable Development
(OICSD) at Somerville College, University of Oxford to UPL Sustainability Fund
For separate report on Corporate Social Responsibility, please refer to the section
‘Social Initiatives' in the annual report.
VIGIL MECHANISM/WHISTLE-BLOWER POLICY
The Company has always strived to conduct its business fairly, ethically and with
integrity. In line with this belief, the Company has in place a robust whistle-blower
policy to deal with any fraud, irregularity, or mismanagement in the Company. This Policy
is in addition to the Company's Global Code of Conduct which also empowers its
stakeholders to make protected disclosures through the reporting channels consisting of
designated e-mail address, hotline and customised web-portal, details of which are
prescribed under the Policy and the Code.
The Chairman of the Audit Committee oversees the whistle-blower policy. The Audit
Committee on a quarterly basis is presented an update on the whistle-blower 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 at the designated
e-mail address - whistleblower@upl-ltd.com.
On a regular basis, the Company undertakes all efforts to create awareness among the
employees about the Policy including the new joinees during the year. The Policy ensures
complete protection to the whistle-blower and follows a zero tolerance approach to
retaliation or unfair treatment against the whistle-blower and all others who report any
concern under this Policy. Total confidentiality of the proceedings of the policy is also
maintained.
The policy is available on the website of the Company under Investors section at
https://www.upl-ltd.com/investors. The Policy was revamped during the year and made more
robust to include the best practices around the globe.
PREVENTION OF SEXUAL HARASSMENT (POSH) OF WOMEN AT THE WORKPLACE
The Company is committed in creating and maintaining a secure and safe work environment
that enables its employees, agents, vendors and partners to work free from unwelcome,
offensive and discriminatory sexual behavior and without fear of prejudice, gender bias
and sexual harassment. In order to deal with sexual harassment at workplace, the Company
has implemented a gender-neutral policy Prevention and Redress of Sexual Harassment Policy
("Policy").
The Policy applies to all those employed and associated with UPL and its subsidiaries
irrespective of whether they are regular, temporary, ad hoc or daily wage basis employees.
The Policy also covers all contract workers, consultants, retainers, probationers,
trainees, and apprentices or called by any other such name engaged by us whether the terms
of their employment are expressed or implied.
A knowledgeable and experienced Internal Compliant Committee comprising mainly of women
and an unbiased third party is currently functional to attend and redress complaints that
arise under this Policy. Further, there are sub committees at unit locations to ensure
strict adherence of this policy and make a workplace free from biases and prejudices. The
Committee has not received any formal complaint during FY2020.
All employees are mandated to attend a classroom training and confirm their adherence
to the rules. During FY2020, a total of 532 employees were trained on POSH workshop
conducted by Company's external partners and 4547 employees acknowledged to comply with
the POSH policy.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate system of internal controls. The Company has adopted
policies and procedures covering all financial and operating functions. These controls
have been designed to provide a reasonable assurance over:
• Accuracy and completeness of the accounting records
• Compliance with applicable laws and regulations
• Effectiveness and efficiency of operations
• Prevention and detection of frauds and errors
• Safeguarding of assets from unauthorised use or losses
The Company has an in-house Internal Audit department with a team of qualified
professionals. The internal audit department prepares an annual audit plan based on risk
assessment and conducts extensive reviews covering financial, operational and compliance
controls. Improvements in processes are identified during reviews and communicated to the
management on an ongoing basis. The Audit Committee of the Board monitors the performance
of the internal audit team on a periodic basis through review of audit plans, audit
findings and issue resolution through follow-ups. Each year, there are at least four
meetings in which the Audit Committee reviews internal audit findings.
Internal Audit function plays a key role in providing to both the management and to the
Audit Committee, 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 CONTROLS OVER FINANCIAL REPORTING
The Company's management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria.
Essential components of internal controls are followed as stated in the Guidance Note on
Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India.
The Company has developed and implemented a Risk & Control Framework to ensure
internal controls over financial reporting. This framework includes testing and monitoring
over entity level controls, process level controls and IT general controls. The entity
level controls include testing and monitoring of compliance to business policies. The
process level controls include a risk control matrix for monitoring key business
processes. The IT general controls include monitoring of the overall IT environment,
computer operations and access to programs and data.
On a periodic basis testing of entity level controls, process level controls and IT
general controls is carried out and status of testing of controls is presented to the
Audit Committee. During the year, controls were tested and no reportable material
weaknesses in design and effectiveness were observed.
RISK MANAGEMENT FRAMEWORK
The Company has instituted strong risk management processes as part of its risk
management framework. This involves a detailed exercise in terms of identifying the
critical risks, assessing them on the basis of probability of occurrence and severity of
impact. This is followed by formulating appropriate plans to mitigate these risks. This
also enables the management to identify if any such risks can be translated into business
opportunities.
Pursuant to Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, a Risk Management Committee is constituted consisting of three
directors of the Company. The Committee reviews findings of the risk management exercise
and effectiveness of mitigation plans put in place. It also seeks feedback from senior
executives across different functions and business regions which aids it in identifying,
monitoring and managing the critical risks. There is continuous monitoring by the
Committee to ensure that mitigation plans are effective in addressing such risks as and
when they arise.
Some of the key risks identified in the past are adverse weather, competition, currency
fluctuation, liquidity, supply chain, business continuity, cybersecurity, R&D, HR and
Regulatory.
For more details on the risks and their mitigation plan, please refer to Management
Discussion and Analysis report in this annual report.
The policy is available on the website of the Company under Investors section at
https://www.upl-ltd.com/investors.
SUBSIDIARY COMPANIES/ASSOCIATE
COMPANIES
The Company has a number of subsidiary companies and associates, spread across the
globe. Crop protection product companies need local registrations to enable them to sell
their products in different countries in the world. These registrations are granted by
local government body of each country to a local entity established in that country.
As on March 31, 2020, the Company had 225 subsidiaries across the globe. Most of these
overseas subsidiaries and associate companies are marketing arms and their main activity
is confined to marketing by servicing their local market with greater efficiency and
ensuring timely availability of different products of the Company.
Some other entities are holding companies which hold investments in other group
entities.
The details of essential parameters of each subsidiary/ associate company like share
capital, assets, liabilities, turnover, profits before and after tax are given separately
under the Statement of AOC-1 Form forming part of the Annual Report.
The companies which were newly added or ceased to be subsidiaries/joint
ventures/associates during the year are as follows:
| Industrias Bioquim Centroamericana, Sociedad Anonima |
Costa Rica |
| Procultivos, Sociedad Anonim |
Costa Rica |
| Inversiones Lapislazuli Marino, Sociedad Anonima |
Costa Rica |
| Bioquim, Sociedad Anonima |
Costa Rica |
| Bioquim Panama, Sociedad Anonima |
Panama |
| Bionic Nicaragua, Sociedad Anonima |
Nicaragua |
| Biochemisch Dominicana, Sociedad De Responsabilidad Limitada |
Dominican Republic |
| Nutriquim De Guatemala, Sociedad Anonima |
Guatemala |
| UPL Agro Ltd |
Hong Kong |
| UPL Portugal Unipessoal, Ltda. |
Portugal |
| UPL Services LLC |
USA |
| United Phosphorus Holdings Uk Ltd |
U.K. |
| AFS Agtech Pvt. Limited |
India |
| Natural Plant Protection Limited |
India |
| Cessations during the year |
|
| UPL Deutschland GmbH(Formerly Known as United Phosphorus GMBH - Germany) |
Germany |
| Arysta LifeScience France SAS |
France |
| Arysta Lifescience Italia SrL |
Italy |
| Arysta LifeScience do Brasil Industria Quimica e Agropecuaria SA |
Brazil |
| Arysta LifeScience Europe Sarl |
France |
| Goemar Developpement SAS |
France |
| Netherlands Agricultural Technologies CV |
Netherlands |
| Dutch Agricultural Formations CV |
Netherlands |
| Agriphar de Costa Rica SA |
Costa Rica |
| Agriphar de Colombia SAS |
Colombia |
| Kempton Chemicals (Pty) Ltd |
South Africa |
| Arysta LifeScience Ecuador S.A. |
Ecuador |
| Volcano Agrociencia Industria e Comercio de Defensivos Agricolas Ltda |
Brazil |
MATERIAL SUBSIDIARY
As on March 31, 2020, the Company has 7 (seven) unlisted material subsidiaries as per
the parameters laid down under SEBI Listing Regulations, which include Anesa S.A., Arysta
Lifescience U.K. Brl Limited, Arysta Lifescience Global Limited, UPL Corporation Limited,
UPL Limited, Gibraltar, UPL Do Brasil - Industria E Comercio De Insumos Agropecuarios S.A.
and UPL NA Inc. None of these subsidiaries have sold, disposed offor leased assets of more
than 20% of its assets during the current year.
DEALING WITH SECURITIES WHICH HAVE REMAINED UNCLAIMED
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, after following the prescribed procedure will dematerialise
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. All the shares with respect to which
dividend remains unclaimed for seven consecutive years, such shares and dividend thereon
on those shares shall be transferred to the IEPF Authority as prescribed by the Ministry
of Corporate Affairs.
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. Accordingly, the disclosure of related party transactions in Form AOC-2
is not applicable.
Prior omnibus approval of the Audit Committee is obtained for related party
transactions which are repetitive in nature and in case such transactions exceed the
limits approved through the omnibus approval, the transactions are subsequently ratified.
The transactions entered into pursuant to the omnibus approval so granted are reviewed on
a quarterly basis by the Audit Committee.
Detailed disclosure on related party transactions as per Ind AS-24 containing name of
the related party and details of the transactions entered with such related party have
been provided under Notes to financial statements
Disclosure on related party transactions on half year basis is also submitted to the
stock exchanges.
The policy on related party transactions as approved by the Board is available on the
website of the Company under Investors section at https://www.upl-ltd.com/investors.
INSURANCE
All the properties and operations of the Company, to its best judgement have been
adequately insured.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There is no significant and material order passed by the Regulators or Courts which
impacts the Company's ability to continue as a going concern.
AUDITORS
a) Statutory Auditor
At the 33rd Annual General Meeting of the Company held on July 8, 2017, the Members of
the Company appointed B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration
Number 101248W/W-100022) as the Statutory Auditor 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. They will hold office till the conclusion of 38th Annual General
Meeting ("AGM") of the Company. The statutory auditor has confirmed that they
are not disqualified from continuing as auditor of the Company.
There are no instances of any fraud reported by the statutory auditor to the Audit
Committee or the Board pursuant to section 143(12) of the Act. The Auditor's Report on
standalone and consolidated financial statements forms part of the Annual Report and
contains an Unmodified Opinion without qualification, reservation or adverse remark.
b) Cost Auditor
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. The Board on the recommendation of the Audit
Committee, has appointed M/s. RA & Co., Cost Accountants to audit the cost accounts of
the Company for the financial year 2020-21 on remuneration of Rs 8.5 lakh. The
Company has received a certificate of eligibility from the cost auditor for the
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
ratification.
Accordingly, a resolution seeking Member's ratification for the remuneration payable to
M/s. RA & Co., Cost Auditor is included in the Notice convening the AGM.
The Cost Audit Report for the financial year 2018-19 was filed with the Ministry of
Corporate Affairs on August 27, 2019. The Cost Audit Report for the financial year 2019-20
will be filed before the due date.
c) Secretarial Auditor
Pursuant to section 204 of the Companies Act, 2013 and The Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. N. L.
Bhatia & Associates, a firm of Company Secretaries in Practice to conduct secretarial
audit for the financial year 2019-20. The Report of the Secretarial Auditor is annexed to
this report. The report of the Secretarial Auditor for the financial year 2019-20 is
unmodified and does not contain any qualification, reservation or adverse remark.
The Board has re-appointed M/s. N. L. Bhatia & Associates to conduct the
secretarial audit for the financial year 2020-21. They have confirmed their eligibility
for the appointment.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of section 152 of the Companies Act, 2013 ("the
Act") and Articles of Association of the Company, Mrs. Sandra Shroff (DIN: 00189012)
Director of the Company, retires by rotation at the forthcoming AGM of the Company and
being eligible has offered herself for re-appointment. In terms of provisions of
Regulation 17(1)(A) of SEBI Listing Regulations, special resolution has been proposed for
approval of members.
During the year, the Board of Directors appointed Ms. Usha Rao Monari (DIN:
0008652684) as an Additional Director (Non-Executive & Independent) on the
recommendation of the Nomination and Remuneration Committee effective December 27, 2019 to
hold office till the conclusion of the ensuing 36th AGM and as an Independent
Director for a term of 5 (five) consecutive years effective December 27, 2019, subject to
approval of the members at the ensuing AGM.
The first term of 5 (five) years of Mr. Hardeep Singh (DIN: 00088096) as an Independent
Director of the Company concluded on February 1, 2020. The Board of Directors, on the
recommendation of the Nomination and Remuneration Committee and based on the performance
evaluation, appointed Mr. Hardeep Singh as an Additional Director (Non-Executive &
Independent) effective February 2, 2020 for the second term of 5 (five) aconsecutive years
effective February 2, 2020, subject to approval of the members in the ensuing AGM.
Further, the Board of Directors also seeks re-appointment of Dr. Vasant Gandhi (DIN:
00008370), whose first term of 5 (five) years as Independent Director expires on November
22, 2020. Based on the recommendation of the Nomination and Remuneration Committee and the
performance evaluation, the Board proposes reappointment for further period of 5 (five)
consecutive years, effective November 23, 2020, subject to approval of the members at the
ensuing AGM.
The information of Directors seeking appointment/ re-appointment as required pursuant
to Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 ("SEBI Listing Regulations") and the Secretarial Standard on General
Meetings issued by The Institute of Company Secretaries of India, is provided in the
notice convening the 36th AGM of the Company.
All the independent directors of the Company as on March 31, 2020 have given
requisite declaration stating that they meet the criteria of independence laid down under
section 149(6) of the Companies Act, 2013 and Regulation 16(b) of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015. In the opinion of the Board,
there has been no change in the circumstances which may affect their status as independent
directors of the Company and the Board is satisfied of the integrity, expertise, and
experience (including proficiency terms of Section 150(1) of the Act and applicable rules
thereunder) of all Independent Directors on the Board. In terms of Section 150 read with
Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014,
Independent Directors of the Company have undertaken requisite steps towards the inclusion
of their names in the data bank of Independent Directors maintained with the Indian
Institute of Corporate Affairs.
During the year, Mr. Mukul B. Trivedi, superannuated from his position of Company
Secretary & Compliance Officer with effect from November 7, 2019. Mr. Sandeep Deshmukh
was appointed as Company Secretary & Compliance Officer of the Company with effect
from November 8, 2019.
As on March 31, 2020, the Company had the following Key Managerial Personnel as per
section 2(51) of the Act:
1. Mr. Rajnikant Shroff Chairman and Managing Director
2. Mr. Arun Ashar Whole-time Director
3. Mr. Anand Vora Global Chief Financial Officer
4. Mr. Sandeep Deshmukh Company Secretary and Compliance Officer
Evaluation of Board's Performance
Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations,
the evaluation process for performance of the Board, its various committees, individual
directors and the Chairman of the Board and respective Committees was carried out during
the year. Each director was provided a questionnaire to be filled up providing feedback on
the overall functioning of the Board, its Committees and contribution of individual
directors. The questionnaire covered various parameters such as structure of the
Board/Committees, board meeting practices, overall board effectiveness,
attendance/participation of directors in the meetings, etc. The directors were also asked
to provide their suggestions for areas of improvement to ensure higher degree of
engagement with the management.
The Independent Directors during the year, completed evaluation of
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.
The respective Committees and the Board also discussed the report of performance
evaluation and agreed to take requisite steps to implement the suggestions.
Committees of Board, Number of Meetings of the Board and Board Committees
The Board currently has six committees, namely, Audit Committee, Nomination and
Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders
Relationship Committee, Risk Management Committee and the Finance and Operations
Committee. All the recommendations made by the Committees of Board including the Audit
Committee were accepted by the Board.
The Board met four times during the year under review. The maximum gap between two
Board meetings did not exceed 120 days. A detailed update on the Board, its Committees,
its composition, terms of reference of various Board Committees, number of board and
committee meetings held and attendance of the directors at each meeting is provided in the
Report on Corporate Governance.
Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination and Remuneration Committee framed
and adopted the Nomination and Remuneration Policy for selection, appointment and removal
of directors, senior management, key managerial personnel (KMP) including their
remuneration. The Board recognises that 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 Directors form broad policies and ensure their implementation in
the best interests of the Company.
The criteria for selection of directors, senior management and KMP are mainly
qualifications, experience, expertise, 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 Plans
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 their performance,
Company's performance, individual targets achieved, industry benchmark and compensation
trends in the industry. Their remuneration consists of monthly salary, bonus, perquisites,
KPI and other retirement benefits.
The Nomination and Remuneration Policy is available on the website of the Company under
Investors section at https://www.upl-ltd.com/investors.
Familiarisation Programme for Independent Directors
Pursuant to the SEBI Listing Regulations, the Company has devised a familiarisation
programme for the Independent Directors, with a view to familiarise them with their role,
rights and responsibilities in the Company, nature of the industry in which the Company
operates, business model of the Company, etc.
Through the familiarisation 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 familiarised
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 them, which explains their role, responsibility and rights in the Company.
Subsequently they are apprised 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 apprise them of various operational and safety aspects
of the plants to get complete understanding of the activities of the Company.
Details of familiarisation programme of Independent Directors are available on the
website of the Company under Investors section at https://www.upl-ltd.com/investors.
HUMAN RESOURCES
The Company continuously strives to be the best globally in all the domains of its
operations. The Company believes that the core foundation of this vision is its employees.
The HR strategy is committed to creating an engaging workforce and an inspirational
leadership that continuously powers this vision. With Arysta acquisition, there was a
bigger task to merge the culture and drive standard vision across. With OpenAg as the new
vision, HR made sure that the communication of our new vision reaches with an impact to
the last level.
As on March 31, 2020, the Company (including . subsidiaries) had 5,922 employees in
India and 11,524 employees globally.
Key initiative on HR front: Launching "my UPL"
The Company has been investing in world class HRIS tool Success Factors. The tool was
implemented to bring the entire integrated organisation on one HR Platform. The manpower
for 68 countries was brought on the single platform to provide a standard employee
experience. This will help in robust process workflows implementation.
With the implementation of myUPL platform it helped in focusing on the goals and target
achievements.
Launching of mid-year appraisals and completing the mid-year feedback to achieve the
goals has been helpful in creating a performance-based culture. This resulted in
completing the entire annual appraisals cycle in myUPL followed by the compensation module
implementation to achieve performance calibration and budgets online.
Role Based Organisation
The integrated organisation has made newer and bolder commitments to all stakeholders.
To fulfill the same, UPL launched Global Job Levels across to build a role-based
organisation. Every employee being mapped based on role being handled keeping in view the
size, geography and targets.
Learning
Learning has always been the focus for the organisation to improve performance of the
employees including behavior and new product trainings. HR has been organising both
regional and global trainings to make sure that the employees' competence are up to the
required levels.
Way Forward
a) Role based competencies
Institutionalising role-based system by creating role based competencies and training
interventions which will help employees in role migrations and providing opportunities for
growth.
b) Talent Management
Utilisation of the force and energy of the millennials, launching of Young Leaders
Program and building talent by providing interventions to succeed in a well defined
framework. This would pave way for the young talent to learn, implement and grow on an
accelerated basis. Succession Planning process will be further streamlined this year.
c) HR Process Outsourcing
To outsource the non-core areas and concentration on the core diligently will be the
key focus area for the year. This will bring in more standardisation of process and quick
turn around time with cost efficiencies.
d) Culture
Culture continues to be the focus area for the year as the vision of the organisation
requires a regular imbibement across different regions, geography and people. A good
culture can deliver the required results.
e) New work systems
With Covid 19 pandemic spread, the way the business is run has changed. With a big
focus on the safety of the employees, different methods to keep the employees engaged,
connected and perform becomes the key to the success of the organisation. Creation and
execution of the framework involves developing new work systems in the new reality.
PARTICULARS OF EMPLOYEES
Details of remuneration as required under section 197(12) of the Act read with rule
5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
is annexed to this Report.
Particulars of employee remuneration as required under section 197(12) of the Act read
with rule 5(2) and rule 5(3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 forms part of this report. In terms of the provisions of section
136 of the Act, the Annual Report is being sent to members excluding the aforementioned
information. Any member interested in obtaining such information may write to the Company
Secretary of the Company.
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 section 134(3) (m) of the
Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are
provided in Annexure 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 March
31, 2020, the applicable accounting standards have been followed alongwith proper
explanation relating to material departures, if any.
b) That such accounting policies as mentioned in the Notes to the financial statements
have been selected and applied consistently and judgement and estimates have been made
that are reasonable and prudent so as to give a true and fair view of the state of affairs
of the Company as at March, 2020 and of the profit of the Company for the year ended on
that date.
c) That proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities.
d) That the annual financial statements have been prepared on a going concern basis.
e) That proper internal financial controls were in place and that the financial
controls were adequate and 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, MD&A AND BRR
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 Regulations. A certificate from B S R & Co. LLP, Chartered Accountants
confirming compliance of conditions of Corporate Governance as stipulated under the SEBI
Listing Regulations is part of this Annual Report.
The Management Discussions and Analysis Report and Business Responsibility Report forms
part of the Annual Report as required under the SEBI Listing Regulations.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has 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.
CONSOLIDATED FINANCIAL STATEMENT
Consolidated financial statement are prepared for the year 2019-20 in compliance with
the provisions of the Companies Act, applicable accounting standards and as prescribed
under the SEBI Listing Regulations. The consolidated statement 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 Auditor's Report thereon
form part of the Company's Annual Report.
ANNUAL RETURN
Pursuant to 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/investors.
EVENTS AFTER BALANCE SHEET DATE
There have been 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
to which the balance sheet relates and the date of this Report.
ACKNOWLEDGEMENT
The Board of Directors wish to place on record its deep sense of appreciation for the
committed services by all the employees of the Company. The Board of Directors would also
like to express their sincere appreciation for the assistance and co-operation received
from the financial institutions, banks, Government of various countries where the Company
has operations, Government authorities, customers, vendors and members during the year
under review.
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.
|
On behalf of the Board of Directors |
|
Rajnikant Shroff |
| Mumbai |
Chairman & Managing Director |
| May 22, 2020 |
(DIN: 00180810) |
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