UPL Ltd
Directors Reports
Dear Members,
Your Directors have the pleasure of presenting a report on the business
performance and the audited consolidated and standalone financial statements of your
Company ("the Company" or "UPL") for the financial year ended March
31, 2022.
| FINANCIAL RESULTS |
|
|
|
|
|
|
|
|
Rs in crores |
| Particulars |
Consolidated |
Standalone |
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Total Income |
46,521 |
38,952 |
17,080 |
11,458 |
| EBITDA |
10,165 |
8,559 |
2,688 |
1,733 |
| Depreciation/amortisation |
2,359 |
2,173 |
1,044 |
977 |
| Finance Cost |
2,295 |
2,060 |
377 |
307 |
| Exceptional items |
324 |
238 |
6 |
15 |
| Profit / (Loss) from Associates |
134 |
42 |
- |
- |
| Profit before tax |
4,966 |
4,181 |
1,261 |
434 |
| Provision for taxation: |
|
|
|
|
| Current tax |
1,096 |
831 |
220 |
195 |
| Deferred tax |
(567) |
(145) |
(135) |
19 |
| Profit after tax |
4,437 |
3,495 |
1,176 |
220 |
| Minority interest |
811 |
624 |
- |
- |
| Net profit for the year |
3,626 |
2,871 |
1,176 |
220 |
OPERATIONAL PERFORMANCE
UPL is focused on facilitating progress for the entire agricultural
value chain. We are building a network that redefines the way an entire industry thinks
and works open to fresh ideas, innovative ways and new answers as we strive towards our
mission to make every single food product more sustainable.
FY 2022 was a year of challenging macro-environment, input cost
inflationary pressures and supply chain disruptions. Inspite of difficult conditions, we
registered strong performance during the year. UPL's consolidated revenue from
operations increased by ~19% to Rs46,240 crores from Rs38,694 crores in FY 2021. EBITDA
increased by 19% to Rs10,165 crores from Rs8,559 crores in FY 2021. The net profit also
witnessed a growth of 26% toRs3,626 crores from Rs2,871 crores in FY 2021. For more
details of the financial performance please refer to the Management Discussion and
Analysis Report.
We have launched nurture.farm, a platform to provide technology-led
solutions to farmers with over 1.4 billion farmers on board in India. The program provides
crop solutions and advisory services, farm mechanisation services, social support
services, insurance and medical support and also educates farmers on sustainable
agricultural practices that are normally inaccessible to small holder farmers.
We have been able to significantly outperform the guidance given at the
start of the year, with nearly every region seeing double-digit growth while we continue
to prudently invest towards ensuring reliable growth going forward. The region-wise
performance for FY2022 was as under:
Latin America
Owing to solid pricing, new product launches and strength of our
herbicide portfolio, the Latin American region grew by 21% year on year. The growth was
majorly driven by Brazil, primarily in herbicides and insecticides.
North America
Herbicides led by glufosinate products and a strong growth in
insecticides helped in marking a strong year with 37% growth. Better commodity prices,
tight supply and favorable channel stock further supported the growth.
Europe
Europe saw an increase of 7% in FY 2022 which was led by fungicides,
herbicides and NPP BioSolutions, despite significant losses due to product bans and
Russia-Ukraine conflict since February 2022.
India
The Indian region saw a strong growth as we grew year on year by 22%.
The revenue increase was driven by herbicides and new product launches including ShenziR,
TriskeleR and TrishukR. The Company achieved robust growth despite adverse market
conditions. The growth was also supported by overall favourable commodity prices for cash
crops, pulses and oilseeds.
Rest of the World
Despite the supply chain constraints, the rest of the world region
witnessed a growth of ~11%. The growth was majorly driven by fungicides, herbicides and
insecticides.
DIVIDEND
The Board has recommended a dividend of 500% i.e. Rs10/- per equity
share of Rs2/- each for the financial year ended March 31, 2022, which if approved at the
forthcoming Annual General Meeting (“AGM”), will be paid to all those equity
shareholders of the Company whose names appear in the Register of Members 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.
The total dividend pay-out will amount to approx. Rs759 crores (including tax). The
dividend recommended is in line with the dividend distribution policy of the Company and
the policy is available on the website of the Company at
https://www.upl-ltd.com/investors/corporate-governance/ policies. History of dividends
declared by the Company since FY 2004 (i.e. since demerger) is available on the website of
the Company at https://www.upl-ltd.com/investors/ shareholder-center/dividend-history.
FINANCE a) Deposits
During FY2022, 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 note
nos. 5, 6 and 32 to the standalone financial statement.
c) Changes in Paid-up Share Capital, Buyback and GDR
During the year, no new equity shares were issued and allotted. The
paid-up share capital of the Company as at March 31, 2022 was 1,52,80,90,912/- comprising
of 76,40,45,456 equity shares of face value of 2/- each. On December 23, 2021, the Company
admitted its GDR programme (listed on Singapore Stock Exchange) for trading on the
International Order Book (IOB), London Stock Exchange's electronic trading platform
for Global Depositary Receipts.
The Members of the Company at the Extra-ordinary General Meeting held
on March 30, 2022 approved buyback of equity shares of the Company at a price not
exceeding Rs875/- per equity share for an aggregate amount not exceeding Rs1,100 crores by
way of ‘Open Market' through the Stock Exchanges. The details of buy back are
available on the website of the Company on the following link https://www.upl-ltd.com/
investors/shareholder-center/buy-back.
d) Transfer to Reserves:
The Company does not propose to transfer any amount to the reserves.
LISTING OF COMMERCIAL PAPERS
The Company has issued Commercial Papers amounting to 4,150 crores
during FY 2021-22. All the Commercial Papers were listed on National Stock Exchange of
India Limited. The Company has not defaulted on any of its dues to the financial lenders.
The borrowings are rated by CRISIL & CARE. The details of ratings
are provided in the Corporate Governance Report which forms a part of this report.
ENVIRONMENT AND SUSTAINABILITY
At UPL, we create value in a responsible manner, supported by our
sustainability strategy. The conservation and responsible use of natural resources is not
just one of our sustainability objectives, but also represents an essential business
imperative. We consistently strive to align our business activities to global
sustainability goals and targets, mitigating environmental risks and enabling positive
environmental impact.
Some of the major achievements of this year are summarized below:
1. UPL included in Dow Jones Sustainability Year Book 2022.
2. ESG rating agency from Netherlands “Sustainalytics” rated
UPL No. 1 among all agro-chemical companies globally.
3. Scored higher international sustainability rating (DJSI, FTSE &
Sustainalytics) in all three dimension (environment, social & governance) from
industry average.
4. Implemented Stream Identification & Segregation for better
wastewater management & treatment.
5. UPL has taken steps towards achieving Zero Liquid Discharge (ZLD)
for its two more manufacturing plants (PL-00 Vapi and PL-01 Ankleshwar) for recycling and
reuse of wastewater.
A. International Sustainability Rating
1.1. Dow Jones Sustainability Indices (DJSI):
UPL DJSI rating has improved 214% in last 5-years. UPL scored higher
rating in all three dimension from industry average. UPL scored highest in environmental
dimension out of three dimensions i.e. Economic, Environmental & Social.
1.2. FTSE Russell ESG Rating:
UPL's FTSE score in 2020-21 was 3.6 out of 5 which is 112%
improvement in last 5-years. UPL was awarded and listed in FTSE 4 Good Index for strong
environmental, social and governance practices which were measured against globally
recognised standards. UPL scored higher rating in all three dimension from industry
average while scoring highest in governance dimension out of three dimensions i.e.
Governance, Environmental & Social.
B. Future Sustainability Initiatives
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 summarized below:
NEW TECHNOLOGY ADOPTION:
In line with our mission of ‘going beyond environmental
compliances' UPL has taken steps towards achieving Zero Liquid Discharge (ZLD) for
its two more manufacturing plants (PL-00 Vapi and PL-01 Ankleshwar) for recycling and
reuse of wastewater. The Green Cell department has added value to achieve this objective
by effective wastewater streams segregation and characterization for their proper
treatment and selection of right technologies to minimize the environmental footprint in a
techno-economical way.
1.1. Water management at PL-00 Vapi
For recycling and reuse of approximately 750 KLD wastewater at PL-00,
following strategies were adopted: a) Identification, sampling, and Characterization of
all wastewater streams. b) Wastewater segregation for ETP, MEE, Scaleban and RO treatment.
c) Through segregation, overall TDS of ETP wastewater streams brought down from ~15000 ppm
to <5000 ppm. d) Scaleban system for recycling of high TDS RO reject into cooling
towers. e) MEE for very high TDS wastewater streams evaporation and condensate treatment
in ETP after establishing its biological treatability potential.
1.2. Water management at PL-01, Ankleshwar
For recycling and reuse of approximately 550 KLD wastewater at PL-01,
following strategies were adopted: a) Identification, sampling, and Characterization all
wastewater streams.
b) Wastewater segregation for ETP, Forward osmosis, strippers, MEE,
Scaleban and RO treatment. c) Implemented stripper technology to treat high and low TDS
IKI wastewater separately for ammonia reduction and hypo elimination at ETP. d) Through
segregation, overall TDS of ETP wastewater streams brought down from ~20000 ppm to
<5000 ppm. e) Scaleban system for recycling of high TDS RO reject into cooling towers.
f) Forward Osmosis for moderately high TDS streams. g) MEE for very high TDS wastewater
streams evaporation and condensate treatment in ETP.
RESEARCH AND DEVELOPMENT
Company's mission “Change the game to make every single food
product more sustainable” is very much inculcated in the minds of scientists working
in the Research and Development Centres of the Company, located across the globe.
Significant investments have been made to enhance Research and
Development capability by creating more laboratory work- space, adding new equipment and
instruments and employing additional human resources. The human resources are highly
qualified, intelligent, and committed scientists, who work tirelessly to offer solutions
to farmer's pain points. The scientists develop crop protection products and
processes that can be considered as sustainable, cost-effective, environment friendly,
safe and most importantly affordable to the end user, the farmer.
It is important to take into consideration environmental effects as
well as safety of the products and processes. Care is taken at Research and Development
Centres to incorporate aspects of atom economy and principles of green chemistry. The
products and the processes are critically evaluated for hazard and safety prior to
commercialization.
Innovative combination products, to provide effective pest management
solutions, are developed in various Research and Development Centres, and marketed
worldwide to support farmers globally. All the products which get commercialized are
tested internally and then at GLP certified laboratories for data generation. These tests
include testing of chemical properties, toxicity, impurity profile, stability and
packaging compatibility, bio-residue and so on.
Production of Specialty Chemicals and Industrial Chemicals are
Company's ambitious plan. To meet with the demands, Research and Development Centres
design processes which can be effectively used for large scale production and are viable,
safe and economical.
Intellectual Property is created for innovative products, combinations,
and processes by applying for patents in many countries. Safeguarding of IP is crucial and
vigilant in-house IP team takes care of this. At the same time Company respects
others' IP and makes sure that there is no violation, while commercialization of
products and processes.
CORPORATE SOCIAL RESPONSIBILITY
At UPL, our fundamental belief is simple “nothing is
impossible”. The 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 neighbouring communities only, as we work on
initiatives that cater to the wider national interest. At UPL, we believe in a holistic
and sustainable growth of society. Our commitment and interventions cater to all the
segment of the society and have been classified in focus areas: (a) Institution of
excellence; (b) Sustainable Livelihood; (c) Nature Conservation; and (d) Local and
National Need.
Our CSR values are shared across the globe and development initiatives
are being undertaken in 30+ countries like Argentina, Brazil, Belgium, Colombia, Cote
d'Ivoire, India, Kenya, Mexico & UK and implementing & supporting more than 80
development interventions benefiting more than 70 communities across continents. We have
impacted around 0.5 million lives globally through our CSR initiatives. Few initiatives
undertaken in FY 2021-22 are:
One Billion Hearts Initiative at Cote d'Ivoire with
The Heart Fund to provide universal access to cardiovascular health for
1 billion people by 2030.
Promote and raise awareness about sustainable development in
agriculture and education in society through football with FIFA Foundation.
Partnership with Oxford India Centre for Sustainable Development
(OICSD) at Somerville College, University of Oxford, UK to advance education on
sustainability with a greater focus on small-holder farmers in the developing world.
Establish Centre of Excellence (CoE) on process safety management.
Backward and forward linkages for farmers through formation, nurturing
and strengthening of Farmers Producer Company.
Toilet and Sanitation Project in India by construction of toilets to
improve school sanitation and drive household hygienic behavior through school children:
Constructed 57 sanitation blocks, mostly in community schools. The said facility is being
used by more than 14,500 students and 3,000 commuters a day.
United Against Child Labour project in India - A proactive initiative
to eliminate all forms of child labour in seed supplier farms and to ensure education for
all children. In last two years, the project reached 6 states which sensitized more than
seed 3,500 growers.
Global Parli & Vandri Cluster in India to transform rural village
through revival and empowerment.
Supporting “Project Ekal Vidyalaya” in Maharastra &
Madhya Pradesh which aims at creating one teacher schools in the remotest parts of the
country. More than 15000 students benefited so far.
UPL is working on installing “Solar Light” in various
locations of India as a community development initiative. We have installed 120 Solar
Lights in Barmer, Rajasthan and 95 solar lights in Singhbara, Morena, Madhya Pradesh.
COVID-19 Relief work
The 2nd wave (Delta Variant) of COVID-19 impacted India like a storm.
UPL responded to the current need of saving human lives using its strength in innovation
and CSR driven contributions, details of which are as under:
UPL in India pioneered the conversion of nitrogen plants to oxygen
plants through our team of engineers & scientists within 72 hours of the second wave
on April 23, 2021.
100+ industry players, government & private institutions were
trained through knowledge sharing forums / webinars on Nitrogen PSA plant to oxygen plant
conversion in the 3rd & 4th week of April 2021.
Helped 5 hospitals in India to achieve self-sufficiency in oxygen
through this innovation.
Procurement of new oxygen plants: Delivered 4 new oxygen plants (Cap
960 LPM) which is catering to 400 beds each in Indore, Gwalior and Varanasi and these 4
new plants are catering to 1600+ beds across 4 different hospitals. Airlifted ZMS (Zeolite
Molecular Sieve) from Germany to carry out more Nitrogen to Oxygen conversions in the 4th
week of April 2021.
500+ oxygen cylinders refilled across hospitals in Gujarat at a very
short notice in the 3rd week of April 2021.
Set up Covid-19 centres at Jhagadia, Netrang, Ankleshwar and Mandva
catering to 300 beds, including Oxygen Supply in the 3rd week of April 2021.
30+ Ventilators and 90 Oxyflow Meters arranged and provided at 3
hospitals in Ankleshwar, Bharuch and Vadodara when there is scarcity for the same.
1200 Jumbo Oxygen Cylinders provided at covid isolation center in
Bharuch.
500 Pulse Oxymeters provided to ASHA workers in Gorakhpur.
37 Oxygen Concentrators provided to 3 Hospitals in Gwalior, Barmer and
Bangalore.
10000+ Covid-19 Medicine Kits provided at Muzaffarnagar, UP by end of
June 2021.
For detailed report on Corporate Social Responsibility, please refer to
the section ‘Social Initiatives' in the annual report and Annexure 1 to this
Board's 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. The Chairman of the Audit Committee oversees the whistle-blower policy. This
policy aims to encourage employees and directors who have concerns about suspected
misconduct to come forward and express these concerns without fear of punishment or unfair
treatment. The policy aims to provide an avenue for employees and directors to raise
concerns and reassure them that they will be protected from reprisals or victimization for
whistleblowing in good faith. This Policy is in addition to the Company's Global Code
of Conduct, which 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. 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 is available on the website of the Company under Investors
section at https://www.upl-ltd.com/investors/ corporate-governance/policies.
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 Complaints 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 to this policy and keep the workplace free from
biases and prejudices. The Internal Complaints Committee has not received any formal
complaint during FY2021-22. All employees are mandated to attend a classroom training and
confirm their adherence to the rules as mentioned on Company's website. During
FY2021-22, a refresher POSH workshop was conducted for 31 Committee members online for 2
days by Company's external partners and 2082 employees, who acknowledged to comply
with the POSH policy. During the year, UPL also tied up with an external partner to launch
an extensive e-training on POSH, Code of Conduct and Anti Bribery across all markets, in 7
global language and mandated for all the employees as well as new joinees.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate system of internal controls. The Company
has adopted policies and procedures covering all major financial and operating functions.
These controls have been designed to provide 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 unauthorized 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. In addition, the Company has also appointed reputed external audit
firms for carrying out the internal audit reviews. 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.
Compliance with laws and regulations is monitored through a
well-implemented Compliance tool that requires individual functions to confirm and report
statutory compliances with all laws and regulations concerning their respective functions.
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
In today's VUCA world, achieving our business goals makes it
imperative for us to stay focused on how we manage our key enterprise-wide risks in an
efficient effective manner.
To achieve above stated objective, UPL has developed and implemented
Enterprise Risk Management (ERM) framework, benchmarked with leading international risk
management standards such as ISO 31000 and Committee of Sponsoring Organisation of the
Treadway Commission (‘COSO').
Enterprise Risk Management (ERM) framework facilitates structured
approach to identify enterprise-wide risks that may impact the organization's
strategic business objectives. While achievement of strategic objectives is the key
driver, our values, culture, obligation and commitment to employees, customers, investors,
regulatory bodies, partners and the community around us are the foundation on which our
ERM framework is developed. Systematic and proactive identification of risks and
mitigation thereof enable effective and quick decision-making and boosts the performance
of the organization.
Over the years, the risk management practices implemented by UPL have
evolved significantly. UPL has adopted a risk management policy to ensure common,
organisation wide understanding of ERM by defining key ERM principles to be adhered across
UPL. UPL has adopted a consistent Framework and standard process across business functions
to ensure a co-ordinated and integrated approach for managing risks and opportunities
across the organization. It has also adopted an ERM Standard which intends to reinforce
the commitment of UPL to effectively manage the existing and evolving risks and harness
the underlying opportunities while safeguarding the business value to achieve its
strategic objectives.
UPL ERM Framework defines the roles and responsibilities of key
stakeholders across the organization to strengthen risk governance. The Company has also
appointed a dedicated Enterprise Risk Management (ERM) team and is formally identifying
Risk Champions across functions to ensure effective and consistent deployment of ERM
framework across the Company. The Company has developed and implemented the combination of
top-down, bottom-up and outside-in approach to identify and mitigate macro strategic and
external risks emanating from business strategies. It provides guidance to the business
for identifying, assessing, prioritizing, responding, monitoring and reporting any risk or
potential threat to these objectives in a consistent manner. The risk management framework
encourages businesses to identify relevant risks and opportunities in line with the
short-term and long-term strategic business plans. The overall ERM program developed by
UPL rests on the foundation of continuous training and development of employees on risk
management to enhance the awareness of ERM framework and strengthen risk-informed
decision-making culture.
Pursuant to Regulation 21 of the SEBI (Listing Obligation and
Disclosure Requirements) Regulation 2015 (“SEBI Listing Regulations”), a Risk
Management Committee, consisting of Mr. Rajnikant Shroff, Chairman and Managing Director,
Mr. Arun Ashar Director Finance, Dr. Vasant Gandhi, Independent Director, Mr. Anand Vora,
Global Chief Financial Officer and Mr. Raj Tiwari, Chief Supply Chain Officer has been
formulated and institutionalised. The Risk Management Committee conducts integrated risks
and performance reviews along with the Senior Executives engaged in different functions.
The Committee reviews identified risks, the effectiveness of the developed mitigation
plans to provide feedback and guidance on emerging risks. The Committee also facilitates
provision of adequate resources for business to effectively mitigate critical risks and
ensure business value is protected and enhanced at all times. The Committee also maintains
a continuous oversight to ensure the risk management framework is effectively integrated
with the core functions such as Strategic Business Planning, Capital Allocation and
assurance providing functions such as Internal Audit, Internal Controls, Compliance
Management etc. to enhance the business resiliency and provide portfolio view of the
risks.
Risk Management Highlights of the Year
During the year, our focus was on extending adoption of the new
integrated ERM framework, ERM Policy and ERM Standard across the organization and
strengthening the risk management program.
For more details on the risks and their mitigation plans, please refer
to Management Discussion and Analysis report in this annual report. The Risk Management
Policy of the Company is available on the website at https://www.upl-ltd.
com/investors/corporate-governance/policies.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
The Company has several 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 the local government body of each country to a local entity established in that
country. As on March 31, 2022, there were 226 subsidiaries / associates / joint ventures
across the globe. Most of these 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 / joint venture such as 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. Subsidiary Financials are available on Company's website at
https://www.upl-ltd. com/investors/shareholder-center/subsidiary-financials.
The companies which were newly added or ceased to be subsidiaries /
associate / joint ventures during the year are as follows:
| (I) Subsidiary Companies: |
Country |
| Additions during the year: |
|
| Acquisitions |
|
| PT EXCEL MEG INDO |
Indonesia |
| PT Ace Bio Care |
Indonesia |
| Newly Incorporated |
|
| Decco Holdings UK Ltd |
United Kingdom |
| Advanta Seeds Holdings UK Ltd |
United Kingdom |
| Advanta Holdings US Inc. |
USA |
| UPL Crop Protection Investments UK Limited |
United Kingdom |
| UBDS COMERCIO DE PRODUTOS AGROPECUARIOS S.A |
Brazil |
| UPL Investments Southern Africa Pty Ltd |
South Africa |
| UPL Ltd, Cayman |
Cayman Island |
| UPL Health & Nutrition Science Holdings Limited |
United Kingdom |
| UPL Animal Health Holdings Limited |
United Kingdom |
| UPL Investments UK Limited |
United Kingdom |
| Cessations during the year: |
|
| Cessations |
|
| Callietha Investments (Pty) Ltd |
South Africa |
| Volcano Chemicals (Pty) Ltd |
South Africa |
| Arvesta Corporation |
USA |
| (I) Subsidiary Companies: |
Country |
| Arysta LifeScience (Shanghai) Co., Ltd. |
China |
| ANESA S.A. |
Belgium |
| Tesaurus Mexico S.A. de C.V. |
Mexico |
| Federation of Agri-Value Chain, Manufacturers and Exporters
(Viz FAME) |
India |
| Agri Net Solutions Limited |
India |
| Mergers |
|
| Omega Agroindustrial, S.A. de C.V. |
Mexico |
| Servicios Agricolas Mundiales SA de CV |
Mexico |
| UPL Limited (formerly known as UPL Agro Limited) |
Mauritius |
| Arysta LifeScience Vostok Ltd. |
Russia |
| Arysta LifeScience RUS LLC |
Russia |
| (II) Associate Companies: |
|
| Additions |
|
| Pixofarm GmbH |
Austria |
MATERIAL SUBSIDIARY
As on March 31, 2022, the Company has 6 unlisted material subsidiaries
as per the parameters laid down under SEBI Listing Regulations. These material subsidiary
companies are: UPL Corporation Limited, Mauritius, UPL Do Brasil - Industria e Comercio de
Insumos Agropecuarios S.A., UPL Agricultural Solutions Holdings BV, UPL Holdings BV, UPL
Agrosolutions Canada Inc. and UPL NA Inc. None of these subsidiaries have sold, disposed
off or leased more than 20% of its assets during the current year. The Company's
policy on material subsidiaries can be accessed at https://
www.upl-ltd.com/investors/corporate-governance/ policies.
RELATED PARTY TRANSACTIONS
All related party transactions (“RPT”) 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 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. The transactions entered into pursuant to the omnibus approval so
granted are reviewed on a quarterly basis by the Audit Committee.
The policy on RPTs was amended on January 31, 2022 by the Board of
Directors to incorporate the changes introduced by SEBI in the SEBI Listing Regulations.
The policy as approved by the Board is available on the website of the Company at
https://www.upl-ltd.com/investors/corporate-governance/policies.
During the financial year 2021-22, SEBI amended the provisions relating
to RPTs pursuant to which approval of the Members of the Company is required for entering
into material RPTs effective April 1, 2022. The Company at the Extraordinary General
Meeting held on March 30, 2022 obtained approval of the Members for continuing /
undertaking RPTs which may exceed the materiality threshold of Rs1,000 crores and which
are in the ordinary course of business and on arms' length basis.
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 are also submitted
to the stock exchanges.
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 are 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 the ensuing 38 th Annual General Meeting (“AGM”) of the Company.
Pursuant to the provisions of Section 139 of the Act, the Board of
Directors of the Company, based on the recommendation of Audit Committee, recommends
reappointment of B S R & Co. LLP, Chartered Accountants, Mumbai for a further period
of five (5) years i.e. upto the conclusion of 43rd AGM. The statutory auditor has
confirmed that they are not disqualified from re-appointed as auditor of the Company. The
Company has also received a letter from them confirming their eligibility to be
re-appointed as the statutory 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 for the year
ended March 31, 2022 forms part of the Annual Report and contains an unmodified opinion
without any 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) Rules, 2014 and amendments thereto, the cost records
maintained by the Company are required to be audited. The Company has maintained cost
records as per the requirements of the Companies (Cost Records and Audit) Rules, 2014. The
Board on the recommendation of the Audit Committee, has appointed M/s. RA & Co., Cost
Accountants to audit the cost records of the Company for the financial year 2022-23 at a
remuneration of 10,75,000/- (Rupees Ten Lakhs and Seventy-Five Thousand only). The Company
has received a certificate of eligibility from the cost auditor for the appointment. As
per the provisions of the Companies Act, 2013, the remuneration payable to the cost
auditor is required to be placed before the Members in a general meeting for approval /
ratification. Accordingly, a resolution seeking Member's approval 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 2020-21 was filed with the
Ministry of Corporate Affairs on August 12, 2021. The Cost Audit Report for the financial
year 2021-22 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 2021-22. The Report of the Secretarial
Auditor is annexed to this report as Annexure 3. The report of the Secretarial Auditor for
the financial year 2021-22 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 2022-23. 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, Mr. Vikram Shroff
(DIN: 00191472) Director of the Company, retires by rotation at the forthcoming AGM of the
Company and being eligible has offered himself for re-appointment. An ordinary resolution
in this regard has been proposed for approval of the members. The information of Mr.
Vikram Shroff seeking re-appointment, as required pursuant to Regulation 36(3) of 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 38th
AGM of the Company.
During the year, the Board of Directors of the Company, on the
recommendation of the Nomination and Remuneration Committee, appointed Ms. Naina Lal
Kidwai (DIN: 00017806) as an Additional Director (Non-Executive and Independent) effective
October 1, 2021 for a period of 5 years. The appointment was approved by the Members of
the Company at the Extraordinary General Meeting held on March 30, 2022.
All the independent directors of the Company as on March 31, 2022 have
given requisite declarations stating that they meet the criteria of independence laid down
under Section 149(6) of the Act and Regulation 16(b) of SEBI Listing Regulations. 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 in 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 are registered on the
Independent Director Databank maintained by the Indian Institute of Corporate Affairs
(IICA).
As on March 31, 2022, 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 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 satisfaction on 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 Board also discussed the report of performance evaluation and its
outcome.
COMMITTEES OF BOARD, NUMBER OF MEETINGS OF THE BOARD AND BOARD
COMMITTEES
The Board has seven committees, namely, Audit Committee, Nomination and
Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders
Relationship Committee, Risk Management Committee, Sustainability 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 seven 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 a very important role to play in ensuring the highest standards of corporate
governance. The Chairman of the Board and other Directors form the broad policies and
ensure their implementation in the best interests of the Company.
The criteria for selection of directors, senior management and KMP
inter-alia include qualifications, experience, expertise, integrity, independence of the
directors and board diversity.
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 independent directors are paid commission on uniform basis. The
Independent directors are not entitled to any stock options.
The remuneration to the Managing Director and other Executive Director
is broadly divided into fixed and variable components. The fixed components comprises of
monthly salary, allowances, perquisites, and other retirement benefits. The variable
component comprise of performance based annual commission. The remuneration payable to
them is subject to 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 and Executive Compensation
Policy are available on the website of the Company at
https://www.upl-ltd.com/investors/corporate-governance/policies.
FA MIL I A R I S AT ION PROGR A MME 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 at
https://www.upl-ltd.com/investors/corporate-governance/ policies.
HUMAN RESOURCES
The Company continuously strives to be the best globally in all the
domains of its operations and believes that its employees are the core foundation of this
vision. The HR strategy is committed to creating an engaging workforce and an
inspirational leadership that continuously powers this vision.
As on March 31, 2022, the Company, including group companies and
subsidiaries, had 6,931 employees in India and 13,054 employees globally.
Key initiatives undertaken for Employees Continuous Performance
The implementation of myUPL (HRIS) platform helped in focusing on goals
and targeting achievements. Mid and Annual appraisals further strengthened our
performance-based culture. The system helped in calibrations, budget planning and
communicating online, providing seamless experience across all geographies.
Learning (Open Intel)
Learning has always been a focus for our organization to improve
performance of employees including new product trainings, leadership, self-improvement and
behavioral courses with launch of UPL “Open Intel” learning platform The courses
and trainings have seen a tremendous response. UPL was able to launch POSH, Code of
Conduct and Anti Bribery trainings across all geographies and is made mandatory for all
new joiners. The courses available includes soft skills and product related curriculum
helping employees in their jobs.
Employee Wellness
Multiple initiatives were undertaken for employee wellness in FY21-22
which was in line with UPL values of Always Human, Agile and Nothing is Impossible. Some
of the initiatives are as under:
Expansion of Employee Assistance Program (EAP) platform to Gender
focused program
Self Defense Program for Women
Financial Wellness Workshop
Mindfulness Workshop on Stress Management and
Mental Health
Yoga Workshop
Expansion of Services with health agencies to provide 24/7 health care
to employees and their families and continued medical support to home quarantined
employees.
Tie-up with external partners on employee wellbeing including online
medical consultation
Continued providing medical support by processing the reimbursements of
home quarantine claims
Held vaccination drives and vaccination reimbursement (2nd dose), as
per need and prevailing local laws and guidelines
Open Mind
People are the bedrock of our business strategy. To hear their views on
organization and culture, UPL launched “Open Mind Your Voice Matters”, an Annual
Culture Survey 2021. The survey saw a participation of 83% globally.
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 4 to this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(3)(c) of the Companies Act, 2013, the directors
confirm that: a) In the preparation of the annual financial statements for the year ended
March 31, 2022, the applicable accounting standards have been followed alongwith proper
explanation relating to material departures, if any.
b) 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 31, 2022 and of the profit of the Company for the
year ended on that date. c) Proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the Companies Act,
2013 for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities. d) 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 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 statements are prepared for the year 2021-22 in
compliance with the provisions of the Companies Act, applicable accounting standards and
as prescribed under the SEBI Listing 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 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 the
draft Annual Return as on March 31, 2022 has been placed on the website of the Company and
the web link of such Annual Return is https://www.upl-ltd.com/investors/
financial-results-and-reports/annual-reports.
EVENTS AFTER BALANCE SHEET DATE
The shareholders of the Company at the Extraordinary General Meeting
held on March 30, 2022 approved the Buyback of fully paid-up equity shares of face value
of 2/- each from the equity shareholders of the Company (other than the promoters, the
promoters group and persons in control of the Company), for an aggregate amount not
exceeding 1,100 crores (Rupees One Thousand One Hundred Crores only) being 14.56% and
5.71% of its total paid-up share capital and free reserves as on March 31, 2021 (on a
standalone and consolidated basis, respectively) for a price not exceeding 875/- (Rupees
Eight Hundred Seventy Five only) per Equity Share through the open market route through
the stock exchanges where the equity shares of the Company are listed.
An unfortunate incident of fire occurred at one of the plants at our
Ankleshwar Unit 1 on May 6, 2022. The emergency response team with the help of local fire
brigade brought the fire under control on instantaneous basis. The Company has lodged the
necessary insurance claim. The Company is committed to put in place best global practices
so that similar incidents are not repeated in future.
Apart from the above, 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.
OTHER DISCLOSURES
1. There was no change in the nature of business of the Company as
stipulated under sub-rule 5(ii) of Rule 8 of Companies (Accounts) Rules, 2014.
2. There is no application made or proceeding pending under the
Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22.
3. There was no instance of one-time settlement with any Bank or
Financial Institution.
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 India and
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 Devidas Shroff |
|
Chairman and Managing Director |
|
(DIN: 00180810) |
| Mumbai |
|
| May 9, 2022 |
|
  Â