Hindalco Industries Ltd
Chairman Speech
TO SHAREHOLDERS
GLOBAL ECONOMY
The global economy is on a rebound. The International Monetary Fund (IMF) estimates
indicate that the global real GDP grew 3.8% in CY17. This is the highest growth pace over
the last six years. It is also the broadest synchronised global growth upsurge since CY10
as underlined by the IMF. This impetus from a supportive monetary policy was further
buoyed by a revival of investment spending in advanced economies.
The expansionary fiscal and monetary policies in the US led to improved growth
prospects. The US grew at 2.3% in CY17 as against 1.5% in CY16. Growth accelerated in
Europe and Asia too.
The global economic recovery is expected to continue. For the current and the next
year, a strong growth at 3.9% is projected. This positive outlook is somewhat clouded.
Increased trade protectionism, rising international crude oil prices, geo-political risks
and the uncertainty about normalisation of monetary policies in advanced economies from
the highly accommodative conditions in the past are some of the factors that dim the
outlook.
INDIAN ECONOMY
India's economy is emerging strongly from the transitory effects of demonetisation and
the implementation of the Goods and Services Tax (GST). Although India's GDP growth slowed
from 7.1% in FY17 to 6.7% in FY18, the economy recorded a seven-quarter-high GDP growth of
7.7% in the exit quarter of FY18. This reflects momentum.
India's macroeconomic indicators remain healthy. The fiscal deficit has been cut to
3.5% of GDP. India's foreign exchange reserves as at March end stood at a comfortable
level of $424 Billion.
Investors seem to be positive on India's economic prospects. The
Foreign Direct Investment (FDI) flows continue to be encouraging.
India's global ranking on the ease of doing business notched up to 100 from 142 in
barely four years, while the country's ranking on global competitiveness index has climbed
from 71st in FY15 to 39th in FY17. The prevailing sense of optimism accentuates India's
continuing economic growth in the future as well. It is attributable to the country's
solid fundamentals, such as deleveraging by corporates, resulting in much stronger balance
sheets, better capacity utilisation with consumption demand becoming stronger and
insolvency and bankruptcy process weeding out non-performing assets, among others.
The Government's unwavering push for infrastructure projects Bharatmala Pariyojana,
airports, metros, affordable housing, urbanisation, smart cities and digitisation-are
excellent stimulators for the economy's growth in the medium term. At the same time, we
cannot ignore near-term challenges. The bucket of concerns consists of rising oil prices,
hardening inflation, firming bond yields and widening current account deficit. The ongoing
global trade frictions, particularly between the US and
China, are worrisome and can have a spillover negative effect on countries like India.
So, the terrain ahead could be a tad bumpy depending on the economic and geopolitical
environment.
THE METALS SECTOR: IN BRIEF
The sector gained substantially from global economic growth, with a surge in demand
from the user industries in both aluminium and copper. China controls about 50% of the
world production and consumption of both the metals. In CY17, China implemented major
reforms, resulting in environment-led closures in winter and a clamp permanently on all
illegal capacities in aluminium.
Consequent to the Chinese actions, the average LME price of aluminium touched a
five-year high to $1,969/ ton, registering a growth of 23% in CY17 against a decline of 3%
in CY16. The global demand barring China, reflected a growth of 3.5% in CY17 compared to
3% in the previous year.
A robust growth by over 8% in CY17 for the second year in a row in China portends well.
With the surge in demand and moderation in inventories, premiums increased across
geographies. In Asia, the premium coursed by 14% to $100/ton in CY17 from $88.5/ton in
CY16.
The average LME price of copper in CY17 augmented by 27% to $6,166/ton from $4,862/ton
in CY16. This was driven by the tight supply of copper concentrate in the global market,
caused by disruptions in the world's two large copper mines in Indonesia and Chile. The
non-availability of concentrate in the global market moderated Tc/Rc.
The demand for refined copper, excluding China, was a modest 1% in CY17 due to the
abundance of scrap availability. The demand in China grew marginally at 4.5% in CY16 to
around 5% in CY17.
The Indian aluminium industry showed a significant recovery in H2FY18, after a subdued
H1FY18. The domestic demand of aluminium extended by 9% in FY18 vis--vis a moderate 1.5%
growth in FY17. The domestic demand of primary copper increased by 6% in FY18 as against
2% in FY17.
Going forward, the thrust on building renewable energy, the emphasis on electrical
vehicles and light weighting through increased usage of aluminium in railways, metros and
mass transportation should generate significant long-term growth opportunities for the
aluminium and copper sector in India.
Further, the ongoing government initiatives such as the creation of 100+ smart cities,
the push for infrastructure, especially on rural infra development, along with Make in
India and Digital India will stoke greater demand.
YOUR COMPANY'S PERFORMANCE
For your Company, this has truly been a record breaking year even as global markets
experienced unusual volatility. Your
Company registered its highest ever Consolidated EBITDA of Rs.15,025 Crore on a
turnover of Rs.1,15,809 Crore.
Your Company's aluminium and copper business in India and Novelis continued to deliver
outstanding operational and financial performance. Stable efficiencies, better
realisations and supportive macros were the major enablers.
Your Company (including Utkal) achieved record aluminium and alumina production levels
at 1.29 Mt and 2.88 Mt, respectively.
All the plants operated at their designed capacities. The output of Value Added
Products (including wire rods) stood at 479 Kt.
In the Copper Business, Cathode production touched 410 Kt, higher by 9% compared to the
earlier year. CC Rod production was 156 Kt, up by 4%. The new CCR#3 plant at Dahej was
commissioned.
Novelis reported a remarkable performance this year with a record shipment of 3.2 Mt,
higher by 4% over the previous year, and an EBITDA of $1.2 Billion, up by 12%. Their per
ton EBITDA of $381 is indeed notable. Novelis continues to improve its product mix by
raising its share of automotive sector from 18% to 20%. Your Company intends to increase
the share of recycling to 57% in FY18, from 55% in FY17.
DELEVERAGING
To further bolster the balance sheet, your Company has prepaid close to Rs.8,000 Crore
of long-term project loans in India. This has led to a significant improvement in the
Consolidated Net Debt to EBITDA at below 3x at the end of March 2018.
WHAT GIVES US THE EDGE
Undeniably, our people, their dedication to work, their sense of belongingness and
pride in the Group, their efforts in putting the organisation first and living our values
give us an advantage over our competitors. I acknowledge their contribution and count on
their continued commitment to take our business far ahead.
THE ADITYA BIRLA GROUP: IN PERSPECTIVE
The year FY18 has been a momentous year on all counts. We reached a record revenue of
$43 Billion with an EBITDA of $6 Billion. Our Group's market cap crossed the $50 Billion
mark. These spectacular achievements are a reflection not only of our growing size and
scale, the inherent soundness of our strategies and operations, but also, more
importantly, reflection of the enormous confidence that investors and other stakeholders
have reposed in us.
I am delighted to share with you that Aon Hewitt, a reputed global consulting firm, in
the ‘Best Employers 2018' study conducted by them, have named our Aditya Birla Group
as the ‘Best Employer' in India.
Moving on to our people processes, what strikes me most is that the development and
leadership aspects embedded in them are all futuristic. I believe, we are headed in the
right direction. Let me give you a flavour of what we have accomplished and how we are
constantly refreshing and reengineering our HR initiatives. Our Group HR has formulated a
unique proposition for leadership development through the 2x2x2 formula.
It is structured in a manner that accords opportunities to high talent to work in two
businesses across two geographies and in two functions. Such an approach should give a
holistic experience and help prepare our future leaders. I had apprised you earlier on the
talent councils led by the
Business Heads and Directors at the Group, business and at the functional levels. So
far, more than 250 talent council meetings have been held with over 8,000 development
conversations and actions initiated for these colleagues. I have attended several of these
meetings and am much encouraged by the positivity and enthusiasm they generate among
employees down the line.
They rightly believe that talent will always bubble to the top.
More than ever before, in the people domain, two segments that have grabbed the
attention of progressive corporates comprise the millennials and the gender diversity
issue. In our Group, 52% of our executives are under 35 years of age. They are the leaders
of tomorrow whom we need to groom today. Today, women constitute over 14% of our employee
force. Game-changing career-enabling policies have been introduced.
These include work-life issues such as maternity, childcare, flexi time, local commute
and accompanied travel for the child and the caretaker. Alongside, as part of the family
support initiative, paternity leave is also being provided.
For younger employees, through our flagship Aditya Birla Group Leadership Programme
(ABGLP), we are building a robust talent pipeline at the entry, junior and middle levels,
who will move into senior leadership over the years. From this cadre, over 350 youngsters
have been placed across the Group.
Gyanodaya, the Aditya Birla Global Centre for Leadership and Learning, continues its
commitment to prepare Profit and Loss (P&L) and manufacturing leaders through its
Accelerated Leadership Development programmes. I take great pride in Gyanodaya bagging the
Gold Award for the Best Corporate University-Culture and Brand in Global CCU Awards FY17
'for operating at the highest levels of excellence and creating value for people, business
and society'.
The Sales, Marketing and Customer Centricity Academy and the HR academy enabled 1,765
managers to hone their expertise to greater heights. The Gyanodaya virtual campus
continues to offer 900+ e-learning modules in multiple languages. During the year nearly
40,000 employees leveraged the e-learning programme.
We are enhancing our HR processes for scale, agility and consistent employee
experience. A comprehensive HR assurance and excellence framework, the HR portal to enable
the last-mile employee anytime-anywhere connect and SeamEx, the Group HR Shared Services
Centre, are milestones in this journey, as they enthuse and energise our people.
IN SUM
Our Group's robust revenue growth, healthy EBITDA margins, efficient capital deployment
and cash flow generation support our ambitious growth plans. Innovation and the spirit of
entrepreneurship that our employees bring to work is amazing and a major contributor to
our Group scaling newer heights year after year.
Yours sincerely,
Kumar Mangalam Birla
CHAIRMAN.
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Hindalco Industries Ltd
Directors Reports
Dear Shareholder,
Your Directors have pleasure in presenting the 59th Annual Report and the audited
standalone and consolidated financial statements of your company for the year ended 31st
March, 2018.
FINANCIAL HIGHLIGHTS
|
|
(Rs. Crore) |
|
Standalone |
Consolidated |
|
2017-18 |
2016-17 |
2017-18 |
2016-17 |
| Revenue from Operations |
43,435 |
39,383 |
1,15,809 |
1,02,631 |
| Other Income |
948 |
1,005 |
1,105 |
1,111 |
| Earnings before Interest, Tax and Depreciation (EBITDA) |
6,072 |
5,819 |
15,025 |
13,558 |
| Depreciation including impairment |
1,617 |
1,428 |
4,606 |
4,469 |
| Finance Costs |
1,901 |
2,323 |
3,911 |
5,742 |
| Profit before Exceptional Items and Tax |
2,554 |
2,068 |
6,508 |
3,348 |
| Share of Equity Accounted Investments |
- |
- |
(125) |
(25) |
| Profit before Exceptional Items and Tax |
2,554 |
2,068 |
6,383 |
3,323 |
| Exceptional Items |
(325) |
85 |
1,774 |
(8) |
| Profit before Tax |
2,229 |
2,153 |
8,157 |
3,315 |
| Tax Expenses |
792 |
596 |
2,074 |
1,433 |
| Profit/ (Loss) for the period |
1,437 |
1,557 |
6,083 |
1,882 |
| Other Comprehensive Income (Loss) |
957 |
536 |
2,991 |
(18) |
| Total Comprehensive Income |
2,394 |
2,093 |
9,074 |
1,864 |
| Basic EPS |
6.45 |
7.56 |
27.3 |
9.22 |
| Appropriations to Reserves |
|
|
|
|
(Rs. Crore) |
| Appropriations |
2017-18 |
2016-17 |
| Opening Balance in Retained |
8,847 |
7,143 |
| Earnings and Other Comprehensive Income |
|
|
| Total Comprehensive Income for the Current Year |
2,394 |
2,093 |
| Dividends paid |
(291) |
(239) |
| Transferred to Debenture |
(150) |
(150) |
| Redemption Fund |
|
|
| Closing Balance in Retained |
10,800 |
8,847 |
| Earnings and Other Comprehensive Income |
|
|
Dividend:
For the year ended 31st March, 2018, the Board of Directors of your Company has
recommended dividend of Rs. 1.20 per equity share (Previous year Rs.1.10 per equity
share) to equity shareholders.
Equity shares that may be allotted upon exercise of Options granted under the Employee
Stock Option Scheme and out of the Share Capital Suspense, and before the Book Closure for
payment of dividend will rank pari passu with the existing shares and shall also be
entitled to receive the aforesaid dividend.
In terms of provisions of Regulation 43A of the Securities and Exchange Board of India
(Listing Obligations & Disclosure Requirements) Regulations, 2015, herein after
referred to as "Listing Regulations" your Company has formulated a
Dividend Distribution Policy. The Policy is given in Annexure-I to the Full Annual
Report and is also accessible from your Company's Website www.hindalco.com.
OVERVIEW AND STATE OF THE COMPANY'S AFFAIRS:
Standalone Full year highlights
Hindalco registered a revenue of Rs. 43,435 crore for the fiscal year 2018 vs Rs.
39,383 crore in the previous year. EBITDA (Earnings before Interest, Tax, Depreciation and
Amortisation) stood at Rs. 6,072 crore, up 4 percent compared to the previous year, on the
back of stable operations with supporting macros despite increasing input costs.
Depreciation was higher by 13 percent due to progressive capitalization and certain
reclassification in FY18. The Finance Cost was down by 18 percent at Rs. 1,901 crore on
account of prepayment and reduction in pricing of the project loans. Profit before Tax
(and Before Exceptional Items) stood at Rs. 2,554 crore, up by 24 percent compared to the
previous year. Net Profit for FY18 stood at Rs.1,437 crore in FY18 as compared to Rs.
1,557 crore in the previous year.
Consolidated Full Year Highlights
Hindalco's consolidated Revenue stood at Rs. 1,15,809 crore for FY18 compared to
Rs. 102,631 crore in the previous year, on the back of excellent operating performance of
all the businesses and better realisations. The Company recorded highest ever consolidated
PBITDA (Profit before Interest, Tax, Depreciation and Amortisation) of Rs. 15,025 crore,
up by 11 percent supported by stable operations and improving efficiencies across all
businesses. Consolidated Profit before Tax (and Before Exceptional Items) almost doubled
and stood at Rs. 6,508 crore, up by 94 percent compared to the previous year on account of
strong overall business performance and savings in interest outgo. Net Profit in FY18,
trebled at Rs. 6,083 crore up by 223% compared to the previous year. For detailed
analysis, refer to the Management Discussion and Analysis section of the Full and Abridged
Annual Report.
Highlights of the Company's Subsidiaries:
(a) Utkal Alumina International Ltd.
Utkal Alumina revenues has grown to Rs. 2,863 Crore in FY 18 compared to Rs. 2,375
Crore in FY 17 up 21% as a result of excellent operating performance. The EBITDA for FY 18
stood at Rs.1187 Crore up 77% compared to Rs. 672 Crore in FY 17. The Profit after tax in
FY 18 was Rs. 561 Crore v/s Rs. (114) Crore in FY17.
|
|
|
(Rs. Crore) |
| Particulars |
FY18 |
FY17 |
% Growth |
| Revenue |
2863.37 |
2374.81 |
21% |
| EBITDA |
1186.55 |
672.02 |
77% |
| PAT |
561.29 |
(114.18) |
|
(b) Novelis Inc.
Performance highlights of Novelis Inc. are provided in the Management Discussion and
Analysis section of the Full and Abridged Annual Report.
Key Initiatives
The Company successfully commissioned the new Continuous Cast Rod Plant (CCR-3) in
Copper in Dahej during the year. This will further enhance the copper rod capacity of its
Dahej Plant. The Work on Utkal's brown field capacity expansion by 500 Kt commenced during
the year and is expected to be completed in 30 months with a total capital outlay of
around Rs.1,300 crore, which will provide further strength to its integration and
availability of best in class alumina to its smelters.
During the fiscal year 2018, Novelis completed JV to establish Ulsan Aluminium in South
Korea, by selling approximately 50% its ownership to Kobe Steel for US$ 314 million which
have helped to unlock the value. Novelis with its objective to invest in world class
assets and technical capabilities to position itself to meet the increasing global demand
for aluminium from the Automotive market, announced its plans to setup a 200 Kt automotive
finishing facility in Guthrie, Kentucky, US which is expected to be commissioned in CY
2020. Novelis has agreed to acquire the operating facilities and manufacturing assets at
its plant in Sierre, Switzerland, that has been historically leased.
HUMAN RESOURCES:
Several innovative people-focused initiatives have been instituted at the Group level,
and these are translated into action at all of the Group Companies. Our basic objective is
to ensure that a robust talent pipeline and a high-performance culture, centred around
accountability is in place. We feel this is critical to enable us retain our competitive
edge.
RESEARCH AND DEVELOPMENT
Your Company's Research & Development (R&D) activities are focused on providing
innovative, cost-effective and sustainable solutions to support consistent growth of
business. The R&D activities of your Company include process, product and application
development, to develop short term as well as long term solutions to the issues faced by
nonferrous sector, such as, raw material quality, cost effective management of waste
generated during processing, recovery of value from by product as well as any waste
products, developing better understanding of the science of processes, reducing the
specific energy consumption and carbon footprint etc.
Specific programs have also been initiated to foster better understanding of the
requirement of existing and prospective customers, and to provide a better service through
application development, so as to increase your company's market share in the chosen
market space.
Technical competencies developed by your company will go a long way in terms of quick
absorption of technologies, enabling pushing boundaries of our processes, so as to
increase the economic performance and improve our new product/ new application pipeline to
address the impending market opportunities.
Your Company already operates two Hindalco Innovation Centres (HIC), one HIC-Alumina at
Belagavi working on R&D of bauxite ore, alumina refining and specialty alumina,
hydrate products; as well as waste management; and one HIC-SemiFab located at
Taloja, near Mumbai, working in the area of tribology, energy and environment
management and aluminium fabricated products and new applications. R&D Team at Birla
Copper, Dahej, is focusing on maximisation of copper recovery as well recovery of various
metal values, such as, Selenium, Tellurium, Nickel, Bismuth, etc., from the effl uent
generated in the plant. In addition, your company engages the Aditya Birla Group's
corporate research and development centre, Aditya Birla Science and Technology Company
Private Limited ("ABSTCPL"), for conducting R&D in select areas of work
through chartered R&D projects.
These are based on the domain expertise and R&D facilities available in ABSTCPL.
The engagement has resulted into patent applications, which have been and will be assigned
to your company on the grant of the patent. ABSTCPL's forte of having multidisciplinary
teams of technical experts, scientists and engineers, enables your company to develop
building competencies in select areas, as a long term value to business. Both the HICs at
Belagavi and Taloja as well as ABSTCPL are DSIR, GOI, recognised R&D Centres.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements for the year ended 31st March, 2018 have been
prepared by your Company in accordance with the provisions of the Companies Act, 2013,
read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the
provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 "Listing Regulations" and forms part of the Full
Annual Report.
EMPLOYEE STOCK OPTION SCHEMES:
ESOS-2006
During the year ended 31st March, 2018, the Company has allotted 1,33,438 fully paid-up
equity share of Rs.1/- each of the Company (Previous year 4,43,476) on exercise of options
under ESOS 2006.
ESOS-2013:
During the year ended 31st March, 2018, the Company has allotted 15,75,374 fully
paid-up equity share of Rs.1/- each of the Company (Previous year 9, 97,195) on exercise
of options under ESOS 2013. The details of Stock Options and Restricted Stock Units
granted under the above mentioned Schemes are available on your Company's website viz.
www.hindalco.com.
A certificate from the statutory auditor on the implementation of your Company's
Employees Stock Option Schemes will be placed at the ensuing Annual General Meeting for
inspection by the members.
There is no material change in the Schemes and the aforementioned schemes are in
compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.
CORPORATE GOVERNANCE
Your Directors reaffirm their continued commitment to good corporate governance
practices. Your Company fully adheres to the standards set out by the Securities and
Exchange Board of India for Corporate Governance practices.
The entire report on Corporate Governance forms part of Full Annual Report.
ABRIDGED ANNUAL REPORT
In terms of the provision of Section 136(1) of the Companies Act, 2013, Rule 10 of
Companies (Accounts of Companies) Rules, 2014 and Regulation 36 of the Listing
Regulations, the Board of Directors has decided to circulate the Abridged Annual Report
containing salient features of the Financial Statements and Directors' Report and other
documents to the shareholders for the Financial Year 2017-18, under the relevant laws.
The Abridged Annual Report is being circulated to the members excluding the
‘Annual Report on CSR Activities', ‘Remuneration Philosophy/ Policy',
‘Secretarial Audit Report', ‘Extract of Annual Return', ‘Dividend Policy',
‘Full Report on Corporate Governance and Shareholders' Information'. Members who
desire to obtain the full version of the Annual Report may write to the Company Secretary
at the registered office. Full version of the Annual Report is also available on the
Company's website www.hindalco.com.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 134(3)(c) of the Companies Act, 2013 "the Act", your
Directors subscribe to the "Directors' Responsibility Statement" and confirm
that:
a) in the preparation of the annual accounts, applicable accounting standards have been
followed along with proper explanations relating to material departures;
b) the accounting policies selected have been applied consistently and judgments 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 31st March, 2018 and of the Profit of
your company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of your
company and for preventing and detecting fraud and other irregularities;
d) the annual accounts of your Company have been prepared on a going concern basis;
e) your Company had laid down internal financial controls and that such internal
financial controls are adequate and were operating effectively;
f) your Company has devised proper system to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:
The information on conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo stipulated under Section 134(3)(m) of the Companies Act, 2013, read
with Companies (Accounts) Rules, 2014 is set out in Annexure-II to the Full and
Abridged Annual Report.
PARTICULARS OF EMPLOYEES:
In accordance with the provisions of Section 197(12) of the Companies Act, 2013
"the Act", read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the names and other particulars of employees are to be set out in
the Directors' Report, as an addendum thereto.
However, in line with the provisions of Section 136(1) of the Act, the Report and
Accounts as set out therein, are being sent to all Members of your Company excluding the
aforesaid information about the employees. Any Member, who is interested in obtaining
these particulars about employees, may write to the Company Secretary at the Registered
Office of your Company.
Disclosures pertaining to remuneration and other details as required under section
197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 are attached as Annexure-III to the Full and Abridged Annual Report.
DIRECTORS:
Board constitution and changes:
Mr. Kumar Mangalam Birla (DIN: 00012813) will retire from office by rotation at the
ensuing Annual General Meeting, and being eligible, offers himself for reappointment.
Mr. Kumar Mangalam Birla has given required declaration under Companies Act, 2013.
Brief resume of the director being reappointed form part of the notice of the ensuing
Annual General Meeting.
Mr. Jagdish Khattar (DIN: 00013496) has resigned as an Independent Director w.e.f 4th
May 2018 due to his personal commitment.
Ms. Alka Bharucha (DIN:00114067) is appointed as an Independent Director on the Board
of the Company w.e.f 11th July, 2018. Ms. Bharucha has given the required declarations
under the Companies Act, 2013 and Listing Regulations.
The Board recommends the reappointment of Mr. Kumar Mangalam Birla and appointment of
Ms. Alka Bharucha. Items seeking your approval is included in the Notice convening the
Annual General Meeting.
Independent Directors Statement:
Independent Directors on your Company's Board have submitted declarations of
independence to the effect that they meet the criteria of independence as provided in
Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing
Regulations.
Policy on appointment and remuneration of Directors and Key Managerial Personnel:
The Nomination and Remuneration Committee has formulated the remuneration policy of
your company which is attached as Annexure-IV to the Full Annual Report.
Meetings of the Board:
The Board of Directors of your Company met five times during the year, details of which
are given in the Corporate Governance Report forming part of the Full Annual Report.
Annual Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the
Directors has carried annual performance evaluation of Board, Independent Directors, Non
Executive Directors, Executive Directors, Committee and Chairman of the Board. The
evaluation framework focused on various aspects of the Board and Committees such as
review, timely information from management etc.
Also, the performance of individual directors was divided into Executive, Non Executive
and Independent Directors and based on the parameters such as contribution, attendance,
decision making, action oriented, external knowledge etc.
The evaluation exercise has been carried out by the Board members on the basis of
evaluation templates for Board, Independent Directors, Non Executive Directors, Executive
Directors, Committees and Chairman of the Board. The template had various questions to be
replied by the directors on aforesaid parameters.
The Nomination and Remuneration Committee evaluated the performance on the basis of the
response received from the Directors.
Similarly, the Independent Directors evaluated the performance of non independent
directors, Chairman and assessed the quality, quantity and flow of information between
company management and Board. Outcome of the evaluation exercise:
1. The Board as a whole performed satisfactorily.
2. Independent Directors are rated high in understanding the Company's business and
expressing their view during the Board meetings.
3. The Non Executive Directors scored well in all aspects.
4. Directors rated Executive Directors as action oriented and good in implementing
Board decisions.
5. Board members rated high to the Chairman in leading the Board effectively.
6. Board members had shown satisfaction in functioning of the Committees.
AUDIT COMMITTEE:
The Audit Committee comprises of Mr. M.M. Bhagat, Mr. K.N. Bhandari, Mr. Y.P.
Dandiwala, Independent Directors of your Company. Mr. Satish Pai: Managing Director and
Mr. Praveen Kumar Maheshwari: Chief Financial Officer and Whole-Time Director are the
permanent invitees.
Further details relating to the Audit Committee are provided in the Corporate
Governance Report forming part of the Full Annual Report.
KEY MANAGERIAL PERSONNEL:
In terms of provisions of Section 203 of the Companies Act, 2013, Mr. Satish Pai:
Managing Director, Mr. Praveen Kumar Maheshwari: Chief Financial Officer and Mr. Anil
Malik: Company Secretary are the Key Managerial Personnel of your Company.
VIGIL MECHANISM:
Your Company has in place a vigil mechanism for directors and employees to report
concerns about unethical behaviour, actual or suspected fraud or violation of your
Company's Code of Conduct.
Adequate safeguards are provided against victimisation to those who avail of the
mechanism and direct access to the Chairman of the Audit Committee in exceptional cases is
provided to them The vigil mechanism is available on your Company's website viz.
www.hindalco.com.
AUDITORS
Statutory Auditors
M/s. Price Waterhouse & Co Chartered Accountants LLP (Registration No.
304026E/E-300009), are the Statutory Auditors of the Company who are appointed for a
period of five years i.e., to hold office from the conclusion of the Fifty Eighth Annual
General Meeting held in 2017 till the conclusion of the Sixty third Annual General Meeting
of the Company, to be held in the Calendar year 2022, subject to ratification, if
required, of their appointment by the Members at every Annual General Meeting till the
Sixty-second Annual General Meeting.
The requirement to place the matter relating to appointment of the Auditors for
ratification by the members at every Annual General Meeting is done away with vide
notification dated 7th May, 2018 issued by the Ministry of Corporate Affairs. Accordingly,
no resolution is proposed for ratification of appointment of the Auditors, who were
appointed in the Annual General Meeting held on 13th September, 2017.
The observation made in the Auditor's Report are self explanatory and therefore, do not
call for any further comments under Section 134(3)(f) of the Act.
Cost Auditors
In terms of the provisions of Section 148 of the Act read with the Companies (Cost
Records and Audit) Amendment Rules, 2014, the Board of Directors of your Company have on
the recommendation of the Audit Committee, appointed M/s. Nanabhoy & Co., Cost
Accountants, Mumbai as Cost Auditors, to conduct the cost audit of your Company for the
financial year ending 31st March, 2019, at a remuneration as mentioned in the Notice
convening the Annual General Meeting.
As required under the Act, the remuneration payable to the cost auditor is required to
be placed before the Members in a general meeting for their ratification. Accordingly, a
resolution seeking Member's ratification for the remuneration payable to Cost Auditors
forms part of the Notice of the ensuing Annual General Meeting.
Secretarial Auditors
Pursuant to provisions of Section 204 of the Companies Act, 2013 read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company
has appointed BNP & Associates, Company Secretaries, Mumbai as Secretarial Auditor for
conducting the Secretarial Audit of your Company for the financial year ended 31st March,
2018.
The Report of the Secretarial Auditors is annexed herewith as Annexure-V to the
Full Annual Report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse
remark.
ENVIRONMENT PROTECTION AND POLLUTION CONTROL
Your Company is committed to sustainable development. A detailed report of the
Company's initiatives and commitment to environment conservation is part of Sustainability
& Business Responsibility Report forming part of the Full and Abridged Annual Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Details of Loans, Guarantee and Investments covered under the provisions of Section 186
of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules,
2014 are given in the notes to Financial Statements of the Full Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
In terms of the provisions of Section 135 of the Companies Act, 2013 ("the
Act") read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the
Board of Directors of your Company has constituted a Corporate Social Responsibility
("CSR") Committee which is chaired by Mrs. Rajashree Birla. The other Members of
the Committee for the Financial year ending 31st March 2018 were Mr. Jagdish Khattar,
Independent Director, Mr. A.K. Agarwala, Non Executive Director, Mr. Satish Pai: Managing
Director and Mr. D. Bhattacharya: Non Executive Director. Dr. Pragnya Ram, Group Executive
President, Corporate Communication & CSR is a permanent invitee to the Committee. Mr.
Jagdish Khattar: Independent Director and Member of CSR Committee has resigned from the
Board w.e.f 4th May 2018. Mr. Y.P. Dandiwala: Independent Director was inducted as a
member of the CSR Committee in the meeting of the Board held on 16th May, 2018.
Your Company also has in place a CSR Policy and the same is available on your Company's
website viz. www.hindalco.com. The Committee recommends to the Board activities to be
undertaken during the year.
Your Company is a caring corporate citizen and lays significant emphasis on development
of the communities around which it operates. Your Company has identified several projects
relating to Social Empowerment & Welfare, Infrastructure Development, Sustainable
Livelihood, Health Care and Education during the year and initiated various activities in
neighbouring villages around plant locations.
During the financial Year 2017-18 the Company has spent Rs. 31.09 Crore under
Section 135 of the Companies Act, 2013 on CSR activities, which represent 2.33% of average
net Profits of the Company for last three financial years. The Annual Report on CSR
activities is attached as Annexure-VI to the Full Annual Report.
RISK MANAGEMENT
Pursuant to the requirement of Listing Regulations, the Company has constituted Risk
Management Committee, which is mandated to review the risk management plan/process of your
company.
Risk evaluation and management is an ongoing process within the Organization. Your
Company has comprehensive risk management policy which is periodically reviewed by the
Risk Management Committee.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the financial year, your Company entered into related party transactions which
were on arm's length basis and in the ordinary course of business. There are no material
transactions with any related party as defined under Section 188 of the Act read with
Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations.
All related party transactions have been approved by the Audit Committee of your
Company. The policy on Related Party Transactions as approved by the Audit Committee and
the Board is available on your Company's website viz. www.hindalco.com.
EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) of the Companies Act, 2013 ("the
Act") read with the Companies (Management and Administration) Rules, 2014, an extract
of the Annual Return of your Company for the financial year ended 31st March, 2018 is
given in Annexure-VII to the Full Annual Report.
BUSINESS RESPONSIBILITY REPORT:
As per the Listing Regulations, a separate section of Business Responsibility Report
forms part of the Full and Abridged Annual Report.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has Internal Financial Control (IFC) framework commensurate with its size,
scale and complexity of businesses. The framework has been designed to provide reasonable
assurance with respect to reliable operational and financial information, complying with
applicable laws, safeguarding of assets, prevention and detection of frauds & errors,
executing transactions with proper authorization and ensuring compliance with company
policies & procedures.
The controls based on the prevailing business conditions and processes have been tested
for operating effectiveness and no reportable material deficiencies in the design were
observed. The Internal Audit team develops an annual audit plan based on the risk profile
of the businesses.
The Internal Audit plan is approved by the Audit Committee, who also reviews compliance
to the audit plan.
The Audit Committee has appointed Internal Auditors who periodically audit the adequacy
and effectiveness of the internal controls laid down by the management and suggest
improvements to strengthen the controls. Significant audit observations and corrective
action(s) thereon are presented to the Audit Committee. The Audit Committee reviews the
reports submitted by the Internal Auditors in each of its meeting, quarterly.
INTERNAL FINANCIAL CONTROL
Your directors confirm having laid down internal financial controls and that such
internal financial controls are adequate and were operating effectively.
SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANIES:
The financial statements of your Company's subsidiaries and related information have
been placed on the website of your Company viz. www.hindalco. com and also available for
inspection during business hours at the registered office of your Company.
Any Member, who is interested in obtaining a copy of financial statements of your
Company's subsidiaries, may write to the Company Secretary at the Registered Office of
your Company. In accordance with the provisions of the section 129 (3) of the Act, read
with the Companies (Accounts) Rules, 2014, a report on the performance and financial
position of each of the subsidiaries, associates and Joint Venture is attached as Annexure-VIII
to the Full and Abridged Annual Report.
ThenamesofCompanieswhichhavebecomeorceased to be subsidiaries, Joint Ventures and
associates are also provided in the aforesaid statement.
OTHER DISCLOSURES:
• There were no material changes and commitments affecting the financial position
of your Company between end of financial year and the date of report.
• Your Company has not issued any shares with differential voting.
• There was no revision in the financial statements.
• Your Company has not issued any sweat equity shares.
• Mr. Satish Pai is a director on the Board of Novelis Inc, wholly owned
subsidiary. He is in receipt of annual fee of US$ 1,50,000 in the calendar year 2017. Mr.
Praveen Kumar Maheshwari: Whole Time Director and Chief Financial Officer has not received
any commission/remuneration from your Company's subsidiaries.
• There is no change in the nature of business.
• During the year under review, your Company has not accepted any fixed deposits
from the public falling under Section 73 of the Act read with the Companies (Acceptance of
Deposits) Rules, 2014. Thus, as on March 31, 2018, there were no deposits which were
unpaid or unclaimed and due for repayment.
• There are no significant and material orders passed by the regulators or courts
or tribunals impacting the going concern status and company's operations in future.
• There were no frauds reported by the Auditors u/s 143(12) of the
Companies Act, 2013.
APPRECIATION
Your Directors place on record their sincere appreciation for the assistance and
guidance provided by the Honorable Ministers, Secretaries and other officials of the
Ministry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and various
State Governments. Your Directors thank the Financial Institutions and Banks associated
with your Company for their support as well.
Your Company's employees are instrumental in your Company scaling new heights, year
after year.
Their commitment and contribution is deeply acknowledged. Your involvement as
Shareholders is greatly valued. Your Directors look forward to your continuing support.
|
For and on behalf of the Board |
| Satish Pai |
M.M. Bhagat |
| Managing Director |
Independent Director |
| DIN:06646758 |
DIN:00006245 |
| Mumbai |
|
| Dated : July 11, 2018 |
|
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