Finolex Industries Ltd
Directors Reports
To the Members,
Your directors have pleasure in presenting the forty-first annual
report together with the audited financial statements (both standalone and consolidated)
for the financial year ended March 31, 2022.
State of the Company?s affairs Financial Results
(Rs in Crores)
| Particulars |
Standalone |
|
Consolidated |
|
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Profit before depreciation, exceptional items
& finance charges |
1,106.90 |
1,061.79 |
1,104.50 |
1,077.05 |
| Less: Finance charges |
14.09 |
7.27 |
14.09 |
7.27 |
| Profit before depreciation, exceptional items and taxation |
1,092.81 |
1,054.52 |
1,090.41 |
1,069.78 |
| Less: i. Depreciation |
83.40 |
77.72 |
83.40 |
77.72 |
| ii. Exceptional items (gain)/loss |
(376.06) |
- |
(376.06) |
- |
| iii. Provision for taxation |
332.00 |
248.78 |
331.73 |
254.27 |
| Profit after depreciation, exceptional items and taxation |
1,053.47 |
728.02 |
1,051.34 |
737.79 |
| Add/(Less): |
|
|
|
|
| i. Retained earnings at the beginning of the year |
2,160.17 |
1,431.92 |
2,226.25 |
1,488.09 |
| ii. Re-measurement of defined benefit plans
and income tax effect |
(0.24) |
0.23 |
(0.24) |
0.23 |
| iii. Share of Other Comprehensive Income (OCI)
of Associate for the year |
- |
- |
0.09 |
0.14 |
| iv. Dividend |
(248.19) |
- |
(248.19) |
- |
| Retained earnings at the end of the year |
2,965.21 |
2,160.17 |
3,029.25 |
2,226.25 |
| Earnings per equity share |
16.98 |
11.73 |
16.94 |
11.89 |
Operations
The operational performance is summarized below:
(Rs in Crores)
| Particulars |
Standalone |
|
Consolidated |
|
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Revenue from operations |
4,647.32 |
3,462.27 |
4,647.32 |
3,462.27 |
| Other income |
83.16 |
72.48 |
82.23 |
71.55 |
| Total income |
4,730.48 |
3,534.75 |
4,729.55 |
3,533.82 |
| Profit before tax (before exceptional item) |
1,009.41 |
976.80 |
1,008.48 |
975.87 |
| Exceptional item gain/(loss) |
376.06 |
- |
376.06 |
- |
| Profit before tax (after exceptional item) |
1,385.47 |
976.80 |
1,384.54 |
975.87 |
| Share of profit of associate before tax |
- |
- |
(1.47) |
16.19 |
| Profit after tax |
1,053.47 |
728.02 |
1,051.33 |
737.79 |
| PVC Pipes and Fittings |
|
|
|
|
| Production in MTs |
230,847 |
212,706 |
230,847 |
212,706 |
| Sale in MTs |
236,895 |
212,059 |
236,895 |
212,059 |
| Sale in Crores |
3,852.67 |
2,634.75 |
3,852.67 |
2,634.75 |
(Rs in Crores)
| Particulars |
Standalone |
|
Consolidated |
|
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| PVC Resin |
|
|
|
|
| Production in MTs |
214,186 |
225,035 |
214,186 |
225,035 |
| Sale in MTs (including inter divisional) |
224,923 |
236,085 |
224,923 |
236,085 |
| Sale in Crores (including inter divisional) |
2,962.10 |
2,273.31 |
2,962.10 |
2,273.31 |
The total production capacity of PVC pipes & fittings stands at
3,70,000 MT p.a. The sales volume for PVC pipes & fittings was 2,36,895 MT for the
financial year ended March 31, 2022 as against 2,12,059 MT for the financial year ended
March 31, 2021. Total standalone income was at Rs 4,730.48 Crores for the financial year
ended March 31, 2022 against Rs 3,534.75 Crores for the financial year ended March 31,
2021. Profit after tax was at Rs 1,053.47 Crores for the financial year ended March 31,
2022 as against Rs 728.02 Crores for the financial year ended March 31, 2021.
The financial year 2021-22 began with the pandemic situation caused by
second wave spread by the COVID-19 all over the world. Consequent to the emergence of
second & third wave of the COVID-19 pandemic, driven by the highly transmissible Delta
and Omicron COVID variants respectively, your Company undertook timely and essential
measures to ensure the safety and well-being of its employees & stakeholders at all
its plant locations and offices & complied with Government and Health
authorities? advisory. In these circumstances, your Company has worked tirelessly to
address the challenges and implemented necessary changes commensurate with the
Company?s business requirements and your Company provided the required support to the
workforce. These measures are monitored on a regular basis to ensure a progressive return
to the desired growth rates. The employee support in terms of adherence to our benchmark
COVID SOP?s and ensuring timely vaccination, has helped in minimizing its impact on
our operations.
Consequent to the approval of the Board of Directors at their meeting
held on September 15, 2021, the Company has transferred leasehold rights of approx. 34.88
acres of land (out of approx. 70 acres) post completion of necessary regulatory approvals
and formalities. The Company has accordingly, recognised _376.06 crores net gain,
disclosed as exceptional item during Q4 FY 2021-22.
Dividend
The Board of Directors has recommended dividend at 200% i.e. final
dividend at 100 % i.e. Rs 2 per equity share and a special dividend at 100% i.e. Rs 2 per
equity share (subject to deduction of tax at source). The dividend on equity shares, if
approved by the Members, will absorb Rs 248.19 Crores. As per Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, ("Listing Regulations") the Company has
formulated a Dividend Distribution Policy which has been uploaded on the Company?s
website https:// www.finolexpipes.com/site/assets/files/12927/dividend distribution
policy.pdf.
Transfer to Reserves
During the year, amount transferred to General Reserve was Nil
(previous year Nil). Thus, the total comprehensive Income for the year of Rs 1,039.07
Crores [Previous year Rs 1,143.07 Crores] was transferred to Reserves and Surplus of
Balance Sheet.
Deposits
During the year, the Company has not accepted any deposits from public,
as described under Chapter V of the Companies Act, 2013 and as such no amount on account
of principal or interest on deposits from public was outstanding as on the date of the
balance sheet.
The Company had no unpaid /unclaimed deposit(s) as on March 31, 2022.
Management discussion and analysis
Pursuant to Regulation 34 (2) of the Listing Regulations, a Management
Discussion and Analysis Report forms part of this annual report.
Consolidation of financial statements
As at the end of the financial year, your Company does not have any
subsidiary Company. However, it does have two associate companies namely ‘Finolex
Plasson Industries Private Limited? and ‘Pawas Port Limited?.
The Company has consolidated financials of Finolex Plasson Industries
Private Limited. The Company has not consolidated financials of an immaterial associate
viz. ‘Pawas Port Limited?, in which the Company holds 49.99% equity shares
(_0.05 Crores) and has not started operations.
The consolidated financial statements as prepared pursuant to the
provisions of Section 129 of the Companies Act, 2013 (the "Act") and Schedule
III of the Act, are annexed and form part of this annual report.
Revision in financial statements
There has been no revision in the financial statements of the Company
during the financial year 2021-22.
Subsidiary and Associate Companies
In terms of Section 129(3) of the Act a statement containing salient
features of the financial statements of the associate or joint venture companies in Form
AOC-1, is annexed and forms part of this annual report.
Pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014, the
performance and financial position of the associate or joint venture companies is included
in the consolidated financial statements which is annexed and forms part of this annual
report.
During the financial year 2021-22, there is no change in associate
company(ies) of the Company.
The Company has formulated the policy on material subsidiaries in
alignment with the provisions of Regulation 16 (i) (c) of the Listing Regulations. As
required under Regulation 46 (2)(h) of the Listing Regulations, the Material Subsidiary
Policy has been uploaded on the Company?s website https://www.finolexpipes.com/site/
assets/files/12930/policy on material subsidiary-1.pdf. Pursuant to Regulation 34(3) of
the Listing Regulations, the related party disclosures as specified in Para A of Schedule
V are given below:
| Sr. No. |
In the accounts of |
Disclosure of amount at the year end and the maximum
amount of loans/ advances/investments outstanding during the year |
Remarks |
| 1. |
Holding Company |
Loans and advances in the nature of loans to
subsidiary by name and amount. |
No Holding Company. |
|
|
Loans and advances in the nature of loans to
associates by name and amount. |
|
|
|
Loan and advances in the nature of loans to
firms/companies in which directors are interested by name and amount. |
|
| 2. |
Subsidiary |
Same disclosures as applicable to the parent company in the
accounts of subsidiary company. |
No Subsidiary Company |
| 3. |
Holding Company |
Investments by the loanee in the shares of parent company and
subsidiary company, when the company has made a loan or advance in the nature of loan. |
No Holding Company |
There are no transactions made by the Company with any person or entity
belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the
Company.
Corporate Governance
A separate report on corporate governance in the compliance with
corporate governance requirements specified in Regulations 17 to 27 and clauses (b) to (i)
and (t) of sub-regulation (2) of Regulation 46 and para C, D and E of Schedule V of the
Listing Regulations along with compliance certificate dated May 18, 2022 obtained from
M/s. SVD & Associates, Practicing Company Secretaries, is annexed and forms part of
this annual report.
Material changes and commitments
Your directors confirm that there are 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 and the date of this report.
Contracts or arrangements with related parties
The particulars of related party transactions are stated in the note
no. 37 in the financial statements and Annexure-2 of this report.
None of the transactions with related parties falls under the scope of
Section 188(1) of the Act. All related party transactions that were entered into during
the financial year were on an arm?s length basis and were in the ordinary course of
business of the Company. There are no materially significant related party transactions
entered into by the Company with its Promoters, Directors, Key Managerial Personnel or
other designated persons which may have a potential conflict of interest with the Company
at large. Accordingly, the disclosure of Related Party Transactions as required under
Section 134(3) (h) of the Act, in Form AOC-2, is not applicable and hence does not form
part of this report. All related party transactions are placed before the Audit Committee
for approval. The Company has developed a Related Party Transactions Manual, Standard
Operating Procedures for the purpose of identifying and monitoring such transactions.
In line with the requirements of the applicable provisions of the
Companies Act, 2013 and the Listing Regulations, the Company has formulated a policy on
Related Party Transactions and the same is available on website of the Company at
https://www.finolexpipes.com/site/assets/ files/12932/related party transactions
policy.pdf.
Risk management
During the financial year 2014-2015, your directors had constituted a
Risk Management Committee. The Risk Management Committee was reconstituted with effect
from 20th September, 2019. The details of Committee and its terms of reference
are set out in the Corporate Governance Report forming part of this report.
The Company has a robust risk management framework to identify,
evaluate business risks and opportunities. This framework seeks to create transparency,
minimize adverse impact on the business objectives and enhance the Company?s
competitive advantage. The business risk framework defines the risk management approach
across the enterprise at various levels including documentation and reporting. The
framework has different risk models which help in identifying risks trend, exposure and
potential impact analysis at a Company level as also separately for business segments.
Risk management forms an integral part of the business planning and forecasting. The key
business risks identified by the Company and its mitigation plans are included in the
management discussion and analysis report.
Internal financial controls
Pursuant to Rule 8 (5) (viii) of the Companies (Accounts) Rules, 2014,
the details in respect of adequacy of internal financial controls with reference to the
financial statements are given below:
The Company has in place adequate internal control procedures,
proportionate to the nature of the business and the size of operations, for smooth conduct
of business. The systems are implemented for safeguarding the assets, the prevention and
detection of fraud and errors, the accuracy and completeness of the accounting records and
timely preparation of reliable financial information.
The scope and authority of the internal auditors are defined by the
Audit Committee from time to time. To maintain its objectivity and independence, the
internal auditors M/s. Ernst & Young, LLP report their observations to the Audit
Committee of the Board. The internal auditors monitor and evaluate the efficacy and
adequacy of internal control system in the Company, its compliance with operating systems,
accounting procedures and policies at all locations of the Company. Based on the report of
the internal auditors, process owners undertake corrective action in their respective
areas which then strengthens the controls. Audit observations and corrective actions
thereon are presented to the Audit Committee of the Board. Based on the work performed by
the internal, statutory and secretarial auditors and external consultants, including the
audit of internal financial controls over financial reporting by the statutory auditors
and the reviews performed by management, the Board is of the opinion that the
Company?s internal financial controls were adequate and effective during FY 2021-22.
Directors and Key Managerial Personnel
The Board of your Company is duly constituted with a proper balance of
executive, non-executive and independent directors.
Pursuant to Section 149 (1) and 161 of the Companies Act, 2013 read
with Rule 8 (5) (iii) of the Companies (Accounts) Rules, 2014, the details relating to
directors and key managerial personnel who were appointed or resigned are reported as
under:
1. Appointment and re-appointment of Directors:
Earlier the Board of Directors at its meeting held on May 21, 2016
based on the recommendation of the Nomination and Remuneration Committee had re-appointed
Mr. Prakash P. Chhabria (DIN 00016017) as Whole-time Director designated as Executive
Chairman and Mr. Sanjay S. Math (DIN 01874086) as Managing Director, for a period
of five years from the December 1, 2016 respectively. The said re-appointments of Mr.
Prakash P. Chhabria and Mr. Sanjay S. Math were approved by the Members at 35th
Annual General Meeting held on August 11, 2016. Earlier, the Board of Directors at its
meeting held on August 26, 2016 based on the recommendation of the Nomination and
Remuneration Committee had appointed Mr. Anil V. Whabi (DIN 00142052) as Whole-time
Director designated as Director - Finance for a period of five years from August 26, 2016.
The said appointment of Mr. Anil V. Whabi was approved by the Members at 36th
Annual General Meeting held on August 11, 2017. The tenure of Mr. Whabi as Whole-time
director designated as Director (Finance) of the Company was completed on close of
business hours of August 25, 2021 and accordingly he ceased to be director of the Company.
The Board of Directors at its meeting held on November 27, 2021 based
on the recommendation of the Nomination and Remuneration Committee and subject to approval
of members at the ensuing Annual General Meeting re-appointed Mr. Prakash P. Chhabria,
Chairman of the Company, as whole-time director designated as Executive Director, Mr.
Sanjay S. Math, as Managing Director and appointed Mr. Anil V. Whabi as an additional
& Whole-time Director designated as Director
– Finance with effect from December 1, 2021 for the tenure as
mentioned in the respective business item(s) relating to their appointment/ re-appointment
of the annexed AGM notice and Explanatory Statement pursuant to Section 102(1) of the
Companies Act, 2013.
Mr. Sanjay S. Math, Managing Director of the Company will retire with
effect from the close of business hours of May 31, 2022. The Board of Directors at its
meeting held on May 18, 2022, redesignated and appointed Mr. Anil V. Whabi as Managing
Director of the Company with effect from June 1, 2022 for a period of one year subject to
approval of the Members of the Company.
The Board of Directors at its meeting held on May 18, 2022 based on the
recommendation of the Nomination and Remuneration Committee appointed Mr. Saumya S.
Chakrabarti (DIN 09594036) as an additional & Whole-time Director designated as
Director - Technical effective from June 1, 2022 subject to approval of Members at the
ensuing Annual General Meeting.
Mr. Anil V. Whabi and Mr. Saumya S. Chakrabarti were appointed as
additional Directors on the Board of the Company with effect from December
1, 2021 and June 1, 2022 respectively, till the conclusion of ensuing
Annual General Meeting.
A notice under Section 160 of the Act, has been received nominating the
candidature of Mr. Anil V. Whabi and Mr. Saumya S. Chakrabarti for their appointment as
Directors of the Company.
The period of appointment/ re-appointment of the said Directors are as
mentioned below:
1. Mr. Prakash P. Chhabria, Chairman of the Company, re-appointed as
Whole-time Director designated as Executive Director for a period of five years from
December 1, 2021 to November 30, 2026.
2. Mr. Sanjay S. Math, re-appointed as Managing Director of the Company
for a period of six months from December 1, 2021 to May 31, 2022.
3. Mr. Anil V. Whabi, appointed as Whole-time Director of the Company
designated as Director – Finance for a period of six months from December 1, 2021 to
May 31, 2022 and re-designated and appointed as Managing Director of the Company from June
1, 2022 to May 31, 2023.
4. Mr. Saumya S. Chakrabarti, appointed as Whole-time Director of the
Company designated and appointed as Director - Technical for a period of five years from
June 1, 2022 to May 31, 2027.
The resolutions for the aforesaid respective appointment(s) /
re-appointment(s) including payment of their remuneration and details of their brief
resume, nature of expertise in specific functional areas, disclosure of relationship
between directors inter-se, names of the listed entities in which the person also holds
the directorship and the membership of the Committee of the Board of directors and
shareholding in the Company as required pursuant to Listing Regulations and the
Secretarial Standards on General Meetings (SS-2) are contained in the notice of the
ensuing annual general meeting.
The Board recommends the appointment and re-appointment of Whole-time
Directors and Managing Director as stated above and payment of their remuneration.
2. Retirement of Mr. Sanjay S. Math, Managing Director
Mr. Sanjay S. Math will retire as Managing Director of the Company with
effect from close of business hours of May 31, 2022 after rendering more than 14 years of
dedicated service to the Company. The Board of Directors at its meeting held on May 18,
2022 has considered and approved the retirement of Mr. Sanjay S. Math, Managing Director
and also Key Managerial Personnel with effect from the end of the current term of
appointment on close of business hours of May 31, 2022.
The Board places on record its deep sense of appreciation for the
valuable contributions made by him during his tenure.
3. Re-appointment of Director
Mrs. Ritu P. Chhabria (DIN 00062144), Non-Executive &
Non-Independent Director will retire by rotation as Director at the ensuing Annual General
Meeting and being eligible, offers herself for re-appointment. The Board recommends her
re-appointment.
4. Independent Directors
Ms. Bhumika L. Batra (DIN 03502004), Mrs. Kanchan U. Chitale (DIN
00007267), Dr. Deepak R. Parikh (DIN 06504537), Mr. Pradeep R. Rathi (DIN
00018577) and Mr. Anami N. Roy (DIN 01361110) are Non-Executive Independent Directors of
the Company. Pursuant to Section 149 (7) of the Act, all Independent Directors have
submitted declaration that:
A) Eachofthemmeetthecriteriaofindependence as provided in Section
149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the
Listing Regulations;
B) They are not aware of any circumstance or situation, which exist or
may be reasonably anticipated, that could impair or impact their ability to discharge
their duties with an objective independent judgment and without any external influence
pursuant to Regulation 25 of the Listing Regulations and there has been no change in the
circumstances affecting their status as independent directors of the Company;
C) They have complied with the requirement of inclusion of their name
in the data bank maintained by Indian Institute of Corporate Affairs as envisaged under
Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, as
applicable and they hold valid registration certificate with Data Bank of Independent
Directors.
The Board is of the opinion that the independent directors are of
integrity and possess the requisite expertise and experience (including the proficiency).
5. Key Managerial Personnel (KMP)
Pursuant to the provisions of Section 203 of the Companies Act, 2013
Mr. Sanjay S. Math, Managing Director, Mr. Anil V. Whabi, Director – Finance &
Chief Financial Officer and Mr. Ashutosh B. Kulkarni, Company Secretary are the Key
Managerial Personnel of the Company as on March 31, 2022.
The Board of Directors on recommendation of Nomination and Remuneration
Committee and Audit Committee, at its meeting held on May 18, 2022 appointed Mr. Niraj
Kedia, as Chief Financial Officer and Key Managerial Personnel with effect from May 20,
2022. Consequently Mr. Anil V. Whabi will cease to be Chief Financial Officer with effect
from end of business hours of May 19, 2022.
Mr. Sanjay S. Math Managing Director of the Company will retire with
effect from close of business hours of May 31, 2022 and accordingly he will cease to be
Key Managerial Personnel of the Company with effect from June 1, 2022.
Training and familiarization programme for directors
In compliance of the Regulation 25 (7) of the Listing Regulations, the
Company has conducted the familiarization programme for independent directors with an aim
to provide them with an insight into their roles, rights, responsibilities within the
Company, the nature of the business of the Company and the business model of the Company.
The Board members are provided with necessary documents, reports and internal policies to
enable them to familiarize themselves with the Company?s procedures and practices.
Periodic presentations are made at the Board and its Committee
Meetings, on business and performance updates of the Company, the global business
environment, business strategy and various risks involved.
The updates on relevant statutory changes and landmark judicial
pronouncements encompassing important laws are regularly presented to the Directors.
The details of the familiarization programme for independent directors
are available on the Company?s website https://www.finolexpipes.com/
site/assets/files/13104/familiarization_programmes_for_
independent_directors_fy_2021-22.pdf.
Policy on directors? appointment and remuneration
The Company?s Nomination and Remuneration Committee is governed by
its terms of reference. The Company?s Nomination and Remuneration Policy includes
directors? appointment and remuneration including the criteria for determining
qualifications, positive attributes, independence of a director and other details are
furnished in Annexure-1.
The Company?s Nomination and Remuneration Policy is available on
the Company?s website https://www.
finolexpipes.com/site/assets/files/12928/nomination_ and_remunaration_policy.pdf.
Annual performance evaluation of the Board, its committees and
individual directors
The Company has devised a nomination and remuneration policy for
performance evaluation of independent, non-executive and executive directors. The basis
for this evaluation include fulfillment of the independence criteria, independence from
the management, qualification, positive attributes, area of expertise and the number of
directorships & memberships held in various committees of other companies.
The Board of Directors has carried out an annual evaluation of its own
performance, its committees and the directors individually as per the requirements of the
Companies Act, 2013 and the Listing Regulations.
In a separate meeting of independent directors, performance of
non-independent directors, the Board as a whole and Chairman of the Company was evaluated,
taking into account the views of executive directors and non-executive directors. The
above criteria are broadly based on the Guidance Note on Board Evaluation issued by the
Securities and Exchange Board of India on January 5, 2017.
The Board and the Nomination and Remuneration Committee reviewed the
performance of individual directors on the basis of criteria such as the contribution of
the individual director to the board and committee meetings. At the board meeting, the
performance of the Board, its Committees, and individual directors was also discussed.
Performance evaluation of independent directors was done by the entire Board, excluding
the independent director being evaluated.
Remuneration of directors and key managerial personnel
Pursuant to the provisions of Section 197(12) of the Companies Act,
2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the details of remuneration of directors and key managerial
personnel are furnished in
Annexure-2.
Particulars of employees
In accordance with the provisions of Section 197(12) of the Companies
Act, 2013 read with Rule 5(2) the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration
in excess of the limits set out in the aforesaid Rules, forms part of this Report.
Further, the Report and the Accounts are being sent to the Members excluding the aforesaid
annexure. In terms of Section 136(1) of the Act, any Member, who is interested in
obtaining these, may write to the Company Secretary at investors@finolexind.com. The same
is also open for inspection during working hours at the Registered Office of the Company.
Auditors and Auditors? Report
In the 36th Annual General Meeting held on August 11, 2017,
M/s P.G. Bhagwat LLP, Chartered Accountants (ICAI Firm Registration No. 116231W/W-100024),
was re-appointed as Statutory Auditors of the Company to hold office for five consecutive
years starting from the conclusion of the thirty sixth Annual General Meeting held on
August 11, 2017 until the conclusion of the forty-first AGM of the Company. M/s P.G.
Bhagwat LLP tenure of 5 years as Statutory Auditors concludes at this ensuing Annual
General Meeting (‘AGM?).
The report of the Statutory Auditors on the Standalone and the
Consolidated Financial Statements for the financial year ended March 31, 2022 is enclosed
to this Report and does not contain any qualification, reservation or adverse remark
requiring any explanations / comments by the Board of Directors.
The Board of Directors of the Company has on the recommendation of the
Audit Committee at its meeting held on May 18, 2022 and as per Section 139 of the
Companies Act, 2013 proposed to appoint M/s. Walker Chandiok & Co. LLP (Firm
Registration No. 001076N/ N500013), Chartered Accountants, as the Statutory Auditors of
the Company for a tenure of 5 consecutive years, to hold the office from the conclusion of
the forty-first AGM until the conclusion of the forty-sixth AGM of the Company to be held
in year 2027. The appropriate resolution seeking your approval for the appointment and
remuneration of M/s. Walker Chandiok & Co. LLP as the Statutory Auditors forms part of
the Notice convening the 41st AGM of the Company.
Further, M/s. Walker Chandiok & Co. LLP have under Section 139(1)
of the Companies Act, 2013 and the Rules framed thereunder, furnished a certificate of
their eligibility and consent for the appointment. They have further confirmed that the
said appointment, if made, would be within the prescribed limits under Section 141(3)(g)
of the Companies Act, 2013 and that they are not disqualified for the appointment and hold
a valid certificate issued by the Peer Review Board of the Institute of Chartered
Accountants of India. The Board commend to seek consent of its Members on appointment of
Walker Chandiok & Co. LLP as Statutory Auditors for tenure of 5 consecutive years, to
examine and audit the accounts of the Company during the said period.
Cost Auditors
Your Company has maintained cost accounting records as specified by the
Central Government under Section 148(1) of the Companies Act, 2013. For the financial year
2021-22, M/s. S. R. Bhargave & Co. Cost Accountants (Firm Registration No. 000218)
have conducted the audit of the cost records of the Company.
The Board at its meeting held on May 18, 2022 has, on recommendation of
the Audit Committee, appointed M/s. S. R. Bhargave & Co. as Cost Auditors to conduct
an audit of cost accounting records of the Company for the financial year ending March 31,
2023. Pursuant to the provisions of Section 148 of the Companies Act, 2013 and Rules made
thereunder, the ratification by the Members is necessary for the payment of remuneration
to the cost auditors. Your directors recommend the same.
The Cost Audit Report for the financial year 2020-21, issued by M/s. S.
R. Bhargave & Co., Cost Auditors, in respect of the various products prescribed under
Cost Audit Rules was filed with the Ministry of Corporate Affairs on October 4, 2021.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,
the Company has appointed M/s. SVD & Associates, Practicing Company Secretaries, Pune
(Peer Review No: P2013MH075200) to undertake the secretarial audit of the Company for the
financial year 2021-22. The secretarial audit report for the financial year 2021-22, is
enclosed as Annexure-3.
The Company has devised proper systems to ensure compliance with the
provisions of all applicable Secretarial Standards issued by the Institute of Company
Secretaries of India and that such systems are adequate and operating effectively.
The statutory auditor?s report and the secretarial auditor?s
report do not contain any qualifications, reservations, or adverse remarks or disclaimer.
Disclosures
Your directors are pleased to furnish the following details which are
required to be reported by the Company in the Director?s Report pursuant to Section
134(3) (a) to (q) of the Act.
Annual return
Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act,
2013 read with Companies (Management and Administration) Rules, 2014, the annual return of
the Company for the financial year March 31, 2022 is available on the website of the
Company and can be accessed at https://www.finolexpipes.com/investors/compliance-report/.
Number of meetings of the Board
During the year under review, nine meetings of the Board of Directors
were held. The details of the meetings are provided in the Corporate Governance Report.
Committees of directors
The details of the committees of the directors pursuant to the Listing
Regulations and the Companies Act, 2013, are described in the Corporate Governance Report.
Audit committee
The Audit Committee has been duly constituted as required under the
provisions of the Companies Act, 2013 and the Listing Regulations.
The required details pertaining to the composition of the Audit
Committee, pursuant to Section 177 (8) of the Companies Act, 2013, are given in the
corporate governance report. There are no instances of the Board not having accepted the
recommendation of the Audit Committee during the financial year 2021-22.
Directors? Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your directors,
on the basis of information and documents made available to them, confirm that: a) in the
preparation of the annual financial statements for the year ended on March 31, 2022, the
applicable accounting standards have been followed along with proper explanation relating
to material departures;
b) the directors have selected such accounting policies and applied
them consistently and made judgements and estimates 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 in that period;
c) the directors have taken proper and sufficient care for 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) the directors have prepared the annual accounts on a going concern
basis;
e) the directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively; and
f) the directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
Details in respect of fraud reported by Auditors
During the year under review, the statutory auditors or the secretarial
auditors or the cost auditors have not reported to the audit committee/ Board and/or
Central Government, under Section 143 (12) of the Companies Act, 2013 read with rules
framed thereunder, any instances of fraud committed against the Company by its officers or
employees, the details of which would need to be mentioned in the Board?s report.
Vigil mechanism / Whistle blower policy
The Company has established a vigil mechanism known as the Whistle
Blower Policy (the "WBP") pursuant to Section 177(9) and (10) of the Companies
Act, 2013 and Regulation 22 of the Listing Obligations, to report genuine concerns to the
Chairman of the Audit Committee. The WBP provides adequate safeguards against
victimization of persons who use such mechanism and ensures direct access to the Chairman
of the Audit Committee. The details of the WBP are explained in the Corporate Governance
Report and also posted on the Company?s website.
The Company affirms that no director or employee has been denied access
to the Chairman of the Audit
Committee and that no complaint was received during the year.
Prevention of Sexual harassment policy
The Company has in place a policy for prevention of sexual harassment
of its employees at the workplace. In line with the requirements of the Sexual Harassment
of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, an Internal
Complaints? Committee has been constituted by the Company to redress any complaints
received regarding sexual harassment.
Your directors state that during the year under review, there was no
complaint received / case filed pursuant to the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.
Prohibition of Insider trading
In compliance with the provisions of the SEBI (Prohibition of Insider
Trading) Regulations, 2015 and to preserve the confidentiality and prevent misuse of
unpublished price sensitive information (UPSI), the Company has adopted a Code of Conduct
to Regulate, Monitor and Report Trading by Insiders (‘Insider Trading Code?) and
a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive
Information (‘Code of Fair Disclosure?). The Company has in place the digital
structured database to monitor the insider trading activities.
The said Code of Conduct is intended to prevent the misuse of UPSI by
insiders and connected persons and ensure that the Directors and designated persons of the
Company and their immediate relatives shall not derive any benefit or assist others to
derive any benefit from having access to and possession of such UPSI about the Company
which is not in the public domain, viz. insider information.
The Code of Fair Disclosure ensures that the affairs of the Company are
managed in a fair, transparent and ethical manner keeping in view the needs and interest
of all the stakeholders.
Particulars of loans, guarantees or investments
The details, as applicable, of loans given, investments made or
guarantees given pursuant to Section 186 of the Companies Act, 2013, are disclosed in note
no. 04 to the financial statements for the financial year 2021-22.
It is clarified that the Company has no loans/ advances and investments
in its own shares.
Significant and material orders passed by the regulators or courts or
tribunals
Pursuant to Rule 8 (5) (vii) of the Companies (Accounts) Rules, 2014,
it is reported that no significant and material orders have been passed by the regulators
or courts or tribunals impacting the going concern status of the Company and the
Company?s operations in future.
There are no application made or proceeding pending under the
Insolvency and Bankruptcy Code, 2016 as at the end of the financial year, nor has the
Company done any one time settlement with any Bank or Financial Institutions.
Employee stock option scheme
During the year under review, your directors confirm that no shares
were issued by the Company under the Finolex Industries Limited – Employee Stock
Option Scheme/ Plan (ESOP) of the Company.
Details pursuant to Regulation 14 of the SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 is available on the Company?s website
https://www. finolexpipes.com/site/assets/files/13346/disclosure under sebi regulations on
esop 2021-22.pdf.
The Company has obtained certificate from SVD
& Associates, secretarial auditors of the Company pursuant to
Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021.
Sweat equity shares and equity shares with differential voting rights
Your directors confirm that neither sweat equity shares nor equity
shares with differential voting rights have been issued by the Company during the year
under review.
The conservation of energy, technology absorption, foreign exchange
earnings and outgo
Your Company is committed to achieve the highest standards of
environmental excellence by adopting environmentally sustainable and effective operating
systems and processes. Your Company has put in place the internationally acclaimed
Environment Management System under ISO 14001 certification at Ratnagiri. Your Company, is
in compliance with all applicable environmental regulations in respect of air, water,
noise, hazardous waste, e-waste etc. to mitigate the potential environmental impact on
society.
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo required to be given under Section 134(3) of the Act read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-4.
Business Responsibility Report
Business Responsibility Report for the year ended March 31, 2022 as
stipulated under Regulation 34(2) (f) of the Listing Regulations, is enclosed as Annexure-5.
Corporate Social Responsibility
The Board has constituted a Corporate Social Responsibility (CSR)
Committee and also framed the corporate social responsibility policy pursuant to Section
135 of the Companies Act, 2013. The required details pertaining to the composition of the
CSR Committee are given in the corporate governance report.
The corporate social responsibility policy of the Company can be viewed
on the Company?s website https://www.
finolexpipes.com/site/assets/files/12926/corporate responsibility policy.pdf.
As a responsible corporate citizen, your Company conducts CSR
activities in education, healthcare, sanitation, skill developments, social welfare, water
conservation and women empowerment through its CSR partner, Mukul Madhav Foundation
("MMF"). Your Company has been actively contributing to the social and economic
development of the underprivileged mainly in and around your Company?s plants
situated at Ratnagiri and Urse in the state of Maharashtra and at Masar in the state of
Gujarat. During the financial year 2021-22, the Company?s CSR efforts included
COVID-19 relief in multiple states.
The CSR activities carried out by your Company through MMF is headed by
Mrs. Ritu P. Chhabria, Managing Trustee of Mukul Madhav Foundation, a driving force in
accomplishing the activities on day-to-day basis.
During the financial year 2021-22, your Company in association with MMF
has incurred expenditure on various CSR activities aggregating Rs 19.00 Crores against the
mandatory CSR expenses of Rs 12.38 Crores.
The Annual report on the CSR activities is enclosed as
Annexure-6.
Cautionary statement
Statements in the Board of Directors? Report and the Management
Discussion & Analysis describing the Company?s objectives, expectations or
forecasts may be 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 affecting the selling prices of finished goods, input availability and
prices, changes in government regulations, tax laws, economic developments within the
country and other factors such as litigation and industrial relations.
Acknowledgements
Your directors take this opportunity to place on record their sense of
gratitude to the banks, financial institutions, central and state government departments
and local authorities for their guidance and support. Your directors are also grateful to
the customers, suppliers and business associates of the Company for their continued
co-operation and support. Your directors express their deep appreciation for the
commitment, dedication and hard work put in by the employees at all levels. Lastly, your
directors are grateful for the confidence and faith shown in them by the shareholders of
the Company.
|
For and on behalf of the Board of Directors |
|
Prakash P. Chhabria |
| May 18, 2022 |
Executive Chairman |
| Place: London |
DIN : 00016017 |
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