DIRECTORS REPORT Your Directors are pleased to present the 49th Annual Report together with the Audited Annual Accounts of your Company for the year ended 31st March, 2016. During the financial year ended 31st March, 2016, revenue from Operations & Other Income was Rs.1218.75 crores as against Rs. 1050.29 crores during previous year, registering a growth of 16%. Profit before exceptional items and tax was at Rs. 92.06 crores as against Rs. 62.44 crores in the previous year. Profit after Tax for the year under review was at Rs. 63.41 crores against Rs. 47.86 crores in the previous year. As on 31st March, 2016, Reserves and Surplus of your Company were at Rs.308.09 crores. Your Directors confirm that there has been no material change and commitments affecting the financial position of your Company occurred between the end of the financial year to which the Financial Statements relate and the date of this Annual Report. A detailed analysis of the operations of your Company during the year under report is included in the Management Discussion and Analysis Report, forming part of this Annual Report. DIVIDEND Your Directors are pleased to recommend for your consideration, a final dividend of Rs. 1.40 (One Rupee and Forty Paise only) per equity share of Rs. 2 each (previous year Rs. 1 per equity share of Rs. 2 each) for the financial year 2015-16. Your Company had paid in February, 2016, an interim dividend of Rs. 0.60 (Sixty paise only) per equity share of Rs. 2 each for the financial year 201516. Accordingly, the total dividend declared/recommended by your Company for the financial year 2015-16 is Rs. 2 (Rupees Two only) per equity share of Rs. 2 each (previous year Rs. 1.50 per equity share of Rs. 2 each). Your Company proposes a higher dividend compared to previous year as your Company has earned a good profit during the financial year 2015-16. exports and international operations Due to subdued market conditions in UK, Europe and Asia Pacific, the International Business of the Company declined during the year. While sale of private label business has grown, branded goods sales declined in select geographies in Europe. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, your Directors, based on their knowledge and belief and the information and explanations obtained confirm that: (a) the applicable accounting standards have been followed in the preparation of the annual accounts along with proper explanation relating to material departures; (b) such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended 31st March, 2016 and of the profit and loss of your Company for the financial year ended 31st March, 2016; (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 your Company and for preventing and detecting fraud and other irregularities; (d) annual accounts for the financial year ended 31st March, 2016 have been prepared on a 'Going Concern' basis. (e) internal financial controls have been followed by your Company which are adequate and operating effectively. (f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION OF INDEPENDENT DIRECTORS Pursuant to section 134(3)(d) of the Act, your Company confirm having received necessary declarations from all the Independent Directors under section 149(7) of the Companies Act, 2013 declaring that they meet the criteria of independence laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. MANAGEMENT DISCUSSION & ANALYSIS REPORT, SECRETARIAL AUDIT REPORT AND REPORT ON CORPORATE GOVERNANCE As provided under Section 134 of the Companies Act, 2013 and Rules framed there under and pursuant to Regulation 34(2) (d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, along with the Management Discussion and Analysis Report, the Report on Corporate Governance and the Certificate in respect of compliance of requirements of Corporate Governance, Secretarial Audit Report and other reports and information are annexed to this Report and forms part of this Annual Report. SUBSIDIARIES The Consolidated Financial Statements of your Company include the financial results of VIP Industries Bangladesh Private Limited and Blow Plast Retail Limited for the financial year 2015-16. The annual accounts of VIP Industries Bangladesh Private Limited and Blow Plast Retail Limited are available for inspection by any Member at the Registered Office of your Company, during normal business hours (9.00 am to 5.00 pm) on all working days except Saturdays, upto the date of Annual General Meeting of the Company, a copy of which can also be sought by any Member on making a written request to the Secretarial Department of your Company in this regard. INSURANCE All the assets of your Company including Plant & Machinery, Buildings and Equipment are adequately insured. depository Your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). ELECTRONIC VOTING Your Company has entered into an agreement with NSDL and CDSL for providing facility of e-voting to its shareholders. For the year 2015-16 your Company has availed services of CDSL for providing facility of remote e-voting to its shareholders for casting their vote electronically. public deposits During the year under review your Company has not accepted any deposits. Your Company does not have any unclaimed deposit as at 31st March, 2016. DIRECTORS Ms. Radhika Piramal, Managing Director of your Company retires by rotation and being eligible offers herself for re-appointment. BOARD EVALUATION Pursuant to Section 134(3) of the Act read with Schedule IV thereto and in terms of Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has set up a policy for the performance evaluation of all Directors, which is available on the website of your Company. The Board of Directors has put in place a process to formally evaluate the effectiveness of the Board, its Committees along with performance evaluation of each Director to be carried out on an annual basis. Accordingly, the annual performance evaluation of the Board, its Committees and each Director was carried out during the financial year 2015-16. Performance of each of your Directors is evaluated on the basis of several factors by the entire Board excluding the Director being evaluated. Your Company has also set up Performance Evaluation Policy for its Independent Directors and Executive Directors inter-alia which includes independent view on Key appointments and strategy formulation, safeguard of stakeholders interest, raising concerns, if any to the Board, up dation of skills and knowledge, strategic planning for finance and business related, operational performance level of the Company, qualification and leadership skills. The Board of Directors of your Company discusses and analyses its own performance on an annual basis, together with suggestion for improvements thereon based on the performance objectives set for the Board as a whole. The Board approved the evaluation results. Your Company has formulated a separate Evaluation Policy for its Board members, which is available on the website of your Company. None of the independent directors are due for re-appointment TRAINING OF INDEPENDENT DIRECTORS The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarize with your Company's procedures and practices. Periodic presentations are made at the Board Meetings and the Board Committee Meetings, on business and performance updates of your Company, global business environment, business strategy and risks involved. Every new independent director of the Board attends an orientation program to familiarize the new inductees with the strategy, operations and functions of your Company. The Executive Directors / Senior Management personnel make presentations to the inductees about your Company's strategy, operations, products, markets, finance, human resources, technology, quality, facilities and risk management. Further at the time of appointment of an independent director, your Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities as a Director. The format of letter of appointment is available on the website of your Company. Your Company has set up a separate Familiarisation program for newly appointed Independent Directors and the same is available on the website of your Company. CODE OF BUSINESS CONDUCT AND ETHICS FOR DIRECTORS/ MANAGEMENT PERSONNEL The Code of Business Conduct and Ethics for Directors/Management Personnel ('the Code'), as adopted by the Board, is a comprehensive Code applicable to Directors and Senior Management Personnel of your Company. The Code, while laying down in detail, the standards of business conduct and ethics also deals with governance aspects. A copy of the Code has been uploaded on your Company's website www.vipindustries.co.in The Code has been circulated to Directors and Senior Management Personnel and its compliance is affirmed by them regularly on an annual basis. A declaration signed by your Company's Managing Director is published in this Report. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW Your Company's Board of Directors met four times during the financial year under review. A calendar of Meetings is prepared and circulated in advance to your Directors. During the year under report, four Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. KEY MANAGERIAL PERSONNEL The Key Managerial Personnel of your Company are Ms. Radhika Piramal, Managing Director and Mr. Jogendra Sethi, Chief Financial Officer. Mr. Shreyas Trivedi designated as General Manager- Legal & Company Secretary has resigned w.e.f. 29th April, 2016 and therefore ceases to be a Key Managerial Personnel of the Company appointed in terms of Section 203 of the Companies Act, 2013. AUDITORS Statutory Auditors The tenure of M/s. M.L.Bhuwania & Co., Chartered Accountants, is completing at the forthcoming Annual General Meeting. Pursuant to completion of the term of M/s. M.L.Bhuwania & Co., the Board on the recommendation of Audit Committee proposes to appoint M/s. Price Waterhouse Chartered Accountants LLP, Chartered Accountants, bearing Firm Registration No. 012754N/N500016 as the Statutory Auditors of your Company for a term of 5 years commencing from the conclusion of 49th Annual General Meeting till the conclusion of 54th Annual General Meeting subject to ratification by Members in each Annual General Meeting. As required under the provisions of Section 139 and Section 141 of the Companies Act, 2013, your Company has received a written certificate from the Statutory Auditors proposed to be appointed, to the effect that their appointment, if made, would be in conformity with the limits specified in the said Section. The Report Received from M/s. M.L. Bhuwania & Co. for the financial year 2015-16 does not contain any qualifications, reservations or adverse remarks. A proposal seeking appointment of M/s. Price Waterhouse Chartered Accountants LLP, Chartered Accountants, as the statutory Auditor of your Company is provided as a part of the Notice convening the ensuing Annual General Meeting. Internal Auditors M/s. Suresh Surana & Associates LLP, Chartered Accountants, was the Internal Auditors of your Company for the financial year 2015-16. Based on the recommendation of the Audit Committee of your Company, the Board of Directors of your Company has re-appointed M/s. Suresh Surana & Associates LLP, Chartered Accountants, as the Internal Auditors of your Company for the financial year 2016-17. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors of your Company have re-appointed M/s. Ragini Chokshi & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of your Company for the financial year 2016-17. The Secretarial Audit Report for the financial year 2015-16 forms part of this Annual Report and is appended as Annexure 'B' to the Board's report. The Report does not contain any qualifications, reservations or adverse remarks. corporate social responsibility The Corporate Social Responsibility (CSR) expenditure incurred by your Company during the financial year 2015-16 was Rs. 1.20 crores which was higher than the statutory requirement of 2% of the average profit for the last three financial years. The CSR initiatives of your Company and various activities undertaken in this regard are detailed in Annexure 'C'. The annual report on CSR activities undertaken during the financial year 2015-16 is in accordance with Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 and is appended as Annexure 'C' to this Report. VIGIL MECHANISM Your Company has established a Vigil Mechanism Policy for your Directors and employees to safeguard against victimisation of persons who use vigil mechanism and report genuine concerns. The Audit Committee oversees the vigil mechanism complaints. During the year, complaints are received under vigil mechanism policy and necessary actions are being taken as per policy. prevention of sexual harassment at workplace As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC). During the year, no complaints with allegations of sexual harassment has been received by ICC. INTERNAL FINANCIAL CONTROLS Your Company has put in place adequate internal financial controls with reference to the financial statements. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies, the safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. MATERIAL SUBSIDIARIES Your Company has established a Policy for determining Material Subsidiaries and the same is available on the website of your Company viz. www.vipindustries.co.in RELATED PARTY TRANSACTIONS Your Company has established a Policy for determining related party transactions. The Audit Committee oversees the related party transactions. The Related Party Transaction Policy is available on the website of your Company. None of the transactions with any of related parties were in conflict with your Company's interest. Attention of members is drawn to the disclosure of transactions with related parties set out in Note No. 32 of Standalone Financial Statements, forming part of the Annual Report. Your Company's major related party transactions are generally with its subsidiaries and associates. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sectoral specialisation and your Company's long-term strategy and capital resources of subsidiaries and associates. All related party transactions are negotiated on arms length basis and are intended to further your Company's interests. PARTICULARS OF EMPLOYEES & EMPLOYEE STOCK OPTION SCHEME In terms of the provisions of Section 197(12) of the Companies Act, 2013 (the Act) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Annual Report. Having regard to the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to the members of your Company. The said information is available for inspection at the registered office of your Company during working hours and any member desirous of obtaining such information may write to the Secretarial Department of your Company and the same will be furnished on request. During the year under review, no fresh stock options have been granted by your Company. Accordingly, no new equity shares have been allotted under the Employee Stock Option Scheme of your Company. Hence, no disclosure under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 have been made during the year under review. SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and your Company's operations in future. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2008-09 is due for remittance to the Investor Education and Protection Fund established by the Central Government on 30th September, 2016. PARTICULARS Of Loans, Guarantees OR Investments Made Under Section 186 Of THE Companies ACT, 2013 There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable. ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in the prescribed Form MGT-9 is annexed herewith as Annexure 'D'. REMUNERATION RATIO OF THE DIRECTORS / Key MANAGERIAL PERSONNEL (KMP) / employees . A brief write up on the Human Resource Department and initiatives taken during the year 2015-16 The Human Resources department of your Company has effectively partnered the business in the year under review to register good growth in line with the Company's targets. Through structured Human Resource processes your Company has been able to attract and retain the right talent at all levels. The Company embarked on a journey last year to become a Great Place to Work where employees trust the Company they work for, take pride in what they do and enjoy the company of the people they work with. The Company strongly believes that an engaged workforce is critical in achieving its business goals and building a sustainable organization. Under this initiative, over the last one year your Company did considerable work around Rewards & Recognition, Training & Development, Compensation & Benefits and Work Life Balance. A positive work environment, employee driven initiatives and exciting career prospects have helped keep attrition under control, inspite of aggressive external market factors. Your Company had been in a long drawn dispute with workers over the retirement age in your Company being 56 years and the matter was referred to Industrial Tribunal, Nashik. The court has given the ruling in your Company's favour. The employee strength as on 31st March, 2016 is 2744. 4. The percentage increase in the median remuneration of employees for the financial year 2015-16 is at 14.47%. The percentage increase in the median remuneration is calculated for comparable employees and does not include employees who were not eligible. 5. Your Company considered the following factors while recommending increase in the compensation. 1. Financial performance of the Company. 2. Sales growth of your Company during the year under review. 3. Salary Benchmarking against peer companies. 4. Industry benchmarks. 6. Your Company provided an average increase in remuneration of 13.17% to Key Managerial Personnel against an overall average increase in median salaries of 14.47%. 7. The comparison of remuneration of each of the Key Managerial Personnel against the performance of your Company is as below: Managing Director: 4.07% of net profits for the year 2015-16. Chief Financial Officer: 1.90% of net profits for the year 2015-16. General Manager - Legal & Company Secretary: 0.68% of net profits for the year 2015-16. 8. The variable payout for Directors is linked with the Company performance as well as individual performance. In the year 2015-16, your Company had met the profitability targets, hence the Company linked variable pay was paid. 9. There are no employees of your Company who receive remuneration in excess of the highest paid Director of the Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure 'A' as attached to this report. INDUSTRIAL RELATIONS Industrial relations remained cordial throughout the year under review. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation for the dedicated services of the employees of your Company at all levels. By Order of the Board of Directors DILIP G. PIRAMAL Chairman (DIN No 00032012) Place: Mumbai Dated: 25th May, 2016 |