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Hindalco Industries

BSE: 500440|NSE: HINDALCO|ISIN: INE038A01020|SECTOR: Aluminium
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Directors Report Year End : Mar '16    « Mar 15
Dear Shareholder,
 
 The Directors have pleasure in presenting the 57th Annual Report and
 the audited standalone and consolidated financial statements of your
 company for the year ended 31st March, 2016.
 
 FINANCIAL HIGHLIGHTS
 
                                                            (Rs. crore)
 
                                    Standalone           Consolidated
                                  FY16      FY15        FY16       FY15
 
 Revenue from Operations        34,318    34,525    1,00,042   1,04,281
 
 Other Income                    1,066       882       1,215      1,105
 
 Profit Before Interest, Tax
 and Depreciation (PBITDA)       4,384     4,299      10,007     10,049
 
 Depreciation                    1,277       837       4,287      3,591
 
 Finance Costs                   2,375     1,637       5,049      4,178
 
 Profit before Exceptional 
 Items and Tax                     732     1,825         671      2,280
 
 Exceptional Items                   -       578         577      1,940
 
 Profit before Tax                 732     1,247          94        340
 
 Tax Expenses                      125       322         515        256
 
 Profit/ (Loss) for the 
 period from Continuing 
 Operations                        607       925        (421)        84
 
 Profit/ (Loss) from 
 Discontinuing Operations            -         -        (158)         -
 
 Share in Profit/ (Loss) 
 of Associates (Net)                 -         -         175        175
 
 Minority Interest in Profit/
 (Loss) (Net)                        -         -        (449)      (596)
 
 Net Profit                        607       925          45        854
 
 Basic EPS -Rs.                   2.94      4.48        0.22       4.14
 
 The amounts proposed to carry to any reserves: 
 
 Standalone Accounts :
 
                                                          (Rs. crore)
 
 Surplus in the Statement                        As at           As at
 of Profit and Loss                         31/03/2016      31/03/2015
 
 Balance as at the                             1279.35          750.00
 beginning of the year
 
 Add: Profit for the year                       607.25          925.16
 
 Less: Transferred to                          (150.00)        (150.00)
 Debenture Redemption Reserve
 
 Less: Dividend on Equity                      (206.50)        (206.52)
 Shares - (a)
 
 Less: Dividend                                 (21.07)         (39.29)
 Distribution Tax - (a) & (b)
 
 Balance as at the end of                      1509.03         1279.35
 the year
 
 a) Dividend on Equity Shares and Tax on Dividend include Rs. Nil
 (Previous year Rs. 0.02 crore) pertaining to previous year for Equity
 shares issued before the record date of dividend.
 
 b) Dividend Distribution Tax is net of Rs. 20.97 crore (Previous year
 Rs. 0.30 crore) being dividend distribution tax paid by subsidiaries.
 
 Dividend:
 
 For the year ended 31st March,2016, the Board of Directors of your
 Company have recommended dividend of Rs. 1 per share (Previous year Rs.
 1 per share) to equity shareholders aggregating to Rs. 249 crore
 (Previous year Rs. 246 crore) including Dividend Distribution Tax.
 
 Equity shares that may be allotted upon exercise of Options granted
 under the Employee Stock Option Scheme 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.
 
 OVERVIEW AND STATE OF THE COMPANY''S AFFAIRS
 
 For the year ended March 31, 2016, the Company''s revenue at Rs. 34,318
 crore was broadly stable at FY 15 level notwithstanding the sharp fall
 in both aluminium and copper realisations. The steep fall in copper
 revenues was offset by increased revenues from aluminium business. The
 aluminium higher revenues were achieved primarily on the back of higher
 volumes and improved product mix despite a sharp decline in
 realisations.
 
 Profit before Interest, Tax, Depreciation and Amortisation (PBITDA) for
 the year was marginally higher by 2%. This reflects a robust
 operational performance in a challenging year, when average
 realisations were much lower. PBIDTA was also augmented by higher other
 income.
 
 As anticipated, depreciation and finance cost increased by Rs. 1,178
 crore over FY 15 following progressive capitalisation of the projects.
 The PBT during FY 16 (before exceptional items) was lower by 60% at Rs.
 733 crore. Net Profit for the year at Rs. 607 crore was lower by 34% as
 compared with that delivered in FY 15.
 
 Standalone Segmental Results:
 
                                                     (Rs. crore)
 
                                                 FY16        FY15 
 
 Aluminium Segment
 
 Net Sales                                     17,125      14,105
 
 Earnings Before Interest & Tax (EBIT)            880       1,349
 
 Copper Segment
 
 Net Sales                                     17,209      20,451
 
 Earnings Before Interest & Tax (EBIT)          1,419       1,516
 
 Aluminium business:
 
 During FY 16, our primary focus was on ramping up the Greenfield
 projects to their designed capacities and stabilise these operations.
 This objective was achieved during the year and all plants are now
 running at their designed capacities.
 
 For the year, Alumina production (including Utkal refinery) was 2.7 Mn
 tonnes, an increase of 19% over FY 15. Aluminium production for the
 year reached a record high. It crossed the 1 Mn tonnes mark for the
 first time reaching 1.13 Mn tonnes an increase of 36% or almost 300 KT
 over that produced during the previous financial year. In spite of
 higher volumes, the EBIT of Aluminium segment declined because of
 higher depreciation following progressive capitalisation of the
 projects. The standalone financials do not include Utkal''s financial
 performance.
 
 Copper Business:
 
 Though copper production for the year was steady at 388 KT, Fertiliser
 production rose by 8%. Our continued thrust on Value addition led to
 higher production of Continuous cast (CC) rods. The production of CC
 rods was higher by 5%. Despite all these initiatives for value
 maximisation, EBIT was 6% lower as compared with that achieved in FY15.
 This was primarily on account of the abolition of certain export
 incentive scheme during the year and challenging market conditions.
 
 Consolidated Results:
 
 Consolidated revenue decreased by 4% while Profit before interest,
 depreciation and taxes was at same level compared to the last year''s
 corresponding fi gures.
 
 Net Profit was lower at Rs. 45 crore on back of adverse macroeconomic
 conditions, higher interest cost, depreciation and loss from
 discontinuing operations.
 
 Novelis Inc. (A wholly owned subsidiary):
 
 Revenues decreased 11% to .9 billion in FY 2016, as higher shipments
 were more than offset by a 16% decrease in average base aluminium
 prices and a 58% decrease in local market premiums.
 
 For fiscal year 2016, the company recorded a net loss of  million.
 Excluding tax effected special items, net income was 1 million for
 the full year.
 
 The rapid decline in local market premiums over the early months of FY
 2016 resulted in 2 million in negative metal price lag for the full
 year, and was primarily responsible for the 12% decrease in EBITDA to
 1 million in FY 2016. Excluding the impact of metal price lag in
 both years, EBITDA was 3 million in FY 2016, up 7% compared to 6
 million in FY 2015.
 
 The company more than doubled its free cash fl ow as compared to the
 prior year, generating 0 million in FY 2016 after investing 0
 million in capital expenditure. As of March 31, 2016, the company
 reported a strong liquidity of .2 billion.
 
 Utkal Alumina International Limited (UAIL) (A wholly owned subsidiary):
 
 The alumina refinery at UAIL produced 1.4 Mn tonne of alumina in FY 16
 compared to 1 Mn tonne in FY 15. Of this, 130 KT of alumina was sold
 outside and the balance was supplied to smelters at Hindalco.  The cost
 of production of alumina at UAIL is comparable to the world benchmark
 cost of production.
 
 UAIL reported an EBITDA of Rs. 714 crore. Its net loss stood at Rs. 93
 crore after accounting for interest charge of Rs. 518 crore and
 depreciation of Rs. 289 crore.
 
 Aditya Birla Minerals Limited:
 
 Aditya Birla Minerals Limited (ABML), Australia, a subsidiary of the
 Company, has sold 100% of the shares in Birla Mt Gordon Pty Ltd to M/s
 Lighthouse Minerals Holdings Pty Ltd on 27th October, 2015.
 
 Further, Metals X Ltd, a listed company in Australia, made a takeover
 offer for shares of ABML. As per the offer, the Shareholders of ABML
 will receive A$ 0.08 per share of ABML in cash and 1 share of Metals X
 Limited for every 4.5 shares of ABML. The Company has accepted the said
 offer on 19th July, 2016 in respect of its entire shareholding of ABML.
 
 There were no other material changes and commitments affecting the
 financial position of your Company between end of financial year and
 the date of report.
 
 Business Reconstruction Reserve:
 
 The Company had formulated a scheme of financial restructuring under
 Sections 391 to 394 of the Companies Act 1956 (the Scheme) between
 the Company and its equity shareholders approved by the High Court of
 judicature of Bombay to deal with various costs associated with its
 organic and inorganic growth plan. Pursuant to this, a separate reserve
 account titled as Business Reconstruction Reserve (BRR) was created
 during the year 2008-09 by transferring balance standing to the credit
 of Securities Premium Account of the Company for adjustment of certain
 expenses as prescribed in the Scheme.  Accordingly, the Company had
 transferred Rs. 8,647.37 crore from Securities Premium Account to BRR
 and till 31st March, 2015, Rs. 250.33 crore and Rs. 2,165.80 crore have
 been adjusted against BRR in stand-alone and consolidated accounts
 respectively. During the year, following expenses has been adjusted
 with BRR in both accounts:
 
 (a) Rs. 279.46 crore towards expenses on exited Projects.
 
 (b) Impairment loss of Rs. 367.31 crore (Net of deferred tax Rs. 194.39
 crore).
 
 (c) Provision of Rs. 35.50 crore towards diminution in value of
 investments.
 
 Had the Scheme not prescribed aforesaid treatment, the impact on
 results and Earnings per Share (EPS) would have been as under:
 
 i) Standalone and Consolidated Net Profit for the year ended 31st
 March, 2016 lower by Rs. 682.27 crore.
 
 (ii) Standalone and Consolidated Basic and Diluted EPS for the year
 ended 31st March, 2016 lower by Rs. 3.30.
 
 HUMAN RESOURCES
 
 Several innovative people – focused initiatives have been instituted at
 the Group level, and these are translated into action at all of the
 Aditya Birla 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 byproduct 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, alumina and
 specialty alumina products, and one HIC-SemiFab located at Taloja, near
 Mumbai, working in the area of aluminium fabricated products. 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 some patent applications, which have been and will be
 assigned to your company on the grant of the patent. ABSTCPL''s forte of
 having multi- disciplinary teams of technical experts, scientists and
 engineers, enables your company to develop building competencies in
 select areas, as a long term value to business.
 
 AWARDS & RECOGNITIONS
 
 Several accolades have been conferred upon your Company, in recognition
 of its contribution in diverse field. A selective list:
 
 Hindalco Marketing:
 
 Hindalco awarded the Top Exporter - Gold Trophy in the category of
 large enterprise for outstanding performance in financial year 2013–14.
 This was the second consecutive year that Hindalco has won the top
 award in this category. This recognition of excellence in exports, is
 an award administered by EEPC (formerly Engineering Export Promotion
 Council), an export promotion council under Union Ministry of Commerce
 and Industry, Government of India.
 
 The London Metal Exchange in March, 2016 approved Aluminium Ingots &
 Sows produced at Aditya and Mahan Smelters as good delivery brands
 against its high grade primary Aluminium contracts.
 
 Aditya Aluminium:
 
 Aditya Aluminium wins Safety Award by the National Safety Council of
 India - Certificate of Appreciation in recognition of appreciable
 achievement in Occupational Safety and Health.
 
 Belagavi Alumina:
 
 Belagavi Alumina wins the State Safety Award – Unnatha Suraksha
 Puraskara - by the National Safety Council of Karnataka State for
 outstanding work in safety performance and management systems in the
 manufacturing sector category.
 
 Belur Rolling Plant:
 
 Belur Rolling Plant wins First Prize in Industrial Relations category,
 for the 16th Long Term Settlement signed at a 78 year old unit, which
 has contributed towards survival and profitability of the plant,
 presented by the National HRD Network Eastern Regional Zenith Awards &
 Recognition Programme held in January 2016.
 
 Birla Copper:
 
 Birla Copper Dahej wins the Greentech Environment Gold Award for 2015,
 in the Metal & Mining sector, for continual sustainable development
 approach, presented by the Greentech Foundation, New Delhi.
 
 Birla Copper Dahej awarded the Greentech Gold Safety Award 2015 in the
 Metal & Mining Sector for outstanding achievement in Safety Management.
 
 Birla Copper Dahej wins the FAI Environmental Protection Award – 2015
 constituted by the Fertilizer Association of India for control of
 pollution.
 
 Gare Palma Coal Mines:
 
 Gare Palma Coal Mines wins First Prize in the HR Best Practices
 category, for cultural change brought about in the newly acquired
 mines, presented by the National HRD Network Eastern Regional Zenith
 Awards & Recognition Programme held in January 2016.
 
 Hirakud:
 
 Hirakud Complex awarded the Greentech Safety Gold Award 2015 in Metal,
 Mining & CPP Sector category presented by the Greentech Foundation, New
 Delhi.
 
 Hirakud Power wins the CII Odisha State Award 2015, First Prize, for
 Best Practices in Environment, Health & Safety.
 
 Utkal Alumina International Limited:
 
 (wholly owned subsidiary)
 
 Utkal Alumina awarded the OTV (Odisha Television) CSR Award 2015 in the
 category of Women''s Empowerment.
 
 Individual:
 
 Mr. D. Bhattacharya, Managing Director Hindalco and Vice Chairman,
 Novelis, named Global Leader of the Year by CEO India, for his multiple
 distinctions achieved on the world stage and leading the Aditya Birla
 Group''s metals business in a highly volatile environment.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 The Consolidated Financial Statements for the year ended 31st March,
 2016 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.
 
 Consolidated Financial Statements (CFS) were approved by the Board of
 Directors on 28th May, 2016 which incorporated accounts of Aditya Birla
 Minerals Limited (ABML), Australia, a subsidiary of the Company, for
 six months ended 30th September, 2015, as full year accounts of ABML
 were not available at that time.  ABML has subsequently finalized its
 accounts for the year ended 31st March, 2016.  Accordingly, the Board
 of Directors in the meeting held on 21st July, 2016 approved updated
 CFS based on full year accounts of ABML which is a part of full Annual
 Report.
 
 EMPLOYEE STOCK OPTION SCHEMES
 
 ESOS – 2006:
 
 During the year ended 31st March, 2016, the Company has allotted 3,185
 fully paid-up equity share of Rs. 1/- each (Previous year 373,666) on
 exercise of options under ESOS 2006 for which the Company has realised
 Rs. 0.03 crore (Previous year Rs. 3.83 crore) as exercise money. The
 weighted average share price at the exercise date was Rs. 134.70 per
 share (Previous year Rs. 168.73 per share).
 
 ESOS – 2013:
 
 During the year ended 31st March, 2016, the Company has allotted 2,193
 fully paid-up equity share of Rs. 1/- each (Previous year 18,848) on
 exercise of options under ESOS 2013 for which the Company has realised
 Rs. 0.03 crore (Previous year Rs. 0.22 crore) as exercise money. The
 weighted average share price at the exercise date was Rs. 114.30 per
 share (Previous year Rs. 154.54 per share).
 
 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.
 
 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 and has implemented all of its stipulations.
 
 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
 balance sheet and statement of profit and loss and other documents to
 the shareholders for the Financial Year 2015-16, 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'', ''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, 2016 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 I 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 Offi ce 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 II to the
 full and Abridged Annual Report.
 
 DIRECTORS
 
 Board constitution and changes:
 
 Mr. Y.P. Dandiwala (DIN:01055000), was appointed as an Independent
 Director of the Company for a term of five years which was also
 approved by the members in the Annual General Meeting held on 16th
 September, 2015. At the same Annual General Meeting, Mr. Kumar Mangalam
 Birla and Mr. Satish Pai were reappointed as the Directors of the
 Company.
 
 Mr. N. J. Jhaveri passed away, hence ceased to be a Director w.e.f. 6th
 June, 2015.
 
 Mr. D. Bhattacharya (DIN:00033553) will demit the office as the
 Managing Director w.e.f. the close of business hours of 31st July 2016.
 He is appointed as the Vice Chairman of the Board.
 
 Mr. Satish Pai (DIN:06646758) is appointed as the Managing Director for
 a term of 5 years w.e.f. opening hours of 1st August 2016.
 
 Mr. Praveen Kumar Maheshwari (DIN:00174361) is appointed as the
 Whole-time Director for a term of 5 Years w.e.f. 28th May,2016. He is
 also the Chief Financial Officer of the Company.
 
 Mr. Girish Dave (DIN:00036455) is appointed as an Independent Director
 for a term of 5 years w.e.f.  28th May, 2016.
 
 These changes are based on recommendation of the Nomination and
 Remuneration Committee. The Board places on record its deep
 appreciation for the services rendered by Mr. Bhattacharya as the
 Managing Director of your Company.
 
 Notices pursuant to Section 160 of the Companies Act, 2013, have been
 received from members proposing Mr. Praveen Kumar Maheshwari and Mr.
 Girish Dave as Directors of the Company.
 
 Smt. Rajashree Birla (DIN:00022995) and Mr. D. Bhattacharya
 (DIN:00033553) will retire from offi ce by rotation at the ensuing
 Annual General Meeting, and being eligible, offers themselves for
 reappointment.
 
 The Board recommends the appointment of Mr. Satish Pai, Mr. Praveen
 Kumar Maheshwari and Mr. Girish Dave and reappointment of Smt.
 Rajashree Birla and Mr. D. Bhattacharya. Items seeking your approval on
 the above are included in the Notice convening the Annual General
 Meeting.
 
 Brief resume of the directors being appointed/ reappointed forms part
 of the notice of the ensuing Annual General Meeting.
 
 All the directors being appointed/reappointed have given required
 declaration under Companies Act, 2013 and Listing Regulations.
 
 All Independent Directors have given declarations that they meet the
 criteria of Independence as laid down under Section 149(6) of the
 Companies Act, 2013 and 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 III
 to the full Annual Report.
 
 Meetings of the Board:
 
 The Board of Directors of your Company met 5 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 have 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.
 
 Board members have evaluated Independent Directors, Non executive
 Directors, Executive Directors, Committee and Chairman of the Board.
 The result of evaluation was satisfactory and meets the requirements of
 the Company.  Board fully agreed and rated 100% on its functioning,
 skill sets and working atmosphere.  Independent Directors scored well
 on expressing their views and in understanding the Company and its
 requirements. Non-Executive Directors scored well in understanding the
 Company and its requirement. Executive Directors are action oriented
 and ensures timely implementation of the Board decisions. Board is
 completely satisfied with the functioning of various Committees. Board
 has full faith in the Chairman in leading the Board effectively and
 ensuring contribution from all its members.
 
 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. D.
 Bhattacharya: Managing Director, Mr. Satish Pai: Deputy Managing
 Director and Mr. Praveen Kumar Maheshwari: Chief Financial Officer 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. D.
 Bhattacharya: Managing Director, Mr. Satish Pai: Deputy 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
 or access to the Chairman of the Audit Committee.
 
 The vigil mechanism is available on your Company''s website viz.
 www.hindalco.com.
 
 AUDITORS
 
 Statutory Auditors:
 
 Pursuant to provisions of Section 139 of the Companies Act, 2013 read
 with the Companies (Audit and Auditors) Rules, 2014, M/s Singhi & Co,
 Chartered Accountants were appointed as Statutory Auditors of the
 Company from the conclusion of fifty fifth Annual General Meeting held
 on 24th September, 2014, until the conclusion of fifty-eighth Annual
 General meeting to be held in the calendar year 2017, subject to
 ratification of their appointment at every Annual General Meeting.
 
 Resolution seeking your ratification is included in the Notice
 convening the Annual General Meeting. The observation made in the
 Auditor''s Report are self explanatory and thereofore, 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, 2017, 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 Auditor:
 
 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 had appointed BNP & Associates,
 Company Secretaries, Mumbai as Secretarial Auditor for conducting the
 Secretarial Audit of your Company for the financial year ended 31st
 March, 2016. The Report of the Secretarial Auditor is annexed as
 Annexure IV 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
 are Mr. Jagdish Khattar, Independent Director, Mr. A.K. Agarwala, Non
 Executive Director and Mr. D. Bhattacharya, Managing Director. Dr.
 Pragnya Ram, Group Executive President, Corporate Communication & CSR
 is a permanent invitee to the Committee. 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 2015-16 the Company has spent Rs. 34.15 crore
 under Section 135 of the Companies Act, 2013 on CSR Activities, which
 represent 2.20% of average net Profits of the Company for last three
 Financial Years.
 
 The Annual Report on CSR activities is attached as Annexure V to the
 full Annual Report.
 
 RISK MANAGEMENT
 
 Pursuant to the requirement of Listing Regulations, the Company has
 constituted Risk Management Committee, 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, 2016 is given in Annexure VI to the
 full Annual Report.
 
 BUSINESS RESPONSIBILITY REPORT:
 
 As per Listing Regulations, a separate section of Business
 Responsibility Report forms part of the full and Abridged Annual
 Report.
 
 INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
 
 Your Company has an Internal Control System, commensurate with the
 size, scale and complexity of its operations. The scope and authority
 of the Internal Audit (IA) function is defined by the Audit Committee.
 
 The Internal Audit Department monitors and evaluates 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 internal auditors, the process owners undertake
 corrective action in their respective areas and thereby strengthen the
 controls. Significant audit observations and corrective actions thereon
 are presented to the Audit Committee.
 
 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 statement on the
 performance and financial position of each of the subsidiaries,
 associates and Joint Venture is attached as Annexure VII to the full
 and Abridged Annual Report.
 
 The names of Companies which have become or ceased to be subsidiaries,
 Joint Ventures and associates are also provided in the aforesaid
 statement.
 
 OTHER DISCLOSURES:
 
 - Your Company has not issued any shares with differential voting.
 
 - There was no revision in the financial statements.  However the Board
 of Directors in the meeting held on 21st July, 2016 approved
 Consolidated Financial Statements (updated) as disclosed in the
 Directors Report.
 
 - Your Company has not issued any sweat equity shares.
 
 - Mr. D. Bhattacharya and Mr. Satish Pai are directors on the Board of
 Novelis Inc, wholly owned subsidiary. They are in receipt of annual fee
 of US$ 1,50,000 and US$ 1,50,000 respectively in the calendar year
 2015.
 
 - There was 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 31st
 March, 2016, 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
 
                                              Kumar Mangalam Birla 
 
 Mumbai                                                   Chairman
 
 Dated : 21st July, 2016                            (DIN: 00012813)
Source : Dion Global Solutions Limited
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