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Marico

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Directors Report Year End : Mar '17    Mar 16

To the Members,

The Board of Directors (“Board”) is pleased to present the Twenty Ninth Annual Report of Marico Limited (“Marico” or “the Company” or “your Company”), for the financial year ended March 31, 2017 (“the year under review” or “the year” or “FY17”).

In line with the requirements of the Companies Act, 2013, including any statutory modification(s) or re-enactment(s) thereof for time being in force (“the Act”) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘‘the SEBI Regulations”), this report covers the financial results and other developments during the financial year April 1, 2016 to March 31, 2017 in respect of Marico and Marico Consolidated comprising Marico, its subsidiaries and associate companies. The consolidated entity has been referred to as “Marico Group” or “Your Group” or “the Group” in this report.

FINANCIAL RESULTS - AN OVERVIEW

(Rs. in Crore)

Particulars

Year ended March 31, 2017

Year ended March 31, 2016

Consolidated Summary Financials for the Group

Revenue from Operations

5,935.92

6,024.45

Profit before Tax

1,148.70

1,028.70

Profit after Tax

810.97

723.33

Marico Limited - Revenue from Operations

4,868.88

4,867.99

Profit before Tax

1,141.72

935.74

Less: Provision for Tax for the current year

299.02

244.48

Profit after Tax for the current year

842.70

691.26

Other Comprehensive Income for the current year

(1.18)

(1.87)

Add: Surplus brought forward

1,933.31

1,744.78

Profit available for appropriation

2,774.83

2,434.16

Appropriations: Distribution to shareholders

451.59

435.43

Tax on dividend

57.03

65.43

508.62

500.86

Surplus carried forward

2,266.21

1,933.31

REVIEW OF OPERATIONS

During 2017, Marico achieved revenue from operations of INR 5,986 Crore, a decline of 1% over FY16. Volume growth for the year was at 4%. The value growth was lower owing to price reductions in the Coconut Oil portfolio in India and Bangladesh and currency devaluation in the Egypt region in H2FY17. The operating margin was at 19.5%. The business reported bottom line of INR 799 Crores, a satisfactory growth of 12% over last year.

Marico India, the domestic business, achieved a turnover of R4,579 Crores in FY17, a decline of 2% over last year. Volume growth for the year was at 4%. The value growth was lower owing to price reductions in the Coconut Oil portfolio. This year witnessed the demonetization impact in Q3FY17 which acted as a dampener on the overall annual volume growths. The operating margin for the India business was healthy at 24.3% before corporate allocations. Higher operating margins can be attributed mainly to gross margin expansion led by softer input costs.

During the year, Marico International, the International FMCG business, posted a turnover of R1,356 Crores, a growth of 1% over FY16 in constant currency terms. The operating margin for the year was at 16.5% (before corporate allocations) reflecting a sustained structural shift over the last few years.

Over the last 5 years, at a consolidated level, the top line has grown by 10% and bottom line by 18% at a Compounded Annual Growth Rate.

There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the FY17 and the date of this report.

SUBSIDIARIES AND ASSOCIATE COMPANIES

A list of bodies corporate which are subsidiaries/associate of your Company is provided as part of the notes to Consolidated Financial Statement. During the period under review, in Vietnam, Thuan Phat Foodstuff Joint Stock Company merged with its Holding Company, Marico South East Asia Corporation (Formerly: International Consumer Products Corporation) with effect from December 1, 2016. Your Company acquired 35.44% equity stake in Zed Lifestyle Private Limited (“Zed”) on March 17, 2017. Consequently, Zed became an associate company of Marico.

A separate statement containing the salient features of the financial statement of all subsidiaries and associate companies of your Company (i.e. Form AOC - 1) forms part of the consolidated financial statement in compliance with Section 129 and other applicable provisions of the Act.

The financial statement of the subsidiary companies and related information are uploaded on the website of your Company and can be accessed using the link http://marico.com/india/investors/ documentation and the same are available for inspection by the Members at the Registered Office of your Company during business hours on all working days except Saturdays and Sundays up to the date of the 29th Annual General Meeting (“29th AGM”), as required under Section 136 of the Act. Any Member desirous of obtaining a copy of the said financial statement may write to the Company Secretary at the Registered Office Address.

Your Company has approved a policy for determining material subsidiaries and the same is uploaded on the Company’s website which can be accessed using the link http://marico.com/ investorspdf/Policy_for_determining_Material_Subsidiaries.pdf. As per this Policy, your Company does not have any material subsidiary.

INDIAN ACCOUNTING STANDARDS

The Ministry of Corporate Affairs (“MCA”), vide its notification dated February 16, 2015 issued Indian Accounting Standards (“IND AS”) applicable to certain classes of companies. In exercise of the powers conferred by Section 133 read with section 469 of the Act and Section 210A(1) of the Companies Act, 1956, the Central Government, in consultation with the National Advisory Committee on Accounting Standards, has replaced the existing Indian GAAP with IND AS. For Marico, IND AS is applicable for the accounting periods beginning April 1, 2016, with the transition date of April 1, 2015.

The following are the key areas which had an impact on account of IND AS transition:

- Revenue reclassification

- Share based payments

- Fair valuation of certain financial instruments

- Defined employee benefit obligations

- Intangible assets

The detailed reconciliation of the transition from IGAAP to IND AS has been provided in Note 35 in the notes to accounts of Standalone Financial Statement and Note 39 in the notes to accounts of Consolidated Financial Statement.

RESERVES

There is no amount proposed to be transferred to the Reserves.

DIVIDEND

Your Company’s wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking/ disbursement of profits to its shareholders. During the year under review, your Board adopted a Dividend Distribution Policy (“DD Policy”) pursuant to Regulation 43A of the SEBI Regulations.

The DD Policy is available on the website of the Company at http://marico.com/india/investors/documentation/corporate-governance.

Based on the principles enunciated in the DD Policy, your Company’s distribution to equity shareholders during FY17 comprised the following;

- First Interim Dividend of 150% on the equity base of Rs.129.02 Crores; and

- Second Interim Dividend of 200% on the equity base of 129.04 Crores.

The total equity dividend for FY17 (including dividend distribution tax) aggregated to Rs. 508.64 Crores. Thus, dividend pay-out ratio is 64% of the consolidated profit after tax as compared to 69% (including one-time special third interim dividend of 100%) during FY16.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of the loans, guarantees and investments covered under the Section 186 of the Act, are given in the notes to the standalone financial statement of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed Management Discussion and Analysis forms an integral part of this Report and, inter-alia, gives an update on Macro Economic Indicators & FMCG Industry, opportunities and threats, risks and concerns, internal control systems and their adequacy, discussion on financial and operational performance, segment-wise performance, human capital initiatives outlook, etc.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

I Resignation of Mr. Atul Choksey

Mr. Atul Choksey (DIN: 00002102), Independent Director of the Company stepped down from the Board of Directors with effect from April 1, 2017 on account of paucity of time. The Board of Directors of Marico placed on record, its appreciation for the invaluable contribution that Mr. Choksey has made during his long tenure with the Company as an Independent Director.

II Appointment of Mr. Rishabh Mariwala and Mr. Ananth Narayanan

The Board at its meeting held on May 2, 2017 appointed Mr. Rishabh Mariwala (DIN: 03072284) as an Additional (Non-Executive) Director of your Company with effect from May 2, 2017. Further, the Board vide a resolution passed by circulation on June 26, 2017 appointed Mr. Ananth Narayanan (DIN: 07527676) as an Additional (Independent) Director of the Company with effect from the said date i.e. June 26, 2017.

Mr. Rishabh Mariwala and Mr. Ananth Narayanan shall hold office as an Additional (Non-Executive) Director and Additional (Independent) Director, respectively, upto the date of the 29th AGM of the Company. Notices in writing, signifying their candidature for appointment as Non-Executive Director and Independent Director, respectively, under Section 160 of the Act has been received from the shareholders of the Company. Accordingly, the matter relating to their appointment is being placed for the approval of the shareholders at the 29th AGM.

III Directors retiring by rotation

In accordance with the provisions of Section 152 of the Act read with Rules made thereunder and the Articles of Association of the Company, Mr. Harsh Mariwala (DIN: 00210342) is liable to retire by rotation at the 29th AGM and being eligible, has offered himself for re-appointment. Accordingly, the matter relating to re-appointment of Mr. Harsh Mariwala is being placed for the approval of the shareholders at the 29th AGM.

The Company has received declarations from all the Independent Directors confirming that they satisfy the criteria of independence as prescribed under the provisions of the Act and the SEBI Regulations.

Brief profiles of Mr. Rishabh Mariwala, Mr. Ananth Narayanan and Mr. Harsh Mariwala and other related information is appended in the Corporate Governance Report. The revised composition of the Board of the Company is also stated in the said Report.

IV Key Managerial Personnel

During the year under review, the Board of Directors at its meeting held on April 29, 2016 appointed Mr. Surender Sharma as the Company Secretary & Compliance Officer in place of Ms. Hemangi Ghag, who had tendered her resignation with effect from April 29, 2016. Ms. Ghag continues as an employee with the Company in a different role. There were no other changes in the Key Managerial Personnel of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act, the Directors of your Company, to the best of their knowledge and based on the information and explanations received from the Company confirm that:

a. in the preparation of the annual financial statement for the financial year ended March 31, 2017, the applicable accounting standards have been followed and there are no material departures from the same;

b. the Directors have selected such accounting policies and applied them 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 your Company as at March 31, 2017 and of the profit of your Company for the said period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a ‘going concern’ basis;

e. proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively;

f. proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively.

PERFORMANCE EVALUATION

In accordance with relevant provisions of the Act read with Rules made thereunder, Regulation 17(10) of the SEBI Regulations and the Guidance Note on Board Evaluation issued by SEBI vide its circular dated January 5, 2017, the evaluation of the performance of the individual Directors, Chairman of the Board, the Board as a whole and its individual statutory Committees was carried out for the year under review. The manner in which the evaluation was carried out is explained in the Corporate Governance Report.

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

Five meetings of the Board of Directors were held during the year. The details of the meetings of the Board and its Committees held during the year under review are stated in the Corporate Governance Report.

CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34 of the SEBI Regulations, a separate report on Corporate Governance along with the certificate from the Statutory Auditor on its compliance, forms an integral part of this report.

BUSINESS RESPONSIBILITY REPORT & SUSTAINABILITY REPORT

Pursuant to Regulation 34 of the SEBI Regulations, the Company had published its maiden Business Responsibility Report in the Annual Report for the previous financial year. During the year under review, the Board adopted the Sustainability Policy through a resolution passed by circulation on June 20, 2016. The Sustainability Policy envisages the broad principles which would drive the sustainability activities of the Company. The said Sustainability Policy can be accessed at this link http://marico. com/make-a-difference/sustainability

Further, the Board of Directors of your Company constituted the Sustainability Committee to drive the sustainability activities of the Company and review the business responsibility and sustainability performance of the Company on annual basis. The Chief Supply Chain Officer of the Company heads the Sustainability Committee and it comprises three more Senior Managerial Personnel of the Company. The composition of the Committee is detailed in the Corporate Governance Report. The Managing Director & CEO of the Company is the Director responsible for ensuring the Business Responsibility activities of the Company.

During the year under review, the Company has also made available its maiden Sustainability Report which is a voluntary report and exhibits your Company’s approach towards sustainability. The Sustainability Report has been exhibited in line with the Global Reporting Initiative (GRI) G4 core guidelines. The said Report presents the sustainability performance of the Company across three pillars of sustainability i.e. economic, environmental and social aspects as per the GRI G4 guidelines. All the relevant aspects related to standard, specific disclosures and sector supplement have been referred to, while defining the report content. The Sustainability Report of the Company can be accessed at this link http://marico.com/make-a-difference/sustainability

AUDITOR & AUDITOR’S REPORT

Statutory Auditor

The Members at the 26th Annual General Meeting had appointed M/s Price Waterhouse, Chartered Accountants as the Statutory Auditor of the Company to hold office until the conclusion of the 29th AGM. Pursuant to Section 139 of the Act and Rules made thereunder, M/s Price Waterhouse retire as the Statutory Auditor at the 29th AGM and are not eligible for re-appointment in view of completion of their tenure.

Accordingly, the Board at its meeting held on May 2, 2017 based on the recommendation of the Audit Committee, approved the appointment of B S R & Co. LLP, Chartered Accountants as the Statutory Auditor of the Company in place of the retiring Auditor for a term of five years to hold office from the conclusion of the 29th AGM till the conclusion of the 34th Annual General Meeting of the Company, subject to ratification of their appointment by the shareholders of the Company at every Annual General Meeting held thereafter.

The Company has received written consent and certificate of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules made thereunder from B S R & Co. LLP. Further, the Company has also received a written confirmation stating that B S R & Co. LLP holds a valid Peer Review Certificate issued by the Institute of Chartered Accountants of India.

The Auditor’s Report for the year ended March 31, 2017 on the financial statement of the Company forms part of Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in the said Auditor’s Report. During the year under review, the Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.

M/s. Price Waterhouse over many years successfully met the challenge that the size and scale of the Company’s operations pose for the Auditor and have maintained the highest level of governance, ethical standards, rigour and quality in their audit The Board places its sincere appreciation for services rendered by M/s. Price Waterhouse as Statutory Auditor of the Company.

COST AUDITOR

As per Section 148 of the Act read with the Companies (Cost Records and Audits) Rules, 2014, the Board of Directors at its meeting held on May 2, 2017, based on the recommendation of the Audit Committee, approved the appointment of M/s. Ashwin Solanki & Associates, Cost Accountants as the Cost Auditor to conduct audit of the cost records of the Company for the financial year ending March 31, 2018. The Company has received written consent and certificate of eligibility in accordance with Section 148 read with Section 141 and other applicable provisions of the Act and Rules made thereunder from M/s. Ashwin Solanki & Associates.

The remuneration payable to the Cost Auditor has been approved by the Board at its aforesaid meeting, based on the recommendation of the Audit Committee. In terms of the provisions of Section 148(3) of the Act read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditor for the financial year ending March 31, 2018 is being placed at the 29th AGM.

During the year under review, the Cost Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act

SECRETARIAL AUDIT

Pursuant to Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on May 2, 2017, based on the recommendation of the Audit Committee, approved appointment of Dr. K. R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor to conduct audit of the secretarial records of the Company for the financial year ending March 31, 2018. The Company has received consent from Dr. K. R. Chandratre to act as such.

The Secretarial Audit Report for the FY17 is enclosed as ”Annexure A” to this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.

RISK MANAGEMENT

For your Company, Risk Management is an integral and important component of Corporate Governance. Your Company believes that a robust Risk Management ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize the shareholder value.

The key cornerstones of your Company’s Risk Management Framework are:

- Periodic assessment and prioritization of risks that affect the business of your Company;

- Development and deployment of risk mitigation plans to reduce the vulnerability to the prioritized risks;

- Focus on both the results and efforts required to mitigate the risks;

- Defined review and monitoring mechanism wherein the functional teams, the top management and the Board review the progress of the mitigation plans;

- Embedding of the Risk Management processes in significant decisions such as large capital expenditures, mergers, acquisitions and corporate restructuring;

- Wherever, applicable and feasible, defining the risk appetite and install adequate internal controls to ensure that the limits are adhered to.

The Constitution of the Risk Management Committee (‘RMC’) is stated in the Corporate Governance Report. The RMC assists the Board in monitoring and reviewing the risk management plan, implementation of the risk management framework of the Company and such other functions as Board may deem fit. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company’s approach on Corporate Governance has been detailed out in the Corporate Governance Report. Your Company has deployed the principles enunciated therein to ensure adequacy of Internal Financial Controls with reference to the financial statements. Your Board has also reviewed the internal processes, systems and the internal financial controls and the Directors’ Responsibility Statement contains a confirmation as regards adequacy of the internal financial controls.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

The composition of the CSR Committee is disclosed in the Corporate Governance Report.

A brief outline of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2016-17 together with progress thereon and the report on CSR activities as required by the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in ”Annexure B” to this Report.

RELATED PARTY TRANSACTIONS

All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval of the Audit Committee is obtained for the related party transactions which are repetitive in nature. In case of transactions which are unforeseen and in respect of which complete details are not available, the Audit Committee grants an omnibus approval to enter into such unforeseen transactions, provided the transaction value does not exceed R1 Crore (per transaction in a financial year). The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals so granted on a quarterly basis.

All transactions with related parties entered into during FY17 were at arm’s length basis and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder. There were no transactions which were material (considering the materiality thresholds prescribed under the Act and Regulation 23 of the SEBI Regulations). Accordingly, no disclosure is made in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules made thereunder.

The Policy on Related Party Transactions is uploaded on the Company’s website and can be accessed using the link http://marico.com/investorspdf/Policy on Related Party Transactions.pdf.

COMPANY’S POLICY ON NOMINATION, REMUNERATION, BOARD DIVERSITY, EVALUATION AND SUCCESSION

In terms of the applicable provisions of the Act, read with the Rules made thereunder and the SEBI Regulations, your Board has formulated a Policy on appointment, removal and remuneration of Directors, Key Managerial Personnel and Senior Management Personnel and also on Board Diversity, Succession Planning and Evaluation of Directors (“NR Policy”). The remuneration paid to Directors of the Company is as per the terms laid down in the NR Policy of the Company. The Managing Director & CEO of your Company does not receive remuneration from any of the subsidiaries of your Company.

The salient aspects of the said Policy are outlined in the Corporate Governance Report and can be accessed using this link http://marico.com/investorspdf/Policy on Nomination, Removal, Remuneration and Board Diversity.pdf

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The ratio of remuneration of each Director to the median employee’s remuneration as per section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2016 is disclosed in ’ “Annexure C” to this report.

The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an annexure to the Annual Report. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members excluding the aforesaid annexure. However, this annexure shall be made available on the website of the Company twenty one days prior to the date of the 29th AGM. The information is also available for inspection by the Members at the Registered Office of the Company during business hours on all working days except Saturdays and Sundays up to the date of the 29th AGM. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office Address.

MARICO EMPLOYEE BENEFIT SCHEME/PLAN

- Marico Employee Stock Option Scheme 2014

The Members of the Company at its Extra Ordinary General Meeting held on March 25, 2014, had approved the Marico Employee Stock Option Scheme 2014 (‘the Scheme’) for the benefit of the Managing Director & Chief Executive Officer of the Company (‘MD & CEO’). The objective of this Scheme was to give a wealth building dimension to the remuneration structure of the MD & CEO. Further, it also aimed at promoting desired behavior for meeting organization’s long term objectives and to enable retention through a customized approach.

The Corporate Governance Committee, responsible for administering the Scheme, had granted 3 lac stock options to the MD & CEO. As at March 31, 2016, the said 3 lac stock options have increased to 6 lacs on account of issue of bonus equity shares by the Company in the ratio of 1:1. These stock options are now vested in the MD & CEO and constitute 0.02% of the paid up equity share capital of the Company as on the date of this report.

During the year under review, out of the stock options vested as above, the MD & CEO had exercised, in aggregate 3 lacs stock options on November 15, 2016, December 26, 2016 and March 24, 2017, respectively. Pursuant to the exercise of stock options, the Securities Issue Committee of the Board had approved, in aggregate, allotment of 3 lac equity shares, vide resolutions passed by circulation on November 21, 2016, December 29, 2016 and March 29, 2017 respectively. The perquisite value in respect of the stock options exercised has been included as part of the disclosure on remuneration of the MD & CEO in the Corporate Governance Report.

- Marico MD CEO Employee Stock Option Plan 2014

The Members at the 26th Annual General Meeting of the Company held on July 30, 2014, had approved the Marico MD CEO Employee Stock Option Plan 2014 (‘MD CEO ESOP Plan 2014’ or ‘the Plan’) for the benefit of Managing Director & Chief Executive Officer (‘MD & CEO’) of the Company.

The Corporate Governance Committee entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder had granted 46,600 stock options to MD & CEO. As at March 31, 2016, the said 46,600 stock options have increased to 93,200 on account of issue of bonus equity shares by the Company in the ratio of 1:1. These stock options are now vested in the MD & CEO and constitute 0.007% of the paid up equity share capital of the Company as on the date of this report. So far, MD & CEO has not exercised any stock options under this Plan.

In view of the implementation of Marico Employee Stock Option Plan, 2016, as explained below, no further grant of stock options is envisaged under this Plan.

- Marico Employee Stock Option Plan 2016

The Members at the 28th Annual General Meeting held on August 5, 2016, had approved the Marico Employee Stock Option Plan, 2016 (“Marico ESOP 2016” or “the Plan”) for issuance of the employee stock options (“Options”) to the eligible employees of the Company including the Managing Director & CEO and the eligible employees of its subsidiaries, whether in India or outside India. Marico ESOP 2016 aims to promote desired behavior among employees for meeting the Company’s long term objectives and enable retention of employees for desired objectives and duration, through a customized approach.

The Plan envisages to grant Options, not exceeding in aggregate, 0.6% of the issued equity share capital of the Company as on August 5, 2016 (‘the Commencement Date’) to the eligible employees of the Company and its subsidiaries and to grant Options to any single employee not exceeding 0.15% of the issued equity share capital of the Company as on the commencement date.

The Corporate Governance Committee is entrusted with the responsibility of administering the Plan and the Scheme(s) notified thereunder. Accordingly, the details of Schemes notified under the Plan and the Options granted thereunder are given in ”Annexure D” to this report.

- Marico Employees Stock Appreciation Rights Plan, 2011

The Members at the 27th Annual General Meeting of the Company held on August 5, 2015, had approved the Marico Stock Appreciation Rights Plan, 2011 (‘STAR Plan’), for the welfare of its employees and those of its subsidiaries. Under the STAR Plan, the Corporate Governance Committee notifies various Schemes for granting Stock Appreciation Rights (STARs) to the eligible employees. Each STAR is represented by one equity share of the Company. The eligible employees are entitled to receive in cash the excess of the maturity price over the grant price in respect of such STARs subject to fulfillment of certain conditions and applicability of income tax. The STAR Plan involves secondary market acquisition of the equity shares of your Company by an Independent Trust set up by your Company for the implementation of the STAR Plan. Your Company lends monies to the Trust for making secondary acquisition of equity shares, subject to statutory ceilings.

As at March 31, 2017 an aggregate of 34,35,730 STARs were outstanding which constitute about 0.27% of the paid up equity share capital of the Company.

STATUTORY INFORMATION ON ESOS, STAR AND TRUST

Disclosure on ESOS, STAR and Trust in terms of Section 62(1)(b) of the Act, read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI Circular dated June 16, 2015 is enclosed as ”Annexure D” and forms part of this report. Further, the Company has complied with the applicable accounting standards in this regard.

The statutory auditor of the Company i.e. M/s. Price Waterhouse, have certified that implementation of all the above employee benefit Schemes/Plans is in accordance with the SEBI (Share Based Employees Benefits) Regulations, 2014, as applicable, and the resolutions passed by the Members at the respective General Meetings approving such employee benefit Schemes/Plans.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Mr. Nikhil Khattau (Chairman), Mr. B. S. Nagesh, Ms. Hema Ravichandar and Non-Executive Director, Mr. Rajen Mariwala. Powers and role of the Audit Committee are included in the Corporate Governance Report. During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.

VIGIL MECHANISM

Your Company has a robust vigil mechanism in the form of Unified Code of Conduct which enables employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Code. The Company’s Unified Code of Conduct can be accessed on its website using the link http://marico.com/ investorspdf/CoC book 09-04-14.pdf.

This mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The guidelines are meant for all members of the Company from the day they join and are designed to ensure that they may raise any specific concern on integrity, value adherence without fear of being punished for raising that concern. The guidelines also cover our associates who partner us in our organizational objectives and customers for whom we exist.

To encourage employees to report any concerns and to maintain anonymity, the Company has provided a toll free helpline number and a website, wherein the grievances/ concerns can reach the Company. For administration and governance of the Code, a Committee called ‘the Code of Conduct Committee’ (‘CCC’) is constituted. The CCC has the following sub-committees namely:

- HR Committee - with an objective to appoint investigation team for investigation of HR related concerns / complaints.

- IT Committee - with an objective of implementing the IT policy and resolution of IT related concerns / complaints under the Code.

- Whistle Blower Committee - with an objective to appoint an investigation team for investigation for whistle blower complaints.

- Prevention of Sexual Harassment Committee (PoSH Committee) - with an objective to ensure a harassment free work environment including but not limited to appointment of investigation team for investigation of sexual harassment concerns/complaints.

The Board, the Audit Committee and the Corporate Governance Committee are informed periodically on the matters reported to CCC and the status of resolution of such cases.

The Company affirms that no personnel has been denied access to the Audit Committee.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has a policy for the prevention of sexual harassment which is embedded in the CCC. 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 PoSH Committee During FY17, this Committee received 1 complaint on sexual harassment and the same was disposed of in accordance with applicable laws and the policy of your Company.

DEPOSITS

There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014, at the end of the financial year 2016-17 or the previous financial year. Your Company did not accept any deposit during FY17.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There were no significant/material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is enclosed as ”Annexure E” to this report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT 9 in accordance with Section 92(3) of the Act, read with the Companies (Management and Administration) Rules, 2014, are enclosed as ”Annexure F” to this report.

ACKNOWLEDGEMENT

Your Board takes this opportunity to thank Company’s members for their dedicated service and firm commitment to the goals & vision of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, distributors, vendors, bankers and all other business associates and from the neighborhood communities of the various Marico locations. We look forward to continued support of all these partners in progress.

On behalf of the Board of Directors

Harsh Mariwala

Place : Mumbai Chairman

Date : June 29, 2017 (DIN: 00210342)

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