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Pidilite Industries Ltd.


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Series: EQ | ISIN: INE318A01026 | SECTOR: Chemicals

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Annual Report

For Year :
2019 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report


The Members

The Directors take pleasure in presenting the Fiftieth Annual Report together with Audited Financial Statements for the year ended 31st March 2019.

Financial Results (Standalone)

( crores )



Gross Turnover



Turnover, Net of Excise



Operating profit



Finance Costs



Depreciation, Amortisation and Impairment Expense



Net Foreign Exchange Loss



Profit Before Tax



Current Year’s Tax



Profit After Current Year’s Tax



Deferred Tax



Profit After Tax



Profit Brought Forward



Other Comprehensive Income included in retained earnings (net of tax)



Profit available for appropriation




Dividend paid

(304.69) *

(243.52) #

Tax on Dividend

(59.63) *

(49.57) #


(364.32) *

(293.09) #

Closing balance of Retained Earnings



* Pertaining to dividend for FY 2017-18

# Pertaining to dividend for FY 2016-17


Your Directors recommend a dividend of Rs. 6.50 per equity share of Rs. 1/- each (previous year a dividend of Rs. 6.00 per equity share of Rs. 1/- each), out of the current year’s profit, on Rs. 50.80 crores equity capital amounting to Rs. 330.19 crores (previous year Rs. 304.69 crores on equity capital of Rs. 50.78 crores).

The dividend payout amount has grown at a CAGR of 22.1% during the ast 5 years.

The dividend payout is in accordance with the Dividend Distribution Policy which is given as an annexure and the same is also available on the website of the Company.

Financial Performance

On a comparable basis, after reflecting accounting impact of GST, the Net Sales grew by 14.5% with sales volume and mix growth of 10.4%. The volume growth in Consumer and Bazaar products segment was 12.2% (previous year 12.1%). However, due to competitive pressure and market conditions, the Industrial Products segment volume grew only by 1.9%, as compared to 7.6% growth in the previous year.

Operating Profit for the year at Rs. 1,489.74 crores increased by 4.2% . Further, Net Profit at Rs. 979.44 crores increased by 2.5%. The slight decline in profit margin is due to higher input cost.

The Indian Rupee was at Rs. 69.17 to a US$ as on 31st March 2019 as compared to Rs. 65.17 to a US$ as on 31st March 2018.

Transfer to Reserves

The Company does not propose to transfer amounts to the general reserve.

Term Finance

The Company has no outstanding term loans (previous year NIL).

Capital Expenditure

The total capital expenditure during the year was Rs. 186.23 crores, spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.

Fixed Deposits

The Company has not accepted any fixed deposits during the financial year 2018-19.


Investment in Subsidiaries

During the year, investment of Rs. 61.04 crores (previous year Rs. 151.19 crores) was made in the subsidiaries. Of this, Rs. 26.24 crores was invested in the overseas subsidiaries and Rs. 34.80 crores in the domestic subsidiaries.

The investments in overseas subsidiaries were in Pidilite Middle East Ltd (Rs. 5.31 crores) and Pidilite International Pte Ltd (Rs. 4.17 crores) for onward investments in their step down subsidiaries and Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda (Rs. 9.35 crores) and in newly incorporated subsidiary Pidilite Ventures LLC (Rs. 7.41 crores).

The investments in domestic subsidiaries were in ICA Pidilite Pvt. Ltd. (Rs. 26.64 crores) and Cipy Polyurethanes Pvt. Ltd. (Rs. 8.16 crores).

During the year

a. Percept Waterproofing Services Limited (Percept)

(80% subsidiary of the Company) was merged with Nina Waterproofing Systems Private Limited (Nina) (70% subsidiary of the Company), pursuant to the Hon’ble National Company Law Tribunal, Mumbai Bench Order dated 11th January 2019 w.e.f. the appointed date i.e. 1st April 2017 and consequently, Percept stands dissolved without winding up.

Further, post the said merger w.e.f. 27th March 2019, Nina’s name was changed to AEKAM Construction Specialties Private Limited (AEKAM) and w.e.f. 15th April 2019, AEKAM is known as Nina Percept Private Limited. Accordingly, the Company’s investment in Percept is merged with Nina Percept Private Limited and the Company now holds 71.53% stake in the merged entity.

b. The Company incorporated a wholly owned subsidiairy in USA, Pidilite Ventures LLC, which shall be engaging mainly in the investments in early stage operating companies in USA.

c. Pidilite Lanka (Private) Limited (Pidilite Lanka)

(a step down subsidiary of the Company in Sri Lanka) has entered into an agreement with Nina Waterproofing Systems Private Limited now known as Nina Percept Private Limited (Nina) and Nina Lanka Construction Technologies (Pvt) Ltd (Nina Lanka) (a wholly owned subsidiary of Nina in Sri Lanka and also a step down subsidiary of the Company) to acquire up to 40% of the share capital in Nina Lanka. As on 31st March 2019, Pidilite Lanka has acquired 25.2% stake in Nina Lanka.

d. Pidilite International Pte. Ltd., a wholly owned subsidiary of the Company in Singapore, alongwith Crown Classics Limited, a company in Kenya, has promoted a joint venture company in Kenya namely Pidilite east Africa Limited (Peal) to carry on business of construction chemicals and waterproofing material. PEAL, by virtue of control, is a step-down subsidiary of the Company.

Performance of Major Domestic and Overseas Subsidiaries (Rs. in crores)

Name of Subsidiary

Sales 18-19

Sales 17-18

% Growth

Ebitda 18-19

EBITDA 17-18

% Growth

Nina Percept Pvt Ltd







ICA Pidilite Pvt Ltd







CIPY Poly Urethanes Pvt Ltd (Acquired on 8th February 2018)







Pidilite Speciality Chemicals Bangladesh Pvt Ltd







Pidilite USA Inc







Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda







Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company







Pidilite Bamco Ltd includes Bamco Supply and Services Ltd (Thailand)







Pidilite MEA Chemicals LLC (UAE)







Pidilite Lanka (Pvt) Ltd







Previous year figures, wherever applicable, are made comparable after reflecting impact of GST for the full year.

* For the period from 08.02.2018 to 31.03.2018

Overseas subsidiaries figures are at constant currency. Figures given above do not include Sales and EBITDA of Cyclo division of Pidilite USA Inc., which was sold by Pidilite USA Inc. in June 2017.

Nina Percept Pvt Ltd, engaged in waterproofing services, reported good sales and EBITDA growth in current year. During the year, ICA Pidilite has acquired brands and technical knowhow of certain wood finish products from the Company. Like for like sales growth after excluding these products is 26% over the last year. EBITDA was impacted by higher input cost and foreign exchange losses. Going forward, local manufacturing is expected to scale up and this should result in improvement in margins. CIPY was acquired in February 2018, hence its performance is not comparable with last year.

The subsidiary in Bangladesh reported good sales growth with healthy profitability, though the profit growth was impacted due to higher input cost.

Pidilite USA sales and EBITDA declined over previous financial year due to drop in sales of pencils and markers catering to adult colouring books mainly because of change in trend.

Pulvitec do Brasil reported marginal sales growth for current year. EBITDA declined due to competitive pressure in key products.

The subsidiaries in Egypt reported lower sales growth due to market conditions. The subsidiaries in Thailand reported modest sales growth. EBITDA in these subsidiaries declined due to lower sales growth and higher input costs. The subsidiary in UAE reported reduction in EBITDA losses due to higher sales and control on expenses.

Pidilite Lanka continued to grow in current year, however EBITDA remains under pressure due to higher input cost and forex losses.

Consolidated Financial Statements

In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as “the Act”), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “Listing Regulations”) and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2018-19, together with the Auditors’ Report, form part of this Annual Report. A statement containing the salient features of the Company’s subsidiaries, associate and joint venture company in the prescribed Form AOC- 1, are set out in Note No. 59 to the Consolidated Financial Statements.

The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate company and joint venture, as approved by their respective Board of Directors except Pulvitec do Brazil Industria e Comercio de Colas e Adesivos Ltda. which has been approved by the local administrator and Plus Call Technical Services LLC, Dubai for which the financial statements have been approved by the management. There has been no transaction in Pidilite East Africa Ltd. from the date of formation till 31st March 2019.

The accounts of the subsidiaries are also uploaded on the website of the Company,

Directors and Key Managerial Personnel

In terms of the Regulation 17(1A) of the Listing Regulations members have approved by passing Special Resolution by means of Postal Ballot the continuation of tenure of Directorship of Shri B S Mehta as Non-Executive Independent Director and Shri N K Parekh as Nonexecutive Director upto the conclusion of ensuing 50th Annual General Meeting (AGM).

The Board of Directors, on the recommendation of Nomination & Remuneration Committee, has recommended to the members, for re-appointment of Shri Bansi Mehta, Shri Uday Khanna and Smt. Meera Shankar as Independent Directors of the Company for a second consecutive term commencing from the conclusion of 50th AGM.

In accordance with the Act and the Articles of Association of the Company, Shri N K Parekh and Shri A N Parekh, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.

Smt Savithri Parekh, resigned with effect from 10th October 2018, as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company. Shri P. Ganesh, Chief Financial Officer of the Company has resigned from the services of the Company effective 25th May 2019.

In terms of Section 203 of the Act and applicable provision of Listing Regulations, the Board of Directors has appointed Shri Puneet Bansal as the Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company with effect from 20th February 2019.

Policy on Directors’ remuneration

The Policy on Directors’ remuneration is given as an annexure and is also available on the website of the Company, The remuneration paid to the Directors is as per the terms laid out in the said policy.

Directors’ Responsibility Statement

Your Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- 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 the Company at the end of the financial year ended 31st March 2019 and of the profit of the Company for that period;

- the directors have taken proper and sufficient care 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;

- the directors have prepared the annual accounts on a going concern basis;

- the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

- the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Annual evaluation by the Board of its own performance, its Committees and individual Directors

The Board has put in place a mechanism for evaluation of its own performance, its Committees and individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to Corporate Governance section of this Annual Report.

Familiarisation Programme

The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.

The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.

Number of meetings of Board of Directors

Eight meetings of the Board of Directors of the Company were held during the year. For further details, please refer to Corporate Governance section of this Annual Report.

Statement of Declaration on Independence given by Independent Directors

All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations.

Corporate Governance

The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requiste certificate from M/s M. M. Sheth & Co., Practising Company Secretaries, is attached to the Report on Corporate Governance.

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulations, is presented in a section forming part of this Annual Report. For sake of brevity the items covered in Board’s Report are not repeated in the Management Discussion and Analysis Report.

Committees of the Board

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

- Audit Committee

- Nomination and Remuneration Committee

- Corporate Social Responsibility Committee

- Stakeholders Relationship Committee

- Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.

Corporate Social Responsibility Committee

The report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as annexure 1. The details of CSR Initiatives forms part of Social & Community Service Initiatives.

Vigil mechanism / whistle Blower Policy

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees.

The said Policy has been communicated to the Directors and employees of the Company and also posted on the website of the Company. For further details, please refer to the Corporate Governance section of this Annual Report.

Policy relating to Prevention of Sexual Harassment

The Company has formulated a Prevention of Sexual Harassment Policy and has formed an Internal Complaints Committee. For further details, please refer to the Corporate Governance section of this Annual Report.

Statutory auditors

In accordance with the provisions of Act, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W/W-100018) have been appointed as the Statutory Auditors of the Company, for a period of 5 years i.e. upto the conclusion of 54th AGM to be held for the adoption of accounts for the year ending 31st March 2023.

There is no qualification or adverse remark in Auditors’ Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.

Cost auditor and Cost audit Report

M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2018-19 to conduct the audit of the cost records of the Company.

M/s V J Talati & Co., Cost Accountants, have been reappointed as the Cost Auditor for the financial year 2019-20. 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 Auditors has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM the Board seeks ratification of the remuneration payable to the Cost Auditors for the financial year 2019-20.

Secretarial auditor and Secretarial audit Report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s M. M. Sheth & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is attached as annexure 2. There is no qualification or adverse remark in their Report.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and outgo

The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached to this Report as annexure 3.

Risk management

In compliance with Regulation 21 of Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers which includes (a) Review and approval of risk management plan (b) Review progress on the risk management plan (c) Propose methodology on risk classification and measurement.

The Company has laid out a risk management plan for identification and mitigation of risks. The Company has also constituted a Management Risk Committee which is chaired by an Executive Director and has various Functional Heads of the Company as members of the Committee. The other Business/Function heads are invited as and when required. The Management Risk Committee identifies the key risks for the Company, develop and implement the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritize the risks, if required depending upon the effect on the business/reputation.

The other details are provided in the Corporate Governance Report section of this Annual Report.

Contracts and Arrangements with Related Parties

All contracts/arrangements entered by the Company during the financial year with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an arm’s length basis. During the year, the Company did not enter into any contract/ arrangement/ transaction with related parties which could be considered as material.

The Policy on materiality of related party transactions and dealing with related party transactions, as approved by the Board, is available on the website: Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per Indian Accounting Standards, are set out in Note No. 43 of the Standalone Financial Statements of the Company.

Particulars of Loans, Guarantees or Investments

Details of loans, guarantees or investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.

Employees Stock option Scheme

The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations). The certificate of Auditors regarding implementation of the Scheme would be placed at the ensuing AGM for inspection by Members.

The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2019 with regard to Scheme is provided in Annexure 4 to this Report.

Extract of Annual Return

Extract of Annual Return of the Company is attached as Annexure 5 to this Report. It is also available on the website:

Business Responsibility Report

A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front forms an integral part of this Report.

Industry Structure and Development

There is no material change in the industry structure as was reported last year.

The Company operates under two major business segments i.e. Branded Consumer & Bazaar Products and Industrial Products.

Products such as Adhesives, Sealants, Art & Craft Materials and Others, Construction and Paint Chemicals are covered under Branded Consumer & Bazaar products segment. These products are widely used by carpenters, painters, plumbers, mechanics, households, students, offices etc. Sale of these products to joineries and projects are also covered under this segment.

Industrial Products segment covers products such as industrial adhesives, synthetic resins, organic pigments, pigment preparations, surfactants, etc. and caters to various industries like packaging, textiles, paints, printing inks, paper, leather, etc.

In both the above business segments, there are a few medium to large companies with national presence and a large number of small companies which are active regionally. Multinational companies are also present in many of the product categories in which the Company operates.

Current Year outlook

The prices of key raw materials which had increased significantly during the first half of the year under review started declining in the later part of the fiscal. Barring unforseen circumstances this trend is likely to continue during the initial months of the current year.

Continued slow down in construction industry and slow down in economic growth in recent months can impact sales growth for current year.

Major subsidiaries in India are taking initiatives to improve margins and achieve consistent sales growth in their respective businesses.

The Company’s major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh.

The Company is in the process of commissioning a second plant in Bangladesh during the year 2019.

The US subsidiary plans to increase its focus on retail and e-commerce. Various initiatives are being taken to improve sales and margin in Brazil. The business environment in some of these countries remain subdued. outlook on opportunities, Threats, Risks and Concerns The Indian economy provides a large opportunity to the Company to market its differentiated products.

Slower growth of the Indian economy and stress in sectors such as construction could impact the performance of the Company.

Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.

Internal Financial Control Systems and their adequacy

The Company has adequate internal financial control procedures commensurate with its size and nature of business.

The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.

The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.

Significant/material orders passed by the Regulators

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

Particulars of Employees and related disclosures

Disclosure pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as annexure 6 to this Report.

Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) are available at the Registered Office of the Company during working hours and shall be made available to any shareholder on request.

Human Resources

The year under review saw substantial progress in people practices, as the Company continued on its journey of excellence in people management policies and processes.

The Company’s ‘Happy and Healthy’ (HAH) movement saw great participation with almost 50% of the employees engaging in various activities.

The Company enhanced the people processes like Career Navigator, Individual Development Plans and Career Paths. Signature capability-building programs like Ignite (for Marketing Managers), Ascent (for Sales Managers), Capstone (for Middle Managers) and Edge (for Young Managers) strengthened the Learning & Development initiative and were well-received by participants and leaders.

Progressive HR policies such as work from home, paternity leave, saturdays offs, etc. were introduced as part of the journey to become a great place to work. Many existing employee benefit policies were revised to make them best in class.

The Company is committed to building a “listening organization” through multiple platforms. Workplace, our in-house social network platform, has played a key role in promoting two-way communication with employees.

The new Human Resource Management System Workline introduced during the year has strengthened the online HR systems and provided employees with a better user experience.

The total number of employees as on 31st March 2019 was 5,742.


The Company has not issued equity shares with differential rights as well as sweat equity shares.

There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.


Your Directors wish to place on record their appreciation of the contribution made by employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.


Mumbai M B Parekh

Date : 14th May 2019 Executive Chairman

Director’s Report