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Pidilite Industries Ltd.

BSE: 500331 | NSE: PIDILITIND |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE318A01026 | SECTOR: Chemicals

BSE Live

Sep 30, 16:00
1427.50 1.10 (0.08%)
Volume
AVERAGE VOLUME
5-Day
36,992
10-Day
32,475
30-Day
53,801
84,302
  • Prev. Close

    1426.40

  • Open Price

    1437.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    0.00 (0)

NSE Live

Sep 30, 15:56
1434.25 6.10 (0.43%)
Volume
AVERAGE VOLUME
5-Day
523,090
10-Day
600,117
30-Day
889,332
647,016
  • Prev. Close

    1428.15

  • Open Price

    1433.50

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    1434.25 (1105)

Annual Report

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Director’s Report

The Directors take pleasure in presenting the Thirty-Eighth Annual Report together with Audited Statements of Accounts for the year ended 31st March 2007. Financial Results (Rupees in Million) 2006-07 2005-06 Gross Turnover 12901 10442 Turnover, Net of Excise 11544 9075 Profit Before Tax 1540 1313 Current Year's Tax 309 409 Profit After Current Year's Tax 1231 904 Deferred Tax 34 17 Profit After Current and Deferred Tax 1197 887 Add: Prior Year Tax Provision written back 2 20 Profit After Tax 1199 907 Profit Brought Forward 369 302 Profit available for appropriation 1568 1209 Appropriations Proposed Dividend on Equity Shares 379 316 Tax on Dividend 64 44 Transfer to General Reserve 600 480 Total 1043 840 Balance Carried to Balance Sheet 525 369 1568 1209 Financial Performance The Operating Profit for the year (before VRS payment of Rs 2.4 million) at Rs 1907.6 million, grew by 18.9%. Net Profit at Rs 1199.3 million, after Prior Year Tax provision written back of Rs 2.3 million, grew by 32.3%. Income Tax for the current year is lower at Rs 308.9 million (including Rs 20.1 million for Fringe Benefit Tax) as against Rs 409 million in the previous year The Credit Rating Information Services of India Ltd. (CRISIL) has affirmed the P1+ rating to Short Term Debt including Commercial Paper Programme of the Company for Rs 1300 million. Dividend The Directors recommend the payment of a dividend of Rs 1.50 per Equity Share of Re 1 each (previous year Rs 1.25 per Equity Share of Re 1 each), amounting to Rs 378.6 million (previous year - Rs 315.5 million) out of the Current Year's profit on 252.4 million Equity Shares of Re 1 each (previous year 252.4 million Equity Shares of Re 1 each). The dividend for the current year will be free of tax in the hands of Shareholders. The dividend payout amount has grown at a CAGR of 20% during the last 5 years. Capital Expenditure The Company incurred capital expenditure of Rs 742.8 million during the year for setting up of a new manufacturing unit at Kalam, Himachal Pradesh and for modernisation/expansion and for other assets. New Units in Himachal Pradesh Fourth Unit for water based synthetic adhesive was commissioned in February 2007. The Company is setting up two more units viz. one for Consumer Products and another for Construction Chemicals, which are expected to commence production respectively during 2nd and 3rd quarter of the Current Year. Current Year Outlook Barring unforeseen circumstances, the Company expects to perform well during the current year. Subsidiaries Pagel Concrete Technologies Pvt Ltd. (Pagel): The Company acquired 75% Equity stake in this Company at a cost of Rs 6.4 million and loan contribution of Rs 3.5 million. Pagel is an existing Company incorporated in India in technical and financial collaboration with PAGEL SPEZIAL-BETON GMBH & CO. KG, GERMANY and engaged in the business of grouts and special mortars. Pidilite USA, Inc (PIL Inc.) : The Company was incorporated on 12th May 2006 in Delaware, USA and acquired the business and assets relating to art material and car care products from two existing companies in USA in June 2006, having combined annual sales turnover of US$ 19 million. The cost of acquisition is US$ 12 million. Pidilite Innovation Centre Pte Ltd. (PICPL) : Pidilite International Pte Ltd., Singapore as a Wholly Owned Subsidiary of the Company has incorporated PICPL., a subsidiary in Singapore on 20th December 2006 to carry out Research, Development and related activities. With the above acquisitions now the Company has 4 direct Overseas Subsidiaries one each in Singapore (Pidilite International Pte Ltd), in UAE (Pidilite Middle East Ltd.), in Brazil (Pidilite Do Brasil Desenvolvimento De Negocios Ltda.) and in USA (Pidilite USA, Inc). These subsidiaries have total 6 step-down subsidiaries viz. Chemson Asia Pte Ltd. (Singapore), Jupiter Chemicals LLC (Dubai), Pidilite Speciality Chemicals Bangladesh Pvt. Ltd. (Bangladesh), Bamco Ltd. (Thailand), PT Pidilite Indonesia (Indonesia), Pidilite Innovation Centre Pte Ltd. Singapore). The total investments during the year by our Company in all Overseas Subsidiaries exceeded US$ 16.7 million. A statement pursuant to Section 212 of the Companies Act, 1956, relating to 12 subsidiary Companies is attached hereto. Consolidated Accounts In accordance with the requirements of Accounting Standards AS 21 (read with AS 23) issued by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its twelve subsidiaries are annexed to this Annual Report. Additionally, a statement giving prescribed particulars of information, in aggregate for each subsidiary, is attached. By letter N0.47/226/2007-CL-III dated 18th May 2007 the Company has obtained from the Government of India, Ministry of Company Affairs, New Delhi, under Section 212 of the Companies Act, 1956, an exemption from annexing to this Report, the Annual Reports of above subsidiary Companies viz. Fevicol Company Ltd, Pidilite International Pte Ltd, Chemson Asia Pte Ltd, Pidilite Middle East Ltd, Jupiter Chemicals LLC, Pidilite Do Brasil Desenvolvimento De Negocios Ltda, Pidilite Speciality Chemicals Bangladesh Pvt Ltd, PT Pidilite Indonesia, Bamco Limited, Pidilite USA, Inc., Pidilite Innovation Centre Pte Ltd. and Pagel Concrete Technologies Pvt. Ltd. for the year ended on 31st March 2007. Accordingly, the said Annual Reports of the above subsidiary Companies are not annexed to this Report. Members desiring to have a copy of audited Annual Accounts of the above subsidiaries may write to the Company Secretary at the Registered Office of the Company and they will be provided with the same upon such a request. Annual Accounts of these subsidiary Companies will also be kept for inspection of the Members at the Registered Office of the Company as well the Registered Office of the subsidiary Companies. Directors Effective from 31st December 2006 Shri Amit Roy resigned from the Board of Directors. Your Directors wish to place on record their sincere appreciation of the valuable contribution made by him during his tenure on the Board. In accordance with the Articles of Association of the Company, Shri B K Parekh, Shri S K Parekh, Shri A B Parekh and Shri Yash Mahajan, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment. Shri V S Vasan has been appointed as Additional Director of the Company with effect from 2nd December 2006 and he holds office up to the conclusion of the ensuing Annual General Meeting. A notice in writing, with deposit of Rs 500 has been received from a member proposing Shri V S Vasan as a candidate for the office of Director. Subject to approval of the members, Shri V S Vasan has also been appointed as a Whole-Time Director for a period of two years from 2nd December 2006 and also designated as Director (Factories Operations) wef 14th December 2006 in place of Shri Amit Roy in overall charge of all the factories of the Company in India. Directors' Responsibility Statement The Directors confirm: (i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March 2007 and of the profit of the Company for that year; (iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) that the Directors have prepared the Annual Accounts on a going concern basis. Corporate Governance Reports on Corporate Governance and Management Discussion and Analysis, in accordance with Clause 49 of the Listing Agreements with Stock Exchanges, along with a certificate from M/s M M Sheth & Co, Practising Company Secretaries, are given separately in this Annual Report. Auditors Members are requested to re-appoint M/s Haribhakti & Co, Chartered Accountants, as Auditors of the Company and also for its branches/depots/ C&F depots for the current year and to fix their remuneration. Cost Auditor Subject to approval of Central Government, Board of Directors have appointed M/s V J Talati & Co as Cost Auditor to conduct cost audit for the financial year 2007-08. Conservation of Energy, Technology Absorption, etc The particulars under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are attached to this Report as Annexure I. Industry Structure and Development There is no change in the industry structure as was reported in the last year. The Company operates under two major business segments i.e. Branded Consumer & Bazaar Products and Speciality Industrial Chemicals. Products such as Adhesives, Sealants, Art Materials, 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. Speciality Industrial Chemicals 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 size companies that are active regionally. There is growing presence of multinationals in many of the segments in which we operate. The share of imports is less than 10% of domestic volumes in most of the product segments. Outlook on Opportunities, Threats, Risks and Concerns Prices of raw materials, packing materials and freight charges continue to rise thereby making further adverse impact on the margins of some of our products. We expect to increase selling price of most of these products over a period of time thereby restoring the margins. Risk and Internal Adequacy The Company has adequate internal control procedures commensurate with its size and nature of business. The Company has appointed Internal Auditors who audit the adequacy and effectiveness of internal controls laid down by the management and suggest improvements. For overseas subsidiaries, this is being done by their Statutory Auditors. The Audit Committee of the Board of Directors periodically reviews the audit plans, internal audit reports, adequacy of internal controls and risks management. Human Resources The Company continues to place significant importance on its human resources and enjoys cordial relations at all levels. During the year, various initiatives for employee involvement and efficiency improvement continued. The total number of employees on 31st March 2007 was 2944. A statement of particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report as Annexure II. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report, together with Accounts, is being sent to the Shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Act. Members desiring to have a copy of the same may write to the Company Secretary at the Registered Office of the Company and they will be provided with the same upon such a request. Vinyl Chemicals (India) Ltd. (VCIL) As you are aware, the Company is a principal promoter of VCIL and has made strategic investment in VCIL. The Company was approached by a Review Committee appointed by the Board of Directors of VCIL for support in the task of restructuring VCIL's operations which had resulted into losses for 5 consecutive quarters till 31st December 2006. The Board of Directors of this Company had therefore appointed a Special Committee to examine all relevant aspects as also explore possible remedial measures. The Special Committee took a view that VAM manufacturing plant of VCIL is of strategic importance to the Company and that there is good probability of VAM manufacturing unit becoming profitable sometime during the year 2008. The Committee therefore recommended to the Board of Directors of this Company that VCIL's manufacturing division at Mahad be demerged into this Company. Subject to approval of Shareholders and the High Court at Mumbai, the Board of Directors of both the Companies at their joint meeting held on 24th April 2007 considered and approved report of Valuation as also draft Scheme of Demerger inter alia providing for ratio of allotment of shares as under: a. For every 12 (twelve) equity shares of face value of Rs 10 each fully paid up in Vinyl Chemicals (India) Ltd., 1 (one) equity share of face value of Re. 1 each in Pidilite Industries Ltd. (fractional resultant number being appropriately rounded up or ignored depending on the fraction being respectively more than half or less than half) treated as fully paid; b. Insofar as it relates to small shareholders of the Vinyl Chemicals (India) Ltd. (a small shareholder means a member holding less than 501 equity shares) the Scheme provides for an option for such small shareholder being allotted 1 (one) 6% Cumulative Redeemable of Preference Share in Pidilite Industries Ltd. of Rs 10 each treated as fully paid for every equity share held by a small shareholder in Vinyl Chemicals (India) Ltd. Both the Companies have submitted a draft Scheme of Arrangement under section 391 read with Section 394 of the Companies Act, 1956 for the above purpose to the Stock Exchanges as per the requirement of Listing Agreement. Both the Companies will take necessary steps as may be required under law for approval and implementation of the Scheme. Appreciation The Directors place on record their appreciation of the efficient services rendered by the employees of the Company at all levels. FOR AND ON BEHALF OF THE BOARD Mumbai B K PAREKH Date: 22nd May 2007 CHAIRMAN Annexure I To The Report of the Directors 2006-2007 Statement containing particulars pursuant to the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 forming part of the report of the Directors. A] CONSERVATION OF ENERGY a) Energy Conservation Measures taken 1. Energy Efficient mixing equipments. 2. Extended use of VFD for process/utilities equipments at new projects. 3. Process/Utilities optimization and automization. b) Additional Investments and Proposals, if any, being implemented for reduction of Consumption of Energy. 1. Use of Agro waste solid fuel (briquette) instead of fuel oil. 2. Revamping utilities with Gas-fired combustion system. c) Impact of measures of (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. 0.75 lac kwh Electricity and 1400 MT of Fuel Oil are expected to be saved annually by above measures. d) Total energy consumption and energy consumption per unit of production as per Form A B. Consumption per unit of production It is not feasible to furnish information in respect of consumption per unit of production. B] TECHNOLOGY ABSORPTION e) Efforts made in technology absorption: (as per Form B) FORM B Disclosure of Particulars with Respect to Technology Absorption RESEARCH & DEVELOPMENT (R&D) 1. Specific areas in which R & D is carried out by the Company R&D programmes are carried out towards development of new products, improvement of the existing products and processes falling under the category of Synthetic Resins, Adhesives, Sealants, Pigments and Pigment Dispersions, Intermediates, Surfactants, Art Materials, Coatings, Fabric Care Products, Construction Chemicals, Maintenance Chemicals, Emulsion Polymers, etc. 2. Benefits derived as a result of the above R&D Increase in sales due to product improvements and introduction of new products; reduction in cost due to process improvements and cycle time reduction. 3. Future Plan of Action Future R&D efforts will continue along similar lines, as at present. 4. Expenditure on R&D (Rs in Million) Year ended Year ended 31st March 2007 31st March 2006 i) Capital 2.75 1.61 ii) Recurring 47.07 39.77 Total 49.82 41.38 iii) Total R&D expenditure as a percentage of total turnover 0.39 0.40 5. Technology Absorption, Adaptation and Innovation i) Technologies, Process developed by our R&D Department are being continuously absorbed and adopted on a commercial scale. ii) Benefits derived as a result of the above efforts : Improvement in products and processes. iii) Information regarding Technology imported during the last 5 years: No technology imported during last 5 years. C] FOREIGN EXCHANGE EARNINGS & OUTGO f) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services and export plans Export earnings during 2006-07 have shown an increase of Rs 310 Million over 2005-2006. We have increased number cf foreign distributors for our products and put in place more employees in exports and overseas business development work. g) Total foreign exchange used and earned (Rs in Million) Year ended Year ended 31st March 2007 31st March 2006 Foreign exchange earned 956 646 Foreign exchanged used* 2,175 1,472 * Out of the above, exchange used for import of materials which are either not manufactured in India and/or not easily available in India, amounted to Rs 1,843 million for the year ended 31st March 2007 (Previous year Rs 1,256 million).

Director’s Report