The Directors take pleasure in presenting the Forty Seventh Annual
Report together with Audited Financial statements for the year ended
31st March, 2016.
(Rs. in Million)
Gross Turnover 50385 46582
Turnover, Net of Excise 47064 43748
Profit Before Tax 10133 6685
Current Year''s Tax 2987 1561
Profit After Current Year''s Tax 7146 5124
Deferred Tax 116 106
Profit After Tax 7030 5018
Profit Brought Forward 4662 2184 *
Profit available for appropriation 11692 7202
Interim Dividend paid 1871 -
Tax on Interim Dividend 381 -
Proposed Dividend on Equity Shares 256 1487
Tax on Dividend 52 303
Transfer to General Reserve - 750
Total 2560 2540
Balance Carried to Balance Sheet 9132 4662
*Net of depreciation of Rs. 133.93 million on transition to schedule II
of the Companies Act, 2013 on tangible fixed assets with nil remaining
useful life (Net of deferred tax).
The Operating Profit for the year at Rs. 11640 million increased by
44.5% and Net Profit at Rs. 7030 million increased by 40.1%. Income tax
for the current year at Rs. 2987 million is higher by 91.3%.
Due to the slowdown in the overall economic environment, sales of the
Company''s products were affected.
Sales of Consumer & Bazaar products grew by 8.7%, lower than the growth
rates recorded in the last 5 years.
Sales of Industrial products grew at a much slower rate of less than 1%
due to weak domestic environment and slowdown in exports.
Decline in input prices led to improved margins for the year.
The Indian Rupee was at Rs. 66.31 to a US $ as on 31st March, 2016 as
compared to Rs. 62.62 to a US $ as on 31st March, 2015.
An interim dividend of Rs. 3.65 per equity share of Rs. 1/- each
amounting to Rs. 1871.3 million, was declared and paid during the year.
In addition, the Directors recommend a final dividend of Rs. 0.50 per
equity share of Rs. 1/- each, out of the current year''s profit, on
512.68 million equity shares of Rs. 1 each amounting to Rs. 256.3
million. Dividend for the current year will be free of tax in the hands
of shareholders upto an amount aggregating to Rs. 10 lacs. The dividend
payout amount has grown at a CAGR of 22.9% during the last 5 years. The
total dividend for the financial year 2015-16 aggregates to Rs. 4.15
per equity share (previous year @ Rs. 2.90 per equity share) amounting
to Rs. 2127.6 million (previous year Rs. 1486.7 million).
The Company has no outstanding term loans.
The total expenditure during the year was Rs. 1344.1 million, spent on
fixed assets for various manufacturing units, offices, laboratories,
warehouses and on information technology.
Synthetic Elastomer Project
The Company has made several attempts in the past few years to find a
strategic partner for the project. While several parties have shown
interest, discussions have not yet progressed sufficiently. The
Management team intends to intensify its efforts in search of a
strategic partner in the coming financial year. In the meantime, the
Company intends to utilize Dahej site for manufacturing Adhesives and
other products for the export market.
The new manufacturing facility at Karad, Maharashtra to produce
electrical insulation tapes, was commissioned in August, 2015 and the
manufacturing facility at Mahad, Maharashtra to produce Fevicol range
of products, was commissioned in February, 2016.
Manufacturing capacity was enhanced at two plants at Himachal Pradesh.
The Company has not accepted any fixed deposits during the year
Investment in Subsidiaries
During the year, investment of Rs. 1088.5 million was made in
subsidiaries. Of these Rs. 412.6 million was invested in overseas
subsidiaries and Rs. 675.9 million was invested in domestic
The investments in overseas subsidiaries were mainly in Pulvitec do
Brasil Industria e Comercio de Colas e Adesivos Ltda (Rs. 127.3
million), Pidilite Middle East Ltd (Rs. 199.2 million) for onward
investments in Pidilite MEA Chemicals LLC (formerly known as Jupiter
Chemicals LLC) and Pidilite International Pte Ltd (Rs. 86.1 million).
The investments in domestic subsidiaries were mainly in Nina
Waterproofing Systems Pvt Ltd (Rs. 611.3 million), Building Envelope
Systems India Ltd (Rs. 64.5 million) and Wood Coat Pvt Ltd (Rs. 0.1
Performance of Domestic Subsidiaries
Nina Waterproofing System Pvt Ltd which commenced operations in April,
2015 reported sales of Rs. 1437.4 million and Profit after Tax of Rs.
Percept Waterproofing Services Ltd reported sales of Rs. 291.7 million
and Profit after Tax of Rs. 5.7 million.
Building Envelope Systems India Ltd reported sales of Rs. 46.2 million
and Profit after Tax of Rs. 7.7 million.
During the year, the Company along with its Wholly Owned Subsidiary
Fevicol Company Ltd incorporated Wood. Coat Pvt Ltd (WCPL). Due to the
joint venture agreement executed with Industria Chimica Adriatica Spa
(ICA), the Company, alongwith its wholly-owned subsidiary, Fevicol
Company Ltd, now holds 50% of the shareholding in WCPL and the
remaining 50% of the shareholding is held by ICA alongwith a partner of
the erstwhile Indian distributor of ICA. Subsequently, WCPL acquired on
a slump sale basis, the wood coating distribution business from
Italcoats and is now the exclusive distributor of ICA wood finishes in
India and other select countries. WCPL proposes to setup a facility i
for manufacture of wood finishes.
Performance of Overseas Subsidiaries
Total Sales grew by 21.4% in constant currency term. Considering the
currency movement over the period, the reported growth is 18.9%.
The subsidiary in US reported sales growth of 12.7% at constant
currency. Sargent Art business continues to deliver higher sales driven
by robust retail segment growth. The focus on international business
also resulted in higher sales in both Cyclo and Sargent Business.
Higher volumes coupled with better product mix resulted in the US
subsidiary reporting 142% growth in profit before tax.
The subsidiary in Brazil reported sales shrinkage of 6.8% in the
current financial year at constant currency due to current economic
recession. The strategic initiatives for cost reduction and margin
improvement have been executed and started showing results in the last
quarter of the financial year. Despite drop in sales, Brazil subsidiary
reported 72.4% reduction in operating losses.
The subsidiary in Bangladesh reported net sales growth of 59% at
constant currency. Increased geographical reach and addition of new
product categories resulted in 121.9% growth in profit before tax.
The subsidiary in Egypt reported sales growth of 6.3% at constant
currency. Margins were under stress due to sharp currency devaluation
(~14%) against the USD. The subsidiary reported marginal operating
losses of Rs.2.1 million.
Sales of the subsidiaries in Thailand grew by 7.7% at constant
currency. Business was impacted in the first half of the financial
year, mainly due to low government spending on key projects. Margins
however improved due to reduction in key raw materials'' prices and
better product mix. Profit before tax grew by 58.5%.
The subsidiary in Dubai reported sales growth of 98% at constant
currency. This includes business of import and distribution of the
Company''s products in the GCC and CIS countries which was started in
November 2014. During the year in December, 2015, the subsidiary has
successfully commissioned capacity modern automated plant for
manufacturing construction chemicals. Losses at PBT level have gone up
by 181.5% over last year due to investment in people and market
The subsidiary in Srilanka started operation in October, 2015 and
achieved breakeven profit. During the year, business has acquired
Intellectual Property and Trademark rights from CIC Holdings PLC,
Srilanka for manufacturing and distribution of their adhesive products.
The subsidiary in Singapore reported growth in sales by 14.4%. PBT
during the year was down by 44.2% over last year mainly due to lower
royalty income from group companies.
The sale in Latin America of the products bearing the Trademark Rally
was low and the earning from royalty was minimal. The subsidiary in
Singapore therefore, sold the Trademark Rally registered in few
countries of Latin America. The profit on such sale was Rs. 43 million.
The subsidiary continues to retain right for Rally brand for rest of
Full year reported profit (PBT) of overseas subsidiaries is Rs. 226.8
million as compared to PBT loss of Rs. 20.2 million last year. In
constant currency and excluding extraordinary transaction, the overseas
subsidiaries made a profit of Rs. 212.1 million as compared to profit
of Rs. 31.1 million . last year.
During the year, the subsidiary in Ethiopia was allotted land
admeasuring 10,000 sq.m. on lease for 80 years by Ethiopian land
development authorities. The subsidiary has started the initial work of
project engineering for construction of a factory.
During the year:
a) Building System Solution Trading Limited Liability Company was
incorporated in Qatar to be engaged in trading of building materials in
which Pidilite Middle East Ltd, (a Wholly Owned Subsidiary) is the
b) Plus Call Technical Services L.L.C was incorporated in Dubai as a
joint venture of Pidilite Middle East Ltd (a Wholly Owned Subsidiary)
with a local operating partner.
c) Pidilite Lanka (Private) Limited was incorporated during the year.
The Company has invested Rs. 104.8 million in Pidilite Lanka (Private)
Limited (as on 31st March, 2016)
During the year the following companies became subsidiaries of the
1. Pidilite Lanka (Private) Limited
2. Wood Coat Pvt Ltd
3. Building System Solution Trading Limited Liability Company
Consolidated Financial Statements
In accordance with the requirements of Accounting Standards AS 21 (read
with AS 23 and AS 27), issued by the Institute of Chartered Accountants
of India, the Consolidated Financial Statements of the Company and its
subsidiaries, associate and joint venture company are annexed to this
Annual Report. A statement containing the salient features of the
Company''s subsidiaries, associate and joint venture company in the
prescribed form is attached.
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 Plus Call Technical Services L.L.C, for which
the financial statements have been approved by the management of the
The Consolidated Financial Statements of the Company for the financial
year 2015-16 are prepared in compliance with applicable provisions of
the Companies Act, 2013, Accounting Standards and presented in
compliance with Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (Listing
Directors and Key Managerial Personnel
Shri Vinod Kumar Dasari has been appointed as an Additional Director by
the Board of Directors with effect from 1st September, 2015. In terms
of Section 161 of the Companies Act, 2013, he holds office upto the
date of the ensuing Annual General Meeting. Notice in writing with
requisite deposit has been received from a member proposing his
candidature for the office of Independent Director for a term of 5
years from the date of this Annual General Meeting upto the conclusion
of the 52nd Annual General Meeting to be held in respect of financial
year ending 31st March, 2021.
Shri Vinod Kumar Dasari shall not be liable to retire by rotation. He
has given the declaration of independence as per Section 149 (6) of the
Companies Act, 2013.
Members approval is sought by way of Special Resolution for
continuation of emplyoment of Shri M B Parekh as Whole Time Director
designated as Executive Chairman for remaining period of his office
upto 31st July, 2018 on attaining 70 years of age. While such
continuation of employment may not require any further approval of the
shareholders, as a matter of abundant caution, it is proposed to obtain
approval of the shareholders at the ensuing Annual General Meeting.
Shri N J Jhaveri, Director of the Company passed away on 6th June,
2015. He was associated with the Company since 1996. The Directors
place on record their sincere appreciation of the valuable services
rendered by Shri N J Jhaveri during his tenure as Director of the
Shri Sandeep Batra, resigned with effect from 18th September, 2015, as
the Chief Financial Officer (Key Managerial Personnel) of the Company.
In terms of Section 203 of Companies Act, 2013, the Board has appointed
Shri Pradeep Jain as the Chief Financial Officer (Key Managerial
Personnel) of the Company with effect from 11th January, 2016.
In accordance with the Articles of Association of the Company, Shri A B
Parekh and Shri Sabyaschi Patnaik, Directors of the Company, retire by
rotation and being eligible, offer themselves for re-appointment.
The members'' approval is being sought at the ensuing Annual General
Meeting for the above appointments.
_ 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
- 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, 2016 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
- the directors have prepared the annual accounts on a going concern
- 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;
- 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 of Directors of the Company has put in place evaluation of
its own performance, its committees and individual directors. The
result of the evaluation is satisfactory and adequate and meets the
requirement of the Company.
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
Seven 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 Companies Act, 2013 and Regulation 16(b) of Listing
Reports on Corporate Governance and Management Discussion and Analysis,
in accordance with Listing Regulations, along with a certificate from
M/s M M Sheth & Co., Practising Company Secretaries, are given
separately in this Annual Report.
In accordance with the provisions of Companies Act, 2013, at the Annual
General Meeting held on 25th September, 2014, the shareholders had
appointed M/s Deloitte Haskins & Sells, Chartered Accountants, as
Statutory Auditors of the Company, for a period of 4 years i.e. up to
the conclusion of 49th Annual General Meeting to be held for the
adoption of accounts for the financial year ending 31st March, 2018.
M/s Deloitte Haskins & Sells, Chartered Accountants, have consented to
be the Auditors of the Company, if their appointment is ratified by the
members at the Annual General Meeting and have also confirmed that
their appointment is as per the provisions of Section 141 of the
Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules,
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 Companies Act 2013.
Corporate Social Responsibility Committee
The details of Corporate Social Responsibility Committee has been
provided under Corporate Governance section of this Annual Report.
The report as per Section 135 of the Companies Act, 2013 read with
Companies (Corporate Social Responsibility Policy) Rules, 2014 is
attached as Annexure 1.
- Audit Committee
The Audit Committee comprises of Directors namely Shri B S Mehta
(Chairman), Shri Ranjan Kapur, Shri M B Parekh and Shri Uday Khanna as
other members. All the recommendations made by the Audit Committee
were accepted by the Board.
Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil mechanism for Directors and
employees and the same has been communicated to the Directors and
employees of the Company and the same is also posted on the website of
Policy relating to Sexual Harassment
The Company has formulated a Sexual Harassment Policy and has formed an
Internal Complaints Committee. No complaints have been received during
Cost Auditor and Cost Audit Report
Pursuant to Section 148 of the Companies Act, 2013 read with the
Companies (Cost Records and Audit) Amendment Rules, 2014, cost audit
records are maintained by the Company. As required under the Companies
Act, 2013, a resolution seeking approval of the members in this regard
is included in the Notice convening the Annual General Meeting.
Cost Audit Report for the year ended 31st March, 2016 will be submitted
in due course.
The Company has filed the Cost Audit Report for the year ended March,
2015 with the Central Government.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013
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
Conservation of Energy, Technology, Absorption and Foreign Exchange
Earnings and Outgo
The particulars under Section 134 of the Companies Act, 2013, read with
the Companies (Accounts) Rules, 2014 are attached to this Report as
In compliance with Regulation 21 of Listing Regulations, a Risk
Management Committee has been constituted by the Board. Risk Management
Committee has been entrusted with roles and powers which include a)
Review and approval of risk management plan b) Review progress on the
risk management plan c) Propose methodology on risk classification and
The Company has laid out a risk management plan for identification and
mitigation of risks. The Company has constituted a Management Risk
Committee which is chaired by the Executive Director and has functional
heads as members of the Committee. Business heads are invited as and
when required. Risks (Business / Reputation) and mitigation plans are
considered by this Committee. The Risk Management Committee of the
Board provides reasonable oversight of the risks.
Contracts and Arrangements with Related Parties
All Contracts/arrangements entered by the Company during the financial
year with related parties 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 material.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed through the following link:
Your Directors draw attention of the members to Note no. 42 to the
financial statement which sets out related party disclosures.
Particulars of Loans, Guarantees or Investments
Details of loans, guarantees or investments covered under the
provisions of Section 186 of the Companies Act, 2013, are given in the
notes to the Financial Statements.
Employees Stock Option Scheme
During the financial year 2013-14, 49,000 options were granted in one
tranche to the eligible employees of the Company in terms of Employees
Stock Option Scheme - 2012 (ESOS- 2012). During the previous financial
year, 20,500 options had vested and were exercised and during the
current financial year, 12,500 options were exercised by the employees.
The Company accordingly made an allotment of 12,500 equity shares on
25th November, 2015. Further, during the year, 2,33,800 options were
granted and these options vest in the manner as specified in ESOS-2012.
The applicable disclosure as stipulated under the SEBI (Share Based
Employee Benefits) Regulations, 2014 as on 31st March, 2016 with regard
to Employee Stock Option Scheme is provided in Annexure 4 to this
ESOP- 2016 covering grant of 45,00,000 options (including 250,000
Options to be granted to Employees / Directors of the subsidiary
companies) was approved by the shareholders through Postal Ballot.
Result of the Postal Ballot was declared on 2nd April, 2016.
Extract of Annual Return
Extract of Annual Return of the Company is attached as Annexure 5 to
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration as per Section 197(12) of the
Companies Act, 2013 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 the provisions of
Section 197 of the Companies Act, 2013 and Rule 5(2) of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
available at the Registered Office of the Company during working hours
and shall be made available to any shareholder on request.
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
in the 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 Material 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.
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. There is growing presence of
multinationals in many of the product categories in which the Company
As mentioned in last year''s report, the VAM plant has been modified to
make a range of Speciality Acetates as import of VAM continues to
remain more viable as opposed to in-house manufacture. The plant now
also manufactures Di-isopropyl Ether (DIPE).
The technology for these products have been indigenously developed and
these products are gaining acceptance with customers.
Current Year Outlook
Recent trends suggest a weak economic scenario in the current year.
This is likely to have an adverse impact on the demand for the
Company''s products. It is expected that the economic scenario may
improve only by the end of the year.
Prices of major Raw materials and packing material were lower in the
current year primarily due to sharp decline in crude prices and going
forward marginal increase in costs are expected.
Three manufacturing units in Himachal Pradesh and one manufacturing
unit in Assam enjoy exemption from excise duty and income tax. One of
these units in Himachal Pradesh will be completing its income tax
holiday period in the financial year 2016-17.
The Company''s major subsidiaries are in USA, Brazil, Thailand, Egypt,
Dubai and Bangladesh.
The economic situation in Brazil is challenging with several key
sectors like construction and real estate showing contraction. This is
likely to have a negative effect on the performance of Brazilian
subsidiary. Other overseas subsidiaries, in aggregate, are working
towards an improved performance, subject to no significant adverse
impact on current business environment.
Outlook on Opportunities, Threats, Risks and Concerns
The Indian economy provides a large opportunity to the Company to
market its differentiated products. Higher growth in select global
economies could provide a boost to exports.
Slower growth of the Indian economy could impact the performance of the
Overseas subsidiaries by virtue of their relatively smaller size remain
vulnerable to the political and economic uncertainties of their
Internal 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 periodically reviews the
audit plans, internal audit reports 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.
The Company continues to place significant importance on its Human
Resources and enjoys cordial relations at all levels.
The journey of transformation from being professionally run by family
to being run by a family of professionals which started a few years
ago, culminated with the joining of Shri Bharat Puri as Managing
Director on 10th April, 2015. Prior to joining as the Managing
Director, Shri Bharat Puri had been associated with the Company as an
Independent Director on the Board, for the past seven years. Formation
of the Pidilite Leadership Team (PLT) led by Shri Bharat Puri, helped
in creating a cohesive senior management group aligned to the overall
A Large Scale Interactive Process (LSIP) was initiated by the
leadership team, to enhance connect with the frontline sales force and
the middle management cadre. This has helped in aligning employees to
Company''s vision, values and objectives and augment energy levels.
During the year, the Talent Management process has further evolved and
strengthened. The Performance Management System has undergone
considerable improvement and has enabled sharpening the process of
setting goals and objectives.
The total number of employees as on 31st March, 2016 was 4978.
Company has not issued equity share with differential rights as well as
sweat equity shares.
Disclosure Relating to Remuneration of Directors and Key Managerial
The remuneration paid to the Directors is in accordance with the
Remuneration Policy formulated in accordance with Section 178 of the
Companies Act, 2013.
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
FOR AND ON BEHALF OF THE BOARD
Mumbai M B Parekh
Date : 19th May, 2016 Executive Chairman