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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 Directors take pleasure in presenting the Forty Eighth Annual Report together with Audited Financial Statements for the year ended 31st March 2017.

Financial Results (Standalone)

(Rs. in crores )


2015-16 *

Gross Turnover



Turnover, Net of Excise



Operating profit



Exceptional items



Profit Before Tax



Current Year’s Tax



Profit After Current Year’s Tax



Deferred Tax



Profit After Tax



Profit Brought Forward



Other comprehensive income (net of tax)



Profit available for appropriation




Dividend paid



Tax on Dividend






Closing balance of Retained Earnings



* figures as per IND AS.

Financial Performance

The Operating Profit for the year at Rs. 1338.94 crores increased by 12.37% and Net Profit at Rs. 773.79 crores increased by 3.63%. Income tax for the current year at Rs. 362.66 crores is higher by 21.38%.

Gross margin for the year improved mainly on account of lower raw material prices.

The Indian Rupee was at Rs. 64.81 to a US $ as on 31st March 2017 as compared to Rs. 66.31 to a US $ as on 31st March 2016.


Your Directors recommend a dividend of Rs. 4.75 per equity share of Rs. 1 each (previous year a total dividend of Rs. 4.15 per equity share of Rs. 1 each) , out of the current year’s profit, on 51.27 crores equity shares of Rs. 1/- each amounting to Rs. 243.52 crores (previous year Rs. 212.76 crores).

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 17.09% during the last 5 years. During the financial year 2016-17, the Board of Directors approved a Dividend Distribution Policy as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) which is available on the website of the Company.

Transfer to Reserves

The Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation and an amount of Rs. 1504.72 crores is proposed to be retained in the profit and loss account.

Term Finance

The Company has no outstanding term loans.

Capital Expenditure

The total capital expenditure during the year was Rs. 120.88 crores, spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.

Synthetic Elastomer Project at Dahej The Company has initiated manufacturing of adhesives for export market at Dahej site. The Company has made and is continuing to make attempts to find a strategic partner for Synthetic Elastomer project. In line with this strategy, the Company has fair valued items of plant and machinery alongwith the integrated patents, designs and drawings (currently included in Capital work in progress) and adjusted the difference between the carrying value and the fair value against the opening reserves of the Company as on 1st April 2015 as permitted by IND AS 101. The Capital work in progress of the project as on 31st March 2017 is Rs. 101 crores.


The new manufacturing facility at Nalagarh (Himachal Pradesh) to produce adhesives, was commissioned during the year.

Fixed Deposits

The Company has not accepted any fixed deposits during the year 2016-17.


Investment in Subsidiaries

During the year, investment of Rs. 89.23 crores was made in subsidiaries. Of these Rs. 8.75 crores was invested in overseas subsidiaries and Rs. 80.48 crores was invested in domestic subsidiaries.

The investments in overseas subsidiaries were in Pidilite Middle East Ltd. (Rs. 8.00 crores) for onward investments in Pidilite MEA Chemicals LLC, Pidilite Industries Egypt SAE (Rs. 0.09 crores) and Pidilite Chemical PLC (Rs. 0.66 crores). The investments in domestic subsidiaries were in Fevicol Company Ltd (Rs. 1.63 crores) and ICA Pidilite Pvt Ltd ('' 78.85 crores).

During the year

a) The name of the subsidiary Wood Coat Pvt Ltd. was changed to ICA Pidilite Pvt Ltd.

b) Pidilite International Pte. Ltd and Pidilite Middle East Ltd, wholly owned subsidiaries of the Company, acquired shares of Nebula East Africa Pvt Ltd (NEAPL), a Company incorporated in Kenya. With this acquisition, the wholly owned subsidiaries of the Company jointly hold 100% of the paid up share capital of NEAPL.

c) Nina Waterproofing Systems Pvt Ltd., a subsidiary of the Company incorporated a subsidiary in Srilanka in the name of Nina Lanka Construction Technologies (Pvt) Ltd.

During the year the following companies became subsidiaries of the Company

a) Nebula East Africa Pvt Ltd

b) Nina Lanka Construction Technologies (Pvt) Ltd.

Performance of Major Domestic and Overseas Subsidiaries

(Rs. in crores)

Name of Subsidiary





% Growth





% Growth

Nina Waterproofing Systems Pvt Ltd







Percept Waterproofing Services Ltd







ICA Pidilite Pvt Ltd







Pidilite USA Inc.







Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda







Pidilite Speciality Chemicals Bangladesh Pvt Ltd







Pidilite Industries Egypt SAE includes PIL Trading (Egypt) Company







Pidilite Bamco Ltd includes Bamco Supply and Services Ltd.







Pidilite MEA Chemicals LLC







Pidilite Lanka Pvt Ltd







Overseas subsidiaries figures are at constant currency.

Sales growth of Nina and Percept, domestic subsidiaries engaged in waterproofing services, was impacted by slowdown in real estate segment. ICA Pidilite, joint venture of the Company and ICA of Italy, commenced operations in 2016-17 and is in the process of setting up of a manufacturing facility for wood finishes at Jambusar, Gujarat.

Pidilite USA reported decline in sales & EBITDA due to slowdown in export of automotive care products to Middle East and Latin America and voluntary recall of tempra & finger paint products based on routine quality control inspections. Sales of Pulvitec do Brasil declined due to economic slowdown. However, EBITDA improved due to cost and margin improvement initiatives.

Pidilite Bangladesh reported decline in EBITDA due to increase in expenses to support future sales growth. Pidilite Lanka commenced operations in October 2015. Sales of Pidilite Bamco and Bamco Supply and Services, subsidiaries in Thailand, declined due to political and economic instability.

The subsidiaries in Egypt reported good sales growth but EBITDA declined due to sharp devaluation of Egyptian currency. Increase in selling, general and administrative expenses at Pidilite MEA, subsidiary in Middle East, did not result in commensurate increase in sales. Actions have been initiated to reduce these expenses.

Consolidated Financial Statements

In accordance with the requirements of Indian Accounting Standards AS 110 (read with IND AS 28), issued by, Central Government under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, 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 LLC for which the financial statements have been approved by the management of the Joint Venture.

The Consolidated Financial Statements of the Company for the financial year 2016-17 are prepared in compliance with applicable provisions of the Companies Act, 2013, Indian Accounting Standards and presented in compliance with Listing Regulations. The accounts of the subsidiaries are also uploaded on the website of the Company.

Directors and Key Managerial Personnel

In accordance with 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.

Shri Pradeep Jain, resigned with effect from 24th March 2017, as the Chief Financial Officer (Key Managerial Personnel) of the Company.

Adoption of new Articles of Association

The existing Articles of Association (AOA) of the Company are based on the provisions of the Companies Act, 1956 and several regulations in the existing AOA contain references to specific sections of the Companies Act, 1956. In order to make the Articles of Association of the Company in tandem with the relevant sections/ provisions under the Companies Act, 2013 and rules made thereunder, it is proposed to replace the existing Articles of Association of the Company by a new set of Articles. Accordingly, in lieu of amendments to various articles in the existing Articles of Association, it is considered prudent and desirable to adopt a new set of Articles of Association of the Company, in substitution for, and to the exclusion of the existing Articles of Association of the Company. Pursuant to Section 14 of the Companies Act, 2013, the consent of the members of the Company by way of a Special Resolution is required for adoption of a new set of Articles of Association of the Company. Accordingly, this matter has been placed before the Members for approval.

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 2017 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; and

- 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 a mechanism for evaluation of its own performance, its Committees and Individual Directors. The evaluation process inter alia considers attendance of Directors at Board and committee meetings, participation at meetings, domain knowledge, cohesion in the Board’s meeting, awareness and observance of governance, etc. The Board carried out annual performance evaluation of the Board, Board Committees and Individual Directors and Chairperson.

The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

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

Six 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(1)(b) of Listing Regulations.

Corporate Governance

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., Practicing Company Secretaries, are given separately in this Annual Report.

Statutory Auditors

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. upto 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, 2014.

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 the Company.

Policy relating to Prevention of Sexual Harassment

The Company has formulated a Prevention of Sexual Harassment Policy and has formed an Internal Complaints Committee. No complaints have been received during the year.

Cost Auditor and Cost Audit Report

M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2016-17 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 2017-18. In terms of the provisions of Section 148(3) of the Companies Act, 2013, 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, the Board seeks ratification at the ensuing AGM of the remuneration payable to the Cost Auditors for the financial year 2017-18.

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 report.

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 Annexure 3.

Risk Management

In compliance with Regulation 21 of Listing Regulations, a Risk Management Committee has been constituted by the Board. Risk Management Committee also known as Risk Management Oversight 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 measurement.

The Company has laid out a risk management plan for identification and mitigation of risks. The Company also has a Management Risk Committee which is chaired by an 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 provides reasonable oversight of the risks.

The other details are provided in the Corporate Governance Report.

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 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 : www.pidilite.com.

Your Directors draw attention of the members to Note No. 44 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

The Employees Stock Option Scheme is in line with SEBI (Share Based Employee Benefits) Regulations, 2014 [SBEB Regulations]. The certificate of auditors regarding implementation of the Scheme being in accordance with SBEB Regulations would be placed at the Annual General Meeting for inspection by Members.

The applicable disclosure, as stipulated under the SBEB Regulations, as on 31st March 2017 with regard to Employee Stock Option 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.

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 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.

Disclosure Relating to Remuneration of Directors and Key Managerial Personnel

The remuneration paid to the Directors is in accordance with the Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013.

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. 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 a growing presence of multinationals in many of the product categories in which the Company operates.

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. Plans are underway to manufacture Isopropyl Alcohol which is a widely used solvent having good domestic market.

Current Year Outlook

During the year 2017-18, it is expected that Goods and Service Tax (GST) will be implemented.

The prices of raw materials and packing materials have firmed up.

One manufacturing unit in Himachal Pradesh will be completing its income tax holiday period in the financial year 2017-18. One manufacturing unit in Assam enjoys exemption from excise duty and income tax. The newly set up unit at Himachal Pradesh will continue to enjoy excise benefit.

Domestic subsidiaries are largely represented by Nina Waterproofing Systems Pvt Ltd., Percept Waterproofing Services Limited and ICA Pidilite Pvt Ltd (ICA). During the financial year 2016-17, ICA commenced operations in the wood finish business. The major subsidiaries in India are in the nascent stages of operation. These companies are taking initiatives to increase their presence in the market.

The Company’s major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh. The business environment in some of these countries remain subdued. However, the management is taking various steps to improve the performance of these subsidiaries.

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 Company.

The domestic subsidiaries are dependent on the construction activity.

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

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 approves the annual internal audit plan, periodically reviews the progress of audits as per approved audit plans, 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.

Human Resources

Several initiatives were undertaken to strengthen the Employee Connect and Talent Development Process.

‘My Pidilite’, an employee helpline, was launched across all locations to facilitate timely redressal of employee queries. An internal communication and collaboration tool - ‘Workplace by Facebook’ was also launched for internal communication, sharing of ideas and employee recognition.

This year the Founder’s Day was celebrated on 14th March 2017 in a grand manner. The spirit of the event embodied the beliefs of our beloved founder late

Shri B K Parekh. Employees who personified the values of the organisation were recognised during the event and were awarded the “Late Shri B K Parekh Excellence Awards”. The event also provided a platform to showcase homegrown talent, with finalists performing and competing for the title of “Pidilite’s Got Talent.” The celebrations were streamed live on Workplace @ FB to enable employees across locations to witness the event and cheer their colleagues.

Opportunities for career growth to the in-house talent, was enhanced by strengthening the Internal Job Posting process and talent development interventions.

The Young Talent Programme was further enhanced through the internship programs and facilitation of career path movements for Young Managers, thus creating the talent pipeline.

The total number of employees as on 31st March 2017 was 5247.


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

The details of constitution of Nomination and Remuneration Committee and Stakeholders Relationship Committee are given in the Corporate Governance Report.


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 : 18th May 2017 Executive Chairman

Director’s Report