Your Directors are pleased to present the 54th Annual Report and Audited Financial Statements of your Company for the year ended 31 March 2014.
Financial results at a glance
|Seq||Financial Results:||(Rs. in Crores)||(Rs. in Crores)|
|3||Less Excise duty||138.88||131.61|
|6||Profit before taxation and extraordinary items||97.52||115.09|
|7||Add Extraordinary item||–||23.66|
|8||Profit before taxation||97.52||138.75|
|9||Less Provision for taxation||41.32||39.63|
|10||Profit after taxation||56.20||99.12|
|11||Add balance brought forward||331.20||275.26|
|12||Amount available for appropriation||387.40||374.38|
|14||Operating Loss due to merger of GPPL||0.72||–|
|15||Transferred to General Reserve||20.00||20.00|
|16||Proposed dividend on equity shares||19.81||19.81|
|17||Tax on Proposed Dividend||3.37||3.37|
|18||Balance carried forward||343.50||331.20|
* Previous year figure are not comparable due to merger of Garde n Polymers Private Limited (Wholly owned subsidiary) with HSIL Limited
We are the first Company in India to introduce water efficient products in the market. We launched an exclusive eco- ware range of Star Rated water efficient closets that have been certified by the International Association of Plumbing and Mechanical Officials (IAPMO), USA.
Your Company recorded an improved performance backed by the merger of Garden Polymers. The consolidated revenues went up by 10.48% to Rs. 1,889 crores in 2013-14 compared to Rs. 1,709 crores in 2012-13. The EBITDA went up by 2.65% to Rs. 271.11 crores in 2013-14 from Rs. 264.11 crores in 2012-13. Your Company’s Cash Profit stood at Rs.160.72 crores in 2013-14 as against Rs.220.46 crores in 2012-13. However, Net Profit declined by 43.30% at Rs.56.20 crores in 2013-14 from Rs.99.12 crores in 2012-13. But not considering exceptional item of last year’s positive, fall in net profit is 25.52%.
The Building Products Division recorded an impressive 17.88% increase in the gross revenues to Rs. 929.28 crores in 2013-14 from Rs. 788.44 crores in the previous year. Gross revenues for your Company’s Packaging Products Division* stood at Rs. 957.88 crores in 2013-14 which represented an increase of 4.28% from Rs. 918.54 crores in 2012-13.
*The Container Glass Division has been re-named as the ‘Packaging Products Division’ following the merger of Garden Polymer Pvt. Ltd. As such, the figures for the Packaging Products Division will not be comparable to the previous year’s figures for the Container Glass Division.
Business Division Review
Performance of the Building Products Division
Several factors, such as enhanced and enriched product mix, increase in prices and volume growth, resulted in an impressive 18.01% growth in net sales for the Building Products Division in 2013-14. The robust sales growth can be vastly attributed to numerous new product launches under hindware Italian Collection range and first full year of operations of Queo brand of products which have been very well received in the market.
Some of the major achievements of our Building Products Division include:
Packaging Products Division
The Company’s newly re-named Packaging Products Division witnessed a 4.64% rise in net sales this year. Several factors such as the GPPL merger, adoption of customised technologies to produce specially coloured bottles, chemical and lightweight bottles contributed to this.
Performance of the Packaging Products Division
The Company’s newly named Packaging Products Division (earlier known as Container Glass Division) witnessed a 4.64% rise in net sales this year. Several factors such as the GPPL merger, adoption of customised technologies to produce specially coloured bottles, chemical and lightweight bottles contributed to this.
Some of the major milestones achieved by our Packaging Products Division include:
Your Directors recommend a dividend of Rs. 3.00 per share (previous year Rs.3.00 per share) on equity shares of Rs. 2.00 each, for the year ended 31 March 2014, for consideration of the Members at their ensuing Annual General Meeting. Total outgo on this account will be Rs. 23.18 crores, including dividend distribution tax Rs. 3.37 crores.
A sum of Rs. 20 crores has been transferred to the General Reserve account of the Company and the balance of Rs. 343.50 crores has been carried to surplus in statement of profit and loss.
A Company with a rich legacy of more than five decades backed by operational excellence, HSIL is a largest player in the domestic sanitaryware segment and ranks second in the Container Glass industry in India. Backed by a well-entrenched large distribution network in the industry, we are engaged in a process of uninterrupted practice for innovation and product upgradation. This enables us to significantly improve our product portfolio, even as we widen our presence along the entire value chain and across all possible price points. This working methodology helps us to meet the shifting requirements of our aspirational customer base under both the Building Products and Packaging Products Divisions. Our enhanced production efficiencies and a cost-effective service delivery model further develops our long-term growth prospects to provide value to all concerned stakeholders.
We have pioneered the manufacturing of specially coloured bottles – a new product category in the domestic market segment
Scheme of Amalgamation
Garden Polymers Private Limited, (GPPL), a wholly owned subsidiary of the Company stood merged with the Company with effect from 1 April 2012, the appointed date fixed for the purpose in terms of the Scheme of Amalgamation approved by the Hon’ble High Court, Calcutta, vide Order dated 9 January 2014, certified copy of which was made over to the Company on 13 March 2014 and subsequently filed with Registrar of Companies, West Bengal. Consequent upon this all the assets and liabilities of GPPL became the assets and liabilities of the Company and accordingly given effect of the same in the financials of the Company.
The present term of Mr. Rajendra Kumar Somany, the Chairman and Managing Director, will expire by efflux of time on 8 January, 2015. The Board is seeking re-appointment of Mr. Rajendra Kumar Somany as the Chairman and Managing Director, whose office will be liable to retire by rotation, for a further period of 3 years commencing from 9 January 2015 upto 8 January 2018. Profile of Mr. Rajendra Kumar Somany is given in the Statement under Section 102 of the Companies Act, 2013 to the Notice of the 54th Annual General Meeting of the Company.
In pursuance of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. Ashok Jaipuria, Mr. Vijay Kumar Bhandari, Mr. N.G Khaitan and Mr. Salil Bhandari as Independent Directors not liable to retire by rotation for a term upto five consecutive years commencing from 27 September 2014. Profile of all such Directors are mentioned in the Statement under Section 102 of the Companies Act, 2013 attached to the Notice of the 54th Annual General Meeting of the Company. The Company has received declarations from all the above Independent Directors confirming that they meet with the criteria of Independence as prescribed both under sub-section (6) of section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has received requisite notice in writing from Members proposing their appointments as Independent Directors not liable to retire by rotation, at the ensuing Annual General Meeting of the Company.
Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Sumita Somany was appointed as an Additional Director w.e.f 29 May 2014 and she shall hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Ms. Sumita Somany for appointment as Director liable to retire by rotation at the ensuing Annual General Meeting of the Company.
In accordance with the provisions under Section 152 of the Companies Act, 2013, read with the Company’s Articles of Association, Mr. G. L Sultania, Director of the Company retires by rotation at the ensuing Annual General meeting and being eligible, offers himself for re-appointment.
A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement are given in a separate section and forms part of this Annual Report.
Further, the Management Discussion and Analysis Report is appended to and forms part of the Annual Report.
As per the requirement under Section 212 (3) of the Companies Act, 1956, a statement of particulars of the Company’s Subsidiaries for the year ended 31 March 2014, is annexed hereto and forms part of this Report.
Particulars under Section 212(8) of the Companies Act,1956
In terms of general exemption granted by the Ministry of Corporate Affairs, copies of Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of the Subsidiary Companies (including step down Subsidiary Companies) have not been attached to the Company’s Balance Sheet, as required under Section 212 (8) of the Companies Act, 1956. These documents will be made available upon receipt of request from the Company’s shareholders and shall be kept open for inspection by any shareholder at the Registered Office of the Company and that of the respective Subsidiary Companies.
However, as directed by the said Ministry, the financial data of the Company’s Subsidiaries have been furnished under Financial Information of Subsidiary Companies forming a part of the Annual Report. Further, pursuant to Accounting Standard-21, specified in the Companies (Accounting Standards) Rules, 2006, the Consolidated Financial Statements presented by the Company include the financial information of its Subsidiaries.
At HSIL, our highly skilled workforce is our most valuable asset. The Company’s people development endeavours are designed to ensure optimal utilisation of employee potential which would, in turn, provide us with a competitive advantage over our competitors. We continue to empower our employees in every possible manner as per individual requirements which will help them realise their true potential and consequently help HSIL to grow as well. We make every attempt to connect with our employees much beyond the professional realm of their activities, and thereby strive to become a preferred employer by choice.
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars of Employees) Rules, 1975, the statement giving names and other particulars of the employees annexed hereto forms part of this Report.
At HSIL, our highly skilled workforce is our most valuable asset. The Company’s people development endeavours are designed to ensure optimal utilisation of employee potential .
Your Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act, 1956, during the year.
Directors’ Responsibility Statement pursuant to section 217 (2AA) of the Companies Act, 1956
Your Directors hereby confirm that to prepare the annual accounts, applicable accounting standards were followed, along with proper explanation relating to material departures, if any.
Your Directors selected such accounting policies, applied them consistently, and judged and estimated reasonably and prudently to give a true and fair view of your Company’s state of affairs and its profit at the end of the financial year.
Your Directors took proper and sufficient care to maintain adequate accounting records, in accordance with the provisions of this Act, for safeguarding your Company’s assets, and for preventing and detecting fraud and other irregularities.
Your Directors prepared the annual accounts on a going concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo
Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in Report of the Board of Directors) Rules, 1988, is annexed to this Report.
The Company’s Statutory Auditors, M/s Walker Chandiok & Co LLP, Chartered Accountants, retire at the ensuing Annual General Meeting. They have confirmed their eligibility for re-appointment in terms of Section 139 of the Companies Act, 2013.
The Audit Committee and the Board of Directors recommend appointment of M/s Walker Chandiok & Co LLP as the Company’s Statutory Auditors from the conclusion of the ensuing Annual General Meeting to the end of the next one.
The notes to the accounts referred to in the Auditors’ Report are self- explanatory and, therefore, do not require any further comments under Section 217 (3) of the Companies Act, 1956.
The Company has appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad, for auditing the cost accounting records of the Company’s Glass Division and Building Products Division (Sanitaryware and Faucets) for the financial year 2013-14.
The Company maintains a system of internal controls designed to provide a high degree of assurance regarding effectiveness and efficiency of operations, safeguard of assets, reliability of financial controls, and compliance with applicable laws and regulations.
Recognising the important role of Internal audit, the Company has an internal audit function which independently evaluate the appropriateness of, and compliance with policies, plans, regulatory and statutory requirements. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in Company’s operations. It also assesses and suggests improvement in risk management efficacy, controls and governance process. The Audit committee and Board provides necessary oversight and directions to the Internal audit function and periodically reviews the findings and ensures corrective measures are taken.
HSIL’s manufacturing facilities endorses the highest health, safety, security and environmental standards.
Your Directors would like to express their sincere appreciation to all the banks, financial institutions, Government authorities, customers, vendors and members who have extended their unstinted support and co-operation during the year under review. The Board would also like to take this opportunity to express their deep sense of gratitude, commitment and dedication shown by the Company’s executives, staff and workers during the course of its operations in this year.
For and on behalf of the Board of Directors
Rajendra K Somany
A. Conservation of Energy
a) Energy conservation measures taken:
b) Additional investment and proposals for reduction of consumption of energy:
c) Impact of the above measures for reduction of energy consumption and consequent impact on cost of production:
Building Products Division:
Packaging Products Division:
Glass plants: Savings of Rr. 1.96 crores per year PET plants
Selaqui plant Dharwad plan
Energy Consumption reduction – NIL
d) Total energy consumption and consumption per unit of production as per Form A (applicable to Glass Products under Packaging Division) was as under:
|1.||a) Electricity (Purchased) :|
|Total Amount (Rs.)||903,818,353||707,018,429|
|b) Own Generation :|
|Units per LT of Fuel Oils||4.02||4.47|
|c) Total (a + b):|
|Total amount (Rs.)||915,715,288||768,569,488|
|2.||Fuels (HSD, LPG & LS HS)|
|Quantity in MT||52,189||57,606|
|B||Consumption Per Million units of production|
|Glass Bottles (Production in Million Pieces)||1,643.86||1,820.74|
|Fuels (HSD, LPG & LS HS) (MT)||32||32|
B. Technology absorpt ion
Research & Development (R&D)
1. Specific areas in which R&D is carried out by the Company
2. Benefits derived from the above R&D initiatives
3. Future Plan of Action
4. Expenditure on R&D
|Rs. In Crores
|Rs. In Crores
|Total R&D Expenditure as a % of total building products revenue||0.07||0.07|
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation and innovation
2. Benefits derived as a result of the above efforts
We were successfully able to achieve lower energy consumption, along with the adoption of new technologies and usage of alternate fuel. This was followed by a marked improvement in product quality and ensuring hygienic conditions within the production area.
C. Foreign Exchange Earnings and Outgo
Activities and initiatives
We were able to develop a variety of new products and strengthen the export team, especially for African market/continent and other developing countries. This enabled us to better penetrate overseas markets and formulate strategies to leverage global opportunities.
|Year||Rs. In Crores
|Rs. In Crores
|Earning in foreign currency||26.38||33.99|
|Outgo of foreign currency||218.27||225.99|
|– Raw material, spare part and others||207.33||195.76|
|– Capital Equipment||10.94||30.23|
For and on behalf of the Board of Directors
Rajendra K Somany
Information as per Section 217(2A) read with Companies (Particu lars of Employees) Rules, 1975 and forming part of Directors’ Report for the year ended 31 March 2014
A ) Employed throughout the year and in receipt of remuneration not less than Rs. 60,00,000 for the year.
|Name of the
and Nature of
|Qualification||Experience (Years)||Date of Employment||Age (Years)||Remuneration Received (Rs.)||Last Employment held and designation|
|Mr. Rajendra K
|B.com, FI (Ceramics) (U.K), LFAI MA, FC MI (UK), Member – IOM3 (U.K),
Emeritus Member- American Ceramic
|59||1 October 1965||77||6,76,47,115||–|
|Mr. Sandip Somany||Joint Managing Director (Contractual)||B.Com., Diploma in Ceramics (USA )||29||1 October 1985||51||6,55,27,258||–|
|Mr. Ram Babu Kabra||President – BPD||B.Com., FCA, ACS,||33||7 September 1981||56||15,128,623||Hyderabad Asbestoes Limited- Chief Accountant|
|Mr. Arun Kumar D||President – Glass Division||B.E.( Mechanical)||42||2 December 1996||67||20,119,284||Nagarjuna Acqua Ltd. – President|
|Mr. J K Somani||Sr. Vice President- BPD||B.Com., ACS||36||16 June 1977||57||8,541,516||–|
|Mr. Anil Kr Chandani||Sr. Vice President (Corporate Finance)||B.Com (Hons.), FCA, FCS, AICWA, DBF (ICFAI)||24||21 April 2008||47||7,791,778||HGCL Limited- General Manager (Corporate
|Mr. Sanjay Gaur||Chief Human Resource Officer||B.Com, MBA||23||4 December 2006||48||7,362,575||Bharti Airtel Ltd (General Manager-HR)|
|Mr. Ajay Seth||Sr. Vice President (Service)||BE, PGDBM||24||10 September 2007||47||6,830,627||Reliance Retail Ltd- Head Operations|
B. Employed for the part of the year and in receipt of remuneration not less than Rs. 5,00,000 per month.
|Name of the Employees||Designation and Nature of Employment||Qualification||Experience (Years)||Date of Employment||Age (Years)||Remuneration Received (Rs.)||Last Employment held and designation|
|Mr. Sushil Lun||President – BPD||B.Tech, MBA||27||3 March 2014||52||1,013,441||Pidilite India Ltd, – President Construction Chemicals Division|
|Mr. Santosh Kr Nema||President – BPD||PGDBM (IIM – A)||31||21 September 2009||55||8,556,536||Cera Sanitaryware- CEO|
|Mr. Ravi Gupt||CEO – AGI, closures||B.E (Mechanical)||40||2 January 2014||64||1,649,250||Gwala Closures India Pvt. Ltd.- Managing Director|
1. Employees named above are wholetime employees of the Company as per the Company’s terms and conditions.
2. Mr. Rajendra K Somany, Chairman and Managing Director and Mr. Sandip Somany, Joint Managing Director are related to each other. None of the other employees are related to any of the Directors of the Company.
3. Mr. Rajendra K Somany, Chairman and Managing Director and Mr. Sandip Somany, Joint Managing Director are promoters of the company and except them no other employee holds 2% or more of the equity share capital of the Company.
4. Remuneration received includes Gross Salary, Bonus, Commission, performance incentive, ex-gratia, actual expenditure for provision of rent free accommodation or benefits or amenities, house rent allowance, leave encashment, medical expenses, leave travel assistance, other allowances, reimbursement of gas, water and electricity expenses. Company’s contribution to provident fund, employee pension scheme, gratuity fund and provision of car are valued as perquisites in accordance with rules under the Income Tax Act, 1961.
For and on behalf of the Board of Directors
Rajendra K Somany