Your Directors are pleased to present the Annual Report on the business and operations
of your Company and the audited Financial Statements of the Company for the year ended
March 31, 2018, in accordance with the Companies (Indian Accounting Standards) Rules, 2015
(IndAS) prescribed under Section 133 of the Companies Act, 2013 and other recognised
accounting practices and policies to the extent applicable provisions of the Act from FY
2017-18.
Financial Results |
|
|
|
|
(Rs. Lakhs) |
Particulars |
Year ended March 31, 2018 |
Year ended March 31, 2017 |
Revenue from Operations |
43,77,05.34 |
44,25,90.65 |
Profit before Depreciation, Amortisation and Tax |
11,38,73.38 |
10,74,59.12 |
Less: - Depreciation and Amortisation |
64,37.39 |
64,17.54 |
Profit before tax |
|
|
Income Tax Expense : |
10,74,35.99 |
10,10,41.58 |
- Current Tax |
3,61,90.58 |
3,70,23.47 |
- Deferred Tax |
12,35.19 |
(16,49.69) |
|
3,74,25.77 |
3,53,73.78 |
Profit after Tax for the Year |
7,00,10.22 |
6,56,6780 |
Other comprehensive income for the year, net of tax |
16,66.78 |
21,60.47 |
Total comprehensive income for the year |
7,16,77.00 |
67,828.27 |
Appropriations |
|
|
Dividend Paid |
(2,94,38.88) |
(29,438.88) |
Tax on Dividend |
(59,93.06) |
(5,993.06) |
|
(3,54,31.94) |
(35,431.94) |
Earnings per Equity Share |
|
|
Basic and Diluted Earnings per Equity Share (INR) |
166.47 |
156.15 |
Dividend per Share (Rs.) |
75.00* |
70.00 |
*Dividend is recommended by the Directors and is subject to the approval of the
Shareholders.
Performance of the Company
Your Company continued its journey to become a true Fast-Moving Consumer Healthcare
Company and performed well amidst increased competitive intensity and volatile external
environment. Net Sales and Profit after Tax for the year ended March 31, 2018 were Rs.
4,15,754 Lakhs and Rs. 70,010.22 Lakhs respectively. Your Company retained its leadership
position in HFD category with volume and value market share at 64.6% and 55.3%
respectively.
Your Company continued its focus on innovation, delivering products of value with
superior science and has taken a step further in the advanced nutrition segment for
consumers who want very high science products.
Your Company has extended the brand Horlicks into a new category of high protein drinks
for active adults with the launch of its new variant Horlicks Protein+. Available
in chocolate and vanilla variants, Horlicks Protein + contains a blend of three high
quality proteins that provide all essential amino acids to address the issue of optimum
quality protein intake amongst the modern-day adults.
Science remains the core of the product portfolio that addresses the nutritional needs
of the consumers. The new Horlicks campaign launched in April 2017, focused on
nutritional inadequacies in the daily diet of kids. The campaign was further strengthened
by the new brand platform of supporting kids' "hunger for growth" which is in
line with the product proposition of making child "Taller, Stronger and
Sharper".
Boost continued robust performance in 2017-18 on the back the successful
communication platform of Play A Bigger Game' that was launched a year ago. The
platform of Play A Bigger Game' was supported with engaging long-form content on
digital & was also extended seamlessly into on-ground activations. Play The
Pros': a unique initiative was launched that gave kids a chance to take on Pros like PV
Sindhu, Virat Kohli, Sunil Chhetri etc. & thereby giving them an opportunity to
"Play A Bigger Game".
From a competitive stand point, Boost continued to grow off-takes at 2X of the category
growth in the core market of South India. The business performance in 2017-18 was well
contributed by both sachets (Low Unit Packs) as well as the large packs with both having
equal contribution to growth. Boost achieved highest ever market share and annual gain in
household penetration in the 4-decade long history of the brand in the South Indian
market.
Horlicks Growth+ launched a new campaign, focused on fostering growth in young
children. Horlicks Growth+ is a breakthrough nutrition formula designed by international
paediatric experts and contains high quality protein with essential nutrients that have
been identified and are known to optimise growth without causing obesity in children. With
the latest TV campaign featuring a young child, Horlicks Growth+ showcases the benefits of
adopting a clinically proven scientific solution to address the rampant growth-related
issues in children.
Women's Horlicks continued its differentiation through product launch in Feb'2018
with "Great New Taste" to penetration by offering new chocolate flavour.
Moreover, a new campaign featuring film star Taapsee Pannu was launched. Fashioned around
the theme of #StandStrong, the campaign sought to bring to the fore the issue of bone
health amongst women in India and envisions to make them #StandStrong in following their
passions.
Dividend
The Directors recommend a total dividend of Rs. 75 per equity share of Rs. 10 each for
the year ended March 31,2018. If approved by the members at the ensuing Annual General
Meeting to be held on August 8, 2018, it will be paid on or before, September 7, 2018 to
those members whose names appear in the Company's Register of Members and to those persons
whose names appear as beneficial owners (as per the details to be furnished by the
depositories in respect of the shares held in dematerialised form) as at the close of
business hours on August 1, 2018.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Fiscal year 2017-18 was characterised by enhanced global economic growth, stabilising
crude oil prices, changing global political landscape, shifting attitudes to
globalisation, free trade, wage stagnation and political uncertainty etc.
In India, the past year has been significant with implementation of key economic
reforms such as GST. Indian government remains keen on driving economic reforms and
initiatives such as Goods and Service tax (GST), Digitisation, Make in India,
Infrastructure Capital Investments, Rural Development and Financial Inclusion etc. Last
year saw Indian economy growing at 6.6% (projected for F.Y 18). Other major developments
included improvement in Ease of Doing business index, Upgradation of India's sovereign
credit rating and other digital inclusion initiatives.
The introduction of GST marked a huge stride towards a single economic union of India
with unified tax structure. It is an indirect tax levied on the supply of goods and
services implemented to replace several cascading taxes levied by the central and state
governments. However, your Company was proactive to ensure GST readiness well in advance.
To ensure GST readiness and compliance, several key processes were reviewed, IT systems
were upgraded and stakeholders across the different nodes of the value chain were trained.
These dedicated efforts ensured orderly and smooth transition into a new economic
environment. A uniform taxation system resulted in economic benefits for the business and
it was one of the first organizations to pass on the benefits to consumers.
The implementation of uniform tax regime led to a short-term disruption in Trade. FMCG
Industry continued to remain under pressure but picked up growth in the last two quarters
of the year owing to stabilizing rural demand, rising urban consumption and low-base
effect (demonetization in Q3, Q4 in F.Y 2017).
Despite challenges, it was well placed to deliver consistent performance given the
understanding of consumer behaviour. It also has robust price value proposition,
high-science based products, Go-to-Market Strategy, pipeline for innovative products,
efficient cost and talent management processes. These, it believes, fortifies us against
headwinds.
The rural business has been working with the vision of building a strong connect with
the communities it serves. Over the years, your Company has built a strong rural business
that continues to reach over 21,500 villages directly. This has helped the Company build
categories & brands and create positive social impact by building awareness on
nutrition & promoting good health practices.
Two key growth drivers in the Rural Programme are Horlicks Swasthya Abhiyan (HSA) and
Village Level Entrepreneurs (VLE); HSA program aims to improve the standard of hygiene
& health in the rural areas, engaging with rural medical practitioners and community
workers, thus creating awareness, education and relevance for the brands. HSA now reaches
over 5,900 villages, 14,000 Rural Medical practitioners and connects with over a million
consumers. VLE has reached more than 3,600 villages by which we are reaching out to bottom
of the pyramid (Direct reach of 2,16,000 households) and in this process, create
livelihood for underprivileged rural women while enhancing access of the products in small
villages economically empowering rural women. Mobile Sakhi, a mobile based advisory
service for pregnant mothers, delivers vital information pertaining to pregnancy is used
by over 63,000 rural women.
Further, your Company has continued to address the issue of malnutrition under Mission
Health, working with strategic partners as part of CSR initiatives during the year. It has
also formulated a clear outline on the CS R philosophy and further details are provided in
CSR Section.
Your Company brings a strong heritage and years of trust and credibility. It has strong
R&D capabilities and the product portfolio continues to be strengthened by accelerated
innovation and renovation to stay relevant to the emerging and differentiated needs of the
consumers. Your Company continues to invest in brands and connect with the consumers
through innovative and diversified platforms of online and offline advertising.
Recognizing the trend of increasing digitization, your Company enhanced its presence in
ecommerce channels.
Your Company has made significant efforts towards digital advocacy programs including
activity targeting moms online, social media amplification of TVCs, Bone Density Tests on
Women's Day, popularisation of "Horlicks Brand Store", digital launches for
Protein+ etc. All these have helped increase engagement, consideration and strengthen
benefit perception amongst customers.
Your Company's focus on cost management, working capital optimisation and
simplification program continued to deliver positive results in mitigating inflation and
supporting profitable growth. Improvement in working capital, better cash flow and cost
optimization have supported sustained investments in Company's brands.
Reserves
The total reserves as on March 31,2018 stood at Rs. 34,43,06.34 Lacs representing an
increase of 11.77% from March 31,2017
Research and Development (R&D)
Your Company's R&D vision is to improve lives of more by creating and sustaining
consumer-led science based innovation. Science remains the core of the product portfolio
that addresses the nutritional needs of consumers. At R&D, new product innovation
teams have been working on new claims, new formats, product platforms and science
platforms to build Innovation pipeline. There were 2 New products launched in the year.
Horlicks Protein+: Launched in Feb'2018 in 2 flavours i.e. Vanilla and
Chocolate, Protein + extended Horlicks presence in the high protein HFD segment for adults
(30- 45 yrs.). Protein+ helps adults in the age group 30+ to support healthy muscles and
energy release. Product has been designed with triple sources of protein and better
quality of proteins with higher levels of essential amino acids.
Women's Horlicks relaunch: Women Horlicks continued its differentiation
through product launch in Feb'2018 with "Great New Taste" to Increase
penetration by offering new chocolate flavour.
GSK Consumer Health advisory Board 2017-2019 is a category led initiative. The first
meeting was conducted in Dec'201 7 for Nutrition category wherein various aspects of
"Childhood Growth and Development in Indian Children" were discussed. Renowned
scientists and physicians in the field of nutrition and paediatrics attended this meeting
to discuss about the current & future nutrition status, challenges and opportunities
for growth and development in Indian children.
The R&D function continues to focus on the regulatory compliance with local food
laws, and proactively engages with the regulatory authorities and industry associations to
shape the regulatory environment for science based innovation in food and nutrition. FSSAI
released Food Safety & Standards Amendment Regulations, 2016 (notification), stating
changes in permitted levels/or removal of specific ingredient/actives from food items. It
has successfully complied with the FSSR regulations including technical feasibility of
regulatory initiatives on proposed Codex changes on Food Safety & Standards Amendment
(Ingredients & Additives) & Proprietary food products meeting ONE RDA (ICMR) for
all vitamins & minerals meeting July'17 timelines.
Also, a high science packaging lab has been established to drive science based
packaging innovation program. This high science lab will help conducting the product
package interactions at early stage of project to enhance speed of execution. It received
many packaging excellence awards and recognitions for the efforts.
Printed electronics Point of Sale (POS) for Horlicks growth Plus: Printed electronics
technology was developed on commercial scale in India as a part of Horlicks Growth+ POS to
enable "Go for More Strategy" in the market. Moreover, CLS (Core Lab Systems)
has been implemented as improvement in R&D Product development process to enhance the
compliance and data integrity.
You will be pleased to know your Company's R&D function has adopted best practices
as mentioned below:
As part of the initiative to build future innovation pipeline, ideation
workshops and consumer insights, developments have been made during the year by consumer
Insight group and commercial category teams with active participation from R&D. The
ideas and concepts generated through this workshop are under validation and scoping, to
build the medium and long-term pipeline. It also adopted best practices in consumer
insights and have a strong network with GSK's global capabilities on scientific
exploration, clinical science, sensory and product understanding, packaging expert
networks to access best information to deliver product of best quality, science and
relevance.
Profitable growth ambitions are actively supported by R&D through a
structured Value Engineering Program which also helps to mitigate the increasing cost of
raw materials. Design to value remains an integral part of R&D product development
process to provide most efficient cost advantage to end consumer.
R&D is working towards the environment sustainability initiatives. In the
area Packaging (Material science), it moved into more sustainable foil less primary
laminate pack structure.
You will be glad to know that your Company's R&D is significantly involved in
building and defining new science and benefits through modern technology that would give
cutting edge advantage to the offerings along with scientific research to drive
differentiated claims, enabling us to sustain our category leadership. Some of the high
science differentiated products are in advance stage of development for launches in short,
medium, and long term, and thus making it innovation pipeline robust.
ISO Certification
Your Company's manufacturing facilities at Nabha, Rajahmundry and Sonepat continue to
be certified to ISO 9001: 2008, ISO 22000: 2005, ISO 14001: 2004 and OHSAS 18001: 2007 by
SGS, a leading International Certification Company. These certifications indicate its
commitment in meeting in a sustainable manner Global Quality, Environment, Health, and
Safety Standards.
Information Technology
Your Company strengthened its efforts in integration of Information Technology for
business efficiencies.
The Information Technology function has been a key business enabler across all
functions of the Company.
During the year, the Company has kicked off simplification projects like creation of
E-forms for streamlining the requisition process. CH tech roadshow was organized to
increase the Tech Quotient of employees by showcasing the technologies readily available
and future innovations which will enhance their productivity.
Internal Control System and Adequacy
Your Company has established and maintained adequate internal control framework in line
with the Internal Financial Controls ("IFC") requirement within the meaning of
the explanation to Section 134(5)(e) of the Companies Act, 2013 including financial
controls based on the internal control over financial reporting criteria established by
the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India (ICAI). The Company has evaluated the
operating effectiveness of internal control systems which are supplemented by:
Well-documented standard operating procedures, policies, risk and control
matrices for all material processes and fraud risk mitigation. Further, these documents
are tested for operating effectiveness, regularly reviewed and updated to align with
global best practices.
Any material variances from the budget are reviewed on a monthly basis and
require approval of the Management Team. All major policy changes are approved by the
Managing Director.
The self-assessment by process/ control owner is also used as the basis of
CEO/CFO certification as required under SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 with the Stock Exchange. Further, the self-certification
is reviewed by the Audit Committee on a half yearly basis.
Your Company has a Risk Management and Compliance Board (RMCB), now called the
Risk Management Committee' (RMC), comprising of the Managing Director, Finance
Director, Operations Director, Executive Vice President - Legal and Executive Vice
President -Human Resource. Risk maps stating the significant business risks, potential
consequences along with mitigation plans are prepared by each function and reviewed by RMC
on a regular basis.
Your Company has a robust internal audit function, that reports into the Audit
Committee and carries out review of operations, systems and functions basis the plan
approved by Audit Committee.
All significant Audit observations and follow-up actions thereon are reported to the
Audit Committee. The Committee reviews the adequacy and effectiveness of your Company's
internal control framework and monitors the implementation of audit recommendations
including those relating to strengthening your Company's risk management policies and
systems.
Human Resource Development
Your Company has set a new goal to be one of the most innovative, best performing and
trusted healthcare companies in the world. The Company has also defined a new set of GSK
Expectations to realize this goal - Courage, Accountability, Development and Teamwork. The
new GSK expectations alongside the values will be the foundation of the culture; it wants
to establish at GSK.
A large part of embedding this culture in the organization is linked to providing
rewarding careers to the people. Building on the 2017 integrated approach to Career
Frameworks (My Winning Career), the focus this year was on employee experience - enabling
people to chart their long-term careers, have conversations with senior leaders and build
plans to develop skills for their next career move.
Various initiatives around My Winning Career', enabled employees in the
organization to come together, take a step back and spend time dedicated to conversations
around careers & development.
The focus has resulted in improved engagement scores in 2017 The latest engagement
survey scores have increased across the themes of the Values, Expectations and Priorities
of Innovation, Performance & Trust.
Your Company continued to invest significantly in developing talent across levels,
leveraging processes such as integrated talent management to ensure sustainability of
talent, role changes and robust succession pipelines for all key roles. It started the
India Leadership Program' - an initiative to develop, engage and retain emerging
leaders in the organization to strengthen succession pipeline at leadership level.
In 2017 it has focused on Employee Experience' - to enable employees experience
key people processes/offerings in the Company. It set-up Kiosks in the annual conferences
to enable employees understand & experience Learning on-the-go' (online learning
resources), Workday (HR management system), Employee Referral Program, GSK Values &
Expectations, Career Frameworks, Employee Safety and Partnership for Prevention (Health
& Wellbeing initiative).
The focus on Differentiated Development ensured that employees can leverage a variety
of opportunities to develop and take on greater responsibilities in line with their career
aspirations. It also continued to build the early talent pipeline by hiring from the best
B-schools in the country, as well as sending the high potential talent on global talent
acceleration programs.
Your Company is strongly committed to principles of inclusion and diversity (I&D)
which is a critical element of the global HR strategy, as well. In 2017, it planned and
executed the second "Inclusion and Diversity Week" which included a set of
events conducted across locations, designed to help our employees value and draw on
diverse knowledge and experiences. In 2017, it also launched the first Inclusion &
Diversity Council. The council created a roadmap for themselves and identified the areas
that they will work on such as awareness & training around I&D, new mothers
related initiatives, talent acquisition & talent management. It focussed itself in
ensuring 100% coverage of all employees in the Prevention of Sexual Harassment (POSH)
training. It also participated in external I&D forums to share and understand best
practices as well as to build future plans around this agenda. Your Company also initiated
discussions with external agencies around child care centres for the benefit of its women
employees.
Building a healthy, engaged workforce remains one of the key priorities thus, it
focussed on embedding the Partnership for Prevention (P4P) program further in India. The
program was launched in India in 2016, offering a host of preventive healthcare services
for employees and their dependents. 2017 saw multiple on ground activations around P4P
like awareness sessions, health and vaccine camps organised across locations to drive
awareness and increase uptake.
Awards and Recognition
Your Company efforts to deliver the best quality products backed up by science based
innovation, strong talent base and brands have been recognised during the year. Some of
the key recognitions are:
Mission Health won the best award in category of Food and Nutrition Education
Program of the Year at Nutrition and Food Security Awards 201 7 by ASSOCHAM (Associated
Chambers of Commerce and Industry of India).
Horlicks won a Gold at DBA Design Effectiveness Awards 2017 for the product
design in the beverage category.
Sensodyne won a Bronze at Big Bang Awards 2017 under the social media category
for the Whitening launch Facebook campaign.
Boost has won a Silver @ EMVIEs'17 for the Best Media Strategy for the campaign
Play A Bigger Game.
Boost won the Gold for Best Video Content & Silver for Best In-App Strategy
for the digital video campaign #playabiggergame at The Maddies'17.
Boost won the Silver for Best Work in Mobile Analytics for its digital video
campaign #playabiggergame at The Big Bang Awards'17
GSK Consumer Health Care was awarded at the prestigious India Star 2017 for
Boost restage and Horlicks growth Plus for the packaging design in consumer category.
The "Sustainable sourcing of Horlicks raw materials' project won first
place in Environmental sustainability' category in this year's CET Environment,
Health, Safety and Sustainability Awards.
Directors
Mr. Navneet Saluja was nominated as Director by Horlicks Limited under Article 97A of
the Articles of Association of the Company w.e.f. January 1, 2018, in place of Mr. Manoj
Kumar. The change was noted and resolution for appointment of Mr. Navneet Saluja as the
Managing Director of the Company for a period of 3 years and 10 months was passed in the
meeting held on December 6, 2017 The Board of Directors wishes to place on record its
sincere appreciation for the valuable advice and guidance rendered by Mr. Manoj Kumar.
Mr. Subodh Bhargava ceased to be the Chairman of the Board from the close of business
hours on March 31,2018, consequent to withdrawal of his nomination by Horlicks Limited.
The Board of Directors wishes to place on record its sincere appreciation for the valuable
advice and guidance rendered by Mr. Subodh Bhargava during his tenure as the Chairman.
Mr. Zubair Ahmed was nominated as Director by Horlicks Limited under Article 97A of the
Articles of Association of the Company w.e.f. April 1, 2018. The change was noted and
resolution for appointment of Mr. Zubair Ahmed as the Nominee Director w.e.f. April 1,2018
was passed and noted in the meeting held on December 6, 2017
Mr. Mukesh Butani has resigned from the Board of Directors w.e.f. March 31, 2018. The
Board of Directors wishes to place on record its sincere appreciation for the valuable
advice and guidance rendered by Mr. Mukesh Butani during his tenure.
Performance Evaluation of Board
A regular process of evaluating the Board's performance can help the Board in
validating the relevance of its processes and provide insights for strengthening its
overall efficiency and effectiveness. It evaluate the Board, the Directors, the Committees
and the Chairman of the Board through a survey that takes place annually and the mechanism
followed is mentioned below:
1. In February 2018, multiple surveys were sent to all Directors through a secured
online survey portal.
2. The evaluation was based on Board's effectiveness, processes adopted by the Board,
contribution by the Board Members, value addition by the Board and effectiveness &
contribution of the Committees.
3. Once the Directors completed the survey, the third party appointed compiled the
results and shared the analysis with the NRC Chairman and Chairman of the Board.
4. The Chairman of the Board then individually discussed the results and shared
feedback with all Directors.
5. Based on the report of performance evaluation, it was determined whether to extend
or continue the term of appointment of the Independent Directors.
It continued to use the same surveys for Board Evaluation which were revised & used
in February 2017. Your Company is compliant to all guidelines circulated by SEBI on the
Board Evaluation process.
Criteria for Appointment of Directors
The success of the Board of Directors depends on the composition, structure, resources,
diligence, and authority of the entire Board, as well as their working relationships with
other participants of corporate governance, including management. Your Company is
committed to corporate governance best practices and is vigilant at the time of
appointment of its Directors.
Key Responsibilities:
The Board of Directors is ultimately responsible for the Company's business affairs and
governance. To that goal a Director would be expected to:
Represent organization's shareholders' interests and create value for them.
Align the interests of management with those of shareholders while protecting
the interests of other stakeholders (customers, creditors, suppliers).
Oversee the Company's performance by setting objectives, establishing short-term
and long-term strategies to achieve these objectives.
Provide counsel to the Company's senior executives on material strategic
decisions and risk management. Establish or approve strategic plans and decisions to
achieve these goals.
Oversee the sustainability of the Company in creating long-term shareholder
value and protecting interests of other stakeholders.
Pre-requisites for consideration:
The candidate to acknowledge that she/he has sufficient time to effectively
discharge her/his duties.
The candidate should have skill sets and expertise area which is complementary
to the current Board. The Board assesses the needs of the current Board to ensure that
there is a range of skills, experience and diversity represented, including an
understanding of:
- The industry and markets in which the Company operates.
- Accounting, finance and legal matters
- Other key areas of business operations
The candidate should have experience and depth of knowledge in her/ his area of
work to contribute meaningfully to the operations of the Board
There should be no conflict of interest between the candidate and the Company.
The individual should not be in relation to any current employee of the Company and should
not be holding more than 2% of the Company's shares at the time or during the appointment
The candidate should not be employed or related to another organization/body
which can directly/indirectly influence the operations of the Company or is in direct
competition with the Company.
The Candidate has not been convicted of any offence, whether involving moral
turpitude or otherwise and sentenced to imprisonment for not less than six months and a
period of five years has not elapsed from the date of expiry of sentence.
Remuneration Policy
Remuneration Policy for Non-Executive Directors
Your Company believes that its Board Members bring immense value in their independent
evaluation and oversight of the operations of the Company. It is therefore expected that
they will devote significant time and provide unbiased point of view to their Board
duties.
The remuneration paid to each Non-Executive Director is as per the structure determined
by the Nomination & Remuneration Committee and the Board. This is reviewed
periodically and compared to other peer organizations. It is ensured that the remuneration
paid to them is in accordance with the provisions of the Companies Act and any other
applicable law.
The remuneration structure for the Non-Executive Directors comprises of annual
Commission and sitting fee per meeting attended.
Remuneration Policy for Employees Philosophy
Your Company recognizes that reward is important in engaging employees and motivating
them to do their best work to deliver the strategic priorities and mission. It rewards
high performance and recognize outstanding achievements of employees in a way that is
consistent with the values and behaviours.
Principles
Competitive - Your Company provides competitive rewards in line with GSK global
best practices.
Differentiated - Your Company differentiates reward to attract and retain
skilled employees; reward the greatest contributors and recognize employees who evolve
their skills to enhance their individual contribution to GSK's success
Alignment - Your Company's reward programs and practices are transparent and
focus on ensuring alignment at several levels
Business alignment - Your Company's reward program considers the common and
business-specific skill/ performance requirements across the various business units
Country alignment - Reward aims at meeting the needs of the diverse workforce
and enabling them to live the mission - to do more, feel better and live longer
Individual alignment - Individual objectives are set and reviewed annually to
ensure employees have a clear understanding of the link between the business value they
deliver and their own performance based reward
Managerial Remuneration
Your Company believes its employees are its biggest assets and aligns its compensation
and benefits towards rewarding employees in line with its Rewards policy. Your Company
focuses on being market aligned as well as differentiate basis performance to drive a
high-performance culture.
Your Company has 3983 permanent workers, including workmen. The remuneration for the
workmen at two of the factories is governed by Long Term Wage Settlement (LTWS) which is
done in consultation with the unions. For the remaining employees, the targeted salary
increase was 10% for all employees including KMP.
When it compare the remuneration of these to that of median employee, it observed the
following ratio:
Name |
Designation |
Remuneration for the year ended March 31, 2018 (Rs.)* |
Remuneration for the year ended March 31,2017 (Rs.)* |
Salary Change |
Ratio of Salary to Median Employee Salary |
Navneet Saluja1 |
Managing Director |
33,747,105 |
NA*** |
NC** |
51 |
Manoj Kumar2 |
Managing Director |
58,456,062 |
59,826,057 |
NC** |
81 |
Vivek Anand3 |
Director - Finance |
30,361,631 |
31,479,632 |
-4% |
41 |
Anup Dhingra4 |
Director - Operations |
48,326,878 |
30,657,970 |
NC** |
65 |
Shanu Saksena5 |
Company Secretary & Area Ethics and Compliance Officer |
11,174,000 |
6,374,617 |
NC** |
15 |
'Remuneration is calculated on accrual basis.
**Not Comparable.
***Not Applicable.
1. Appointed in the role with effect from January 01,2018, salary increase & ratio
to median salary not comparable.
2. Ceased to be in the role with effect from December 31, 2017, salary increase &
ratio to median salary not comparable.
3. Salary change is negative due to reduced variable payment as per his terms of
appointment.
4. Appointed in the role with effect from September 01, 2016, salary increase &
ratio to median salary not comparable.
5. Appointed in the role with effect from August 05, 2016, salary increase & ratio
to median salary not comparable.
Your Company believes that by means of the variable pay plan the Company can link a
portion of compensation to the individual and business performance which creates a strong
positive reinforcement. It also ensures that the employees of the Company are rewarded
only when the Shareholders' goals are met. Your Company's variable pay plan, therefore,
links the variable pay to both - individual performance and business results such as sales
growth and operating profits.
The ratio of the remuneration of the highest paid director to that of the employees who
are not Directors but receive remuneration in excess of the highest paid Director during
the fiscal year is not applicable. It is also, affirmed that the remuneration is as per
the Remuneration Policy of your Company
Name |
Designation |
Remuneration of KMP as percentage of Revenue |
Remuneration of KMP as percentage of PBT |
Navneet Saluja1 |
Managing Director |
0.08% |
0.31% |
Manoj Kumar2 |
Managing Director |
0.13% |
0.54% |
Vivek Anand |
Director - Finance |
0.07% |
0.28% |
Anup Dhingra |
Director - Operation |
0.11% |
0.45% |
Shanu Saksena |
Company Secretary & Area Ethics and Compliance Officer |
0.03% |
0.10% |
|
|
0.42% |
1.69% |
1. Appointed in the role with effect from January 01,2018
2. Ceased to be in the role with effect from December 31, 2017
Total KMP Remuneration as a percentage of Revenue: 0.42% Total KMP Remuneration as a
percentage of PBT: 1.69%
Your Company believes in balancing the competitiveness of pay as well as sustainability
of the associated costs for the organization. The salary increases for this year were
aimed at maintaining the pay competitiveness with market as well as performance of the
Company.
Policy on Board Diversity
As stated in the policy for appointment of Directors, your Company recognizes that the
success of the Board of Directors depends on the composition, structure, resources,
diligence, and authority of the entire Board, as well as their working relationships with
other participants of corporate governance, including management. GSK is committed to
build a truly diverse Board which brings with it diversity of expertise, skills, regional
and industry experience, gender and demographics. GSK believes that such a Board will
enhance the quality of decisions by utilizing the diversity of its members.
The Nomination and Remuneration Committee (NRC) is responsible for reviewing and
assessing the composition and performance of the Board, as well as identifying
appropriately qualified persons to occupy Board positions. At the time of appointment, the
candidate must bring with him/ her skill sets and expertise area which is complementary to
the current Board composition. The Board will have an optimum combination of Executive,
Non-executive and Independent Directors with at least one women Director in compliance
with all statutory provisions. The Board of Directors shall maintain an appropriate mix of
diversity, skill, experience and expertise on the Board.
The NRC and the Board of Directors shall refer to this Policy on Board Diversity at the
time of appointment of persons as a Board Member.
Particulars of Employees
The information required pursuant to Section 197 of the Companies Act, 2013 read with
Rules, 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 in respect of employees of the Company will be provided to members
upon request in writing made before the Annual General Meeting where in Financial
Statements for the relevant fiscal year are proposed to be adopted. In terms of Section
136 of the Act, the copy of the Annual Report is being sent to the Members and others
entitled thereto, and is also available for inspection by the Members at the Registered
Office of the Company during business hours on working days of the Company up to the date
of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy
thereof, such Member may write to the Company Secretary in this regard.
The Annual Report of the Company is also available on the Company's website-
www.gsk-ch.in.
Particulars of Loans, Guarantee, Investment U/S 186
There are no Loans, guarantees, Investments to be reported u/s 186 of Companies Act
2013.
Details of Board Meetings
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the year six Board Meetings and five Audit Committee Meetings were convened and
held, the details of which are given in the Corporate Governance Report. The intervening
gap between the Meetings was within the period prescribed under the Companies Act, 2013.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Information required as per the Companies Accounts Rules, 2014 is given in the Annexure
I to this Report.
Auditors
Messrs Deloitte Haskins & Sells LLP, who are appointed till the conclusion of the
63rd Annual General Meeting, being eligible, are being ratified at the forthcoming Annual
General Meeting.
Secretarial Audit
Pursuant to provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit
Report is annexed herewith as Annexure II to this Report duly certified by S.N.
Ananthasubramanian & Co., a firm of Company Secretaries in practice to undertake the
Secretarial Audit of the Company.
Composition of Audit Committee
Please refer corporate governance report for composition of audit committee.
Risk Management Policy
The Company has a Risk Management policy and an internal control framework, which is
used to manage risks.
Vigil Mechanism for Directors and Employees of Company
The detailed policy for Vigil Mechanism and Whistle blower is available at
www.gsk-ch.in.
Extract of Annual Report
Information required under this clause is given in the Annexure III to this report.
Related Party Transaction
Disclosures as required under Form AOC 2 are contained in Note 28 (Financial
Statements). There are no transactions, which are not at arm's length and all the Related
Party transactions are at arm's length basis.
The detailed policy for Related Party Transactions is available at
http://www.gsk-ch.in/Policies.aspx
Fixed Deposits
The Company has not accepted any deposits within the meaning of Section 73 of the
Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
Information on Company's Share Performance
The market capitalisation of the Company increased by 18% (Rs 2,56,33,27 lacs) Vs March
31,2017 (Rs 2,16,99,82 lacs). The EPS stands at Rs.166.47 vs Rs.156.15 as on closing date
of last fiscal year. The PE ratio as on March 28, 2018 (last trading day) stands at 36.6
vs 33 as on last trading day of fiscal year 2017-18.
Environment and Social Commitment
Your Company is on a mission "to help people to do more, feel better, live
longer". Your Company has revamped its CSR programme and launched its "Mission
Health" programme which is in aligned with United Nations' (UN) Sustainable
Development Goals (SDG) and Government of India's National Health Policy. Mission Health
is a national movement of your Company which is in line with its philosophy and goals to
address the need of the country, engaging with key stakeholders and linking brands with
purpose, cause and focus.
Mission Health programme is implemented in 7 states viz Bihar, UP, MP, Karnataka, AP,
Haryana and Punjab where micro-nutrient programme is being implemented in 1000 government
schools and reaching out to 150,000 children. Mission Health is implemented in the states
of UP, MP and Karnataka. The NITI (National Institution for Transforming India) Aayog has
announced partnership with these three states each to radically transform their Health and
Education sector under its Sustainable Action for Transforming Human Capital (SATH)
initiative.
The Mission Health programme is planned to focus on thematic areas of micronutrient
deficiency, tackling dengue and eradicating lymphatic Filariasis (elephantiasis).
Your Company has spent 2% of its average net profit of last three fiscal years as part
of your CSR in the reporting period.
Your Company undertakes these activities in the following different ways:
a) Nutrition: Your Company has started three key programs to address the
nation's issue of malnutrition with strategic partners. Following are the programs
initiated during the reporting period:
Holistic nutrition program for 50,000 kids with The Akshaya Patra Foundation in
Karnataka
Mass Outreach Through Schools with SHARP for 1,50,000 in Karnataka; Madhya
Pradesh; Uttar Pradesh; and Bihar
Improve awareness about malnutrition with NGO Sakshi for 200 kids in Haryana
b) Skill development: It has started a program with Confederation of Indian
Industry focussing on Capacity building of FBOs including MidDay Meal Organisers, Self
Help Groups, Mass and Railways Catering, Food Storage Locations on how to prepare, produce
and serve Safe Food.
c) Water Sanitation & Hygiene programme (WASH): In partnership with Save the
Children, JSI R&T India foundation and Sakshi, it is implementing WASH programme in
Haryana, Punjab and AP to create awareness on sanitation and hygiene among communities.
This programme will link with Government of India's Swachh Bharat Mission.
d) Healthcare: It supports its Global program for eradicating Lymphatic
Filariasis (elephantiasis) through Albendazole contribution to World Health Organization
(WHO).
Allied against Dengue: This programme is implemented in 5 districts of UP by WISH
Foundation. Programme is in line with National Vector Control Programme and focuses on
continuous medical education for Doctors & Pharmacists and community awareness on
prevention and management of Dengue.
For other details regarding CS R, please refer Annexure IV to Directors' Report.
Significant Material Orders Passed by the Court/ Regulator/ Tribunal Impacting Going
Concern Status and Company's Operations in Future
Your Company has not received any material Show cause under the Companies Act/SEBI
Regulations. Notices received from other regulatory/ statutory authorities are being
suitably dealt with.
There are no significant legal /arbitral proceedings against the Company. All such
matters are being brought to the notice of the Audit Committee/Board.
Director's Responsibility Statement
To the best of their knowledge and belief and according to the information and
explanation obtained, your Directors make the following statement in terms of Section 134
(3) (c) and 134(5) of the Companies Act 2013 for the year ended March 31, 2018:
a. The Financial Statements of the Company for the period ended March 31, 2018 have
been prepared in accordance with Indian Accounting Standards (Ind AS) notified under
Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standard)
Rules, 2015 (as amended)] and other relevant provisions of the Act. There have been no
material departures in the adoption and application of accounting standards.
b) All Financial Statements have been prepared on historical cost convention, as a
going concern and on the accrual basis.
c) The estimates and judgments relating to Financial Statements have been made on a
prudent and reasonable basis to ensure that Financial Statements reflect, in a true and
fair manner, the form and substance of the transactions and reasonably present the
Company's state of affair and profit for the year.
d) The Directors of the Company have taken adequate care for the maintenance of
adequate accounting records in accordance with the provisions of Companies Act, 2013 for
safeguarding of assets of the Company and for preventing and detecting fraud and other
irregularities.
e) The Company has established and maintained adequate internal control framework in
line with the Internal Financial Controls ("IFC") requirement within the meaning
of the explanation to Section 134(5) (e) of the Companies Act, 2013 including financial
controls based on the internal control over financial reporting criteria established by
the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India (ICAI). The internal financial controls
are adequate and operating effectively and the internal auditors have conducted periodic
audits to provide reasonable assurances on the same.
f) The systems to ensure compliance with the provisions of all applicable laws are in
place and were adequate and operating effectively.
Declaration of Independent Directors
Pursuant to Sections 149(6) & 149(7) of Companies Act 2013, the Independent
Directors of your Company have given a declaration that they have complied with the
criteria of independence as set out under sub section (6) of Section 149 of the Companies
Act, 2013.
Cautionary Statement
Statements in this report particularly that pertains to Management Discussion and
Analysis may contain certain statements that might be considered forward looking. These
statements are subject to certain risks and uncertainties. Actual results may differ
materially from those expressed in the statement as important factors could influence the
Company's operations such as Government policies, local, political and economic
development, risks inherent to the Company's growth and such other factors.
Acknowledgements
The Directors wish to extend their thanks and appreciation to all the employees of the
Company at all levels, agents and other business associates for their commitment,
dedication and respective contributions to the Company's operations during the year under
review.
The Directors would also like to acknowledge the valuable guidance, technical
assistance and advice being received from the Associate Company in the U.K. Your Directors
look forward to the future with confidence.
|
For and on behalf of the Board |
Zubair Ahmed |
Navneet Saluja |
(DIN: 00182990) |
(DIN: 002183350) |
Chairman |
Managing Director |
Vivek Anand |
Kunal Kashyap |
(DIN: 06891864) |
(DIN: 00231891) |
Director |
Director |
Place : Gurugram |
|
Dated : May 11, 2018 |
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