Pidilite_Industries_Annual_Report_2010

Annual Report 2009 - 2010 building bonds building bonds ‘Building Bonds’ has been the foundation of our interaction with all our internal and external stakeholders. This year we take our philosophy to the next level infusing it with a renewed sense of creativity. Creativity is what excites and drives us. It is a spark that, we believe, will ignite the imagination of those directly and indirectly associated with Pidilite. Company Information Board of Directors B K Parekh S K Parekh M B Parekh N K Parekh R M Gandhi N J Jhaveri Bansi S Mehta Ranjan Kapur Yash Mahajan Bharat Puri D Bhattacharya A B Parekh A N Parekh V S Vasan J L Shah Chairman Vice Chairman Managing Director Joint Managing Director Director Director Director Director Director Director Director Wholetime Director Wholetime Director Wholetime Director (up to 21.10.2009) Wholetime Director (wef 21.10.2009) Corporate Office Ramkrishna Mandir Road Off Mathuradas Vasanji Road Andheri (E), Mumbai 400 059 Registered Office Regent Chambers, 7th Floor Jamnalal Bajaj Marg 208, Nariman Point Mumbai 400 021 Registrar & Transfer Agent TSR Darashaw Limited 6-10, Haji Moosa Patrawala Ind. Estate 20, Dr. E Moses Road, Mahalaxmi Mumbai 400 011 President & Company Secretary P C Patel Solicitors & Advocates Wadia Ghandy & Co Auditors Haribhakti & Co Internal Auditors Mahajan & Aibara Bankers Indian Overseas Bank Corporation Bank ICICI Bank The Royal Bank of Scotland N.V. contents 02 Company Information 04 Management Discussion and Analysis 11 Economic Value Added (EVA) 12 Financial Charts 14 10 Years Financial Performance 16 Directors’ Report 22 Corporate Social Responsibility Report 24 Annexure I to the Directors’ Report 27 Auditor’s Report 30 Balance Sheet 31 Profit & Loss Account 32 Schedules 56 Cash Flow Statement 58 Statement Pursuant to Section 212 60 Corporate Governance Report 65 Corporate Governance Compliance Certificate 66 Information for Shareholders 68 Consolidated Financial Statements PIDILITE ANNUAL REPORT 2009-10 3 Management Discussion & Analysis Pidilite Industries Limited on a stand-alone basis achieved 10% growth in net sales. However, excluding the sales from the “Others” segment, net sales growth was 15%. Earnings before depreciation, interest, tax and foreign exchange loss increased by 60%, profit before tax (PBT) increased by 102% and profit after tax (PAT) increased by 97% on a stand-alone basis. The profitability of the Company significantly improved in the current year due to lower material costs, strengthening of Indian Rupee, lower duties and control on costs. Sales growth picked up in the second half of the year, due to improvement in economic conditions. The Company’s sales have grown at a CAGR of 18% over the last five years. On a consolidated basis, Pidilite net sales grew by 10%, PBT increased by 144% and PAT increased by 144%. Overseas Subsidiaries reduced losses in the current year due to reduction in costs and improved economic conditions. Performance by Industry Segment Consumer and Bazaar Products Branded Consumer and Bazaar Products Segment contributed to 77% of the total net sales of the Company and grew by 15%. Net sales of branded Adhesives and Sealants grew by 14% and contributed 49% of the total sales of the Company. Construction and Paint Chemicals grew by 17% and Art Materials and other products grew by 13%. Growth rates improved in the second half of the year. Consumer and Bazaar Product sales have grown at a CAGR of 18% over the last 5 years. Exports of Consumer and Bazaar products grew by 11% to Rs 945 million and have grown at a CAGR of 31% over the last 5 years. Profit before interest and tax for the Consumer and Bazaar segment increased by 51%. BUSINESS SEGMENTS % 18% CONSUMER & BAZAAR PRODUCTS Adhesives & Sealants Construction / Paint Chemicals Art Materials & Others SPECIALITY INDUSTRIAL CHEMICALS Industrial Resins Industrial Adhesives Organic Pigments & Preparations 49% 10% 8% 6% 1% 8% OTHERS 2009-10 Speciality Industrial Chemicals Speciality Industrial Chemicals contributed 22% of the total sales of the Company and grew by 14%. Exports of Speciality Industrial Chemicals declined by 12.4% to Rs 856 million due to adverse global economic conditions. Profit before interest and tax for the Speciality Industrial Chemicals segment grew by 72%. Others This segment largely consists of the Vinyl Acetate Monomer manufacturing unit merged into the Company effective 1st April 2007. Since the pricing of bought out VAM was more advantageous, the Company opted to import rather than operate the plant. Consequently the revenue in this segment was only Rs 157 million as compared to Rs 932 million in the previous year. The Company is evaluating options to manufacture other products in the plant as in the near future import of VAM is likely to be more viable. PID ILITE ANNUAL RE PORT 2009 -10 5 New products In the adhesives category the Company has started expanding its range of products by introducing new products for the joinery segment. These products are used in mechanized joinery and modular furniture units. During the year the Company acquired the retail wood working brand of Henkel, i.e. Woodlok. Products under this brand were relaunched in select markets in the second half of the year. The Company has started expanding its range of Dr. Fixit Flooring Solutions for use in industrial and commercial flooring. Superior grades of Tile Fixing Products were introduced under Roff brand during the year. The Company has introduced the SMARTCARE range of products for healthcare & hospitality segments. M Seal Super, a versatile epoxy putty meant for DIY applications which can be used in both wet and dry conditions, was introduced during the year. In the Arts & Stationary range several innovative products/modifications were introduced to serve consumers better. Fevistik Blue and Fevistik Purple are new introductions. Unlike regular white glue, these coloured sticks, when applied, appear coloured but the colour disappears after a few seconds enabling young children to see and control the application of glue. New products launched during 2009-10 in the Industrial Products segment range include Binders for water based links and overprint varnishes. A high performance binder was introduced for decorative texture paints. In the leather product range an important addition was made in the form of high performance upgradation compound. Customer relations ¬ Pidilite and Fevicol celebrated their Golden Jubilee Year in 2009-10. There were many initiatives linked with the Golden Jubilee celebration involving dealers, carpenters and trade partners. A special Golden Jubilee Furniture Book was launched and was well appreciated with a print of over 30,000 copies. Dr. Fixit Institute (DFI) of Structural, Protection and Rehabilitation continued the successful Healthy Construction Lecture Series to increase awareness of the Global Best Practices in this field. 3R’s – A publication for leading experts on Repair, Restoration, Renewal of built environment was initiated to position DFI and the Dr. Fixit brand as an expert in Construction Chemicals. A campaign for free health check up, for terrace waterproofing, was successfully carried out in key markets as an on ground activation programme. This was supported by TV advertising. The response has been overwhelming and the same concept is being extended to other products. The annual International Art and Craft Contest attracted participation from 2250 schools in India and from 5 international locations with an overall participation of 7 lakh students. The theme this year was “My mother, my world”. The finals were held in Goa where the Honorable Chief Minister of Goa was the chief guest. ¬ ¬ ¬ ¬ ¬ Two of our mass consumer contact initiatives entered the Limca Book of Records for maximum participation. On one occasion 2500 students participated in glass painting and on the other occasion 3500 students participated in pot painting with Crackle medium. Both events were covered extensively in print and electronic media. The year saw release of four new commercials. “Moochwali” an advertisement for Fevicol, was released as part of the Golden Jubilee Year celebrations. “Moochwali” won three Abby awards at the last Goafest, the annual advertising awards event of Advertising Club, Bombay and Advertising Agencies’ Association of India. There were two new commercials for Fevikwik with the theme “Paanch Rupiya Nikal” and one of these won an ABBY at the abovementioned Goafest. The fourth new advertisement was for Dr. Fixit Newcoat – “No Breaking News”. Media & advertising PIDILITE ANNUAL REPORT 2009-10 9 Book value per share of Re 1 (Rs) Earning per share (EPS) of Re 1 (Rs) Base Value: 31st March 2006 = 1 Market Capitalisation (Times) BSE Sensex (Times) 2.18 18.55 5.80 14.49 12.63 9.66 8.16 2.37 1.79 1.39 1.55 1.16 3.72 2.89 1 1.08 1.27 0.86 0.80 05-06 06-07 07-08 08-09 09-10 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 Book value per share & earning per share for the years 2005-06 to 2008-09 have been restated for the 1:1 bonus issue made in 2009-10. Miscellaneous The Company’s net worth (Equity Capital + Reserves) has grown from Rs 4118 million in 2005-06 to Rs 9386 million at the end of 2009-10, giving a Compounded Annual Growth Rate (CAGR) of 22.87%. The market capitalisation of the Company on 31st March 2010 was Rs 57876 million and has grown at a CAGR of 31.82% since the IPO in 1993. Other matters The following matters are elaborated in the Directors’ Report ¬ Financial Performance ¬ Industry Structure and Development ¬ Outlook on Opportunities, Threats, Risks and Concerns ¬ Risk and Internal Adequacy ¬ Human Resources Economic Value Added (EVA) Computation of EVA EVA NOPAT Weighted average cost of capital employed Cost of equity = Risk-free return equivalent to yield on long term Government of India (GOI) securities (taken @ 7%) + market risk premium (assumed @ 7.5%) x beta variant for the Company (taken at 0.9), where the beta is a relative measure of risk associated with the Company’s shares as against the stock market as a whole. Cost of debt = Effective interest applicable to Pidilite based on an appropriate mix of short, medium and long term debt, net of taxes. = Net operating profit after tax (NOPAT) - Weighted average cost of capital employed. = Net profit after tax + post tax interest cost at actual. = (Cost of equity x average shareholder funds) + (cost of debt x average debt). Economic Value Added Analysis Item 1. 2. 3. 4. Risk Free Return on Long Term GOI Securities Cost of Equity Cost of Debt (Post Tax) Effective Weighted Average Cost of Capital 2005-06 7.5% 13.5% 7.0% 12.6% 2006-07 8.0% 14.0% 7.3% 12.8% 2007-08 7.9% 13.9% 7.2% 11.5% 2008-09 7.1% 13.1% 6.7% 10.3% 2009-10 7.0% 13.8% 5.9% 10.9% Economic Value Added (Rupees in million) 5. 6. 7. 8. 9. 10. 11. 12. 13. Average Debt Average Equity (Shareholder Funds) Average Capital Employed (Debt + Equity) Profit After Tax (as per P&L account) Interest (as per P&L account, net of Income Tax) Net Operating Profit After Tax (NOPAT) Weighted Average Cost of Capital (4 x 7) Economic Value Added (10 – 11) EVA as a % of Average Capital Employed (12÷7) 581 3843 4424 907 10 917 558 359 8.1% 968 4498 5466 1199 42 1241 700 541 9.9% 3204 5637 * 8841 * 1883 106 1989 1016 973 11.0% 5303 6866 * 12169 * 1464 210 1674 1253 420 3.5% 4897 8360 13257 2935 189 3124 1445 1679 12.7% * Excluding 6% Redeemable Preference Share Capital of Rs. 28.75 million issued on 31st March 2008 and redeemed on 5th September 2008. Notes 2 3 Effects have been given in 10 Years’ Financial Performance for above note. Figures in Financial Charts, 10 Years’ Financial Performance and EVA are as per the Annual Report of respective years, except where stated otherwise. PIDILITE ANNUAL REPORT 2009-10 1 Profit After Tax includes Prior Years’ Tax Provision written back. 11 Financial Charts DISTRIBUTION OF REVENUE (2009-10) Material Cost 48.6% Operating Cost 21.6% Employee Cost 9.6% Interest 1.4% Depreciation 2.3% Foreign Exchange Fluctuation Expense 0.5% Current Tax 1.9% Deferred Tax -0.1% Dividend 4.3% Retained Earning 10% CURRENT RATIO Current Assets (Rs in million) Current Liabilities (Rs in million) Current Ratio 7091 7053 6239 4124 3095 2312 1789 1384 2.2 2.3 3.1 2.5 2835 4279 1.5 05-06 06-07 07-08 08-09 09-10 PBIT & INTEREST COVER PBIT (Rs in million) Interest Cover (Times) 3575 PBT & PBT AS % OF NET SALES PBT (Rs in million) PBT as % to Net Sales 3289 2403 1950 1603 1328 88.5 25.4 15.0 6.1 12.5 14.5 13.3 14.6 9.3 1313 1540 2242 1632 17.0 05-06 06-07 07-08 08-09 09-10 05-06 06-07 07-08 08-09 09-10 DEBT EQUITY RATIO Total Debt (Rs in million) Net Worth (Rs in million) (Equity + Reserves) VALUE ADDITION TO BUSINESS THROUGH RESERVES Reserves less Misc. Expenditure Share Capital (Equity) (Rs in million) 4214 5580 5026 7083 6143 8880 Debt Equity Ratio 1383 553 4118 0.1 4877 0.3 0.8 0.8 7336 9386 0.4 4625 3866 PIDILITE ANNUAL REPORT 2009-10 6396 506 252 252 253 253 05-06 06-07 07-08 08-09 09-10 05-06 06-07 07-08 08-09 09-10 13 10 Years Financial Performance (Rupees in million) Highlights Operating Results Sales and Other Income Manufacturing & Other Expenses Operating Profit Interest (Net) Depreciation Profit from Ordinary Activities Foreign Exchange Fluctuation Expense/(Income) Profit before Tax Current Tax Deferred Tax Profit after Tax for the year Add: Prior Year’s Tax Provision written back Profit after Tax Dividend on Equity Shares Dividend on Preference Shares Retained Earning Financial Position Capital-Equity Capital-Preference 252 252 Reserve (Less Revaluation Reserve & Misc. Expenditure) Net Worth Borrowings Deferred Tax Liability (Net) Funds Employed Fixed Assets# Gross Block Depreciation Net Block Investments in - Overseas Subsidiaries - Others Net Current Assets Total Assets * Includes Tax on Dividend 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 CAGR % 5269 4373 896 70 165 661 661 182 479 479 125 * 354 5772 4774 998 42 190 766 766 165 80 521 19 540 177 363 6678 5521 1157 30 225 902 902 295 14 593 593 214 * 379 7647 6458 § 1189 18 255 916 916 294 8 614 614 228 * 386 8998 7649 § 1349 17 270 1062 1062 345 (13) 730 36 766 288 * 478 10617 9005 § 1612 15 274 1323 10 !! 1313 409 17 887 20 907 360 * 547 13081 17248 19313 16730 2583 318 472 1793 161 1632 150 18 1464 1464 518 * 1 945 20487 16355 4132 286 464 3382 93 3289 423 (25) 2891 44 2935 885 * 2050 16.29 15.78 18.52 16.98 12.17 19.89 19.52 9.86 11186 § 14489 § 1895 63 302 1530 (10) !! 1540 309 34 1197 2 1199 443 * 756 2759 161 385 2213 (29) !! 2242 223 140 1879 4 1883 518 * - ~ 1365 22.09 22.30 24.27 21.54 252 252 2079 † 2331 443 279 † 3053 252 252 2459 † 2711 416 † 293 † 3420 252 252 2835 3087 562 301 3950 252 252 3315 3567 610 288 4465 252 252 3866 4118 553 305 4976 252 252 4625 4877 1383 339 6599 253 29 282 6143 6425 5026 423 11874 253 253 7083 7336 5580 441 13357 506 506 8880 9386 4214 415 14015 8.03 8.03 18.59 17.69 28.26 20.50 1915 2167 449 2616 2255 736 1519 159 938 2616 2772 921 1851 151 1051 3053 3132 † 1122 2010 † 148 1262 † 3420 § # 3541 1373 2168 150 1632 3950 4203 1635 2568 30 154 1713 4465 4811 1905 2906 225 134 1711 4976 5554 2182 3372 753 139 2335 6599 8444 2973 5471 1594 30 4779 11874 10166 3433 6733 2197 210 4217 13357 10838 3889 6949 2448 2658 1960 14015 19.06 20.31 18.41 36.71 8.53 20.50 Includes VRS Payment of Rs 2.4 million Excluding Revalued Assets & Depreciation thereon † Figures were reclassified/regrouped in 2003-04 !! Included in Other Income/Expenses now reclassified/regrouped ~ Less than Rs 1 million (Rupees in million) Highlights Funds Flow Sources Internal Generation Increase in Capital & Reserve (Net) on Amalgamation Increase in Loans Decrease in Investment - Others Decrease in Working Capital Decrease in Miscellaneous Expenditure Total Applications Decrease in Preference Capital on redemption Repayment of Loans Capital Expenditure (Net) Investments in - Overseas Subsidiaries - Others Dividend Increase in Working Capital Increase in Miscellaneous Expenditure Total Ratios Return on Average Net Worth % (RONW) (PAT divided by Average Net Worth) Return on Average Capital Employed % (ROCE) (PBIT divided by Average Funds Employed**) Long Term Debt/Cash Flow Gross Gearing % (Debt as a percentage of Debt plus Equity) Current Ratio (Current Assets divided by Current Liabilties) Assets Turnover (times) (Gross Sales divided by Total Assets) § † ~ ^ * ** Includes Cost of Brand Acquired Rs 87.3 million Includes Cost of Brand Acquired Rs 133.7 million Includes Proceeds of FCCB bonds Rs 1594.4 million Excluding Deferred Tax Liability (Net) # ‡ μ 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 644 70 714 810 7 817 832 3 835 877 146 1023 1023 47 2 1072 1201 21 1 2 1225 1536 830 2 2368 2335 197 3643 ^ 109 3 6287 1949 554 563 3066 3373 2257 5630 341 238 125 10 714 8 19 413 2 228 370 10 1023 - 57 768 528 5 443 624 2368 - - 29 1734 603 181 519 3066 1366 680 523 § 177 109 817 384 # 214 218 835 669 † 30 4 288 81 1072 613 ‡ 195 360 1225 2484 ~ 841 518 2444 μ 6287 251 2,448 885 5630 24.1 24.0 23.5 21.2 23.0 23.6 26.7 33.4 * 21.3 * 34.6 28.0 30.0 31.6 27.6 27.6 30.0 29.3 27.2 * 16.0 * 27.0 0.1 0.1 0.3 0.2 0.2 0.2 0.4 1.2 2.4 1.2 17.1 16.0 13.3 15.4 14.6 11.8 22.1 44.0 43.2 31.0 2.6 2.3 2.6 3.0 2.5 2.2 2.3 3.1 2.5 1.5 PIDILITE ANNUAL REPORT 2009-10 2.0 1.9 1.9 1.9 2.0 2.1 2.0 1.4 1.4 1.4 Includes Cost of Brands Acquired Rs 90.8 million Includes Cost of Brands Acquired Rs 17.8 million Includes unutilised proceeds of FCCB bonds Rs 1102.4 million Includes Cost of Brands, Patents and Trademarks Acquired Rs 517.1 million Excluding 6% Redeemable Preference Share Capital of Rs 28.75 million issued on 31st March 2008 and redeemed on 5th September 2008. 15 Directors’ Report To The Members Your Directors take pleasure in presenting the Forty First Annual Report together with Audited Statements of Accounts for the year ended 31st March 2010. Financial Results (Rupees in million) 2009-10 Gross Turnover Turnover, Net of Excise Profit Before Tax Less: Current Year’s Tax Profit After Current Year’s Tax (Add)/Less: Deferred Tax Profit After Current and Deferred Tax Add: Prior Year Tax Provision written back Profit After Tax Profit Brought Forward Profit available for appropriation Appropriations Proposed Dividend on Equity Shares Dividend on Preference Shares Tax on Dividend Transfer to Capital Redemption Reserve Transfer to Debenture Redemption Reserve Transfer to General Reserve Total Balance Carried to Balance Sheet 759 126 323 1500 2708 1006 3714 443 1 75 29 257 600 1405 779 2184 20215 19297 3289 423 2866 (25) 2891 44 2935 779 3714 2008-09 19074 17611 1632 150 1482 18 1464 1464 720 2184 Financial Performance The Operating Profit and Net Profit, for the year at Rs 4132 million and Rs 2891 million increased by 60% and 97% respectively. Income Tax for the current year at Rs 423 million is higher than Rs 150 million (including Rs 28 million for Fringe Benefit Tax) in the previous year. In the last year’s report, the Company had highlighted the impact of the economic slowdown in India and abroad and its impact on the overall economic growth rate and on particular segments in which the Company operates. The difficult economic conditions continued in the first six months of current year and improvement in growth rates was witnessed in the second half of the year. However, there was substantial reduction in the input costs due to softening of prices of commodity chemicals and this together with the strengthening of the Indian Rupee, lower duties and cost control measures taken by the Company have helped in improving the year’s performance. During the year, foreign exchange gain attributable to loans taken for depreciable assets was Rs 123.6 million and the same has been credited to the value of fixed assets. Out of total unamortized foreign exchange loss of Rs 164 million as on 31st March 2009, an amount of Rs 145 million has been reversed during the year due to foreign exchange gains. Further an amount of Rs 10 million has been amortized in the current year. The balance unamortized foreign exchange loss as on 31st March 2010 is Rs 9 million. NET SALES & GROWTH % Net Sales (Rs in million) Growth % 19297 17611 15353 11544 9075 27.2 17.9 14.7 9.6 33.0 05-06 06-07 07-08 08-09 09-10 PBT, PAT & GROWTH (YOY) PBT (Rs in million) (Growth %) PAT (Rs in million) (Growth %) 2242 1883* 1540 1313 # 907 23.6 18.4 1199 ‡ 3289 2935 *** 101.6 100.4 57.0 45.6 1632 ** 1464 32.2 17.3 08-09 -27.2 -22.3 05-06 06-07 # ‡ * After deferred tax of Rs 34 million and prior year’s tax provision written back of Rs 2 million After deferred tax of Rs 140 million and prior year’s tax provision written back of Rs 4 million ** After deferred tax of Rs 18 million and prior year’s tax provision written back of Rs nil. *** After deferred tax of Rs 25 million and prior year’s tax provision written back of Rs 44 million. 17 PIDILITE ANNUAL REPORT 2009-10 After deferred tax of Rs 17 million and prior year’s tax provision written back of Rs 20 million 07-08 09-10 Golden Jubilee Year The year 2009-10 is the Golden Jubilee year of the Company and recognizing its significance, the Company has issued bonus equity shares in the ratio of 1:1 in March 2010. The Board has also recommended a Golden Jubilee Special Dividend of Re 0.50 per equity share on the enhanced share capital after bonus Issue. The Company has reached its present position with the support of its valued customers and all stakeholders. The Company places on record its deep appreciation for their support. Capital Expenditure The overall expenditure during the year was Rs 680 million. Out of this approximately Rs 187 million was spent on fixed assets for various manufacturing units, offices, laboratories and warehouses and on information technology. The expenditure on the Synthetic Elastomer Project was approximately Rs 472 million. Investment in Subsidiaries During the year, investment of Rs 251 million was made in overseas subsidiaries. Dividend The Directors recommend a dividend of Rs 1.50 per equity share of Re 1 each including Golden Jubilee Special Dividend of Re 0.50 per share, out of the current year’s profit, on 506.1 million equity shares of Re 1 each (enhanced on account of bonus equity shares issued during the year) (previous year @ Rs 1.75 per equity share on 253.1 million equity shares of Re 1 each), amounting to Rs 759.2 million (previous year Rs 442.9 million). The dividend for the current year will be free of tax in the hands of shareholders. The dividend payout amount has grown at a CAGR of 24.7% during the last 5 years. Synthetic Elastomer Project As mentioned last year, all equipments have arrived at the project site at Dahej (SEZ). Detailed engineering design of the Monomer and Polymer plant has been completed. Using this facility, small quantity of finished products have been manufactured. Currently work is under way to set up a pilot plant which will enable the Company to streamline key process parameters and to make trial quantities of various grades of elastomers. The total amount spent till 31st March 2010 on this project is Rs 2648 million. Manufacturing Plants The adhesives manufacturing capacities at Kalamb in Himachal Pradesh and Daman were expanded during the year. A drive for TPM, aimed at improving performance through greater involvement and participation of employees, was initiated during the year at the manufacturing units. 80% of the manufacturing units are now certified 885 Term Finances The Company had borrowed US $ 17 million through an ECB Term loan amounting to Rs 796.2 million, repayable in 3 annual installments. During the year the Company has repaid the 1 of the 3 annual installments amounting to st US $ 5.67 million equivalent to Rs 262.9 million. EQUITY DIVIDEND PAYOUT & % OF NET PROFIT Dividend Payout (Rs in million) (including Tax on Dividend) under ISO 14000/OHSAS 18000 and the balance units are likely to undergo the certification process during the next year. Dividend Payout (%) 518 443 360 39.7 36.9 27.5 35.4 30.2 518 Foreign Currency Convertible Bonds (FCCB) During the financial year 2007-2008, the Company had raised US $ 40 million through issue of zero coupon Foreign Currency Convertible Bonds. As mentioned in last year’s report, the Company has repurchased bonds of face value of US $ 2.8 million which were cancelled and extinguished. 05-06 06-07 07-08 08-09 09-10 2.5 1.25 2.7 1.50 3.6 1.75 2.8 1.75 3.3 1.50* Dividend Cover (Times) Dividend Per Share (Rs) * Dividend for 2009-10 is on the enhanced capital base on account of bonus equity shares issued during the year. The FCCB holders are entitled to a right to convert their holdings into equity shares of the Company on or after 16th January 2008. Those FCCB holders who exercised this right till the Record Date i.e. 17th March 2010 were eligible to receive the bonus shares on par with the other shareholders. Furthermore, those FCCB holders who opt for conversion after the Record Date are, under the terms on which the FCCBs were offered, entitled to a proportionately higher number of equity shares as if the conversion had taken place prior to the Record Date. Performance of the subsidiary in Dubai was impacted by poor trading conditions, resulting in losses. In February 2010, Chemson Asia Pte Ltd merged with Pidilite Innovation Centre Pte. Ltd. (both wholly owned subsidiaries of PIPL). Overall there was significant improvement in the performance of the overseas subsidiaries with substantial reduction in losses due to measures taken to improve sales and reduce costs. Total revenue from overseas subsidiaries for the year was Rs 2695 million, up by 16% over the previous year. The total investment in overseas subsidiaries as on 31st March 2010 stands at Rs 2448 million. A statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiaries in India and abroad, is attached hereto. Subsidiaries - Overseas Subsidiaries The Company has 13 overseas subsidiaries (4 direct and 9 step-down) including those having significant manufacturing and selling operations in USA, Brazil, Thailand, Singapore, Dubai, Egypt and Bangladesh. Pulvitec, the Brazilian subsidiary reported impressive results with 28% growth in sales. This, together with lower material costs and control on costs helped the Company post cash profits for the year. Operations in USA significantly reduced costs and improved margins. While overall sales remained flat, losses reduced by 38%. The operations in Thailand posted cash profits on the back of 26% growth in sales. Pidilite International Pte. Ltd. (PIPL), a wholly owned subsidiary of the Company acquired the remaining 25% equity shares of Pidilite Bamco Ltd. (PBL) from other shareholders at a cost of US $ 526,675. With this acquisition, all the shares (except 2 shares) of PBL are held by PIPL. During the year, Pidilite Industries Egypt, SAE and Pidilite Specialty Chemicals Bangladesh Pvt Ltd commenced manufacturing operations in Egypt and Bangladesh, respectively. PIL Trading Egypt (LLC), a subsidiary of the Company’s step down subsidiary (namely Pidilite Industries Egypt SAE), was incorporated during the year for the purpose of carrying on trading activities in Egypt, North Africa and COMESA countries. The subsidiary in Bangladesh recorded profits in its first year of operations on the back of robust sales and good margins. Consolidated Accounts In accordance with the requirements of Accounting Standards AS 21 (read with AS 23) issued by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Annual Report. Additionally, a statement giving prescribed particulars of information, in aggregate for each subsidiary, is attached. By letter No. 47/244/2010-CL-III, of 2010, the Company has obtained from the Government of India, Ministry of Corporate Affairs, New Delhi, under Section 212 of the Companies Act, 1956, an exemption from annexing to this Report, the Annual Reports of subsidiary Companies for the year ended on 31st March 2010. Accordingly, the Annual Reports of the Subsidiary Companies are not annexed to this Report. Members desiring to have a copy of audited Annual Accounts of the above subsidiaries may write to the Company Secretary at the Registered Office of the Company and they will be provided with the same upon such a request. Annual Accounts of these subsidiary Companies will also be kept for inspection of the Members Registered Office of the subsidiary Companies. The Annual Reports of the subsidiary companies are available on the website of the Company. PID ILITE ANNUAL RE PORT 2009 -10 at the Registered Office of the Company as well as at the 19 Directors The terms of appointment of Shri A N Parekh as a Wholetime Director will expire on 30 June 2010. Subject to the th Corporate Governance Reports on Corporate Governance and Management Discussion and Analysis, in accordance with Clause 49 of the Listing Agreements with Stock Exchanges, along with a certificate from M/s M M Sheth & Co, Practising Company Secretaries, are given separately in this Annual Report. approval of members, your Directors at their Meeting held on 16 June 2010 have re-appointed him for a further th period of 5 years. Effective from 21st October 2009, Shri V S Vasan, a Wholetime Director resigned from the Board of Directors. Your Directors place on record their sincere appreciation of the valuable contribution made by him during his tenure on the Board. In accordance with the Articles of Association of the Company, Shri A B Parekh, Shri R M Gandhi, Shri Yash Mahajan and Shri N J Jhaveri, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment. Subject to approval of members, Shri J L Shah has been appointed as an Additional Director and also Whole-time Director designated as Director (Factories Operations) of the Company with effect from 21st October 2009 and he holds office up to the conclusion of the ensuing Annual General Meeting. A notice in writing, with requisite deposit has been received from a member proposing Shri J L Shah as a candidate for the office of Director. Auditors Members are requested to re-appoint M/s Haribhakti & Co, Chartered Accountants, as Auditors of the Company and also for its branches/C & F depots/depots, for the current year and to fix their remuneration. Cost Auditor The Company has received the approval of the Central Government for the appointment of M/s. V. J. Talati & Co. as Cost Auditor to conduct cost audit for the financial year 2010–11. Conservation of Energy, Technology Absorption, etc. The particulars under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are attached to this Report as Annexure I. Industry Structure and Development There is no 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 Speciality Industrial Chemicals. Products such as Adhesives, Sealants, Art Materials, Construction and Paint Chemicals are covered under branded Consumer & Bazaar Products segment. These products are widely used by carpenters, painters, plumbers, mechanics, households, students, offices, etc. Speciality Industrial Chemicals segment covers products such as Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment Preparations, Surfactants, etc. and caters to various industries like packaging, textiles, paints, printing inks, paper, leather, etc. In both the above business segments, there are a few medium to large companies with national presence and a large number of small sized companies that are active regionally. There is a growing presence of multinationals in Directors’ Responsibility Statement Your Directors confirm that: • in the preparation of the Annual Accounts, the applicable accounting standards have been followed; • 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 as at 31 March 2010 and of the profit of st the Company for the year ended on that date; • the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and • the Directors have prepared the Annual Accounts on a going concern basis. many of the segments in which the Company operates. The share of imports is less than 10% of domestic volumes in most of the product segments. The “Other” segment covers manufacture and sale of VAM. The Company is the only manufacturer of VAM in the country with an installed capacity of 30,000 MT per annum. As mentioned earlier, due to global demand supply situation it was viable to import VAM rather than manufacture inhouse and accordingly the plant remained shut last year. Going forward, in the near future, import of VAM is likely to remain more viable. The Company is exploring alternative products which can be manufactured in the same plant. Human Resources In order to foster collaborative working in addressing Company wide opportunities and issues, task forces titled Corporate Initiative Teams (CITs) were formed. These CITs have successfully completed several projects in the areas of customer service and employee engagement. Competency and capability frameworks, aligned to the values of the Company have been developed. The organizational capability of Business Divisions and Functions has been strengthened and non-family professionals now occupy many key senior positions in the Company. The total number of employees as on 31st March 2010 was 4121. A statement of particulars pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report as Annexure II. As per the provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Report, together with Accounts, is being sent to the Members of the Company, excluding statement of particulars of employees under Section 217(2A) of the Act. Members desiring to have a copy of the same may write to the Company Secretary at the Registered Office of the Company and they will be provided with the same upon such a request. Current Year Outlook During the current year sales growth is expected to improve. However, margins will be under pressure due to significant increase in input costs. The Company’s major subsidiaries are in USA, Brazil, UAE, Thailand, Egypt and Bangladesh. The units in Brazil, Thailand, Bangladesh and Egypt are expected to show improved performance. However, the economic scenario in USA & UAE remains uncertain. Outlook on Opportunities, Threats, Risks and Concerns Improvement in economic conditions, in India and abroad, is likely to have positive impact on Company’s sales for the current year. However, significant increase in input cost is likely to put pressure on margins in the near term. The Company’s overseas business is improving but there is a need to strengthen the management structure to support these businesses. Appreciation Your Directors place on record their appreciation of the efficient services rendered by the employees of the Company at all levels. Internal Control Systems and their adequacy The Company has adequate internal control procedures commensurate with its size and nature of business. The Company has appointed Internal Auditors who audit the adequacy and effectiveness of internal controls laid down by the management and suggest improvements. For overseas subsidiaries, this is being done by their statutory auditors. The Audit Committee of the Board of Directors periodically reviews the audit plans, internal audit reports, adequacy of internal controls and risk management. Date: 16th June, 2010 CHAIRMAN PIDILITE ANNUAL REPORT 2009-10 FOR AND ON BEHALF OF THE BOARD Mumbai B K PAREKH 21 Corporate Social Responsibility Report The Company continued to consolidate on existing projects and started several new initiatives in areas of health care, education and rural development. The Hanumant Hospital, Gram Nirman Samaj and Mahuva Education Trust continued to make a strong contribution to society. Rural Development Self help groups for development of women and children were established during the year. Other initiatives like Water Resource Management Scheme, Indira Awaas Yojana and Gram Nirman Samaj continued during the year. Water Resources Management Scheme Education Shri Balvant Parekh Science City at Bhavnagar with facilities like conference hall, computer unit, physics laboratory and library was inaugurated by Dr. Pankaj Joshi, an eminent scientist, on 26th January, 2010. The Science City uses novel methods to generate interest among students in science and helps develop analytical skills through simple experiments. The library of the Science City is unique. Books for all ages, CD and DVD on science and culture are the major attractions of the library. The library also has puzzles and scientific toys to develop skills. A custom made Science Mobile Van (Vigyan-Vahini) displaying 35 working science models was launched. 12,000 students of 60 rural schools of Bhavnagar district benefited from this initiative. Kalsar village in Bhavnagar district, had facilities for girls to study only up to class VII. This impeded completion of school education as the girl students had to travel to schools outside the village, which led to drop-outs. Facilities for studies have been extended up to class X, including working knowledge of computers and this will enable girls, in the village, to complete schooling up to Class X. “Balvant Parekh Centre for General Semantics and Other Human Sciences” has been established at Vadodara with support from Parekh family. Vision behind this Centre is to facilitate a process for spreading the awareness of the benefits of general semantics among the people in India, which will lessen their social and personal anxieties and stress and enable them to achieve harmony in relationship. Workshop on Semantics Gram Nirman Samaj - Gram Vikas Yojana Science City at Bhavnagar The Centre works in tandem with the Forum on Contemporary Theory. Knowledge and methodology from diverse academic fields such as language and communication studies, humanities, sciences, sociology and anthropology are incorporated into the academic endeavors of the Centre. The Company is likely to provide support to this Centre as it is carrying out pioneering work in the field of semantics in India. Healthcare Hanumant Hospital continued to provide quality healthcare and expanded its reach. Medical camps and educational training programmes were also conducted. Arogya Fund with contributions from donors and other organizations, helps the hospital extend medical assistance to needy patients. A unique multi speciality medical seminar was conducted during the year where renowned faculties from USA conducted sessions. 120 doctors of Mahuva and neighbouring regions participated in the seminar. Health Awareness Booklets were released on five different topics and distributed to libraries of primary schools in the villages. Hanumant Hospital - Medical camp Hanumant Hospital Medical seminar Science City inauguration 23 PIDILITE ANNUAL REPORT 2009-10 Annexure I to the Directors’ Report Statement containing particulars pursuant to the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 forming part of the report of the Directors. A a) CONSERVATION OF ENERGY Energy Conservation Measures taken 1. 2. 3. 4. Campaign based synchronization of utilities with plant operations. Optimization of batch process and size to reduce cycle time. Addition of energy efficient utilities. Retrofitting utilities for alternative fuels. b) Additional Investments and Proposals, if any, being implemented for reduction of Consumption of Energy. 1. 2. Installation of renewable energy source for process water heating and emergency lighting. Continuing with energy conservation measures on above lines. c) Impact of measures of (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. 2.5 lakh kwh electricity and 300 MT of fuel oil are expected to be saved annually by above measures. d) Total energy consumption and energy consumption per unit of production As per Form A FORM A Disclosure of particulars with respect to Conservation of Energy A. Power and Fuel consumption / Generation Year ended 31st March 2010 1. Electricity a. Purchased Year ended 31st March 2009 Units Total amount Rate / Unit (Average) b. ‘000 kwh Rs in million Rs 1,76,63 96.42 5.46 1,62,38 89.66 5.52 Own Generation (i) Through Diesel Generator Units Units per litre of diesel oil Cost / Unit (ii) Windmill Generation Units ‘000 kwh 86,12 84,39 ‘000 kwh Kwh Rs / kwh 2,75 2.59 13.49 5,02 2.65 14.23 2. Coal Quantity Total Amount Average Rate MT Rs in million Rs ‘000 /MT 2,419 10,52 4.35 7,562 26.94 3.56 A. Power and Fuel Consumption / Generation Year ended 31st March 2010 Year ended 31st March 2009 3. Natural Gas Quantity Total Amount Average Rate ‘000 SCM Rs in million Rs /SCM 23,52 38.19 16.23 21,93 29.77 13.58 4. Fuel Oil Quantity Total Amount Average Rate MT Rs in million Rs ‘000 /MT 16,94 41.14 24.29 20,54 49.77 24.23 5. Brickquittes Quantity Total Amount Average Rate MT Rs in million Rs ‘000 /MT 920 36.92 4.01 819 28.26 3.45 B. Consumption per unit of production It is not feasible to furnish information in respect of consumption per unit of production B] TECHNOLOGY ABSORPTION Efforts made in technology absorption: (as per Form B) FORM B Disclosure of particulars with respect to Technology Absorption RESEARCH & DEVELOPMENT (R&D) 1. Specific areas in which R&D is carried out by the Company R&D activities are carried out for development of new products, improvement of existing products in the category of Synthetic Resins, Adhesives, Sealants, Pigments and Pigment Dispersions, Intermediates, Surfactants, Art Materials, Coatings, Fabric Care Products, Construction Chemicals, Maintenance Chemicals, Emulsion Polymers, Vinyl Acetate Monomer etc. 2. Benefits derived as a result of the above R&D optimization, process improvements and cycle time reduction. PIDILITE ANNUAL REPORT 2009-10 Increase in sales due to product improvements and introduction of new products; reduction in cost due to formulation 3. Future Plan of Action Future R&D efforts will continue along present lines. 25 4. Expenditure on R & D (Rs in million) Year ended 31st March 2010 Year ended 31st March 2009 5.23 77.81 83.04 0.43 i) ii) Capital Recurring Total 5.35 87.60 92.95 0.45 iii) Total R&D Expenditure as a Percentage of total turnover 5. Technology Absorption, Adaptation and Innovation i) Technologies and processes developed by the R&D Department are being continuously absorbed and adopted on a commercial scale. ii) Benefits derived as a result of the above efforts : Improvement in products and processes. iii) Information regarding Technology imported during the last 5 years : No technology imported during last 5 years. C] FOREIGN EXCHANGE EARNINGS & OUTGO f) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services and export plans. Export earnings during 2009-10 have shown an increase of Rs 19 million over 2008-2009. The Company regularly participates in international exhibitions and has appointed additional representatives for overseas business development work. g) Total foreign exchange used and earned (Rs in million) Year ended 31st March 2010 Year ended 31st March 2009 Foreign exchange earned Foreign exchanged used * * 1,842 2,678 1,823 2,882 Out of the above, exchange used for import of materials which are either not manufactured in India and / or not easily available in India, amounted to Rs 1,889 million for the year ended 31st March 2010 (Previous year Rs 2,181 million). Disclosure of particulars in the report of Board of Directors Under Health, Safety & Environment for the year 2009-2010 Sixteen out of nineteen Pidilite locations are now certified for OHSAS 18001 – 2007 and ISO 14001 – 2004. The executives of all major units have certified themselves as Lead Auditors for ISO 14001 – 2004. The Company is preparing for compliance to CLP (Classification Labeling and Packaging) & GHS (Globally Harmonized System) legislations which will become effective from end 2010. The Company is exploring avenues for certification of the manufacturing locations for Green Carbon Foot Print. Auditors’ Report To the Members of Pidilite Industries Limited 1. We have audited the attached Balance Sheet of Pidilite Industries Limited (‘the Company’) as at 31st March 2010 and also the Profit and Loss account and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the paragraph 3 above, we report that: I. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The Balance Sheet, Profit and Loss account and Cash Flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, Balance Sheet, Profit and Loss account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. v. On the basis of the written representations received from the directors, as on 31st March 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. 2. vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010; 3. b) in the case of the Profit and Loss account, of the profit for the year ended on that date; and c) in the case of Cash Flow statement, of the cash flows for the year ended on that date. For HARIBHAKTI & CO Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Place: Mumbai Date: 19th May 2010 4. ii. iii. 27 PIDILITE ANNUAL REPORT 2009-10 Annexure to Auditors’ Report [Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Pidilite Industries Limited on the financial statements for the year ended 31st March 2010] i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies was noticed on such verification. (c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. ii. (a) The management has physically verified the stocks of stores, spares, raw materials, packing materials and finished goods. In our opinion, the frequency of verification is reasonable. In respect of inventories lying with third parties, these have been confirmed by them. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year. iii. (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence clauses 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. (b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence clauses 4(iii)(f) and 4(iii)(g) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. iv. In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company. v. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. vii. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. viii. We have broadly reviewed the books of account maintained by the Company in respect of production of Synthetic Resins where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. ix. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows : Name of the Statute Sales Tax Act Sales Tax Act Sales Tax Act Central Excise Act Central Excise Act Nature of dues Sales tax in various states Sales tax in various states Sales tax in various states Excise duty in various states Excise duty in Panvel Amount (Rs in million) 292.13 30.01 3.77 0.39 0.03 Period to which the amount relates for various years for various years for various years For various years For various years Forum where dispute is pending Deputy Commissioner of sales tax Sales tax Tribunal High Court CESTAT Commissioner (Appeals) x. The Company has neither accumulated losses as at 31st March 2010, nor it has incurred any cash losses either in the financial year under audit and in the immediately preceding financial year. sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. xviii. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. xix. According to the information and explanations given to us, the Company has not issued debentures during the year. xx. The Company has not raised any money by pubic issue during the year. xxi. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management. xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xv. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company. xvi. In our opinion, the term loans have been applied for the purpose for which the loans were raised. xvii. According to the information and explanations given to us and on an overall examination of the balance For HARIBHAKTI & CO Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Place: Mumbai Date: 19th May 2010 29 PIDILITE ANNUAL REPORT 2009-10 Balance Sheet As at 31st March 2010 (Rs in million) As at 31st March 2010 As at 31st March 2009 Schedule I. SOURCES OF FUNDS 1. Shareholders’ Funds a. b. Share Capital Reserves and Surplus 1 2 506.13 8879.66 253.07 7083.08 9385.79 7336.15 2. Loan Funds a. b. Secured Loans Unsecured Loans 3 4 2184.50 2029.80 4214.30 2593.09 2987.05 5580.14 440.87 13357.16 3. Deferred Tax Liability (Net) 415.36 14015.45 TOTAL II. APPLICATION OF FUNDS 1. Fixed Assets a. b. c. d. Gross Block Less : Accumulated Depreciation Net Block Capital work in progress 5 8063.91 3889.19 4174.72 2774.02 7778.35 3432.81 4345.54 2387.47 6948.74 6733.01 2407.10 2. 3. Investments Current Assets, Loans and Advances a. b. c. d. e. Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances 6 7 2506.31 2387.59 331.16 51.51 962.19 6238.76 5106.64 2288.93 2413.03 1270.76 211.15 868.93 7052.80 Less : Current Liabilities and Provisions a. b. Liabilities Provisions 8 3301.93 976.76 4278.69 2241.16 594.59 2835.75 1960.07 14015.45 12 4217.05 13357.16 Net Current Assets TOTAL Notes forming part of the Accounts AS PER OUR ATTACHED REPORT OF EVEN DATE For HARIBHAKTI & CO. Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary FOR AND ON BEHALF OF THE BOARD B K PAREKH Chairman S K PAREKH Vice Chairman M B PAREKH Managing Director Profit and Loss Account For The Year Ended 31st March 2010 (Rs in million) Schedule INCOME Turnover ( Gross) Less : Excise Duty Net Sales Other Income EXPENDITURE Materials Other Expenses Depreciation Profit before Taxation Income Tax Expense Current Tax Less : MAT Credit Entitlement Deferred Tax Fringe Benefit Tax Profit for the year Prior year Tax Provision written back (Net) Balance brought forward from previous year Profit available for appropriation Dividend on Preference Share Capital Proposed Dividend on Equity Share Capital Corporate Tax on Dividend Transfer to Capital Redemption Reserve Transfer to Debenture Redemption Reserve Transfer to General Reserve Balance carried to Balance Sheet Earnings per share: (Refer note 15 of Schedule 12) Basic (Rs) Diluted (Rs) Face Value of Share (Re) Notes forming part of the Accounts 12 565.29 142.29 423.00 (25.49) 10 11 9958.16 5858.47 463.86 9 20215.34 917.89 2009-10 2008-09 19073.50 1462.28 19297.45 271.77 19569.22 17611.22 238.92 17850.14 10328.35 5417.62 472.16 16280.49 3288.73 16218.13 1632.01 182.45 59.90 122.55 17.96 27.71 397.51 2891.22 43.73 779.13 3714.08 759.20 126.10 885.30 322.46 1500.00 1006.32 168.22 1463.79 720.27 2184.06 0.75 442.87 75.38 519.00 28.75 257.18 600.00 779.13 5.80 5.64 1.00 2.89 2.81 1.00 For HARIBHAKTI & CO. Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary B K PAREKH Chairman S K PAREKH Vice Chairman M B PAREKH Managing Director 31 PIDILITE ANNUAL REPORT 2009-10 AS PER OUR ATTACHED REPORT OF EVEN DATE FOR AND ON BEHALF OF THE BOARD Schedules Numbers 1 to 12 annexed to and forming part of the Balance Sheet as at 31st March 2010 and Profit and Loss Account for the year ended 31st March 2010 As at 31st March 2010 (Rs in million) As at 31st March 2009 SCHEDULE 1 SHARE CAPITAL Authorised 70,00,00,000 (39,00,33,999) Equity Shares of Re 1 each Nil (50,00,000) 6% Cumulative Redeemable Preference Shares of Rs 10 each Nil (2,50,00,000) Unclassified Shares of Re 1 each TOTAL Issued, Subscribed and Paid up Capital : 50,61,34,612 (25,30,61,306) Equity Shares of Re 1 each, fully paid-up (Notes 1 to 3) Bonus Shares Issue (Note 4) TOTAL NOTES: Out of the above 1. 2. 3. 4. 74,75,880 Equity Shares of Re 1 each have been issued for consideration other than cash pursuant to various schemes of amalgamation in earlier years. 47,94,81,646 (22,64,14,340) Equity Shares of Re 1 each have been allotted as fully paid-up Bonus Shares by way of capitalisation of General Reserve, Securities Premium Account and Capital Redemption Reserve. The Equity Shares of the face value of Rs 10 each were sub-divided into ten Equity Shares of the face value of Re 1 each w.e.f. 27th September 2005. Bonus Shares Issue Account transferred to Equity Share Capital on account of settlement of dispute for title of 6000 fully paid bonus shares. 700.00 700.00 390.03 50.00 25.00 465.03 506.13 506.13 253.06 0.01 253.07 SCHEDULE 2 RESERVES AND SURPLUS Capital Reserve Balance as per last Balance Sheet Capital Redemption Reserve Balance as per last Balance Sheet Less: Capitalised during the year for bonus issue Cash Subsidy Reserve Balance as per last Balance Sheet Special Reserve Balance as per last Balance Sheet Less: Transferred to General reserve Debenture Redemption Reserve Balance as per last Balance Sheet Add : Transferred from Profit and Loss Account General Reserve Balance as per last Balance Sheet Less : Earlier year’s Foreign Exchange Fluctuation Add : Transferred from Special Reserve Less : Capitalised during the year for bonus issue Add : Transferred from Profit and Loss Account 3.37 3.37 28.75 28.75 9.47 28.75 28.75 9.47 1.19 1.19 327.46 322.46 649.92 5933.71 1.19 224.32 1500.00 7,210.58 1.19 1.19 70.28 257.18 327.46 5,338.41 4.70 600.00 5,933.71 779.13 7,083.08 Profit and Loss Account TOTAL 1,006.32 8,879.66 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 3 SECURED LOANS 750 (750) 11.9% Secured Redeemable Non Convertible Debentures of Rs 10,00,000 Each (Note.1) 750 (750) 10.2% Secured Redeemable Non Convertible Debentures of Rs 10,00,000 Each (Note.1) Term Loans from Banks (Note.2) Working Capital Loans from Banks (including Working Capital Demand Loan) (Note.3) TOTAL 1. 750.00 750.00 466.92 217.58 2,184.50 750.00 750.00 796.23 296.86 2,593.09 Secured Redeemable Non Convertible Debentures are secured by way of mortgage and charge (by First pari passu charge) on the immovable property in Gujarat and all movable properties of the Company. 750 Secured Redeemable Non Convertible Debentures with interest @ 11.9% p.a. will be redeemed at par on 5th December 2013. 750 Secured Redeemable Non Convertible Debentures with interest @ 10.2% p.a. will be redeemed at par on 19th December 2011. Term Loan from Banks is secured by way of hypothecation of all movable Plant and Machinery of the Company. Working Capital Loans from Banks are secured by way of first charge on the stock of Raw Materials, Finished Goods, Packing Material, Stock in Process, Bills Receivable and Book Debts and by way of second charge on the entire Plant and Machinery of the Company including Stores and Spares. Further, these loans are secured by way of an Equitable Mortgage on the Land and Building of the Company’s unit at Kondivita, Mumbai. 2. 3. SCHEDULE 4 UNSECURED LOANS Short term Commercial Paper & Others Long Term Interest free Sales Tax loan from Government of Maharashtra Foreign Currency Convertible Bonds (US $ 37.2 million (38.9 million) Zero Coupon Convertible Bonds due in 2012) During the year Company has bought back bonds of US $1.7 million ($1.1 million). TOTAL Amount due within one year Rs 5.86 million (Rs 653.73 million) 350.59 1,679.21 354.32 1,982.73 650.00 2,029.80 2,987.05 33 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 5 FIXED ASSETS (Rs in million) GROSS BLOCK Additions/ Adjustments 0.08 26.11 231.87 9.87 10.19 9.61 206.19 70.20 17.26 (5.24) 0.59 368.62 119.38 21.71 (0.24) 6.67 4977.39 2360.25 307.19 (2.00) 2665.44 140.85 82.22 1375.51 261.47 41.18 302.65 77.03 5.80 0.78 6.58 2.16 124.97 124.97 70.45 1072.86 2311.95 227.77 123.97 Deductions/ Adjustments As at 31.3.2010 As at 1.4.2009 Provided during the year Deductions / Adjustments As at 31.3.2010 As at 31.3.2010 As at 31.3.2009 127.05 71.23 1087.93 2391.94 239.96 135.41 DEPRECIATION NET BLOCK PARTICULARS As at 1.4.2009 Freehold Land 127.05 Leasehold Land 77.03 Buildings 1349.40 Plant and Machinery 4752.19 Furniture and Fixtures 359.34 Vehicles 205.61 Capital Expenditure on Scientific Research 1.44 5.35 3.07 1.95 47.65 25.00 1.36 0.19 1.44 0.95 0.05 1.00 26.36 2.14 0.44 21.29 0.93 0.49 17.30 1.12 - Buildings - Plant and Machinery 3.07 42.30 - Furniture and Fixtures Assets given on Lease 1.82 1.82 1.82 1.82 - Plant and Machinery Intangible Assets 70.40 809.82 8063.91 7778.35 21.12 304.59 990.01 26.49 19.03 68.36 517.63 3432.81 2973.48 1.61 72.53 463.86 472.16 (7.48) (12.83) 69.97 590.16 3889.19 3432.81 2774.02 6948.74 2387.47 6733.01 0.43 219.66 4174.72 2.04 271.07 4345.54 - Goodwill 70.40 - Copyrights, Trademarks, etc. 788.70 Total 7778.35 Previous Year 6814.83 Capital work in progress * TOTAL * Capital work in progess includes capital advances of Rs 42.77 million (Rs 127.26 million) (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 6 INVESTMENTS I. Long Term at Cost a. Trade : Quoted G 7,451,540 (7,451,540) Equity Shares of Re 1 each of Vinyl Chemicals (India) Ltd. 11.79 11.79 b. Non Trade : i) Quoted G 3,594 (3,594) Equity Shares of Rs 10 each of Hindustan Adhesives Ltd. 14,400 (14,400) Equity Shares of Rs 10 each of Hindustan Organic Chemicals Ltd. 1,674 (837) Equity Shares of Rs 10 each of Reliance Industries Ltd. (earlier : 4,188 Equity Shares of Rs 10 each of Indian Petrochemicals Corporation Ltd. and 837 nos. Bonus Shares received during the year) 222,542 (222,542) Equity Shares of Rs 10 each of Indian Overseas Bank Ltd. 61,900 (61,900) Equity Shares of Rs 10 each of Menon Pistons Ltd. TOTAL 1 (a) + b (i) [Market Value Rs 87.59 million (Rs 35.34 million)] 0.09 0.72 0.77 2.96 4.38 20.71 0.09 0.72 0.77 2.96 4.38 20.71 G G G G ii) Unquoted G 200,200 (200,200)Equity Shares of Rs 10 each of Enjayes Spices & Chemicals Oil Ltd. 121,300 (121,300) Equity Shares of Rs 10 each of Pal Peugeot Ltd. 2,275 (2,275) Equity Shares of Re 1 each of Himalaya House Co-op Society Ltd. (Cost Rs 2275) 628 (628) Equity Shares of Rs 100 each of Jawahar Co-op Industrial Estate Ltd. 40 (40) Equity Shares of Rs 50 each of Regent Chambers Premises Co-op Society Ltd. (Cost Rs 2000) 25 (25) Equity Shares of Rs 10 each of New Usha Nagar Co-op Housing Society Ltd. (Cost Rs 250) 10 (10) Equity Shares of Rs 100 each of Taloja CETP Co-op Society Ltd. (Cost Rs 1000) TOTAL 1 b (ii) 5.29 1.21 0.06 6.56 0.50 687.61 331.64 795.34 629.92 3.48 0.15 6.42 0.17 0.17 5.29 1.21 0.06 6.56 0.50 599.99 281.02 682.62 629.92 3.00 0.15 6.42 0.17 0.17 2203.96 2,231.23 PIDILITE ANNUAL REPORT 2009-10 G G G G G G c. In Subsidiary Companies : G 50,000 (50,000) Equity Shares of Rs 10 each of Fevicol Company Ltd. 15,586,053 (13,637,959) Equity Shares of Pidilite International Pte Ltd. 27,431,411 (23,651,213) Equity Shares of Pidilite Middle East Ltd. 34,849,000 (29,983,000) Equity Shares of Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda 14,380,000 (14,380,000) Equity Shares of Pidilite USA Inc 3,000 (2,250) Equity shares of Pidilite Industries Egypt 24,000 (24,000) Equity Shares of Pidilite South East Asia Ltd. 75,000 (75,000) Equity Shares of Pagel Concrete Technologies Pvt Ltd. 10,000 (10,000) Equity Shares of Bhimad Commercial Co Pvt Ltd. 10,000 (10,000) Equity Shares of Madhumala Traders Pvt Ltd. TOTAL - I (c) TOTAL - I G G G G G G G G G 2455.40 2482.67 35 (Rs in million) As at 31st March 2010 II. Short Term at cost : In Units of Mutual Fund (Unquoted) G As at 31st March 2009 Nil (400) Units of Rs 70000 each of Infinity Venture India Fund 1,969,358 (Nil) Units of Reliance Medium Term Fund-Retail Plan -Growth Option 2,655,189 (Nil) Units of HDFC-Cash Management Fund-Treasury Advantage Plan-WholesaleGrowth Option 38,055,404 (Nil) Units of Birla Sunlife -Dynamic Fund-Growth option 24,810,772 (Nil) Units of HDFC-High Interest Fund -STP -Growth Option 44,809,008 (Nil) Units of ICICI Prudential Medium Term Premium Plus -Growth Option 23,842,656 (Nil) Units of ICICI Prudential Ultra Short Term Super Premium -Growth Option 17,250,897 (Nil) Units of Reliance Short Term Fund-Retail Plan -Growth Option 25,520,287 (Nil) Units of IDFC-Money Manager Fund-Investment Plan -Institutional Plan B-Growth 15,000,000 (Nil) Units of HDFC FMP 14M March 2010- Growth -Series XII Nil (17,268,327) Units of Prudential ICICI Flexible Income Plan -Daily Dividend Option TOTAL : II TOTAL : I + II 37.25 53.56 579.85 450.00 450.00 245.26 300.00 364.75 150.00 2630.67 5113.34 6.70 TOTAL 5106.64 1.89 182.59 184.48 2,415.71 8.61 2,407.10 G G G G G G G G G G Less Diminution in value of Investments Previous year’s figures are indicated in brackets. (Rs in million) Investments purchased and sold during the year other than shown above : Units of Reliance Medium Term Fund-Retail Plan -Growth Option Units of HDFC-Cash Management Fund-Treasury Advantage Plan-Wholesale-Growth Option Units of ICICI Prudential Ultra Short Term Super Premium -Growth Option Units of Birla Sunlife Short TF-Institutional -Growth Option Units of ICICI Prudential Flex. Inc.Plan-Premium -Growth Units of ICICI Prudential Ultra Short Term Plan-Premium Plus -Growth Units of ICICI Prudential Insititutional Liquid Plan-Growth Units of IDFC-MMF-TP -Super -Institutional Plan C-Growth Units of Birla Sunlife Short term Fund-Institutional -Daily Dividend Reinvestment Option Units of ICICI Prudential Flexible Income Plan-Premium -Daily Dividend Reinvestment Option Units of Reliance Medium Term Fund-Daily Dividend Reivestment Option Units of IDFC-Money Manager Fund-Treasury Plan -Daily Dividend Reinvestment Option Untis of IDFC-MMF-Treasury Plan -Super -Inst.Plan C-Daily Dividend Reinvestment Option Units of IDFC-MMF-Investment Plan -Inst. Plan B-Daily Dividend Reinvestment Option Units of HDFC-CMF-Treasury Advantage Plan-Wholesale-Daily Dividend Reinvestment Option (No. of Units) 27,853,821 32,461,005 2,911,491 53,557,884 3,968,465 18,565,571 1,509,662 33,494,601 99,777,759 98,439,455.84 52,438,351.09 39,902,056.20 23,032,576.77 5,061,965.48 40,940,376.45 Purchase Value 524.21 647.71 29.95 578.33 669.49 190.02 340.00 360.36 998.33 1,607.35 896.46 401.83 230.36 50.70 410.69 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 7 CURRENT ASSETS, LOANS AND ADVANCES A. Current Assets a. Inventories (As valued and certified by the Management) Consumable Stores and Spares Raw Materials Goods in Process Finished Goods Traded Goods Packing Materials b. Sundry Debtors (Unsecured) Over six months Considered good Considered doubtful Others, Considered good Less : Provision for doubtful debts c. Cash and Bank Balances Cash on Hand Cheques on Hand Remittances in Transit Bank Balances : With Scheduled Banks : In Current Accounts In Fixed Deposit Accounts (Against bank guarantees) Others : In Fixed Deposit with Municipal Co-op.Bank Ltd. [Maximum outstanding during the year Rs 0.03 million (Rs 0.03 million)] d. Other Current Assets Interest Receivable Foreign Currency Monetary item Translation Difference Account (Refer Note 10 of Schedule 12) Claims Receivable B. Loans and Advances (Unsecured, considered good) Advances recoverable in cash or in kind or for value to be received Advance Payment of Taxes (Net of Provisions) MAT Credit Entitlement Loans and Advances to Staff Loans and Advances to Subsidiaries Deposits Balances with Central Excise Department TOTAL 225.19 137.36 311.27 56.48 42.40 86.75 102.74 962.19 6,238.76 299.61 17.99 120.05 55.05 175.15 85.40 115.68 868.93 7,052.80 0.80 140.66 0.87 174.58 0.24 21.41 694.30 162.94 1334.00 165.76 127.90 2,506.31 20.19 848.35 140.75 987.81 167.21 124.62 2,288.93 84.54 101.88 2303.05 2489.47 101.88 2,387.59 171.54 73.50 2,241.49 2,486.53 73.50 2,413.03 186.82 2.85 0.03 1,093.64 1.40 0.03 331.16 0.14 9.14 42.23 51.51 1,270.76 164.43 46.72 211.15 37 PIDILITE ANNUAL REPORT 2009-10 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 8 CURRENT LIABILITIES AND PROVISIONS A. Current Liabilities Acceptances Sundry Creditors (Refer Note 2 of Schedule 12) Small and Medium Enterprises Others 166.02 948.26 1,114.28 Dealers’ Deposits Investor Education and Protection Fund shall be credited by the following to the extent required as and when necessary : Unclaimed Dividends & Preference Share Capital Other Liabilities 333.84 160.84 364.87 525.71 294.23 45.70 27.17 9.84 1,798.27 3,301.93 10.22 1,383.83 2,241.16 B. Provisions For Gratuity For Leave encashment Dividends: Proposed Dividend Corporate Tax on Dividend 759.20 126.09 885.29 976.76 TOTAL 4,278.69 442.87 75.26 518.13 594.59 2,835.75 (Rs in million) 2009-10 2008-09 0.18 91.29 7.63 68.83 SCHEDULE 9 OTHER INCOME Interest received - (Gross) Tax deducted at source Rs 0.79 million (Rs 0.04 million)] Insurance Claim Received Dividend received On Trade Investments On Units of Mutual Fund 1.19 28.18 29.37 Export Incentives Profit on sale of Investments Profit on sale of Fixed Assets Miscellaneous TOTAL 71.96 18.48 1.43 142.50 271.77 1.06 8.16 9.22 46.58 4.62 167.66 238.92 7.19 0.84 10.56 0.28 (Rs in million) 2009-10 2008-09 SCHEDULE 10 MATERIALS A Raw Materials consumed Opening Stock Add : Purchases 848.35 6783.42 7631.77 Less : Closing Stock 694.30 6,937.47 B Packing Materials consumed Opening Stock Add : Purchases 124.62 2393.23 2517.85 Less : Closing Stock 127.90 2,389.95 C Cost of Traded Goods Opening Stock Add : Purchases 167.21 997.67 1164.88 Less : Closing Stock 165.76 999.12 D (Increase) / Decrease in Stocks Closing Stock Goods in Process Finished Goods 162.94 1334.00 1496.94 Less : Opening Stock Goods in Process Finished Goods 140.75 987.81 1128.56 (368.38) TOTAL 9,958.16 147.15 1105.35 1252.50 123.95 10328.35 PIDILITE ANNUAL REPORT 2009-10 1025.42 7084.37 8109.79 848.35 7261.44 208.75 2072.90 2281.65 124.62 2157.03 136.02 817.12 953.14 167.21 785.93 140.75 987.80 1128.55 39 (Rs in million) 2009-10 2008-09 SCHEDULE 11 OTHER EXPENSES Stores and Spares consumed Clearing, Forwarding and Octroi Duty Power and Fuel Water Charges Employees' Cost : [Refer Notes 1 (vii), 6 and 7 of Schedule 12] Salaries, Wages, Bonus, Allowances Contribution to Provident and Other Funds Welfare Expenses Rent Rates and Taxes Insurance Licence fees Repairs : Buildings Machinery Others Directors' Fees Advertisement and Publicity Legal, Professional and Consultancy fees Communication Expenses Printing and Stationery Travelling and Conveyance Expenses Bad Debts Provision for Doubtful Debts Processing and Packing Charges Bank Charges Commission and Brokerage Miscellaneous expenses [Refer Note 19 of Schedule 12] Scientific Research and Development Expenditure [Refer Note 1(v) of Schedule 12] Audit Fees For Other Services Donations Diminution in value of Investments [Refer Notes 1(vi) of Schedule 12] Foreign Exchange Fluctuation [Refer Note 10 of Schedule 12] Loss on Fixed Assets Sold / Discarded Interest On Term Loan On Debentures Others 89.37 823.19 206.14 15.54 85.20 770.45 254.22 15.23 1816.65 108.94 49.84 1,975.43 121.68 23.25 25.70 0.87 20.67 46.76 24.82 92.25 0.35 634.55 145.39 59.96 24.04 314.10 36.13 28.38 314.09 39.76 23.97 430.35 20.02 2.20 1.33 3.53 28.05 93.09 3.26 89.84 165.75 30.44 286.03 1478.99 102.52 48.94 1630.45 117.14 19.44 30.01 1.39 22.63 40.43 24.76 87.82 0.15 492.38 244.16 59.08 27.39 317.44 0.58 64.32 313.55 69.02 37.81 244.76 16.62 1.69 0.89 2.58 31.19 1.80 160.70 4.95 72.91 50.20 194.68 317.79 5417.62 TOTAL 5,858.47 SCHEDULE 12 NOTES ON ACCOUNTS 1 Significant Accounting Policies: i. General The financial statements are prepared under the historical cost convention, on the basis of a going concern and as per applicable Indian Accounting Standards. The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis. ii. Revenue Recognition i. ii. iii. iv. Income from sale of goods is recognised upon transfer of significant risk and rewards of ownership of the goods to the customer which generally coincides with delivery and acceptance of the goods sold. Interest income is recognised on accrual basis. Claims which are not of material nature / Insurance Claim etc. are accounted for when no significant uncertainties are attached to their eventual receipt. Dividend is accounted on cash basis. iii. Fixed Assets, Depreciation and Impairment Loss a. b. Fixed Assets are stated at cost of acquisition or construction, reduced by accumulated depreciation. Preoperative expenditure during construction period / trial run : Direct expenses as well as clearly identifiable indirect expenses incurred on the projects during the period of construction are capitalised alongwith the respective assets. The Company provides depreciation as under : For assets acquired upto 30th June 1987, on Straight Line Method (SLM) basis. For assets acquired after 30th June 1987 and before 31st March 1993, on SLM basis at rates specified in Schedule XIV of the Companies Act, 1956. For assets acquired after 31st March 1993, on SLM basis as per new rates prescribed under Schedule XIV vide notification no. GSR 756 (E) dated 16th December 1993 issued by the Department of Company Affairs. For assets costing Rs 5000 or less, depreciation is provided fully. For additions made during the year, depreciation is provided on pro-rata basis The Goodwill acquired by the Company is amortised over a period of 5 years on SLM basis. The Copyrights, Trademarks, Technical Knowhow, etc. acquired by the Company are amortised over a period of 10 years on SLM basis. In case, the recoverable amount of the fixed assets is lower than its carrying amount, provision is made for the impairment loss. c. 1. 2. 3. 4. 5. 6. 7. d. iv. Method of Valuation of Inventories a. b. Raw Materials and Packing materials are valued at cost on weighted average basis. Finished goods, including traded goods and work in process are valued at lower of cost and net realisable value. Cost (arrived at on weighted average) for this purpose includes direct materials, direct labour, excise duty and appropriate overheads including freight costs upto the ports in respect of finished goods meant for exports. Consumable stores and spares are valued at lower of cost or net realisable value, as estimated by the management. Obsolete, defective, unserviceable and slow / non-moving stocks are duly provided for. PIDILITE ANNUAL REPORT 2009-10 c. d. 41 SCHEDULE 12 NOTES ON ACCOUNTS v. Research and Development Expenditure a. b. vi. Capital Expenditure is shown separately in Fixed Assets. Revenue expenses including depreciation, except expenditure specifically shown, is charged to respective heads of accounts. Investments a. b. Long Term Investments are stated at cost. In case there is a diminution of permanent nature in value of Investments (other than long term strategic investment), the same is provided for. i. Quoted current investments are stated at the lower of cost and market value. ii. Unquoted current investments are stated at the lower of cost and fair value where available. c. In case of subsidiaries, investments are valued at cost. vii. Retirement Benefits a. b. c. Contribution to Provident, Superannuation and Family Pension funds are funded as a percentage of salary/ wages. Gratuity liability is funded as per group gratuity scheme of Life Insurance Corporation of India. Leave encashment liability is provided for on the basis of actuarial valuation as at the year end. viii. Transactions in foreign currencies a. b. Transactions are recorded at the exchange rates prevailing on the date of transaction. Foreign currency designated assets and liabilities are restated at the year end rates and the resultant gain or loss is taken to Profit and Loss Account except in respect of fixed Assets which is being capitalised (Refer Note 10 of Schedule 12) ix. Income Tax Provision for current tax is made on the basis of relevant provisions of the Income Tax Act,1961. The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is virtual / reasonable certainty that these would be realised in future. x. Provisions, Contingent Liabilities and Contingent Assets A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material are disclosed by way of notes to accounts. Contingent assets are neither recognised nor disclosed in the financial statements. 2. The Company did not have any time during the year amount due to small and medium enterprises (SME) which is outstanding for more than 45 days. Further no interest is paid / payable to such SME creditors. The above information and that given in Schedule 8 “Current Liabilities and Provisions”regarding small and medium enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 12 NOTES ON ACCOUNTS 3. i. ii. iii. Contingent liabilities not provided for: Guarantees given by Banks in favour of Government and others Guarantees given by Company Disputed liabilities in respect of Income Tax, Sales Tax, Central Excise and Customs (under appeal) Claims against the company not acknowledged as debts. 48.98 647.00 323.80 56.02 565.30 112.25 iv 81.44 196.68 76.07 101.81 4. Estimated amount of contracts, net of advances, remaining to be executed on capital account and not provided for The net amount of exchange differences (credited) / debited to Profit & Loss Account. Remuneration to Directors: (Includes benefits which are debited to respective expenses) a. b. c. d. Remuneration Commission Provident Fund Contribution Other Perquisites (Excluding Gratuity and Leave encashment which is provided for the Company as a whole) 5. 93.09 160.70 6. 48.20 85.14 2.41 4.04 41.45 42.75 2.24 2.90 7. Computation of Net Profit for Commission Payable to Directors in accordance with Section 198 of the Companies Act, 1956. Profit as per Profit and Loss Account before provision for taxation and commission to directors. Add: Directors’ remuneration Contribution to Provident Fund Other Perquisites 48.20 2.41 4.04 3373.87 1674.76 41.45 2.24 2.90 54.65 3428.52 Less : Profit/(Loss) on sale of investments Profit/(Loss) on sale of fixed assets Net Profit for the year for the purpose of Directors’ Commission Commission payable to Directors a. Managing Director, Joint Managing Director and Wholetime Director b. Others 82.44 2.70 85.14 18.48 (1.83) 3411.87 46.59 1721.35 (0.33) 1721.68 40.20 2.55 42.75 43 PIDILITE ANNUAL REPORT 2009-10 (Rs in million) As at 31st March 2010 As at 31st March 2009 8. Sundry debtors include amount due from : Company as per Section 370 (1B) of the Companies Act, 1956 : Parekh Marketing Limited 119.29 114.97 9. 10. The borrowing cost on Foreign Currency Convertible Bonds / ECB of Rs 74.51 million (Rs 87.09 million) has been capitalised during the year. The Company had in March 2009 exercised the option permitted by the Central Government under Notification No G.S.R 225 (E) to treat foreign exchange difference relating to assets as adjustments in the carrying value of such depreciable assets and amortise other differences of a specified nature over the term of the relative item. Accordingly for the year ended 31st March 2010, the Company has credited the gain of Rs 123.64 million to the carrying cost of the depreciable assets and credited Rs 145.07 million to Foreign Currency Monetary Item Translation Account. Out of the said Foreign Currency Monetary Item Translation Account Rs 10.20 million has been amortised in the current year ended 31st March 2010. Disclosure as per clause 32 of the listing agreement 11. (a) Loans in the nature of Inter Corporate Deposits (ICD’s) given to Subsidiaries: Name of the subsidiary companies Amount outstanding As on 31st March 2010 8.55 8.70 0.25 3.20 Maximum Balance outstanding during the year 16.05 16.20 121.70 3.34 i) ii) iii) iv) Bhimad Commercial Company Pvt. Ltd. Madhumala Traders Pvt. Ltd. Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda Pagel Concrete Technologies Pvt. Ltd. Notes: a) Loans and Advances shown above, fall under the category of ‘Loans & Advances’ in nature of loans where there is no repayment schedule and are re-payable on demand. Loans and Advances referred to in point (i), (ii) and (iv) above are not interest bearing. b) SCHEDULE 12 NOTES ON ACCOUNTS 12. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956 : Details of licenced capacity, installed capacity, production and sales of the goods manufactured : i. DETAILS OF THE GOODS MANUFACTURED / SALES / STOCKS Licenced Capacity* Installed Capacity* Approx. Opening Stock (Qty) Opening Production Stock Meant for (Rs in Sale (Qty) million) Sales B (Qty) Sales B (Rs in million) Closing Stock (Qty) Closing Stock (Rs in million) Class of Goods A Dyestuffs M.T. 3900 3144 2362 184.54 20949C 19631 1834.40 3680 233.47 (3900) K.L. (3144) (2349) 595 (662) (173.04) 79.86 (113.65) (18952) 6615D (5580) (18939) 6135 (5647) (1682.46) 1365.09 (1135.35) (2362) 1075 (595) (184.54) 140.26 (79.86) Chemicals M.T. 335265 (341115) K.L. 37780 (34260) Others Nos. Lac 244085 (239380) 28860 (28740) 9619 (10373) 2831 (2781) 98 (100) Traded Goods 453.30 (523.34) 227.35 (251.86) 42.76 (43.47) 167.21 (136.02) 1155.02 (1241.38) * A B C D E F This being technical matter, is as certified by the Management and relied upon by Auditors. Class of Goods is based on main classification given in the Industries (Development and Regulation) Act, 1951. Excluding Resale of Raw Materials / Packing Materials Rs 210.41 million (Rs 101.84 million) Includes 17721 Tonnes (16621 Tonnes) produced in the factory of third party. Includes 5315 KL (3775 KL) produced in the factory of third party. Includes 38423 Tonnes (34723 Tonnes) produced in the factory of third party. Includes 5380 KL (4243 KL) produced in the factory of the third party. Figures in bracket indicate previous year’s figures. PIDILITE ANNUAL REPORT 2009-10 140076E (133931) 35159F (29458) 2336G (2225) 136566 (134685) 34028 (29408) 2291 (2227) 11044.02 (11108.45) 4085.19 (3460.89) 589.53 (511.47) 1086.70 (1073.04) 20004.93 (18971.66) 13129 (9619) 3962 (2831) 143 (98) 596.11 (453.30) 296.18 (227.35) 67.98 (42.76) 165.76 (167.21) 1499.76 (1155.02) G Includes 2332 Nos Lac (2219 Nos Lac) produced in the factory of the third party. 45 SCHEDULE 12 NOTES ON ACCOUNTS ii. a Value of Imported and Indigenous Raw Materials consumed and percentage thereof : 2009-10 Rs in million Imported Indigenous 2418.28 4308.78 6727.06 * 2008-09 Rs in million 2550.69 4621.47 7172.16 * 2009-10 Quantity MT Vinyl Acetate Monomer Miscellaneous (None of which individually account for more than 10% of total consumption) 6727.06 * Notes: * Net of Resale of Raw Materials Rs 210.41 million (Rs 89.28 million) 7172.16 * 21321 Value Rs in million 990.91 5736.15 Quantity MT 10354 2009-10 % 35.95 64.05 100.00 2008-09 % 35.56 64.44 100.00 2008-09 Value Rs in million 723.19 6448.97 ii. b. Consumption of Raw Materials (Rs in million) 2009-10 iii. C.I.F. Value of Imports: Raw Materials Capital Goods Others 1888.76 6.59 448.53 2343.88 iv. Expenditure in Foreign Currency : Foreign Travel Professional Fees Interest Others 35.53 33.13 72.19 193.05 333.90 iv. Earnings in Foreign Exchange: FOB Value of Exports Others 1838.46 4.01 1842.47 1819.53 3.60 1823.13 27.18 113.96 66.40 144.77 352.31 2181.09 36.50 311.93 2529.52 2008-09 SCHEDULE 12 NOTES ON ACCOUNTS 13. Segment reporting: INFORMATION ABOUT BUSINESS SEGMENTS Business Segments Consumer & Bazaar Products 14797.15 (12877.62) Inter Segment Revenue (at cost plus 10%) Total Revenue RESULTS Segment Results Unallocated Corporate Expenses Unallocated Corporate Income Operating Profit Interest Expenses Interest / Dividend Income Income Tax (Provision for Taxation and Deferred Taxation) Net Profit OTHER INFORMATION Segment Assets Unallocated Corporate Assets Total assets Segment Liabilities Unallocated Corporate Liabilities Total liabilities Capital Expenditure Unallocated Corporate Capital Expenditure Depreciation 227.45 (247.23) 69.27 (73.34) 38.57 (41.02) 143.73 (517.15) 40.92 (101.89) 15.39 (10.21) 2221.47 (1244.70) 736.78 (477.54) (187.29) 5497.55 (5153.63) 2053.81 (1898.45) 380.47 (499.46) 7931.83 (7551.54) 10362.31 (8641.37) 18294.14 (16192.91) 2958.25 (1909.53) 5950.10 (6947.23) (8856.76) 200.04 (629.25) 491.10 (1118.91) 335.29 (361.59) PIDILITE ANNUAL REPORT 2009-10 (Rs in million) Industrial Products Others Total REVENUE External Sales 4343.30 (3801.70) 309.60 (306.40) 4652.90 (4108.10) 914.63 (531.15) 157.00 (931.90) 19.30 (535.50) 176.30 (1467.40) (125.74) (92.78) 19297.45 (17611.22) 348.45 (858.68) 19645.90 (18469.90) 4637.78 (3170.02) 1263.85 (1412.86) 164.27 (172.86) 3538.20 (1930.02) 286.03 (317.79) 36.56 (19.78) 397.51 (168.22) 2891.22 (1463.79) 19.55 (16.78) 14816.70 (12894.40) 3848.89 (2546.09) 8908.35 47 SCHEDULE 12 NOTES ON ACCOUNTS INFORMATION ABOUT GEOGRAPHICAL SEGMENTS (Rs in million) India GEOGRAPHICAL SEGMENTS 2009-10 Sales Revenue Carrying amount of Segment Assets Additions to Fixed Assets and Intangible Assets Notes: SEGMENT INFORMATION Business Segment The Company is operating into three business segments: Consumer & Bazaar Products, Industrial Products and Others. This segmentation is based around customers. Consumer & Bazaar Products consist of mainly Adhesives, Sealants, Art Materials and Construction Chemicals. Industrial Products consists of Organic Pigments, Industrial Resins and Industrial Adhesives. Others consist of VAM manufacturing unit of Vinyl Chemicals (India) Ltd. demerged into the Company w.e.f 1st April 2007. Geographical Segment For the purpose of geographical segment the sales are divided into two segments : Sales within India and Sales to other countries. 17395.11 17821.53 689.27 2008-09 15695.62 15574.65 1746.17 2009-10 1902.34 472.61 1.87 2008-09 1915.60 618.26 1.99 2009-10 19297.45 18294.14 691.14 2008-09 17611.22 16192.91 1748.16 Other Countries Total 14. Deferred Taxation: Out of the net deferred tax liability of Rs 415.36 million as at 31st March 2010, the major components of deferred tax balances are set out below (Rs in million) Upto 31st March 2009 Deferred Tax Liability i) Difference between Accounting and Tax Depreciation (Cumulative) 506.10 (5.38) 500.72 During the year 2009-10 Carried as at 31st March 2010 Deferred Tax Assets i) Leave Salary & Others 65.25 20.11 85.36 B. Net Deferred Tax Liability The above working of deferred tax is based on assessment orders where assessments are complete and on return of income in other cases. 440.85 (25.49) 415.36 SCHEDULE 12 NOTES ON ACCOUNTS 15. Earnings Per Share As at 31st March 2010 Weighted Average no of shares used in computing Basic Earnings per share Add Weighted average Potential no of equity shares that could arise on exercise of option on Zero Coupon Convertible Bonds from 16th Jan 2008 to 1st December 2012 506134612 14300428 520435040 2934.95 5.80 5.64 As at 31st March 2009 **506134612 14953942 521088554 1463.79 2.89 2.81 Weighted Average no of shares used in computing Diluted Earnings per share Net Profit after tax and Preference dividend and Tax on it ( Rs in million) Basic Earnings Per Share * (Rs) Diluted Earnings Per Share * (Rs) * Equity shares of face value of Re 1 each. ** Adjusted for bonus shares issued during the year. 16. a) Particulars of Unhedged foreign currency Exposure as at Balance Sheet Date Amount Rs 432.81 million (USD 8.78 million, Euro 0.54 million, SPD 0.1 million, THB 1.03 million, Zar 0.31 million) Previous Year Rs 593.5 million (USD 10.68 million, Euro 0.6 million, GBP 0.1 million, THB 1.1million, Zar 0.05 million) Rs 56.5 million (USD 1.14 million, Euro 0.5 million) Previous Year Rs 104.10 million (USD 2.05 million, Euro 0.09 million) Rs 2146.13 million ( USD 48.55 million) Previous Year Rs 2515.8 million (USD 50.2 million) Particulars Export Debtors Creditors Loans b) Details of Forward Contract outstanding as at the End of Year No. of Contracts 19 1 Buy Amount Rs 132.66 million Rs 4.83 million Purpose Import of Raw Materials. Import of Raw Materials. Currency USD EURO 49 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 12 NOTES ON ACCOUNTS 17. Related Party Disclosures Related Party Disclosures as required by AS-18, “Related Party Disclosures”, are given below: i Relationships: a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t. u. ii Parekh Marketing Ltd. Vinyl Chemicals (India) Ltd. Kalva Marketing and Services Ltd. Nitin Enterprises Fevicol Company Ltd. Bhimad Commercial Co Pvt. Ltd. Madhumala Traders Pvt. Ltd. Pagel Concrete Technologies Pvt. Ltd. Pidilite International Pte Ltd. Pidilite Middle East Ltd. Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda Pidilite USA Inc. Jupiter Chemicals (LLC) P.T. Pidilite Indonesia Pidilite Speciality Chemicals Bangladesh Pvt. Ltd. Pidilite Innovation Centre Pte Ltd. Pidilite Industries Egypt - SAE Pidilite Bamco Ltd. Pidilite South East Asia Ltd. Bamco Supply Services Ltd. PIL Trading Egypt (LLC) Significant Influence Substantial Interest in Voting Power (Associate) Significant Influence Controlling Interest 100% Subsidiary 100% Subsidiary 100% Subsidiary 75% Subsidiary 100% Subsidiary 100% Subsidiary 100% Subsidiary 100% Subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 100% Subsidiary of wholly owned subsidiary 49% Subsidiary of wholly owned subsidiary and having significant influence 100% Subsidiary of wholly owned subsidiary Key Management Personnel : Sarva Shri M B Parekh - Managing Director, N K Parekh - Jt Managing Director, A B Parekh and A N Parekh - Wholetime Directors, Shri V S Vasan - Wholetime Director (for the period 1st April 2009 till 21st October 2009). Shri J L Shah - Wholetime Director (From 21 st October 2009) iii Other Directors : Sarva Shri B K Parekh, S K Parekh, R M Gandhi, N J Jhaveri, B S Mehta, R Kapoor , Y Mahajan, B Puri and D. Bhattacharya SCHEDULE 12 NOTES ON ACCOUNTS iv. Nitin Enterprises Pidilite International Pte Ltd. Pidilite Middle East Ltd. Bhimad Commercial Co Pvt Ltd. (-) (-) (-) (-) (-) (14.02) Madhumala Traders Pvt Ltd. Pagel Concrete Technology Pvt Ltd. Transactions with Related Parties during the year ended 31st March 2010 are as follows : Nature of Transaction RemuneParekh Vinyl Kalva ration to MarketChemMarketDirectors ing icals ing and Ltd. (India) Services Ltd. Ltd. (Rs in million) Pulvitec do Brasil Industria e Comercio de Colas e Adesivos Ltda 427.65 (505.90) (-) (-) 1.68 (1.06) a. Sales and Related Income b. (-) 87.18 (83.70) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) Other Income (including Electricity Generation) c. Purchases and Other Related Services 0.50 (-) (-) (-) 1026.35 (707.12) (-) (-) 0.39 (0.10) (-) d. Remuneration to Directors: - Sitting Fees - Managing Director/Jt Managing Director - Wholetime Directors - Commission to Non Executive Directors 0.35 (0.15) 95.28 (66.44) 41.80 (20.36) 2.70 (2.40) e. Investment in Share Capital f. Loans Given / (repayment of loan received) g. Purchase of Fixed Assets h. Sale of Fixed Assets i. Interest Paid / (Received) j. Reimbursement of expenses made k. Reimbursement of expenses received l. Provision For Doubtful Debts Made m. Bad Debts Written Off (-) (-) (-) (-) (-) 0.79 (1.45) (0.61) (-) (-) (-) (-) (0.53) (-) (-) 0.07 (7.13) 0.62 (0.75) (-) (-) (-) (-) (0.72) (-) (-) (-) (-) (-) (-) (-) (-) 0.01 (-) 0.07 (-) (-) (-) (-) (-) (-) (-) (7.50) (-) (-) (-) (-) (-) (-) (-) (-) (7.50) (-) (-) (-) (-) (-) (-) (-) (-) (-) (0.14) (-) (-) (-) (-) (-) (-) (-) (-) 87.62 (192.45) (-) (-) (-) (-) (-) (-) (-) (-) 50.62 (122.99) (-) (-) (-) (-) (-) (-) (-) (-) 112.72 (128.71) (112.72) (54.31) (-) 0.12 (1.46) (1.47) ((3.60)) (1.27) (-) (-) (-) n. Outstanding Balances : - Debtors - Creditors - Outstanding Payable (Net of receivable) 119.29 (114.97) 0.28 (1.61) (119.01) ((113.36)) (35.60) 99.37 (64.02) 99.37 (28.42) (-) (-) (-) 0.58 (0.12) 7.94 (3.93) 7.36 ((3.81)) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (0.54) (0.54) (-) (-) (-) 5.94 (19.34) (-) (5.94) ((19.34)) During the year, loan given to Pulvitec do Brasil Indueria e Comercio de Colas e Adesivos Lta of Rs 112.72 million Converted in to Equity Shares. 51 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 12 NOTES ON ACCOUNTS Pidilite Innovation Centre Pte Ltd. Chemson Asia Pte Ltd. Pidilite Bamco Ltd. Pidilite South East Asia Bamco Supply Services Limited Pidilite Industries Egypt SAE (Rs in million) PIL Total Trading Company Egypt iv. Transactions with Related Parties during the year ended 31st March 2010 are as follows : Nature of Transaction Pidilite Jupiter Nebula PT USA Chemi- Trading Pidilite Ltd. cals FZE Indone(L.L.C.) sia a. 16.23 (-) Sales and Related Income 0.31 (4.53) 9.73 (6.62) (-) (23.57) (2.64) Pidilite Speciality Chemicals Bangladesh Pvt Ltd. 14.98 (1.68) (-) (0.07) (0.60) 0.34 (0.56) 6.86 (-) 477.78 (561.25) b. Other Income (including Electricity Generation) c. Purchases and Other Related Services 2.15 (-) 12.17 (11.91) 0.56 (0.56) (37.35) (-) (25.79) (-) 6.21 (12.06) 0.09 (0.09) (0.34) (-) 20.49 (15.50) 0.09 (0.09) (-) 0.27 (0.27) 3.87 (4.50) 0.80 (0.80) (0.16) (-) (13.88) (-) (-) (-) (-) 4.85 (1.91) 1156.27 (912.31) d. Remuneration to Directors: - Sitting Fees - Managing Director/Jt Managing Director - Wholetime Directors - Commission to Non Executive Directors e. Investment in Share Capital f. Loans Given/(Taken) g. Purchase of Fixed Assets h. Sale of Fixed Assets i. Interest Paid / (Received) j. Reimbursement of expenses made k. Reimbursement of expenses received l. Provision For Doubtful Debts Made m. Bad Debts Written Off (155.33) (-) (-) (-) (4.25) (-) 3.51 (0.44) (-) (-) (-) (-) (-) (0.19) (-) (-) 35.47 (0.40) (2.21) (0.71) (-) (-) (-) (-) (-) (-) (-) (0.01) (0.17) (-) (-) (-) (-) (-) (-) (-) 8.84 (-) (-) 2.98 (10.00) 13.08 (-) (-) (-) (0.52) (2.47) (-) (0.17) 0.64 (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) 0.48 (3.00) (-) (-) (2.78) (-) (0.01) 0.49 (-) (-) (-) (-) (-) (-) (-) (-) (-) 0.63 (0.20) (-) (-) (-) (-) (-) (-) (-) 0.16 (2.33) 1.41 (0.56) (-) (-) (0.15) (-) (-) (-) (-) (-) (0.75) (-) (-) (-) (-) (-) (-) (-) (-) 0.12 (0.04) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) 0.35 (0.15) 95.28 (66.44) 41.80 (20.36) 2.70 (2.40) 251.44 (602.63) (127.86) (54.31) 0.01 (1.96) 0.19 (6.71) (5.72) ((3.60)) 48.84 (13.21) 1.70 (3.79) 2.98 (10.00) 13.08 (-) n. Outstanding Balances : - Debtors - Creditors - Outstanding Payable (Net of receivable) 37.70 (3.90) 7.96 (0.38) (29.74) ((3.52)) 5.69 (30.81) 0.95 (20.14) (4.74) ((10.67)) (-) (-) (-) 3.37 (27.68) 2.58 (6.75) (0.79) ((20.93)) 5.68 (0.09) (-) (5.68) ((0.09)) 0.26 (-) 4.67 (3.48) 4.41 (17.99) 9.59 (6.19) (-) (9.59) ((9.59)) (-) (3.57) (3.57) 3.49 (1.57) 0.16 (0.22) (3.33) ((1.35)) 1.05 (-) (4.56) (1.05) (4.56) 0.48 (0.12) (-) (0.48) ((0.12)) 6.61 (-) (-) (6.61) (-) 199.73 (240.39) 123.91 (109.20) (75.82) ((131.19)) SCHEDULE 12 NOTES ON ACCOUNTS 18. The Company has classified various employee benefits as under : (A) (a) (b) (c) Defined Contribution Plans Provident Fund Superannuation Fund State Defined Contribution Plans - Employers' Contribution to Employees' State Insurance - Employers' Contribution to Employees' Pension Scheme 1995 The Provident Fund and the State Defined Contribution Plans are operated by the Regional Provident Fund Commissioner and the Superannuation Fund is administered by the Life Insurance Corporation of India. Under the schemes, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. These funds are recognised by the Income Tax Authorities. The Company has recognised the following amounts in the Profit and Loss Account for the year : (Rs in million) 2009-10 (i) (ii) (iii) (iv) Contribution to Provident Fund Contribution to Employees' Superannuation Fund Contribution to Employees' State Insurance Scheme Contribution to Employees' Pension Scheme 1995 53.76 11.55 1.73 25.69 (B) Defined Benefit Plans (a) (b) Gratuity Leave Encashment Applicable to certain employees Valuations in respect of Gratuity and Leave Encashment have been carried out by Life Insurance Corporation of India & independent actuary respectively, as at the balance sheet date, based on the following assumptions : (i) (ii) Discount Rate (per annum) Rate of increase in Compensation levels 8% 4% (Rs in million) 2009-10 Gratuity i. Changes in Present value of Obligation a. b. c. d. e. f. g. h. i. j. k. Opening Present value of Obligation Interest Cost Past Service Cost Current Service Cost Contributions by Plan participants Curtailment Cost/(Credit) Settlement Cost/(Credit) Benefits Paid Actuarial (Gains)/Loss Amalagamation/ Scheme Closing Present value of Obligation 158.57 12.69 13.59 9.86 3.04 178.03 68.83 5.26 10.41 136.56 10.93 11.28 8.07 7.87 158.58 60.19 4.88 8.78 15.83 10.80 68.83 Leave Encashment 2008-09 Gratuity Leave Encashment 18.11 24.90 91.29 53 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 12 NOTES ON ACCOUNTS (Rs in million) 2009-10 Gratuity a. b. c. d. e. f. g. h. iii. a. b. c. d. iv. Opening Present value of Plan Assets Expected Return on Plan Assets Actuarial (Gain) / Loss Employer's Contributions Employees' Contributions (incl. Rs Nil transferred from previous employers) Benefits Paid Amalagamation / Scheme Closing Fair value of Assets Bank Deposits (Sp. Dep. Scheme, 1975) Debt Instruments Administered by Life Insurance Corporation of India Others 177.85 150.95 150.95 15.26 21.50 9.86 177.85 Leave Encashment 2008-09 Gratuity 117.08 11.17 30.76 8.07 150.95 Leave Encashment - Percentage of each category of Plan Assets to total closing fair value Reconciliation of the Present Value of Defined Present Obligations and the Fair Value of Assets a. b. c. d. e. f. g. Closing Present value of Funded Obligation Closing Fair value of Plan Assets Funded (Asset) / Liability recognised in the Balance Sheet Closing Present value of Unfunded Obligation Unrecgonised Past Service Cost Unrecognised Acturial (Gain) / Loss Unfunded Net Liability recognised in the Balance Sheet Closing Present value of Obligation Closing Fair value of Plan Assets (Asset) / Liability recognised in the Balance Sheet Current Service Cost Past Service Cost Interest Cost Expected Return on Plan Assets Curtailment cost / (Credit) Settlement Cost / (credit) Net Actuarial (Gain) / Loss Employees' Contribution Total Expenses recognised in the Profit and Loss Account 178.03 177.85 0.18 178.03 177.85 0.18 13.59 12.69 15.26 3.04 14.06 91.29 91.29 91.29 91.29 10.41 5.26 24.90 40.57 158.58 150.95 7.63 158.58 150.95 7.63 11.28 10.93 11.17 7.87 18.91 68.83 68.83 68.83 68.83 8.78 4.88 10.80 24.47 v. Amounts recognised in the Balance Sheet a. b. c. vi. Expenses recognised in the Profit and Loss Account a. b. c. d. e. f. g. h. i. 19. Miscellaneous expenses includes excise duty on 2009-10 Closing Stock Less: Opening Stock Excise duty on stock included in Miscellaneous Expenses 145.96 82.45 63.51 2008-09 82.45 160.01 (77.56) 20. Figures in bracket indicate previous year’s figures. 21. Previous year’s figures have been regrouped / rearranged wherever necessary. SCHEDULE 12 NOTES ON ACCOUNTS 22. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 2009-10 I. Registration Details: Registration No. State Code Balance Sheet Date 2008-09 14336 11 31.03.2010 (Rs in million) 14336 11 31.03.2009 (Rs in million) Nil Nil Nil Nil 13357.16 13357.16 253.07 7083.08 2593.09 2987.05 440.87 6733.01 2407.10 4217.05 19073.50 1462.28 17611.22 238.92 16218.13 1632.01 1463.79 2.89 175.00 II. III. IV. V. Capital Raised during the year Public Issue Nil Rights Issue Nil Bonus Issue 253.07 Private Placement/ On Amalgamation Nil Position of Mobilisation and Deployment of Funds Total Liabilities 14015.45 Total Assets 14015.45 Sources of Funds Paid-up Capital 506.13 Reserves and Surplus 8879.66 Secured Loans 2184.50 Unsecured Loans 2029.80 Deferred Tax Liability (Net) 415.36 Application of Funds Net Fixed Assets 6948.74 Investments 5106.64 Net Current Assets 1960.07 Performance of Company Turnover 20215.34 Less : Excise duty 917.89 Net Turnover 19297.45 Other Income 271.77 Total Expenditure 16280.49 Profit Before Tax 3288.73 Profit After Tax 2934.95 Earning per Share in Rs 5.80 Dividend rate % 150.00 Generic Names of three Principal Products/Services of the Company (as per monetary terms) Item Code No. Product (ITC Code) Description 3506 ADHESIVES 3905 + 3906 SYNTHETIC RESINS 3204 ORGANIC PIGMENTS AND PREPARATIONS BASED ON ORGANIC PIGMENTS Signatures to Schedules 1 to 12 FOR AND ON BEHALF OF THE BOARD B K PAREKH Chairman S K PAREKH Vice Chairman Mumbai Date : 19th May 2010 P C PATEL President & Secretary M B PAREKH Managing Director 55 PIDILITE ANNUAL REPORT 2009-10 Cash Flow Statement For The Year Ended 31st March 2010 (Rs in million) 2009-10 A CASH FLOW FROM OPERATING ACTIVITIES Net Profit before taxation Adjustment for Depreciation (Reversal)/ Additional Provision for Diminution in value of Investments Interest paid Dividend received Interest received (Profit) / Loss on Sale of Investment (Profit) / Loss on Sale of Assets Unrealised Foreign exchange losses / ( Gain) Bad debts w/off / provision for doubtful debts 463.86 (1.91) 286.03 (29.37) (7.19) (18.48) 1.83 (4.12) 64.51 755.16 Operating Profit before Working Capital changes Working Capital changes : Inventories (Inc) / Dec Debtors (Inc) / Dec Loans and Advances, etc. (Inc) / Dec Current Liabilities Inc / Dec (217.38) (39.07) 221.65 1076.16 1041.36 Cash generated from operations Interest received Interest paid Income Tax paid (Net) 7.19 (286.03) (689.86) (968.70) Net Cash flow from Operating Activities 4116.55 5085.25 10.56 (317.79) (108.44) (415.67) 2602.26 366.51 (239.50) (64.58) 336.56 398.99 3017.93 4043.89 3288.73 472.16 1.80 317.79 (9.22) (10.56) 0.33 149.73 64.90 986.93 2618.94 1632.01 2008-09 Cash Flow Statement For The Year Ended 31st March 2010 (Rs in million) 2009-10 B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Sale of Investments Dividend received Net Cash flow from Investing Activities (815.94) 10.88 (1 0817.33) 8,138.18 29.37 (3454.84) 661.71 C CASH FLOW FROM FINANCING ACTIVITIES (Repayment) / Increase of long term borrowings (Repayment) / Increase of long term borrowings - Bank (Decrease) / Increase in Short term Borrowings - Bank (Repayment) / Increase of Short Term Borrowings - Foreign Currency Loan (Redemption) / Issue of Foreign Currency Convertible Bonds (Redemption) / Issue of Preference Shares (Redemption) / Issue of secured Redeemable Non Convertible Debentures Dividend paid (Including Dividend Tax, where applicable) Net Cash Flow from Financing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents as at 1st April 2009 Cash and Cash Equivalents a s at 31st March 2010 1270.76 331.16 (939.60) Purchase of Fixed assets excludes Exchange loss capitalised [Refer Note 10 of Schedule 12] AS PER OUR ATTACHED REPORT OF EVEN DATE For HARIBHAKTI & CO. Chartered Accountants B K PAREKH Chairman CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary S K PAREKH Vice Chairman (3.73) (263.14) (729.28) (86.64) (518.52) (1601.31) (939.60) 1485.50 1270.76 (214.74) (1.20) (250.00) (728.82) (471.79) (43.85) (28.75) 1,500.00 (512.74) (537.15) (214.74) (1517.19) 13.33 (2690.78) 1905.57 9.22 (2279.85) 322.41 2008-09 FOR AND ON BEHALF OF THE BOARD M B PAREKH Managing Director 57 PIDILITE ANNUAL REPORT 2009-10 Statement pursuant to Section 212 of The Companies Act, 1956 relating to Subsidiary Companies Names of the subsidiaries Fevicol Company Ltd. Pidilite International Pte Ltd. Pidilite Middle East Ltd. AED 31st March 2010 100% 100% 100% by Pidilite by Pidilite Middle International East Ltd. Pte Ltd. (99%) & Pidilite Middle East Ltd. (1%) 300000 3.67 141.46 35.92 218297435 25881800 8696784900 42.61 *100% by Pidilite International Pte Ltd. 100% by Pidilite International Pte Ltd. (99%) & Pidilite Middle East Ltd. (1%) 31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010 100% AED Taka Baht IDR US Dollars Jupiter Chemicals (L.L.C.). Pidilite Speciality Chemicals Bangladesh Pvt Ltd. Pidilite Bamco Ltd. PT Pidilite Indonesia Pidilite USA Inc Pidilite Innovation Center Pte Ltd. Currency 31st March 2010 100% 100% Indian Rs The financial year of the subsidiary ended on Singapore Dollars 31st March 2010 Singapore Dollars 31st March 2010 100% by Pidilite International Pte Ltd. Holding company’s interest Equity Share Capital Including Share application Money 0.50 749.87 335.92 23325088 27431411 14380000 646.74 995155 31.99 Local Currency Indian Rs in million (0.26) (66.38) (0.49) (62.97) (2064894) (40160) (5142136) 659186 0.43 (2932549) (4.07) 700991011 3.43 (1049558) (47.20) (153931) (4.95) Net aggregate Profits or (Losses) for the current financial year since becoming subsidiary, so far as concern the Members of the Holding Company, not dealt with or provided for in the accounts of the Holding Company Local Currency Indian Rs in million 0 0.10 (9.19) (1.41) (308947) (179126) (7590809) (94.26) 72000 0.04 (13764023) (19.78) (4086483808) (17.91) (5002057) (219.36) (31887) (1.03) Net aggregate Profits or (Losses) for the previous financial years since becoming subsidiary, so far as concern the members of the Holding Company, not dealt with or provided for in the accounts of the Holding Company Not Applicable Not Not Applicable Applicable Not Applicable Local Currency Indian Rs in million Additional information u/s 212(5) Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable FOR AND ON BEHALF OF THE BOARD B K Parekh Chairman S K Parekh Vice Chairman * One Equity share each held by Shri M B Parekh and Shri A N Parekh respectively Mumbai Date : 19th May 2010 P C PATEL President & Secretary M B Parekh Managing Director Statement pursuant to Section 212 of The Companies Act, 1956 relating to Subsidiary Companies Bamco Madhumala Bhimad Pidilite Pulvitec do Brasil Pidilite Southeast Asia Ltd. Supply atnd Traders Pvt Commercial Co Industries Egypt Industria e ComServices Ltd. Ltd. Pvt Ltd. - SAE mercio de Colas e Adesivos ltda Indian Rs 31st March 31st March 2010 2010 100% 100% 100% by Pidilite International Pte Ltd. (97%), Pidilite Industries Ltd. (2%) & Pidilite Middle East Ltd. (1%) 0.10 211.75 878.53 5.56 25928495 34849444 4000000 1000000 1.39 100% 100% by Pidilite 49% International by Pidilite Pte Ltd. (97%), International Pte Ltd. Pidilite Industries Ltd. (3%) 31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010 100% by Pidilite Industries Egypt- SAE Indian Rs EGP Brazilian Reais Baht Baht EGP Indian Rs 31st March 2010 75% PIL trading Egypt (L.L.C.)* Pagel Concrete Technologies Pvt Ltd. Currency The financial year of the subsidiary ended on Holding company’s interest Equity Share Capital Including Share application Money 0.10 51000 0.42 1.00 Local Currency Indian Rs in million 4.49 4.49 (27.21) (7.50) - (3331901) (297695) (4005078) (5.56) 368035 0.51 (184166) (1.50) - Net aggregate Profits or (Losses) for the current financial year since becoming subsidiary, so far as concern the Members of the Holding Company, not dealt with or provided for in the accounts of the Holding Company Local Currency Indian Rs in million 7.65 7.65 (3.38) - (406398) (10322898) (229.02) (61697) (0.09) 231279 0.33 - (1.53) Net aggregate Profits or (Losses) for the previous financial years since becoming subsidiary, so far as concern the members of the Holding Company, not dealt with or provided for in the accounts of the Holding Company Not Applicable Not Applicable Not Applicable Local Currency Indian Rs in million Additional information u/s 212(5) Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable FOR AND ON BEHALF OF THE BOARD B K Parekh Chairman S K Parekh Vice Chairman M B Parekh Managing Director * Became subsidiary of Pidilite Industries Egypt-SAE during the year. Mumbai Date : 19th May 2010 59 PIDILITE ANNUAL REPORT 2009-10 Corporate Governance Report In compliance with Clause 49 of the Listing Agreement with Stock Exchanges, the Company submits the following report: 1. Company’s Philosophy on Code of Governance The Company is committed to good Corporate Governance and has complied in all material respects with the requirements specified in the Listing Agreement with the Stock Exchanges. 2. Board of Directors During the Financial Year 2009-10, 5 Board Meetings were held on 20th May 2009, 27th July 2009, 21st October 2009, 28th January 2010 and 24th/25th March 2010# Details of composition of the Board, category, attendance of Directors at the Board Meetings and the last Annual General Meeting (AGM), number of other Directorships and Committee Memberships as on 31st March 2010 are given below: Sr. No. Name Category No. of Board Meetings attended 5 3 5 5 4 5 3 5 4 5 4 2 3 3 2 Attendance at last AGM No. of Directorships held in other Companies(*) 15 6 9 8 9 11 NA 4 13 16 13 2 15 No. of Committee positions held in other Companies @ Memberships 2 2 3 5 4 1 1 Chairmanships 4 4 4 1 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Shri B K Parekh (Chairman) Shri S K Parekh (Vice Chairman) Shri M B Parekh (Managing Director) Shri N K Parekh (Jt.Managing Director) Shri A B Parekh (Wholetime Director) Shri A N Parekh (Wholetime Director) Shri V S Vasan ** (Wholetime Director) Shri R M Gandhi Shri N J Jhaveri Shri Bansi S Mehta Shri Ranjan Kapur Shri Yash Mahajan Shri Bharat Puri Shri D Bhattacharya Shri J L Shah *** (Wholetime Director) NED (P) NED (P) ED (P) ED (P) ED (P) ED (P) ED NED (I) NED (I) NED (I) NED (I) NED (I) NED (I) NED (I) ED Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes NA # * @ ** *** Meeting held on 24th March 2010 and continued on 25th March 2010. Includes Directorships held in Private Limited Companies, Section 25 Companies, Alternate Directorships and Directorships in bodies incorporated outside India. Includes position in Audit Committee and Shareholders’/Investors’ Grievance Committee only. Resigned as a Director wef 21st October 2009. Appointed as an Additional Director and Wholetime Director wef 21st October 2009. ED – Executive Director, ED (P) – Executive Director, Promoter, NED (P) – Non-Executive Director, Promoter, NED (I) – Non Executive Director, Independent. Shri B K Parekh, Shri S K Parekh and Shri N K Parekh are related to each other. Shri M B Parekh and Shri A B Parekh are related to each other as well as to Shri B K Parekh. Shri A N Parekh is related to Shri N K Parekh. 3. Audit Committee During the financial year 2009-10, 5 meetings of the Committee were held on 15th May 2009, 20th May 2009, 27th July 2009, 21st October 2009 and 28th January 2010. Details of composition of the Committee and attendance of the members at the meetings are given below: Sr. No. 1 2 3 4 Name Shri Bansi S Mehta Shri N J Jhaveri Shri B K Parekh Shri Ranjan Kapur Designation Chairman Member Member Member Category NED (I) NED (I) NED (P) NED (I) No. of Meetings attended 5 3 3 4 The Managing Director is a permanent invitee to the meetings. The Company Secretary is the Secretary of the Committee. Director - Finance and Chief Financial Officer are invited to attend the meetings. The Statutory Auditors and the Cost Auditors are invited when required. The powers and terms of reference of the Committee are as specified in Clause 49 of the Listing Agreement with the Stock Exchanges and Section 292A of the Companies Act, 1956. 4. Remuneration of Directors Although Remuneration Committee (being a non-mandatory requirement) has not been constituted by the Company, all matters relating to review and approval of compensation payable to the Executive and Non-executive Directors are considered by the Board within the overall limits approved by the Members. Executive Directors’ remuneration details for the financial year 2009-10 are given below: Sr. No. Name Salary * (Rs) 1,03,74,144 51,87,060 42,75,092 38,74,140 6,45,038 16,06,451 Commission Payable (Rs) 5,55,23,160 1,11,04,632 1,00,95,120 57,20,568 Perquisites (Rs) 66,16,737 42,76,243 37,91,953 35,61,871 24,93,692 32,03,217 Total (Rs) 7,25,14,041 2,05,67,935 1,81,62,165 1,31,56,579 31,38,730 48,09,668 Tenure (No. of years) 5 5 5 5 2 2 1 2 3 4 5 6 Shri M B Parekh (Managing Director) Shri N K Parekh (Jt. Managing Director) Shri A B Parekh (Wholetime Director) Shri A N Parekh (Wholetime Director) Shri V S Vasan ** (Wholetime Director) Shri J L Shah *** (Wholetime Director) * ** *** Includes House Rent Allowance Resigned as a Director wef 21st October 2009 Appointed as an Additional Director and Wholetime Director wef 21st October 2009. PIDILITE ANNUAL REPORT 2009-10 The above figures are exclusive of Company’s contribution to Provident Fund, Superannuation, Gratuity and encashment of leave at the end of tenure as per the rules of the Company. Notice period for the Executive Directors is as applicable to the senior employees of the Company. No severance fee is payable to the Executive Directors on termination of employment. The Company does not have a scheme of stock options for the Directors or the employees. 61 The details of sitting fees paid for attending to the Board/ Committee meetings and commission due to the Non-executive Directors for the year ended 31st March 2010 are as under: Sr. No. 1 2 3 4 5 6 7 8 9 Name Shri B K Parekh Shri S K Parekh Shri R M Gandhi Shri N J Jhaveri Shri Bansi S Mehta Shri Ranjan Kapur Shri Yash Mahajan Shri Bharat Puri Shri D Bhattacharya Sitting fees (Rs) 75,000 57,000 79,000 62,000 15,000 25,000 25,000 Commission Payable (Rs) 3,00,000 3,00,000 3,00,000 3,00,000 3,00,000 3,00,000 3,00,000 3,00,000 3,00,000 Total (Rs) 3,00,000 3,00,000 3,75,000 3,57,000 3,79,000 3,62,000 3,15,000 3,25,000 3,25,000 The Company do engage M/s. Bansi S Mehta & Co., Chartered Accountants firm in which Shri Bansi S Mehta is a partner for legal/tax advice. The services provided by them are purely of professional nature and the fees paid for such services do not result in any material pecuniary benefit to them and they do not have any material association with the Company. Other Non-executive Directors did not have pecuniary relationships or transactions vis-à-vis the company. In terms of the special resolution passed by the Members at Annual General Meeting held on 27th August 2008, Non Executive Directors have been paid aggregate commission at a rate not exceeding 1% per annum of the net profit of the Company computed in accordance with section 309(5) of the Companies, Act, 1956 as determined by the Board of Directors, based on consideration of time spent in attending Board meetings, Committee meetings and advice given to the Company as experienced/expert persons, whenever approached. The number of shares held by Non Executive Directors as on 31st March 2010: Shri R M Gandhi – 70,450; Shri N J Jhaveri – 10,000; Shri Ranjan Kapur - Nil ; Shri Bansi S Mehta - 24,716; Shri Yash Mahajan - 10,000; Shri B K Parekh - 58,16,446; Shri S K Parekh – 4,59,69,560; Shri Bharat Puri - Nil; Shri D. Bhattacharya – Nil 5. Shareholders/Investors Grievance Committee During the year 12 meetings of the Share Transfer Committee were held and 1 meeting of the Shareholders’/ Investors’ Grievance Committee was held on 8th January 2010 which was attended by Shri R M Gandhi and Shri B K Parekh. Details of composition of the Committee is given below: Sr. No. 1 2 3 Name Shri R M Gandhi Shri B K Parekh Shri S K Parekh Designation Chairman Member Member Category NED (I) NED (P) NED (P) The Committee has the power to look into redressal of shareholders/investors grievance such as non-receipt of shares sent for transfer, non-receipt of declared dividends, non-receipt of Annual Reports etc. The Secretarial Department of the Company, under the supervision of Shri P C Patel, President & Secretary who is also nominated as the “Compliance Officer” as required by SEBI/Listing Agreement and TSR Darashaw Limited, Registrar & Transfer Agent, attend to all shareholders/investors grievances received directly or through SEBI, Stock Exchanges, Ministry of Corporate Affairs and Registrar of Companies. Barring certain cases pending in Courts/Consumer Forums, mainly relating to disputes over the title to shares, in which the Company has been made a party, the Company and TSR Darashaw Ltd. have attended to all the shareholders/investors grievances/correspondences generally within a period of 15 days from the date of receipt. The total number of letters received from the shareholders were 1,521 of which only 6 were in the nature of complaints. All the complaints were resolved to the satisfaction of shareholders. There were no pending complaints as on 31st March 2010. 1 request for transfer of shares and 4 requests for dematerialization of shares were pending for approval as on 31st March 2010 which were dealt with by 5th April 2010 & 7th April 2010 respectively. The Company has framed a Code of Internal Procedures and Conduct for Prevention of Insider Trading on the lines of model code specified by SEBI. Shri P C Patel, President & Secretary is the Compliance Officer for the purpose. 6. General Body Meetings Details of Location, Date and Time of the Annual General Meetings held during the last three years are given below: Financial Year 2008-09 Venue Kamalnayan Bajaj Hall, Bajaj Bhavan, Jamnalal Bajaj Marg, Nariman Point, Mumbai-400 021. Kamalnayan Bajaj Hall, Bajaj Bhavan, Jamnalal Bajaj Marg, Nariman Point, Mumbai-400 021. Kamalnayan Bajaj Hall, Bajaj Bhavan, Jamnalal Bajaj Marg, Nariman Point, Mumbai-400 021. Date & Time 4th August 2009 at 11.00 a.m. 27th August 2008 at 11.00 a.m. 29th August 2007 at 11.00 a.m. 2007-08 2006-07 The following Special Resolutions were passed with requisite majority in the previous 3 Annual General Meetings: 2008-2009 Section 314 of the Companies Act, 1956. 2007-2008 under Section 198, 269, 309, 311 and Schedule XIII of the Companies Act, 1956. Directors) under Section 309 of the Companies Act, 1956. 2006-2007 USA, INC, a subsidiary of the Company under Section 314 of the Companies Act, 1956. of Vinyl Chemicals (India) Ltd. into the Company. An Extraordinary General Meeting was also held on 4th March 2010 for Members’ approval for increase in Authorised Capital, consequential amendments in the Capital Clause of the Memorandum & Articles of Association and issue of Bonus Equity Shares. No Special Resolution was passed through postal ballot during the last year. At the ensuing Annual General Meeting, there is no resolution proposed to be passed through postal ballot. PIDILITE ANNUAL REPORT 2009-10 7. Disclosures Company at large. 63 the regulations and guidelines of SEBI. Consequently, no penalties were imposed or strictures passed against the Company by SEBI, Stock Exchanges or any other statutory authority on any matter relating to capital markets during the last 3 years. the non- mandatory requirements, the Company has adopted the following: Shri B K Parekh, Non-executive Chairman, is maintaining the office at the Company, at the Company’s expense and also allowed reimbursement of the expenses incurred in performance of his duties. 8. Means of Communication The Economic Times (English), Maharashtra Times (Marathi) and displayed on the Company’s website. .9. Information relating to Directors Information relating to Directors seeking appointment/reappointment as required under clause 49(IV)(G)(i) of the Listing Agreement is given in the Notice of the Annual General Meeting. 10. Information for Shareholders Detailed information in this regard is provided in the “Information for Shareholders” section, appearing in the Annual Report. 11. Declaration by the Managing Director under Clause 49(1)(D)(ii) Declaration by the Managing Director of the Company under Clause 49(1)(D)(ii) of the Listing agreement with Stock Exchanges is given below: “Pursuant to Clause 49 (1)(D) (ii) of the Listing Agreement with Stock Exchanges, I hereby declare that all the Board Members and Senior Management personnel of the Company have affirmed compliance with the Code of Conduct for the year ended 31st March 2010.” Corporate Governance Compliance Certificate To The Members of M/s Pidilite Industries Limited Co. Regn No: 14336 Nominal Capital: Rs 70 Crore We have examined relevant records of M/s Pidilite Industries Ltd. (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement with Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. for the financial year ended 31st March 2010. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of certification. The compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of the Company nor the efficacy or effectiveness with which the Management has conducted the affairs of the Company. On the basis of our examination of the records produced, explanations and informations furnished, we certify that the Company has complied with all the applicable mandatory conditions of the said Clause 49 of the Listing Agreement. Date: 16th June 2010 Mumbai For M M SHETH & CO Company Secretaries M M SHETH Proprietor FCS.1455, CP.729 65 PIDILITE ANNUAL REPORT 2009-10 Information for Shareholders Annual General Meeting Day, Date & Time : Wednesday, 11th August 2010 at 11 a.m. Venue : Kamalnayan Bajaj Hall, Bajaj Bhavan, Jamnalal Bajaj Marg, Nariman Point, Mumbai 400 021. Share prices during the financial year 2009-10 at BSE for one equity share of Re 1 each were as under: Month High April, 2009 May, 2009 June, 2009 July, 2009 August, 2009 th Share Price (Rs) Low 83.50 89.50 109.05 101.25 131.00 141.30 143.75 156.05 184.00 191.30 185.00 106.50** Financial Year 1st April 2010 to 31st March 2011 101.30 138.50 141.50 146.65 157.00 156.50 175.00 210.00 201.00 229.00 210.20 244.75* Date of Book Closure 28th July 2010 to 11th August 2010 (both days inclusive) Dividend Payment Dividend will be paid after 11 August 2010 subject to the approval of the shareholders at the Annual General Meeting. September, 2009 October, 2009 November, 2009 December, 2009 January, 2010 February, 2010 March, 2010 * Cum-Bonus price ** Ex-Bonus price Listing of Shares on Stock Exchanges The equity shares of the Company are listed on Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Annual Listing fee for the financial year 2010-11 has been paid to BSE & NSE. Stock Codes Name of the Stock Exchange Bombay Stock Exchange Ltd. National Stock Exchange of India Ltd. Stock Code 500331 PIDILITIND Stock Performance The performance of the Company’s shares in comparison to BSE sensex is given in the Chart below: 300 Listing of Secured Redeemable Non-Convertible Debentures (NCDs) The Company has issued NCDs (Series I) aggregating to Rs 750 million and NCDs (Series II) aggregating to Rs 750 million, which are listed at the Wholesale Debt Market segment of National Stock Exchange of India Ltd. and the Debenture Trustees are IDBI Trusteeship Services Ltd., Asian Building, Ground Floor, 17 R Kamani Marg, Ballard Estate, Mumbai 400 001. 280 260 240 220 200 180 160 ISIN for NCDs NCDs (Series I) NCDs (Series II) INE318A07015 INE318A07023 140 120 Jul-09 100 Apr-09 May-09 Jun-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Market Price Data Share prices during the financial year 2009-10 at NSE for one equity share of Re 1 each were as under: Month High April, 2009 101.00 May, 2009 132.60 June, 2009 141.00 July, 2009 158.85 August, 2009 157.40 September, 2009 157.45 October, 2009 175.00 November, 2009 209.40 December, 2009 201.50 January, 2010 228.70 February, 2010 210.80 March, 2010 245.00* * Cum-Bonus price ** Ex-Bonus price Share Price (Rs) Low 83.70 89.50 109.25 101.30 131.00 142.20 144.20 155.65 183.00 191.50 186.20 106.30** Adj Sensex Pidilite Registrar & Transfer Agent TSR Darashaw Limited Unit: Pidilite Industries Limited 6-10, Haji Moosa Patrawala Ind. Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai – 400 011 Tel : 022 - 66568484 Fax : 022 - 66568494 E-mail: csg-unit@tsrdarashaw.com Website: www.tsrdarashaw.com Mar-10 Feb-10 Jan-10 Share Transfer System The Company has delegated the authority to approve shares received for transfer in physical form as under: No. of shares Upto 2000 (*4000) Upto 10000 (*20000) above 10000 (*20000) Authorisation given to TSR Darashaw Limited Any one of the Sarva Shri B K Parekh, S K Parekh, M B Parekh, Directors or in their absence, the Company Secretary. Share Transfer Committee comprising the Directors viz, Sarva Shri B K Parekh, S K Parekh, N K Parekh and R M Gandhi. Shareholding Pattern as on 31st March, 2010: UTI, Mutual Funds, Banks & Insurance Companies 8.16% FII’s 9.12% Indian Public & Bodies Corporate 12.14% Promoters 70.58% *Revised w.e.f. 19th May 2010 Presently the share transfers which are received in physical form are processed and the share certificates duly transferred are returned generally within a period of 15 days from the date of receipt, subject to the documents being valid and complete in all respects. Distribution of Shareholding as on 31st March 2010. No. of Equity Shares held Upto 5000 5001 – 10000 10001 – 20000 20001 – 30000 30001 – 40000 40001 – 50000 50001 – 100000 100001 and above Total No. of Shareholders & shares in physical mode No. of beneficial owners & shares in electronic mode Total No.of folios 31,105 2,055 314 78 55 26 56 119 33,808 2,359 31,449 33,808 % 92.00 6.08 0.93 0.23 0.16 0.08 0.17 0.35 100.00 6.98 93.02 100.00 No of Shares 1,58,52,396 1,58,11,863 46,96,915 19,57,868 20,02,095 12,02,108 40,21,263 46,05,90,104 50,61,34,612 55,32,839 50,06,01,773 50,61,34,612 % 3.13 3.12 0.93 0.39 0.40 0.24 0.79 91.00 100.00 1.09 98.91 100.00 2012 at the original price of Rs 256.035 per share (now reset in terms of the provision of the offering circular). The Company has repurchased Bonds of face value of The Company issued Bonus Equity Shares in the ratio of 1:1 during March 2010 with Record Date on 17th March 2010. FCCB holders who exercised their right till the Record Date were eligible to receive the Bonus Shares on par with other Shareholders. Furthermore, those FCCB holders who opt for conversion after the Record Date, under the terms on which the FCCBs were offered are entitled to a proportionately higher number of Equity Shares as if the conversion had taken place prior to the Record Date. The Bonds have been issued at par and will be redeemed, if not converted into shares, at 139.37% of par value on maturity. The Bonds are listed on the Singapore Exchange Securities Trading Limited and the shares to be issued upon conversion of the Bonds will be listed on the NSE and BSE. ISIN for Bonds: XSO330177667 Dematerialisation of shares & liquidity As on 31st March 2010, 98.91% of total equity shares of the Company were held in dematerialised form with National Securities Depository Ltd. and Central Depository Services (India) Ltd. The Company’s equity shares are required to be compulsorily traded in the dematerialised form. The shares are available for dematerialisation under ISIN INE318A01026. Requests for dematerialisation of shares are processed and generally confirmed within 15 days of receipt. Plant Locations in India Mahad, Panvel, Taloja, Kondivita, Sakinaka (Maharashtra), Vapi, Surat (Gujarat), Daman (Union Territory of India), Kala Amb, Baddi (Himachal Pradesh). Address for Correspondence Registered Office : Regent Chambers, 7th Floor, Jamnalal Bajaj Marg, 208, Nariman Point, Mumbai - 400 021. Email : pcpatel@pidilite.com Website: www.pidilite.com through Zero Coupon Foreign Currency Convertible Bonds. The Bonds have a yield to maturity of 6.75% per annum (calculated on a semi-annual basis) and are redeemable in 2012 i.e after 5 years and 1 day from closing date. The Bonds are convertible into equity shares of the Company at any time on and after 16th January 2008 until 1st December Corporate Secretarial/Investors’ Assistance Department The Company’s Secretarial Department headed by Shri P C Patel, President & Secretary, is situated at the Registered Office mentioned above. Shareholders/Investors may contact Shri P C Patel or Shri K S Krishnan at the Registered Office in Mumbai for any assistance they may need. 67 PIDILITE ANNUAL REPORT 2009-10 Outstanding GDRs/ADRs/Warrants/Convertible instruments Consolidated Financial Statements Auditors’ Report To the Board of Directors of Pidilite Industries Limited on the Consolidated Financial Statements We have audited the attached Consolidated Balance Sheet of Pidilite Industries Limited (“the Company”) and its Subsidiaries (including subsidiaries of subsidiaries) and an associate (collectively referred to as “the group”) as at 31st March 2010 and also the consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of subsidiaries (including subsidiaries of subsidiaries), whose financial statements reflect total assets of Rs 3,586 million as at 31st March 2010, total revenues of Rs 2,914 million for the year then ended. We also did not audit the financial statements of an associate in whose financial statements the Group’s share of profit is Rs 24 million for the year ended 31st March 2010. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. We report that the consolidated financial statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standards (AS) 21, “Consolidated financial statements” and Accounting Standards (AS) 23, “Accounting for Investments in Associates in Consolidated Financial Statements” as notified pursuant to the Companies (Accounting Standards) Rules, 2006 and on the basis of the separate financial statements of Pidilite Industries Limited and its subsidiaries (including subsidiaries of subsidiaries) and the associate included in the Consolidated Financial Statements. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the Consolidated Balance Sheet, of the State of Affairs of the Group as at 31st March 2010; b) in the case of the Consolidated Profit and Loss Account, of the Profit for the year ended on that date; and c) in the case of the consolidated Cash Flow Statement, of the Cash Flows of the Group for the year ended on that date. . For HARIBHAKTI & CO Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Place: Mumbai Date: 19th May 2010 69 PIDILITE ANNUAL REPORT 2009-10 Consolidated Balance Sheet As at 31st March 2010 (Rs in million) As at 31st March 2010 As at 31st March 2009 Schedule I SOURCES OF FUNDS 1. Shareholders’ Funds a. b. Share Capital Reserves and Surplus 1 2 506.13 8213.31 253.07 6687.94 8719.44 6941.01 2. Loan Funds a. b. Secured Loans Unsecured Loans 3 4 2627.36 2058.96 4686.32 416.66 1.58 13824.00 3000.63 3087.92 6088.55 433.95 6.71 13470.22 3. 4. Deferred Tax Liability (Net) Minority Interest TOTAL II APPLICATION OF FUNDS 1. Fixed Assets a. b. c. d. Gross Block Less : Accumulated Depreciation Net Block Capital work in progress 5 9808.19 4346.22 5461.97 2927.63 9273.25 3761.09 5512.16 2819.13 8389.60 8331.29 253.66 2. 3. Investments Current Assets, Loans and Advances a. b. c. d. e. Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances 6 7 2978.74 2959.02 448.52 51.51 994.32 7432.11 2677.69 2798.23 2876.03 1600.55 223.54 787.94 8286.29 Less : Current Liabilities and Provisions a. b. Liabilities Provisions 8 3695.75 979.65 4675.40 2804.24 596.78 3401.02 2756.71 4885.27 Net Current Assets TOTAL Notes forming part of the Accounts 12 13824.00 13470.22 AS PER OUR ATTACHED REPORT OF EVEN DATE For HARIBHAKTI & CO. Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary FOR AND ON BEHALF OF THE BOARD B K PAREKH Chairman S K PAREKH Vice Chairman M B PAREKH Managing Director Consolidated Profit and Loss Account For The Year Ended 31st March 2010 (Rs in million) Schedule INCOME Sales Less : Excise Duty Net Sales Other Income EXPENDITURE Materials Other Expenses Depreciation Profit before Taxation Income Tax Expense Current Tax Less : MAT Credit Entitlement Deferred Tax Fringe Benefit Tax Profit for the year Prior year Tax Provision written back (Net) Share of Profit in Associate Company for the year Minority Interest Balance brought forward from previous year Profit available for appropriation Dividend on Preference Share Capital Proposed Dividend on Equity Share Capital Corporate Tax on Dividend Transfer to Capital Redemption Reserve Transfer to Debenture Redemption Reserve Transfer to General Reserve Balance carried to Balance Sheet Earnings per share: (Refer note 6 of Schedule 12) Basic (Rs) Diluted (Rs) Face Value of Share (Re) Notes forming part of the Accounts AS PER OUR ATTACHED REPORT OF EVEN DATE For HARIBHAKTI & CO. Chartered Accountants CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary 12 566.94 142.29 424.65 (16.52) 10 11 11390.68 7083.79 665.50 9 22842.21 926.60 2009-10 2008-09 21325.52 1462.28 21915.61 335.19 22250.80 19863.24 287.19 20150.43 11662.64 6624.42 588.24 19139.97 3110.83 18875.30 1275.13 182.92 59.90 123.02 16.00 27.71 408.13 2702.70 43.73 23.70 (0.54) 208.95 2978.54 759.20 126.10 885.30 322.46 1500.00 270.78 5.47 5.32 1.00 166.73 1108.40 3.53 6.88 495.07 1613.88 0.75 442.87 75.38 519.00 28.75 257.18 600.00 208.95 2.23 2.16 1.00 B K PAREKH Chairman S K PAREKH Vice Chairman M B PAREKH Managing Director 71 PIDILITE ANNUAL REPORT 2009-10 FOR AND ON BEHALF OF THE BOARD Schedule Schedule Numbers 1 to 12 annexed to and forming part of the Consolidated Balance Sheet as at 31st March 2010 and Profit and Loss Account for the year ended 31st March 2010 As at 31st March 2010 (Rs in million) As at 31st March 2009 SCHEDULE 1 SHARE CAPITAL Authorised 70,00,00,000 (39,00,33,999) Equity Shares of Re 1 each Nil (50,00,000) 6% Cumulative Redeemable Preference Shares of Rs 10 each Nil (2,50,00,000) Unclassified Shares of Re 1 each TOTAL Issued, Subscribed and Paid up 50,61,34,612 (25,30,61,306) Equity Shares of Re 1 each, fully paid-up (Notes 1 to 3) Bonus Shares Issue Suspense Account (Note 4) TOTAL 700.00 700.00 506.13 506.13 390.03 50.00 25.00 465.03 253.06 0.01 253.07 NOTES Out of the above 1. 74,75,880 Equity Shares of Re 1 each have been issued for consideration other than cash pursuant to various schemes of amalgamation during earlier years. 2. 47,94,81,646 (22,64,14,340) Equity Shares of Re 1 each have been allotted as fully paid-up Bonus Shares by way of capitalisation of General Reserve, Securities Premium Account and Capital Redemption Reserve. 3. The Equity Shares of the face value of Rs 10 each were sub-divided into ten Equity Shares of the face value of Re 1 each w.e.f. 27th September 2005. 4. Bonus Shares Issue Suspense Account transferred to Equity Share Capital on account of settlement of dispute for title of 6000 fully paid bonus shares. SCHEDULE 2 RESERVES AND SURPLUS Capital Reserve Balance as per last Balance Sheet Capital Redemption Reserve Balance as per last Balance Sheet Less:- Capitalised during the year for bonus issue Cash Subsidy Reserve Balance as per last Balance Sheet Special Reserve Balance as per last Balance Sheet Less: Transferred to General reserve Debenture Redemption Reserve Balance as per last Balance Sheet Add : Transferred from Profit and Loss Account General Reserve Balance as per last Balance Sheet Less : Earlier year's Foreign Exchange Fluctuation Add : Transferred from Special Reserve Less:- Capitalised during the year for bonus issue Add : Transferred from Profit and Loss Account Foreign Currency Translation Reserve Profit and Loss Account TOTAL 5.11 5.16 28.75 28.75 11.24 28.75 28.75 9.47 1.19 1.19 327.46 322.45 649.91 5933.71 1.19 224.32 1,500.00 7210.58 65.69 270.78 8213.31 1.19 1.19 70.28 257.18 327.46 5338.41 4.70 600.00 5933.71 173.25 208.95 6687.94 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 3 SECURED LOANS 750 (750) 11.9% Secured Redeemable Non Convertible Debentures of Rs 10,00,000 Each ( Note.1) 750 ( 750) 10.2% Secured Redeemable Non Convertible Debentures of Rs 10,00,000 Each ( Note.1) Term Loans from Banks ( Note.2) Working Capital Loans from Banks (including Working Capital Demand Loan) ( Note.3) TOTAL 1. 750.00 750.00 750.00 466.92 660.44 2627.36 750.00 796.23 704.40 3000.63 Secured Redeemable Non Convertible Debentures are secured by way of mortgage and charge (by First pari passu charge) on the immovable property in Gujarat and all movable properties of the Company. 750 Secured Redeemable Non Convertible Debentures with interest @ 11.9% p.a. will be redemeed at par on 5th December 2013. 750 Secured Redeemable Non Convertible Debentures with interest @ 10.2% p.a. will be redemeed at par on 19th December 2011. Term Loan from Banks is secured by way of hypothecation of all movable Plant and Machinery of the Company. Working Capital Loans from Banks are secured by way of first charge on the stock of Raw Materials, Finished Goods, Packing Material, Stock in Process, Bills Receivable and Book Debts and by way of second charge on the entire Plant and Machinery of the Company including Stores and Spares. Further, these loans are secured by way of an Equitable Mortgage on the Land and Building of the Company’s unit at Kondivita, Mumbai. 2. 3. SCHEDULE 4 UNSECURED LOANS Short term Commercial Paper & Others Long term Interest free Sales Tax loan from Government of Maharashtra Foreign Currency Convertible Bonds (US $ 37.2 million (38.9 miliion) Zero Coupon Convertible bonds due in 2012) (During the year Company has bought back bonds of US $1.7 million ($1.1 million) Others TOTAL Amount due within one year Rs 5.86 million (Rs 653.73 million) 350.59 1679.21 354.32 1,982.73 650.00 29.16 2058.96 100.87 3087.92 73 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 5 FIXED ASSETS (Rs in million) GROSS BLOCK Additions / Adjustments 0.57 174.14 77.03 1523.49 5454.63 436.07 230.14 83.31 21.89 8.32 137.59 31.19 2.58 2515.90 370.09 35.41 2850.58 166.20 96.88 278.76 49.82 0.61 327.97 5.80 0.78 6.58 70.45 1195.52 2604.05 269.87 133.26 174.14 131.71 423.75 36.38 11.73 14.62 4.38 32.32 2.11 3.83 Deductions / Adjustments As at 31.3.2010 As at 1.4.2009 Provided during the year Deductions / Adjustments As at 31.3.2010 As at 31.3.2010 As at 31.3.2009 177.40 71.23 1115.12 2547.30 266.49 149.72 DEPRECIATION NET BLOCK PARTICULARS As at 1.4.2009 Freehold Land 177.40 Leasehold Land 77.03 Buildings 1393.89 Plant and Machinery 5063.20 Furniture and Fixtures 404.07 Vehicles 233.03 Capital Expenditure on Scientific Research 5.35 3.07 1.95 0.19 47.65 25.00 1.36 1.44 0.94 0.05 0.99 26.36 2.14 0.45 21.29 0.93 0.50 17.30 1.12 - Buildings 1.44 - Plant and Machinery 42.30 - Furniture and Fixtures 3.07 Assets given on Lease 1.82 1.82 1.82 - Plant and Machinery 1.82 Intangible Assets 0.15 21.12 630.76 1092.16 (40.41) 95.82 20.04 993.01 9808.19 9273.25 (0.17) 36.63 18.69 829.07 143.26 20.00 546.76 3761.09 3169.99 100.28 7.06 82.79 665.50 588.24 29.38 0.02 4.05 80.37 (2.86) 214.16 27.04 625.50 4346.22 3761.09 2927.63 8389.60 2819.13 8331.29 614.91 9.59 367.51 5461.97 704.50 16.31 445.17 5512.16 - Goodwill 847.76 - Computer software 36.31 - Copyrights, Trademarks, etc. 991.93 Total 9273.25 Previous Year 8140.68 Capital work in progress including capital advances TOTAL (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 6 LONG TERM INVESTMENTS (AT COST) I. In Equity Shares (Fully paid) a. Trade : Quoted : G 7,451,540 (7,451,540) Equity Shares of Re 1 each of Vinyl Chemicals (India) Ltd. Goodwill (Net Arising at the time of acquisition of shares) Share of undistributed Profit / losses in previous years Share of Profit / Losses Current Year Total 1 a) 11.79 (9.52) 12.24 23.70 38.21 11.79 (9.52) 8.72 3.52 14.51 G G G b. Non Trade : i) G G Quoted : 3,594 (3,594) Equity Shares of Rs 10 each of Hindustan Adhesives Ltd. 14,400 (14,400 ) Equity Shares of Rs 10 each of Hindustan Organic Chemicals Ltd. 1,674 (837) Equity Shares of Rs 10 each of Reliance Industries Ltd. (earlier : 4,188 Equity Shares of Rs 10 each of Indian Petrochemicals Corporation Ltd. and 837 nos. Bonus Shares received during the year) 222,542 (222,542) Equity Shares of Rs 10 each of Indian Overseas Bank Ltd. 61,900 (61,900) Equity Shares of Rs 10 each of Menon Pistons Ltd. Total 1 b) Total 1 (a) + b (i) [Market Value Rs 87.59 million (Rs 35.34 million)] 0.09 0.72 0.77 0.09 0.72 0.77 G G 2.96 4.38 8.92 47.13 2.96 4.38 8.92 23.43 G ii) G Unquoted 200,200 (200,200) Equity Shares of Rs 10 each of Enjayes Spices & Chemicals Oil Ltd. 121,300 (121,300) Equity Shares of Rs 10 each of Pal Peugeot Ltd. 2,275 (2,275) Equity Shares of Re. 1 each of Himalaya House Co-op Society Ltd. (Cost Rs 2275) 628 (628) Equity Shares of Rs 100 each of Jawahar Co-op Industrial Estate Ltd. 40 (40) Equity Shares of Rs 50 each of Regent Chambers Premises Co-op Society Ltd. (Cost Rs 2000) 25 (25) Equity Shares of Rs 10 each of New Usha Nagar Co-op Housing Society Ltd. (Cost Rs 250) 2,500 (2,500) Equity Shares of Rs 10 Each Of Saraswat Co-Operative Bank Ltd. 10 (10) Equity Shares of Rs 100 each of Taloja CETP Co-op Society Ltd. (Cost Rs 1000) 5.29 1.21 0.06 0.03 6.59 5.29 1.21 0.06 0.03 6.59 G G G G G G G . In Partnership Firm Nitin Enterprise TOTAL - I 53.72 47.77 77.79 75 PIDILITE ANNUAL REPORT 2009-10 (Rs in million) As at 31st March 2010 II. Short Term at cost : In Units of Mutual Fund (Unquoted) G As at 31st March 2009 1,969,358 (Nil) Units of Reliance Medium Term Fund-Retail Plan -Growth Option 2,655,189 (Nil) Units of HDFC-Cash Management Fund-Treasury Advantage Plan-Wholesale-Growth Option 38,055,404 (Nil) Units of Birla Sunlife -Dynamic Fund-Growth option 24,810,772 (Nil) Units of HDFC-High Interest Fund -STP -Growth Option 44,809,008 (Nil) Units of ICICI Prudential Medium Term Premium Plus -Growth Option 23,842,656 (Nil) Units of ICICI Prudential Ultra Short Term Super Premium -Growth Option 17,250,897 (Nil) Units of Reliance Short Term Fund-Retail Plan -Growth Option 25,520,287 (Nil) Units of IDFC-Money Manager Fund-Investment Plan -Institutional Plan B-Growth 15,000,000 (Nil) Units of HDFC FMP 14M March 2010- Growth -Series XII Nil (17,268,327) Units of Prudential ICICI Flexible Income Plan -Daily Dividend Option Nil (400) Units of Rs 70000 each of Infinity Venture India Fund TOTAL - II TOTAL : I + II 37.25 53.56 579.85 450.00 450.00 245.26 300.00 364.75 150.00 2,630.67 2,684.39 6.70 2,677.69 182.59 1.89 184.48 262.27 8.61 253.66 G G G G G G G G G G Less Diminution in value of Investments TOTAL Previous year’s figures are indicated in brackets. (Rs in million) Investments purchased and sold during the year other than shown above : Units of Reliance Medium Term Fund-Retail Plan -Growth Option Units of HDFC-Cash Management Fund-Treasury Advantage Plan-Wholesale-Growth Option Units of ICICI Prudential Ultra Short Term Super Premium -Growth Option Units of Birla Sunlife Short TF-Institutional -Growth Option Units of ICICI Prudential Flex. Inc.Plan-Premium -Growth Units of ICICI Prudential Ultra Short Term Plan-Premium Plus -Growth Units of ICICI Prudential Insititutional Liquid Plan-Growth Units of IDFC-MMF-TP -Super -Institutional Plan C-Growth Units of Birla Sunlife Short term Fund-Institutional -Daily Dividend Reinvestment Option Units of ICICI Prudential Flexible Income Plan-Premium -Daily Dividend Reinvestment Option Units of Reliance Medium Term Fund-Daily Dividend Reivestment Option Units of IDFC-Money Manager Fund-Treasury Plan -Daily Dividend Reinvestment Option Untis of IDFC-MMF-Treasury Plan-Super -Inst. Plan C-Daily Dividend Reinvestment Option Units of IDFC-MMF-Investment Plan-Inst. Plan B-Daily Dividend Reinvestment Option Units of HDFC-CMF-Treasury Advantage Plan-Wholesale-Daily Dividend Reinvestment Option (No. of Units) 27,853,821 32,461,005 2,911,491 53,557,884 3,968,465 18,565,571 1,509,662 33,494,601 99,777,759 98,439,455.84 52,438,351.09 39,902,056.2 23,032,576.77 5,061,965.485 40,940,376.45 Purchase Value 524.21 647.71 29.95 578.33 669.49 190.02 340.00 360.36 998.33 1607.35 896.46 401.83 230.36 50.70 410.69 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 7 CURRENT ASSETS, LOANS AND ADVANCES A Current Assets a. Inventories (As valued and certified by the Management) Consumable Stores and Spares, etc. Raw Materials Goods in Process Finished Goods Traded Goods Packing Materials b. Sundry Debtors (Unsecured) Over six months Considered good Considered doubtful Others, Considered good Less : Provision for doubtful debts c. Cash and Bank Balances Cash on Hand Cheques on Hand Remittances in Transit Bank Balances : With Scheduled Banks : In Current Accounts In Fixed Deposit Accounts Others : In Fixed Deposit with Municipal Co-op.Bank Ltd. [Maximum outstanding during the year Rs 0.03 million (Rs 0.03 million)] 448.52 d. Other Current Assets Interest Receivable Foreign Currency Monetary item Translation Difference Account (Refer Note 7 of Schedule 12) Other Current Assets Claims Receivable B. Loans and Advances (Unsecured, considered good) Advances recoverable in cash or in kind or for value to be received Advance Payment of Taxes (Net of Provisions) MAT Credit Entitlement Loans and Advances to Staff Deposits Balances with Central Excise Department TOTAL 276.80 140.41 311.27 59.80 93.96 112.08 994.32 7432.11 359.35 18.00 120.05 55.89 97.63 137.02 787.94 8286.29 0.14 9.14 42.23 51.51 20.68 164.43 3.00 35.43 223.54 1600.55 0.03 0.03 301.67 4.60 1335.70 88.36 1.56 140.66 1.64 174.58 0.24 103.91 109.77 2855.11 3068.79 109.77 2959.02 171.54 82.90 2704.49 2958.93 82.90 2876.03 21.41 893.09 167.66 1428.65 338.09 129.84 2978.74 20.19 984.11 140.75 1322.37 167.21 163.60 2798.23 77 PIDILITE ANNUAL REPORT 2009-10 (Rs in million) As at 31st March 2010 As at 31st March 2009 SCHEDULE 8 CURRENT LIABILITIES AND PROVISIONS A Current Liabilities Acceptances Sundry Creditors Small and Medium Enterprises Others 166.02 1209.29 1375.31 Dealers’ Deposits Investor Education and Protection Fund shall be credited by the following to the extent required as and when necessary : Unclaimed Dividends and Preference Share Capital Other Liabilities 333.84 160.84 849.11 1009.95 294.23 45.70 27.17 9.84 1931.06 3695.75 10.22 1462.67 2804.24 B Provisions For Gratuity For Leave encashment Dividends: Proposed Dividend Corporate Tax on Dividend 759.20 126.09 885.29 979.65 TOTAL 4675.40 442.87 75.26 518.13 596.78 3401.02 0.18 94.18 7.63 71.02 2009-10 2008-09 SCHEDULE 9 OTHER INCOME Interest received - (Gross) [Tax deducted at source Rs 0.79 million (Rs 0.04 million)] Insurance Claim Received Dividend received On Trade Investments On Units of Mutual Fund 1.19 28.18 29.37 1.07 8.16 9.23 6.57 0.84 11.09 0.28 Export Incentives Profit on sale of Investments Profit on sale of Fixed Assets Miscellaneous TOTAL 71.96 18.48 1.97 206.00 335.19 46.58 5.86 214.15 287.19 (Rs in million) 2009-10 2008-09 SCHEDULE 10 MATERIALS A Raw Materials consumed Opening Stock Add : Purchases 984.11 7,546.41 8,530.52 Less : Closing Stock 893.08 7,637.44 1,116.43 8,108.97 9,225.40 984.11 8,241.29 B Packing Materials consumed 2,409.75 2,157.03 C Cost of Traded Goods Opening Stock Add : Purchases 167.21 1,647.56 1,814.77 Less : Closing Stock 338.09 1,476.68 276.56 1,255.27 1,531.83 167.21 1,364.62 D (Increase) / Decrease in Stocks Closing Stock Goods in Process Finished Goods 167.66 1,428.65 1,596.31 Less : Opening Stock Goods in Process Finished Goods 140.75 1,322.37 1,463.12 (133.19) TOTAL 11,390.68 154.84 1,207.98 1,362.82 (100.30) 11,662.64 140.75 1,322.37 1,463.12 79 PIDILITE ANNUAL REPORT 2009-10 (Rs in million) 2009-10 2008-09 SCHEDULE 11 OTHER EXPENSES Stores and Spares consumed Clearing, Forwarding, Octroi Duty, etc. Power and Fuel Water Charges Employees' Emoluments : [Refer Notes 1 (viii) of Schedule 12] Salaries, Wages, Bonus, Allowances Contribution to Provident and Other Funds Welfare Expenses Rent Rates and Taxes Insurance Licence fees Repairs : Buildings Machinery Others Directors' Fees Advertisement and Publicity Legal, Professional and Consultancy fees Communication Expenses Printing and Stationery Travelling and Conveyance Expenses Bad Debts Provision for Doubtful Debts Processing and Packing Charges Bank Charges Commission and Brokerage Miscellaneous expenses Scientific Research and Development Expenditure [Refer Notes 1(vi) of Schedule 12] Remuneration to Auditors Audit Fees (Including Tax Audit Fees) For Other Services Donations Diminution in value of Investments [Refer Notes 1(vii) of Schedule 12] Foreign Exchange Fluctuation [Refer Note 7 of Schedule 12] Loss on Fixed Assets Sold / Discarded Interest On Term Loan On Debentures Others TOTAL 97.49 933.18 230.67 19.99 93.80 880.61 273.70 18.56 2,359.80 111.21 53.79 2,524.80 182.23 26.42 34.12 3.00 20.93 57.37 30.39 108.69 8.86 717.62 178.20 79.68 30.00 355.34 40.33 40.08 314.09 54.82 106.99 546.09 2.75 2,043.99 107.20 53.51 2,204.70 181.37 23.06 36.31 2.55 23.03 50.11 33.13 106.27 4.51 582.33 260.69 78.90 35.44 368.03 5.08 70.64 313.55 79.70 98.34 310.51 2.86 9.33 1.33 10.66 28.05 72.83 8.27 89.84 165.75 72.95 328.54 7,083.79 11.78 0.89 12.67 31.19 1.80 181.20 5.21 72.91 50.20 237.73 360.84 6,624.42 SCHEDULE 12 NOTES ON ACCOUNTS 1 Significant Accounting Policies: i. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard (AS21) on Consolidated Financial Statements and it comprises of the results of Pidilite Industries Limited (Holding Company) and subsidiary companies viz. Name of Subsidiary Company Fevicol Company Ltd. Bhimad Commercial Co Pvt Ltd. Madhumala Traders Pvt Ltd. Pagel Concrete Technologies Ltd. Nitin Enterprises Pidilite International Pte Ltd. Pidilite Middle East Ltd. Pulvitec do Brasil Industria e Commercio de Colas e Adesivos Ltda Pidilite USA Inc. Jupiter Chemicals (LLC) PT Pidilite Indonesia Pidilite Speciality Chemicals Bangladesh Pvt. Ltd. Pidilite Innovation Centre Pte Ltd. Pidilite Industries Egypt - SAE Pidilite Bamco Ltd. Pidilite South East Asia Ltd. PIL Trading Egypt (LLC) Bamco Supply Services Ltd. Country of incorporation India India India India India Singapore Dubai Brazil USA Dubai Indonesia Bangladesh Singapore Egypt Thailand Thailand Egypt Thailand Proportion of Ownership Interest 100% 100% 100% 75% Subsidiary Subsidiary Subsidiary Subsidiary Partnership firm 100% holding of wholly owned Subsidiary 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 49% Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned Subsidiary Subsidiary of wholly owned subsidiary & Having significant influence As far as possible, the consolidated financial statements are prepared using uniform accounting policies for like transactions & other events in similar circumstances & are presented in the same manner as holding company separate financial statements except as provided under para iv(5), iv(6), iv(e), v(e) and viii(d). ii. General The financial statements are prepared under the historical cost convention, on the basis of a going concern and as per applicable Indian Accounting Standards. The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis. PIDILITE ANNUAL REPORT 2009-10 iii. Revenue Recognition i. Income from sale of goods is recognised upon transfer of significant risk and rewards of ownership of the goods to the customer which generally coincides with delivery and acceptance of the goods sold. Interest income is recognised on accrual basis. Claims which are not of material nature / Insurance Claim etc. are accounted for when no significant uncertainties are attached to their eventual receipt. ii. iii. vi) Dividend is accounted on cash basis. 81 SCHEDULE 12 NOTES ON ACCOUNTS iv. Fixed Assets, Depreciation and Impairment Loss a. b. Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Preoperative expenditure during construction period/trial run : Direct expenses as well as clearly identifiable indirect expenses, incurred on project during the period of construction are being capitalised alongwith the respective assets. The Company provides depreciation as under 1. For assets acquired upto 30th June 1987 on Straight Line Method (SLM) basis, except certain assets for which Written Down Value (WDV) basis is adopted at rates equivalent to the rates specified in the Income-Tax Act, 1961. For assets acquired after 30th June 1987 and before 31st March 1993, on SLM basis at rates specified in Schedule XIV of the Companies Act, 1956. For assets acquired after 31st March 1993, on SLM basis as per new rates prescribed under Schedule XIV vide notification No. GSR 756 (E) dated 16th December 1993 issued by the Department of Company Affairs. For assets costing Rs 5000 or less, depreciation is provided fully. For additions made during the year, depreciation is provided on pro-rata basis. The Goodwill acquired by the Company is amortised over a period of 5 years on SLM basis. In Case of Subsidiaries no goodwill is amortised except Pulvitec do Brasil Industria e Commercio de Colas e Adesivos Ltda where goodwill is amortised over a period of 10 years. The Copyrights, Trademarks, Technical Knowhow, etc. acquired by the Company are amortised over a period of 10 years on SLM basis. In case of subsidiaries, it is not amortised except for Pidilite USA Inc where it is amortised over a period of 15 years. c. 2. 3. 4. 5. 6. 7. d. In case, the recoverable amount of the fixed assets is lower than its carrying amount, provision is made for the impairment loss. The depreciation on fixed assets of the subsidiary companies is provided for on SLM over their estimated useful life at rates permissible under applicable local laws. e. v. Method of Valuation of Inventories a. b. Raw Materials and Packing materials are valued at lower of cost on weighted average basis. Finished goods, including traded goods and Work in progress are valued at lower of cost and net realisable value. Cost (arrived at on weighted average) for this purpose includes direct materials, direct labour, excise duty and appropriate overheads including freight costs upto the ports in respect of finished goods meant for exports. Consumable stores & spares are valued at lower of cost or net realisable value as estimated by the management. Obsolete, defective, unserviceable and slow / non-moving stocks are duly provided for. In case of Subsidiary companies, inventory valuation is as per generally accepted accounting principles of respective countries. c. d. e. SCHEDULE 12 NOTES ON ACCOUNTS vi. Research and Development Expenditure a. b. Capital Expenditure is shown separately in Fixed Assets. Revenue expenses including depreciation except expenditure specifically shown, are charged to respective heads of accounts. vii. Investments a. Long Term Investments are stated at cost. In case there is a diminution of permanent nature in value of Investments (other than long term strategic investment) the same is provided for. i) ii) c. Quoted current investments are stated at the lower of cost and market value. Unquoted current investments are stated at the lower of cost and fair value where available. b. Cost of each investment is arrived at on the basis of the average carrying amount of the total holding of that investment. viii. Retirement Benefits a. Contribution to Provident, Superannuation and Family Pension funds are funded as a percentage of salary / wages. Gratuity liability is funded as per group gratuity scheme of Life Insurance Corporation of India. Leave encashment liability is provided for on the basis of acturial valuation as at the year end. Retirement benefits for the employees in subsidiary companies are governed under applicable local laws. b. c. d. ix. Transactions in foreign currencies a. b. c. Transactions are recorded at the exchange rates prevailing on the date of transaction. Foreign currency designated assets, liabilities and capital commitments are restated at the year end rates. In case of foreign subsidiaries, being non-integral foreign operations, revenue items are consolidated at the average rate prevailing during the year.All assets & liabilities are converted at rates prevailing at the end of the year. Any exchange difference arising out of consolidation is transferred to “Foreign Currency Translation Reserve”. Foreign currency designated assets and liabilities are restated at the year end rates and the resultant gain or loss is taken to Profit and Loss Account except in respect of fixed Assets which is being capitalised (Refer Note 7 of Schedule 12) . d. x. Income Tax Provision for current tax is made on the basis of relevant provisions of the Income Tax Act, 1961 in case of the Holding Company and Income Tax Laws of the respective country in case of the subsidiary companies. The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is virtual / reasonable certainty that these would be realised in future. . 83 PIDILITE ANNUAL REPORT 2009-10 SCHEDULE 12 NOTES ON ACCOUNTS xi. Provisions, Contingent Liabilities and Contingent Assets A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material are disclosed by way of notes to accounts. Contingent assets are neither recognised nor disclosed in the financial statements. xii. In case of Associate where the company directly or indirectly through subsidiaries holds more than 20% of the equity, investment in associate is accounted for using Equity method in accordance with Accounting Standard AS-23 -Accounting for Investment in Associates in consolidated financial statement issued by the Institute of Chartered Accountants of India. The Associate Company considered in the financial statements is Country of incorporation Proportion of Ownership Interest 40.64% Vinyl Chemicals (India) Ltd. India (Rs in million) As at 31st March 2010 2. Contingent liabilities not provided for: i. ii. iii. Guarantees given by Banks in favour of Government and others Guarantees given by Company Disputed liabilities in respect of Income Tax, Sales Tax, Central Excise and Customs (under appeal) iv. Claims against the company not acknowledged as debts 81.44 76.07 50.25 647.00 323.80 56.32 565.30 112.25 As at 31st March 2009 SCHEDULE 12 NOTES ON ACCOUNTS 3 Segment reporting INFORMATION ABOUT BUSINESS SEGMENTS Business Segments Consumer & Bazaar Products Industrial Products Others (Rs in million) Total REVENUE External Sales Inter Segment Revenue (at cost plus 10%) Total Revenue RESULTS Segment Results Unallocated Corporate Expenses Unallocated Corporate Income Operating Profit Interest Expenses Interest / Dividend Income Income Tax (Provision for Taxation and Deferred Taxation) Net Profit OTHER INFORMATION Segment Assets Unallocated Corporate Assets Total assets Segment Liabilities Unallocated Corporate Liabilities Total liabilities Capital Expenditure Unallocated Corporate Capital Expenditure Depreciation 429.09 (363.31) 69.27 (73.34) 38.57 (41.02) 191.85 (982.92) 40.92 (101.89) 15.39 (10.21) 3093.08 (2,419.96) 736.78 (477.54) (187.29) 5702.81 (5,831.96) 2053.81 (1,898.45) 380.47 (499.46) 8,137.09 (8,229.87) 10362.31 (8,641.37) 18,499.40 (16,871.24) 3,829.86 (3,084.79) 5950.10 (6,845.44) (9,930.23) 248.16 (1,095.02) 491.10 (1,118.91) 536.93 (477.67) PIDILITE ANNUAL REPORT 2009-10 17,415.31 (15,129.64) 19.55 (16.78) 17,434.86 (15,146.42) 3,712.33 (2,305.62) 4,343.30 (3,801.70) 309.60 (306.40) 4,652.90 (4108.10) 914.63 (531.15) 157.00 (931.90) 19.30 (535.50) 176.30 (1,467.40) (125.74) (92.78) 21,915.61 (19,863.24) 348.45 (858.68) 22,264.06 (20,721.92) 4,501.22 (2,929.55) 1262.06 (1,412.84) 164.27 (98.94) 3,403.43 (1,615.65) 328.54 (360.84) 35.94 (20.32) 408.13 (166.73) 2,702.70 (1,108.40) 9,779.96 85 SCHEDULE 12 NOTES ON ACCOUNTS INFORMATION ABOUT GEOGRAPHICAL SEGMENTS (Rs in million) India GEOGRAPHICAL SEGMENTS 2009-10 Sales Revenue Carrying amount of Segment Assets Additions to Fixed Assets and Intangible Assets Notes: SEGMENT INFORMATION Business Segment The Company is operating into three business segments: Consumer & Bazaar Products, Industrial Products and Others. This segmentation is based around customers. . Consumer & Bazaar Products consist of mainly Adhesives, Sealants, Art Materials and Construction Chemicals. Industrial Products consists of Organic Pigments, Industrial Resins and Industrial Adhesives. Others consist of VAM manufacturing unit of Vinyl Chemicals ( India) Ltd. demerged into the Company wef 1st April 2007. Geographical Segment For the purpose of geographical segment the sales are divided into two segments : Sales within India and Sales to other countries. 17,395.11 17,821.53 689.27 2008-09 15,695.62 15,574.65 1,746.17 2009-10 4,520.50 677.87 49.99 2008-09 4,167.62 1,296.59 467.76 2009-10 21,915.61 18,499.40 739.26 2008-09 19,863.24 16,871.24 2,213.93 Other Countries Total 4. A. Deferred Taxation In respect of Holding Company: Out of the net deferred tax liability of Rs 415.36 million as at 31st March, 2010, the major components of deferred tax balances are set out below : (Rs in million) Upto 31 March 2009 Deferred Tax Liability i) Difference between Accounting and Tax Depreciation (Cumulative) 506.10 (5.38) 500.72 st During the year 2009-10 Carried as at 31st March 2010 Deferred Tax Assets i) Leave Salary & Others 65.25 20.11 85.36 Net Deferred Tax Liability The above working of deferred tax is based on assessment orders where assessments are complete and on return of income in other cases. 440.85 (25.49) 415.36 SCHEDULE 12 NOTES ON ACCOUNTS B. In respect of Subsidiaries: (Rs in million) Upto 31 March 2009 1. Chemson Asia Pte Ltd. Accounting profit / (loss) Income Tax at statutory rate Timing Difference Nonallowable Items Deferred Tax Assets not provided 2. PT Pidilite Indonesia Out of the net deferred tax asset of Rs (1.15) million as at 31st March 2010, the major components of deferred tax balances are set out below : Deferred Tax Liability i) Difference between Accounting and Tax Depreciation (Cumulative) Deferred Tax Assets i) ii) Leave Salary Others 3.12 6.74 9.86 Net Deferred Tax Asset 3. Pidilite USA, Inc. Current Deferred Tax Asset Account Receivable Accured Vacation pay Inventory Current Deferred Tax Asset , net Less:- Valuation Allowance Current Deferred Tax Asset, net Non Current Deferred Tax Asset Net operating losses Intangibles other than goodwill Goodwill Less:- Valuation Allowance Non Current Deferred Tax Asset , Net Non Current Deferred Tax Liability Goodwill Property , Plant and equipment Non Current Deferred Tax Liability Non Current Deferred Tax Asset 4. Pidilite Industries Egypt - SAE Deferred Tax Liability Deferred Tax Asset Net Deferred Tax Asset (1.24) (1.24) (1.24) (1.24) 3.80 8.44 3.80 0.02 (4.96) 0.02 3.82 3.47 3.82 PIDILITE ANNUAL REPORT 2009-10 st During the year 2009-10 Carried as at 31st March 2010 (1.19) (0.20) (0.16) 0.36 1.19 0.20 0.16 (0.36) - 2.60 5.97 8.57 8.57 0.52 0.77 1.29 (1.29) (9.86) 2.50 2.37 9.99 14.86 (14.86) 87.73 (83.09) 4.64 (0.62) (1.02) 5.34 3.7 (3.7) (13.29) 0.92 8.01 3.19 (1.17) 1.87 1.35 15.33 18.55 (18.55) 74.44 0.92 8.01 (79.89) 3.47 87 SCHEDULE 12 NOTES ON ACCOUNTS 5. Related Party Disclosures Related Party Disclosures as required by AS -18, “Related Party Disclosures”, are given below : i) Relationships a. b. c. Vinyl Chemicals (India) Ltd. Kalva Marketing and Services Ltd. Parekh Marketing Ltd. Substantial Interest in Voting Power (Associate) Significant Influence Significant Influence ii) Key Management Personnel Sarva Shri M B Parekh - Managing Director, N K Parekh - Jt Managing Director, A B Parekh and A N Parekh - Wholetime Directors Shri V S Vasan - Wholetime Director (for the period 1st April 2009 till 21st October 2009). Shri J L Shah - Wholetime Director (From 21 st October 2009) iii) Other Directors Sarva Shri B K Parekh, S K Parekh, R M Gandhi, N J Jhaveri, B S Mehta, R Kapoor, Y Mahajan, B Puri and D. Bhattacharya iv) Transactions with Related Parties during the year ended 31st March 2010 are as follows : (Rs in million) Nature of Transaction a. b. Sales and Related Income Other Income (including Electricity Generation) Purchases and Other Related Services Remuneration to Directors: - Sitting Fees - Managing Director / Jt. Managing Director - Wholetime Directors - Commission to Non Executive Directors 0.35 (0.15) 95.28 (66.44) 41.80 (20.36) 2.70 (2.40) e. f. g. h. l. j. Investment in Share Capital Loans Given / (repayment of loan received) Purchase of Fixed Assets Sale of Fixed Assets Interest Paid / (Received) Reimbursement of expenses made (-) (-) (-) (-) (-) 0.79 (1.45) (-) (-) (0.53) (-) (-) 0.07 (7.13) (-) (-) (0.72) (-) (-) (-) 0.35 (0.15) 95.28 (66.44) 41.80 (20.36) 2.70 (2.40) (-) (-) (1.25) (-) (-) 0.86 (8.58) Remuneration to Directors Parekh Vinyl Chemicals Kalva Marketing Marketing Ltd. (India) Ltd. and Services Ltd. 427.65 (505.90) 0.50 (-) c. d. (-) (-) 1026.35 (-) (-) Total 427.65 (505.90) 0.50 0.00 1026.35 (Rs in million) Nature of Transaction k. l. m. n. Reimbursement of expenses received Reimbursement of expenses made Bad Debts Written Off Outstanding Balances : - Debtors - Creditors - Outstanding Payable (Net of receivable) 119.29 (114.97) 0.28 (1.61) (119.01) ((113.36)) (35.60) 99.37 (64.02) 99.37 (28.42) (-) (-) (-) 119.29 (150.57) 99.65 (65.63) (19.64) ((84.94)) Remuneration to Directors Parekh Vinyl Chemicals Kalva Marketing Marketing Ltd. (India) Ltd. and Services Ltd. (0.61) (-) (-) 0.62 (0.75) (-) (-) (-) (-) (-) Total 0.62 (1.36) (-) (-) 6. Earnings Per Share As at 31st March 2009 Weighted Average no of shares used in computing Basic Earnings per share Add: Weighted average Potential no of equity shares that could arise on exercise of option on Zero Coupon Convertible Bonds from 16th Jan 2008 to 1st December 2012 506134612 14300428 520435040 2,769.59 5.47 5.32 As at 31st March 2008 **506134612 14953942 521088554 1,118.06 2.23 2.16 Weighted Average no of shares used in computing Diluted Earnings per share Net Profit after tax including prior year Tax Provision written back (Rs in million) Basic Earnings Per Share * (Rs) Diluted Earnings Per Share * (Rs) * Equity shares of face value of Re 1 each. ** Adjusted for bonus share issued during the year. 7. The Company had in March 2009 excercised the option permitted by the Central Government under Notification No G.S.R 225 ( E) to treat foreign exchange difference relating to assets as adjustments in the carrying value of such depreciable assets and amortise other differences of a specified nature over the term of the relative item. Accordingly for the year ended 31st March 2010, the Company has credited the gain of Rs 123.64 million to the carrying cost of the depreciable assets and credited Rs 145.07 million to Foreign Currency Monetary Item Translation Account. Out of the said Foreign Currency Monetary Item Translation Account Rs 10.20 million has been amortised in the current year ended 31st March 2010. Figures in bracket indicate previous year’s figures. Previous year’s figures have been regrouped / rearranged wherever necessary and strictly not comparable as current year figures consist of Seventeen subsidiaries as against Sixteen subsidiaries in previous year. Signatures to Schedules 1 to 12 FOR AND ON BEHALF OF THE BOARD B K PAREKH Chairman S K PAREKH Vice Chairman PIDILITE ANNUAL REPORT 2009-10 8. 9. Mumbai Date : 19th May 2010 P C PATEL President & Secretary M B PAREKH Managing Director 89 Consolidated Cash Flow Statement For The Year Ended 31st March 2010 (Rs in million) 2009-10 A CASH FLOW FROM OPERATING ACTIVITIES Net Profit before taxation Adjustment for Depreciation Additional /(Reversal) Provision for Diminution in value of Investments Interest paid Dividend received Interest received (Profit) / Loss on Sale of Investment (Profit) / Loss on Sale of Assets Foreign Exchange loss on ECB / FCCB Misc Expenditure Written Off Increase in Foreign Currency Translation Reserve Bad debts w/off / provision for doubtful debts 665.50 (1.91) 328.54 (29.37) (6.57) (18.48) 6.30 (4.12) (107.56) 80.41 912.74 Operating Profit before Working Capital changes Working Capital changes : Inventories (Inc) / Dec Debtors (Inc) / Dec Loans and Advances, (Inc) / Dec Current Liabilities Inc / (Dec) (180.51) (163.40) 122.61 902.47 681.17 Cash generated from operations Interest received Subsidy Received Interest paid Income Tax paid (Net) 6.57 1.77 (328.54) (694.55) (1,014.75) Net Cash flow from Operating Activities 3,689.99 4,704.74 11.09 (360.84) (105.52) (455.27) 2,369.94 190.02 (295.26) 36.01 286.89 217.66 2,825.21 4,023.57 3,110.83 588.24 1.80 360.84 (9.23) (11.09) (0.65) 149.73 0.26 176.80 75.72 1,332.42 2,607.55 1,275.13 2008-09 Consolidated Cash Flow Statement For The Year Ended 31st March 2010 (Rs in million) 2009-10 B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Sale of Investments Dividend received Net Cash flow from Investing Activities (864.63) 10.88 (10,518.12) 8,138.18 29.37 (3,204.32) 485.67 C CASH FLOW FROM FINANCING ACTIVITIES (Repayment) / Increase of long term borrowings (Repayment) / Increase of long term borrowings - Bank (Decrease) / Increase in Short term Borrowings - Bank (Repayment) / Increase of Short Term Borrowings - Foreign Currency Loan (Redemption) / Issue of Foreign Currency Convertible Bonds (Redemption) / Issue of Equity Shares (Redemption) / Issue of secured Redeemable Non Convertible Debentures (Repayment) / Increase of Short Term Borrowings - Others Dividend paid (Including Dividend Tax, where applicable) Net Cash Flow from Financing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents as at 1st April 2009 Cash and Cash Equivalents as at 31st March 2010 1,600.55 448.52 (1,152.03) AS PER OUR ATTACHED REPORT OF EVEN DATE (3.73) (263.14) (693.96) (86.64) (71.71) (518.52) (1,637.70) (1,152.03) 1,718.47 1,600.55 (117.92) (1.20) (418.18) (370.67) (471.79) (43.85) (28.75) 1,500.00 80.86 (512.74) (266.32) (117.92) (2,025.20) 13.98 (2,125.11) 1,905.56 9.23 (2,221.54) 148.40 2008-09 FOR AND ON BEHALF OF THE BOARD For HARIBHAKTI & CO. Chartered Accountants B K PAREKH Chairman CHETAN DESAI Partner Membership No. 17000 Mumbai Date : 19th May 2010 P C PATEL President & Secretary S K PAREKH Vice Chairman M B PAREKH Managing Director 91 PIDILITE ANNUAL REPORT 2009-10 Information on Subsidiary Companies (As directed by Central Government Order under Section 212(8) of the Companies Act, 1956) Names of the subsidiaries Pidilite International Pte Ltd.* Pidilite Middle East Ltd.* Jupiter Chemicals (L.L.C.)* Pidilite Speciality Chemicals Bangladesh Pvt Ltd.* Pidilite Bamco Ltd.* Fevicol Company Ltd. PT Pidilite Indonesia* Pidilite USA Inc* IDR 8,696,784,900 42.61 (5,078,541,808) (24.88) 4,093,159,080 20.06 474,915,988 2.33 6,222,224,956.00 30.49 2,608,618,626.00 12.78 1,907,627,615.26 9.35 700,991,010.74 3.43 0.00490 US Dollars 14,380,000 646.74 (6,056,049) (272.37) 16,762,654 753.90 8,438,703 379.53 24,758,619.64 1,113.51 (1,019,189.12) (45.84) 30,369.00 1.37 (1,049,558.12) (47.20) 44.97 1 2 Currency Capital Foreign Currency Indian Rs 0.50 - Singapore Dollars 23,325,088 749.87 (2,373,841) (76.32) 21,002,943 675.22 51,696 1.66 257,784.00 8.29 AED 27,431,411 335.92 (219,286) (2.69) 27,282,125 334.09 70,000 0.86 140.00 (40,160.00) (0.49) (40,160.00) (0.49) 12.25 AED 300,000 3.67 (12,732,949) (155.93) 21,738,598 266.21 34,171,546 418.46 15,368,468.44 188.20 (5,142,136.46) (62.97) (5,142,136.46) (62.97) 12.25 Taka 218,297,435 141.46 698,441 0.45 260,520,264 168.82 41,524,388 26.91 62,136,621.18 40.26 659,186.27 0.43 659,186.27 0.43 0.65 Baht 25,881,800 35.92 (444,384) (0.62) 83,626,076 116.07 58,188,660 80.77 122,736,064.38 170.36 (2,932,548.69) (4.07) (2,932,548.69) (4.07) 1.39 (includes Share Indian Rs application Money) in Million 3 Reserves Foreign Currency Indian Rs in Million 4 Total Assets Foreign Currency Indian Rs in Million 5 Total Liabilities Foreign Currency Indian Rs in Million 6 Investments (except in case of subsidiaries) 7 Turnover & Other Income Foreign Currency Indian Rs in Million Foreign Currency Indian Rs in Million 8 Profit/(Loss) Before Taxation Foreign Currency Indian Rs in Million 9 Provision For Tax (including Deffered Tax) 10 Profit/(Loss) After Taxation Foreign Currency Indian Rs in Million Foreign Currency Indian Rs in Million 11 Proposed Dividend Foreign Currency Indian Rs in Million 12 Exchange Rate as on 31st March 2010 (0.19) 0.31 0.01 - (2,064,894.13) (0.26) (66.38) - - (2,064,894.13) (0.26) (66.38) 32.15 * Financial statements of these Foreign Subsidiaries have been converted in to Indian Rupees at rates prevailing as on 31st March 2010. Information on Subsidiary Companies (As directed by Central Government Order under Section 212(8) of the Companies Act, 1956) Names of the subsidiaries Pulvitec do Brasil Industria e Commercio de Colas e Adesivos Ltda* Pidilite Industries Egypt - SAE* PIL trading Egypt (L.L.C.)* Pidilite Innovation Centre Pte Ltd.* Madhumala Traders Pvt Ltd. Pidilite Southeast Asia Ltd.* Bamco Supply and Services Limited* Pagel Concrete Technologies Pvt Ltd. EGP 51,000 0.42 (184,166) (1.50) 3,665,211 29.93 3,798,377 31.02 3,463,461.96 28.29 (184,166.31) (1.50) Indian Rs 1.00 (4.28) 0.08 3.36 0.03 0.01 (0.01) Bhimad Commercial Co Pvt Ltd. Indian Rs 0.10 12.17 20.82 8.55 20.81 4.50 4.49 - 1 2 Currency Capital Foreign Currency Singapore Indian Rs Dollars 995,155 - EGP 25,928,495 211.75 (6,247,726) (51.02) 21,187,123 173.03 1,506,353 12.30 - Brazilian Reais 34,849,444 878.53 (10,354,010) (261.02) 35,474,851 894.30 10,979,417 276.78 - Baht 4,000,000 5.56 (4,140,775) (5.75) 537,299 0.75 678,073 0.94 - Baht 1,000,000 1.39 1,223,088 1.70 7,267,485 10.09 5,044,397 7.01 - (includes Share Indian Rs application Money) in Million 3 Reserves Foreign Currency Indian Rs in Million 4 Total Assets Foreign Currency Indian Rs in Million 5 Total Liabilities Foreign Currency Indian Rs in Million 6 Investments (except in case of subsidiaries) 7 Turnover & Other Income Foreign Currency Indian Rs in Million Foreign Currency Indian Rs in Million 8 Profit/(Loss) Before Taxation Foreign Currency Indian Rs in Million 9 Provision For Tax (including Deffered Tax) 10 Profit/(Loss) After Taxation Foreign Currency Indian Rs in Million Foreign Currency Indian Rs in Million 11 Proposed Dividend Foreign Currency Indian Rs in Million 12 Exchange Rate as on 31st March 2010 31.99 (185,818) (5.97) 1,577,875 50.73 768,538 24.71 774,501.94 24.90 0.10 12.16 20.97 8.70 20.94 4.50 - 1,957,322.11 45,258,249.98 15.99 (3,331,900.91) (27.21) 1,140.93 (297,695.46) (7.50) 88,753.26 11,156,053.34 0.12 (4,005,078.30) (5.56) 15.49 890,452.90 1.24 (153,930.84) (4.95) 4.49 - - - (4,005,078.30) (5.56) - 139,361.24 0.19 751,091.66 1.04 - (184,166.31) (1.50) - - - - (3,331,900.91) (297,695.46) 4.49 - (0.01) - (153,930.84) PIDILITE ANNUAL REPORT 2009-10 (4.95) 32.15 4.49 - (27.21) - (7.50) - - 8.17 25.21 1.39 1.39 8.17 * Financial Statements of these Foreign Subsidiaries have been converted in to Indian Rupees at rates prevailing as on 31st March 2010 93 Notes Notes 95 PIDILITE ANNUAL REPORT 2009-10 Pidilite has been conducting an International Art and Craft Contest for the last 4 years covering various schools and participation of over 5 million students from India and other countries. Sargent Art Online Art Contest is held in USA in partnership with the Art education association of the respective states. Entries are invited from seven different states. Winners get a free trip with their art teacher and one parent to New York. The contests provide an excellent platform to the students to explore their creativity and to showcase their talent. Top, Bottom L & R - IACC contest held in Goa, India IACC contest held in Egypt IACC contest held in Egypt IACC contest held in Egypt Mega Drawing Competition in Indonesia Selected contestants of the Sargent Art Online Art Contest Pidilite Industries Limited Registered Office Regent Chambers, 7th Floor Jamnalal Bajaj Marg 208 Nariman Point Mumbai 400 021 www.pidilite.com