Annual Report 2015-16 Creativity has the ability to add magic to the world and make life joyful like few other things can. By helping people unleash their creativity to the fullest, our products manifest beauty and open up unlimited possibilities. "e Sculptoonist RANJAN KAPUR What began as a fascination with ready-made M-seal Ganesha idols has grown into a healthy obsession for Mr. Ranjan. Malleable when so and hard when dry, M-seal has enabled him to sculpt the quirky gurines he lovingly calls ‘Sculptoons’, each one proudly bearing a unique name and identity too! Craing the everyday BHAVANA MISHRA Ex-chef and hospitality trainer Bhavana initially took up art as a hobby, and has never looked back since. She abhors wastage, which is why she uses her creativity and the brilliant shades and viscosity of Fevicryl to give old utensils and everyday kitchen products a brand new lease for life. Educate to elevate PURNIMA SAMPAT As an art educator, Purnima strives to help people of all age groups reach their full creative potential. By encouraging creative expression and experimentation, she passionately transforms her students from beginners to masters. And they, in turn, transform canvases into masterpieces! Creation is liberation ANVITA SHAH & JANINE DOCTOR Although Anvita and Janine have been exposed to the contemporary digital world, they are both far more drawn to the charm of the traditional, hands-on approach to art; it feels more real and personal. And Pidilite’s products serve as the perfect outlets for creative expression, experimenta- tion and exploration. Handmade art from the heart LUISA & HERVÉ From beautiful jewellery and vases to lamps and wall art, Luisa and Hervé work in tandem with local villagers to create hand-made paper items. Born out of a simple idea, Auroville Papers uses passion for paper, unrestrained creativity and Fevicol for binding so as to empower locals and contribute to their well-being. Of expression & creation RAJASHREE THAKKAR Adept at 300 art and cra! forms from across the globe, Rajashree believes that art isn’t about a speci"c form; it’s about creativity. Dedication, an impressive repertoire, contemporary teaching techniques and a host of Pidilite products have enabled her to nurture the creative artist within many a child. Little pieces make big dreams NITA JOSHI Post exiting the ad-mad world, Nita took up mosaic art as a hobby and felt an instant connection. Aer exhibiting her works she formally studied the art form in Italy. Today she creates beautifully intricate mosaic work and sculptures using a range of Pidilite products like Fevicol, M-seal, Fevikwik and Dr. Fixit Grout. Putting the ‘I’ in creative PRASOON PANDEY A creative maverick, Prasoon believes that creativity is synonymous with individuality. He always aims to do things di!erently, shunning any form of standardization in design. He is at his happiest "xing things and resurrecting old and discarded objects with the aid of Pidilite products like M-seal, Fevikwik and Fevicol. Company Information Board of Directors M B Parekh Ranjan Kapur Uday Khanna Executive Chairman Director Director N K Parekh Sanjeev Aga Meera Shankar Vice Chairman Director Director Bharat Puri A B Parekh Sabyaschi Patnaik Managing Director Whole Time Director Whole Time Director B S Mehta A N Parekh Vinod Dasari Director Whole Time Director Director (wef 01.09.2015) Corporate Office Registrar & Transfer Agent Solicitors & Advocates Bankers Ramkrishna Mandir Road TSR Darashaw Limited Wadia Ghandy & Co Indian Overseas Bank Off Mathuradas Vasanji Road 6-10, Haji Moosa Patrawala Corporation Bank Andheri (E), Mumbai 400059 Ind. Estate 20, Dr. E Moses ICICI Bank Auditors Road, Mahalaxmi HDFC Bank Mumbai 400 011 Deloitte Haskins & Sells Citibank N.A. Registered Office Standard Chartered Bank PLC. Regent Chambers Company Secretary Internal Auditors 7th Floor Jamnalal Bajaj Marg 208, Nariman Point Savithri Parekh Mahajan & Aibara Mumbai 400 021 Chief Financial Officer Pradeep Jain (wef 11.01.2016) contents 10 12 19 20 Management Economic Financial Company Discussion and Value Added Charts Information Analysis (EVA) 22 24 32 36 10 Years Directors’ Social & Annexures to Financial Report Community the Directors’ Performance Initiatives Report 56 62 68 69 Balance Business Auditor’s Sheet Pro!t & Loss Responsibility Report Account Report 70 106 108 117 Notes Cash Flow Statement Corporate Information for Governance Report Shareholders & Compliance Certi!cate 2015-16 119 2015-16 Consolidated Financial Statements PIDILITE ANNUALANNUAL REPORTREPORT 11 Management Discussion & Analysis Standalone Net sales of the Company grew by 7.6%. Financials “EBITDA” (earnings before interest, taxes, depreciation, amortisation, exceptional items and foreign exchange differences) excluding non-operating income grew by 46.8%. Non-operating income was marginally higher than last year. Based on an independent valuation, the Company made an impairment provision of ` 270 million towards its investment in Pulvitec, the Brazilian subsidiary. Consequently Profit before Tax grew by 51.6% and Profit after Tax grew by 40.1%. Consolidated On a consolidated basis, net sales grew by 10.8%. Financials The performance of overseas subsidiaries has shown improvement as compared to the previous year. While aggregate sales of overseas subsidiaries grew by 18.9%, aggregate profit before tax stood at ` 226.8 million compared to a loss of ` 20.2 million in the previous year. New Initiative As part of the transition process, “Project Runway” was initiated with a leading global management consultancy firm. The objective being: preserve “what’s working well”, drive growth across businesses and address chokepoints and create strong platform for future growth. The organisation structures of Business Divisions are also being revisited to bring in alignment with the business strategy. Performance by Adhesives & industry segment Sealants 53 Construction/ 19 Paint Chemicals Art & Cra! Material and Others 11 (Business segments %) Industrial Adhesives, Resins & Others 11 Organic Pigments and Preparations 6 Consumer & Bazaar Products Industrial Products Branded Consumer & Bazaar Industrial Products contributed 17% Products Segment contributed 83% of the total sales of the Company and of the total net sales of the Company grew at slower rate of less than 1%. and grew by 8.7%. Profit before interest and tax for the Net sales of branded Adhesives segment grew by 58.9% due to lower and Sealants grew by 13.7% and input costs. contributed 53% of the total sales “Others”, largely comprises of the Company. Construction and manufacture and sale of Speciality Paint Chemicals grew by 1.4% and Acetates namely iso propyl acetate. Art & Craft Material and other As mentioned in last year’s report, products grew by 0.5%. the VAM plant has been modified to Consumer & Bazaar Product sales make a range of Speciality Acetates have grown at a CAGR of 15% over as import of VAM continues to the last 5 years. remain more viable as opposed to Profit before interest and tax for in-house manufacture. #e plant the Consumer & Bazaar segment now also manufacturers Di-isopropyl 2015-16 increased by 43.9 %. Ether (DIPE). The technology for these products has been indigenously developed and these products are gaining acceptance with customers. PIDILITE ANNUAL REPORT 13 Advertising Campaigns & Communications Fevicol’s new ‘Dahi Handi’ TV advertisement reinforced the brand promise of ‘The Strongest Bond’, which is characterized by several-storey high human pyramid built during the ‘Dahi Handi’ celebrations. The advertisement was launched in digital space followed by television launch across major channels. On the day of the digital preview, it created 78 million impressions on Twitter, generated 10,000 tweets and #StrongestBond went on to trend at No.2 position. The TV advertisement garnered a total of 2.4 million views on Facebook Fevikwik launched its new ‘Pyaun Pyaun’ multimedia and YouTube. marketing campaign across TV, radio and digital with a humorous take on different scenarios from the life of a simple man. The film aimed at broadening the usage of Fevikwik to all kinds of common items such as footwear, mug, spectacles and toys. The digital launch of TV advertisement garnered 1.1 million views on Facebook and YouTube. The Company continues to drive innovation through its New Product Launches new product launches, sharper consumer insights and advanced technology. Fevicryl Liquid Fevistik + Highlighter Roff Tile Bonder is an M-seal Wet Set is an Embroidery enables is a combination of two economical and easy to HSR[\SXWW\ZKLFKQRW users to create utility features for use on-site mix used for RQO\KDUGHQVXQGHUZDWHU embroidery-like effect, FROOHJHJRHUVDQG\RXQJ À[LQJDOOW\SHVRIWLOHVRQ but also effectively bonds and is as easy to use as adults – Fevistik and a conventional cement bed. WRDGDPSVXUIDFHZKLFK DSHQ +LJKOLJKWHU PD\EHVXEPHUJHG in water. Digital Fevikwik launched a digital campaign in Kerala with an Fevicol DesiDesigngn Ideas was launched on the digital platform innovative voice-controlled online boat race contest whereinrein with a new website and a mobile applicatioapplication. This website the fastest participants stood a chance to win exciting prizes connects home-owners to professionals like Interior such as mobile phones. The campaign was supported by RJ Designers and Contractors. Currently the website has activations on radio and extensive on-ground visibility. This registrations of 10,000 Interior Designers and 15,000 was the first of its kind digital campaign which made use of Contractors and houses 50,000 design ideas. sound-based technology. Awards The Company received the ‘Most Promising Company of the Year’ at the CNBC-TV18, 11 th India Business Leader Awards (IBLA). ‘The Fevicol Room’ at Lalbaugcha Raja won the Silver at the Abby Awards 2016 in the Events and Experiential Public Relations category. ‘Kwik Kwik Fevikwik’, the digital boat race contest won the Bronze at the Abby Awards 2016 in the Online Games category. Fevikwik ‘Pyaun Pyaun’ radio campaign won a Bronze at the Golden Mikes 2016 in Best Use of Branded Content/ Sponsorship on Radio in Effectiveness category.