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UPL Ltd.

BSE: 512070 Sector: Agri and agri inputs
NSE: UPL ISIN Code: INE628A01036
BSE 00:00 | 24 Apr 2020 UPL Ltd
NSE 05:30 | 01 Jan 1970 UPL Ltd

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OPEN 346.90
PREVIOUS CLOSE 348.55
VOLUME 120637
52-Week high 709.25
52-Week low 240.30
P/E 50.83
Mkt Cap.(Rs cr) 25,672
Buy Price 336.00
Buy Qty 5.00
Sell Price 336.00
Sell Qty 70.00
OPEN 346.90
CLOSE 348.55
VOLUME 120637
52-Week high 709.25
52-Week low 240.30
P/E 50.83
Mkt Cap.(Rs cr) 25,672
Buy Price 336.00
Buy Qty 5.00
Sell Price 336.00
Sell Qty 70.00

UPL Ltd. (UPL) - Director Report


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Company director report

To

The members of

UPL Limited

Your Directors have pleasure in presenting their report and audited accounts for theyear ended on 31st March 2019.

FINANCIAL RESULTS

(H in crore)

Consolidated Standalone
Current Year Previous Year Current Year Previous Year
Total Revenue 22077 17920 9220 7809
Earnings before interest tax depreciation amortisation exceptionals prior period adjustments and minority interest 4053 3919 1398 1384
Depreciation/amortization 969 675 724 666
Finance Cost 963 783 185 135
Exceptional items 451 63 4 7
Profit/(Loss) from Associates 14 (93)
Profit before tax 1684 2305 486 576
Provision for taxation
Current tax 442 311 83 180
Adjustments of tax relating to earlier years (4) (79) (3) (83)
Deferred tax (273 43 1 (69)
Profit after tax
Minority interest 1519 2030 404 548
72 8
Net profit for the year 1447 2022 404 548

OPERATIONAL PERFORMANCE

a) The Company ended the year with growth in revenues of 14%. This growth comprised of7% growth in volumes 4% growth in price and favorable exchange impact of 3%. Performancehighlights by region are as follows:-In India the growth in sale of crop protectionproducts was 4%. Rainfall in India during last year was below average (91% of long termaverage) and less than the forecast made. The country experienced fifth straight year ofless than normal rains.

Apart from deficit in rainfall the problems for farm sector were aggravated on accountof erratic rains. In some parts of the country there were heavy floods resulting in lossof life crops and property. The affected states were mainly Madhya Pradesh UttarPradesh Bihar and Jharkhand.

With less rains the rabi season was also not very encouraging. In spite of suchdifficult situation in the country the Company has achieved revenue growth of 4%. Thegrowth was observed in key insecticides and herbicides.

The Company launched a few non-selective herbicides during the year. The Company’sinitiative of Adarsh Kisan Centre expanded to more areas and the farming communityappreciated the same.

In Latin America the Company’s revenue grew by 25% while the crop protectionindustry grew by 11% in CY2018. This is a significant achievement considering that Braziland some of the other Latin American countries faced political and economic uncertainties.The growth was across all key product segments notably Sperto and Unizeb line of productsof the Company. These products are very well accepted in these countries.

In North America the herbicide portfolio recorded good growth and has been successfulin addressing the issue of weed-resistance. The market sentiment was adversely impacteddue to trade war between China and USA. The Company’s efforts to improve sales is nowbearing fruit after good rains returned last year in USA.

As indicated in the last Annual Report the European market has begun improving.Southern Europe witnessed wet weather resulting in growth in sale of fungicides. Also thesugar beet season has been good and this has driven sales of herbicides and fungicides.

As regards rest of the world the revenue growth has been 6%. Africa and South EastAsia countries have been the growth drivers in this region. The herbicide sales areimproving in these markets. However in Australia the extended drought impacted sales.

ACQUISITION OF ARYSTA LIFESCIENCE

During the year the Company through its subsidiary UPLCorporationLimitedinMauritiusacquiredArystaLifeScience.

Arysta had a turnover close to US$ 2 billion. It too is a global provider of innovativecrop protection solutions including bio-solutions and seed treatment. Further there isminimal overlap in the product portfolios of UPL and Arysta. The product portfolios ofboth companies are complementary leading to significant cross-selling opportunities. Interms of regional presence Arysta’s stronger presence in Africa and Eastern Europemeans that the combined entity will be able to offer a wide basket of solutions forvarious raw crops and specialty crops across a broad swathe of countries. This willcomprise of crop protection products bio-solutions and seed treatment products. This willencompass all aspects of crop life cycle starting from seed up to post harvest. Thisacquisition will result in enhanced R&D capabilities for the group.

The acquisition was made for US$ 4.2 billion. This was funded through a combination offresh equity and debt at UPL Corporation level. The debt of US$ 3 billion was provided bya syndicate of banks. The Company obtained all the regulatory approvals necessary tocomplete the acquisition in a period of six months.

With this acquisition the Company will be among top five global crop protection productcompanies.

FUTURE OUTLOOK

We expect the global crop protection industry to generate higher volumes in 2019supported by improvement in prices. UPL is ideally positioned to take advantage of theseupsides. The acquisition of Arysta LifeScience is opportune in that sense. Arysta bringswith it a vast marketing network multiple distribution channels access to newer marketsa much wider and complementary product portfolio making the future of the combinedCompany very bright. Arysta’s strong presence in fast growing segments likebio-solutions and seed treatment will ensure that the Company is future ready. The Companyhas established its brand image in the market as a trusted supplier which guaranteesquality products at competitive prices. The Company devises its marketing strategies in amanner that ensures a win-win scenario for all stakeholders at all times. Overall a verybright and promising future is expected for the Company.

DIVIDEND

Your Directors have recommended dividend of 400% i.e. H8 per Equity Share of H2 eachfor the financial year ended 31st

March 2019 which if approved at the forthcoming Annual General Meeting will be paidto all those Equity Shareholders of the Company whose names appear in the Register ofMembers as on 29th May 2019 and whose names appear as beneficial owners as per thebeneficiary list furnished for the purpose by National Securities Depository Limited andCentral Depository Services (India) Limited.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("LODR") the Company has formulated its DividendDistribution Policy and the same is uploaded on the website of the Company which can beaccessed at https://www.upl-ltd.com/policies-compliances-announcements.

BONUS SHARES

To mark the golden jubilee of the Company your Directors have announced issue of BonusShares in the ratio of one bonus share for every two shares held by the member. The samewill be subject to the approval of the members and for this a separate Extra OrdinaryGeneral Meeting will be held. On approval by the members the Bonus Shares will be issuedto those members whose names appear in the register of members as on the record date whichwill be announced after the said Extra Ordinary General Meeting and to those members whosenames appear as beneficial owners as per the beneficiary list furnished for the purpose byNational Securities Depository Limited and Central Depositary Services (India) Limited.

FINANCE

(a) Fixed Deposits

The Company has not accepted fixed deposits during the year. There are no fixeddeposits outstanding as at 31st March 2019.

(b) Particulars of Loans Guarantees or Investments

The details of Loans Guarantees or Investments are given in the notes to the FinancialStatements.

(c) Changes in Paid-up Share Capital

During the year the Company has issued and allotted the following shares: (i) 9589equity shares of H2 each to Employees under Employee Stock Option Plan of the Company.

CREDIT RATING

The Company has a good reputation for prudent financial management and ability to meetits financial commitments. The Company’s credit facilities in India have been ratedby CARE as CARE AA+(Negative) for long term facilities and CARE A1+ for short termfacilities and by CRISIL as CRISIL AA+(Negative) for long term facilities and CRISIL A1+for short term facilities. Company’s commercial paper are rated by CARE as CARE A1+and by CRISIL as CRISIL A1+. Company’s non-convertible debentures are rated by CAREas CARE AA+ (Negative) and by Brickwork Ratings as BWR AA+(Stable).

The international bonds issued by UPL Corporation Ltd a subsidiary of the Companyhave been rated by S&P as BBB-(Stable) Moody’s Baa3 (Positive) & FitchBBB-(Negative). It has issued 5 year US$ 500 mn US$ denominated Senior Notes under144A/Reg S in October 2016 and a 10 year US$ 300 mn US$ denominated Senior Notes under RegS in February/March 2018.

ESOP

The details as required to be disclosed under the SEBI (Share Based Employee Benefits)Regulation 2014 are put on the Company’s website at the link https://www.upl-ltd.com/policies-compliances-announcements

SAFETY AND ENVIRONMENT

Safety

Safety and well-being of each and every one working for and on behalf of the Companyremains to be of top priority for the Company. Your company has taken some significantsteps in order to enhance its overall safety performance as part of business continuityprocess to take it to the next level eventually to meet its vision of being best in classand installed a unique engagement initiative "Safety First" for making safety away of life.

Initiatives like Zero Leak Programme Mistake proofing thuman ough Poka-yoke SafetyAbnormality reporting 5S have helped sustain our safety performance.

Capability Building through level 0 1 & 2 training and employee engagementinitiatives are continuously being strengthened. Level 0 1 & 2 trainings are trainingfor safety and functional capability building an employee can take charge only afterhe/she has successfully passed the assessment. Your company has a system of internal &external safety audit and average compliances of 2nd and 3rd party audit have been asignificant 95+%. "Safety First" is a unique engagement Initiative to bringabout interdependent culture which focuses on enhanced safety Leadership throughcommunication engagement horizontally deploying best practices and corrective/preventive actions management enhancing effectiveness of plant safety representatives andleadership involvement. Our company engaged services of overseas reputed consultants forimparting training on Safety Leadership on doing things differently making the sameinitiatives more impactful.

For the current year our company had a LTIFR : 0.117 per 200 thousand hours worked.Company strongly focuses on the reporting of Safety Abnormalities Man Machine andMan-Chemical interfaces and closure of the same through mistake proofing. 8 plants of theCompany globally worked without any recordable incidents. Company made substantialimprovement in execution of Green Field projects.

The Company has initiated a process of Activity based risk assessment and developinghealth and fire index as an additional measure for well being of the people employed aswell as asset protection.

The motto remains: Everyone working for and on behalf of UPL - "Doing Safer isDoing Better".

Environment

At the Company sustainability is driven by smarter innovation and profitable growth.We believe that a business can be profitable by adopting sustainable practices ensuringharmony with the society and environment. We are constantly working to reduce ourenvironmental footprint and find innovative product solutions that benefit the society.Our commitment to environmental protection extends beyond the scope of legal requirements.We are committed to the chemical industry’s Responsible Care™ initiative andhave set out the basic principles of this commitment in our Global Environmental FootprintReduction Plan. Certified HSEQ management systems control its operational implementation.

This year company has released its second Sustainability Report as per GRI standards inaccordance with comprehensive option. The Company’s Sustainable Development Plan isfully aligned with UN Sustainable Development Goals. and that the financial controls wereadequate and were operating effectively.

f) That systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

Corporate Governance Report

Your Company and its Board has been complying with Corporate Governance practices asset out in a separate report in pursuance of requirement of para C of Schedule V of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The ManagementDiscussions and Analysis Report forms part of this Report. Auditor’s certificateconfirming compliance of the Corporate Governance as stipulated under the said Regulationsis also attached to this Report.

Dealing with securities which have remained unclaimed Members are hereby informed thatas per Regulation 39(4) read with Schedule VI of the SEBI Regulations the Company is inthe process of sending reminders to those Members whose share certificates have remainedunclaimed to contact the Company immediately in the matter. The Registrar and TransferAgent M/s Link Intime India Pvt. Ltd. is in the process of compiling the data forunclaimed shares. The Company now after following the prescribed procedure willdematerialize unclaimed shares which are retained with the Company. These shares would beheld by the Company on behalf of the holders of such shares in an "Unclaimed SuspenseAccount" to be opened with a depository. At the end of seven years hereof theseshares shall be transferred by the Company to the IEPF. Dividends remaining unclaimed inrespect of such shares shall also be held in a separate suspense account and wouldlikewise be transferred to IEPF at the end of seven years. Members may note that thelawful claimant in respect of these shares / dividend will be able to claim such sharesdividend from the Company till such time they remain in the unclaimed suspense account asaforesaid.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors complied with the applicable Secretarial Standards issued by theInstitute of Companies Secretaries of India relating to the meetings of the Board andGeneral Meetings.

BUSINESS RESPONSIBILITY REPORTING

A separate section of Business Responsibility forms part of this Annual Report asrequired under Regulation 34(2)(f) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial statements are prepared for the year 2018-19 in compliance withthe provisions of the Companies Act applicable Accounting Standards and as prescribedunder the SEBI regulations. The consolidated statements are prepared on the basis ofaudited financial statements of the Company its subsidiaries associates and jointventures. These consolidated financial statements along with the Auditors Report thereonform part of the Company’s Annual Report. They are also put up on the website of theCompany https://www.upl-ltd.com/ policies-compliances-announcements.

COPY OF THE ANNUAL RETURN

Pursuant to the Section 92(3) of the Companies Act 2013 a copy of Annual Return hasbeen placed on the website of the Company and the web link of such Annual Return ishttps:// www.upl-ltd.com/ policies-compliances-announcements

LISTING OF THE COMPANY’S EQUITY SHARES

The equity shares of the Company are listed on the BSE Ltd. and National Stock Exchangeof India Ltd. There is no default in paying annual listing fees.

ACKNOWLEDGEMENT:

The Directors are thankful to all the stakeholders and various government agencies andministries for their continued support.

CAUTIONARY STATEMENT:

Statements in the Director’s Report and the Management Discussion and Analysisdescribing the Company’s objectives expectations or predictions may be forwardlooking within the meaning of applicable securities laws and regulations. Actual resultsmay differ materially from those expressed in the statement. Important factors that couldinfluence the Company’s operations include: global and domestic demand and supplyconditions availability of critical materials and their cost changes in governmentpolicies and tax laws economic development of the country and other factors which arematerial to the business operations of the Company. that the Company has

Mumbai On behalf of the Board of Directors
17th May 2019
Registered Office:
3-11 G.I.D.C. Vapi Rajnikant Devidas Shroff
Dist. Valsad Gujarat Chairman & Managing Director
Pin: 396195 (DIN: 00180810)


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