avatar 3M Company Manufacturing
  • Location: Minnesota 
  • Founded:
  • Website:

Pages

  • Page 1

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    3M INDIA LIMITED CIN: L31300KA1987PLC013543 Registered Office: Plot Nos. 48-51, Electronic City, Hosur Road, Bengaluru – 560100 Phone: 080-22231414, Fax: 080-2223 1450, email id: vsrinivasan@mmm. com, website: www. 3m. com/in NOTICE TO MEMBERS NOTICE is hereby given that the Twenty Nineth (29th) Annual General Meeting of the Company will be held at 11.00 A.M. on Friday, the 5th August 2016 at Trinity Hall, Vivanta by Taj, 41/3, M. G. Road, Bengaluru – 560 001, to transact the following business: ORDINARY BUSINESS: ADOPTION OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016. 1. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT the Financial Statements of the Company including Audited Balance Sheet as at March 31, 2016, the Statement of Profit and Loss of the Company for the year ended as on that date together with the Auditors’ Report thereon and the Board’s Report including Secretarial Audit Report be are hereby received, considered and adopted.” RE-APPOINTMENT OF MR. RAMESH RAMADURAI, WHO RETIRES BY ROTATION. 2. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT Mr. Ramesh Ramadurai (DIN-07109252), Director, who retires by rotation at this Annual General Meeting, and being eligible for re-appointment, be and is hereby re-appointed as a Director of the Company.” APPOINTMENT OF MESSRS. BSR & CO. LLP, CHARTERED ACCOUNTANTS, BENGALURU (ICAI FIRM REGISTRATION No. 101248W/W-100022), AS AUDITORS FOR A PERIOD FIVE (5) YEARS AND FIXING THEIR REMUNERATION. 3. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT pursuant to the provisions of Sections 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 and their corresponding rules and based on the recommendation of the Audit Committee and of the Board of Directors, Messrs. BSR & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), who have offered themselves for appointment and have confirmed their eligibility under the relevant provisions of Chapter X of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, be and are hereby appointed as Statutory Auditors of the Company, to hold office for a period of five(5) years from the conclusion of the 29th Annual General Meeting up to the conclusion of fifth Annual General Meeting to be held after the 29th Annual General Meeting, subject to ratification at every Annual General Meeting, at a remuneration as may be decided by the Board of Directors of the Company every year.” SPECIAL BUSINESS: APPOINTMENT OF MS. RADHIKA RAJAN AS AN INDEPENDENT DIRECTOR. 4. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules made there under (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act, 2013 and provisions of Listing Regulations, Ms. Radhika Rajan (DIN-00499485), Director of the Company, in respect of whom the Company has received a notice in writing pursuant to Section 160 of the Companies Act, 2013 from a Member proposing her candidature for the office of Director, be and is hereby appointed as an Independent Director of the Company to hold office from May 27, 2016 to May 26, 2021.” RATIFICATION OF REMUNERATION PAYABLE TO MESSRS. RAO, MURTHY & ASSOCIATES, COST AUDITORS FOR THE FINANCIAL YEAR ENDING 2016-17. 5. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT pursuant to the provisions of Section 148(3) and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modifications(s) or re-enactment thereof for the time being in force), the remuneration payable to Messrs. Rao, Murthy & Associates, Bengaluru (holding ICAI Registration No. 000065), Cost Auditors, appointed by the Board of Directors based on the recommendation of the Audit Committee of the Company to conduct the audit of the Cost records of the Company for the Financial year 2016-17 amounting to Rs. 430,000/-(Rupees Four Lakhs Thirty Thousand only) as also the payment of service tax as applicable and re-imbursement of out of pocket expenses incurred by them in connection with the audit of cost records be and is hereby ratified and confirmed.” 25


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    NOTICE TO THE MEMBERS 3M India Limited APPOINTMENT OF MS. DEBARATI SEN AS DIRECTOR OF THE COMPANY. 6. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT in accordance with applicable provisions of the Companies Act, 2013 and the Rules made there under(including any statutory modification(s) or re-enactment thereof), Ms. Debarati Sen (DIN-07521172), who was appointed as an Additional Director of the Company by the Board of Directors at its meeting held on May 27, 2016 in terms of Section 161(1) of the Companies Act, 2013 and whose term of office expires at this Annual General Meeting and in respect of whom the Company has received a notice in writing pursuant to Section 160 of the Companies Act, 2013 from a member proposing her candidature for the office of Director, be and is hereby appointed as a Director of the Company whose period of office shall not be liable to determination by retirement of Directors by rotation.” APPOINTMENT OF MS. DEBARATI SEN AS MANAGING DIRECTOR OF THE COMPANY. 7. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT pursuant to the provisions of Sections 2(54), 196, 197, 198, 203 and any other applicable provisions of the Companies Act, 2013 and the rules made there under (including any statutory modification(s) or re-enactment thereof for the time being in force), read with Schedule V to the Companies Act, 2013 and subject to the requisite approval of the Central Government, the consent of the Company be and is hereby accorded to the appointment of Ms. Debarati Sen (holding DIN-07521172), who was appointed as a non-retiring Director of the Company by the Board of Directors with effect from June 1, 2016 under the Articles of Association of the Company, as the Managing Director of the Company for a period of five(5) years effective from June 1, 2016 up to May 31, 2021, on the terms and conditions of appointment and remuneration as contained in the agreement, and the Board of Directors be and is hereby authorized to alter and vary such terms of appointment and remuneration so as to not exceed the limits specified in Schedule V to the Companies Act, 2013 as may be agreed to by the Board of Directors and Ms. Debarati Sen.” APPROVAL OF ESTIMATED MATERIAL RELATED PARTY TRANSACTIONS FOR THE YEAR 2016-17 WITH 3M COMPANY, USA. 8. To consider and, if thought fit, to pass, the following resolution as an ordinary resolution: “RESOLVED THAT pursuant to provisions of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) (including any statutory modification(s) or amendments(s) or re-enactments(s) thereof, for the time being in force), approval of the members be and is hereby accorded to the following Material Related Party transactions estimated / to be entered into and to be carried out in ordinary course of business and at arm’s length price with 3M Company, USA (Parent Company), a ‘Related party’ as defined under Section 2(76) of the Companies Act, 2013 and Regulation 2 (zb) of the Listing Regulations: Rs. in crores Sl No. Nature of Transactions Estimated value of transactions for the Financial year 2016-17 INCOME 1. Income from Contract Research 25.79 2. Sale of Goods 9.31 3. Re-charge of expenses 15.34 Total 50.44 EXPENDITURE 1. Purchases of Materials 298.66 2 Royalty 24.55 3 Re-charge of expenses 1.25 4. Corporate Management Fee 72.91 Total 397.37 RESOLVED FURTHER THAT the Board of Directors of the Company (including its Committee thereof) be and is hereby authorized to do all such acts, deeds or things, as may be considered necessary, desirable and expedient, in order to give effect to the aforesaid resolution.” 26


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    NOTICE TO THE MEMBERS 3M India Limited PAYMENT OF REMUNERATION BY WAY OF COMMISSION TO NON-EXECUTIVE DIRECTORS OF THE COMPANY FOR FIVE (5) FINANCIAL YEARS COMMENCING FROM THE FINANCIAL YEAR APRIL 01, 2016. 9 To consider and, if thought fit, to pass, the following resolution as a special resolution: “RESOLVED THAT pursuant to the provisions of Section 197 and any other applicable provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) a sum not exceeding one percent (1%) per annum of the net profits of the Company calculated in accordance with the provisions of Section 198 of the Companies Act, 2013, be paid to and distributed amongst the Directors (other than the Managing Director or Whole-time Director of the Company) or some or any of them in such amounts or proportions and in such manner and in all respects as may be decided and directed by the Board of Directors and such payments shall be made in respect of the profits of the Company for each financial year, for a period of five(5) financial years commencing from April 1, 2016. RESOLVED FURTHER THAT the above remuneration shall be in addition to fee payable to the Director(s) for attending the meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board of Directors and reimbursement of expenses for participation in the Board and other meetings. RESOLVED FURTHER THAT the Board be and is hereby authorized to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this Resolution.” By order of the Board V. Srinivasan Place : Bengaluru Company Secretary Date May 27, 2016 ACS-16430 NOTES: (1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY / PROXIES TO ATTEND AND VOTE INSTEAD OF HIMSELF / HERSELF AND SUCH PROXY / PROXIES NEED NOT BE A MEMBER OF THE COMPANY. A PERSON CAN ACT AS PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY (50) AND HOLDING IN THE AGGREGATE NOT MORE THAN TEN (10) PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY. THE INSTRUMENT OF PROXY IN ORDER TO BE EFFECTIVE MUST BE DEPOSITED/LODGED AT THE REGISTERED / CORPORATE OFFICE OF THE COMPANY DULY COMPLETED AND SIGNED NOT LATER THAN 48 HOURS BEFORE THE TIME FIXED FOR HOLDING THE MEETING. A PROXY FORM IS SENT HERWITH. PROXIES SUBMITTED ON BEHALF OF THE COMPANIES, SOCIETIES ETC., MUST BE SUPPORTED BY AN APPROPRIATE RESOLUTION/AUTHORITY, AS APPLICABLE. (2) Explanatory statement pursuant to Section 102 of the Companies Act, 2013, in respect of Special Business is annexed hereto. (3) The Register of Members and the share transfer books of the Company will remain closed from July 30, 2016 (Saturday) to August 5, 2016 (Friday), both days inclusive. (4) The shares of the Company are mandated by the Securities and Exchange Board of India for trading in dematerialized form by all investors. Members holding shares in physical form are advised to dematerialize their shares to avoid the risks associated with the physical holding of such share certificates. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit the PAN to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form can submit their PAN details to the Company’s Registrar and Transfer Agent. (5) The Registrar and Transfer Agent; Karvy Computer Share Private Limited, Karvy Selenium Tower-B, Plot Nos. 31 & 32, Financial District, Gachibowli, Nanakramguda, Serilingampally, Hyderabad- 500 032 is handling registry work in respect of shares held both in physical form and in electronic/demat form. (6) Members are requested to bring their copy of the Annual Report and the Attendance Slip to the Annual General Meeting. ONLY MEMBERS/ PROXIES WILL BE ADMITTED INTO THE HALL FOR THE MEETING. (7) Members may refer Additional Information on Directors recommended for appointment / re-appointment under the provisions of Listing Regulations. (8) Members holding shares in electronic form are requested to register their e-mail address with their respective depository participants and members holding shares in Physical form are requested to register their e-mail address with the Company’s Registrar and Transfer Agents and participate in the “Green initiative” launched by the Ministry of Corporate Affairs in future. As per rule 3 of Companies (Management & Administration) Rules, 2014, Register of Members of all the Company’s now should have additional details pertaining to e-mail, PAN / CIN, UID, Occupation, Status, Nationality. We request all the Members of the 27


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    NOTICE TO THE MEMBERS 3M India Limited Company to update their details with their respective depository participants in case of shares held in electronic form and with the Company’s Registrar and Transfer Agents in the case of physical holding immediately. (9) Members holding shares in physical form are requested to notify to the Company’s Registrar and Transfer Agent of any change in their address and update their Bank account details. Members holding shares in electronic form are requested to notify any change of address and update bank account details to their respective depository participants directly. (10) Pursuant to Section 72 of the Companies Act, 2013, shareholders holding shares in physical form may file nomination in the prescribed Form SH-13 with the Company’s Registrar and Transfer Agent. In respect of shares held in electronic / demat form, the nomination form may be filed with the respective Depository Participant. (11) Electronic copy of the Notice of the 29th Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent to all the members whose email IDs are registered with the Company/Depository Participants(s) for communication purposes unless any member has requested for a hard copy of the same. For members who have not registered their email address, physical copies of the Notice of the 29th Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent in the permitted mode. All documents referred to in the accompanying Notice and the Explanatory Statement shall be open for inspection during normal business hours on all working days except Saturdays, up to and including the date of the Meeting. (12) Voting through electronic voting system(Remote E-Voting) : Pursuant to Section 108 of Companies Act, 2013 read with Rule 20 of Companies (Management and Administration) Rules, 2014 as substituted by the Companies (Management and Administration) Amendment Rules, 2015 and Regulation 44 of the Listing Regulations and Secretarial Standard on General Meetings (SS2) issued by the Institute of Company Secretaries of India, the Company is pleased to provide the facility to Members to exercise their right to vote by electronic means. The Members, whose names appear in the Register of Members / list of Beneficial Owners as on July 29, 2016 (Friday) i. e. the date prior to the commencement of Book closure date are entitled to vote on the Resolution set forth in this Notice. The remote e-voting period will commence at 10.00 A.M. on August 1, 2016 (Monday) to 5.00 P.M. on August 4, 2016 (Thursday). It is hereby clarified that it is not mandatory for a member to vote using the remote e-voting facility, and a member may avail of the facility at his/her/ it discretion, subject to compliance with the instructions prescribed below. The Company has engaged the services of Karvy Computershare Private Limited (Karvy) for facilitating remote e-voting for the Annual General Meeting. The Members desiring to vote through remote e-voting mode may refer to the detailed procedure on e-voting given hereinafter. INSTRUCTION FOR REMOTE E-VOTING (a) To use the following URL for remote e-voting: From Karvy website : https://evoting. karvy. com (b) Shareholders of the Company holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically. (c) Enter the login credentials [i. e., user id and password mentioned in the Notice of the AGM]. The Event No+ Folio No/DP ID-Client ID will be your user ID. (d) After entering the details appropriately, click on LOGIN. (e) You will reach the Password change menu wherein you are required to mandatorily change your password. The new password shall comprise of minimum 8 characters with at least one upper case (A-Z), one lower case (e-z), one numeric value (0-9) and a special character(@, #, $ ). The system will prompt you to change your password and update any contact details like mobile, email etc. on first login. You may also enter the secret question and answer of your choice to retrieve your password in case you forget it. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. (f) You need to login again with the new credentials. (g) On successful login, the system will prompt you to select the EVENT i. e., 3M India Limited and click on SUBMIT. (h) Now you are ready for e-voting as “Cast Vote” page opens. On the voting page, the number of shares as held by the shareholder as on July 29, 2016 (Friday) will appear. If you desire to cast all the votes assenting/dissenting to the Resolution, then enter all shares and click FOR / AGAINST as the case may be. You are not required to cast all your votes in the same manner. You may also choose the option ABSTAIN in case you wish to abstain from voting (i) Shareholders holding multiple folios / demat account shall choose the voting process separately for each folios / demat account. (j) Cast your vote by selecting an appropriate option and click on SUBMIT. A confirmation box will be displayed. Click OK to confirm else CANCEL to modify. Once you confirm, you will not be allowed to modify your vote. During the voting period, shareholders can login any number of times till they have voted on the resolution. 28


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    NOTICE TO THE MEMBERS 3M India Limited (k) Once the vote on the resolution is cast by the shareholder, he shall not be allowed to change it subsequently. (l) The Companies (Management and Administration) Amendment Rules, 2015 provides that the electronic voting period shall close at 5.00 P.M. on the date preceding the date of the AGM. Accordingly the Portal will be open for voting from: 10.00 A.M. on August 1, 2016 (Monday) to 5.00 P.M. on August 4, 2016 (Thursday). The e-voting module shall be disabled by Karvy at 5.00 P.M. on the same day. During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date of July 29, 2016 (Friday), may cast their vote electronically. Once the vote on a resolution is cast by the shareholder, the shareholder shall not be allowed to change it subsequently. (m) In case of any queries, you may refer the Frequently Asked Questions (FAQs) for shareholders and e-voting User Manual for shareholders available at the download section of https://evoting. karvy. com or contact Mr. Rajeev Kumar of Karvy Computershare Pvt Ltd at 040-67161524 OR at Tel No. 1800 345 4001 (toll free). (n) The Company has appointed Mr. Vijayakrishna K. T, Practising Company Secretary, who in the opinion of the Board is a duly qualified person, as a Scrutinizer who will collate the electronic voting process in a fair and transparent manner: provided that the scrutinizer so appointed may take assistance of a person who is not in employment of the Company and who is well-versed with the electronic voting system. (o) The voting rights of the shareholders shall be in proportion to their shares of the paid-up equity share capital of the Company as on the cut-off date of July 29, 2016 (Friday). (p) The Members, whose names appear in the Register of Members / list of Beneficial Owners as on Friday, July 29, 2016, are entitled to vote on the Resolutions set forth in this Notice. (q) Any person, who acquires shares of the Company and becomes member of the Company after dispatch of the Annual Report and holding shares as of the cut-off date i. e. July 29, 2016 (Friday), may obtain the login ID and password by sending an email to evoting@karvy. com/ rajeev. kr@karvy. com, by mentioning their Folio No. /DP ID and Client ID No. Else, if your Mobile number is registered against Folio No. /DP ID-Client ID, the member may send SMS:MYEPWD <space> Event Number + Folio or DP ID Client ID to +91 9212993399. Example for NSDL :MYEPWD <SPACE> IN12345612345678 Example for CDSL :MYEPWD <SPACE> 1402345612345678 Example for PHYSICAL :MYEPWD <SPACE> XXX1234567 However, if you are already registered with Karvy for remote e-voting then you can use your existing user ID and password for casting your vote. If e-mail or mobile number of the member is registered against Folio No. /DP ID Client ID, then on the home page of https://evoting. karvy. com, the member may click “forgot password” and enter Folio No. or DP ID Client ID and PAN to generate as password. (r) A member may participate in the meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again at the meeting. (s) Voting at AGM: The members who have not cast their vote by remote e-voting can exercise their voting rights at the AGM. The Company will make arrangements of ballot papers in this regards at the AGM Venue. (t) The scrutinizer shall, immediately after the conclusion of voting at the General Meeting, first count the votes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two(2) witnesses not in the employment of the Company and make not later than three(3) days of conclusion of the meeting a consolidated scrutinizer’s report of the total votes cast in favor or against, if any, to the Chairman or a person authorized by him in writing who shall countersign the same. (u) The results declared along with the report of the scrutinizer shall be placed on the website of the Company www. 3m. com/in and on https://evoting. karvy. com immediately after the result is declared by the Chairman. The Company shall, simultaneously, forward the results to the stock exchanges where the shares are listed. (v) In case of joint shareholders attending the meeting, only such joint holder who is higher in the order of names will be entitled to vote. (w) Institutional members (i. e., other than individuals, HUF, NRI etc. ) are required to send scanned copy (PDF/JPG Format) of the relevant Board Resolution / Authority letter etc., to the Scrutinizer through e-mail at vijaykt@vjkt. in, with a copy marked to evoting@karvy. com. File naming convention should be ‘Corporate Name EVENT NO. ’ The documents should reach the Scrutinizer on or before the close of working hours on August 4, 2016 (Thursday). 29


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    NOTICE TO THE MEMBERS 3M India Limited (x) In case a Member receives physical copy of the Notice of AGM (for members whose email IDs are not registered with the Company/Depository Participant(s) or requesting physical copy) in the permitted mode: (i) Initial password as below is given in the attendance slip for the AGM: EVEN USER ID PASSWORD (E-Voting Event Number) XXXXXXX XXXXXXX XXXXXXXX (ii) Please follow all steps from Sl. No. (12)(c) to (12)(j) above to cast your vote. ADDITIONAL INFORMATION ON DIRECTORS RECOMMENDED FOR APPOINTMENT / RE-APPOINTMENT AS PER THE PROVISONS OF LISTING REGULTIONS: Item 2 In terms of Sections 149, 152 and any other applicable provisions of the Companies Act, 2013, for the purpose of determining the Directors liable to retire by rotation, the Independent Directors shall not be included in the total number of Directors of the Company. Mr. Ramesh Ramadurai, Non-Executive Director, shall accordingly retire at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment. A brief profile of Mr. Ramesh Ramadurai, nature of his expertise in specific functional areas, names of companies in which he holds directorships, memberships of the Board’s Committees, shareholding in the Company and relationships between Directors inter-se, as stipulated under the provisions of Listing Regulations are exhibited below. Mr. Ramesh Ramadurai, Non-Executive Director (DIN- 07109252): Mr. Ramesh Ramadurai, 54, was appointed as Business Director for 3M Industrial Business in July 2014 and is based out of Shanghai responsible for the entire Asia Pacific Area. Prior to this role, Mr. Ramesh Ramadurai served as Managing Director of 3M Philippines from August 2011 until June 2014, based in Manila. He Joined 3M India in 1989 as Sales Engineer and held positions as Country Business Leader in Industrial Business and Electro & Telecommunications. He was seconded to Global Headquarters in St Paul, USA, and worked as Market Segment Manager in Industrial Business, as Global Business Manager for a line of Industrial Tapes, and as International Business Manager for 3M’s Packaging, Masking and Specialty Tapes businesses. Prior to 3M, Mr. Ramesh Ramadurai worked for a year as a Production Engineer at an Offshore Oil Production facility, and for about 3 years in a business planning and development role at an automotive parts and motorcycle manufacturer. Mr. Ramesh Ramadurai holds MBA from the Indian Institute of Management in Calcutta and is a Bachelor of Technology in Chemical Engineering from the Indian Institute of Technology, Kanpur. He was appointed as a Non-Executive Director of the Company from March 27, 2015. Mr. Ramesh Ramadurai is not related to any other Directors of the Company. Mr. Ramesh Ramadurai is neither a Director nor a member in any Company registered in India / outside India. He is a Member of Corporate Social Responsibility Committee. Accordingly, the Board recommends his re-appointment. Except Mr. Ramesh Ramadurai, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in Item No. 2. This Explanatory Statement may also be regarded as a disclosure under Listing Regulations. Appointment of other Directors (item Nos. 4 and 6) For the details pertaining to Ms. Radhika Rajan and Ms. Debarati Sen, please refer to the below Explanatory Statements in respect of the Special Business set out at item Nos. 4 and 6 of the Notice of Annual General Meeting pursuant to Section 102 of the Companies Act, 2013. EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013. Item 3 The Explanatory Statement for this Item No. 3 is being provided voluntarily though strictly not required as per Section 102 of the Companies Act, 2013 (“the Act”). The Members are informed that Messrs. Lovelock & Lewes (LL) are Statutory Auditors of the Company since 1995. At the Annual General Meeting (AGM) of the Company held on August 4, 2015, Messrs. Lovelock & Lewes were appointed as Statutory Auditors for a period of two years viz., FY 2015-16 & 2016-17 (subject to ratification by the shareholders at the AGM in 2016) in line with the provisions of Section 139 of the Companies Act, 2013 (“Act”) read with Companies (Audit and Auditors) Rules, 2014. Subsequent thereto, Messrs. Lovelock & Lewes informed us of the rotation of assigned partner as part of its internal policy for the financial year 2016-17. As the new Statutory Auditors for the Company were to be appointed under the Act for the FY 2017-18 onwards, 30


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    NOTICE TO THE MEMBERS 3M India Limited it was considered desirable to have the new Statutory Auditors appointed from the financial year 2016-17 itself. This was deliberated between the Company and Messrs. Lovelock & Lewes and was unconditionally agreed by both, so as to ensure and facilitate smooth transition of audit work. Accordingly, a written confirmation from Messrs. Lovelock & Lewes was considered at the Audit Committee and Board of Directors of the Company in their respective meetings held on May 26, 2016 and May 27, 2016. Pursuant to and in light of the above, the Company has identified Messrs. BSR & Co., LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Bengaluru- 560071 as new Statutory Auditor. In view of above, the Board of Directors of the Company on the recommendation of Audit Committee has appointed Messrs. BSR & Co., LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Bengaluru- 560071 as Statutory Auditors of the Company, subject to the approval of the members of the Company at this Annual General Meeting. Messrs. BSR & Co., LLP, Chartered Accountants Bengaluru- 560071 being eligible, have indicated their willingness to serve as Statutory Auditors of the Company, if appointed at this Meeting. The Company has received a Special Notice under Section 140(4) (i) of the Companies Act, 2013 read with Rule 23 of the Companies (Management and Administration) Rules, 2014 from 3M Company, USA, shareholder holding 75% of total share capital proposing the name of Messrs. BSR & Co., LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Bengaluru- 560071, for appointment as Statutory Auditors for a period of 5 years from the conclusion of the 29th Annual General Meeting till the conclusion of the fifth Annual General Meeting thereafter. Their appointment as Statutory Auditors, if approved, by the members of the Company, will take effect from the conclusion of this Annual General Meeting. Further, as required under the provisions of Sections 139 and 141 of the Act, Messrs. BSR & Co., LLP, Chartered Accountants Bengaluru- 560071 have confirmed that their appointment, if made at this Annual General Meeting, shall be in accordance with the provisions of the Act. None of the Promoters /Directors/Key Managerial Personnel of the Company/ their respective relatives, is, in anyway, concerned or interested, financially or otherwise, in the resolution set out at item no. 3 of the Notice. The Board recommends the ordinary resolution set forth at Item No. 3 of the Notice, for the approval of the members of the Company. Following Explanatory Statements are furnished in respect of Special Business: Item 4 Ms. Radhika Rajan, 60, is a Non-Executive Independent Director of the Company. She was appointed as an Additional Director of the Company by the Board of Directors with effect from May 27, 2016, pursuant to provisions of Section 161 of the Companies Act, 2013 and the Articles of Association of the Company and holds office up to the date of ensuing Annual General Meeting. Section 149 (10) of the Companies Act, 2013 provides that an Independent Director shall hold office for a term of up to five consecutive years on the Board. Further, Section 149 (13) of the Companies Act, 2013 states that the provisions relating to retirement of Directors by rotation shall not apply to the appointment of Independent Directors. Further, in view of the above, it is proposed to appoint Ms. Radhika Rajan as an Independent Director under Section 149 and other applicable provisions of the Companies Act, 2013 and the Rules made there under read with the provisions of Listing Regulations. The Nomination & Remuneration Committee of the Company at its meeting held on May 26, 2016 has recommended the appointment of Ms. Radhika Rajan as an Independent Director under Section 149 of the Companies Act, 2013 from May 27, 2016 to May 26, 2021. The Company has received notice in writing from a Member along with the deposit of Rs. 1,00,000/- proposing the candidature of Ms. Radhika Rajan for the office of Director of the Company. The Company has received from Ms. Radhika Rajan – (i) consent in writing to act as Director in Form DIR 2 pursuant to Rule 8 of Companies (Appointment & Qualification of Directors) Rules, 2014, (ii) intimation in Form DIR 8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that she is not disqualified under sub-section (2) of Section 164 of the Companies Act, 2013, confirming her eligibility for such appointment, and (iii) a declaration to the effect that she meets the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013. (iv) In the opinion of the Board, Ms. Radhika Rajan fulfills the conditions of her appointment as Independent Director as specified in the Companies Act, 2013, Rules made there under and the provisions of Listing Regulations and is Independent of the Management. A Brief profile of Ms. Radhika Rajan, nature of her expertise in specific functional areas, names of companies in which she holds directorships, memberships of the Board’s Committees, shareholding in the Company and relationships between directors inter-se, as stipulated as per the provisions of Listing Regulations is given below. Copy of the draft letters of appointment of the proposed Director as Independent Director setting out the terms and conditions are available for inspection by Members at the Corporate Office of the Company and the same has been disclosed in the website of the Company. 31


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    NOTICE TO THE MEMBERS 3M India Limited Ms. Radhika Rajan, (DIN- 00499485): Ms. Radhika Rajan, 60, heads DSP Investments, the umbrella Company of the Kothari Family Office, in Mumbai, India. The Kothari portfolio comprises of Indian securities, fixed-income, corporate paper and loans, and some angel and private equity investments. Previously, Radhika was President of TCG Advisory of the TCG Group, New York. In this capacity, Radhika conceived, set up, structured and managed the operations of TCG’s offshore Indian Equities Funds for 7 years. Prior to joining the Fund in 2003, she advised TCG and several other private equity groups on various companies and proposed investments in the US-India corridor. Ms. Radhika Rajan is a US citizen and long term resident of New York who relocated to India a few years earlier. She has focused on India as an investment destination since 1999, when she became New York based Executive Vice-President of Mphasis. Prior to Mphasis, Ms. Rajan worked as a global macro proprietary trader at Chemical Bank (now JPMorgan) Itochu, UBS, Bank of America, and Bank of Montreal where she created and managed several profitable trading structures. As a global macro trader, she traded and took proprietary positions in a range of currencies, cash and options and in interest rate and commodity futures and derivatives Ms. Rajan holds an MBA degree from the Indian Institute of Management Ahmedabad and an MSc (Physics) from Indian Institute of Technology, Mumbai. She was a National Science Talent Scholar through her Masters ‘degree. Ms. Rajan is an invited author of “The Global Internet Economy,” a book published by MIT Press in 2003. She is a charter member of TIE, the global Entrepreneurs organization and served as an Executive Board Member of TIE Tristate for over 5 years. TIE, a global association of entrepreneurs active in accelerating the globalization of Indian business. (www. tie. org and www. tietristate. org) Names of other companies/firms in which Ms. Radhika Rajan hold/held office as Director/Partner is given below: - Sonata Software Limited - Tata Advanced Systems Limited - Tata Sikorsky Aerospace Limited - Nova Integrated Systems Limited - Tata Lockheed Martin Aero Structures Limited - TAS-AGT Systems Limited - Sonata Information Technology Limited Names of Committees/Chairmanships held by Ms. Radhika Rajan is given below: Membership of Committee Chairmanship of Committees Name of the Company Audit Stakeholder’s Relationship Audit Stakeholder’s Relationship Tata Advanced Systems Limited ✓ Tata Sikorsky Aerospace Limited ✓ Nova Integrated Systems Limited ✓ Tata Lockheed Martin Aero Structures Limited ✓ TAS-AGT Systems Limited ✓ 3M India Limited(from May 27, 2016) ✓ ✓ Ms. Radhika Rajan does not hold by herself or for any other person on a beneficial basis, any shares in the Company. She is not related to any other Directors of the Company. The Board considers her appointment would be of immense benefit to the Company and it is desirable to avail services of Ms. Radhika Rajan as an Independent Director. Accordingly, the Board recommends the resolution in relation to appointment of Ms. Radhika Rajan as an Independent Director, for the approval by the members of the Company. Except Ms. Radhika Rajan, being an appointee, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 4. This Explanatory Statement may be regarded as a disclosure under the Listing Regulations. Item 5 The Board of Directors of the Company at its meeting held on May 27, 2016 had on the recommendation of the Audit Committee, approved the re-appointment and remuneration of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2017 for the 32


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    NOTICE TO THE MEMBERS 3M India Limited products covered as per the Companies (Cost Records and Audit) Rules, 2014, on an remuneration of Rs. 430, 000/- plus service tax as applicable and out of pocket expenses at actuals. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a) (ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is to be ratified by the Members of the Company. Accordingly, the Members are requested to ratify the remuneration payable to the Cost Auditors as set out in the Resolution for the aforesaid services to be rendered by them. None of the Directors, Key Managerial Personnel of the Company and their relatives, is in any way concerned or interested or otherwise, in the resolution set out at Item No. 5. Item 6 Based on the nomination from 3M Company, USA, the Nomination & Remuneration Committee of the Company at its meeting held on May 26, 2016 has recommended the appointment of Ms. Debarati Sen as a Director of the Company. The Board of Directors at its meeting held on May 27, 2016, appointed Ms. Debarati Sen as an Additional Director of the Company from June 1, 2013, pursuant to provisions of Section 161 of the Companies Act, 2013 and the Articles of Association of the Company and holds office up to the date of ensuing Annual General Meeting. The Company has received notice in writing from a Member along with the deposit of Rs. 1,00,000/- proposing the candidature of Ms. Debarati Sen for the office of Director of the Company. Ms. Debarati Sen does not hold by herself or for any other person on a beneficial basis, any shares in the Company. She is not related to any other Directors of the Company. She is neither a Director nor a member in any other Company registered in India. She has been appointed as a member of the Stakeholder’s Relationship Committee and Corporate Social Responsibility (CSR) Committee of the Company from June 1, 2016. A brief profile of Ms. Debarati Sen, nature of her expertise in specific functional areas is given below: Ms. Debarati Sen (DIN-07521172): Ms. Debarati Sen, 48, held the position of Director, Corporate Sales Operations for 3M Company, USA leading corporate initiatives critical to growth, sales effectiveness and efficiency. She was the Director for 3M’s US Atlantic & Pacific Branch Operations (Puerto Rico, Hawaii, Guam & Alaska). Ms. Debarati Sen’s career spans over 24 years in Asia and US with over 18 years in 3M in various global, regional and country roles driving marketing, sales and customer engagement, product development, business development, strategy as well as mergers and acquisitions. In her last role she headed the global Oil & Gas business for 3M. She has also held the position of Vice President of Global Marketing – Equipment Protection Business at Pentair, Inc. She is on the board of the 3M A3CTION (Asian Employee Resource Network) and an Executive Member of 3M’s Women’s Leadership Forum. She also volunteers her time in reducing homelessness and poverty in the community and in supporting education and empowerment in women and is on the national governing board of Jeremiah Program, a Minnesota based national charity. Ms. Debarati holds a BS/BE in Electronics Engineering, as well as an MBA in Marketing & Finance. Her career with 3M started in India in 1996 where she was the Division Manager for Personal Safety Division for 5 years and also led the Disposable Respirator business for Asia. Names of other companies/firms in which Ms. Debarati Sen hold/held office as Director/Partner are given below: - 3M Lanka (Private) Limited, Sri Lanka, Managing Director The Board considers that the appointment of Ms. Debarati Sen as a Director of the Company would be of immense benefit to the Company. Accordingly, the Board of Directors recommends her appointment as a Director of the Company whose period of office is not liable to determination by retirement of Directors by rotation. Except Ms. Debarati Sen, being an appointee, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 6. This Explanatory Statement may also be regarded as a disclosure under Listing Regulations. Item 7 The Board of Directors at their meeting held on May 27, 2016, appointed Ms. Debarati Sen as a non-retiring Director of the Company with effect from June 1, 2016 and subject to necessary approvals as the Managing Director of the Company for a period of five (5) 33


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    NOTICE TO THE MEMBERS 3M India Limited years with effect from the said date. She has been appointed as a member of the Shareholders’/ Investors’ Grievance Committee and Corporate Social Responsibility (CSR) Committee of the Board of Directors of the Company from June 1, 2016. The appointment was made pursuant to the nomination from 3M Company, USA, nominating Ms. Debarati Sen as the Managing Director in place of Mr. Amit Laroya, who relinquished office as the Managing Director of the Company with effect from the closing hours of May 31, 2016. Application will be filed with the Central Government for the appointment of Ms. Debarati Sen as the Managing Director, since she was not staying in India for a continuous period of twelve (12) months immediately preceding the date of her appointment as the Managing Director. The appointment of Ms. Debarati Sen is appropriate and in the best interest of the Company. The approval of the members is being sought to the terms, conditions and stipulations for the appointment of Ms. Debarati Sen as the Managing Director and the remuneration payable to her. The terms and conditions fixed by the Board of Directors at their meeting held on May 27, 2016 are keeping in line with the remuneration package that is necessary to encourage good professional managers with a sound career record to important position as that of the Managing Director. The terms of appointment and remuneration as contained in the agreement are given below: - Period of Appointment: Five (5) years with effect from June 1, 2016. Salary including allowances and Incentives (excluding Perquisites): Not exceeding Rs. 39 Lakhs per month. (Upper limit for her entire tenure of (Five) 5 years) Perquisites: She will be entitled to all the perquisites listed herein below in addition to the Salary including allowances and incentives mentioned above. Personal Accident Insurance: In accordance with the rules of the Company as applicable to the senior managers. Club Fees: In accordance with the rules of the Company as applicable to the senior managers. Provident Fund: Contribution to Provident Fund in accordance with the rules of the Company as applicable to the senior managers, to the extent such contributions, either singly or put together are not taxable under the Income Tax Act, 1961. Gratuity: In accordance with the rules of the Company as applicable to the senior managers. Company car and driver: The Company shall provide a car with the driver for business and personal use in accordance with the rules of the Company as applicable to the senior managers. Other perquisites: She will be entitled to all other perquisites in accordance with the rules of the Company as applicable to the senior managers. The perquisites stated shall be valued as per Income Tax Act, 1961, wherever applicable, and in the absence of any provisions in the said Act, the perquisites shall be valued at actuals. Minimum Remuneration: Notwithstanding anything herein above stated, where in any financial year during the currency of the tenure of Ms. Debarati Sen, the Company incurs a loss or its profits are inadequate, the Company subject to the approval of Central Government shall pay the same remuneration as stated above but subject to being within the overall limits on managerial remuneration as provided under Section 197 and other applicable provisions of the Companies Act, 2013 including any statutory modification or re-enactment thereof for the time being in force, and the rules framed there under read with Schedule V to the said Act. The Board of Directors shall communicate the Central Government approval including any revision in the terms of remuneration to Ms. Debarati Sen for her acceptance. The Contract of service of Ms. Debarati Sen is terminable with a notice period of 90 days on either side. She is not liable to retire by rotation. No sitting fees shall be paid for attending the meetings of the Board of Directors or Committees thereof. Ms. Debarati Sen may be deemed to be concerned or interested in this proposal to the extent of the remuneration payable to her. In view of the provisions of Sections 196, 197, 203 and any other applicable provisions of the Companies Act, 2013, the Board recommends the Ordinary Resolution set out at Item No. 7 of the accompanying Notice for the approval of the Members. She does not hold by herself or for any other person on a beneficial basis, any shares in the Company. Except Ms. Debarati Sen, being the appointee herself, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 7. This may be deemed to be the abstract of terms of contract and memorandum of interest as required under Section 190 of the Companies Act, 2013. This Explanatory Statement may also be regarded as a disclosure under the Listing Regulations. 34


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    NOTICE TO THE MEMBERS 3M India Limited Item 8 The Company is the flagship listed Company of 3M Company, USA in India. 3M Company, USA holds 75% equity stake in the Company. 3M Company, USA is a diversified technology Company with a global presence in the following businesses: Industrial; Safety and Graphics; Electronics and Energy; Health Care; and Consumer. 3M is among the leading manufacturers of products for many of the markets it serves. Most 3M products involve expertise in product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies. 3M India Limited manages its operations in five (5) operating business segments: Industrial; Safety and Graphics; Energy; Health Care; and Consumer. 3M’s five business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M product lines. The Company has three Manufacturing Plants and a nationwide sales and branch network in India. The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Group’s synergies, state of art products and technologies, competencies and “3M” brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA at arm’s length basis. The Audit Committee at its meeting held on February 5, 2016 has reviewed and after due consideration, accorded omnibus approval for the estimated value of transactions mentioned in the item No. 8 of the Notice for the year 2016-17 (estimated). An analysis of all the Related Party Transactions(RPTs) estimated / to be entered into by the Company during the year for the year 2016-17(estimated) and the basis of charge was undertaken through a third party professional firm. The Audit Committee upon review of such analysis, is of the view that all these RPTs by the Company are at Arm’s Length basis. 3M Company, USA is a Holding Company (Promoter) of the Company and is a “Related Party” as per the definition under Section 2(76) of the Companies Act, 2013 and Regulation 2(zb) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). The Listing Regulations with respect to RPTs were notified on September 2, 2015, inter-alia requires that all existing material related party contracts or arrangements entered prior to September 3, 2015 and which may continue beyond such date shall be placed for approval by way of an ordinary resolution of the shareholders in the first General Meeting subsequent to the notification of the Listing Regulations. As per the provisions of Companies Act, 2013 and Listing Regulations, based on past trend, the transactions as described hereunder are likely to exceed 10% of the annual turnover of the Company as per the last audited financial statements of the Company(2015-16) and may exceed the materiality threshold as prescribed by Companies Act, 2013 and Listing Regulations. Thus, in terms of the provisions of Companies Act, 2013 and Listing Regulations, these transactions would require the approval of the members by way of an Ordinary Resolution. As per the provisions of Listing Regulations, all entities falling under the definition of related parties shall abstain from voting on the resolution and accordingly, the promoters will not vote on item No. 8. Particulars Information Name of the Related party 3M Company, USA. Nature of relationship Holding Company (Parent)of the Company Period for which the shareholders’ approval is sought April 1, 2016 to March 31, 2017 Name of Director(s) or key Managerial None, except Mr. Albert C Wang, Mr. Manuel B Pardo, Mr. Ramesh Ramadurai, Ms. personnel who is related, if any, Debarati Sen, Mr. Amit Laroya and Mr. B. V. Shankaranarayana Rao (being Nominees of 3M Company, USA on the Board of the Company). Nature and Particulars of transactions with 3M Income from Contract Research, Sale of Goods, Purchases of Materials, Royalty, Company, USA (“RPTs”) Re-charge of expenses paid and received and Corporate Management Fee. These transactions are in the ordinary course of business and are on an arm’s length basis. Material terms of the contracts/arrangements/ Terms and Conditions for the transaction are in ordinary course of business and transactions on arm’s length basis, which is same for the entire 3M Companies throughout the world. Details are given in Annexure G to the Report of the Directors. 35


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    BOARD’S REPORT 3M India Limited Duration of these RPTs have been continued These transactions have been undertaken since inception of the Company from from the past time to time depending on needs of business. The value of each type of RPTs in the last two This information forms part of the notes to the audited financial statements for the years FY 2015-16. Estimated Monetary value of such RPTs The Company adopts April-March as its financial year. Accordingly, the current financial year FY 2016-17 has just begun for the Company. Considering the business phenomenon being dynamic, and given the fact that the Company is seeking the approval of the Members in midst of the current financial year, the Company expects the level of transactions for the year 2016-17 with 3M Company, USA to be above the Materiality threshold as prescribed under the provisions of Companies Act, 2013 and Listing Regulations. Whether the transactions have been approved Yes. The Audit Committee has granted omnibus approval as per the prevailing legal by the Audit Committee requirements. The proposed RPTs are in accordance with the RPTs Policy of the Company. Any other Information relevant or important None. for the Members to make a decision on the proposed transactions. Considering the current volatility in the business environment, where neither nor foreign exchange rates can be predicted in advance, the Company expects the level of transactions to be above the materiality threshold as prescribed under the Listing Regulations for the period for which the approval of Members is sought as stated above. The proposed RPTs are in ordinary and normal course of business and on Arms’ Length basis and play a significant role in the Company’s business operations and accordingly the Board recommends the Ordinary resolution set forth in item No. 8 of the Notice for the approval of the Members in terms of Regulation 23 of the Listing Regulations. None of the Directors or Key Managerial Personnel of the Company except Mr. Albert C Wang, Mr. Manuel B Pardo, Mr. Ramesh Ramadurai, Ms. Debarati Sen, Mr. Amit Laroya and Mr. B. V. Shankaranarayana Rao (being Nominees of 3M Company, USA on the Board of the Company) and their relatives may be deemed to be concerned or interested, directly or indirectly, in this Resolution. Item 9 The Members of the Company by way of Postal Ballot had approved on September 14, 2011 by way of a Special Resolution, the payment of remuneration by way of Commission to the Non-Executive Directors of the Company, of a sum not exceeding one percent (1%) per annum of the Net Profits of the Company, calculated in accordance with the provisions of the Companies Act, 1956, for a period of five (5) years commencing from April 1, 2011. It is proposed to extend the remuneration for further period of five (5) years of the Company commencing from April 1, 2016, provided that the remuneration in the form of Commission shall not exceeding one percent (1%) per annum of the Net Profits of the Company computed in accordance with the provisions of the Companies Act, 2013. This remuneration will be distributed amongst all or some of the Directors in accordance with the directions given by the Board of Directors and subject to any other applicable requirements under the Companies Act, 2013. The Directors shall receive individually a sum as may be decided by the Board from time to time and this remuneration shall be in addition to fee payable to the Directors for attending the meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board, and reimbursement of expenses for participation in the Board and other meetings. Accordingly, a fresh approval of the Members is sought by way of a Special Resolution under the applicable provisions of the Companies Act, 2013 for payment of remuneration by way of Commission to the Directors of the Company, other than Managing Director and Whole-time Director, for a period of five (5) years commencing from April 1, 2016 as set out in the Resolution at Item No. 9 of the Notice. Directors other than the Managing Director, Whole-time Director and Key Managerial Personnel of the Company are deemed to be concerned or interested in the resolution set out at item No. 9 of the Notice to the extent of the remuneration that may be received by them. By order of the Board V. Srinivasan Place : Bengaluru Company Secretary Date : May 27, 2016 ACS-16430 36


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    BOARD’S REPORT 3M India Limited BOARD’S REPORT To the Members of 3M India Limited, Your Directors have pleasure in presenting the 29th Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended March 31, 2016. FINANCIAL HIGHLIGHTS Following are the working results: (Rs. in Lakhs) Year ended Year ended %age Particulars March 31,2016 March 31,2015 Increase(+)/ (Audited) (Audited) Decrease(–) Total Income(excluding excise duty) 212,019.48 185,477.60 +14.31% Of which – Export Sales 4,672.24 3,942.92 +18.50% – Other Income 1,721.61 1,447.84 +18.91% Less : Expenditure 176,112.69 163,718.62 +7.57% Profit Before Interest and Depreciation 35,906.79 21,758.98 +65.02% Less : Interest 218.65 342.27 –36.12% Less : Depreciation 4,888.91 4,960.49 –1.44% Profit Before Taxation 30,799.23 16,456.22 +87.16% Less: Provision for Taxation 10,706.25 5,622.06 +90.43% Profit after Taxation 20,092.98 10,834.16 +85.46% STATE OF COMPANY’S AFFAIRS The external environment indicates long term growth in India. Several leading financial institutions have vouched for the growth as well. While the Indian economy gives us long term optimism, currently prevailing issues also made us play cautiously in the market environment. Your Company focused on improving productivity and gearing up for the much faster paced economy that is expected over the next few years. The mantra we followed is productivity led growth in this financial year. Productivity improvement was achieved through 5 distinct steps that the Company undertook;  Portfolio prioritization and Commercialization focus: We focused on relentlessly prioritizing our resources to our prioritized businesses.  Vital Few Metrics: We strengthened the predictability of our actions by focusing on a few metrics, following the Hoshin Kanri methodology of Business Process Execution.  Market & Segment Prioritization: Developed a deep understanding of the external environment and focusing on segments that are profitable.  Keeping the Customer First: Enhanced our customer service team and developed newer business models including ecommerce, which helped in attaining a more effective reach to our end customers.  Developing a bigger, bolder and smarter plan through increased internal collaboration. Change Management was integral to executing the above five steps, while keeping our employees engaged and energized. Following these steps helped us to enter a phase of “Efficient growth”, which is central to our growth strategy. The Company registered an overall turnover growth of 14.31% at Rs. 212,019.48 Lakhs for the financial year ended March 31, 2016 compared to Rs.185,477.60 Lakhs in the previous year. The Profit Before Interest and Depreciation was at Rs. 35,906.79 Lakhs compared to Rs. 21,758.98 Lakhs for the previous year. The operating margin for the current year was at 16.94% compared to 11.73% for the last year. Profit Before Tax was at Rs.30,799.23 Lakhs compared to Rs. 16,456.22 Lakhs for the previous year. Profit After Taxation was at Rs. 20,092.98 Lakhs compared to Rs.10,834.16 Lakhs for the previous year. Lower material cost and interest, portfolio prioritization and expense productivity increased the profitability at all levels for the year under review. Export Sales was at Rs.4,672.24 Lakhs for the year ended March 31, 2016 compared to Rs. 3,942.92 Lakhs in the previous year, an increase of 18.50%. 37


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    BOARD’S REPORT 3M India Limited The Industrial business grew by 9.90%; Health Care business grew by 15.51%: Safety and Graphics business grew by 16.71%; Consumer business grew by 16.81% and Energy business grew by 30.12%. The EPS (Basic and Diluted) of the Company for the year 2015-16 was Rs. 178.36 per share as compared to Rs. 96.17 per share in the previous year. Detailed analysis of the performance has been discussed in the Management’s Discussion and Analysis Section of the Annual Report. CONTRIBUTION TO EXCHEQUER During the Financial year 2015-16, the Company through its business contributed to various taxes viz., VAT, TDS, Sales Tax, State Excise, CENVAT and Customs close to Rs.46,707.08 Lakhs, in aggregate. MATERIAL CHANGES AND COMMITMENTS There have been no material changes and/or commitments affecting the financial position of the Company since the close of the Financial year and the date of this report. CHANGE IN THE NATURE OF BUSINESS There were no changes in the nature of business during the year under review as prescribed in Rule 8(ii) of the Companies (Accounts) Rules, 2014. DIVIDEND AND TRANSFER TO RESERVES The Company has launched new growth plan with a long term objective and is in the process of implementing many initiatives and projects. A more detailed assessment is being carried out to estimate the required resources. As a result, it has been decided to conserve and retain the earnings and, therefore, not propose dividend or transfer any amounts to reserves. CAPITAL INVESTMENTS Capital Investments during the year 2015-16 were at Rs. 1,092.46 Lakhs (Net of capital work-in-progress and capital advances) (2014-15: Rs. 1,471.70 Lakhs). MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report is annexed herewith as “Annexure A”. CORPORATE GOVERNANCE AND SHAREHOLDER INFORMATION A separate Report on Corporate Governance in terms of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as “Listing Regulations”) along with a Certificate from a Practising Company Secretary regarding compliance to the Conditions stipulated under Chapter IV of Regulations is annexed as “Annexure B”. DETAILS OF BOARD MEETINGS DURING THE YEAR During the financial year ended March 31, 2016, five (5) Meetings of the Board were held on May 29, 2015, August 3, 2015, October 30, 2015, February 5, 2016 and February 26, 2016.The details of other committee meetings are given in the Corporate Governance Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. B.S. Iyer, Chairman of the Board, ceased to be a Director on the Board of the Company upon completion of his term as Independent Director with effect from the closing hours on 31st March 2016. He was associated with the Company as Director from December 2001. The Board expresses its deep appreciation of the valuable contributions made by Mr. Iyer to the progress of the Company. At the Meeting of the Board held on May 27, 2016: - Ms. Radhika Rajan was appointed as Additional Director categorized as Non-Executive Independent Director of the Company from May 27, 2016. The Board of Directors welcomes Ms. Radhika Rajan to the Board. The details of Ms. Radhika Rajan are furnished in the Explanatory Statement to the Notice of the Annual General Meeting pursuant to Section 102 of the Companies Act, 2013. The Board recommends her appointment. - Ms. Debarati Sen was appointed subject to the requisite approvals from the Members and the Central Government, as Additional Director and as Managing Director of the Company for a period of five (5) years from June 1, 2016 in place of Mr. Amit Laroya. The Board of Directors welcomes Ms. Debarati Sen to the Board. The details of Ms. Debarati Sen are furnished in the Explanatory 38


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    BOARD’S REPORT 3M India Limited Statement to the Notice of the Annual General Meeting. The Board recommends her appointment. She will be a Key Managerial Personnel of the Company from June 1, 2016. - Mr. Amit Laroya shall cease to be the Managing Director of the Company from the closing hours of May 31, 2016 consequent upon his appointment as Managing Director of 3M Korea. The Board expresses its deep appreciation of the valuable contributions made by Mr. Laroya during his tenure as Managing Director of the Company to the progress of the Company. Mr. Laroya will continue as Non-Executive Director of the Company. - Mrs. Sadhana Kaul resigned as Director of the Company with effect from the closing hours of May 27, 2016 due to her pre-occupation and other commitments. The Board expresses its appreciation of the contributions made by Mrs. Kaul during her tenure as Director of the Company. - Mr. Bharat Shah was appointed as Chairman of the Board. The Board of Directors welcomes Mr. Bharat Shah as new Chairman of the Board. Mr. Ramesh Ramadurai, Non-Executive Non-Independent Director will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The details of Mr. Ramesh Ramadurai are given in the Explanatory Statement to the Notice of the Annual General Meeting. The Board of Directors recommends his re-appointment. Mr. Sameer Agarwal ceased to be Chief Financial Officer (CFO) with effect from the closing hours of March 31, 2016 and Mr. Panagiotis Goulakos (Panos), was appointed as CFO from March 15, 2016. As at the financial year ending March 31, 2016, Mr. Amit Laroya, Managing Director, Mr. B.V. Shankaranarayana Rao, Whole-time Director, Mr. Panagiotis Goulakos (Panos), Chief Financial Officer and Mr. V. Srinivasan, Company Secretary and Compliance Officer, are the Key Managerial Personnel of the Company. COMPOSITION OF AUDIT COMMITTEE As at the financial year ending March 31, 2016, the Audit Committee of the Company consisted of three (3) Non-Executive Independent Directors and one (1) Non-Executive Director and all of them have financial and accounting knowledge. The members of the Committee are Mr. Biren Gabhawala (Chairman), Mr. B. S. Iyer (up to March 31, 2016), Mr. Bharat Shah and Mr. Manuel B Pardo. The Board has accepted all the recommendations of the Audit Committee during the year under review. NOMINATION AND REMUNERATION COMMITTEE POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and for other employees and their remuneration. The same has been disclosed in the website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/summary/. The composition, criteria for selection of Directors and the terms of reference of the Nomination and Remuneration Committee is stated in the Corporate Governance Report. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has also established an effective vigil mechanism by way of Business Conduct Concern Reporting Policy (Whistleblower Policy) for upholding 3M’s Code of Conduct. The details of the said Policy are stated in the Corporate Governance Report and also available on the website of the Company http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/ financial-facts/summary/. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY The Directors had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. 3M globally is aligned to Company’s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission(COSO) in Internal Control — Integrated Framework (2013). The internal control framework essentially has two elements viz., (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations and (2) an assurance function provided by Internal Audit. The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies. 39


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    BOARD’S REPORT 3M India Limited The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal control procedures. The Internal Auditor functionally reports to the Audit Committee and administratively to the Managing Director. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board. The Audit Committee also meets the Company’s Statutory Auditors to ascertain their views on financial statements including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of internal control system. DIRECTORS’ RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013: (a) that in the preparation of the annual financial statements for the Financial year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date; (c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) that the annual financial statements have been prepared on a going concern basis; (e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; (f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. INFORMATION ON THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURE The Company does not have any Subsidiaries/Associates/Joint Venture. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as “Annexure C”. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Vijayakrishna K.T, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as “Annexure D”. There were no qualifications in the Secretarial Audit report for the year ended March 31, 2016. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The Information on Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed as “Annexure E”. DEPOSITS During the year under review, the Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. 40


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    BOARD’S REPORT 3M India Limited PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS During the year under review, the Company has not given any Loan, provided any guarantees or made any Investments covered under Section 186 of the Companies Act, 2013. RISK MANAGEMENT POLICY The Company has a Risk Management Policy pursuant to the requirements of Listing Regulations. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board’s Report. CORPORATE SOCIAL RESPONSIBILITY As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Innovation and Women Empowerment. These projects are in accordance with Schedule VII to the Companies Act, 2013.  In Education: The Company worked with NGO partners to inculcate the spirit of inquiry and innovative thinking among underprivileged children. We work with the Agastya Foundation on the Mobile Science Lab initiative which helps disseminate scientific practical knowledge to 100 Government schools in 2 states in India (Karnataka and Maharashtra), sparking curiosity among 20,000+ children.  Women Empowerment: The Company’s vision is to help develop leadership skills to empower underprivileged women though entrepreneurship and local governance. The Company works with two reputable NGOs in Bangalore to deliver a skills development program which is equipping more than 150 young women with the necessary skills to make them employable.  Social Innovation: As a way to contribute to the innovation eco-system in the country, the Company supports young innovators in the age group of 18 to 30 years with an Incubation Fund and Awards Program, jointly with the Confederation of Indian Industries (CII). The program identifies unique innovations that can help solve social challenges in India. The award winners are offered grants by the Company to pursue their projects and develop prototypes for further development. The Annual Report on CSR activities is annexed herewith as “Annexure F” including the reasons for not spending the full amount for the year 2015-16. RELATED PARTY TRANSACTIONS (RPTs) All Related Party Transactions (RPTs) that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. A statement giving details of all RPTs is placed before the Audit Committee for their approval on a quarterly basis. The policy on RPTs as approved by the Board is uploaded on the Company’s website at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/ financial-facts/summary/. The Company being a part of 3M conglomerate, has rights to carry out the business within India and accordingly, has access to Group’s synergies, state of art products and technologies, competencies and “3M” brand name which are very critical and essential to carry out its business operations more efficiently in an increasingly globalized and competitive scenario. As a part of its regular business, the Company purchases, avails/renders services from/to 3M Company, USA at arm’s length basis. As per the provisions of the Companies Act, 2013 and Listing Regulations, all RPTs require approval of the members by an ordinary resolution. Based on past trend, the transactions with 3M Company, USA(Holding Company) are likely to exceed 10% of the annual turnover of the Company as per the last audited financial statements of the Company and may exceed the materiality threshold as prescribed under the provisions of Listing Regulations. Thus, in terms of Listing Regulations, these transactions would require approval of the members. The RPTs are necessary, normal to business, plays a significant role in the Company’s business operations and also form integral part of the Company’s business. An analysis of all the RPTs entered into / by the Company and the basis of charge was undertaken through a third party professional firm. Accordingly, the Board recommends for the approval of the members in terms of the provisions of Listing Regulations. The Form No. AOC-2 is annexed herewith as “Annexure G”. ANNUAL BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and The Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, its Committee and the Directors individually. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 41


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    BOARD’S REPORT 3M India Limited HUMAN RESOURCES Your Company considers people as its biggest assets and is at the heart of its human resource strategy. It has put concerted efforts in talent management and succession planning practices, strong performance management and learning and training initiatives to ensure that your Company consistently develops inspiring, strong and credible leadership. Your Company has established an organization structure that is agile and focused on delivering business results. With regular communication and sustained efforts, it is ensuring that employees are aligned on common objectives and have the right information on business evolution. As at March 31, 2016, the Company had employee strength of 1,388 personnel. PARTICULARS OF EMPLOYEES Pursuant to Section 197(12) of the Companies Act, 2013 and Rule 5(1) (2) & (3) of the Companies (Appointment & Remuneration) Rules, 2014, details / disclosures of Ratio of Remuneration to each Director to the median employee’s remuneration is annexed herewith as “Annexure H”. Further, the Statement showing details of employees of the Company employed throughout the year and employees employed for part of the year who were in receipt of remuneration of Rs. 60 Lakhs or more per annum / Rs. 5 Lakhs or more per month is annexed herewith as “Annexure I.” DECLARATION FROM INDEPENDENT DIRECTORS The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013, that they meet the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013 read with Listing Regulations. The same is annexed herewith as “Annexure J”. STATUTORY AUDITORS Messrs. Lovelock & Lewes have been the Statutory Auditors of your Company since 1995. As you may be aware, at the Annual General Meeting (AGM) of the Company held on August 4, 2015, Messrs. Lovelock & Lewes were appointed as Statutory Auditors for a period of two years viz., FY 2015-16 & 2016-17 (subject to ratification by the shareholders at the AGM in 2016) in line with the provisions of Section 139 of the Companies Act, 2013 (“Act”) read with Companies (Audit and Auditors) Rules, 2014. Subsequent thereto, Messrs. Lovelock & Lewes informed us of the rotation of assigned partner as part of its internal policy for the financial year 2016-17. As the new Statutory Auditors for the Company were to be appointed under the Act for the FY 2017-18 onwards, it was considered desirable to have the new Statutory Auditors appointed from the financial year 2016-17 itself. This was deliberated between the Company and Messrs. Lovelock & Lewes and was unconditionally agreed by both, so as to ensure and facilitate smooth transition of audit work. Accordingly, a written confirmation vide letter dated May 19, 2016 from Messrs. Lovelock & Lewes was received. Pursuant to the above, the Company has identified Messrs. BSR & Co., LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/ W-100022), Bengaluru- 560071 as new Statutory Auditor. The Company has received a Special Notice under Section 140(4) (i) of the Companies Act, 2013 read with Rule 23 of the Companies (Management and Administration) Rules, 2014 from 3M Company, USA, shareholder holding 75% of total share capital proposing the name of Messrs. BSR & Co., LLP, Chartered Accountants, for appointment as Statutory Auditors for a period of 5 years (effective from the Financial Year 2016-17) from the conclusion of the 29th Annual General Meeting. Messrs. BSR & Co. LLP, Chartered Accountants have furnished their eligibility certificate under Section 141 of the Companies Act, 2013. As required under the Listing Regulations, Messrs. BSR & Co. LLP, Chartered Accountants have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Board of Directors of the Company on the recommendation of Audit Committee have appointed Messrs. BSR & Co., LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), Bengaluru- 560071 as Statutory Auditors of the Company, subject to the approval of the members of the Company at the ensuing Annual General Meeting. The Notice of AGM contains a business to this effect for your approval. Messrs. Lovelock & Lewes, over many years, have since 1995 successfully met the challenge that the size and scale of the Company’s operations posed for auditors and have maintained the highest level of governance, rigour and quality in their audit. The Board of Directors wishes to place on record its deep appreciation and gratitude to Messrs. Lovelock & Lewes for their guidance and support as Statutory Auditors of the Company. COST AUDIT Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company in respect of the products covered under the said rules are required to be audited by a Cost Accountant. Accordingly, the Board of Directors of the Company at its meeting held on May 27, 2016 on the recommendation of the 42


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    BOARD’S REPORT 3M India Limited Audit Committee, approved re-appointment of Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, (holding Registration No. 000065), to conduct the audit of the cost records of the Company for the financial year ended March 31, 2017 on an remuneration of Rs. 430,000/- plus service tax as applicable and out of pocket expenses at actuals. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm’s length relationship with the Company. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking ratification of the remuneration payable to Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru is included in the Notice convening the Annual General Meeting. Disclosure on cost audit: For the financial year ending March 31, 2015, the due date of filing the Cost Audit Report submitted by Messrs. Rao, Murthy & Associates, Cost Accountants, Bengaluru, was September 27, 2015 and the same was filed with the Ministry of Corporate Affairs on September 24, 2015 vide SRN No. S39552641. OTHER DISCLOSURES • The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The following is a summary of sexual harassment complaints received and disposed off during the year 2015-2016: No of complaints received: 2 No of complaints disposed off: 2 • There were no qualifications by the Auditors in their report forming part of this financials for the year ended March 31, 2016. • During the year under review, the Company has not bought its own shares nor has given any loan to the employees (including KMPs) of the Company for purchase of the Company shares. • During the year under review, no Commission or Remuneration was paid to the Executive Directors from Holding / Subsidiary Companies. LISTING WITH STOCK EXCHANGES The Company has paid the Annual Listing Fees for the year 2016-2017 to National Stock exchange of India Limited (NSE) and BSE Limited (BSE) where the Company’s Shares are listed. The new SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 came into effect from December 1, 2015 with a view to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The Company has complied with the said Regulations by entering into new Listing Agreement with BSE and NSE. EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS The Company has only one class of share, i.e., equity share with a face value of Rs. 10 each. The Authorized/Issued/Subscribed and fully paid-up Capital as at March 31, 2016 was Rs. 11,26,50,700 (divided into 1,12,65,070 equity shares of Rs. 10 each).During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. ENVIRONMENT, HEALTH AND SAFETY Compliance with relevant regulations and 3M Global Environmental, Health and Safety policies is an integral part of the Company’s operating philosophy and the Company stands committed to continually improve on these objectives. There was a considerable focus on improving Environment, Health and Safety during the period under review by the Company. Environment: The Company has three (3) Manufacturing Plants in operation in India. All three (3) plants have environmental management systems certified to ISO 14001: 2004. The Company continuously endeavors to improve on environmental management to minimize the environmental impacts. All plants have sewage / waste water treatment plants and the treated water is recycled for horticulture within the facilities. The plants have set up various measures to reduce and reuse water where ever possible. The plants have also installed rain water harvesting systems to divert the rain water for ground water recharging. With the approval from local Pollution Control Boards, plants have now started sending industrial waste to cement companies to generate energy instead of in-house incineration and thereby reducing overall carbon foot prints by saving the part of the coal consumption of cement plants. As part of World Environmental day initiative, the plants have taken up various environmental awareness programs including tree plantation in plants as well as public places. Health and Safety: All three (3) manufacturing plants have health and safety management systems certified to OHSAS 18001: 2007. All plants have dedicated safety officers supported by Corporate EHS. Plant Safety committees, which include shop floor employees and chaired by Plant managers, are in place and meet regularly to review issues impacting plant safety and employees health. High risk 43


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    BOARD’S REPORT 3M India Limited operations are controlled through the hierarchy of controls identified through 3M’s risk prioritization matrix initiative. Key measures like conducting training programs on various health and safety issues including dealing with epidemics, ergonomics, industrial hygiene, process safety management, machine guarding, work safety, road safety, first-aid, manual handling etc. have been implemented. Regular health checkup of the plant employees is carried out. Every year plants celebrate safety month in March and conduct various safety awareness programs like safety quiz, drawing competition, slogan and hazard identification competition. All plants have full- fledged emergency communication and management systems including fire alarms, fire hydrants and fire sprinklers. Regular mock drills are conducted to check the adequacy and preparedness of these systems. The plants have a well-equipped first aid rooms to attend to immediate medical needs. During this period under consideration, there were no lost time accidents across three plants. 3M Ahmedabad plant has been audited by 3M Global EHS auditors and the auditors commended the plant for complying with 3M Global EHS policies. During this period under consideration, 3M Ranjangaon plant received National Safety Systems Excellence award from FICCI, post a rigorous site audit and review by FICCI safety experts. AWARDS AND RECOGNITION • 3M India Ranjangaon plant’s commitment to stringent safety systems at the workplace earned national recognition with the FICCI “Safety Systems Excellence Award”. The award recognizes companies for the robustness of their safety systems and not for performance alone. The selection across Indian companies is conducted through a rigorous four-stage process which includes on- site audit by safety experts and a final selection by the Hon’ble Jury for the awards. • 3M India received various awards for demonstrating quality & technical excellence for some of the Company’s key account customers. The Company was awarded a “Certificate of Appreciation for Outstanding Support in Sales Promotion” by Honda Cars at their Annual Supplier convention. Toyoda, a supplier of Toyota, recognized the Company for outstanding effort and commitment in the area of quality and delivery. Honda Motorcycle and Scooters also recognized 3M India for outstanding contribution towards Honda’s two-wheeler business. • 3M India’s top consumer brand, Scotch-Brite® released a television commercial last year which was selected for the best advertisement award in the home care category at the first edition of the IndIAA Awards. These awards were instituted by the India Chapter of International Advertising Association. The awards recognized 16 brands from a final shortlist of 76 nominees that were selected from over 500 entries by an eminent panel of business and brand leaders. • 3M India Ranjangaon plant received 3M Corporate recognition for quality and manufacturing excellence with global awards for 3 projects - 1 for quality achievement and 2 for process technology excellence. • 3M India also received accolades for excellence in marketing, innovation and support functions with regional awards. ACKNOWLEDGEMENT The Board wishes to place on record its appreciation to all employees in the Company, for their sustained efforts and immense contributions to the good levels of performance and growth that your Company has achieved during the year. The Board also acknowledges the continued support and co-operation received from 3M Company, USA. The Directors express their gratitude to the Central Government and the State Governments of Karnataka, Maharashtra and Gujarat for the support given to the Company. The Directors also thank all customers, dealers, suppliers, banks, members and others connected with the business of the Company for their co-operation. On behalf of the Board of Directors Amit Laroya B.V. Shankaranarayana Rao Place : Bengaluru Managing Director Whole-time Director Date : May 27, 2016 DIN: 00098933 DIN: 00044840 44


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited MANAGEMENT DISCUSSION AND ANALYSIS REPORT Cautionary Statement: Members and Investors are cautioned that the discussion in this section of the Annual Report may contain statements that involve risks and uncertainties. Forward-looking statements mentioned may involve risks and uncertainties that could cause results to differ materially from those projected. Consequently, actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors. THE COMPANY The Company is the flagship Listed Company of 3M Company, USA in India. 3M Company, USA holds 75% equity stake in the Company and is a diversified technology and science Company with a global presence in the following businesses: Industrial; Health Care; Consumer; Safety and Graphics; and Energy and is among the leading manufacturers of products for many of the markets it serves. Most of its products involve expertise in product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies. The Company has manufacturing facilities in India at Ahmedabad, Bengaluru, Pune and has a R&D Center in Bengaluru. As at March 31, 2016, the Company had employee strength of 1,388 personnel. The Company managed its operations in five (5) operating business segments: Industrial; Health Care; Consumer; Safety and Graphics; and Energy. The Company’s five business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M product lines. 3M products are sold through numerous distribution channels, including directly to users and through numerous wholesalers, retailers, converters, distributors and dealers in a wide variety of trades in many countries around the world. The Management of the Company believes that the confidence of wholesalers, retailers, converters, distributors and dealers in 3M and its products is a confidence developed through long association with skilled marketing and sales representatives and has contributed significantly to 3M India’s growth and its position in the marketplace. Global Economic Overview Global growth is projected at 2.3% for 2016 and 2.7% for 2017. Some near term economic indicators have shown improvement leading to the improved future forecast. In USA, domestic activity remains modest and the average GDP growth for 2016 may fall below 2%. Eurozone is slated to grow at 0.5% to 0.6% in the first quarter of this year. In China, growth is expected to be 6.2 to 6.5%. Foreign Exchange rates continue to cause turmoil in the economy. India Economic Overview India has a strong GDP forecast for the next 5 years, indicating a +7% level for the next few years. The IIP has not been at the expected levels of 8% however. Inflation has been under control, and relative to most economies, the exchange rate has not risen as sharply. Some of the key trends in the market are;  Pickup in consumption: We see strong growth in retail, construction and healthcare. With the increasing income in the middle class, we are also seeing a larger use of life style products with Indian consumers.  Increased focus on sustainability: We are seeing a rising focus in the government as well as consumers for air quality and water quality. Several reforms are being introduced by the government to improve the environment, including green initiatives.  Rapid adoption of ecommerce: Ecommerce is helping companies better target their customers, and make themselves more relevant. It is also helping them reach more efficiently into Tier II towns.  Make in India campaigns leading to increased FDI in India: Several industries have benefitted from the Make in India campaign, especially Electronics, Automobiles, Defence and SME sectors. Increased manufacturing in India will also help improve the Tier 1 and Tier 2 supply market in India.  Smart cities: Through this initiative, the government has showcased their focus on providing more urban solutions to the country. The government is working closely with system integrators and partners to plan for a more sustainable future for Indian cities. 45


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited RESULTS OF THE OPERATIONS OF THE COMPANY The Company registered an overall turnover growth of 14.31% at Rs. 212,019.48 Lakhs for the financial year ended March 31, 2016 compared to Rs.185,477.60 Lakhs in the previous year. The Profit Before Interest and Depreciation was at Rs. 35,906.79 Lakhs compared to Rs. 21,758.98 Lakhs for the previous year. The operating margin for the current year was at 16.94% compared to 11.73% for the last year. Profit Before Tax was at Rs.30,799.23 Lakhs compared to Rs. 16,456.22 Lakhs for the previous year. Profit After Taxation was at Rs. 20,092.98 Lakhs compared to Rs.10,834.16 Lakhs for the previous year. Lower material cost and interest, portfolio prioritization and expense productivity increased the profitability at all levels for the year under review. Export Sales was at Rs.4,672.24 Lakhs for the year ended March 31, 2016 compared to Rs. 3,942.92 Lakhs in the previous year, an increase of 18.50%. Other Operating Income: The other income was at Rs. 1,721.61 Lakhs for the year 2015-16 when compared to Rs. 1,447.84 Lakhs for the previous year 2014-15. Cost of Goods sold: The % of cost of raw material consumed as against sales for the year 2015-16 has gone down to 56.68% as against 59.32% for the previous year 2014-15 mainly on account of increase in productivity, portfolio prioritization etc.,. Employee Benefits Expense: Employee cost as a % of sales for the year 2015-16 stood at 11.91% (previous year 13.27%) at Rs. 25,252.77 Lakhs ( previous year : Rs. 24,616.49 Lakhs), lower by 10.26%. Sales per employee have improved by 20.32% to Rs.152.75 Lakhs (no. of employee’s 1,388) in the current year 2015-16 from Rs. 126.95 Lakhs (no. of employees 1,461) for the previous year 2014-15. Finance Cost: The interest cost for the year 2015-16 was at Rs.218.65 Lakhs compared to Rs. 342.27 Lakhs in the previous year 2014-15. The interest cost is on account of lease rentals of vehicles and office equipment. Interest earned: The Company earned Rs. 1,335.40 Lakhs on the surplus during the year 2015-16 when compared to Rs. 66.59 Lakhs during the year 2014-15 by keeping the funds in flexi deposits with the Bank. Earnings per Share (EPS): The EPS (Basic and Diluted) of the Company for the year 2015-16 was Rs. 178.36 per share as compared to Rs. 96.17 per share in the previous year. Share Capital: The Company has only one class of share, i.e. equity share with a face value of Rs. 10 each. The Authorized/Issued/Subscribed and fully paid-up Capital as at March 31, 2016 was Rs. 11,26,50,700 (divided into 1,12,65,070 equity shares of Rs. 10 each). During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. Reserves & Surplus: Entire profit of Rs.20,092.98 Lakhs is retained in profit and loss account for the year ended March 31, 2016. The Reserves & Surplus was at Rs. 99,737.82 Lakhs including the current year retained profit. Shareholder’s Fund: The total shareholder funds increased to Rs. 100,864.33 Lakhs as at March 31, 2016 from Rs. 80,771.35 Lakhs as of the previous financial year 2014-15 end, representing a growth of 24.87% mainly on account of retained profits of the current year. Depreciation: The depreciation charge for the current year is lower at Rs. 4,888.91 Lakhs as against a charge of Rs. 4,960.49 Lakhs of previous year 2014-15 due to full year amortization of Technical Center (CTC) equipment at Gurgaon. Fixed Assets-Capital Expenditure: The gross Fixed Assets as at March 31, 2016 was Rs.58,461.81 Lakhs as compared to Rs. 58,712.71 Lakhs of previous financial year 2014-15. The Company has incurred a capital expenditure of Rs. 1,092.46 Lakhs (Net of capital work-in progress and capital advances) during the year 2015-16 (previous year : Rs. 1,471.70 Lakhs), a decrease of 25.77% year on year. 46


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Inventories: Inventory as at March 31, 2016 amounted to Rs. 29,051.15 Lakhs as against Rs. 29,556.55 Lakhs of previous financial year 2014-15.The inventory ratio has decreased to 88 days as at March 31, 2016 from 98 days of previous year 2014-15. Trade Receivables: Trade Receivables as at March 31, 2016 amounted to Rs.28,273.89 Lakhs as against Rs. 24,912.02 Lakhs of previous year 2014-15. The debtor’s turnover ratio was at 49 days (previous year: 49 days). Cash and Bank balances: The total balance of cash and bank balances as at March 31, 2016 was Rs.37,087.50 Lakhs as compared to Rs. 11,390.95 Lakhs as at March 31, 2015. Overall analysis of the financial statements: Year Ended March 31, 2016 Year Ended March 31, 2015 Particulars Rs. in Lakhs % Rs. in Lakhs % Revenue(Net) 210,297.87 99.19 184,029.76 99.22 Other income 1,721.61 0.81 1,447.84 0.78 Total Revenue 212,019.48 100.00 185,477.60 100.00 Cost of Materials consumed 62,907.96 29.67 60,892.42 32.83 Purchases of stock-in-trade 58,315.20 27.50 52,314.30 28.21 Changes in inventories of finished goods, work-in-progress (1,041.88) (0.49) (3,187.45) (1.72) and stock-in –trade Employee Costs 25,252.77 11.91 24,616.49 13.27 Other Expenses 30,678.64 14.47 29,082.86 15.68 Profit Before Finance Costs and Depreciation 35,906.79 16.94 21,758.98 11.73 Finance Costs 218.65 0.10 342.27 0.18 Depreciation 4,888.91 2.31 4,960.49 2.67 Total Expenditure 181,220.25 85.47 169,021.38 91.13 Profit Before Tax 30,799.23 14.53 16,456.22 8.87 Tax 10,706.25 5.05 5,622.06 3.03 Profit After Tax 20,092.98 9.48 10,834.16 5.84 Segment wise performance: The Industrial business grew by 9.90%; Health Care business grew by 15.51%: Safety and Graphics business grew by 16.71%; Consumer business grew by 16.81% and Energy business grew by 30.12%. (A) INDUSTRIAL BUSINESS: The Industrial segment serves a broad range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket (auto body shops and retail), electronics, appliance, paper and printing, packaging, food and beverage, and construction. Industrial products include tapes, a wide variety of coated, non-woven and bonded abrasives, adhesives, advanced ceramics, sealants, specialty materials, closure systems for personal hygiene products, acoustic systems products, and components and products that are used in the manufacture, repair and maintenance of automotive, marine, aircraft and specialty vehicles. Major industrial products include vinyl, polyester, foil and specialty industrial tapes and adhesives; Scotch® Masking Tape, Scotch® Filament Tape and Scotch® Packaging Tape; packaging equipment; 3M™ VHB™ Bonding Tapes; conductive, low surface energy, sealants, hot melt, spray and structural adhesives; reclosable fasteners; label materials for durable goods; and coated, nonwoven and microstructured surface finishing and grinding abrasives for the industrial market. Other industrial products include fluoroelastomers for seals, tubes and gaskets in engines. 47


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Major transportation products include insulation components, including Thinsulate™ Acoustic Insulation and components for catalytic converters; functional and decorative graphics; abrasion-resistant films; adhesives; sealants; masking tapes; fasteners and tapes for attaching nameplates, trim, moldings, interior panels and carpeting; coated, nonwoven and microstructured finishing and grinding abrasives; structural adhesives; and other specialty materials. In addition, 3M provides paint finishing and detailing products, including a complete system of cleaners, dressings, polishes, waxes and other products. Rs. in lakhs 12 Months Ended 12 Months Ended 31.03.16 31.03.15 Segment Revenue 87,928.20 80,005.78 Financial Highlights Profit Before Interest & Tax 14,318.71 9,117.03 Capital Employed 29,181.79 32,083.27 Highlights • Industrial Business continues to focus on high gross margins product categories while rationalizing low profitable ones to stabilize profits. • The Industrial Retail business comprising wood working, decorative & auto refinish excelled in penetrating into lower tiers of the Indian market. In 2015 they also embarked into the Micro Enterprises & Mill Stores market space. • 3M Acoustics insulation continue to be specified in the leading new compact car models launched. • Despite the currency translation, the Industrial adhesives & tapes team achieved high bottom line growth through portfolio prioritization and increased local asset utilization. • 2015 saw the business drive distinct impetus on training, for both 3M employees & channel partners, where other than the regular product, behavioral training modules were covered. • 3M continues to invest in the Car Care segment with new formats which include mobile detailing and fuel station centers fueling further growth in this space. • Strong focus on Digital Marketing to drive sales through online asset creation and engagement. • 3M ventured into the e-commerce space with Automotive After-Market products with a plan to add products from other business groups. • 3M Abrasive products ramped up local conversion to ensure faster execution of custom requirements • Customer well-received 3M’s ‘Precision Shaped Grain’ portfolio products across the Bonded & Flexible abrasives market segments. • 3M continued their market leader position in the Paint Finishing System segment. (B) HEALTH CARE BUSINESS : Our Health Care business segment serves markets that include large multi-specialty hospitals and small clinics, dental and orthodontic practitioners, processed food manufacturers and pharmaceutical companies. Our offerings include medical and surgical supplies, medical devices, skin & wound care and infection prevention products & solutions, drug delivery systems, dental and orthodontic products and food safety products. Rs. in lakhs 12 Months Ended 12 Months Ended 31.03.16 31.03.15 Financial Highlights Segment Revenue 31,437.64 27,217.41 Profit Before Interest & Tax 3,917.76 1,709.71 Capital Employed 12,554.11 12,521.68 48


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Highlights • Products manufactured in Medical plant in Ranjangaon have found good acceptance amongst end customers and this has resulted in significant business growth. • The Go-to-Market strategy to expand reach into smaller cities through the extended sales representative model has been successfully scaled up leading to higher level of penetration of 3M products in markets that were earlier not covered. • 3M Healthcare has partnered with leading hospitals to upgrade Operating Room practices and sterilization assurance standards • Sales through e-commerce for both medical and dental products have gained traction and we are seeing continued year on year growth. • 3M Healthcare continued its focus on reinforcing customer relationships and had launched a number of customer education initiatives. • “Healthcare Academy” which offers basic and premium online courses for our customers has seen encouraging registrations since launch. This should go a long way to improve patient care through education of caregivers (C) SAFETY AND GRAPHICS BUSINESS : The Safety & Graphics business serves a broad range of markets that serve to increase the safety, security & productivity of people & improves facility design, aesthetics, hygiene, etc. Major product offerings include personal protection products; traffic safety & security products, border security solutions; public safety & identity management solutions; commercial graphics sheeting & systems; architectural surface & lighting solutions; cleaning & protection products for commercial establishments, etc Personal protection products include maintenance-free & reusable respirators, personal protective equipment, head & face protection, body protection, hearing protection & protective eyewear. In traffic safety & security, 3M provides reflective sheeting used on highway signs, vehicle license plates, construction work-zone devices, pavement marking systems, electronic surveillance products, films that protect against counterfeiting & reflective materials that are widely used on apparel, footwear & accessories, enhancing visibility in low-light situations. Traffic safety & security also provides remote people-monitoring technologies used for offender-monitoring applications. The portfolio also includes RFID tracking technologies & Automatic Number Plate Recognition (ANPR). Major commercial graphics products include films, inks, digital signage systems & related products used to produce graphics for vehicles, signs & interior surfaces. Other products include spill-control sorbents; nonwoven abrasive materials for floor maintenance & commercial cleaning; floor matting, housekeeping chemicals, etc. Rs. in lakhs 12 Months Ended 12 Months Ended 31.03.16 31.03.15 Financial Highlights Segment Revenue 52,658.89 45,118.03 Profit Before Interest & Tax 3,723.23 1,366.62 Capital Employed 14,445.77 15,993.55 Highlights • Personal Safety Division is making significant progress in the fast growing Pharmaceutical sector through focused Key Account Programs. It has created the India Pharmaceutical Advisory Council to ensure increased Safety at high risk and hazardous pharma manufacturing zones. The division continues to increase its penetration into the SME segment through various awareness and contact programs and other onsite SME activation programs. • The Traffic Safety & Security Division continues their good work in the road safety market with launch of new products like Conspicuity Tapes, Vertical Delineators, Solar RPMs, flexible median markers, etc. The division continues to educate the market with night demos, Key opinion leader(KOL) programs, contractor programs, etc., while participating in key industry events like Inter traffic, Indian Road Federation(IRF) Road Safety Week, Indian Road Congress(IRC) Annual Exhibitions, CII Conferences, NHAI events, etc., to propagate use of road safety products to save lives on the road. • The Traffic Safety & Security Division has launched new products like Automated Number Plate Recognition (ANPR) cameras, Variable Message Signs to cater to the Smart City Requirements in India. ANPR Cameras help the city authorities automate enforcement of traffic rules thereby making the roads safer to drive on. 49


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Highlights • Commercial Solutions division is now vertically aligned into focusing on premises and brand ownership thereby helping customers in creating brand experiences within & outside the organization. The division saw a lot of success in the refurbishment and vehicle personalization market spaces and continues to invest in awareness building programs. • Commercial Solutions division also expanded on its University program for training maintenance professionals (over 500) via focused on site training workshops, Applicator Trainings, etc., (D) CONSUMER BUSINESS: The Consumer segment serves markets that include consumer retail, modern trade, office retail, and the pharmacy channel. The products in this segment include office supply products, stationery products, home care products, protective material products, and consumer health care products. Major consumer products include Scotch® brand products, such as Scotch® Magic™ Tape and Scotch® Glue Stick; Post-it® Products, such as Post-it® Flags, Post-it® Note Pads and Dispensers; home care products, including Scotch-Brite® Scour Pads, Scotch-Brite® Scrub Sponges, Scotch-Brite™ Microfiber Cloth products; for the pharmacy channel – Nexcare™ Adhesive Bandages; and Nexcare® branded first aid product lines. Rs. in lakhs 12 Months Ended 12 Months Ended 31.03.16 31.03.15 Financial Highlights Segment Revenue 21,946.59 18,788.94 Profit Before Interest & Tax 3,319.98 972.79 Capital Employed 7,844.74 12,071.67 Highlights • In the year 2015, focused on growth of Scotch-Brite products especially in scouring and kitchen wipe segments. • Continued growth with distribution expansion program to increase availability of Home Care range of products in Tier B&C towns. • Focused on growth in Modern Trade by partnering with Key players for categories in Home Care & Stationery products. • Continued investment in ”Scotch-Brite” brand in Television and trade to create pull for our products, especially in the utensil and wipes portfolio. • Accelerated sales through ecommerce channel with focus on product portfolio, good digital content and on-line demand generation programs. • Continue to build trade loyalty for our products and brands through retailer engagement programs. (E) ENERGY BUSINESS: Infrastructure Protection Products Division of 3M offers a comprehensive array of products that ensure effective protection against corrosion for a variety of installations and structures. While 3M™ Scotchkote™ Fusion Bonded Epoxy Powders and Scotchkote™ Liquid Epoxy Coatings offer protection for steel pipelines, associated fittings and structures used in the oil, gas, water, industrial and construction markets, the range of 3M™ Scotchcast™ Powder Resins are ideal for OEM electrical insulation applications. 3M Dynatel Locators combine simple interfaces, large backlit high-resolution graphics, excellent balance and ergonomics with precision locating capabilities to quickly and accurately identify underground assets. In Renewable Energy 3M is helping to transform the fields of Generation & Conservation of Energy. 3M supports solar & wind energy initiatives through product solutions such as films, tapes, coatings, encapsulants and adhesives that help reduce the cost of energy generation. For energy conservation and management needs of customers we provide affordable window film technology that ensures effective health and environment protection. Rs. in lakhs 12 Months Ended 12 Months Ended 31.03.16 31.03.15 Financial Highlights Segment Revenue 11,654.31 8,956.68 Profit Before Interest & Tax 3,123.29 1,444.98 Capital Employed 4,778.48 6,280.35 50


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Highlights • Weakness in the global Oil & Gas scenario lead to project delays. However, there was traction in some domestic projects in Telecom and Oil & Gas sectors which reversed the trend for infrastructure protection products. • High Temperature Scotchkote Fusion Bonded Epoxy powder was used to coat offshore pipelines. • For Renewable energy business, there was increased usage of Energy Management and safety films due to enhanced focus on energy efficiency & green buildings, security concerns and the growing usage of glass in commercial and residential complexes. Action Plans: Our action plans are well aligned to the market opportunities.  Seeing the pickup in consumption while the IPI remains stagnant, 3M has increased focus on consumption driven businesses. This has yielded strong results for us with 60% of our growth coming from a few top actions in consumption businesses, like adoption of newer business models, and increased spend on digital marketing. We have also focused our geographic penetration plans mainly for consumption driven businesses.  3M is also tapping on the increased sustainability focus of companies as well as the government through introduction of products and green initiatives. 3M has increased focus on sciences that save lives, save resources, save energy and improve productivity efficiently.  3M targets to have 10% of its sale through ecommerce in the next 5 years. 3M has beaten its own plans for ecommerce in 2015, and is laying a foundation for much faster growth through ecommerce in the coming years, through strategic tie ups.  3M is known globally to be a leading manufacturer. The Make in India initiative is helping 3M deploy its manufacturing strength within the country. The evolving Electronics, Defence and Automobile manufacturing will help 3M lay a very strong foundation for local manufacturing in the country.  3M’s philosophy for smart cities is to help develop the market for smart cities through collaboration with other relevant stakeholders with similar interests. We are working closely with the government to help India develop smart cities. OPPORTUNITIES AND THREATS 3M’s globally competitive cost positions and well crafted business strategies have enabled it to retain its leading market positions. Your Company strongly believes in the 3M™ brand equity and its ability to provide its customers with innovative solutions. The Company is operating in a highly competitive market which may exert pressure both on the top line as well as the bottom line of the Company. As the Company’s products involve expertise in product development, manufacturing and marketing, are subject to competition from products manufactured and sold by other technologically oriented companies both within India and outside India. In addition, Inflation, rupee depreciation, high commodity prices and hardening interest rates remain key challenges needing focused attention. RISKS AND CONCERNS Provided below are cautionary statements of what we believe to be the most important risk factors applicable to the Company. • The impact of increase in duties on the products of the Company and consequent increase in the cost of goods sold. • The Company’s results are affected by competitive conditions and customer preferences. • The Company’s growth objectives are largely dependent on the timing and market acceptance of its new product offerings, including its ability to continually renew its pipeline of new products and to bring those products to market. • Prices of inputs are expected to rise significantly. Whilst the Company continues to pursue cost reduction initiatives, increase in price of input materials and rupee depreciation could impact the Company’s profitability to the extent that the same are not absorbed by the market through price increases and/or could have a negative impact on the demand in the domestic market. • The operations are subject to risk arising from fluctuations in exchange rates with reference to currencies in which the Company transacts. • The Company’s future results may be affected if the Company generates fewer productivity improvements than estimated. • The outcome of contingencies, such as legal and regulatory proceedings. • The effects of changes in tax, and other laws and regulations. 51


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited OUTLOOK We are optimistic about our future in India. We have built the right processes in the system to ensure we are ready for scale up when the economy achieves the aspirations the government has set for India. Our well entrenched business models will ensure that we grow as well as help the nation grow, through our strong technological platforms, evolving business models, and focus on a sustainable future. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY All key functions and divisions of the Company are independently responsible to monitor risks associated with in their respective areas of operations such as production, supply chain, marketing, finance, accounting, treasury, legal and others areas like health, safety and environment. The Company has identified various risks through an internal self-assessment compliance checklist and has laid out necessary procedures to mitigate the same. The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies. The Company, through its own Corporate Internal Audit Department, carries out periodic audits to cover all the offices, factories and key areas of business segments based on the plan approved by the Audit Committee and bring out any deviation to internal control procedures. The Internal Auditor functionally reports to the Audit Committee and administratively to the Managing Director. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board. DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS We embarked on an ambitious project, where we planned to get the entire organization together to create our ‘Aspiration’ for 3M India. This saw the birth of the “We Will” initiative which got 1300 plus employees together voicing their aspiration for a Bigger, Bolder and Smarter 3M in India. “Customer First” was recognized as the central theme. This was included in our Strategic Plan, and in all our actions across Business / functions. As an outcome this workshop clearly identified the need to accelerate Efficient Growth. There was a visible shift that the Company made in refocusing the Organization to Customer First. We took the entire Organization thru the Change Management process and transferred the ownership for Change during the “We Will” workshop. There were several initiatives including identifying Customer First projects across businesses and functions, forming cross functional/ multi level teams to deep dive into these projects. Leadership programs and other learning interventions captured these themes as well. There was a wide coverage of Customer First deliverables which were mapped for all employees as part of their goals & objectives in the Performance Management system. Productivity was another theme that was driven with a lot of focus and direction. Re purposing of talent, restructuring, revamping the Sales Incentive Plan, in addition to motivating employees through rewards and recognitions programs. The year continued to be extremely challenging in view of the economy. There was a positive sentiment which was further accentuated by the programs that were created as above. The employees took complete ownership and delivered exemplary results across various parameters. We enhanced Productivity thru Price and Lean Six Sigma (LSS) to drive Cost of Goods Sold (COGS) target, we built Stretch COGS Improvement, sharpened Operating Plan delivery with a focus on mix and also improved headcount productivity. There was also a significant and positive movement of the Contribution Income (COI) that built credibility of the Organization, whist boosting the confidence of the team. Employees and teams rose to the occasion to the satisfaction of the leaders. They were inspired and motivated to deliver despite the resource constraints and the external environment combined. The year also witnessed the HR function initiating several large initiatives including XChange, an inter corporate Hipo capability building program, where 3M took the lead to form a learning consortium. This was a huge success and received phenomenal feedback from the participants. Leadership Edge was another initiative which focused on intense external coaching for our senior leaders. The feedback from the pilot group has been overwhelming. The 3M India CSR initiatives reflects a socially responsible organization that inspires its people to contribute to the communities whose lives we impact. Under the umbrella initiative of 3M Gives, we engage our employees through the program called – EMBRACE. All financial contributions and volunteering efforts are focused around three areas viz., Education, Women Empowerment and Social innovation. 52


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    ANNEXURE ‘A’ TO BOARD’S REPORT 3M India Limited Every year, 3M observes Global Volunteering Day, when 3Mers around the world engage in volunteering activities. In 2015, more than 300 employees from 10 3M locations in India spent half a day doing community service with the Company’s CSR projects. All of you would be aware that Chennai was ravaged by floods in Nov/ Dec 2015. Several lives were lost and properties damaged. The Company formed a very close bond with its employees and their families and supported them during these trying times both emotionally and financially. We continued to build and strengthen the HR Business acceleration with visits and interventions with key Customers. We went beyond just sharing HR Best practices into helping some of the Customers build HR processes as well. This initiative has further strengthened the HR credibility with the business and also helped Business leaders to leverage the benefits and make it a differentiator. This initiative enhanced the credibility of 3M’s people practices and the quality of our people, products and services in the minds of the Customers. The Women’s leadership Forum moved to a new level a well with its focus on Diversity & Inclusion. Senior women leaders took Reflections workshops which focused on employees careers, to key Customers which earned huge admiration for 3M. Through all this, the Company continued enhancing its discipline on Operational excellence. There was tremendous rigor built into the performance management system and there was enough evidence on the ground to demonstrate the visible change in culture of compliance. On behalf of the Board of Directors Amit Laroya B.V. Shankaranarayana Rao Place : Bengaluru Managing Director Whole-time Director Date : May 27, 2016 DIN: 00098933 DIN: 00044840 53


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    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited REPORT ON CORPORATE GOVERNANCE THE COMPANY’S GOVERNANCE PHILOSOPHY 3M’s Corporate Governance principles govern how the Company carries on its business on a daily basis, enabling the Company to outperform and lead the way to sustainable growth. The governance principles provide sufficient framework that defines the roles, rights, and responsibilities of different groups within the organization. The Board of Directors oversees the Executive Directors and Senior Management (viz., the Leadership Team) including Key Managerial Personnel and ensures that appropriate procedures and controls are in place covering Managements activities in operating the Company on ethical grounds on a day-to-day basis. The Company has adhered to Clause 49 of the Listing Agreement with the Stock Exchanges and also with the SEBI (LODR) Regulations, 2015 after the same became applicable. BOARD OF DIRECTORS Composition: The Board comprises of Executive and Non-Executive Directors, who are persons of vast and varied experience and with professional background and experience in Business, Industry, Finance and Law. The Board of Directors of the Company is headed by a Non-Executive and Independent Director. As at the financial year ending March 31, 2016, the Board of Directors of the Company has an optimum combination of Executive and Non-Executive Directors including a Woman Director and not less than fifty percent (50%) of the Board of Directors comprises Non- Executive Directors and is in conformity with the provisions of the Companies Act, 2013 and the Listing Regulations, 2015. None of the Directors of the Company is related to each other and with any employees of the Company. All the Independent Directors of the Company are in compliance with Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. Brief Profile of the Directors of the Company: Mr. B.S. Iyer, Independent Director (DIN-00138425) – (up to March 31, 2016): Mr. B.S. Iyer, 66, is a Post Graduate in Commerce and Post Graduate in Law from the University of Bombay, holds a Diploma in Management Accounting, Member of the All India Management Association and is a Fellow Member of the Institute of Company Secretaries of India. Mr. Iyer held senior positions, responsible for Corporate Legal affairs for over 30 years. He retired as Vice President –Legal and Company Secretary of Bosch Limited. He is a Corporate Legal Resource person for several MNCs and Indian companies. He was appointed as a Director of the Company from December 26, 2001 and was appointed as Chairman of the Board from the conclusion of the Annual General Meeting held on August 4, 2014. At the Annual General Meeting held on August 4, 2015, he was appointed as an Independent Director for a period from March 27, 2015 to March 31, 2016. Mr. Albert C Wang, Non-Executive Director (DIN- 05234667): Mr. Albert Wang, 47, joined 3M Group in January 2012 as General Counsel, Asia Pacific and is based out of Shanghai, China. Prior to joining 3M, Mr. Albert Wang was Legal Director for Dell Inc. from 2001-2012 leading their legal affairs efforts for Greater China as well as regionally (Asia Pacific) for their Public & Large Enterprise business unit. He began practicing law with the New York-based international law firm of Coudert Brothers, with postings in Hong Kong (1993-1998) and Shanghai (1998-2001).There, his practice was focused on foreign direct investment and mergers and acquisitions, representing a wide array of multinational corporations and global financial institutions across a broad range of industry sectors. Mr. Albert Wang graduated in 1990 from Colgate University with a Bachelor of Arts degree in Political Science. He earned his Juris Doctor degree from The George Washington University National Law Center in 1993. He is a member of the New York State Bar, the American Chamber of Commerce in Shanghai and the U.S. China Business Council. He was appointed as a Non-Executive Director of the Company from March 12, 2012. Mr. Amit Laroya, Executive Director (DIN-00098933) – (up to May 31, 2016 as Managing Director): Mr. Amit Laroya, 51, started his career at Asian Paints and moved to 3M India in 1990 as the Division Head of Traffic, safety and Security. He has held positions in 3M India as the Country Business Leader in Safety & Graphics, Industrial, Electro and Telecommunication in addition to being the first Master Black Belt for India region. He has also held positions as the M&A Manager for India region and General Manager of 3M Lanka. His assignment as the Managing Director of 3M Indonesia makes him well suited to understanding emerging market needs. He also has a good understanding of global corporate strategies at 3M having recently worked in St Paul, USA, as the Global Director-for 3M Strategy & Corporate Development & the Director of International Strategic Planning & M&A. Mr. Amit Laroya is an Economics Honors graduate from the University of Delhi with MBA in Marketing and Finance from XLRI in India. He was appointed as Managing Director of the Company from October 1, 2013. Mr. B.V. Shankaranarayana Rao, Executive Director (DIN-00044840): Mr. B.V. Shankaranarayana Rao, 56, holds a Bachelor Degree in Commerce and a Master’s Degree in Business Administration from Bengaluru University. He has been with the Company since 1990. He has over 30 years of experience in Finance and Corporate Management. He has held various positions during his tenure in 3M India. 54


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    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited He has also worked in 3M Asia Pacific, Singapore, prior to heading the Finance Department in 3M India Limited. He was appointed as a Whole-time Director of the Company from July 24, 2002. Mr. Shankar Rao heads the Business Services Group, Business Transformation and Information Technology. Mrs. Sadhana Kaul, Non-Executive Director (DIN- 02589934) – (up to May 27, 2016): Mrs. Sadhana Kaul, 52, joined the Company in 2005 and has over 21 years of experience in the legal field, having worked in different capacities in law firms in the US and in India. Prior to joining the Company, she was with GE Medical Systems as Senior Legal Counsel based in Bengaluru. She holds a Bachelor’s Degree in Law from Trinity College Cambridge, UK and a Masters Degree in International and Comparative Law from Georgetown University Law Center, Washington D.C. She was appointed as a Whole-time Director of the Company from October 09, 2009 and was the General Counsel of the Company till November 1, 2013. She resigned as Director and Whole-time Director with effect from November 1, 2013 consequent upon her appointment as General Counsel for South East Asia Region, Singapore. In addition to her current role, she also acts as Asia Pacific Area Counsel for the Industrial and Transportation Business. She leads the planning, development and execution of strategic legal initiatives whilst managing the legal risks. She was appointed as a Non-Executive Director of the Company from February 10, 2014. Mr. Biren Gabhawala, Independent Director (DIN- 03091772): Mr. Biren Gabhawala, 51, was appointed to the Board of the Company as an Additional Director from August 5, 2014. At the Annual General Meeting held on August 4, 2015, he was appointed as an Independent Director for a period of Five (5) years from August 4, 2014. He holds a Bachelor’s degree in Commerce from University of Mumbai and is a qualified Chartered Accountant and fellow member of Institute of Chartered Accountants of India. He is into practice for last 26 years. He is a Senior Partner of Messrs. C. M. Gabhawala & Co. Chartered Accountants and specializes in Direct and Indirect Taxation, FEMA, International Taxation, Mergers, and Acquisitions. Mr. Bharat D Shah, Independent Director (DIN- 00136969): Mr. Bharat D Shah, 69, was appointed to the Board of the Company as an Additional Director from March 27, 2015. At the Annual General Meeting held on August 4, 2015, he was appointed as an Independent Director for a period of Five (5) years from March 27, 2015. Mr. Bharat Shah has extensive experience and expertise in the field of banking, finance and securities market. He has been one of the founder members of HDFC Bank Limited and has played a key role in the establishment and consistent growth of the Bank. He is also on the Board of various prominent companies. Before joining the Financial Sector, he worked with Technova, Bradma and Pyrene in London. He has also worked with Leading MNCs viz., Thomas Cook, Citibank and with UBS. Mr. Bharat Shah is the Chairman of HDFC Securities Limited. He has his Bachelor’s in Science Degree from the University of Mumbai and also holds a Degree in Applied Chemistry with special reference to metal finishing from Borough Polytechnic, London. Mr. Ramesh Ramadurai, Non-Executive Director (DIN- 07109252): Mr. Ramesh Ramadurai, 54, was appointed as Business Director for 3M Industrial Business in July 2014 and is based out of Shanghai responsible for the entire Asia Pacific Area. Prior to this role, Mr. Ramesh Ramadurai served as Managing Director of 3M Philippines from August 2011 until June 2014, based in Manila. He Joined 3M India in 1989 as Sales Engineer and held positions as Country Business Leader in Industrial Business and Electro & Telecommunications. He was seconded to Global Headquarters in St Paul, USA, and worked as Market Segment Manager in Industrial Business, as Global Business Manager for a line of Industrial Tapes, and as International Business Manager for 3M’s Packaging, Masking and Specialty Tapes businesses. Prior to 3M, Mr. Ramesh Ramadurai worked for a year as a Production Engineer at an Offshore Oil Production facility, and for about 3 years in a business planning and development role at an automotive parts and motorcycle manufacturer. Mr. Ramesh Ramadurai holds MBA from the Indian Institute of Management in Calcutta and is a Bachelor of Technology in Chemical Engineering from the Indian Institute of Technology, Kanpur. He was appointed as a Non-Executive Director of the Company from March 27, 2015. Mr. Manuel B Pardo, Non-Executive Director (DIN- 07125832): Mr. Manuel B. Pardo, 54, was named Finance Director – Asia based out of Hong Kong in August 2014. A 15-year veteran of 3M, he served as Industrial Adhesives and Tapes Division Finance Manager of 3M U.S, since 2009. Mr. Manuel Pardo joined 3M in 2000, worked in Business Finance, IT, Sourcing and also as Legal Manager in 3M Colombia. He has worked with various 3M divisions and lead Latin America Finance division. He is a certified Six Sigma Master Black Belt – Finance for Latin America and Canada. A native of Colombia, Mr. Manuel Pardo had first-hand experience with economies in various stages of development. Throughout his career he developed practical expertise with managing successfully operations during currency fluctuations and devaluations. Prior to joining 3M, Mr. Manuel Pardo had broad experience in the Oil Industry, Agribusiness, Pension Funds and Banking. Mr. Manuel Pardo earned a Master Degree in International Management, University of St. Thomas, St. Paul, Minnesota in 1991, and has a Bachelor degree in Business with finance concentration from a very well know Colombian University. He was appointed as a Non-Executive Director of the Company from March 27, 2015. 55


  • Page 46

    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited Names of other companies/firms in which Directors of the Company hold/held office as Director/Partner are given below: Mr. B. S. Iyer (up to March 31, 2016) – Nil Mr. Albert C Wang – Nil Mr. Ramesh Ramadurai – Nil Mr. Manuel B Pardo – Nil Mr. B.V. Shankaranarayana Rao – 3M Lanka (Private)Limited, Sri Lanka, Director Mrs. Sadhana Kaul (up to May 27, 2016) – 3M Lanka (Private) Limited, Sri Lanka, Director Mr. Amit Laroya (up to May 31, 2016 as Managing Director) – 3M Lanka (Private )Limited, Sri Lanka, Managing Director Mr. Biren Gabhawala – eClerx Services Limited, Director – C.M. Gabhawala & Co, Partner Mr. Bharat D Shah - Atlas Documentary Facilitators Company Private Limited, Director - Faering Capital Trustee Company Private Limited, Director - HDFC Securities Limited, Chairman - Hexaware Technologies Limited, Director - Exide Industries Limited, Director - IDFC Alternatives Limited, Director - Salisbury Investments Private Limited, Director - Strides Shasun Limited, Director - AGS Transact Technologies Limited, Director - India Transact Services Limited, Director - Tata Sky Limited, Director 56


  • Page 47

    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited Names of Committees/Chairmanships held details of the Directors are given below: Membership of Chairmanship of Committee Committees Name of the Director Name of the Company Stakeholder’s Stakeholder’s Audit Audit Relationship Relationship Mr. B.S. Iyer (up to March 31, 2016) 3M India Limited ✓ ✓ ✓ Mr. Albert C Wang Nil Mr. Ramesh Ramadurai Nil Mr. Manuel B Pardo 3M India Limited ✓ Mr. B.V. Shankaranarayana Rao Nil Mrs. Sadhana Kaul (up to May 27, 2016) Nil Mr. Amit Laroya (up to May 31, 2016) 3M India Limited ✓ Mr. Biren Gabhawala • 3M India Limited ✓ ✓ ✓ • eClerx Services Limited ✓ ✓ ✓ Mr. Bharat D Shah • 3M India Limited ✓ ✓ • Hexaware Technologies Limited ✓ ✓ • IDFC Alternatives Limited ✓ • AGS Transact Technologies Limited ✓ • Strides Shasun Limited ✓ Meetings: The meetings of the Board of Directors are normally held at the Company’s Corporate Office in Bengaluru. Meetings are generally scheduled well in advance and the notice of each Board / Committee Meetings is given in writing to each Director. The yearly calendar of the meetings is finalized before the beginning of the year. Additional Meetings are held when necessary. The Board meets at least once a quarter to review the quarterly performance and financial results of the Company. The Board is provided with the relevant information as stipulated in Listing Regulations. The Meetings are governed by a structured agenda. The Board papers, agenda and other explanatory notes are circulated to the Directors seven (7) days prior to the Meetings. In addition, for any business exigencies, the resolutions are passed by circulation and later placed at the subsequent Board/Committee Meeting for ratification. The Minutes of the Committee Meetings are sent to all Directors individually within the time limits prescribed under the Companies Act, 2013 and are further tabled at the Board Meetings. The Company Secretary is responsible for convening the Board and Committee meetings, preparation and distribution of Agenda and other documents and recording of the Minutes of the meetings. He acts as an interface between the Board and the Management and provides required assistance and assurance to the Board and the Management on compliance and governance aspects. Details of Board Meetings during the financial year: During the financial year from April 01, 2015 to March 31, 2016, five (5) Meetings of the Board were held; on May 29, 2015, August 3, 2015, October 30, 2015, February 5, 2016 and February 26, 2016.The last Annual General Meeting (AGM) was held on August 4, 2015. None of the Directors is a Director in more than ten (10) Public Limited Companies or acts as an Independent Director in more than seven (7) Listed Companies. The Managing Director and the Whole-time Director do not serve as Independent Director on any Listed Company. Further, none of the Directors acts as a member of more than ten (10) committees or acts as Chairman of more than five (5) committees across all Public Limited Companies in which he/she is a Director. Particulars of the Directorships of Board, membership and office of the Chairman of Board Committees across all Companies as on March 31, 2016 and attendance at the Board Meetings of the Company are exhibited below: 57


  • Page 48

    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited No. of Directorships and Committee No. of Meetings Whether Name & Designation Memberships / Chairmanships Category attended of the Director Directorships Committee Committee Held Attended last AGM held@ Memberships# Chairmanships# Mr. B.S. Iyer (Chairman) Non-Executive & (Director) Independent Director 5 5 1 2 1 Yes (up to March 31, 2016) Mr. Albert C Wang (Director) Non-Executive Director 5 1 1 Nil Nil No (Promoter Group) Mr. Biren Gabhawala (Director) Non-Executive & 5 3 2 4 2 Yes Independent Director Mr. Bharat D Shah (Director) Non-Executive & 5 3 9 7 Nil Yes Independent Director Mr. Ramesh Ramadurai Non-Executive Director 5 1 1 Nil Nil No (Director) (Promoter Group) Mr. B.V. Shankaranarayana Rao Executive Director 5 5 2@@ Nil Nil Yes (Whole-time Director) (Promoter Group) Mrs. Sadhana Kaul (Director) Non-Executive Director 5 1 2@@ Nil Nil Yes (up to May 27, 2016) (Promoter Group) Mr. Amit Laroya Executive Director (Managing Director) (Promoter Group) 5 5 2@@ 1 Nil Yes (up to May 31, 2016) Mr. Manuel B Pardo (Director) Non-Executive Director 5 1 1 1 Nil No (Promoter Group) @ excludes directorship in private companies and includes directorship in 3M India Limited. @@includes directorship in one foreign Body Corporate # excludes committees other than Audit Committee and Stakeholders’ Relationship Committee Committee of the Board: With a view to have a more focused attention on business and for better governance and accountability, the Board has constituted the following mandatory committees viz. Audit Committee, Stakeholders’ Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. The terms of reference of these Committees are determined by the Board and their relevance reviewed from time to time. Board Training and Induction At the time of appointing a Director, a familiarization programme for Directors of the Company brochure is given which inter alia explains the history of the Company, products / divisions of the Company in which it operates, performance of the Company during the last quarter/year, other Directors’ profile, Leadership Team details, situation of factories and branch offices etc., role, function, duties and responsibilities expected as a Director of the Company. In the same document, the Director is also explained in detail the compliances required from him under the Companies Act, Listing Regulations and other relevant regulations. The Managing Director of the Company also has a one-to-one discussion with the newly appointed Director. The above initiatives help the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him to effectively fulfill his role as a Director of the Company. Apart from the above, business heads also makes presentations on their respective business and updates the Board. The familiarization document is also disclosed on the website of the Company at http://solutions.3mindia.co.in/wps/portal/3M/ en_IN/about-3M/information/corporate/financial-facts/summary. 58


  • Page 49

    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited The Company has issued a formal letter of appointment to all the Independent Directors of the Company in the manner as provided in the Companies Act, 2013 including the tenure of appointment. The terms of appointment has also been disclosed on the website of the Company at http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/corporate/financial-facts/summary/. CODE OF CONDUCT The Company’s Board has laid down a code of conduct for all Board Members and Senior Management of the Company. The code of conduct is available on the website of the Company: http://solutions.3mindia.co.in/wps/portal/3M/en_IN/about-3M/information/ corporate/financial-facts/summary/. Requisite annual affirmations of compliance with respective codes have been made by the Directors and Senior Management of the Company for the period April 01, 2015 to March 31, 2016. The Certificate by the CEO of the Company concerning compliance with the Code of Conduct for Directors and Senior Management is given below: Code of Conduct for Directors and Senior Management CEO Confirmation I hereby confirm that: The Company has obtained from the Directors and Senior Management personnel affirmation that they have complied with the above code for, and in respect of, the year ended March 31, 2016. (Amit Laroya) Place : Bengaluru Managing Director Date May 9, 2016 DIN: 00098933 AUDIT COMMITTEE The Audit Committee of the Company functions in accordance with the requirements of Section 177 of the Companies Act, 2013 and the Listing Regulations. Terms of Reference of Audit Committee: The terms of reference of the Audit Committee as per guidelines set out under the Listing Regulations read with Section 177 of the Companies Act, 2013, is set out below: 1. The Audit Committee shall have minimum three (3) directors as members. Two-thirds (2/3) of the members of Audit Committee shall be Independent Directors. 2. All members of Audit Committee shall be financially literate and at least one (1) member shall have accounting or related financial management expertise. 3. Chairman of the Audit Committee shall be an Independent Director. 4. The Chairman of the Audit Committee shall be present at Annual General Meeting to answer shareholder queries. 5. The Audit Committee may invite such executives of the Company as it considers appropriate (and particularly the head of the finance function) to be present at the meetings of the Committee, but on occasions it may also meet without the presence of any of the executives of the Company. The CFO, Internal Auditor and a representative of the Statutory Auditor may be present as invitees for the meetings of the Audit Committee. 6. The Company Secretary shall act as Secretary of the Audit Committee. 7. The Audit Committee shall meet at least four (4) times in a year and not more than 120 days shall elapse between two meetings. The quorum shall be either two (2) members or one-third (1/3) of the members of the Audit Committee, whichever is higher but there shall be a minimum of two (2) independent members present. Powers of Audit Committee The Audit Committee has the following powers: 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. 59


  • Page 50

    ANNEXURE ‘B’ TO BOARD’S REPORT 3M India Limited Role of Audit Committee The role of the Audit Committee shall include the following: 1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; 2. Recommendation for appointment, remuneration and terms of appointment of statutory auditors and cost auditors of the Company; 3. Approval of payment to statutory auditors and cost auditors and for any other services rendered by the statutory auditors; 4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the Board for approval, with particular reference to: (a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s Report in terms of clause (c) of sub-Section 3 of section 134 of the Companies Act, 2013. (b) Changes, if any, in accounting policies and practices and reasons for the same. (c) Major accounting entries involving estimates based on the exercise of judgment by management. (d) Significant adjustments made in the financial statements arising out of audit findings. (e) Compliance with listing and other legal requirements relating to financial statements. (f) Disclosure of any related party transactions. (g) Modified opinion (s) in the draft Audit Report. 5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval; 6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 7. Review and monitor the auditor’s independence and performance, and effectiveness of audit process; 8. Approval or any subsequent modification of transactions of the Company with related parties; 9. Scrutiny of inter-corporate loans and investments; 10. Valuation of undertakings or assets of the Company, wherever it is necessary; 11. Evaluation of internal financial controls and risk management systems; 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any significant findings and follow up there on; 15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 18. To review the functioning of the Whistle Blower mechanism; 19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate; 20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 21. To grant omnibus approval for related party transactions which are in the ordinary course of business and on an arm’s length pricing basis. 60

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