Akar Auto Industries Ltd.
|BSE: 530621||Sector: Engineering|
|NSE: N.A.||ISIN Code: INE864E01021|
|BSE 15:40 | 16 Mar||51.95||
|NSE 05:30 | 01 Jan||Akar Auto Industries Ltd|
Akar Auto Industries Ltd. (AKARAUTO) - Director Report
Company director report
Your Board of Directors are pleased to present 27th Annual report of the Companytogether with Audited Accounts for the year ended March 31 2016.
The advance estimate of real GDP growth released in February 2016 by the CentralStatistical Organisation of the Government of India suggests a pick-up from 7.2% in theprevious year to 7.6% for 2015-16 (henceforth FY2016). While still short of the 8% growththat India needs to achieve on a steady state basis this will be a creditableachievement given the muted global economic scenario. Indeed there have been early signsof an up-tick in both consumer demand and the beginnings of much needed growth ininvestments. As of now these are more in the nature of 'green shoots'. However if themonsoons are as good as the preliminary meteorological forecast suggests coming asit will after two consecutive years of drought across many parts of India then thecountry ought to expect higher GDP growth in 2016-17.
India's economy showed gradual recovery in 2015-16. Fiscal deficit and inflation wereunder control. Public investment was up. Interest rates were reduced. But rural demand andprivate investment remained weak. The fall in global prices of oil and commoditiesbenefited the economy and the automobile sector. However the slowdown in the globaleconomy led to weak export demand.
The automotive industry in general is cyclical and economic slowdowns in the recentpast have affected the manufacturing sector including the automotive and relatedindustries in India. Persistence of negative economic trends or further deterioration inkey economic factors such as growth rate interest rates and inflation as well as reducedavailability of financing for vehicles at competitive rates could materially and adverselyaffect the Company automotive sales in India and results of operations key for this year.
The Company achieved total turnover of Rs. 18455.48 lacs against Rs.15930.49 lacs inthe previous year which is more than 15.85% . The Net Profit after tax was also increasedto Rs. 183.55 lacs against Rs 122.68 in the previous year. This achieved by expending thecustomer base and also increasing its presence of export market.
In order to maintain its leadership position your Company is continuously focused onupgrading its product and manufacturing technology as well as acquire new and advancedtechnology to meet the emerging expectations of the customers. The R&D staff isactively involved in the development of new cutting-edge products together withdevelopments in new materials as well as advanced manufacturing techniques. The in-houseR&D plays a major role in providing the interface between the company priorities andthe adoption of the collaborators technology.
FINANCIAL RESULTS AT A GLANCE
The Board recommended a dividend of 10% (i.e. Rs. 1.00 per share) on 53 94 005 equityshares of Rs.10 each for 2015-16 Subject to the approval of the Shareholders at theAnnual General Meeting to be held on 30th September 2016.
The paid up equity share capital as on March 31 2016 was Rs.53940050 divided into5394005 equity share of face value of Re. 10/- each.
A) Issue of equity shares with differential rights
The Company did not issue equity shares with differential rights during the financialyear 2015-16.
B) Issue of sweat equity shares
The Company did not issue sweat equity shares during the financial year 2015-16.
C) Issue of employee stock options
The Company did not issue stock options during the financial year 2015-16.
D) provision of money by company for purchase of its own shares by employees or bytrustees for the benefit of employees
The Company does not have a scheme for purchase of its own shares by employees or bytrustees for the benefit of employees.
Transfer to reserves
The appropriations for the year are:-
Your Company has not accepted any deposits covered under Chapter V of the CompaniesAct 2013 and hence no details pursuant to Rule 8(v) anf 8(vi) of the Companies (Accounts)Rules 2014 are reported.
PARTICULARS OF LOANS INVESTMENTS AND GUARANTEES:
The Particulars of loans guarantee or investments given or made by the Company underSection 186 of the Companies Act 2013 are disclosed at Note Nos. 11 & 28 of thefinancial statements.
The company has given performance guarantees and /or guarantees against loans given byKarvy Finance Services Limited to Akar Industries Pvt. Ltd.
Material changes effecting
FINANCIAL POSITIONS OF THE COMPANY
No material changes have occurred and commitments made affecting the financialposition of the company between the end of the financial year of the Company and date ofthis report.
There is no order passed by any regulator or court or tribunal against the companyimpacting the going concern concept or future operations of the Company.
Investor education and protection fund
Dividend which was declared by the company for the year ended March 31 2009 at theAnnual General Meeting held on 30th September 2009 and remain unclaimed will betransferred to the Investor Education and Protection Fund of the Central Government onOctober 30th 2016 pursuant to the provisions of Companies Act 2013. Thereafter no claimshall lie on dividend for the year ended March 2009 from the shareholders. Notice forunpaid dividend is attached with the Notice convening 27th Annual General Meeting.
The Shareholders of the Company in their Twenty Fifth Annual General Meeting held on29th September 2015 had accorded their approval pursuant to the provisions of Section139 141 and other applicable provisions of Companies Act 2013 and rules made there underto appoint M/s A. K. Bagadia & Co. Chartered Accountants as Statutory Auditor of theCompany of the period of three years commencing from the conclusion of Twenty Fifth AnnualGeneral Meeting until the conclusion of Twenty Eighth Annual General Meeting.
The Board of Directors of the Company has pursuant to the provisions of Section 139recommended the ratification of appointment M/s A. K. Bagadia & Co CharteredAccountants for the approval of the Shareholders from the conclusion of Twenty SeventhAnnual General Meeting till the conclusion of Twenty Eighth Annual General Meeting.
The Auditor's report to the Shareholders for the year under review does not contain anyqualification reservation or adverse remark or disclaimer.
The Secretarial Auditors M/s Pankaj & Associates Company Secretaries has issuedSecretarial Audit Report of the Financial Year 2015-16 pursuant to Section 204 of theCompanies Act 2013 which is annexed to the Director's Report.
Your Directors have appointed M/s B. R. Chandak & Co Cost Accountants as the CostAuditors for the Financial Year 2016-17. M/s B. R. Chandak & Co Cost Accountantswill submit the cost audit report alongwith annexure to the Central Government (Ministryof Corporate Affairs) in the prescribe form within specified time and at the same timeforward a copy of such report to your company.
The Company does not have any subsidiary within the meaning of the Companies Act 2013
Transparency is the cornerstone of your Company's philosophy and all requirements ofCorporate Governance are adhered to both in letter and spirit. All the Committees of theBoard of Directors meets at regular intervals as required in terms of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015. Your Board of Directors hastaken all necessary steps to ensure compliance with all statutory requirements. TheDirectors and Key Management Personnel of your Company have complied with the approved'Code of Ethics for Board of Directors and Senior Executives' of the Company.
The Report on Corporate Governance as required under the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 forms part of and is annexed herewithmarked as "Annexure - V".
OCCUPATIONAL HEALTH SAFETY & ENVIRONMENT
Your Company has effectively deployed policies on Safety Occupational Health &Environment at all locations. It continually focus on improving the effectiveness ofsystem processes through globally accepted standards. Your Company develop andmanufacture products that are safe eco-friendly and economical. Our products enhancepeople's safety and reduce contamination to environment also during their subsequentrecycling and disposal.
Your Company design processes to ensure that people's health and safety and effects onthe environment. Your company is fully prepared to deal with emergencies due to fire &safety. Your Company reviews its processes and its behavior on a regular basis and measuretheir effects on people and on the nature. This is the process of identifying potentialfor improvement and ensures the effectiveness of our program towards work safetypeople's health and the environment.
During the year the Company had cordial relations with workers staff and officers. Theshop floor management is done through personal touch using various motivational tools andmeeting their training needs requirements. The Company has taken initiative for safety ofemployees and implemented regular safety imparted machine safety training wearingprotective equipments etc.
INTERNAL CONTROL SYSTEM
The Company has adequate internal control systems and procedures designed toeffectively control the operations at its corporate office and plants. The internalcontrol systems are designed to ensure that the financial and other records are reliablefor the preparation of financial statements and for maintaining assets. The Company haswell designed Standard Operating Procedures. Internal Auditors conduct audit covering awide range of operational matters and ensure compliance with specified standards. Plannedperiodic reviews are carried out by Internal Audit. The findings of Internal Audit arereviewed by the top management and by the Audit Committee of the Board of Directors.
Based on the deliberations of Statutory Auditors to ascertain their views on thefinancial statements including the financial reporting System and Compliance to AccountingPolicies and Procedures the Audit Committee was satisfied with the adequacy andeffectiveness of the Internal Controls and System followed by the Company.
The Indian automotive industry is affected materially by the general economicconditions in India and around the world. Muted industrial growth in India during FY 2015-lb along with continuing higher inflation and interest rates continue to pose risks tooverall growth in this market. The automotive industry in general is cyclical and economicslowdowns in the recent past have affected the manufacturing sector including theautomotive and related industries in India. Persistence of negative economic trends orfurther deterioration in key economic factors such as growth rate interest rates andinflation as well as reduced availability of financing for vehicles at competitive ratescould materially and adversely affect the Company automotive sales in India and results ofoperations key for this year.
Your company has advantage of having strong brand value large network widely spreadproduct range strong partners and collaborators relationship. It is fully prepared tomeet the challenge of competition leveraging its competitive strengths of network qualitytechnology product range and brand value.
RISK AND AREA OF CONCERN:
Your company is exposed to various business risks. These risks are driven throughexternal factors like economic environment competition regulations etc. Cost &Quality are critical success factors in current business environment. Risk of losingmarket share/ ability to maintain high share or losing business share with key accountsare rooted on these factors.
The Company has laid down a well defined risk management mechanism covering the riskmapping and trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor andnon-business risks. The Audit Committee and Board periodically review the risks andsuggest steps to be taken to manage/mitigate the same through a properly definedframework.
During the year a risk analysis and assessment was conducted and no major risks werenoticed which may threaten the existence of the Company.
OPPORTUNITIES AND THREATS
Your Company has growth opportunities in industrial and automotive division's speciallycommercial vehicle divisions. Your Company has strategies in place to tap the potential.However the new entrants and aggressive expansion plan of existing competitors are biggestchallenge. The competitive price network strategy technology & product quality arecritical to our success. Your company has advantage of having strong brand value largenetwork widely spread product range strong partners and collaborators relationship. Itis fully prepared to meet the challenge of competition leveraging its competitivestrengths of network quality technology product range and brand value. With increasingawareness and education of the Indian customer a range of non-vehicular products andservices like spares after sales annual maintenance contracts etc are also gainingpopularity in demand. India has emerged as a major hub for global manufacturing with itsadvantage of lower input costs availability of local supplier base and high domesticdemand.
In addition to the above the Company also has the advantage of a strong in-housedesign and development facility and professionals. The Company is focusing on increasingits global presence as an effective hedge against domestic downturn as well as a growthopportunity.
The automotive industry and the demand for automobiles is influenced by generaleconomic conditions including among other things rates of economic growth availabilityof credit disposable income of consumers interest rates environmental and tax policiessafety regulations freight rates and fuel and commodity prices. Negative trends in any ofthese factors impacting the regions where the Company operates could materially andadversely affect our business results of operations and financial condition. The Indianautomotive industry is affected materially by the general economic conditions in India andaround the world. The progress of the economy also depends on the political situationaround the world.
The automotive industry in general is cyclical and economic slowdowns in the recentpast have affected the manufacturing sector including the automotive and relatedindustries in India.
WHISTLE BLOWER POLICY
The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting the highest standards of professionalism honestyintegrity and ethical conduct. The Company has a Whistle Blower Policy under which theemployees are free to report violations of the applicable laws and regulations and Code ofConduct.
Whistle Blower Policy is available on the website of the company at
DIRECTORS AND KEY MANAGERIAL PERSONNEL
On the recommendation of Nomination and Remuneration Committee the Board re-designateShri. Pradeep Nijampurkar as an Whole Time Director of the Company with effect from01.04.2016 for a further period of 3 years subject to approval of the shareholders. Weseek your approval for the appointment of Shri. Pradeep Nijampurkar as an Whole TimeDirector in the ensuing Annual General Meeting.
As per the provisions of the Companies Act 2013 Shri Sunil Todi & Shri R. L.Gupta will retire by rotation at the ensuing Annual General Meeting and being eligibleoffered themselves for re-appointment. The Board recommends for their re-appointment.
The information on the particulars of Directors eligible for appointment in terms ofregulation 33 of SEBI (Listing Obligations and Disclosure requirements) Regulations 2015has been provided in the notes to the notice convening the Annual General Meeting.
INDEPENDENT DIRECTORS DECLARATION
The Independent Directors have confirmed and declared that they are not disqualified toact as an Independent Director in compliance with provisions of Section 149 of theCompanies Act 2013 and the board is also of the opinion that the Independent Directorsfulfill all the conditions specified in the Companies Act 2013 making them eligible toact as Independent Directors.
During the year under review four Board Meetings and four Audit Committee Meetings wereconvened and held the detail of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.
The details of constitution of the Board and its Committees are given in the CorporateGovernance Report.
STAKEHOLDER RELATIONSHIP COMMITTEE
Stakeholder relationship Committee comprises of Shri. N K Gupta as Chairman Shri.Sunil Todi and Shri. Pradeep Nijampurkar as members. The details of term of reference ofthe Committee member dates of meeting held and attendance of the Directors are givenseparately in the Corporate Governance Report.
The Audit Committee comprises of Shri V K Chopra as Chairman Shri S N Shukla and ShriSunil Todi as Members. The details of term of reference of the Committee member dates ofmeeting held and attendance of the Directors are given separately in the CorporateGovernance Report
CODE OF CONDUCT
Directors Key Managerial Personnel and Senior Management of the Company have confirmedcompliance with the Code of Conduct applicable to the Directors and employees of theCompany. The Code of Conduct is available on the Company's website www. akartoolsltd.com
The equity shares continue to be listed on the BSE Limited (BSE). The Company has paidannual listing fee for the financial year 2016-17 to BSE..
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions those were entered during the financial year were in theordinary course of business and on an arm's length basis. There were no materiallysignificant related party transactions entered into by the Company with PromotersDirectors Key Managerial Personnel or other persons which may have a potential conflictwith the interest of the Company.
All related party transactions are placed before the Audit Committee for review andapproval. Prior omnibus approval is also obtained from the Audit Committee for the relatedparty transactions which are of repetitive nature and which can be foreseen andaccordingly the required disclosures are made to the Audit Committee on quarterly basis interms of the omnibus approval of the Committee.
The policy on materiality of related party transactions and also on dealing withrelated party transactions as approved by the Audit Committee and the Board of Directorsis uploaded on the web-site under the following web-link '
Since all related party transactions entered into by the Company were in the ordinarycourse of business and were on an arm's length basis and there were no material relatedparty transactions during the year Form AOC - 2 is not applicable to the Company.
The particulars required to be furnished under section 134(3) (a) of the Companies Act2013 read with Companies (Management and Administration) Rules 2014as prescribed in FormNo. MGT -9 is given in Annexure 'III'.
DEMATERIALISATION OF SHARES
The shares of your Company are being traded in electronic form and the Company hasestablished connectivity with both the depositories i.e National Securities DepositoryLimited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of thenumerous advantages offered by the Depository system Members are requested to avail thefacility of dematerialization of shares with either of the Depositories as aforesaid Ason March 31st 2016 97.9% of the share capital stands dematerialized.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND Foreign Exchange EARNINGS AND OUTGO
The information relating to energy conservation technology absorption and foreignexchange earnings and outgo as required to be disclosed under the Companies (Accounts)Rules 2014 are in Annexed-IV as a part of this Annual Report.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES /INDUSTRIAL RELATION FRONT INCLUDING NUMBEROF PEOPLE EMPLOYED:
The Company believes that success of any organization depends upon availability ofhuman capital. Our assets are our people who work to innovate beyond and challengeestablished boundaries. Thus employees are vital to the Company. We have a favorable workenvironment that encourages innovation and meritocracy. We focus on attracting the bestand brightest talent and the meritocracy is the sole criteria for selection. The Companyfirmly believes that manpower is the most important asset above all. The Company has goodcordial relation with trade union and employees representatives and views theserelationships as contributing positively to the success of the business.
The total number of employees of the Company as on March 31 2016 stood at 471.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details are required under section 134(3)(q) and 197(12) of the Companies Act 2013 read with Rule 5(1) and 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 provided inthe Board Report.
DISCLOSURE AS PER SEXUAL HARRASEMENT OF WOMEN AT WORKPLACE (PREVENTION PROHBITION ANDREDRESSAL) ACT 2013
Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention andProhibition and Redressal) Act 2013 read with Rule 14 the internal committee constitutedunder the said act.
During the year no complaints with allegations of sexual harassment were filed withthe Company.
ANNEXURES FORMING A PART OF DIRECTOR'S REPORT
The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and form a part of this Report:
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to the provisions of sub-section (5) of Section 134 of the companies act2013 your directors confirm that:
1 in the preparation of annual accounts the applicable accounting standard had beenfollowed along with proper explanation relating to material departures.
2 the Directors had in consultation with Statutory Auditors selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the Net Profit of the Company for theFinancial Year Ended 31st March 2016.
3 the Directors have taken proper and sufficient care to maintain adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and preventing and detecting fraud and other irregularities.
4 the Directors have prepared the annual accounts on a 'going concern' basis.
5 The Directors have laid down adequate Internal Financial Controls to be followed bythe Company and such Internal Financial Controls were operating effectively during theFinancial Year Ended 31st March 2016.
6 The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectivelythroughout the Financial Year Ended 31st march 2016.
FORWARD LOOKING STATEMENTS
This Report contains forward-looking statements that involve risks and uncertainties.
When used in this Report the words "anticipate" "believe""estimate" "expect" "intend" "will" and othersimilar expressions as they relate to the Company and/or its businesses are intended toidentify such forward-looking statements. The Company undertakes no obligation to publiclyupdate or revise any forward-looking statements whether as a result of new informationfuture events or otherwise. Actual results performance or achievements could differmaterially from those expressed or implied in such forward-looking statements. Readers arecautioned not to place undue reliance on these forward-looking statements that speak onlyas of their dates. This Report should be read in conjunction with the financial statementsincluded herein and the notes thereto.
Your Directors wish to place on record the their appreciation of the assistance andcooperation received from its bankers customers (domestic as well as overseas)suppliers shareholders staff from each level and other business associates for theirvaluable contribution in the growth of the organization whose continuous support andcooperation has been a source of strength to the company enabling it to achieve its goals.The Directors look forward to their continued support in future.