To the members of Atul Auto Limited
Your Directors have pleasure in presenting the 28th Annual Report along withthe audited financial statements for the year ended 31st March 2016.
The financial performance of the Company for the year ended 31st March 2016is summarized below:
| ||2015-16 ||2014-15 |
|Revenue from Operations ||53104 ||49280 |
|Profit before Tax (PBT) ||7152 ||5761 |
|Exceptional Item ||- ||(165) |
|Profit before Tax after Exceptional Item ||7152 ||5926 |
|Less: Current Tax ||2434 ||1920 |
|Deferred Tax ||(22) ||(52) |
|Profit after Tax (PAT) ||4740 ||4058 |
|Add: Balance in Profit and Loss Account ||9231 ||6977 |
|Amount available for appropriations ||13971 ||11035 |
|Appropriations || || |
|Transfer of WDV of assets completing its useful life ||- ||120 |
|Deferred Tax on assets completing its useful life ||- ||(41) |
|Interim Dividend Declared ||603 ||549 |
|Tax on Interim Dividend ||123 ||110 |
|Proposed Dividend ||548 ||548 |
|Tax on Proposed Dividend ||112 ||112 |
|Transfer to General Reserve ||474 ||406 |
|Balance Carried to Balance Sheet ||12111 ||9231 |
|Earnings Per Share (') ||21.60 ||18.49 |
OPERATING RESULTS AND BUSINESS OPERATIONS
During the year under review your Company's operating
and financial performance scaled new heights which can be
demonstrated by following highlights:
Number of vehicles sold increased by 5.52% to 43893 (Previous year 41598)
Revenue from operation increased by 7.76% to ' 53104 Lacs (Previous year '49280 Lacs)
Export revenue increased by 8.74% to ' 1827 Lacs (Previous year '1681 Lacs)
Profit before depreciation finance cost other income exceptional items andtax (PBDIT) increased by 31.70 % to '7628 Lacs (Previous year '5792 Lacs)
Profit before tax (PBT) increased by 21% to ' 7152 Lacs (Previous year ' 5926Lacs)
Tax expense increased by 29% to ' 2412 Lacs (Previous year '1868 Lacs)
Profit after tax (PAT) increased by 17% to '4740 Lacs (Previous year ' 4058Lacs)
TRANSFER TO RESERVE
Your Directors propose to transfer ' 474 Lacs to the General Reserve out of amountavailable for appropriation and an amount of ' 1211 Lacs is proposed to be retained insurplus in the Statement of Profit and Loss.
During the financial year 2015-16 your Company declared and paid an interim dividendof ' 2.75 (Rupees two and paise Seventy Five only) per equity share of the face value of '5 (Rupees Five) each in the month of November 2015. In addition your Directors recommendpayment of ' 2.50 (Rupees Two and paise Fifty only) per equity share of the face value of' 5 (Rupee Five) each as final dividend for the financial year 201516 subject to theapproval of the shareholders at the ensuing AGM. If approved the total dividend(excluding dividend distribution tax) (interim and final dividend) for the financial year2015-16 will be ' 5.25 (Rupees Five and paise Twenty Five only) per equity share of theface value of ' 5 (Rupees Five) each as against the total dividend of ' 5 (Rupees Fiveonly) per equity share of the face value of ' 5 (Rupees Five) paid for the previousfinancial year 2014-15.
The dividend payout ratio for the year inclusive of dividend distribution tax will be29.25% as against 32.50% in the previous year. The total dividend (interim & finaldividend) pay-out (including dividend distribution tax) for the financial year 201516 willbe ' 1386 Lacs.
The Register of Members and Share Transfer Books will remain closed from 10thSeptember 2016 to 16th September 2016 (Both days inclusive) for the purposeof payment of final dividend for the financial year ended on 31st March 2016and Annual General Meeting. The Annual General Meeting is scheduled to be held on Friday16th September 2016.
During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).
LOANS GUARANTEES AND INVESTMENTS
During the year under Report the Company has not given any loans or provided guaranteeor security to any person or body corporate in terms of Section 186 of the Companies Act2013.
We continue to be debt-free and maintain sufficient cash to meet our strategicobjectives. We understand that liquidity in the Balance Sheet has to balance betweenearning adequate returns and the need to cover financial and business risks. Liquidityenables us to make a rapid shift in direction if there is a market demand. We believethat our working capital is sufficient to meet our current requirements. As on 31stMarch 2016 we had liquid assets of ' 1282.50 lacs as against ' 2580.45 lacs at theprevious year end. These funds comprise cash bank balance and investment in liquid mutualfunds.
The Company has made the expenditure for the initial development of the land purchasedat Bhayla Bavla near Ahmedabad for future expansion. The Company incurred a capitalexpenditure of ' 1079 Lacs (' 3359 Lacs in the previous year). The entire capitalexpenditure was funded out of internal accruals.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary or Joint Venture.
The Company is having an Associate Company namely Khushbu Auto Finance Limited aNon-Banking Finance Company. Since the operations of this associate company is notsignificant and hence immaterial for consolidation. Accordingly the accounts have notbeen consolidated.
The credit rating for the cash credit facility of ' 15 Crores approved to the Companyby IDBI Bank Limited has been upgraded to CRISIL "A" with stable outlook fromCRISIL "A-" with stable outlook. The rating continues to reflect the Company'sabove-average financial risk profile marked by low gearing above average debt protectionmetrics improving market share established distribution network and efficient workingcapital management
AWARD AND RECOGNITION
Gujarat Innovation Society recognized and honored the jewels of Gujarat who arecontinuously engaged in Innovation activities and its promotion for more than two decadesin any field touching the human lives with Gujarat Ratna Award. Mr. Jayantibhai J ChandraChairman and Managing Director of the Company has been awarded as "GujaratRatna" for the best performance of the Company in Auto Sector by Mrs. AnandibenPatel the Chief Minister of Gujarat State in the award ceremony held at Ahmedabad onevening of 12th March 2016.
PARTICIPATION AT AUTO EXPO
Your Directors are pleased to inform you that the Company had participated in the motorshow - the Auto Expo 2016 held between 5th February 2016 to 9thFebruary 2016 at Noida Delhi NCR. The Company has put up prototype of the three wheelerautomobile. This Expo spread over 58 acres of land with around 60000 sqm exhibition area& convention facilities business lounges VIP lounges business centre restaurantsfood courts parking area storage and warehouse facilities which is organized by ACMACII and SIAM. Almost all giants of the Auto Sectors world over took part in the expo.
The three wheeler automobiles can be categorized in following segments:
Atul Auto Limited is the only Company in India who is having presence in all the abovesegments of three wheeler automobiles. All the vehicles of the Company have been approvedby the Automotive Research Association of India. The Company sells its vehicles under thebrand name "Atul Shakti" "Atul Gem" "Atul Smart""Atul Gemini" etc.
We continue our journey of delivering value to our customers through significantinvestments in quality programs. The
Company has designed its operational cycle with a strong insistence of maintaining andfurther improving the quality of the product. The Company takes reviews directly from thecustomers on the regular basis and the product related requirements of the customers areduly intimated to Research and Development department for the improvements andinnovations. The Company also obtains the reviews of the dealers who are in constant touchof the Customers of the vehicles. Your Directors understands that the quality of theproduct is the base of business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis forms an integral part of this report and givesdetails of the overall industry structure economic developments performance and state ofaffairs of your Company's various businesses viz. the decorative business internationaloperations industrial and home improvement business internal controls and theiradequacy risk management systems and other material developments during the financialyear 2015-16.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Independent Directors of your Company are not liable to retire by rotation. Mr.Niraj J Chandra Whole-time Director is liable to retire by rotation at the ensuing AGMpursuant to the provisions of Section 152 of the Companies Act 2013 read with theCompanies (Appointment and Qualification of Directors) Rules 2014 and the Articles ofAssociation of your Company and being eligible have offered himself for reappointment.
The term of Mr. Hakubhhai Lalakiya Mr. Hasmukhbhai Adhvaryoo and Mr. HemantkumarBhatt Independent Directors of the Company expires on 11th August 2016. YourDirectors proposes to extend term of office of all three Directors for three more years.
The term of Mr. Jayantibhai J Chandra Chairman & Managing Director and Mr.Mahendrakumar J Patel Whole-time Director & CFO expired on 31st March2016. The Board has reappointed Mr. J J Chandra as the Chairman & Managing Directorand Mr. M J Patel as Whole-time Director & CFO subject to approval of Members of theCompany. Further the Board has also approved increase in remuneration of Mr. J J ChandraMr. M J Patel and Mr. Niraj Chandra w.e.f. 1st June 2016 subject to approval ofMembers of the Company.
Necessary resolutions for the re-appointment of the aforesaid directors have beenincluded in the notice convening the ensuing AGM and details of the proposal forre-appointment are mentioned in the explanatory statement of the notice. Your directorscommend their re-appointment.
Further the Board has appointed Ms. Margie S Parikh as Additional Independent Directorof the Company pursuant to section 149 161 and Schedule IV of the Companies Act 2013with effect from 19th January 2015. The said appointment has been approved bythe shareholders in the Twenty Seventh Annual General Meeting with effect from 31stAugust 2015 for three years.
All the directors of the Company have confirmed that they are not disqualified frombeing appointed as directors in terms of Section 164 of the Companies Act 2013.
There was no change in the Key Managerial Personnel during the year.
COMMITTEES OF THE BOARD
The Board of Directors has the following Committees:
I. Audit Committee
II. Remuneration and Nomination Committee
III. Stakeholders' Relationship Committee
IV. Corporate Social Responsibility Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
DECLARATION OF INDEPENDENCE
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under 149 (6) of the CompaniesAct 2013 and Rules issued there under as well as Regulation 16(1)(b) of ListingRegulations (including any statutory modification(s) or re-enactment(s) for the time beingin force).
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a structured questionnaire was preparedafter taking into consideration the various aspects of the Board's functioningcomposition of the Board and its Committees culture execution and performance ofspecific duties obligations and governance.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members. ThePolicy is available on the website of the Company.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDPARTICULARS OF EMPLOYEES
The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s)orre-enactment(s) for the time being in force).
Except Managing Director and Whole-time Directors there is no employee in the Companywho have been paid the remuneration in excess of the limit specified in rule 5(2)(i) and(ii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
None of the employees of the Company was in receipt of remuneration in financial year2015-16 which in the aggregate or as the case may be at a rate which in the aggregateis in excess of that drawn by the managing director or whole-time director or manager andholds by himself or along with his spouse and dependent children not less than twopercent of the equity shares of the company.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report as Annexure [A].
NUMBER OF MEETINGS OF BOARD
The Board met four times during FY 2015-16. The details of which are provided in theCorporate Governance Report. The gap between any two meetings was within the periodprescribed by the Companies Act 2013 and the SEBI Listing Regulation.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 the Directorsbased on the information and representations received from the operating managementconfirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures from the same;
b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c) the directors have taken proper and sufficient care to the best of their knowledgeand ability for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;
d) the directors have prepared the annual accounts on a going concern basis; and
e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively.
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and such systems were adequate and operating effectively.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return as on 31stMarch 2016 in Form MGT - 9 in accordance with Section 92(3) of the Companies Act 2013read with the Companies (Management and Administration) Rules 2014 are set out herewithas Annexure [B] to this report.
HUMAN RESOURCE AND INDUSTRIAL RELATIONS
The Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of business. The Company has a structured induction process atallocations and management development programs to upgrade skills of managers. Objectiveappraisal systems based on Key Result Areas (KRAs) are in place for senior managementstaff.
The Company is committed to nurturing enhancing and retaining top talent throughsuperior Learning & Organizational Development. This is a part of Corporate HRfunction and is a critical pillar to support the organization's growth and itssustainability in the long run.
HEALTH SAFETY AND ENVIRONMENT
The Company is taking continuous steps and also developing environment friendlyprocesses for effective resource management with specific focus to energy water and basicraw materials. Monitoring and periodic review of system regarding health safety andenvironment is done on a continuous basis with emphasis and focus given to safety atworkplace.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
The particulars of conservation of energy research and development technologyabsorption and foreign exchange earnings and outgo in terms of Section 134 of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 for the year ended 31stMarch 2016 are annexed to this report as Annexure [C].
CORPORATE SOCIAL RESPONSIBILITY
Your Company has always laid emphasis on progress with social commitment. We believestrongly in our core values of empowerment and betterment of not only the employees butalso our communities. Following this principle the Company had laid the foundation of acomprehensive approach towards promoting and facilitating various aspects of oursurrounding communities.
The Company has undertaken projects in the area of promoting education promotinghealth care sanitation etc. These projects are in accordance with Schedule VII of theCompanies Act 2013 and the Company's CSR policy. The Report on CSR activities as requiredunder the Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed asAnnexure [D] and forms an integral part of this Report.
The Board has approved a policy for Corporate Social Responsibility and same has beenuploaded on the website i.e. www.atulauto.co.in
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with certificate from the Auditors on its compliance forms anintegral part of this report.
AUDITORS' AND AUDITORS' REPORT Statutory Auditors
M/s. Maharishi & Co Chartered Accountants (Registration Number: 124872W) who areStatutory Auditors of the Company hold office up to the ensuing Annual General Meeting andare recommended for re-appointment for the financial year 2016-17. As required under theprovisions of Section 139 of the Companies Act 2013 the Company has obtained writtenconfirmation from M/s. Maharishi & Co that their appointment if made would be inconformity with the limits specified in the said Section.
There is no Audit qualification for the year under review. The statutory auditors havenot put any adverse remark reservation or disclaimer that the Board need to reply.
In terms of provisions of Section 204 of the Companies Act 2013 read with Rules madethereunder the Company has appointed M/s. Bunty Hudda & Associates PracticingCompany Secretaries (CP No. 11560) to undertake the Secretarial Audit of the Company forthe financial year 2015-16. The Secretarial Audit Report is attached to this Report asAnnexure [E].
There is no secretarial audit qualification for the year under review.
The Company is not required to get its cost records audited for the financial year2015-16.
INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 and the Rules made thereunder are not attracted. Thusdisclosure in Form AOC-2 in terms of Section 134 of the Companies Act 2013 is notrequired. Further there is no material transaction with any related party during the yearunder review. The Company has developed a framework through Standard Operating Proceduresfor the purpose of identification and monitoring of such Related Party Transactions.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval of the Audit Committee was obtained for transactionswhich are of repetitive nature. Transactions entered into pursuant to omnibus approval areaudited by the Internal Auditor and a statement giving details of all Related PartyTransactions are placed before the Audit Committee and the Board for review and approvalon a quarterly basis.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company. Your Directors draw attention of the members toNote no. 42 to the financial statement which sets out related party disclosures for theyear under review.
The Company has adopted a Whistle Blower Policy as part of vigil mechanism to provideappropriate avenues to the Directors and employees to bring to the attention of themanagement any issue which is perceived to be in violation of or in conflict with the Codeof Business Principles of the Company. The details of the same have been described in moredepth in Corporate Governance Report.
Any incidents that are reported are investigated and suitable action taken in line withthe whistle blower policy. The Policy is also available on your Company's website.
Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.
Some of the risks that the Company is exposed to are: Financial Risk Commodity PriceRisk Regulatory Risk Human Resource Risk Strategic Risk etc.
ADOPTION OF NEW ARTICLE OF ASSOCIATION OF THE COMPANY
The new Articles of Association of your Company were adopted in accordance with theprovisions of the Companies Act 2013 read with the Rules issued there under at TwentySeventh Annual General Meeting of the Company held on 31st August 2015.
Few statutory disclosures the Company are required to be disclosed are as under:
The paid up Equity Share Capital as at 31st March 2016 stood at '10.97 crore. During the year under review the Company has not issued shares withdifferential voting rights nor has granted any stock options or sweat equity. As on 31stMarch 2016 none of the Directors of the Company hold instruments convertible into equityshares of the Company.
The Company has not paid any commission to any of its Directors and henceprovision of disclosure of commission paid to any Director as mentioned in Section 197(14)is not applicable.
There has been no instances of any revision in the Board's Report or thefinancial statement hence disclosure under Section 131(1) of the Act.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
There have been no material changes /commitments affecting the financialposition of the company which have occurred between the end of the financial year of thecompany to which the financial statements relate and the date of the report.
Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work solidarity cooperation anddedication during the year.
Your Directors sincerely convey their appreciation to customers shareholders vendorsbankers business associates regulatory and government authorities for their continuedsupport.
For and on behalf of the Board
of ATUL AUTO LIMITED
(J J Chandra)
Chairman and Managing Director
Place : Shapar (Dist. Rajkot)
Date : 30th May 2016