Board of Directors of your company has great pleasure in presenting to you their 36thAnnual Report and the audited statement of accounts for the year ended March 31 2016.
|FINANCIAL PERFORMANCE SUMMARY || || |
| || ||Rs. in Lakhs |
|A. FINANCIAL RESULTS ||2015/16 ||2014/15 |
|Net Sales ||41693.56 ||39500.54 |
|Total Expenditure ||39239.26 ||37685.83 |
|Operating profit ||2454.30 ||1814.71 |
|Other Income ||684.38 ||708.90 |
|Earnings before Interest Tax Depreciation and Amortization ||3138.68 ||2523.61 |
|Finance Cost ||38.42 ||33.15 |
|Cash Profit ||3100.26 ||2490.46 |
|Provision for Depreciation & Amortization ||555.73 ||129.63 |
|Profit before Tax ||2544.53 ||2360.83 |
|Provision for Tax (net) ||891.44 ||834.98 |
|Profit after Tax ||1653.09 ||1525.85 |
|Balance in Profit & Loss A/c brought forward from the || || |
|previous year ||7121.37 ||6903.98 |
|Profit available for appropriation ||8774.46 ||8429.83 |
|B. APPROPRIATIONS || || |
|Equity Dividend || || |
|Interim ||160.54 ||160.54 |
|Final ||802.70 ||802.70 |
|Corporate Dividend tax ||196.13 ||192.62 |
|Transfer to General Reserve ||165.30 ||152.60 |
|Balance carried to Balance Sheet ||7449.79 ||7121.37 |
The Company has paid an Interim Dividend of 25% ( Rs. 2.50 per Equity Share) to theshareholders on February 22 2016.
The Board of Directors has recommended a Final Dividend of 125% ( Rs. 12.50 per equityshare) to the Equity shareholders.
Thus the aggregate dividend for the year works out to 150% ( Rs. 15/- per Equityshare).
The said dividend if approved by the members would involve a total cash outflow ofRs. 1159.37 lakhs (inclusive of Interim Dividend and Dividend Distribution Tax thereon)for the FY 2015-16 and result in a payout of 70% of the current profit (Previous year76%).
TRANSFER TO GENERAL RESERVE
The Company proposes to transfer Rs. 165.30 lakhs to the general reserve out of theamount available for appropriation.
The paid up Equity Share Capital as on 31st March 2016 was Rs. 642.16 lakhs. Duringthe year under review the Company has not issued any shares.
The bus segment has maintained its dominance in contributing to your Company's revenueand profit. Proportion of bus division's revenue in total revenue of the Company clocked85% during the year under review. Large portion of our workforce is operating in the bussegment at Goa. Operations at the pressings division though under pressure improvedappreciably by 11% as compared to last year.
Your Company's Product Sale for the financial year 2015-16 crossed the key milestone ofRs. 417 crores reflecting a growth of 5.55% over the previous financial year. TheCompany's profit before tax during the financial 2015-16 year was at Rs. 25.45 crores asagainst Rs. 23.61 crores in the preceding financial year. Net profit after tax stood atRs. 16.53 crores as compared to Rs. 15.26 crores in the preceding financial year. DuringFY 2015-16 your Company sold highest number of buses (4960 numbers) so far sold in anyof previous financial years. Your Company also achieved the landmark of 52657 buses soldfrom FY 1989-90 to 2015-16.
Operations of the Company and business overview have been discussed in more detail inthe Management Discussion and Analysis forming part of this report.
Bus Body Segment
Revenue from Bus Segment increased by 5% at Rs. 352.61 crores in FY 2015-16 ascompared Rs. 336.93 crores in the preceding financial year. In FY 2015-16 4960 buseswere sold as compared to 4591 buses in preceding financial year which is an increase of369 buses. This is the highest number of buses manufactured so far in any of the previousfinancial year.
Out of the 4960 buses sold during the financial year 2015-16 2647 buses were forExport Application which was lower by 7% as compared to the preceding financial year. Themajor factor in reduction of Export Application buses was reduced demand from Middle Eastcaused by the economic slowdown as a result of drop in Oil Prices.
While the overall demand for buses in the country was similar to that witnessed in theprevious year whereas Company able to maintain volume growth by increasing share ofbusiness in Direct Customer Orders by In-house Marketing efforts and Entry into new bussegment for TML by introduction of new models during the financial year 2015-16.
Sheet metal business is in sync with the automobile industry and is dependent on theprogress of the same. The segment is necessarily capital incentive which is presentlyhaving over capacity with respect to current industry demand. With a marginal improvementin the industry Sheet Metal business also improved during the financial year 2015-16.Revenue (exclusive of miscellaneous income) from this segment has shown increase from Rs.57.97 crores (2014-15) to Rs. 64.30 crores with a growth of 11% in the given financialyear.
This segment looks more promising with new orders received from Tata Motors-Dharwad andTata Cummins- Phaltan and Jamshedpur which will help in increasing the Sheet MetalDivision's capacity utilization in the financial year 2016-17.
Share of pressings business in the overall revenue of the company has increasedmarginally from 14.68% in FY 2014-15 to 15.42% in FY 2015-16.
As a result of ongoing endeavour of rationalising and rightsizing the workforce theemployee cost remain 10% of sale revenue beside increase in salaries & wage andoverall strength of permanent employees came down to 572 as on 31st March 2016 against 576on 31st March 2015.
CORPORATE SOCIAL RESPONSIBILITY
The key focus areas of the ACGL's CSR program are women empowerment support of thedifferently abled education public health and environment. These projects are largely inaccordance with Schedule VII of the Companies Act 2013.
Brief outline of the CSR Policy:
In ACGL Corporate Social Responsibility (CSR) philosophy revolves around engagementsin socially relevant activities for the under-privileged sections of the society. TheCompany believes in inclusive growth to facilitate creation of a value-based and empoweredsociety through continuous and purposeful engagement of society around. Our commitment toCSR is focused on initiatives that make a constructive contribution to the community andencourage sustainable development.
A policy on CSR has been formulated by the Corporate Social Responsibility Committee(CSR Committee) and adopted by the Board of Directors. The contents of this policy areavailable on the website of the Company.
Your Company is committed to allocate at least 2% of its average Net Profits madeduring the three immediately preceding financial years calculated in accordance with theprovisions of the Act and the Rules made thereunder towards Corporate SocialResponsibility projects. The Company would undertake one or more of the activities whichrelate to schedule VII of the Act as its projects for CSR activities.
Composition of the Committee:
As per Section 135 (1) of the Companies Act2013 the Company has constituted aCorporate Social Responsibility Committee. Mr S V Salgaocar resigned from the Board of theCompany w. e. f. 29.10.2015. The composition of the Committee as on date is as under:
|Mr S V Salgaocar ||Chairman (upto 29.10.2015) |
|Mr Shrinivas V Dempo ||Chairman (w.e.f. 29.10.2015) |
|Mr P F X D'Lima ||Member |
|Mr Steven Pinto ||Member |
|Dr Vaijayanti Pandit ||Member |
|Mr O V Ajay ||Member |
The Annual Report on CSR activities for FY 2015-16 is annexed as "AnnexureA".
Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (LODR) and SEBI circular dated October 13 2015 a freshListing Agreement has been executed by the Company with Bombay Stock Exchange Limitedwithin the prescribed time limit. A separate section on Corporate Governance forming partof the Directors' Report and Auditors' certificate regarding compliance of conditions ofCorporate Governance have been included in the Annual Report.
Borrowings of the company in the form of Cash Credits as at end March 2016 stood atRs. 290.34 lakhs (previous year Rs. 352.83 lakhs). Cash and bank balance stood at Rs.178.39 lakhs (previous year Rs. 167.25 lakhs).
DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment and Retirement of Directors:
During the year Mr S V Salgaocar Independent Director and Chairman of the Companyresigned from the services of the Company effective October 29 2015. The Directors wishto place on record their deepest appreciation of the tremendous contribution of MrSalgaocar in the success achieved by the Company during his long tenure as a Director andChairman of the Company.
Mr Shrinivas Dempo has been appointed as Additional (Independent) Director on the Boardof the Company effective September 12 2015. He has been appointed as the Chairman of theCompany effective October 29 2015. Pursuant to the provisions of Section 161 of the Actand the Articles of Association of the Company Mr Dempo vacates office and is eligiblefor re-appointment. Members are requested to refer to Item No.5 of the Notice of theAnnual General Meeting for details.
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149 (6) of the Act and Regulation 16(1) (b) of the Listing Regulations. In the opinion of the Board they fulfill theconditions of independence as specified in the Act and the Rules made there under and areindependent of the management.
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Mr R Ramakrishnan retires by rotation and is eligible forre-appointment. Members are requested to refer to Item No.3 of the Notice of the AnnualGeneral Meeting for details.
Key Managerial Personnel:
Pursuant to the provisions of section 203 of the Act details of Key ManagerialPersonnel (KMP) during the Financial Year 2015-16 are given below:-
|Sr No ||Name of the KMP ||Designation |
|1 ||O V Ajay ||CEO & Executive Director |
|2 ||Harjit Singh Madaan (upto 05.08.2015) ||Chief Financial Officer |
|3 ||Raghwendra Singh Butola (effective 21.10.2015) ||Chief Financial Officer |
|4 ||Pravin Satardekar ||Company Secretary |
The Company has adopted Governance Guidelines on Board Effectiveness. The GovernanceGuidelines cover aspects related to composition and role of the Board Chairman andDirectors Board diversity definition of independence Director Term Retirement Age andCommittees of the Board. It also covers aspects relating to nomination appointmentinduction and development of Directors Director Remuneration Subsidiary oversight Codeof Conduct Board Effectiveness Review and Mandates of Board Committees.
Procedure for Nomination and Appointment of Directors:
The Nomination and Remuneration Committee is responsible for developing competencyrequirements for the Board based on the industry and strategy of the Company. Boardcomposition analysis reflects in-depth understanding of the Company including itsstrategies environment operations financial condition and compliance requirements. TheNomination and Remuneration Committee conducts a gap analysis to refresh the Board on aperiodic basis including each time a Director's appointment or re-appointment isrequired. The Committee is also responsible for reviewing and vetting the CVs of potentialcandidates vis--vis the required competencies and meeting potential candidates prior tomaking recommendations of their nomination to the Board. At the time of appointmentspecific requirements for the position including expert knowledge expected iscommunicated to the appointee.
Criteria for Determining Qualifications Positive Attributes and Independence of aDirector:
The Nomination and Remuneration Committee has formulated the criteria for determiningqualifications positive attributes and independence of Directors in terms of provisionsof Section 178 (3) of the Act and Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
Independence: In accordance with the above criteria a Director will be considered asan 'Independent Director' if he/she meets with the criteria for 'Independent Director' aslaid down in the Act and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
Qualifications: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is alsoensured that the Board has an appropriate blend of functional and industry expertise.While recommending the appointment of a Director the Nomination and RemunerationCommittee considers the manner in which the function and domain expertise of theindividual will contribute to the overall skill-domain mix of the Board.
Positive Attributes: In addition to the duties as prescribed under the Act theDirectors on the Board of the Company are also expected to demonstrate high standards ofethical behavior strong interpersonal and communication skills and soundness of judgment.Independent Directors are also expected to abide by the 'Code for Independent Directors'as outlined in Schedule IV to the Act.
Annual Evaluation of Board Performance and Performance of its Committees and ofDirectors:
Pursuant to the applicable provisions of the Act and the Listing Regulations the Boardhas carried out an annual evaluation of its own performance performance of the Directorsas well as the evaluation of the working of its Committees.
The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Board itsCommittees and Directors.
The Board's functioning was evaluated on various aspects including inter alia degreeof fulfillment of key responsibilities Board structure and composition establishment anddelineation of responsibilities to various Committees effectiveness of Board processesinformation and functioning.
Directors were evaluated on aspects such as attendance and contribution at Board/Committee Meetings and guidance/support to the management outside Board/ CommitteeMeetings. In addition the Chairman was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and motivating and providing guidance to the Managing Director/CEO/WholeTime Director.
Areas on which the Committees of the Board were assessed included degree of fulfillmentof key responsibilities adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of the Chairmanand the Non Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Board as a whole. The Nomination and RemunerationCommittee also reviewed the performance of the Board its Committees and of the Directors.
The Chairman of the Board provided feedback to the Directors on an individual basis asappropriate. Significant highlights learning and action points with respect to theevaluation were presented to the Board.
The Company has adopted a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and ListingRegulations.
The philosophy for remuneration of Directors Key Managerial Personnel and all otheremployees of the Company is based on the commitment of fostering a culture of leadershipwith trust. The Remuneration Policy of the Company is aligned to this philosophy.
The Nomination and Remuneration Committee has considered the following factors whileformulating the Policy:
i) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
ii) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
iii) Remuneration to Directors Key Managerial Personnel and Senior Management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals.
It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company.
Details of the Remuneration Policy are also provided in the Corporate GovernanceReport.
Board and Committee Meetings
The Meetings dates are circulated in advance to the Directors. During the year sevenBoard Meetings and four Audit Committee Meetings were convened and held. There have beenno instances during the year when recommendations of the Audit Committee were not acceptedby the Board.
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Act and the Listing Regulations.
DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet. (This does not include advances against supply of spare parts and scrap notappropriated against supply of goods or provision of services within a period of 365 daysfrom the date of acceptance of such advance- Kindly Refer section V of the MGT 9).
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of loans/guarantees/investments have been disclosed in the financialstatements. The said loans/guarantees/investments are within the limits stipulated in theSection 186 (2) of the Companies Act 2013.
PARTICULARS OF EMPLOYEES AND REMUNERATION:
The information required under Section 197 (12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedas "Annexure B".
The information required under Rule 5 (2) and (3) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure forming partof the Report. In terms of the first proviso to Section 136 of the Act the Report andAccounts are being sent to the Shareholders excluding the aforesaid Annexure. AnyShareholder interested in obtaining the same may write to the Company Secretary at theRegistered Office of the Company. Except CEO & Executive Director none of theemployees is getting covered in the aforesaid provisions.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGOINGS:
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of TheCompanies (Accounts) Rules 2014 is annexed as "Annexure C".
(1) Statutory Auditors
M/s Deloitte Haskins & Sells LLP - Firm Registration No 117366W/W-100018 (DHS) whoare the Statutory Auditors of the Company hold office until the ensuing Annual GeneralMeeting. It is proposed to re-appoint them to examine and audit the accounts of theCompany for the financial year 2016-17. M/s Deloitte Haskins & Sells LLP have underSection 139(1) of the Companies Act 2013 furnished a certificate of their eligibilityfor re-appointment. Members are requested to consider the re-appointment of DHS andauthorize the Board of Directors to fix their remuneration.
(2) Cost Audit
Cost audit for the financial year 2015-16 is not applicable to the Company.
(3) 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 hasappointed Mr Shivram Bhat a Practicing Company Secretary Membership no. 10454 toundertake the Secretarial Audit of the Company for FY 2015-16. The Report of theSecretarial Auditor is annexed herewith as "Annexure D".
The Statutory Auditors' Report and the Secretarial Audit Report for the financial yearended March 31 2016 do not contain any qualification reservation adverse remark ordisclaimer.
THE EXTRACT OF THE ANNUAL RETURN FILED WITH MCA
Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in form MGT.9 is annexed as"Annexure E".
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder. The Policy aims toprovide protection to employees at the workplace and prevent and redress complaints ofsexual harassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to inquire into complaints of sexual harassment and recommendappropriate action.
The Company has not received any complaint of sexual harassment during the financialyear 2015-16.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy to deal with instances of fraud andmismanagement if any. The details of this Policy are explained in the CorporateGovernance Report and also posted on the website of the Company. It is affirmed that nopersonnel of the Company has been denied access to the Audit Committee.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
However Members attention is drawn to the Statement on Contingent Liability formingpart of the Financial Statement.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultant including audit of internal ?nancial controlsover ?nancial reporting by the statutory auditors and the reviews performed by Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Company's internal financial controls were adequate and effective duringthe financial year 2015-16.
Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:
i) In the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
ii) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;
iii) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv) They have prepared the annual accounts on a going concern basis;
v) They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
vi) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the financial year were incompliance with the applicable provisions of the Companies Act 2013 ('the Act') and theListing Regulations (erstwhile Listing Agreement entered into with the Stock Exchange)[LODR].
Tata Motors Limited (TML) is a "Related Party" of the Company under ListingRegulations. The transactions with TML exceed the materiality threshold as prescribedunder regulation 23 of LODR. The Members at their 35th Annual General Meeting held onJuly 31 2015 have accorded their approval to the Board of Directors to enter into suchmaterial contracts/arrangements/transactions with Tata Motors Limited.
All Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is put in place for the transactions whichare repetitive in nature. A statement of all Related Party Transactions is placed beforethe Audit Committee for its review on a quarterly basis specifying the nature value andterms and conditions of the transactions.
The Company has adopted a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Company's website at the web link: http://www.acglgoa.com.Details of the transactions with Related Parties are provided in the accompanyingfinancial statements. There were no transactions during the year which would require to bereported in Form AOC 2.
The Board has laid down a clear Risk Policy to identify potential business risks andinstall effective mitigation processes to protect Company's assets and business risks.Risk Assessment and minimization plan are reviewed by the Risk Management Committee of theBoard on a periodic basis.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under Listing Regulations isprovided as an Annexure to this Report.
Your Directors would like to place on record their sincere appreciation for the supportand assistance extended by the Company's suppliers bankers and business associates. YourDirectors are thankful to the esteemed shareholders for their continued support and theconfidence reposed in the Company and its Management. The Directors wish to place onrecord their appreciation for the support and guidance provided by its parent companyTata Motors.
The Directors place on record their sincere thanks for the help and support receivedfrom Government of Goa and related Government and semi-Government agencies. Your Directorsacknowledge the unstinted service rendered by the employees of the Company at all levelstowards its overall success.
| ||On behalf of the Board of Directors |
|Place : Panaji Goa ||Shrinivas Dempo |
|Date : July 2 2016 ||Chairman |