To the Members
Your Directors have the pleasure in presenting the 36th Annual Report on the businessand operations of your Company together with the Audited Statements of Accounts for thefinancial period ended March 31 2017:
( Rs. in million)
|Particulars ||2016-2017 ||2015-2016 |
|Total Revenue ||11488.17 ||10875.44 |
|Profit before depreciation & tax ||1133.23 ||919.94 |
|Less : Depreciation amortization & Loss on assets discarded ||394.63 ||404.70 |
|Tax expenses ||252.81 ||167.50 |
|Profit After Tax ||485.79 ||347.74 |
|Balance of Profit from Previous Year ||2546.45 ||2298.81 |
|Profit available for appropriation ||3032.25 ||2646.55 |
|Appropriations : || || |
|Dividend for the year ||- ||83.12 |
|Tax on dividend ||- ||16.98 |
|Transfer to General Reserve ||- ||- |
|Surplus retained in Profit & Loss Account ||3032.25 ||2546.45 |
The Board at its meeting held on May 18 2017 is pleased to recommend a dividend ofRs. 8/- per Equity Share of the face value of Rs. 10/- each for the financial year endedMarch 31 2017 subject to the approval of shareholders at the ensuing Annual GeneralMeeting to be held on Friday August 18 2017.
The total amount of Dividend aggregates to Rs. 120.90 million excluding DividendDistribution Tax.
The register of members and share transfer books will remain closed from August 162017 to August 18 2017 (both days inclusive) for the payment of final dividend to theshareholders of the Company for the year ended on March 31 2017.
The Dividend will be paid to members within 30 days from the date of declaration ofdividend to the Members whose names appear in the Register of Members as on August 152017.
Transfer of Amount to Investor Education & Protection Fund
In terms of the provisions of the Companies Act 2013 and Investor Education ProtectionFund Authority (Accounting
Audit Transfer and Refund) Rules 2016 a sum of Rs. 133753/- which isunpaid/unclaimed dividends pertaining to the FY 2008-09 was transferred to the InvestorEducation and Protection Fund during the year.
PERFORMANCE OF THE COMPANY
The Sales and other income for the financial year under review was Rs. 11488.17Million as against Rs. 10875.44 Million for the previous financial year. The Profitbefore tax (PBT) was Rs. 738.60 Million and the Profit after tax (PAT) was Rs.485.79 Million for the financial year under review as against Rs. 515.24 Million and Rs.347.74 Million respectively for the previous financial year.
The paid up Equity Share Capital as on March 31 2017 stood at Rs. 151.12 Million.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock options nor sweat equity.
Your Company has not accepted any deposits under Chapter V of the Companies Act 2013during the year.
TRANSFER TO RESERVE
There is no transfer to General Reserve Account during the year under review.
The equity shares of the Company are listed with BSE Limited and National StockExchange of India Limited. There are no arrears on account of payment of listing fees tothe Stock Exchanges.
DIRECTORS & KEY MANAGERIAL PERSONNEL:
As on March 31 2017 there were seven (7) Directors on the Board of your Companyconsisting of four (4) Independent Directors two (2) Non-Executive Directors of whom oneis the Chairman and one (1) Executive Director. None of the Directors have resigned orappointed during the year under review.
In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Dr. Narayanaswamy Muthukumar President & Whole Time Director of theCompany retires by rotation at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment.
Mr. S Ramkumar Chief Financial Officer & Company Secretary retired from his officewith effect from April 30 2016 and Mr. Ranganathan Sankaran has been appointed as ChiefFinancial Officer of the Company with effect from April 1 2016.
Ms. Thejeshwini. N has been appointed as Company Secretary of the Company with effectfrom November 5 2016.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence and that there has been nochange in the circumstances which may affect their status as independent director duringthe year as prescribed under sub-section (6) of Section 149 of the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations and Disclosure requirements)Regulations 2015.
The Companies Act 2013 states that a formal Annual Evaluation needs to be made by theBoard of its own performance and that of its committees and individual Directors.Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 mandates that the Board shall monitor and review the Board evaluationframework. Pursuant to these provisions the Company has developed a framework for theBoard evaluation. The framework includes evaluation on various parameters such asinformation flow Board dynamics decision making company performance and strategy Boardand committee's effectiveness and peer evaluation.
The evaluation of all the Directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board.
During the year 2016-17 Independent Directors met on February 6 2017 discussed andreviewed the below:
Performance of Non Independent Directors Performance of the Chairman Performance of theBoard Committees
Discussed on the quality quantity and timeliness of flow of information between theCompany management and the Board Members
Overall performance of the Company
FAMILIARIZATION PROGRAMME FOR THE BOARD MEMBERS
Your Company has in place a structured induction and familiarization programme for allits Directors including Independent Directors and new appointee(s) to the Board. Throughsuch programs the Directors are briefed on the background of your Company their rolesrights responsibilities nature of the industry in which it operates business modeloperations ongoing events etc.
The Board members are provided with the necessary documents brochures reports andinternal policies to enable them to familiarize with the Company's procedure and practice.
Periodic presentation are made at the Board Meetings Board Committee Meetings andIndependent Directors Meetings on business and overall performance updates of the Companybusiness strategy and risk involved.
The details of programs for Familiarization for Independent Directors are posted on thewebsite of the Company and can be accessed at: www.autoaxle.com/Directors.aspx
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors make the followingstatements:
(a) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
(b) we 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 fair viewof the state of affairs of the company as at March 31 2017 and of the profit of thecompany for the year ended on that date;
(c) we have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) we have prepared the annual accounts on a going concern basis;
(e) we have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively; and
(f) we have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
AUDITORS & AUDITORS' REPORT
a. Statutory Auditors
M/s. Deloitte Haskins & Sells Chartered Accountant Bangalore (Firm RegistrationNo.008072S) were appointed as auditors of the Company since its inception. They were lastre-appointed as auditors of the Company at 33rd Annual General Meeting held on February 52015 as per the Companies Act 2013. Currently they are holding office of the auditors upto the conclusion of the 36th Annual General Meeting. As per second proviso to Section139(2) of the Companies Act 2013 (the Act) a transition period of three years from thecommencement of the Act is provided to appoint a new auditor if the existing auditor'sfirm has already completed the tenure as per the provisions of the Companies Act 2013.
Accordingly as per the said requirements of the Act M/s. S R Batliboi &Associates LLP Chartered Accountants (Firm Registration No. 101049W/E300004) are proposedto be appointed as auditors for a period of 5 years commencing from the conclusion of 36thAnnual General Meeting till the conclusion of the 41st Annual General Meeting subject toratification by shareholders every year as may be applicable in place of M/s. DeloitteHaskins & Sells Chartered Accountants.
M/s. S R Batliboi & Associates LLP Chartered Accountants have consented to thesaid appointment and confirmed that their appointment if made would be within thelimits specified under Section 141(3)(g) of the Act. They have further confirmed that theyare not disqualified to be appointed as statutory auditor in terms of the provisions ofthe proviso to Section 139(1) Section 141(2) and Section 141(3) of the Act and theprovisions of the Companies (Audit and Auditors) Rules 2014.
The Audit Committee and the Board of Directors recommend for the appointment of M/s. SR Batliboi
& Associates LLP Chartered Accountants as statutory auditors of the Company fromthe conclusion of the 36th Annual General Meeting till the conclusion of 41st AnnualGeneral Meeting to the shareholders.
The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.
Further no frauds have been reported by the Auditors in their reports.
b. Internal Auditor
The Audit Committee and the Board of Directors recommend for the re-appointment of M/s.Price Waterhouse & Co. Bangalore LLP Chartered Accountants as Internal Auditors ofthe Company for the Financial Year 2017-18.
c. Secretarial Auditor
Pursuant to the provisions of the Section 204 of the Companies Act 2013 and the rulesmade there under and based on the recommendations of the Audit Committee CS Pracheta MPracticing Company Secretary has been appointed to conduct Secretarial Audit of theCompany's secretarial and other related records for the Financial year 2016-17.
The Secretarial Audit Report for the financial year ended March 31 2017 in form MR-3is appended to this report under Annexure A.
Explanation for observations made by the Company Secretary in practice:
The compliance under Secretarial Standards on meetings of the Board of Directors havebeen largely met with but for certain improvements on the procedural aspects which wouldbe complied henceforth.
INTERNAL FINANCIAL CONTROL
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.
During the year such controls were tested and no reportable material weaknesses in thedesign or operation were observed.
Corporate Governance is about maximizing the value and to ensure fairness to all itsshareholders. Your Company is renowned for its exemplary governance standards and believethat sound corporate governance is critical to enhance and retain investor trust. YourCompany ensures that performance is driven by integrity.
The Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 [SEBI (LODR Regulations)2015] have strengthened the governance regime in the country and your Company is incompliance with the governance requirements provided under the law both in letter andspirit. The Board also exercises its fiduciary responsibilities in the widest sense of theterm.
Your Company has in place all the statutory committees required under the law. Detailsof the Board Committees along with their terms of reference composition and meeting ofthe Board and its Committees held during the year are provided in the Corporate GovernanceReport which is presented in a separate section forming part of the Annual Report.
A Certificate from an Independent Practicing Company Secretary confirming compliancewith the conditions of Corporate Governance as stipulated under the aforesaid Regulation34(3) [(Schedule V (E)] of Securities and Exchange Board of India (Listing Obligations& Disclosure Requirements) Regulations 2015 is attached to the Corporate GovernanceReport.
MEETINGS OF THE BOARD
During the financial year the Board met four times details of which are provided inthe Corporate Governance Report. The maximum interval between any two meetings did notexceed 120 days as prescribe under the Companies Act 2013.
COMMITTEES OF THE BOARD
Your Company has the following committees which have been established as a part of thecorporate governance practices and are in compliance with the requirements of theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirement) Regulations 2015.
Nomination and Remuneration Committee Stakeholders Relationship Committee CorporateSocial Responsibility Committee Risk Management Committee
The details with respect to the compositions roles number of meetings held during theyear is detailed in the corporate governance report of the Company which forms a part ofthis Board's Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134 of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 are appended as Annexure- B to this report.
PARTICULARS OF REMUNERATION OF DIRECTORS & CERTAIN SPECIFIED EMPLOYEES:
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 theratio of remuneration of each Director to the median of the employees' remuneration astatement containing the names of top ten employees in terms of remuneration drawn andevery employee who is employed throughout the financial year and was in receipt of aremuneration of Rs. 102 lacs per annum or more and of every employee who is employed partof the financial year was in receipt of remuneration of Rs. 8.50 lacs or more permonth is appended as Annexure - C.
EXTRACT OF ANNUAL RETURN 2016-17
The detail forming part of the extract of Annual Return in MGT 9 is appended as Annexure- D.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT2013
Particulars of loans covered under section 186 of the Companies Act 2013 form part ofthe notes to the financial statement provided in this Annual Report. These loans areprimarily granted for furtherance of business of the borrowing companies.
Your Company has not given any guarantee or provided any security in connection with aloan to any other body corporate or persons and has not made any investment in thesecurities of any other body corporate.
POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and separate its functions of governance andmanagement. On March 31 2017 the Board consists of seven members one of whom isexecutive or whole-time director two are non executive directors and four are independentdirectors out of which one is Independent Woman Director.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management Personnel and their remuneration.
The Nomination and Remuneration policy is appended as Annexure - E to thisreport.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES (RPT)
The related party transactions that were entered into during the financial year were inthe ordinary course of business and on the arm's length basis.
All related party transactions are placed before the Audit Committee and also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basisfor the transactions which are foreseen and of repetitive nature.
For transactions with Meritor HVS (India) Limited the Company has obtainedshareholder' approval in their 33rd Annual General Meeting held on February 5 2015 fortransaction value annually of Rs. 25000 Million for a period of five (5) financial yearsstarting from October 1 2014.
Further all transactions entered into pursuant to the omnibus approval so granted arereviewed and a statement giving details of all related party transactions is placed beforethe Audit Committee and the Board of Directors for their approval on a quarterly basis.
In accordance with the requirements of the Companies Act 2013 and SEBI (LODR)Regulations 2015 your Company has formulated a Policy on Related Party Transactions whichis also available on Company's website at www.autoaxle. com/Policy.aspx.
Related Party disclosures as per AS-18 have been provided in Note 32 to the financialstatement.
The particulars on RPTs in AOC 2 is annexed to the Report as Annexure F.
RISK MANAGEMENT SYSTEM
The Company has a robust risk management framework comprising risk governance structureand defined risk management processes. The risk governance structure of the Company is aformal organisation structure with defined roles and responsibilities for risk management.
The processes and practices of risk management of the Company encompass riskidentification classification and evaluation. The Company identifies all strategicoperational and financial risks that the Company faces by assessing and analysing thelatest trends in risk information available internally and externally and using the sameto plan for risk activities.
The Company has set up a Risk Management Committee to review the risks faced by theCompany and monitor the development and deployment of risk mitigation action plans and thestatus is updated to the members of the Audit Committee and the Board of Directors onquarterly basis.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
The Company has been carrying out various Corporate Social Responsibility (CSR)activities. These activities are in terms of section 135 read with Schedule VII of theCompanies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014.During the year the Company has spent Rs. 3.83 Million on various CSR activities.
The Annual Report on CSR activities that includes details about the CSR policydeveloped and implemented by the Company and CSR initiatives taken during the year isappended to the Report as Annexure G.
STATE OF COMPANY'S AFFAIRS
Discussion on state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis (MDA). MDA for the year under review as stipulated underSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is presented in a separate section forming part of the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34(2)(e) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Management Discussion andAnalysis Report is presented in a separate section forming part of the Annual Report.
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177 of the Companies Act 2013 andRegulation 22 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015. Under the policy the Directors and Employeesare free to report any violation of the applicable laws and regulations and the code ofconduct of the Company. The reportable matters are to be disclosed to the Audit Committee.During the year under review the Company has not received any complaints under the saidmechanism.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Your Company has always believed in providing a safe workplace for every individualworking in Company's premise through various interventions and practices. The Companyalways endeavours to create and provide an environment that is free from discriminationand harassment including sexual harassment.
In terms of provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has formulated a Policy to preventSexual Harassment of Women at Workplace. During the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
SIGNIFICANT AND MATERIAL ORDERS
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There were no adverse material changes or commitments occurred after March 31 2017which may affect the financial position of the Company or may require disclosure.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATES
Your Company does not have any subsidiary joint venture nor any associates.
CHANGE IN THE NATURE OF BUSINESS
There are no change in the nature of business of your Company.
AWARDS AND RECOGNITION
During the year 2016-17 your Company was conferred with awards and recognition aslisted below:
1. Machinist Super Shop Floor 2016 Award in Green Manufacturing Category on May 262016 at Pune.
2. During Quality Circle Forum of India (QCFI) 7th Regional Convention QualityConcepts-Kaizen Award held on May 22 2016 at Vidyavardhaka College
Mysuru your Company bagged 13 gold awards 1 silver award and 1 bronze award.
3. Your Company won Quality Circle Forum of India (QCFI) Chapter Convention ofQuality Concepts Kaizen Awards at Coimbatore on October 15 2016 and QCFI CCQC 2016Kaizen Awards at Bangalore on October 23 2016.
Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work cooperation and dedication duringthe year. Your Directors sincerely convey their appreciation to customers shareholdersbankers business associates regulatory and government authorities for their continuedsupport.
Your Directors wish to place on record their appreciation for the continuedco-operation and support extended by Kalyani Group Pune and Meritor Inc. USA
| ||For and on behalf of the Board of Directors |
|Place: Pune ||Dr. B. N. Kalyani |
|Date: 18th May 2017 ||Chairman |