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Automotive Stampings & Assemblies Ltd.

BSE: 520119 Sector: Auto
NSE: ASAL ISIN Code: INE900C01027
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VOLUME 804
52-Week high 71.15
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Mkt Cap.(Rs cr) 83.66
Buy Price 52.75
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OPEN 53.95
CLOSE 53.85
VOLUME 804
52-Week high 71.15
52-Week low 32.20
P/E
Mkt Cap.(Rs cr) 83.66
Buy Price 52.75
Buy Qty 249.00
Sell Price 53.95
Sell Qty 50.00

Automotive Stampings & Assemblies Ltd. (ASAL) - Director Report

Company director report

Dear Members

Your Directors take pleasure in presenting the Twenty Sixth Annual Report together withthe Audited Financial Statements of your Company for the financial year ended March 312016. The Management Discussion and Analysis forms part of the Report.

FINANCIAL RESULTS

(Rs in Lakhs)
Particulars Financial Year
2015-16 2014-15
Revenue from Sale of Products (Net) 26121.68 28864.98
Other Operating Revenue 175.64 185.14
Other Income 90.58 4.68
Total Revenue 26387.90 29054.80
Cost of Materials Consumed (including change in inventories) 19503.87 22608.91
Employee Benefit Expense 4090.91 4073.56
Other Expenses 2966.53 3016.26
Earnings / (Loss) before Depreciation Financial Charges and Tax (173.41) (643.93)
Interest Expense 932.62 824.35
Depreciation and Amortization Expense 963.23 968.90
Profit / (Loss) before Tax (2069.26) (2437.18)
Tax Expense / (Credit) - (120.09)
Profit / (Loss) for the year (2069.26) (2317.09)

DIVIDEND

Due to the loss during the year the Board of Directors has not recommended anydividend.

#MDStart#

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian Automobile Industry is made up of Original Equipment Manufacturers (OEMs)i.e. Automobile manufacturers and auto component manufacturers.

The Industry is an emerging sector in India with almost all global majors having setup their facilities here. The Industry has been continually evolving and absorbing newertechnologies in order to align itself with global developments and realize its fullpotential.

The Auto Components Industry in India comprises of Tier One manufacturers who supplycomplete component modules to OEMs Tier Two manufacturers who cater to Tier Onemanufacturers and Tier Three manufacturers who supply components to Tier Twomanufacturers. The Industry is divided into five segments viz. engine parts drivetransmission & steering parts suspension & brake parts electric parts and body& chassis. The fortunes of the Auto Components Industry are closely linked with thoseof the OEMs.

In 2015-16 Auto Industry witnessed an overall growth of 2.58 % for all Segments (asper the table given below). The Passenger Vehicle segment registered a growth of 5.97 %within this segment the Utility vehicle grew at 13.66 % and Passenger Car grew by 4.02 %due to new launches in the compact segment of Utility Vehicles and Passenger Cars.

Commercial Vehicle segment grew by 12.10 % based on the recovery of M&HCV segmentat 27.04 % and LCV segment saw some recovery during the year registering a meager growthof 2.77 %. Three wheeler segment registered a negative growth of (1.59 %).

The chart given below shows the production of various categories of vehicles during FY2015-16 vis-a-vis FY 2014-15.

Segment 2015-16 2014-15 % Growth
Passenger cars 2519444 2422158 4.02
Utility vehicles 711830 626296 13.66
Vans 182585 172965 5.56
Passenger Vehicles 3413859 3221419 5.97
M&HCVs 341181 268558 27.04
LCVs 441633 429740 2.77
Commercial Vehicles 782814 698298 12.10
Three Wheelers 933950 949019 -1.59
Two wheelers 18829786 18489311 1.84
Quadricycle* 531 - -
Total of All Categories 23960940 23358047 2.58

* Cumulative data is only for Oct-March 16 Source SIAM report

The Auto Components Industry started showing signs of recovery during FY 2015-16 acrossall segments.

The chart below shows sales and export of various categories of vehicles during FY2015-16 compared to FY 2014-15:

Segment Domestic Sales Exports
2015-16 2014-15 % Growth 2015-16 2014-15 % Growth
Passenger cars 2025479 1877706 7.87 532053 542112 -1.86
Utility vehicles 586664 552135 6.25 118721 77025 54.13
Vans 177535 171395 3.58 3115 2204 41.33
Passenger Vehicles 2789678 2601236 7.24 653889 621341 5.24
M&HCVs 302373 232755 29.91 35192 30652 14.81
LCVs 383331 382193 0.30 66497 56287 18.14
Commercial Vehicles 685704 614948 11.51 101689 86939 16.97
Three wheelers 538092 532626 1.03 404441 407600 -0.78
Two wheelers 16455911 15975561 3.01 2481193 2457466 0.97
Quadricycle* - - - 334 - -
Total of All Categories 20469385 19724371 3.78 3641546 3573346 1.91

* Cumulative data is only for Oct-March 16

The domestic sales of Passenger Vehicles grew by 7.24 % in FY 2015-16 over the sameperiod last year. Within the Passenger Vehicles Passenger Cars Utility Vehicles and Vansgrew by 7.87 % 6.25 % and 3.58 % respectively during the year over the same period lastyear mainly due to new launches in the compact segment for Passenger Cars and Utilityvehicles at very attractive prices.

The domestic Commercial Vehicles segment registered a growth of 11.51 % in FY 2015-16as compared to the same period last year largely driven by replacement demand decliningfuel prices pre-buying ahead of BS IV norms and ABS mandatory fitment. Medium & HeavyCommercial Vehicles (M&HCVs) registered a growth at 29.91 % and Light CommercialVehicles (LCVs) grew marginally by 0.30 % during FY 2015-16 over the same period lastyear.

Three Wheelers domestic sales grew only by 1.03 % in FY 2015-16 over the same periodlast year. In FY 2015-16 overall automobile exports grew by 1.91 %. Passenger Vehiclesand Commercial Vehicles registered a growth of 5.24 % and 16.97 % respectively. ThreeWheelers de-grew by 0.78 % FY 2015-16 over FY 2014-15.

The Indian Auto Components Ancillary Industry continues to face adverse headwinds tomaintain volumes and margins.

Your Company operates in Sheet Metal Components Assemblies and Sub-assemblies segmentof the Auto Components Industry. It manufactures a range of sheet metal components andassemblies for the Automobile Industry and is a Tier One auto components supplier.

OPERATIONS

Your Company's sales during the year were impacted by lower volumes in the segment inwhich it predominantly operates. Some of the models under passenger car segment and LCVsegment on which your Company has heavy dependence recorded sharper drop in volume andthis had an adverse effect on sales. Even though the passenger car recorded growth of4.02 % your Company couldn't achieve corresponding growth since the major customerincluding anchor customer of your Company recorded a negative growth.

Due to the above the capacity utilization of your Company was low. To minimize theimpact of falling volumes and increase in minimum wages bonus and energy costs yourCompany has taken cost reduction initiatives as counter measures such as EBITDAimprovement programmes by enhancing productivity and improving operational excellence.Apart from the cost reduction programmes your Company has been aggressively pursuing newbusiness opportunities in Utility Vehicle segment Commercial Vehicles Segment and ThreeWheeler Segment by getting greater share of business from existing Customers. Your Companyis also participating in new program launches in LCV segment which will further enhanceits share of business in LCV segment. Your Company is exploring to participate in M &HCV segment by pursuing new business opportunities it with major Customers. Further yourCompany will also be adding non-auto business. The order booking of the Company during FY2015-16 is healthy and it will be realized into sales as per vehicle introduction plan byrespective Customer. Accordingly it will have a positive impact on volumes and hencebetter capacity utilization margins and overall performance on a sustained basis in thefuture.

INCOME AND EXPENDITURE

Net Sales dropped by 9.50% to Rs 26121.68 Lakhs primarily due to reduction in Customervolumes and lower steel price leading to lower component sales. Other operating incomemainly comprises of income from job work which is reduced by 5.13% to Rs 175.64 Lakhs.Other Income mainly consists of profit on sale of assets (net) of Rs 79.48 Lakhs. Cost ofmaterials consumed (including change in stock) as a percentage to sales decreased by 3.66%to 74.67% because of change in the product mix. The Management has been taking continuoussteps to improve material utilisation.

The inflationary effect of Employee expenses has been partially offset by theproductivity improvements programs undertaken by the Management. Other Expenses comprisingManufacturing Administration and Selling Expenses have been reduced by 1.65% to Rs2966.53 Lakhs due to reduction in Sales volumes and implementation of EBITDA improvementprogrammes. Even though net sales were dropped by 9.50% as compared to FY 2014-15 howeverwith the management initiatives on productivity improvements and cost reductionprogrammes the Loss before Depreciation Financial Charges and Tax was contained at Rs173.41 Lakhs as against Earnings before Depreciation Finance Costs and Tax of Rs 643.93Lakhs in the previous year.

Interest expense increased by 13.13% to Rs 932.62 Lakhs due to increase in borrowings.Depreciation and amortization expense have been reduced from Rs 968.90 Lakhs to Rs 963.23Lakhs.

OPPORTUNITIES AND THREATS

Investment in Technology / Process:

As the automotive market is continually upgrading its technology and processes yourCompany is also upgrading its technology to participate in new vehicle programmes launchedby Customer.

Company's flown technology / processes / system improvement plan:

Your Company is undertaking various new technology initiatives process upgradation andsystem enhancements which will further improve the productivity and potential for newbusinesses from existing and new customers. This will not only enhance the capacityutilization but will also broaden the customer base and introduction into new businesssegments.

The auto industry is on the way to grow but the major customers of your Company areunder pressure and have to regain the market position in their respective segments.

The profitability of the Indian Auto Components Industry is likely to continue to beunder strain due to pricing pressures from OEMs because of new product launches which hascreated heightened competitive intensity thereby constraining their pricing flexibility.

SEGMENT-WISE PERFORMANCE

The Company operates only in the Automobile Component Segment in the Domestic Market.

FUTURE OUTLOOK

According to SIAM in FY 2016- 17 passenger vehicle sales are projected to grow between6-8 % M & HCVs at 12-15 % and in LCV segment single digit growth is expected.Three-wheeler sales are also expected to recover with rising urbanization and migration tocities boosting intra-city transportation. Three-wheeler manufacturers are pushing furtherinto rural areas as LCVs try to encroach on traditional three- wheeler markets. Accordingto SIAM during FY 2016-17 industry GDP is expected to grow at 7.6 % whereas the overallGDP of the country is expected to grow at a rate of 7.9 %.

There is proposed outlay by the Government on account of infrastructure spending inRoads Railways Ports and Smart City etc. The Government has also planned certaininitiatives to boost Rural consumption which will help drive GDP growth. AdditionallyGovernment is planning to bring 7 pay Commission which will provide higher discretionaryincome. Normal monsoons are forecasted for the year as a result it is likely thatagricultural GDP would experience a faster growth pace. All these factors will eventuallydrive GDP growth. Recently RBI has cut repo rate by 25 basis point putting the currentrate at 6.50 % thereby reducing the interest rates by 50 basis points. This momentum maycontinue in FY 2016-17 provided inflation is under control. It is expected that Commodityprices will remain stable or may slightly go up.

RISKS AND CONCERNS

Skill Availability:

In some of the locations of our operations sourcing of skilled labour is an issuewhich may create challenges for future growth.

Rising input costs:

The rising input cost is a cause for concern which unless controlled will impactsales and also erode margins.

Concentrated Customer Base:

Concentrated OEM and limited product portfolio make the component manufacturersvulnerable to the vagaries of business cycles.

Your Company has been taking steps to mitigate the risks by creating a state ofinternal readiness to seize opportunities that unfold and continues to explore newbusiness opportunities.

STATE OF COMPANY'S AFFAIRS

Discussion on state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has developed robust internal control systems by documenting procedurescovering financial and operating functions. These systems are providing a reasonableassurance with regard to its financial and operations controls.

Some significant features of the internal control systems are:

• Implementation of ERP (SAP) for online control of all transactions includingfinance materials dispatch quality costing etc. across all locations.

• A detailed preparation and subsequent monitoring of both Annual budgets &Capital Expenditure budgets for all its functions.

• Internal audits are conducted by external auditors and they audit all aspects ofbusiness based on audit programmes finalized by the Audit Committee.

• Review of the financial performance by Audit Committee.

RELATED PARTIES

Note 25 of the Financial Statements sets out the nature of transactions with relatedparties. Transactions with Related Parties are carried out in the ordinary course ofbusiness and at the arm's length. The details of the transactions are tabled before theAudit Committee. Further details on this are explained in the Corporate Governance Report.None of the transactions with related parties falls under the scope of Section 188 (1) ofthe Companies Act 2013. Hence no particulars are being provided in Form AOC-2.

CORPORATE SOCIAL RESPONSIBILTY (CSR)

Pursuant to the provisions of the Companies Act 2013 and rules made there underamended from to time your Company is not mandatorily required to spend any amount on thisaccount in view of the losses. Your Company has however been undertaking CSR initiativesvoluntarily.

Corporate Social Responsibility Committee constituted in terms of Section 135 of theCompanies Act 2013 monitors the CSR activities undertaken by the Company as per CSRPolicy. The CSR Policy has been uploaded on the website of the Company: www.autostampings.com.

The employees from all plants of the Company voluntarily contribute their time byvisiting orphanages/ old age homes schools etc. to provide some companionship and succorto children and aged people. Your Company identifies employable local youth and providestraining to them under their Skill Development Centre.

ENVIRONMENT HEALTH AND SAFETY

Your Company is committed to provide a safe secure and healthy workplace and this hasbeen documented in the Health Safety and Environment (HSE) policy which is part of theOverarching Wellness strategy of your Company. Your Company has therefore adopted acomprehensive approach to implement this by adopting 'Total Safety Culture' concept acrossits operations. All the Plants of the Company have been certified for EMS 14001 and OHSAS18001. All plants are especially focused on the wellness initiative. Your Company hasinitiated a process for implementation of the British Safety Council (BSC) Certification.All plants are having three star ratings and taken a goal for achieving four star rating.Internal Audits of BSC for health safety and environment have been conducted at allPlants every quarter and training and awareness initiatives have been undertaken. Healthchecks and counseling are extended to employees.

During the year the approach to safety has been further strengthened in all operationsof your Company. Regular safety drills and safety audits are continued at all plants. Therequisite training is provided to the employees in Safety. Your Company has adopted"Grey to Green" climate change policy to reduce its carbon footprint by reducingpower consumption and selling steel scrap to be reprocessed and sold.

There is a continued focus on tracking of "near miss" incidences which hasresulted not only in reduction of reportable accidents but even in first aid injuries& non- reportable accidents. Safety competitions presentations on safety kaizensmock drills etc. are conducted for achieving a safe and healthy work environment.

Your Board of Directors are continually updated on Health Safety and Environmentrelated matters.

QUALITY INITIATIVES

All the manufacturing Plants of your Company are certified under TS 16949 and ISO14001. Your Company has been implementing the 'Tata Business Excellence Model' to buildexcellence in its business operations.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Deepak Rastogi (DIN : 02317869) will retire by rotation at the conclusion of theforthcoming Annual General Meeting and being eligible has offered himself forre-appointment.

Mr. Arvind Goel (DIN: 02300813) retired by rotation and was re-appointed in the 25thAGM held on July 23 2015.

Pursuant to the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel of the Company are: Mr. Anil Khandekar Manager designated as ChiefExecutive Officer Mr. Ajay Joshi Chief Financial Officer and Mr. Ashutosh KulkarniCompany Secretary. During the year under review Mr. Shailendra Dindore resigned from thepost of Company Secretary and Compliance Officer with effect from EOB July 10 2015. TheBoard places on record its appreciation for the services rendered by him during his tenurewith the Company. Mr. Ashutosh Kulkarni has been appointed as Company Secretary andCompliance Officer with effect from July 23 2015. Apart from above there has been nochange in the Directors / Key Managerial Personnel during the year.

EVALUATION OF DIRECTORS THE BOARD & ITS COMMITTEES

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out the annualperformance evaluation for FY 2015-16 of (a) its flown performance; (b) the Directorsindividually; and (c) the working of its Committees viz. 'Audit Committee' 'Nominationand Remuneration Committee' 'Corporate Social Responsibility Committee'; 'FinanceCommittee' and the 'Stakeholders Relationship Committee'. The details of evaluationprocess have been explained in the Corporate Governance Report.

REMUNERATION POLICY

The details of the Remuneration Policy as approved and adopted by Board are stated inthe Corporate Governance Report.

POLICY WRT QUALIFICATIONS ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

The Company has adopted the Guidelines on Board Effectiveness ("GovernanceGuidelines" or "guidelines") which inter-alia cover the criteria fordetermining qualifications attributes and independence of a Director. The details of thePolicy are stated in the Corporate Governance Report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from all the Independent Directorsunder Section 149 (7) of the Companies Act 2013 that they meet the criteria ofindependence laid down in Section 149 (6) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

BOARD AND COMMITTEE MEETINGS

The details of Board / Committee composition and meetings held during the year aregiven in the Corporate Governance Report.

CHANGE IN THE NATURE OF BUSINESS

During the year under review there has been no change in the nature of business of theCompany.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no adverse material changes or commitments occurring after March 31 2016which may affect the financial position of the Company or may require disclosure.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by the Regulators / Courts whichwould impact the future operations / going concern status of the Company.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

There are no loans guarantees or investments made by Company under Section 186 of theCompanies Act 2013.

DEPOSITS

The Company has not accepted deposits under Chapter V of the Companies Act 2013.

CORPORATE GOVERNANCE

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Report on Corporate Governance along with the Certificate ofCompliance from the Auditors forms part of this Report.

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 including audit of internal nancial controls over nancial reportingby the Statutory Auditors and the reviews performed by Management and the relevant BoardCommittees including the Audit Committee the Board is of the opinion that the Company'sinternal financial controls were adequate and effective during the financial year 2015-16.

Accordingly pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:

1. in the preparation of the annual financial statements for the year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures;

2. accounting policies have been selected and applied consistently and judgments andestimates that are reasonable and prudent have been made so as to give a true and fairview of the state of affairs of the Company as at March 31 2016 and of the loss of theCompany for the year ended on that date;

3. proper and sufficient care have been taken for the maintenance of accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Companyfor preventing & detecting fraud and / or other irregularities;

4. the annual accounts have been prepared on a going concern basis;

5. internal financial controls have been laid down by the Company and that suchinternal financial controls are adequate and are operating effectively; and

6. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed as Annexure I tothis Report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT-9 isannexed as Annexure II to this Report.

PERSONNEL

At the end of March 2016 your Company had 636 employees (excluding trainees andapprentices) and there is no change in the employee count of March 2016 as compared toend of March 2015. Your Company accords high importance in building and sustaining healthyemployee engagement with the aim of achieving competitive productivity & harmoniouswork environment. The industrial relations during the year was remained peaceful. With aview to ensure prompt resolution of employee's grievances various Committees have beenset up under the capable Chairmanships which are guided by Functional Heads / DepartmentHeads e.g. Works Committee Health Safety and Environment Committee Prevention of SexualHarassment Committee (POSH) etc.

The functioning of these Committees are regularly reviewed by the Management and theBoard is also updated regularly.

During the year your Company has signed a long term wage settlement agreement withworkers union of Bhosari plant which is unique and historical in many ways. Consideringthe competitive market scenario it has become essential to have substantial improvementin the productivity on the shop floor. Your Company has been implementing TPM WCSQKaizen and other various systems to improve overall performance of all plants.

The Information required under Section 197(12) read with Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is set out in AnnexureIII to this Report.

A statement containing the name of employee who received remuneration in excess of thelimits prescribed under Section 197 of the Companies Act 2013 read with Rule 5 (2) and(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is setout in Annexure IV to this Report.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has adopted a Policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace in line with the provisions of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules there under.The Policy aims to provide protection to employees at the workplace and prevent andredress complaints of sexual harassment and for matters connected or incidental theretowith the objective of providing a safe working environment where employees feel secure.Your Company has also constituted an Internal Complaints Committee known as thePrevention of Sexual Harassment (POSH) Committee to inquire into complaints of sexualharassment and recommend appropriate action.

Your Company has not received any complaint of sexual harassment during the financialyear 2015-16.

RISK MANAGEMENT

The details of Risk Assessment framework are set out in the Corporate Governance Reportforming part of the Boards' Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a vigil mechanism. The details of the same are explained in theCorporate Governance Report and also posted on the website of the Company.

NAMES OF THE COMPANIES WHICH HAVE BECOME / CEASED TO BE SUBSIDIARIES JOINT VENTURES ORASSOCIATE COMPANIES DURING THE YEAR

The Company did not have any subsidiaries associates or joint ventures during theyear.

AUDITORS

1. Statutory Auditors:

M/s. Price Waterhouse Chartered Accountants (Firm Reg. No. 301112E) will retire at theconclusion of the ensuing AGM as Statutory Auditors and being eligible offer themselvesfor re-appointment. Your Company has received a certificate confirming that ifre-appointed their re-appointment will be in accordance with Section 139 read withSection 141 of the Companies Act 2013. Members are requested to consider there-appointment of the Statutory Auditors and authorize the Board of Directors to fix theirremuneration.

2. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshad appointed M/s. SVD & Associates Company Secretaries for conducting SecretarialAudit of the Company for FY 2015-16. The Report of the Secretarial Audit is annexedherewith as Annexure V to this Report. Based on the Audit Committeerecommendations the Board has approved re-appointment of M/s. SVD & AssociatesCompany Secretaries for conducting the Secretarial Audit for FY 2016-17.

The Auditors' Report and the Secretarial Audit Report for the year ended March 31 2016do not contain any qualification reservation and adverse remark.

AWARDS AND RECOGNITION

Your Company received meritorious Award for "Improvement in Quality" organizedby Quality Circle Forum of India (QCFI) and Award for "QualityImplementation" from Tata Motors Limited.

FORWARD LOOKING STATEMENTS

Certain statements describing the Company’s Estimates Projections ExpectationsFuture Outlook Industry Structure and Developments may be construed "forward-lookingstatements" within the meaning of applicable laws and regulations. Actual results maydiffer materially from those either expressed or implied in this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks and appreciation for the confidencereposed and continued support extended by Central and State Governments BankersCustomers Suppliers and Members.

Your Board would like to place on record its sincere appreciation to the employees forthe dedicated efforts and contribution in playing a very significant part in the Company'soperations.

For and on behalf of the
Board of Directors
Pradeep Mallick
Chairman
Date: April 28 2016
Place: Pune

#MDEnd#

Annexure I to Boards' Report

INFORMATION ON CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO REQUIRED IN TERMS OF SECTION 134(3)(m) OF THE COMPANIES ACT 2013 READ WITH RULE8(3) OF THE COMPANIES (ACCOUNTS) RULES 2014

A. CONSERVATION OF ENERGY-

(I) Steps taken or impact on conservation of energy:

The Company has always been giving due consideration for the conservation of energy byadopting the following measures:

• Fitting of auto shut-off timer to Presses (Scrap Conveyors) and Presses (MainMotor) during idle time resulting in energy saving.

• Maintaining of power factor to unity by using RTPXE panel with Harmonies.

• Use of AC drives for Presses and Cranes.

• Use of T5 energy efficient tube lights for plant lighting to reduce powerconsumption.

• Use of LED Energy efficient high bay lights for plant lighting to reduce powerconsumption.

• Setting up of pressure for loading and unloading compressor to reduceconsumption.

• Converted 150 Kilo Volt Ampere (KVA) a Primary Weapon Systems guns to 38 KVA ITwelding guns.

• Maintaining of low air pressure in weld shop and high pressure at press shop toreduce compressor consumption.

• Installation of VSD type compressor (Variable Frequency Drive system in AtlasCopco compressor) to reduce energy consumption.

• Use of industrial fuel saver (magnetic) for generating hot water and ovenresulting saving in fuel consumption.

• Use of transparent sheets in plant stores and storage area resulted powerconsumption saving.

These measures are aimed at effective management and utilization of energy resources ina proper manner and resultant cost saving for the Company.

(ii) Steps taken by the Company for utilizing alternate sources of Energy:

The Company proposes to explore the alternate sources of energy.

(iii) Capital Investment on Energy Conservation Equipments:

The Company acknowledges the fact that investment in energy conservation offerssignificant economic benefits in addition to climate change benefits.

During the year the Company has invested approx. Rs 39.99 Lakhs as capital investmenton energy conservation equipments.

The equipments in which investment was made included among others 38 KVA IT weldingguns and AC Drive etc.

B. RESEARCH AND DEVELOPMENT & TECHNOLOGY ABSORPTION-

The Company researches on metal forming technologies used elsewhere in the world forvehicle mass reduction. Networking is done with suppliers who manufacture specialequipment required for using these technologies in the production process.

Based on the technology needs of the Customers the appropriate support for thetechnology is arranged by the Company.

The engineering team of the Company develops concepts for productivity improvementduring development of new Dies and welding fixtures with Die makers and fixturemanufacturers for new customer programmes.

As the Company has no separate R & D cell the expenditure on these R & Dactivities cannot be ascertained separately.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO-

During the year the total foreign exchange expenditure amounted to Rs 776.93 Lakhs(which includes Rs 762.33 Lakhs for the import of raw materials and components and Rs14.60 Lakhs towards expenditure in foreign currency).

The Company did not earn any foreign exchange.

Annexure III to Boards' Report

[Pursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel)

Rules 2014]

1. The ratio of the remuneration of each Director to the median remuneration of theEmployees of the Company for the financial year: ( Explanation: (i) the expression"median" means the numerical value separating the higher half of a populationfrom the lower half and the median of a finite list of numbers may be found by arrangingall the observations from lowest value to highest value and picking the middle one; (ii)if there is an even number of observations the median shall be the average of the twomiddle values)

The percentage increase in remuneration of each Director Chief Financial OfficerChief

Executive Officer Company Secretary or Manager if any in the financial year:

None of the Directors of the Company is in receipt of any kind of remuneration otherthan the Sitting Fees.

The ratio of remuneration of Manager (designated as "Chief ExecutiveOfficer") to the Median Remuneration of all employees who were on the payroll of theCompany and the percentage increase in his remuneration during the financial year 2015-16are given below

Manager (designated as "Chief Executive Officer") Ratio to Median Percentage Increase in Remuneration
Mr. Anil Khandekar has been appointed wef April 1 2014 29.81:1 28.44%

The percentage increase in remuneration of the Chief Financial Officer is 9.47%.

During the year under review Mr. Shailendra Dindore Company Secretary resigned fromthe post of Company Secretary and Compliance Officer EOB July 10 2015. Mr. AshutoshKulkarni was appointed as Company Secretary and Compliance Officer w.e.f. July 23 2015.Therefore details of increase in remuneration of Company Secretary is not applicable.

2. The percentage increase in the median remuneration of employees in the financialyear: 7.18%

3. The number of permanent employees on the rolls of Company: 636 employees (excludingtrainees and apprentice).

4. The explanation on the relationship between average increase in remuneration andCompany performance:

Remuneration of employees has a close linkage with the performance of the Company. ThePerformance Incentive is the variable component and part of salary for all the managementstaff. The Performance Incentive is calculated based on both individual and Companyperformance. The Company Performance has a higher weightage for senior positions and lowerweightage for junior positions.

5. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:

The Company's sales during the year 2014-15 were impacted by lower volume due toeconomic scenario. Further some of the models on which your Company has heavy dependencerecorded sharper drop in volume and this had a very adverse effect on sales. Consequentlyyour Company could not utilize its capacity fully. In addition the fluctuations in demandover the year detracted from balancing the other resources. The steep increase inElectricity and Fuel prices lowered profitability.

To minimise the impact of falling volumes and increasing input costs the Companylaunched a number of containment actions and cost reduction drives as counter measures toenhance internal efficiencies and improve operational excellence.

The Company's performance during 2014-15 its revival plans and individual performancewere considered while approving the variable pay and the increase in remuneration for theKey Managerial Personnel which increased by an average of 9.47 % during the financialyear 2015-16. Mr. Ashutosh Kulkarni was appointed as Company Secretary and ComplianceOfficer w.e.f. July 23 2015. Therefore percentage increase for KMPs mentioned above isnot applicable to the Company Secretary.

The Company conducts the bench marking of the salaries and the salaries are paid inline with the market trend.

6. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer in case of listedcompanies:

The market capitalization of the Company as at March 31 2016 is Rs 53.30 Crore asagainst Rs 64.01 Crore as at March 31 2015 decrease of 16.73 % during the F.Y. 2015-16under review.

There being Loss per share for both the Financial years the price earnings ratio ofthe Company as at March 31 2016 and March 31 2015 has not been calculated.

The Company successfully completed the Rights Issue of the equity shares in July 2011with the issue proceeds of Rs 29.46 Crore. The Company issued 5665856 equity shares ofRs 10/- each at a premium of Rs 42/-.

The market quotation of the Equity Shares of the Company as on March 31 2016 was Rs33.60 for shares of face value of Rs 10/- each representing a decrease of 35.38 % overthe period.

7. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The percentage increase in the salaries of employees other than the managerialpersonnel in the last financial year is 7.18% as against an increase of 9.47% % in thesalary of the Key Managerial Personnel. The increment given to each individual employee isbased on the employees' performance and also benchmarked against a comparable basket ofrelevant companies in India.

8. Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the Company:

The Company's sales during the year 2014-15 were impacted by lower volume due toeconomic scenario. Further some of the models on which your Company has heavy dependencerecorded sharper drop in volume and this had a very adverse effect on sales. Consequentlyyour Company could not utilize its capacity fully. In addition the fluctuations in demandover the year detracted from balancing the other resources. The steep increase inElectricity and Fuel prices lowered profitability.

To minimise the impact of falling volumes and increasing input costs the Companylaunched a number of containment actions and cost reduction drives as counter measures toenhance internal efficiencies and improve operational excellence.

The Company's performance during 2014-15 its revival plans and individual performancewere considered while approving the variable pay and the increase in remuneration. Theremuneration during the year increased by 9.47% for the Chief Financial Officer. Duringthe financial year F.Y. 2015-16 Mr. Shailendra Dindore Company Secretary resigned fromthe post of Company Secretary and Compliance Officer EOB July 10 2015. Mr. AshutoshKulkarni was appointed as Company Secretary and Compliance Officer w.e.f. July 23 2015.Therefore details of increase in remuneration of Company Secretary is not applicable.

9. The key parameters for any variable components of remuneration availed by theDirectors:

None of the Directors of the Company is in receipt of any kind of remuneration otherthan the Sitting Fees.

10. The ratio of the remuneration of the highest paid Director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid Directorduring the year:

None of the Directors of the Company is in receipt of any kind of remuneration otherthan the Sitting Fees. Hence the above criteria is not applicable.

11. Affirmation that the remuneration is as per the Remuneration Policy of the Company:

It is affirmed that the remuneration paid is as per the Remuneration Policy forDirectors Key Managerial Personnel and other employees adopted by the Company.

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