(SECTION 134 OF THE COMPANIES ACT 2013)
To The Members
The Directors have pleasure in submitting 44th Annual Report together withAudited Financial Statements of your Company for the year ended on 31 March 2016.
| || |
Financial year ended
|Financial Results ||31.03.2016 ||31.03.2015 |
|Revenue from operations and other income (gross) ||433.31 ||451.90 |
|Profit before finance cost and depreciation and amortisation expense ||33.18 ||23.87 |
|Finance Cost ||16.16 ||16.35 |
|Depreciation and Amortisation expense ||16.50 ||13.95 |
|Profit/(Loss) before tax ||0.52 ||(6.43) |
|Less: Tax expense/(benefit) ||0.28 ||(2.22) |
|Profit/(Loss) after tax ||0.24 ||(4.21) |
|Surplus in Statement of Profit and Loss || || |
|Opening balance ||25.79 ||30.96 |
|Less: Depreciation on transition to Schedule II to the Act on tangible fixed assets with nil remaining useful life (Net of deferred tax) || ||0.96 |
|Add: Profit/(Loss) for the year ||0.24 ||(4.21) |
|Closing Balance ||26.03 ||25.79 |
In view of inadequate profits for the year your Directors have decided not torecommend any dividend on equity shares of the company for the year ended 31 March 2016.
The slowdown of economy on the back of recessionary trends especially in domestictractor segment led to marginal drop in turnover for the year ended 31 March 2016 vis avis previous year. Further global slowdown has led to a dip in sales to overseascustomer(s).
The operations of the period resulted in higher EBITDA of Rs. 33.18 crores vis a visRs. 23.87 crores in the previous year. This was primarily on account of higher realizationof export incentives and strict control on overheads especially manpower and energy costs.
During FY 2015-16 the Company has availed Corporate loan of Rs. 25.00 crores forshoring up of Net Working Capital. The Company also repaid Rs. 17.15 crores of existingborrowings to Financial Institutions and Banks.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed analysis of the Company's operations in terms of performance in marketsmanufacturing activities business outlook risks and concerns forms part of theManagement Discussion and Analysis a separate section of this report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors confirm that:-
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had 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 as at 31 March 2016 and of the profitand loss of the Company for the period ended on that date;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) the directors had prepared the annual accounts on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
RELATED PARTY CONTRACTS AND ARRANGEMENTS
The contracts or arrangements of the Company with related parties during the periodunder review referred to in Section 188(1) of the Companies Act 2013 were in ordinarycourse of business and on arm's length basis. During the year the Company had not enteredinto any contract/ arrangement/ transaction with related parties which could be consideredmaterial in accordance with the related party transaction policy of the Company. The saidpolicy as approved by the Board in terms of provisions of Regulation 23 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 ("theRegulations") (Clause 49 of the erstwhile Listing Agreements) is available on thewebsite of the Company i.e. www.bharatgears.com under the linkhttp://bharatgears.com/documents/related-party-transactions-policy. pdf.
The prescribed form AOC-2 of the Companies (Accounts) Rules 2014 is enclosed asAnnexure -"A" to this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
During the period under review the Company has not made any loan guarantee orinvestment in terms of provisions of Section 186 of the Companies Act 2013.
In accordance with the provisions of the Companies Act 1956 and the Articles ofAssociation of your Company Mr. W.R. Schilha Director of the Company retire by rotationat the ensuing Annual General Meeting. Therefore in terms of Section 149 of the CompaniesAct 2013 it has been proposed to appoint Mr. W.R. Schilha as Non Executive IndependentDirector for a period of 5 (Five) Years upto the conclusion of the 49th AnnualGeneral Meeting (AGM) of the Company in the Calendar Year 2021 at the ensuing AGM of theCompany.
The Company has received notice under Section 160 of the Companies Act 2013 frommember of the Company proposing the candidature for the office of Director for the aboveDirector.
During the year under review the members approved the appointment of Mr. Rakesh Chopraand Mr. V.K. Pargal as Independent Directors.
The brief resume of the Director proposed to be appointed is given in the noticecalling the Annual General Meeting.
During the year under review Mr. Surinder P. Kanwar has been re-appointed as Chairmanand Managing Director of the Company for a further period of 5(Five) years with effectfrom 01 October 2015.
Mr. N.J. Kamath and Dr. Ram S. Tarneja resigned from the directorship of the Company on29 May 2015 & 31 July 2015 respectively. The Board expresses its sincere gratitudeto Mr. N.J. Kamath and Dr. Ram S. Tarneja for their valuable contribution to the Companyduring their tenure.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2015-16 5 (Five) Board Meetings were held on the followingdates:-
29 May 2015;
31 July 2015;
29 October 2015;
29 January 2016; and
22 March 2016
The gap between any two meetings was not more than one hundred twenty days as mandatedunder the provisions of Section 173 of the Companies Act 2013 and Regulation 17(2) ofSEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (erstwhile Clause49 of the Listing Agreements).
In terms of provisions of Section 149(7) of the Companies Act 2013 all theIndependent Directors of the Company have furnished a declaration to the ComplianceOfficer of the Company at the meeting of the Board of Directors held on 24 May 2016stating that they fulfill the criteria of Independent Director as prescribed under Section149(6) of the Companies Act 2013 and are not being disqualified to act as an IndependentDirector.
In terms of the Regulation 25(7) of the Regulations (Clause 49 of the erstwhile ListingAgreements) the Company has adopted a familiarization programme for the IndependentDirectors to familiarize them with working of the Company nature of the industry in whichthe Company operates business model of the Company their roles rightsresponsibilities and other relevant details. The details of familiarization programmeduring the Financial Year 2015-16 are available on the official website of the Companyi.e. www.bharatgears.com under the linkhttp://bharatgears.com/documents/details-of-familarisation- programme-forindependent-directors-FY15-16.pdf.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
In terms of provisions of Section 178 of the Companies Act 2013 read with Regulation19 of the Regulations (Clause 49 of the erstwhile Listing Agreements) a policy relatingto remuneration for the Directors Key Managerial Personnel and other employees has beenadopted by the Board of Directors of the Company in pursuance of its formulation andrecommendation by the Nomination and Remuneration Committee thereby analyzing the criteriafor determining qualifications positive attributes and independence of a Director. Thesaid policy is annexed as Annexure-"B" to this report and is also available onthe website of the Company i.e. www.bharatgears.com under the linkhttp://bha.ratgea.rs.com/documents/nomination-a.nd-remuneration- policy-bgl.pdf.
The Board of Directors of the Company has established a framework for the evaluation ofits own performance and that of its committees and individual Directors of the Company inconsultation with the engaged consultant and fixed certain parameters covering theevaluation of the Chairman Executive Directors and Independent Directors on the basis ofwhich the evaluation is being carried on annual basis in terms of provisions of theCompanies Act 2013 and the Regulations.
During the year under review the Board of Directors at its meeting held on 22 March2016 has carried out the evaluation of its own performance and that of its committees andIndependent Directors of the Company and the Independent Directors in their separatemeeting held on even date have evaluated the performance of the Chairman andNon-Independent Directors of the Company respectively in accordance with the frameworkapproved by the Board.
KEY MANAGERIAL PERSONNEL
The following Directors/Officials of the Company have been designated as Key ManagerialPersonnel (KMP) of the Company by the Board of Directors in terms of provisions of Section203 of the Companies Act 2013 and the Regulations (Clause 49 of the erstwhile ListingAgreements):
1. Mr. Surinder P. Kanwar Chairman & Managing Director
2. Mr. Sameer Kanwar Joint Managing Director
3. Mr. Milind Pujari Chief Financial Officer
4. Mr. Prashant Khattry Head (Legal) & Company Secretary
No Key Managerial Personnel (KMP) of the Company has resigned during the financial yearended 31 March 2016.
DISCLOSURES UNDER THE COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014
Details pertaining to remuneration as required under section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are enclosed as Annexure-"C" to this report.
PARTICULARS OF EMPLOYEES
Information regarding employees in accordance with the provisions of Rule 5(2) and Rule5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014is given in Annexure-"D" to this Report.
A robust and integrated enterprise risk management framework is in existence underwhich the common prevailing risks in the Company are identified the risks so identifiedare reviewed on periodic basis by the Audit Committee and the management's actions tomitigate the risk exposure in a timely manner are assessed.
A risk management policy under the above said enterprise risk management framework asapproved by the Board has been adopted by the Company and being reviewed on yearly basis.
CORPORATE SOCIAL RESPONSIBILITY
In terms of provisions of Section 135 of the Companies Act 2013 the Corporate SocialResponsibility Committee ("CSR Committee") is in existence to monitor theCorporate Social Responsibility Policy of the Company as approved by the Board and thesaid policy is available on website of the Company i.e. www.bharatgears.com.
The CSR Committee comprises of Mr. Surinder P. Kanwar Mr. Sameer Kanwar Mr. RakeshChopra and Mr. S.G. Awasthi.
During the Financial Year 2015-16 the provisions of Section 135 of the Companies Act2013 were not applicable on the Company since the Company does not fall under theconditions necessary for complying with CSR provisions. Hence nil amount required to bespent during the year.
The Audit Committee comprises of Mr. Rakesh Chopra Mr. V.K. Pargal and Mr. S. G.Awasthi.
During the year under review Mr. N.J. Kamath (the erstwhile member of Committee) andDr. Ram S. Tarneja (the erstwhile Chairman of Committee) ceased to be a member and thechairman of the Committee respectively due to their resignation with effect from 29 May2015 and 31 July 2015 respectively. Mr. S.G. Awasthi inducted as a member of theCommittee on 31 July 2015 and Mr. Rakesh Chopra (the erstwhile member of Committee)designated as the Chairman of the Committee on 31 July 2015 accordingly the AuditCommittee had been reconstituted.
INTERNAL COMPLAINTS COMMITTEE FOR PREVENTION OF SEXUAL HARASSMENT
Pursuant to Section 21 of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 read with Rule 14 of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Rules 2013 the Company has constitutedInternal Complaints Committee (ICC) at all its Units (i.e. Faridabad Mumbra and Lonand)where any grievance of sexual harassment at workplace can be reported.
The Company has also adopted a policy on Prevention of Sexual Harassment at workplace.The objective of the policy is to provide its women employees a workplace free fromharassment/discrimination and every employee is treated with dignity and respect. The saidpolicy is available on the website of the Company i.e. www.bharatgears.com under the linkhttp://bha.ra.tgea.rs.com/documents/policy-for-prevention- of-sexual-harassment.pdf.
During the year under review ICC of all units of the Company has not received anycomplaint pertaining to sexual harassment of women at workplace.
SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANIES
During the year under review no Company has become or ceased to be subsidiary jointventure or associate of the Company.
During the year under review the Company did not accept any deposits. However interms of provisions of Section 205C of the
Companies Act 1956 the Unclaimed Final Dividend pertaining to the Financial Year2007-08 amount aggregating to Rs. 180825.00 (Rupees One Lac Eighty Thousand EightHundred Twenty Five only) had been transferred to the "Investor Education andProtection Fund" established by the Central Government.
Further the Unclaimed Final Dividend for the Financial Year 2008-09 is proposed to betransferred to the "Investor Education and Protection Fund" on 29 August 2016upon the completion of seven years from the date of transfer of said Dividend into theUnclaimed Dividend Account.
The Statutory Auditors M/s Deloitte Haskins & Sells Ahmedabad (ICAI RegistrationNo. 117365W) Chartered Accountants (DHS) had been appointed as Statutory Auditors of theCompany in the 42nd Annual General Meeting held on 01 August 2014 for a periodof 3 (Three) years in terms of provisions of Section 139 of the Companies Act 2013 tohold office from the 42nd AGM to the third consecutive Annual General Meetingfrom the 42nd AGM in the calendar year 2017 (subject to ratification by themembers at every Annual General Meeting).
Therefore the consent of members for ratification of appointment of Statutory Auditorsto hold office from the ensuing Annual General Meeting of the Company till the next AnnualGeneral Meeting of the Company in calendar year 2017 is being sought in the ensuing AnnualGeneral Meeting.
REPORT ON FINANCIAL STATEMENTS
The report of M/s Deloitte Haskins & Sells Ahmedabad (ICAI Registration No. 117365W) Chartered Accountants (DHS) the Statutory Auditors of the Company on thefinancial statements of the Company for the year ended 31 March 2016 is annexed to thefinancial statements in terms of provisions of Section 134(2) of the Companies Act 2013.The observations of the Auditors in their report are self-explanatory and/or explainedsuitably in the Notes forming part of the Financial Statements. The report of theStatutory Auditors does not contain any qualification reservation or adverse remark whichneeds any explanation or comment of the Board.
The Board has appointed M/s AGB & Associates Practicing Company Secretaries asSecretarial Auditor for the Financial Year 2015-16 in terms of provisions of Section 204of the Companies Act 2013. The Secretarial Audit Report of the Company for the financialyear ended 31 March 2016 in the prescribed form MR-3 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure-"E" tothis report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark which needs any explanation or comment of the Board.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Bharat Gears has a proper and adequate system of internal financial controls whichincludes the policies and procedures for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and
detection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information. During the year suchcontrols were tested and no material weakness in the design or operations were observed.
During the year under review the Company had not been mandatorily required to get itsCost Records audited in terms of provisions of Section 148 of the Companies Act 2013 readwith Companies (Cost Records and Audit) Amendment Rules 2014 notified by the Ministry ofCorporate Affairs (MCA) on 31 December 2014 as the Industry under which the Companyfalls has been exempted from the Cost Audit under the said rules.
The Company is committed to maintain the quality standards of Corporate Governance. TheReport on Corporate Governance as stipulated under Clause 49 of the ListingAgreements/Schedule V(C) of the Regulations forms part of this Report.
The requisite Certificate of Compliance from Statutory Auditors M/s Deloitte Haskins& Sells confirming compliance with the conditions of Corporate Governance isattached to this Report.
In terms of provisions of Section 177 of the Companies Act 2013 the Company hasestablished an effective mechanism called Vigil Mechanism (Whistle Blower Mechanism). Themechanism under the policy has been appropriately communicated within the organisation.The purpose of this policy is to provide a framework to promote responsible whistleblowing by employees or by any other person who avails such mechanism. It protectsemployees or any other person who avails such mechanism wishing to raise a concern aboutserious irregularities unethical behavior actual or suspected fraud within the Companyby reporting the same to the Audit Committee.
Protected disclosure can be made by the whistle blower in a closed and secured envelopeor sent through e-mail to the Compliance Officer.
During the year under review no employee was denied access to the Audit Committee.
The policy on vigil mechanism is available on the website of the Company i.e.www.bha.ra.tgea.rs.com under the link http://bha.ra.tgea.rs.com/documents/policy-on-vigil-mechanism.pdf.
RECONCILIATION OF SHARE CAPITAL AUDIT
As per the directive of the Securities and Exchange Board of India (SEBI) theReconciliation of Share Capital Audit is undertaken by a firm of Practicing CompanySecretaries on quarterly basis. The audit is aimed at reconciliation of total shares heldin CDSL NSDL and in physical form with the admitted issued and listed capital of theCompany.
The Reconciliation of Share Capital Audit Reports as submitted by the Auditor onquarterly basis was forwarded to the BSE Limited Mumbai and the National Stock Exchangeof India Limited Mumbai where the original shares of the Company are listed.
LISTING OF SHARES
The Equity Shares of the Company are listed on the BSE Limited Mumbai and NationalStock Exchange of India Limited Mumbai.
Pursuant to the notification of the regulations your Company has entered into newListing Agreement with the aforesaid Stock Exchanges respectively on 10 February 2016 asmandated under the said Regulations.
DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT 2013
Except as disclosed elsewhere in the Annual Report there have been no material changesand commitments which can affect the financial position of the Company between the end offinancial year and the date of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO
The information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with the Rule 8 of the Companies (Accounts) Rules 2014 is given inAnnexure-"F" to this Report.
EXTRACT OF ANNUAL RETURN
In terms of provisions of Section 92(3) of the Companies Act 2013 read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 the extract of the AnnualReturn of the Company in Form MGT-9 of the Companies (Management and Administration)Rules 2014 is enclosed as Annexure-"G" to this report.
There were no instances of any significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and company's operations infuture.
During the year under review industrial relations in the Company continued to becordial and peaceful.
The Board of Directors thanks the shareholders for their continued support and theywould like to place on record their appreciation for the dedicated services rendered bythe Employees at all levels.
The Directors wish to convey their gratitude to the Financial Institutions BankersCustomers Suppliers and Collaborators for the assistance and confidence reposed by themin the Company.
For and on behalf of the Board of Directors
| ||Surinder P. Kanwar |
|Place: Mumbai ||Chairman and Managing Director |
|Dated: 24 May 2016 ||DIN:00033524 |