Your Directors have pleasure in presenting the Seventieth Annual Report for the yearended on March 31 2016.
| || ||(Rs. Cr) |
| ||For the year ended on March 31 2016 ||For the year ended on March 31 2015 |
|Gross Revenue ||3610.70 ||4122.29 |
|Excise Duty ||80.70 ||75.81 |
|Net Revenue ||3530.00 ||4046.48 |
|Profit Before Interest Depreciation Amortisation Exceptional Items & Tax ||217.78 ||222.05 |
|Finance Cost ||51.29 ||57.11 |
|Profit Before Depreciation Amortisation Exceptional Items & Tax ||166.49 ||164.94 |
|Depreciation and Amortisation ||60.11 ||66.06 |
|Profit Before Exceptional Items & Tax ||106.38 ||98.88 |
|Exceptional Income ||14.51 ||30.63 |
|Profit Before Tax ||91.87 ||68.25 |
|Tax ||2.49 ||(6.46) |
|Profit After Tax ||89.38 ||74.71 |
The brief highlights of the Companys performance for the financial year endedMarch 31 2016 are:-
Net Revenue of the Company for the Financial Year 2015-16 was Rs. 3530 Cr.
Profit Before Interest Depreciation Amortisation Exceptional Items & Taxstood at Rs. 217.78 Cr.
Profit Before Tax (PBT) stood at Rs. 91.87 Cr and Profit After Tax (PAT) stoodat Rs. 89.38 Cr. Earnings per share is of Rs. 7.49 for the year under review.
Your Company sold 51455 tractors during the year under review.
Management Discussion & Analysis
Management Discussion & Analysis which forms an integral part of this Annual Reportprovides a detailed analysis on the performance of individual businesses and theiroutlook.
Your Directors are pleased to recommend a Dividend of Rs. 1.20 per Equity Share (12%)on the face value of Rs. 10 each aggregating Rs. 14.71 Cr. (exclusive of tax on dividend)for the financial year ended March 31 2016. The dividend payout is subject to theapproval of members at the ensuing Annual General Meeting (AGM).
The dividend if approved at the ensuing AGM will be paid to members whose namesappear in the Register of Members as on September 9 2016; in respect of shares held indematerialised form it will be paid to members whose names are furnished by NationalSecurities Depository Limited and Central Depository Services (India) Limited asbeneficial owners as on that date.
The dividend payout for the period under review has been formulated in accordance withshareholders aspirations and the Companys policy to pay sustainable dividendlinked to long-term growth objectives of the Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March 31 2016 asrequired to be disclosed pursuant to the provisions of Clause 12 of SEBI (Employees StockOption Scheme and Employees Stock Purchase Scheme) Guidelines 1999 as amended areenclosed at Annexure A and forms an integral part of this Report.
In accordance with the provisions of Companies Act 2013
(hereinafter referred as "the Act") and Articles of Association of theCompany Mr. Hardeep Singh and Mr. G.B. Mathur Directors retires by rotation at theensuing AGM and being eligible offers themselves for re-appointment.
The Board of Directors in their meeting held on May 25 2016 co-opted Mr. D J Kakaliaas Additional Director on the Board of the Company. He shall hold office as Director ofthe Company upto the date of ensuing AGM. Mr. S.C. Bhargava had resigned as Director ofthe Company w.e.f. March 29 2016. The Board places on record its appreciation for thevaluable guidance and services rendered by him during his tenure with the Company.
Pursuant to the provisions of Section 149 and other applicable provisions of the Actyour directors are seeking appointment of Mr. D J Kakalia as Independent Director for aperiod of 3 years. The Company has received requisite notice in writing from membersproposing the appointment of Mr. D J Kakalia as Director of the Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with criteria of independence as prescribed under sub-section(6) of Section 149 of the Act and SEBI (Listing Obligations and Disclosure Requirements)
Regulations 2015 (hereinafter referred as "the Listing Regulations"). Thepolicy for selection of directors and determining directors independence is attached as Annexure- B and forms an integral part of this Report. The Company has devised a Policy forperformance evaluation of Independent Directors Board Committees and other individualDirectors which includes criteria for performance evaluation of the Non-Executive andExecutive Directors. In accordance with the Policy a process of evaluation was followedby the Board for its own performance and that of its Committees and individual Directors.The remuneration policy for directors key managerial personnel and other employees isannexed as Annexure C and forms an integral part of this Report.
The brief resumes and other details relating to the Directors who are proposed to beappointed/ re-appointed as required to be disclosed under the Listing Regulations isgiven in the Annexure to the Notice of the 70th AGM.
Your Directors recommend the appointment/ re-appointment of the above said Directors atthe ensuing AGM.
The details of programme for familiarisation of Independent Directors with the Companytheir roles rights responsibilities in the Company nature of industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company www. escortsgroup.com.
Conservation of Energy Technology Absorption 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(3)(m) of theAct read with Companies (Accounts) Rules 2014 are provided as Annexure Dand forms an integral part of this Report.
Your Company reaffirms its commitment to the good corporate governance practices andhas adopted the Code of Conduct which has set out the systems processes and policyconforming to international standards. Pursuant to the Listing Regulations CorporateGovernance Report and
Auditors Certificate regarding compliance of conditions of Corporate Governanceare enclosed as Annexure E and forms an integral part of this Report.
Corporate Social Responsibility
The key philosophy of all CSR initiatives of the Company is to make CSR a key businessprocess for sustainable development of the society. The initiatives aim at enhancingwelfare measures of the society based on the immediate and long term social andenvironmental consequence of its activities. The Company intends to undertake other needbased initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companys website www.escortsgroup.com underInvestors Information Section. During the year the Company has spent Rs. 1.16 Cr. (0.71%of the average net profits of last three financial years) on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure F and formsan integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act andAccounting Standard (AS) - 21 applicable to the Consolidated Financial Statements readwith AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting ofInterests in Joint Ventures issued by The Institute of Chartered Accountants of India. TheAudited
Consolidated Financial Statements along with the Auditors Report thereon areannexed with this Report.Subsidiaries Joint Ventures and Associate Companies
The statement containing salient features of financial statements of subsidiariesassociate and joint venture companies prepared in accordance with Section 129 of the Actread with Rule 5 of Companies (Accounts) Rules 2014 forms an integral part of thisReport. The Consolidated Financial Statements presented by the Company include thefinancial results of its subsidiaries associate and joint venture companies.
The Company will make available the Annual Accounts of its subsidiaries associate andjoint venture companies and related information to the members of the Company who may beinterested in obtaining the same. The annual accounts of its subsidiaries associate andjoint venture companies will also be kept open for inspection at the Registered Office ofthe Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transaction entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with thepolicy of the Company on the materiality of related party transactions. The particulars ofcontracts and arrangement with related parties under Section 188(1) of the Act in FormAOC-2 is enclosed as Annexure G.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the
Board may be accessed on the Companys website www. escortsgroup.com underInvestors Information Section. Your Directors draw attention of the members to Note 45 tothe financial statement which sets out related party disclosures.
Auditors and Auditors Report Statutory Auditors
M/s. S.N. Dhawan & Co. Chartered Accountants Delhi (Firm Registration No.000050N) Statutory Auditors of the Company hold office till the conclusion of the ensuingAGM and are eligible for re-appointment.
The Company has received letter of confirmation from M/s. S. N. Dhawan & Co.Chartered Accountants to the effect that their appointment if made would be within theprescribed limits under Section 139 of the Act and that they are not disqualified for suchappointment within the meaning of Section 141 of the Act read with Companies (Audit andAuditors) Rules 2014.
The observations and comments given by the Statutory Auditors in their report readtogether with notes to Accounts are self-explanatory and hence do not call for anyfurther comments under Section 134 of the Act.
The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co. CostAccountants New Delhi (Firm Registration No. 000019) Cost Auditors of the Company underSection 148 of the Act for conducting the audit of cost records for the financial year2016-17.
The due date of filing the Cost Audit Report for the year ended on March 31 2015 wasSeptember 30 2015 and the same has been filed on September 28 2015.
The Board of Directors of the Company had appointed M/s. Jayant Gupta and AssociatesPracticing Company Secretary to conduct secretarial audit of the Company for the financialyear 2015-16. The Secretarial Audit Report for the financial year ended March 31 2016 isenclosed as Annexure H and forms an integral part of this Report. Theobservations and comments given by the Secretarial Auditors in their report areself-explanatory and hence do not call for any further comments under Section 204(3) ofthe Act.
The Board has also re-appointed M/s Jayant Gupta and Associates Practicing CompanySecretary to conduct secretarial audit of the Company for the financial year 2016-17.
A Risk Management Committee which has been entrusted with the responsibility to assistthe Board in (a) overseeing and approving the Companys enterprise wide riskmanagement framework; and (b) overseeing that all the risks that the organisation facessuch as strategic financial credit market liquidity security property IT legalregulatory reputational and other risks have been identified and assessed and there is anadequate risk management infrastructure in place capable of addressing those risks. TheRisk Management Policy was reviewed and approved by the Committee.
Internal Financial Controls
The Company has in place adequate internal financial controls for ensuring the orderlyand efficient conduct of its business. During the year such controls were tested and noreportable material weakness in the design or operation was observed.
Meetings of the Board
Six meetings of the Board of Directors were held during the year. For further detailsplease refer Report on Corporate Governance annexed as Annexure E to thisReport.
All the recommendations made by the Audit Committee were accepted by the Board.
For constitution and other details of the Audit Committee please refer Report onCorporate Governance annexed as Annexure E to this Report.
Extracts of Annual Return
In terms of provisions of Section 92 of the Act read with the Companies (Management andAdministration) Rules 2014 the extracts of Annual Return in Form MGT-9 is enclosed as Annexure I and forms an integral part of this Report.
The Company has a vigil mechanism for Directors and Employees to report their concernsabout unethical behavior actual or suspected fraud or violation of the Companys
Code of Conduct. The mechanism provides for adequate safeguards against victimizationof effected Director(s) and Employee(s). In exceptional cases Directors and Employeeshave direct access to the Chairman of the Audit Committee.
The Whistle Blower Policy is available on Companys website.
Shifting of Registered Office
The Company has shifted its registered office within the State of Haryana from"SCO-232 First Floor Sector - 20 Panchkula - 134 109" to "15/5 MathuraRoad Faridabad - 121 003" w.e.f. January 30 2016.
Registrar and Share Transfer Agent
The Company has appointed M/s Karvy Computershare Private Limited Karvy SeleniumTower B Plot No. 31-32 Gachibowli Financial District Nanakramguda Hyderabad
- 500 032 Andhra Pradesh w.e.f February 19 2016 as Registrar and Share TransferAgent.
Particulars of Loans given Investments made Guarantees given and Securities provided
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilised by the recipient has been given elsewhere in the Annual Report and forms anintegral part of this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 a statement showingthe names and other particulars of the employees drawing remuneration in excess of theprescribed limits is available with the Company Secretary. Having regard to the provisionsof Section 136(1) of the Act the Annual Report excluding the aforesaid information isbeing sent to the members of the Company. Any member interested in obtaining suchparticulars may write to the Company Secretary of the Company and the same will befurnished on request. Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as Annexure J andforms an integral part of this Report.
The Company has not accepted/ renewed any Fixed Deposit during the financial year.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Companies Act 1956 the dividendwhich remained unclaimed or unpaid for a period of seven years has been transferred by theCompany from time to time on due dates to the Investor Education and Protection Fund.
As on March 31 2016 no unclaimed deposits are pending for transfer to InvestorEducation and Protection Fund.
Directors Responsibility Statement
Pursuant to the requirement under Section 134(5) of the
Act with respect to Directors Responsibility Statement your
Directors hereby state that:
(i) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under
Schedule III to the Act have been followed alongwith proper explanation relating tomaterial departures; (ii) the Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31 2016and of the profit and loss of the Company for the year ended on that date; (iii) theDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; (iv) theDirectors have prepared the annual accounts for financial year ended March 31 2016 on agoing concern basis;
(v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and (vi) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys operations in future.
Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors would like to express their sincere appreciation of the positiveco-operation received from the Central Government the Government of Haryana Karnatakaand
Uttaranchal Financial Institutions and the Companys
Bankers Customers and Dealers.
The Directors also wish to place on record their deep sense of appreciation for thecommitment displayed by all executives officers workers and staff of the Companyresulting in the successful performance of the Company during the year. The Board alsotakes this opportunity to express its deep gratitude for the continued co-operation andsupport received from its valued shareholders.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
|Place: Faridabad ||RAJAN NANDA |
|Date: May 25 2016 ||Chairman & Managing Director |
Annexure A to the
DISCLOSURE REGARDING EMPLOYEES STOCK OPTION PLAN PURSUANT TO THE SEBI (EMPLOYEES STOCKOPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME) GUIDELINES 1999
|(a) Total Number of Options as on 31.03.2015 ||192000 || || |
|(b) Options granted during the year || ||Options ||Grant date |
| ||1. Option ||256000 ||01.10.2015 |
| ||Grant Total ||256000 || |
|(c) Pricing Formula ||At a price not less than the par value of Companys share and not more than the closing Market Price of the Stock Exchanges: |
| || ||Options ||GP (Rs.) ||MP (Rs.) |
| ||1. Option ||256000 ||85/- ||153.30 |
| ||Grant Total ||256000 || || |
|(d) Options Vested ||192000 |
|(e) Options Exercised ||108000 |
|(f) The Total number of shares arising as a result of exercise of options ||108000 |
|(g) Options Lapsed/Cancelled ||228900 |
|(h) Variation of terms of options ||Nil |
|(i) Money realised by exercise of options ||9180000/- |
|(j) Total number of options in force ||111100 as on 31.03.2016 |
|(k) Employee wise details of options granted to : ||Senior Managerial Personnel |
| Senior managerial personnel during the year ||Name ||No. of Options |
| ||Mr. S. Sridhar ||80000 |
| ||Mr. Shailendra Agrawal ||40000 |
| ||Mr. Sameer Tandon ||32000 |
| ||Mr. Dipankar Ghosh ||32000 |
| ||Mr. Bharat Madan ||20000 |
| ||Mr. Shenu Agarwal ||20000 |
| ||Mr. Ashok Gupta ||16000 |
| ||Mr. Rajneesh Agarwal ||16000 |
| ||Total ||256000 |
| Any other employee who receives a grant in any one year of options amounting to 5% or more of option granted during the year. ||All the senior managerial personnel as stated above have been granted options amounting to 5% or more of options granted during the year. Except the above no other employees has been granted options amounting to 5% or more options granted during the year. |
| Identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. ||NIL |
|(l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 Earnings Per Share. ||Rs. 7.49 per Equity Share |
|(m) Where the Company has calculated the employee compensation cost using the intrinsic value of stock options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of options shall be disclosed. The impact of this difference on profits and EPS of the Company shall also be disclosed. ||The profit of the year would have been higher by Rs. 177.54 lakhs. |
| ||The EPS for the year would have been higher by Rs. 0.14. |
|(n) Weighted average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock. ||Fair value option is Rs. 39.47 and Exercise Price is Rs. 85.00. |
|(o) A description of the method and significant assumptions used during the year to estimate the fair values of options including the following weighted average information : ||The Black Scholes Option Pricing Model for dividend paying stock has been use to compute the fair value of the options. The significant assumptions made are: Option Issued on 01.10.2015 |
| Risk free interest rate ||7.44 % |
| Expected life ||3 Years |
| Expected volatility ||0.0223 |
| Expected dividends and ||12% |
| The price of the underlying share in market at the time of option grant ||Rs. 154.35 |
| ||The shares to be issued under stock options shall rank pari passu including the right to receive dividend. Expected dividend payouts to be paid during the life of the option reduce the value of a call option by creating drop in market price of the stock. Adjustments for known anticipated dividend payouts over the life of the option are made to the formulae under the Black Scholes method. |
| ||For and on behalf of the Board of Directors |
|Place: Faridabad ||RAJAN NANDA |
|Date: May 25 2016 ||Chairman & Managing Director |
Annexure B to the Directors Report
POLICY ON APPOINTMENT OF DIRECTORS AND MEMBERS OF SENIOR MANAGEMENT
(i) This Policy on Appointment of Directors and Members of Senior Management (the"Policy") applies to the Board of Directors (the "Board")of Escorts Limited
(" Escorts" or the "Company") and the Senior
Management of Escorts. This Policy was recommended by the Nomination and RemunerationCommittee of the Company ("NRC") and approved by the Board at its meetingheld on January 16 2015 and shall be subjected to periodic review by NRC.
(ii) The primary objective of the Policy is to provide a framework and set standardsfor the appointment of talented and self-motivated Directors and Members of SeniorManagement who should have the capacity and ability to lead Escorts towards achieving itsstated goals and strategic objectives taking into account the interest of allstakeholders. (iii) The Board is ultimately responsible for the appointment of Directorsand recommending the appointment of Independent Directors to the shareholders for theirapproval. (iv) The Board delegates its responsibility for the assessment and selection ofsuitable candidates for the position of Directors of Escorts to the NRC which will submitits recommendations to the Board in accordance with this Policy.
For the purposes of this Policy:
Executive Board shall mean and include the Chairman andManaging Director Managing Director and any other Whole-time Director of Escortsappointed by the Board/ Shareholders by whatever name called.
Senior Management shall mean and include the following:
Employees in the grade of Associate Vice President and above; and
KMPs (other than Whole-time Directors).
3. Criteria for Appointment as a Director and Senior Management Positions:
(i) Matching the requirements of Escorts and enhancing the competencies of the Boardare the basis for NRC to shortlist and recommend a candidate for appointment to the Board.When recommending a candidate for such appointment NRC shall consider: (a) the results ofassessment of the proposed appointee against a range of criteria formulated by NRC whichinclude but shall not be limited to skill sets regional and industry experiencebackground integrity and other qualities required to operate successfully in the positionof Director having due regard to the benefits of diversity of the Board; (b) the extentto which the proposed appointee is likely to contribute to the overall effectiveness ofthe Board and work constructively with the existing Directors and Senior Management; (c)the present and potential future needs and requirements of the Company and sector in whichit conducts its business and operations; (d) the nature of existing positions held by theproposed appointee including other directorships held or other relationships and theimpact it may have on the appointees ability to exercise independent judgment; (e)any requirements under applicable law (including but not limited to under the CompaniesAct 2013 and/or the rules and regulations made thereunder) and/or under the ListingAgreements; and (f) time commitment required from a Director to properly discharge hisfiduciary duties towards the Company. (ii) The criteria to be considered when assessingprospective candidates for appointment as Directors shall include the following:
(a) highest levels of personal and professional ethics and integrity; (b) high qualityattributes such as discipline objectiveness sensitivity and creativity; (c) sharing anddemonstrating the values of Escorts; (d) qualification in relevant disciplines (e.g.finance secretarial management accountancy legal and engineers etc.) or being arecognised specialist in disciplines or areas relevant to the Company and/ or itsbusiness; (e) experience in the management of a diverse organisation whether located inIndia and/or overseas in the Sector where the Company is already doing business orintents to enter into; (f) experience in accounting and finance secretarialadministration corporate engineering and strategic planning or fund management; (g)demonstrable ability to work effectively with the Board; (h) excellent interpersonalcommunication and representational skills; (i) demonstrable leadership skills; (j) stronginfluencing and negotiating skills; and (k) continuous professional development to updateknowledge and skills.
(iii) The criteria to be considered when assessing prospective candidates for a SeniorManagement position shall include the following: (a) highest levels of personal andprofessional ethics and integrity; (b) demonstrable leadership skills; (c) specialistknowledge and/or experience required for the Senior Management position in question; (d)good interpersonal relationships; (e) demonstrating intelligence maturity and wisdom; (f)possesses managerial abilities such as effective communication skills action focuspeople engagement cultural sensitivity flexibility team player strategic thinkingetc.;
(g) sharing and demonstrating the values of Escorts ; and (h) ability to significantlycontribute towards achievement of the strategic and business objectives of the Company.(iv) Every person proposed to be appointed as a Director or a member of Senior Managementshould be able to give sufficient time and attention to the Companys affairs.
(v) The Policy is aimed to engage Directors (including Non-Executive Directors andIndependent Directors) and Members of Senior Management who are highly skilled competentand experienced persons within the fields of business finance accounting managementsales marketing administration research corporate governance technical operationslaw or other disciplines related to the Companys business and operations. (vi) Inaddition to such requirements as may be specified under this Policy the IndependentDirectors shall also fulfill the applicable requirements prescribed under Section 149 ofthe Companies Act 2013 and the rules and regulations made thereunder the provisions ofthe Listing Agreement(s) and other applicable laws as modified or amended or supplementedfrom time to time.
(vii) Each Independent Director shall be required to duly submit/ make the stipulateddeclarations required to be furnished pursuant to the provisions of the Companies Act2013 and the rules and regulations made thereunder the Listing Agreements otherapplicable laws and the Articles of Association of the Company. (viii) No person shall beconsidered for appointment/reappointment as a Director of Escorts if he is disqualifiedto be appointed/re-appointed as such in terms of the provisions of Section 164 of theCompanies Act 2013 or under any other applicable law. (ix) No person shall be consideredfor appointment as a Director of Escorts if he is already a Director in ten or morepublic companies or private companies which is either a holding or subsidiary company ofa public company.
4. Selection Process
(i) The selection procedure to be followed for the appointment of persons for the Boardis as below: (a) NRC in consultation with the Chairman and Managing Director of Escortsshall determine the selection criteria applicable for each position at the Board level("Director Selection Criteria").
(b) For the positions of Whole-time Directors and based on the applicable SelectionCriteria NRC in consultation with the Chairman and Managing Director of Escorts shallgenerate a potential list of candidates for the Board position in question who may meetthe prescribed Director Selection Criteria. (c) For the positions of Independent Directorsor Non-Executive Directors NRC shall finalise a list of potential candidate(s) who meetsthe applicable Director Selection Criteria and shall submit such list to the Chairman ofthe Board along with its recommendations.
(d) The Chairman of the Board shall thereafter meet the short listed candidate(s) toassess their capability for the job. In the event that the Chairman may feel that no shortlisted candidate is suitable for appointment to the Board the Chairman may require NRC tosubmit a fresh list of candidates. (e) The candidate selected by the Chairman shall beappointed in accordance with the relevant provisions of the Companies Act 2013 rulesmade thereunder and Clause 49 of the Listing Agreements subject to the approval of theBoard and/or Shareholders of Escorts at General Meeting. (ii) The selection procedure tobe followed for the appointment of persons at the Senior Management positions is as below:(a) In case of vacancy of KMP (other than Whole-time Directors) the Companys HR inconsultation with NRC shall identify and short list employees to fill such vacancy whomay meet the criteria mentioned in this Policy. The appointment of the successfulcandidate shall be made by the Board in accordance with the provisions of the CompaniesAct 2013 rules made thereunder Clause 49 of the Listing Agreement(s) and theCompanys internal rules and regulations and policies.
(b) In case of vacancy in other Senior Management positions the Companys HRshall identify and short list employees to fill such vacancy. The details of appointmentwill be placed before NRC and/or Board for noting only.
5. Appointment Procedure
(i) Every Director shall be appointed/re-appointed by Escorts at Board or GeneralMeeting as per the requirements of the Companies Act 2013 Listing Agreement(s) or anyother applicable laws. (ii) No person shall be appointed/re-appointed as a Director ofEscorts unless he/she has been allotted the Director Identification Number (DIN) and hefurnishes to Escorts a declaration to the effect that he is not disqualified to become aDirector under the provisions of the Companies Act 2013 and rules made there under orunder any other law for the time being in force and files consent to hold the office asDirector. (iii) No person shall be appointed as a Director whose name appears in the listof willful defaulters published by the Reserve Bank of India. (iv) NRC shall ensure thatthe appointment/reappointment of Directors of Escorts is as per the terms of this Policyand recommendations of candidates are made to the Board for appointment.
6. Letters of Appointment to Directors
Escorts shall issue a formal letter of appointment to the person appointed as aDirector of Escorts. The letter of appointment to be issued to the Independent Directorsshall inter alia set out the matters as stated in Schedule IV of the Companies Act 2013.
7. Evaluation Procedure for Directors
(i) NRC shall develop such assessment criteria as it shall deem fit for the purposes ofundertaking performance evaluation of the Directors and the Board as a whole. NRC shallundertake an annual performance evaluation of all Directors of Escorts based on therelevant assessment criteria developed by it.
(ii) The assessment criteria for performance evaluation of Directors shall be disclosedin accordance with the relevant provisions of the Companies Act 2013 the rules framedthereunder and Clause 49 of the Listing Agreement.
8. Policy Review
(i) This Policy may be amended modified or supplemented from time to time to ensurecompliance with any modification amendment or supplementation to the Companies Act 2013and rules made thereunder the Listing Agreements the Securities and Exchange Board ofIndia Act 1992 and rules/regulations/guidelines made thereunder the Memorandum andArticles of Association of the Company or as may be otherwise prescribed by the Board fromtime to time. (ii) NRC may issue/implement such guidelines procedures formats and/orreporting mechanisms to enforce this Policy as it may deem fit.
Annexure C to the Directors Report
REMUNERATION POLICY FOR THE DIRECTORS KEY MANAGERIAL PERSONNEL SENIOR MANAGEMENT ANDOTHER EMPLOYEES
The primary objective of this Remuneration Policy for the Directors Key ManagerialPersonnel Senior
Management and other employees (the "Policy") is to provide aframework for the remuneration of the Directors Key Managerial Personnel (KMP) Membersof Senior Management and other employees of the
Escorts Limited ("Escorts" or the "Company").
In terms of Section 178 of the Companies Act 2013 read with rules framed thereunderand Clause 49 of Listing Agreements the Nomination and Remuneration Committee ofDirectors of the Company (NRC) has formulated and recommended this Policy for the approvalof the Board of Directors of Escorts. The primary objectives of this Policy are as under:
(i) To ensure that the level and composition of remuneration is in line with othercompanies in the industry sufficient to attract and retain right talent at all levelsand keep them motivated enough to meet the organisational objectives. (ii) To ensure thata reasonable balance is maintained in terms of composition of remuneration (fixed andvariable component). (iii) To have performance measurement parameters in place to assessthe overall performance of Directors KMPs Members of Senior Management and otheremployees. Based on the above objectives and broad parameters set herein the Board ofDirectors of Escorts at its meeting held on January 16 2015 has approved this Policy.
This Policy shall be applicable and act as a guiding principle with regard toremuneration payable by Escorts to all Directors KMPs Members of Senior Management andother employees of the Escorts.
3. Remuneration of Non-Executive/Independent Directors
(i) ThekeyelementsofremunerationofNon-Executive/ Independent Directors are commissionand sitting fees (except professional fee if any) subject to overall limit as prescribedin the Companies Act 2013 read with rules made thereunder and the approval of theshareholders as applicable. They shall be covered under the Directors and OfficersLiability Insurance (D&O) Policy. The Independent Directors shall not be eligible forstock options.
(ii) Since the Non-Executive/Independent Directors collectively endeavour to ensurethat the Company performs well and is compliant with applicable laws rules regulationsand guidelines they may be paid commission subject to the approval of the Board.
4. Remuneration of Whole-time Directors including Whole-time KMP (being aDirector)
(i) The Whole-time Directors are appointed on a contractual basis for a fixed tenure asapproved by the shareholders and such contracts are renewable upon expiry of the tenuresubject to recommendation by NRC/Board and approval of the shareholders. (ii) Theremuneration paid to Whole-time Directors is within the limits approved by theshareholders of Escorts which includes fixed salary perquisites variable pay in the formof commission other benefits and allowances and certain retiral benefits within theoverall limit under Section 197 of the Companies Act 2013. They are also eligible forstock options as per the scheme framed/to be framed by Escorts from time to time. (iii)The Whole-time Directors shall be covered under the Directors and Officers LiabilityInsurance (D&O) Policy.
(iv) Their annual increments shall be linked to their overall performance and asrecommended by NRC and approved by the Board from time to time.
5. Members of Senior Management KMP (other than whole-time directors) and otheremployees
(i) Senior Management shall mean and include the following: (a) Employees in the gradeof Associate Vice President and above; and
(b) KMPs (other than Whole-time Directors).
(ii) The key components of remuneration package of the Senior Management and otheremployees of Escorts shall comprise of basic salary dearness allowance house rentallowance transport allowance ex-gratia performance bonus contribution to providentfund and superannuation fund premium on medical insurance and personal accidentinsurance scholarship for children gratuity leave travel allowance leave encashmentetc. which is linked to their grade. They are also eligible for stock options as per thescheme framed/ to be framed by Escorts from time to time. (iii) The remunerationperformance appraisal and rewards of Members of Senior Management and other employeesshall be in line with the stated objectives. (iv) The annual increments for the SeniorManagement and KMP (other than Whole-time Directors) and other employees shall be linkedto their overall performance and as decided by the Chairman and Managing Director inconsultation with their reporting managers and Companys HR. The
Board on the recommendation of NRC shall also review and approve the remunerationpayable to the Key Managerial Personnel of the Company.
(v) Employees must conduct themselves to ensure that no breach of Code of ConductEscorts Code of conduct for prevention of Insider trading or such other code as may beapplicable from time to time Standard Operating Procedures (SOPs) and all other relevantand applicable codes is committed. Any such breach will have a direct bearing on theirperformance appraisal and rewards and shall also attract appropriate disciplinary action.
6. Disclosures in the Boards Report
(i) The disclosures as required under the relevant provisions of the Companies Act2013 rules made thereunder and the revised Clause 49 of the Listing Agreements shall bemade with regard to the remuneration details of the Directors KMPs Senior Management andother employees. (ii) This Policy shall be uploaded on the website of the Company.
7. Policy review
(i) This Policy may be amended modified or supplemented from time to time to ensurecompliance with any modification amendment or supplementation to the Companies Act 2013rules made thereunder the Listing Agreements the Securities and Exchange Board of IndiaAct 1992 and rules/regulations/guidelines made thereunder the Memorandum and Articles ofAssociation of the Company or as may be otherwise prescribed by the Board from time totime. (ii) NRC may issue/implement such guidelines procedures formats and/ or reportingmechanisms to enforce this Policy as it may deem fit.
Annexure D to the Directors Report
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
I) Conservation of Energy
1. ENERGY CONSERVATION MEASURES TAKEN
The Company has always been conscious of the need for the Conservation of the Energy& Optimum utilisation of available resources & has been steadily making progresstowards this end.
Energy Conservation measures have been implemented at all the Companys Plants andOffices. Company has also taken special efforts on undertaking Specific EnergyConservation Projects and achieved high level of saving through implementation.
During the year ended March 31 2016 your Company has taken a lot of initiatives forreduction in power cost by not only reducing the consumption through implementation of newtechnologies but also by improving its production processes.
Your Company has undertaken special projects in the field of Energy Conservation &achieved notable saving through their implementation.
In pursuit of the continual improvement in Energy Conservation in generationdistribution & consumption areas following initiatives have been taken:
1) Introduced LED lighting in shop floor by replacing 250 watt lamps with energyefficient LED 72 watt lamps with improved lux level.
2) Replaced old roof sheets with FRP transparent sheets to increase the natural lightsin shop-floor.
3) Installed small Air Compressors across EAM Plant to avoid running of big AirCompressors during Off-Days.
4) Replaced GI Air Pipe with low friction losses Aluminium Air Pipe Line.
5) Installed wind ventilators in shop floor to reduce power consumption of exhaustfans.
6) Reduced the power cost by reducing the Maximum Demand Indicator of CHD Plant from1000 Kva to 250 Kva.
7) Maximum use of low cost power from Open Access to reduce the power cost.
8) Installed LED lights by replacing existing T5 lights at the operation officesMarketing & R & D lab area.
9) Replaced street light of 250W mercury lamps with 85 W CFL
2. Additional Investment & Proposals for Power Saving Projects duringfinancial year ended March 31 2016
1) Roof top Solar Power Generation Plant to get maximum benefit from renewable energyresources.
2) Conversion from 250 watts lights to 72 watt LED lights in production area.
3) Installation of Heat Pumps to eliminate electrical heating in washing machines.
4) Replacement of fixed speed Air compressors with Energy efficient Air Compressors.
5) Energy Audit through CII Team.
6) Replacement of existing Mercury 250 watt bulbs with 150 W LED light in the shopfloor.
7) Variable Speed Drive high air pressure compressor will be commissioned by June 2016resulting into 20% saving on energy consumption.
3. Impact of the above measures on Energy Conservation and Cost of Production
1) Reduction in Power Consumption
2) Efficient use of natural resources
3) Reduction in Manufacturing Cost
4) Significant reduction in Carbon Emission
5) Hedge against continuous energy rate increase
6) Optimum performance of equipment on sustainable basis.
II) Technology Absorption
1. Research & Development (R&D) a) Specific areas in which R&D was carriedout by the Company
(i) New series of tractors with high torque & fuel efficient engines introducedinto production for (45hp - 60hp) upgraded for Power and Performance during the year2015-16.
(ii) Design & development of new high end engine series for 90 hp series tractors.
(iii) To meet the new and emerging agricultural application requirement new tractordeveloped with more no. of speeds [16+4] options. 20 Speeds in tractor first time inIndia.
(iv) Developed new range of tractors with 4WD in 50 & 60 hp ranges to meet variousapplication requirements.
(v) Initiated projects to extend "Anti-Lift Technology" to 45 & 50 hptractors for customers doing heavy haulage & agri application.
(vi) Upgrade of Farmtrac series of tractor with all new features & added freshnesswith more efficiency and 500 hrs. service interval (First time in India on Tractors).
b) Benefits derived as a result of the above R&D
(i) Escorts delivered a series of new products with enhanced power and performance andmade a better value proposition for customers. This has given more customer coverage forEscorts products & resulted in to consistent volumes and market share gain.
(ii) High end engine series of 90 hp is now being utilized to make new competitivehigher hp tractors for exports markets. Full range of tractors from 25 90 hp would beavailable for both exports and domestic markets.
(iii) New tractors with more nos. speeds transmission are made and given to market forincreased utility at customer end.
(iv) Significant material cost reduction in tractors through design optimization.
(v) 4WD tractors in 50 & 60 hp range have been launched in the market.
(vi) Tractors projects with "Anti Lift Technology" have been extended tohigher hp segment for launching in the domestic market in coming year.
c) Future plan of Actions New Product Introduction
(i) Design & development of new high end tractor series for future emission norms.
(ii) High end transmission to meeting all emerging application (agri constructionequipment etc).
(iii) 4WD tractor 50 90 hp range of tractors for domestic and export market
(iv) Higher hp tractors with AC cabin and other premium features.
(v) Design & development of future tractor series.
(vi) Product range for global market.
(vii) Application specific tractor for niche market.
d) Expenditure on R & D
| ||For the financial year ended on March 31 2016 ||For the financial year ended on March 31 2015 |
|a) Capital Expenditure* ||9.04 ||7.59 |
|b) Recurring Expenditure ||71.23 ||68.42 |
|Total R&D Expenditure ||80.27 ||76.01 |
|Total R&D Expenditure as a percentage of total turnover ||2.77% ||2.23% |
*Does not include capital advance/capital work in progress
2. TECHNOLOGY ABSORPTION ADAPTATION & INNOVATION a) Efforts in brief madeduring the year towards technology absorption adaptation & innovation
(i) Up-gradation of Design Development and testing infrastructure at R&D todevelop & absorb new contemporary technologies in a most cost effective manner tooffer products at a competitive price.
(ii) Joint technology partnerships with global R&D houses for tractor &aggregate designing.
(iii) Collaborative work with global technology partner & styling houses.
(iv) Technology upgradation for Engine Transmission Hydraulic & usage of advancedpredictive software.
(v) Design validation & virtual testing thru predictive analysis software and loadaccelerated test rigs.
(vi) Filing of patents/ design registrations for new and innovative designs.
(vii) Knowledge enhancement through tie-up with industry technology experts.
(viii) Participation in agriculture exhibitions & workshops in India & abroad.
(ix) Enhanced facilities for noise intensity mapping to cater coming noise norms andoperator comfort norms.
(x) DSIR Ministry of Science and Technology Govt. of India approved in house EscortsR&D facility with form 3CM for u/s 35 (2AB) of Income Tax Act 1961 for the purpose of200 % weighted tax reduction.
b) Benefit derived as a result of above efforts
(i) Escorts R&D expenditures eligible for 200% weighted tax deduction.
(ii) Self-reliant design capability for Engines Transmissions Hydraulics &agricultural tractors with advanced technologies for emerging domestic & export marketneeds.
(iii) New products contributing approx. 40-50% of total tractor sales.
c) In case of imported technology (imported during the last 5 years reckoned fromthe beginning of the financial year):
|1. Technology imported ||NIL |
|2. Year of Import ||NIL |
|3. Has technology been fully absorbed? ||N.A. |
|4. If not absorbed areas where this has not taken place reasons therefore and future plans of action ||N.A. |
III) Foreign Exchange Earnings and Outgo
Activities relating to export
Escorts entered into new markets like Algeria Namibia Cambodia and Zimbabwe. InEuropeon market the Company maintains its market leadership amongst all Indianplayers.
Overall market prospects for the Company look bright.
Total Foreign Exchange earning and outgo
| || ||Rs. Cr |
| ||For the financial year ended on March 31 2016 ||For the financial year ended on March 31 2015 |
|a) Foreign exchange outgo: || || |
|- Imports (including capital goods) ||67.49 ||67.31 |
|- Others ||33.33 ||25.75 |
|Total ||100.82 ||93.06 |
|b) Foreign Exchange earned ||124.57 ||231.96 |
Annexure F to the Directors Report
AnnualReportonCorporateSocialResponsibility (CSR) Activities
1. Brief CSR Policy
The main objective of CSR Policy is to lay down guidelines for the Company to make CSRa key business process for sustainable development of the society. It aims at enhancingwelfare measures of the society based on the immediate and long-term social andenvironmental consequences of its activities.
The Board of Directors of Escorts will review the CSR implementation every year.
Escorts shall include in its Annual Report the CSR activities/ project undertaken bythe Company including the progress thereof.
The CSR Committee may require Project Appraisal of its CSR projects to be carried outby External Agencies/ Third Party Agency if required.
Utilisation Certificate along with statement of expenditure duly certified by therespective Statutory Auditors will be submitted by the organisation/ Institution to whomCSR fund is allocated.
To undertake the above activities Committee may delegate the power of execution topersons/ officers of the Company.
2. Composition of CSR Committee
a) Mr. Rajan Nanda b) Mr. Nikhil Nanda c) Mr. Hardeep Singh d) Mrs. Vibha Paul Rishi e)Mr. G. B. Mathur
3. Average Net Profit of the Company for last three financial years: Rs. 163.72 Cr.
4. Prescribed CSR Expenditure: Rs. 3.27 Cr.
5. Details of CSR spent during the financial year
a) Total amount to be spent for the financial year : Rs. 3.27 Crore.
b) Amount Unspent: Rs. 2.11 Crore.
c) Amount spent during the financial year is given in the table herein below:
6. Reasons for not spending the amount:
Despite of approval of various projects for CSR Implementation the Company under theguidance and directions of the CSR committee is able to spend Rs. 1.16 Cr. in thefinancial year 2015-16. The Company will be able to spend full amount in coming years.
7. Statement of the CSR Committee:
The statement of the CSR Committee of the Board of Directors of the Company isreproduced below:
"The implementation and monitoring of Corporate
Social Responsibility (CSR) Policy is in compliance with
CSR objectives and policy of the Company."
Amount spent during the financial year is as follows:
|Sl. No. ||CSR Project or Activity ||Sector in which the Project is covered ||Projects or programs ||Amount Outlay ||Amount spent on the Projects or Programs ||Cumulative expenditure up to the reporting period ||Amount spent: |
| || || ||Local Area or other ||Specify the State & District where projects or programs was undertaken ||(Budget) project or program wise ||Direct Expenditure on projects or programs ||Overheads || ||Direct ||Through Implementing Agency |
|1. ||Escorts School (s) WASH ||Cl. (i) Promoting ||Local Area and Other ||Haryana - Faridabad ||0.78 ||0.18 ||- ||0.18 ||0.18 ||- |
|2. ||Drain/ Sewage Cleaning Machines: Clean India Movement ||Cl. (i) Promoting Healthcare including Preventive Healthcare and sanitation including contribution to the Swach Bharat Kosh set up by the Central Government for promotion of Sanitation ||Local Area and Other ||Haryana - Faridabad ||0.48 ||0.48 ||- ||0.48 ||0.48 ||- |
| || || || || || || || || || || |
|3. ||Skill Development Project ||Cl. (ii) Employment Enhancing Vocation Skills ||Local Area and Other ||Haryana Faridabad New Delhi Maharashtra Pune Ahmednagar ||1.00 ||0.50 ||- ||0.50 ||- ||0.50 |
Annexure G to the Directors Report
Form No. AOC-2
(Pursuant to Clause (h) of sub-section (3)of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/ arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms lengthbasis
|(a) ||Name(s) of the related party and nature of relationship ||NIL |
|(b) ||Nature of contracts/ arrangements/ transactions ||NIL |
|(c) ||Duration of the contracts/ arrangements/ transactions ||NIL |
|(d) ||Salient terms of the contracts or arrangements or transactions including the value if any ||NIL |
|(e) ||Justification for entering into such contracts or arrangements or transactions ||NIL |
|(f) ||Date(s) of approval by the Board ||NIL |
|(g) ||Amount paid as advances if any: ||NIL |
|(h) ||Date on which the special resolution was passed in general meeting as required under first proviso to Section 188. ||NIL |
|2. ||Details of material contracts or arrangement or transactions at arms length basis || |
|(a) ||Name(s) of the related party and nature of relationship ||NIL |
|(b) ||Nature of contracts/arrangements/ transactions ||NIL |
|(c) ||Duration of the contracts/ arrangements/ transactions ||NIL |
|(d) ||Salient terms of the contracts or arrangements or transactions including the value if any: ||NIL |
|(e) ||Date(s) of approval by the Board if any: ||NIL |
|(f) ||Amount paid as advances if any: ||NIL |
Annexure H to the Directors Report
Form No. MR-3
Secretarial Audit Report
(For the Financial Year ended March 31 2016)
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
The Members ESCORTS LIMITED
15/5 Mathura Road Faridabad - 121 003 Haryana
I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Escorts Limited (hereinaftercalled "the Company"/ "EL"). Secretarial Audit was conducted in amanner that provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing my opinion thereon.
Based on my verification of Escorts Limiteds books papers minute books formsand returns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorised representatives during theconduct of secretarial audit I hereby report that in my opinion the Company has duringthe audit period covering the Financial Year ended on March 31 2016 complied with thestatutory provisions listed hereunder and also that the Company has proper Board processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter:
1. I have examined the books papers minute books forms and returns filed and otherrecords maintained by Escorts Limited for the period ended on March 31 2016 according tothe provisions of: I. The Companies Act 2013 (the Act) and the Rules made thereunder; II.The Securities Contracts (Regulation) Act 1956 (SCRA) and the rules madethereunder;
III. The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder; IV.Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to theextent of Foreign Direct Investment Overseas Direct Investment and External CommercialBorrowings; V. The following Regulations and Guidelines prescribed under the Securitiesand Exchange Board of India Act 1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The erstwhile Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 1992 and the Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 (Not applicable to the Company during the Audit Period);
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 as replaced by the SEBI (Share BasedEmployee Benefits) Regulations 2014;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not applicable to the Company during the Audit Period);
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not applicable to the Company during the Audit Period); and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998 (Not applicable to the Company during the Audit Period);
(i) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.
VI. I further report that having regard to the compliance system prevailing in theCompany and based on the representation made by the management of the Company and onexamination of the relevant documents and records in pursuance thereof the Company hascomplied with the following laws applicable specifically to the Company: (a) The MotorVehicles Act 1988 and the Rules made thereunder;
(b) The Aircraft Act 1934 and rules made thereunder; and
(c) The Petroleum Act 1934 and the Rules made thereunder
I have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by the Institute of Company Secretaries of India whichcame into effect from 01.07.2015; (ii) The Listing Agreements entered into by the Companywith Stock Exchanges applicable upto 30.11.2015; and Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 with effect from01.12.2015.
During the period under review the Company has generally complied with the provisionsof the Act Rules Regulations Guidelines Standards etc. mentioned above.
3. I further report that: a) The Board of Directors of the Company is dulyconstituted with proper balance of Executive Directors Non-Executive Directors andIndependent Directors. b) The changes in the composition of the Board of Directors thattook place during the period under review were carried out in compliance with theprovisions of the Act. c) Adequate notice is given to all directors to schedule the BoardMeetings agenda and detailed notes on agenda were sent at least seven days in advanceand a system exists for seeking and obtaining further information and clarifications onthe agenda items before the meeting and for meaningful participation at the meeting. d)Majority decision is carried through while the dissenting members views are capturedand recorded as part of the minutes.
I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.
I further report that during the audit period the Company shifted its registered officefrom the city of Panchkula to the city of Faridabad within the state of Haryana afterobtaining shareholders approval to the same through Postal Ballot Mechanism.
This report is to be read with my letter of even date which is annexed as Annexure andforms integral part of this report.
For Jayant Gupta and Associates (Jayant Gupta)
Practicing Company Secretary
FCS : 7288 CP : 9738
Place : New Delhi
Date : May 25 2016
Annexure to the Secretarial Audit Report of Escorts Limited for financial year endedMarch 31 2016
The Members Escorts Limited
Management Responsibility for Compliances
1. Maintenance of secretarial record is the responsibility of the management of theCompany. My responsibility is to express an opinion on these secretarial records based onmy audit.
2. I have followed the audit practices and process as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. I believe that the process and practices I followed provide areasonable basis for my opinion.
3. I have not verified the correctness and appropriateness of financial records andBooks of Account of the Company.
4. Wherever required I have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. My examination was limited tothe verification of procedure on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
For Jayant Gupta and Associates (Jayant Gupta)
Practicing Company Secretary
FCS : 7288 CP : 9738
Place : New Delhi
Date : May 25 2016
Annexure J to the Directors Report
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
(I) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:
|Sl. No. ||Name of Director/ KMP and Designation ||Remuneration of Director/ KMP for the financial year 2015-16 (Rs. In Cr) ||% Increase in Remuneration in the financial year 2015-16 ||Ratio of remuneration of each Director/ to median remuneration of employees ||Comparison of the Remuneration of the KMP against the performance of the Company |
|1. ||Rajan Nanda Chairman and Managing Director ||5.259 ||Nil ||61.15 ||Profit Before Tax increased by 34.6% and Profit After Tax increased by 19.6% in the financial year 2015-16 |
|2. ||Nikhil Nanda Managing Director ||5.125 ||Nil ||59.60 || |
|3. ||Nitasha Nanda Whole-time Director ||1.460 ||Nil ||16.97 || |
|4. ||G.B. Mathur Non-Executive Director ||0.020 ||Not Applicable ||0.23 || |
|5. ||Hardeep Singh Non-Executive Director ||0.081 ||Not Applicable ||0.94 || |
|6. ||Dr. S.A. Dave Non-Executive Director ||0.069 ||Not Applicable ||0.80 || |
|7. ||Mr. S.C. Bhargava Non-Executive Director ||0.069 ||* ||* ||Not Applicable |
|8. ||Mr. P.H. Ravikumar Non-Executive Director ||0.030 ||Not Applicable ||0.35 || |
|9. ||Mrs. Vibha Paul Rishi Non-Executive Director ||0.027 ||Not Applicable ||0.31 || |
|10. ||Dr. Sutanu Behuria ||0.032 ||Not Applicable ||0.37 || |
|11. ||Bharat Madan Group Financial Controller ||1.177 ||10.58% ||Not Applicable ||Profit Before Tax increased by 34.6% and Profit After Tax increased by 19.6% in the financial year 2015-16 |
|12. ||Ajay Sharma Group General Counsel & Company Secretary ||0.659 ||# ||Not Applicable || |
* Details not given as Mr. S.C. Bhargava was director only for part of financial year2015-16 i.e. upto March 29 2016. # Details not given as the same is not comparable withlast year figure.
(II) Increase in median remuneration of employees for the previous financial year:7.05% (III) Relationship between average increase in remuneration and Companysperformance: On an average employees received an annual increase of 7.05%. The increasein remuneration is in line with the market trends in the respective industry. In order toensure that remuneration reflects Company performance the performance pay is also linkedto organisation performance apart from an individuals performance.
(IV) Average percentage increase made in salaries of employees other than themanagerial personnel in the last financial year: 7.05% (V) No commission was paid to theNon-Executive Directors of the Company during 2015-16 and 2014-15. Hence percentageincrease in Remuneration in the financial year 2015-16 has been shown as not applicable.
(VI) There were 4059 permanent employees on the rolls of the Company as on March 312016.
(VII) a) Variations in the market capitalisation of the Company: The marketcapitalisation as on March 31 2016 was Rs. 1706.88 crore (Rs. 1561.02 crore as on March31 2015). b) Price Earnings ratio of the Company was 19.10 as at March 31 2016 and was20.34 as at March 31 2015. c) Percent increase over/ decrease in the market quotations ofthe shares of the Company as compared to the rate at which the company came out with thelast public offer in the year- The Company had come out with initial public offer (IPO) in1960. An amount of Rs. 1000 invested in the said IPO has been increased to Rs. 5.30 lakhas on March 31 2016 excluding conversion of debentures warrants and dividend amount.
(VIII) The key parameters for the variable component of remuneration availed by thedirectors are considered by the Board of Directors based on the recommendations of theNomination and Remuneration Committee as per the Remuneration Policy for the DirectorsKey Managerial Personnel Senior Management and other Employees. (IX) The ratio of theremuneration of the highest paid director to that of the employees who are not directorsbut receive remuneration in excess of the highest paid director during the year NotApplicable; and
(X) It is hereby affirmed that the remuneration paid is as per the Remuneration Policyfor the Directors Key Managerial Personnel Senior Management and other Employees.