Your Directors have pleasure in presenting the Seventy First Annual Report and theCompany's audited financial statements (standalone and consolidated) for the financialyear ended on March 31 2017.
|Particulars ||Year ended on ||Year ended on |
| ||March 31 2017 ||March 31 2016 |
|Gross Revenue ||4211.04 ||3494.49 |
|Excise Duty ||74.42 ||71.91 |
|Net Revenue ||4136.62 ||3422.58 |
|Profit from continuing operations before Interest Depreciation Exceptional ||367.17 ||232.55 |
|Items & Tax || || |
|Finance Cost ||31.11 ||49.54 |
|Profit from continuing operations before Depreciation Exceptional Items ||336.06 ||183.01 |
|& Tax || || |
|Depreciation & Amortisation ||63.07 ||57.50 |
|Profit from continuing operations before Exceptional Items & Tax ||272.99 ||125.51 |
|Exceptional Item ||(3.76) ||12.29 |
|Profit from continuing operations before Tax ||276.75 ||113.22 |
|Tax Expense ||75.60 ||12.50 |
|Profit from continuing operations after Tax ||201.15 ||100.72 |
|Profit/(Loss) from discontinued operations before tax ||(58.46) ||(25.96) |
|Tax expense of discontinued operations ||(17.75) ||(8.99) |
|Net profit/(loss) from discontinued operations after tax ||(40.71) ||(16.97) |
|Net profit for the period ||160.44 ||83.75 |
|Appropriations for the year:- || || |
|Dividends ||(14.35) ||(14.30) |
|Tax on Dividends ||(2.99) ||(2.99) |
|Dividend received on shares held by beneficiary trust* ||4.48 ||4.48 |
* for more information please refer note 45 of the notes to accounts of standalonefinancial statement
The brief highlights of the Company's performance (standalone) for the financial yearended March 31 2017 are:-
Net Revenue of the Company for FY 2017 of B4136.62 cr. was higher by 20.86%over the last year (B3422.58 cr. in FY 2016).
Profit from continuing operations Before Interest Depreciation AmortisationExceptional Items & Tax stood at B367.17 Cr.
Profit from continuing operations Before Tax (PBT) stood at B276.75 Cr andProfit from continuing operations After Tax (PAT) stood at B201.15 Cr. Net profit for theperiod stood at B160.44 Cr.
Earnings per share is of B13.43 for the year under review.
Your Company sold 63786 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 B1.50 per Equity Share (15%) onthe face value of B10/- each aggregating B18.39 Cr. (exclusive of tax on dividend) forthe financial year ended March 31 2017. The dividend payout is subject to the approval ofmembers 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 8 2017 in respect of shares held indematerialized form and members whose names are furnished by National SecuritiesDepository Limited and Central Depository Services (India) Limited as beneficial ownersas at that date.
The dividend payout for the period under review has been formulated in accordance withshareholders' aspirations and the Company's Dividend Distribution Policy to paysustainable dividend linked to long-term growth objectives of the Company to be met byinternal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March 31 2017 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 the Company Ms. Nitasha NandaWhole-time Director and Mr. G.B. Mathur Director retires by rotation at the ensuing AGMand being eligible offers themselves for reappointment.
The Board of Directors in their meeting held on May 29 2017 had recommended there-appointment and remuneration of Mr. Nikhil Nanda as Managing Director for a furtherperiod of 5 years w.e.f September 19 2017 subject to the approval of the shareholders inthe ensuing Annual
General Meeting. His appointment is appropriate and in the best interest of theCompany.
Dr. S.A. Dave had resigned as Director of the Company w.e.f. September 20 2016. TheBoard places on record its warm appreciation for the valuable guidance and servicesrendered by Dr. Dave during his tenure with the Company.
The Board of Directors in their meeting held on May 29 2017 had recommended there-appointment of Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishi as Independent Directorsfor a further period of 5 years for approval of members of the Company at the ensuing AGM.
Pursuant to the provisions of Section 149 and other applicable provisions of the Actyour directors are seeking re-appointment of Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishias Independent Directors for a period of 5 years.
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 under Regulation 16(1)(b) of SEBI (Listing Obligationsand Disclosures Requirements) Regulation 2015 (hereinafter referred as "the ListingRegulations"). The policy for selection of directors and determining directorsindependence is attached as Annexure - B and forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the Non-Executive and Executive Directors. In accordance with the Policy aprocess of evaluation was followed by the Board for its own performance and that of itsCommittees and individual Directors. The remuneration policy for directors key managerialpersonnel and other employees is annexed as Annexure C and forms an integral partof 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 71st AGM.
Your Directors recommend the appointment/ reappointment of the above said Directors atthe ensuing AGM.
The Company has devised a process where various presentations/ programs are beingconducted to make them familiarise with various developments at Industry level newbusiness initiatives and organisation strategies etc.
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 - D and forms anintegral part of this Report.
Your Company reafirms its commitment to the good corporate governance practices and hasadopted the Code of Conduct which has set out the systems processes and policy conformingto international standards. Pursuant to Regulation 34(3) of the Listing Regulations 2015Corporate Governance Report and Auditors' Certificate regarding compliance of conditionsof Corporate Governance are enclosed as Annexure - E and forms an integral part of thisReport.
Corporate Social Responsibility (CSR)
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 need based initiatives in compliance withSchedule VII of the Act.
The CSR Policy may be accessed on the Company's website www.escortsgroup.com underInvestors Information Section. During the year the Company has spent B3.30 Cr. (1.93% ofthe average net profits of last three financial years) on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure F and forms anintegral part of this Report.
Indian Accounting Standards
The Ministry of Corporate Affairs (MCA) on February 16 2015 notified that IndianAccounting Standards (Ind AS) are applicable to certain classes of companies from April 12016 with a transition date of April 1 2015. Ind AS has replaced the previous Indian GAAPprescribed under Section 133 of the Companies Act 2013 ("the Act") read withRule 7 of the Companies (Accounts) Rules 2014. Ind AS is applicable to the Company fromApril 1 2016.
The reconciliations and descriptions of the effect of the transition from previous GAAPto Ind AS have been set out in Note 49 in the notes to accounts in the standalonefinancial statement and in Note 49 in the notes to accounts in the consolidated financialstatement.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act andIndian Accounting Standard (IND AS) - 110 applicable to the Consolidated FinancialStatements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31on Financial Reporting of Interests in Joint Ventures issued by The Institute of CharteredAccountants of India. The Audited Consolidated Financial Statements along with theAuditors' Report thereon are annexed 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/ transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. 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 of contracts and arrangement with related parties under Section 188(1)of the Act in Form AOC-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 Company's website www.escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to Note 48 in the notes to accounts in thestandalone financial statement and to note 47 in the notes to accounts in the consolidatedfinancial statement which sets out related party disclosures.
Auditors and Auditors' Report
Pursuant to the provisions of Section 139 of the Act read with Companies (Audit andAuditors) Rules 2014 M/s. S.N. Dhawan & Co. LLP Chartered Accountants Delhi (FirmRegistration No. 000050N/N50004) Statutory Auditors of the Company hold office till theconclusion of the ensuing AGM and are not eligible for re-appointment.
M/s. Walker Chandiok & Co LLP Chartered Accountants New Delhi (Firm RegistrationNo. 001076N/ N500013) have shown their interest to act as Statutory Auditors of theCompany for a period of 5 years subject to the ratification of their appointment at everyAGM.
The Company has received letter of confirmation from M/s. Walker Chandiok & Co LLPChartered 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 M/s. S.N. Dhawan & Co. LLP CharteredAccountants Statutory Auditors in their report read together with notes to Accounts forthe year ended March 31 2017 are self-explanatory and hence do not call for any furthercomments 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 year2017-18.
The due date of filing the Cost Audit Report for the year ended on March 31 2016 wasSeptember 30 2016 and the same has been filed on September 28 2016.
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 2016-17. The Secretarial Audit Report for the financial year ended March 31 2017 isenclosed as Annexure H and forms an integral part of this Report.
The observations 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 2017-18.
A Risk Management Committee which has been entrusted with the responsibility to assistthe Board in (a) overseeing and approving the Company's enterprise wide risk managementframework; and (b) Overseeing that all the risks that the organisation faces such asstrategic 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 effcient 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
Five meetings of the Board of Directors were held during the year. For further detailsplease refer Report on Corporate Governance annexed as Annexure E to this Report.
For constitution and other details of the Audit Committee please refer Report onCorporate Governance annexed as Annexure-E to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
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 asAnnexure 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 Company's Code ofConduct. The mechanism provides for adequate safeguards against victimization of effectedDirector(s) and Employee(s). In exceptional cases Directors and Employees have directaccess to the Chairman of the Audit Committee. The Whistle Blower Policy is available onCompany's website.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s KarvyComputershare Private Limited Registrar and Share Transfer Agents (Karvy RTA) from thefollowing address: -
M/s Karvy Computershare Private Limited Karvy Selenium Tower B Plot No. 31-32Gachibowli Financial District Nanakramguda Hyderabad-500032 Telengana
All correspondence may kindly be sent to the above address only.
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 are available with the Company Secretary. Having regard to theprovisions of Section 136(1) of the Act the Annual Report excluding the aforesaidinformation is being sent to the members of the Company. Any member interested inobtaining such particulars may write to the Company Secretary of the Company and the samewill be furnished on request.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure J and forms an integralpart 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 Act the dividend which remainedunclaimed or unpaid for a period of seven years has been transferred by the Company fromtime to time on due dates to the Investor Education and Protection Fund.
As on March 31 2017 no unclaimed deposits are pending for transfer to InvestorEducation and Protection Fund.
Divestment of Auto Products Business
During the year the Company has divested its OEM & Export Business of Auto ProductDivision as a part of the planned strategic reorientation of the business to focus on coreverticals in the Agri-Machinery Construction Equipment and Railway Equipment segments.
During the year the credit rating of the Company have been upgraded as under:
India Ratings has upgraded the long-term rating from IND A-' to IND A'.
ICRA Limited has upgraded the long-term rating from "A-" to "A"with upward change in outlook from "STABLE" to "POSITIVE".
Business Responsibility Report
As stipulated under the Listing Regulations the Business Responsibility Reportdescribing the initiatives taken by the Company from an environmental social andgovernance perspective can be accessed at the website of the Company www.escortsgroup.comunder Investor Information Section.
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 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistentlyand made judgements 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 March 31 2017 and of the profitand loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year ended March 312017 on a going 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 with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
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 di3erential 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 Company's 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 andUttaranchal Financial Institutions and the Company's 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 sta3 of the Companyresulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continuedco-operation and support received from its valued shareholders.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
|Place: Faridabad ||RAJAN NANDA |
|Date: May 29 2017 ||Chairman & Managing Director |