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G G Automotive Gears Ltd.

BSE: 531399 Sector: Engineering
NSE: N.A. ISIN Code: INE493B01017
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G G Automotive Gears Ltd. (GGAUTOMOTIVE) - Director Report

Company director report

To

The Members

G. G. AUTOMOTIVE GEARS LIMITED.

Your Directors have great pleasure in presenting 43RD ANNUAL REPORT along with theAudited Balance Sheet and Profit and Loss Account for the year ended 31st March 2017.

1. FINANCIAL RESULTS:

(Rs. in INR)

Year ended on

31.03.2017 31.03.2016
Profit Before Depreciation 24839186 18473990
Less: Depreciation 16316732 13339729
Profit before tax 8574831 5134261
Less: Provision for Income Tax 1652922 990165
Less: Provision for Deferred Tax Liability/ (Asset) (1100481) 1676382
Profit after tax 8022390 2467714
Add: Previous year's profit brought forward
Balance carried to Balance sheet 8022390 2467714

2. FINANCIAL OPERATIONS & STATE OF AFFAIRS OF THE COMPANY:

During the year your Company has reported a total turnover of Rs. 282641249/-(Rupees Twenty-Eight Crore Twenty-Six Lakhs Forty-One Thousand Two Hundred and Forty NineOnly). However the total expenditure incurred by the Company during the year under reviewamounted to Rs. 217930897/- (Rupees Twenty-One Crores Seventy-Nine Lakhs ThirtyThousand Eight Hundred and Ninety-Seven Only)

During the year due to sluggish and adverse market trend your Company has reported areduced amount of net profit of Rs. 8022390/- (Rupees Eighty Lakhs Twenty-Two ThousandThree Hundred and Ninety Only) as compared to net profit of Rs. 2467714/- (RupeesTwenty-Four Lakhs Sixty-Seven Thousand Seven Hundred and Fourteen Only) in previous year.Your Directors are taking optimum efforts to increase the profits through aggressivesales campaign.

During the year the Company has started a new forging plant Unit-II for manufacturingof steel forging.

3. TRANSFER TO RESERVES:

There are no transfers to any specific reserves during the year.

4. DIVIDEND:

Your directors do not recommend dividend for the year 31st March 2017 with a view toconserve the resources & expansion of divisions.

5. PUBLIC DEPOSITS:

During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).

6. NUMBER OF BOARD MEETINGS AND ITS COMMITTEES:

During the year under review 4 Board Meeting were held.

Details of the Meetings held during the financial year are as follows:

7. COMMITTEES OF THE BOARD:

The Company's Board has the following committees:

1. Audit Risk and Compliance Committee

2. Nomination and Remuneration Committee

3. Shareholders/Investors Grievance Committee (Stakeholders' Relationship Committee)

The said committee consists of 3 (Three) Members out of which 2 (Two) members areIndependent and 1 (one) is Promoter Director.

During the year there were in total 4 Audit Committee Meetings 2 Nomination &Remuneration Committee and 4 Stakeholders Relationship Committee were held.

8. INDUSTRIAL RELATIONS:

Your Company has always considered its workforce as its valuable asset and continues toinvest in their excellence and development programs. Your Company has taken severalinitiatives for enhancing employee engagement and satisfaction.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Retirement by rotation and subsequent re-appointment:

Shri. Kennedy Gajra is liable to retire by rotation at the ensuing AGM pursuant to theprovisions of Section 152 of the Companies Act 2013 read with the Companies (Appointmentand Qualification of Directors) Rules 2014 and the Articles of Association of yourCompany and being eligible has offered himself for reappointment. Appropriate resolutionsfor their re-appointment is being placed for your approval at the ensuing AGM.

The Independent Directors of your Company hold office upto 31st March 2019 and are notliable to retire by rotation. Shri Kennedy Gajra Managing Director & CEO and ShriNarayan Shrivas CFO are the Key Managerial Personnel of your Company in accordance withthe provisions of Sections 2(51) 203 of the Companies Act 2013 read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (including anystatutory modification(s) or re-enactment(s) for the time being in force).

During the year there is change in the Composition of Directors of the Company.

Mr. Ram Gajra ceased as a Director of the Company due to sad demised on 6th November2016 and Mr. Kennedy Ram Gajra has appointed Chairman cum Managing Director w.e.f. 17thJanuary 2017 and Further Mr. Anmol Gajra has appointed as an Executive Director w.e.f.5th June 2017.

Disclosure Relating to Remuneration of Directors Key Managerial Personnel andparticulars of Employees:

The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force).

The Managing Director & CEO of your Company does not receive remuneration from anyof the subsidiaries of your Company.

The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in Annexure VI to this report and is alsoavailable on the website of your Company (www.ggautomotive.com)

10. LISTING OF SHARES:

The Equity Shares of the Company are listed on the BSE Limited Mumbai. However thetrading of Shares has been suspended by BSE. Your company has complied the compliances asrequired by the BSE and the requisite approval for resumption of trading is awaited.

11. EXTRACT OF ANNUAL RETURN:

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and administration) Rules 2014 is furnished in AnnexureII and is attached to this Report.

12. DIRECTORS RESPONSIBILITY STATEMENT:

The Board of Directors hereby conhrms.

i) That in the preparation of the annual accounts the applicable accounting standardhad been followed along with proper explanation relating to material departures.

ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the Profit or Loss of the Company for that period.

iii) That the Directors have taken proper and sufficient care for the maintenances ofadequate accounting records in accordance with the provision of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) That the Directors have prepared the Annual accounts on a going concern basis.

v) That the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

vi) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operating.

13. DECLARATION OF INDEPENDENT DIRECTORS:

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(7) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.

14. POLICY ON DIRECTORS APPOINTMENT REMUNERATION & BOARDS PERFORMANCE:

During the year the Board adopted a formal mechanism for evaluating its performanceand as well as that of its Committees and individual Directors including the Chairman ofthe Board. The exercise was carried out through a structured evaluation process coveringvarious aspects of the Boards functioning such as composition of the Board &committees experience & competencies performance of specific duties &obligations governance issues etc. Separate exercise was carried out to evaluate theperformance of individual Directors including the Chairman who were evaluated onparameters such as attendance contribution at the meetings and otherwise independentjudgment safeguarding of minority shareholders interest etc.

The evaluation of the Independent Directors was carried out by the entire Board andthat of the Chairman and the Non-Independent Directors were carried out by the IndependentDirectors.

The Directors were satisfied with the evaluation results which reflected the overallengagement of the Board and its Committees with the Company.

The said policy is available on the website of the Company under the following linkhttp://www.ggautomotive.com/pdf/Nomination-&-Remunerati-n-Policy.pdf.

15. COMMENTS ON AUDITOR'S REPORT:

There are no qualifications reservations or adverse remarks or disclaimers made by M/sShah Gandhi & Company Statutory Auditors in their report. The Statutory Auditorshave not reported any incident of fraud to the Audit Committee of the Company in the yearunder review.

16. AUDITORS:

"RESOLVED THAT pursuant to the provisions of Section 139 and other applicableprovisions if any of the Companies Act 2013 and other Rules framed thereunder andpursuant to the recommendation of the Audit Committee ofthe Board of Directors M/s. S. CKabra & Co. Chartered Accountants having firm registration no 000337C Mumbai be andare hereby appointed as Statutory Auditors of the Company to hold office from theconclusion of this Annual General Meeting (AGM) to the conclusion of forty-eight AGM ofthe Company (Subject to ratification of the appointment by the members at every AGM heldafter this AGM) on such remuneration as shall be fixed by the Board of Directors."

The resolution for their appointment is put forward for your approval in the ensuingAnnual General Meeting.

17. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013

There are no Loans Guarantees or Investment made by the Company under Section 186 ofthe Companies Act 2013

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The particulars of contracts or arrangements with related parties referred to inSection 188(1) as prescribed in Form AOC - 2 of the rules prescribed under Chapter IXrelating to Accounts of Companies under the Companies Act 2013 is appended as AnnexureD.

All Related Party Transactions are presented to the Audit Committee and the Board. Astatement of all related party transactions is presented before the Audit Committeespecifying the nature value and terms and conditions of the transactions.

19. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

During the year the Company has started a new forging plant Unit-II for manufacturingof steel forging.

Further there were no material changes and commitments affecting the financial positionof the Company during the financial year of the Company to which the financial statementsrelate and the date of the report.

20. CONSERVATION OF ENERGY TECHNOLOGY & FOREIGN EXCHANGE:

Information on conservation of energy technology absorption foreign exchange earningsand out go is required to be given pursuant to provision of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 is annexed hereto markedAnnexure III and forms part of this report.

21. WHISTLE BLOWER POLICY/VIGIL MECHANISM:

The Company has established a vigil mechanism for Directors and employees to reporttheir genuine concerns details of which have been given in the Corporate GovernanceReport annexed to this Report. It is available on the Company's website:www.ggautomotive.com.

22. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

The Management's Discussion and Analysis Report for the year under review asstipulated under Regulation 34 of the SEBI (Listing Obligation and DisclosureRequirements) Regulation 2015 is annexed to this report.

23. SUBSIDIARIES/ JOINT VENTURES & ASSOCIATE COMPANYS:

The Company operates as a single entity with no subsidiaries or Joint Venture orAssociate Companies as explained within the meaning of the Companies Act 2013. Since theCompany has no Joint Venture or Associate Companies the company is not required to giveinformation in AOC-1 as required under Companies Act 2013.

24. SECRETARIAL AUDITOR & REPORT:

The Board of Directors of the Company has appointed M/s. Nitin Sarfare PracticingCompany Secretary; to conduct the Secretarial Audit and their Report on Company'sSecretarial Audit is appended to this Report as Annexure I.

Auditors Observation:

The company has not appointed Company Secretary as required under section 203 read withrule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

The Company does not have functional Website as per Regulation 46 of the LODR.

The disclosure regarding intimation of death of Managing Directors and change inCompliance Officer has not been made within the stipulated time as prescribed underRegulation 30 of LODR.

Directors Comment:

The Company is in process to find out a suitable candidate as Company Secretaryhowever the company will be appointing a Company Secretary immediately.

The Company's website is under process of updating and it will completed shortly.

The said compliance was accidental omission.

25. INTERNALAUDITORS:

As per section 138 of the Companies Act 2013 the Company has appointed M/s. S. N.Gadiya & Co. internal auditors for the year to 2017-2018 to conduct the internalaudit and to ensure adequacy of the Internal controls adherence to Company's policies andensure statutory and other compliance through periodical checks and internal audit.

26. PARTICULARS OF EMPLOYEES:

There are no employees in the Company who if employed throughout the financial yearwere in receipt of remuneration whose particulars if so employed are required to beincluded in the report of the Directors in accordance with the provisions of Rule 5 (2)and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.

27. DISCLOSURE UNDER SEXUAL HARASSMENT ACT:

Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013 do not mandate the Company to Sexual Harassment Redressal Mechanism within theCompany as there are no female employees in the Company.

28. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation of the support which theCompany has received from its promoters lenders business associates includingdistributors vendors and customers the press and the employees of the Company.

BY ORDER OF THE BOARD OF DIRECTORS
FOR G. G. AUTOMOTIVE GEARS LIMITED
SD/-
KENNEDY RAM GAJRA
Date: 26.05.2017 (CHAIRMAN CUM MANAGING DIRECTOR)
Place: Dewas. DIN: 02092206

Annexure III

Report on Conservation of Energy Technology Absorption Foreign Exchange Earnings andOutgo and forming part of Board's Report for the year ended 31 March 2017.

(A) Conservation of Energy:

(i) Steps taken or impact on conservation of energy: The company is taking adequatesteps progressively on conservation of energy.

(ii) Steps taken by the Company for utilizing alternate sources of energy: The companyis not making use of alternate sources of energy.

(iii) capital investment on energy conservation equipment's: During the Financial year2016-2017 the company has not spent amount on capital investment on energy conservationequipment.

(B) Technology absorption: -

1. The efforts made towards technology absorption During the year the company has not made any technological changes.
2. The benefits derived like product improvement cost reduction product development or import substitution The installed equipment's has resulted in enhanced production capacity and better quality product at lower power consumption
3. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year: The company has not imported technology during the last three financial years.
a) the details of technology imported
b) the year of import
c) whether the technology been fully absorbed
d) If not fully absorbed areas where absorption has not taken place and the reasons thereof

C. Foreign Exchange Earnings and Outgo: (Rs. In Lacs)

2016-2017 2015-2016
Foreign Exchange earned 11.26 82.35
Foreign Exchange used 111.82 179.12
Net Foreign Exchange earnings -100.56 -96.77

Annexure D

FORM NO. AOC - 2

[Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies(Accounts) Rules 2014]

Form for disclosure of particulars of contracts / arrangements entered into by theCompany with the related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arms-length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not at arm's length basis:

Sr. No Name of the Related Party & Nature of Relationship Nature of contracts/ arrangements/ transactions Duration of the contracts / arrange- ments/ transactions Salient terms of the contracts or arrangements or transactions including the value if any Justification for entering into such contracts or arrangements or transactions date(s) of approval by the Board Amount paid as advances if any Date on which the special resolution was passed in general meeting as required under first proviso to section 188
Not Applicable

2. Details of contracts or arrangements or transactions at arm's length basis:

Name of the Related Party & Nature of Relationship Nature of contracts/ arrangements/ transactions Duration of the contracts / arrangements/ transactions Salient terms of the contracts or arrangements or transactions including the value if any Amount paid as advances if any
Mrs. B. K. Gajra RENT GIVEN TO WIFE OF KENNEDY GAJRA (Managing Director) Annually AS PER THE TERMS OF THE AGREEMENT 180000/- p.a.
Mr. Kennedy Gajra Salary Annually As per the terms and conditions of appointment of Managing Director 3000000/- p.a.
Mr. Ram Gajra Salary Annually As per the terms and conditions of appointment of Managing Director 1200000/- p.a.
Mr. Anmol Gajra Salary Given to son of Kennedy Gajra Annually As per terms of employment 600000 p.a.
Mrs. Aashna Gajra Salary given to daughter of Kennedy Gajra Annually As per terms of employment 600000 p.a.
Mr. Kennedy Gajra Provident Fund to Managing Director Annually As per the terms and conditions of appointment of Managing Director 360000/- p.a.
Mr. Anmol Gajra Provident Fund to Son of Mr. Kennedy Gajra Annually As per terms of employment 72000 p.a.
Mr. Aashna Gajra Provident Fund to daughter of Mr. Kennedy Gajra Annually As per terms of employment 72000 p.a.

 

Kennedy Ram Gajra Pravin Kumar Shishodiya
Chairman cum Managing Director Director
DIN:02092206 DIN:02138042
DATE: 26.05.2017
PLACE: DEWAS.

ANNEXURE VI

Disclosure Requirement No. Disclosure Details
1. Ratio of the remuneration of each director Mr. R. S. GAJRA the Chairman & Managing Director
to the median remuneration of the employees for the financial year Ratio: 7.78 times
Mr. K. R. GAJRA
Ratio: 19.46 times
Mr. Shailendra Ajmera
Ratio: NIL times
Mr. Pravin Kumar Shisodiya
Ratio: NIL times
Mrs. Ruchi Sogani Ratio: Nil Times
2. Percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year Director/KMP Designation % increase/ (decrease) in Remuneration
Mr. Ram. S. GAJRA Managing Director No Change
Mr. Kennedy R. GAJRA Jt. Managing Director No Change
3. Percentage increase in the median remuneration of employees in the financial year 18 %
4. Number of permanent employees on the rolls of Company at the end of the year 105.
5. Explanation on the relationship between average increase in remuneration and Company performance The remuneration expense of the Company has not changed during the financial year 2016-17.
6. Comparison of the remuneration of the Key Managerial Personnel (KMP) against the performance of the Company During the year there is no change in the Remuneration of KMP (CFO).
7. Variations in the market capitalisation of theCompany price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer Particulars March 31 2017 March 31 2016 Variation (%)
Market Capitalisation N.A. N.A. N.A.
Price earnings ratio (based on consolidated EPS) N.A. N.A. N.A.
As on March 31 2017 the shares of the Company were quoted at 5 per share on BSE Limited. The Stock price as at March 31 2017 has remained unchanged since trading has been suspended by BSE Ltd. The Company share are not traded due to suspension the information regarding price earning and market capitalization cannot be asserted.
8. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration The aggregate remuneration of employees other than managerial Personnel have increased by 18 % and there is no change in KMPs remuneration.
9. Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company Directors/KMP Designation Remuneration FY 2016-17
% of PBT (standalone) % of PBT (Consolidated)
Narayan Shrivas CFO 7 7
Kennedy Ram Gajra MD 35 35
Kennedy Ram Gajra CMD 14 14
Shailendra Ajmera NIL NIL NIL
Pravin Kumar Shishodiya NIL NIL NIL
Ruchi Sogani NIL NIL NIL
10. Key parameters for any variable component of remuneration availed by the directors The key parameters for variable component of remuneration availed by directors are:
• "Group Performance;
• "Business Performance; and
• "Individual Performance
11. Ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year Not applicable.
12. Affirmation that the remuneration is as per the remuneration policy of the Company Remuneration paid to the employees including KMPs is as per the Remuneration Policy of the Company