Your Directors take pleasure in presenting the 55th Annual Report on the business andoperations of the Company together with the Audited Financial Statement for the yearended March 31 2017.
The Company's sales grew by 6% and Operating Profit (EBITDA) PBT and PAT grew by11.4% 16% and 8.5% respectively. The improved profitability was due to raw material costreduction fixed expenses control warranty cost reduction better working capital andcash flow management. The Company continued to deliver good results on the strength ofstrong customer orientation leveraging its core competencies in technology manufacturingand supply chain efficiency.
|FINANCIAL RESULTS || || |
| || ||(' in million) |
|PARTICULARS ||Year ended ||Year ended |
| ||31.03.2017 ||31.03.2016 |
|Net Sales ||15130.55 ||14264.18 |
|Earnings before Interest Tax and Depreciation and Amortization (EBITDA) ||1440.15 ||1293.07 |
|Finance Cost ||16.55 ||24.83 |
|Depreciation ||353.27 ||331.86 |
|Profit/(Loss) Before Tax (PBT) ||1108.12 ||954.93 |
|Provision for Taxation: || || |
|- Current ||236.88 ||203.13 |
|- Deferred Tax ||55.05 ||(0.58) |
|Prof/(Loss) After Tax (PAT) ||816.19 ||752.38 |
|Profit/(Loss) Account Balance at the beginning of the year ||2996.29 ||2451.37 |
|Profit available for appropriations ||3812.48 ||3203.75 |
|Appropriations: || || |
|Dividend on Equity Shares ||64.65 ||172.37 |
|Tax on Dividend ||13.16 ||35.09 |
|Transferred to General Reserves ||0.00 ||0.00 |
|Profit/(Loss) Account balance at the end of the year ||3734.67 ||2996.29 |
Your Company recorded total sales of ' 15130.55 million in FY2017 as compared to '14264.18 million in FY2016. It reported a 11.4% growth in EBITDA largely based on volumegrowth in Aftermarket Passenger Cars and Commercial Vehicles Business Units and controlon raw material costs. The Company improved its EBITDA to 9.4% in FY2017 from 9.0% inFY2016. The result was a Profit After Tax of ' 816.19 million in FY2017 as compared to '752.38 million in FY2016 representing 8.5% growth. The earnings per Share increased to '5.68 per share in FY2017 from ' 5.24 per share in FY2016.
The Company reported an improvement in EBITDA margins from 9.2% in the first quarter ofthe year under review to 9.4% in the last quarter. As a result the Company's annualEBITDA margin strengthened from 9.0 % in FY2016 to 9.4% in FY2017.
The prospects of the Company appear reasonably optimistic for a number of reasons. Theforecast for FY2018 is expected to be better. A positive outlook on the monsoon this yearand implementation of GST may lead to a spurt in demand and sales. The Government'sMake in India' initiative is likely to strengthen the case for manufacturing andwith a moderate rise expected in GDP growth the Indian Automobile and Auto Componentssector appears poised for a reasonable growth. The Company's performance in theAftermarket and Exports is expected to be better due to an improved thrust and focus.
The Company is pleased to report that operating efficiency across all its manufacturingplants enhanced during the year and led to improved profitability. Higher operatingefficiency was a result of process improvements constant benchmarking with available bestpractices leveraging technology collaborations employee training and a conducive workingenvironment at all its plant locations.
Your Directors declared an interim dividend of ' 0.45 per equity share of ' 1 each(previous year ' 0.45 per equity share of ' 1 each). This dividend amounted to ' 64.64million (previous year ' 64.64 million). This was distributed to shareholders whose namesappeared on the Register of Members as on November 22 2016. Your Directors furtherrecommended for the approval of shareholders a final dividend of ' 0.85 per equity shareof ' 1 each (previous year 0.75 per equity share of ' 1 each). This proposed dividend willamount to ' 122.10 million (previous year ' 107.73 million). The dividend subject to itsdeclaration will be distributed to shareholders whose names appear on the Register ofMembers on Wednesday August 02 2017.
During the year under review the unclaimed final dividend pertaining to the FY2009 andunclaimed interim dividend pertaining to the FY2010 was transferred to the InvestorEducation and Protection Fund following a due notice to the members.
The paid-up Equity Share Capital as on March 31 2017 was ' 143.64 million. During theyear under review the Company did not issue any shares and did not grant stock options orsweat equity shares to employees. The details of the shareholding of the Directors are asmentioned below as on March 31 2017:
|Sr. No. Name of Director ||Shareholding ||% of Holding |
|1 Mrs. Anjali Singh ||641942 shares ||0.45% |
|2 Mr. Manoj Kolhatkar ||4000 shares ||0.003% |
The Company has discontinued the acceptance of deposits with effect from November 092015. Accordingly no further deposits shall be accepted by the Company under the saidscheme. The deposits already accepted under the said scheme upto November 07 2015 shallbe served till their applicable tenure. The details pertaining to deposits is as under:
|Sr. No. Details ||Amount (' in million) / Remark |
|i Public deposits accepted during the year ||Nil |
|ii Deposits that remained unpaid or unclaimed as at the end of the year ||29.83 |
|iii Whether there has been any default in repayment of deposits or payment of interest thereon: || |
|a. at the beginning of the year ||Nil |
|b. maximum during the year ||Nil |
|c. at the end of the year ||Nil |
|iv Details of deposits which are not in compliance with the requirements of Chapter V of the Act ||Nil |
MEETINGS OF THE BOARD
The Board of the Company comprised six Directors as on March 31 2017. The Boardcomprised Mrs. Anjali Singh Mr. Manoj Kolhatkar Mr. Pradipta Sen Mr. Atul Khosla Mr.Aditya Vj and Mr. Jagdish Kumar. The details of the meetings during the financial yearunder review are mentioned below.
|Sr. No. Date of Meetings ||Board Strength ||No. of Directors Present |
|1 May 20 2016 ||6 ||6 |
|2 July 29 2016 ||6 ||6 |
|3 November 11 2016 ||6 ||6 |
|4 February 02 2017 ||6 ||5 |
|5 March 30 2017 ||6 ||6 |
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The composition of the Board of Directors of the Company is as below.
|Sr. No. Name of Director ||DIN ||Position |
|1 Mrs. Anjali Singh ||02082840 ||Non-Executive Chairperson |
|2 Mr. Manoj Kolhatkar ||03553983 ||Managing Director |
|3 Mr. Pradipta Sen ||00051758 ||Non-Executive Independent Director |
|4 Mr. Atul Khosla ||02674215 ||Non-Executive Independent Director |
|5 Mr. Aditya Vij ||03200194 ||Non-Executive Independent Director |
|6 Mr. Jagdish Kumar ||00318558 ||Non-Executive Director |
In accordance with the Article 128 129 and 130 of the Articles of Association of theCompany and Section 152(6)(d) and (e) of the Companies Act 2013 Mr. Jagdish Kumarretires by rotation and being eligible offers himself for reappointment.
The appointment of Mrs. Anjali Singh as Executive Chairperson of the Company for aperiod of 5 years w.e.f. May 15 2017 pursuant to provisions of Section 196 of theCompanies Act 2013 being a Whole-time Director/ Key Managerial Personnel is proposed inthe ensuing Annual General Meeting.
The details of the Directors who are proposed to be appointed/re-appointed in theensuing Annual General Meeting forms part of the Corporate Governance Report. During theyear under review no changes occurred in the constitution of the Board of Directors.
B. Declaration of independence
The Non-Executive Independent Directors enlisted below provided a declaration underSection 149 (6) of the Companies Act 2013 that they meet the criteria of independence.The declarations from the Directors is attached as Annexure A.
|Sr. No. Name of Director |
|1 Mr. Pradipta Sen |
|2 Mr. Atul Khosla |
|3 Mr. Aditya Vij |
C. Formal Evaluation
Pursuant to the provisions of the Companies Act 2013 and the Regulations of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board carried outan annual evaluation of its own its Committees the Chairperson and the Directorsindividually. A detailed note on the manner of evaluation forms a part of the CorporateGovernance Report.
D. Audit Committee
The Audit Committee was constituted as per the provisions of the Companies Act 2013and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Composition of the Audit Committee is as below:
|Sr. No. Name of Director ||DIN ||Position |
|1 Mr. Atul Khosla ||02674215 ||Non-Executive Independent Chairman |
|2 Mr. Pradipta Sen ||00051758 ||Non-Executive Independent Member |
|3 Mr. Jagdish Kumar ||00318558 ||Non- Executive Member |
E. Key Managerial Personnel
During the year under review there has been no change in the Key Managerial Personnelof the Company.
COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION
The Company has in place a Nomination and Remuneration Policy which was duly approvedby the Board in the Financial Year 2014-15. The remuneration in all forms paid to theManaging Director was in compliance with the said Policy. The remuneration toNon-Executive Independent Directors in the form of commission and sitting fees was alsopaid in terms of the said Policy. The disclosure of the details of the Nomination andRemuneration Policy forms part of the Corporate Governance Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
Disclosures relating to the Loans Guarantees or Investments as defined under Section186 of the Companies Act 2013 forms part of the notes to the Financial Statement.
A Vigil Mechanism in the form of an Ethics Helpline and Whistle Blower Policy wasestablished by the Company to trace and deal with instances of fraud and mismanagement.The details/report for the same was directly reported to the Audit Committee Chairman. Abrief note on the Whistle Blower Policy is disclosed in the Corporate Governance Report.The Policy is also posted on the Company's website.
INTERNAL CONTROLS AND SYSTEMS
The Company has satisfactory internal control systems and vigilance systems which arecontinuously evaluated by professional internal and statutory auditors of repute. TheCompany continues to improve the present internal control systems by implementation ofappropriate policy and processes. The Company is focused on incorporating the controls andchecks in ERP system of SAP. The Company has in place an adequate system to ensureefficacy of operations compliance with applicable legislation safeguarding of assetsadherence to management policies and promotion of ethical conduct.
A dedicated legal compliance cell ensures that the Company conducts its business withhigh standards of legal statutory and regulatory compliances. The Audit Committee reviewsthe internal control systems and procedures periodically. The Company maintains a systemof Internal Financial Controls (IFC) designed to provide a high degree of assurance onvarious business areas such as Procure to Pay Inventory Order to Cash Fixed AssetsHuman Resource Legal Book Close and MIS regarding effectiveness and efficiency ofoperations reliability of financial controls and compliance with laws and regulations.This is done by recording the results of key manual controls status across the Company andalso retaining the back-up of the same in a common secured server for future reference.
BUSINESS RISK MANAGEMENT
In a competitive auto environment like most other Tier- I companies Gabriel too facesseveral threats. Competition in the suspension industry is expected to put pressure fordeveloping competitive products with high performance quality and longer life. TheCompany's business is exposed to many internal and external risks which were identifiedafter proper risk assessment. Some of the key risks identified are a threat to marketshare due to global competition procurement of few components exports and regulatorycompliance. As per the Policy the risks have been reviewed by the senior management aswell as short term and long term risk mitigation plans have been identified. A RiskCommittee formed under the Chairmanship of the Chief Financial Officer meets every quarterto review progress and an update of the same is presented to the Board. During the yearunder review specific exercise was carried out to revisit all risks and update the RiskRegister. Two risks on which substantial risk mitigation was completed were removed andtwo risks related to Operations Management and Potential Risk of Non-compliances atplants were added. The key risks of the organization are:
The Company is proactively prepared for a sectoral slowdown by widening its productbasket and cushioning it from any downturn. The Company singled out Exports andAftermarket Business Unit as key growth verticals for the future and reformulated tacticsto enhance revenue shares from these segments without compromising growth with OEMs.
The Company is working closely with customers to develop products collaboratively. TheCompany has empowered its employees to seek and eliminate operating inefficiencies thusstrengthening margins in the process. The Company invested in renewable energy with theobjective to moderate costs across the long term.
The Company has been engaged in vendor rationalization with the objective of enhancingpurchasing efficiencies. The Company has identified over reliance on single sourcedvendors as a risk. It has adopted strategic partnerships alternate sourcing and vendorconsolidation for high-risk vendors. The Company used eSourcing to get additional costreductions from existing / new vendors on regular basis.
The Company keeps up with its strategy to engage into technology collaborations toenhance product and process competencies. It has set up a dedicated team to focus onExports for the regions of South Asia ASEAN Middle East and Latin America.
The Company conducts comprehensive checks to ensure that all transactions are correctlyauthorized recorded and reported. Its internal control system is supplemented by anextensive array of internal audits reviews of findings and assessment of improvementopportunities. The Company is improving its established Intranet-based software to derivea visual confirmation of compliance across its plants. The Company identified additionalrisk of Statutory and Environment Health and Safety (EHS) compliance at key vendors forcontinuous monitoring.
CONTRACT AND ARRANGEMENT WITH RELATED PARTIES
During the year the Company has not entered into any contract/ arrangement/transaction with related parties which were either not at an arm's length or not in theordinary course of business and further could be considered material in accordance withthe Policy of the Company on materiality of related party transactions.
Hence there is no information to be provided in Form AOC-2 while the particulars ofall Related Party Transactions in terms of Accounting Standards-18 are forming part of thefinancial statements.
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.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134(m) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 information relating to the foregoing matters is attached asAnnexure C to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed by the regulators or courts havingcompetent jurisdiction which could have an impact on the business of the Company underthe going concern concept.
CORPORATE GOVERNANCE REPORT
A separate section on Corporate Governance is included in the Annual Report and theCertificate from the Company's Auditors confirming the compliance of conditions ofCorporate Governance as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed thereto.
MANAGEMENT DISCUSSION ANALYSIS
In terms of the provisions of Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management's Discussion and Analysis is set out inthis Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the requirement of Section 135 of the Companies Act 2013 the Companyconstituted a CSR Committee and CSR Policy to track related transactions and initiatives.The detailed Policy is posted on the Company's website. Further a detailed report on theCSR activities inter- alia disclosing the composition of CSR Committee and CSR activitiesis detailed in Management Discussion Analysis and also as Annexure B.
PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has zero tolerance for sexual harassment at workplace. The Company has inplace a Prevention of Sexual Harassment Policy in line with the requirements of the SexualHarassment of Women at the Workplace (Prevention Prohibition and Redressal) Act 2013.Through the Policy the Company has constituted a Committee and established a grievanceprocedure through Internal Complaints Committee for protection against victimization.
The Company is committed to provide a healthy environment to all its employeesconducive to work without the fear of prejudice and gender bias. During the year underreview 1 complaint of sexual harassment was raised the same was disposed and appropriateaction was taken within statutory timelines.
In 54th Annual General Meeting held on July 29 2016 M/s. B. K. Khare and Co.Chartered Accountants have been appointed as Statutory Auditors of the Company for aperiod of 5 years. Ratification of appointment of Statutory Auditors for the 2nd year isbeing sought from the Members of the Company at this AGM. Further M/s. B. K. Khare andCo. Chartered Accountants have under Section 139(1) of the Act and the Rules framedthereunder furnished a certificate of their eligibility and consent for appointment.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedKPRC & Associates a firm of Company Secretaries in practice to undertake theSecretarial Audit. The Self Explanatory report of the Secretarial Audit is attached asAnnexure D.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return as per Section 92 (3) of the Companies Act 2013 andRule 12 (1) of the Companies (Management and Administration) Rules 2014 in the Form MGT 9is attached as Annexure E.
PARTICULARS OF EMPLOYEES
The statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required under Section 197(12) of the Act read with Rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in a separate annexure forming part of this report. Further the report andthe accounts are being sent to the members excluding the aforesaid annexure. In terms ofSection 136 of the Act the said annexure is open for inspection at the Registered Officeduring business hours on working days of the Company. Any shareholder interested inobtaining a copy of the same may write to the Company Secretary.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
1. In preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures.
2. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent to give a true and fairview of the state of affairs of the Company at the end of the financial year March 312017 and of the Profit of the Company for that period.
3. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this act for safeguarding theassets of the Company and for preventing / detecting fraud and other irregularities.
4. The Directors have prepared the annual accounts on a going concern basis.
5. The Directors have laid down internal financial controls followed by the Company andthat such financial controls are adequate and operating effectively.
6. The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Your Directors wish to thank the collaborators technology partners financialinstitutions bankers customers suppliers shareholders and employees for theircontinued support and co-operation.
For and on behalf of the Board
Place: New Delhi Chairperson
Date: May 15 2017 (DIN 02082840)