Honda Siel Power Products Ltd.
|BSE: 522064||Sector: Engineering|
|NSE: HONDAPOWER||ISIN Code: INE634A01018|
|BSE LIVE 13:27 | 14 Dec||1310.00||
|NSE 13:39 | 14 Dec||1314.65||
|Mkt Cap.(Rs cr)||1,328|
|Mkt Cap.(Rs cr)||1328.34|
Honda Siel Power Products Ltd. (HONDAPOWER) - Director Report
Company director report
Your Directors are pleased to present the 32nd Annual Report together withAudited Financial Statements of the Company for the year ended March 312017.
1. Financial Highlights
(' in lakhs)
Results of Operations and the state of Company's affairs
Your company achieved aggregate Gross sales of ' 72844 lakh in 2016-17 (as against '70121 lakh in 2015-16). This marks a growth of 3.9% over the previous year.
The year saw the introduction of a Petrol Run Mini Tiller and 2HP Engine for the vastand growing agriculture and horticulture markets. We expect these introductions to helpboost farm productivity.
A detailed report on operations titled Management Discussion and Analysis Report'is annexed to the Board's Report as Annexure-A and forms part hereof.
Your Directors recommend a dividend of ' 7.50/- per equity share of ' 10/- each (75%)for the year ended 3151 March 2017 (previous year 60%). The total outgo on thisaccount (including dividend tax) will be ' 916 lakh.
3. Transfer of Amounts to Investor Education and Protection Fund
In compliance with Section 125 of the Companies Act 2013 the Company has transferreda sum of ' 352728/- during the Financial Year 2016-17 to the Investor Education andProtection Fund established by the Central Government. The said amount representsunclaimed dividend which was lying with the Company for a period of seven years from thedue date of payment.
At the beginning of the financial year reminders for claiming/ encashing dividendlying with the Company as aforesaid are sent to all such shareholders prior totransferring the same to Investor Education and Protection Fund.
4. Transfer of Shares to the Investor Education and Protection Fund
In terms of provisions of Section 124(6) of Companies Act 2013 and Investor Educationand Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 sharesof the Company in respect of which dividend entitlements have remained unclaimed forseven consecutive years or more are required to be mandatorily transferred by the Companyto Investor Education and Protection Fund.
In terms of aforementioned provisions/rules individual notices have been sent toconcerned shareholders providing them an opportunity to claim dividend for 2009-10onwards. The said notice alongwith the details of concerned shareholders was published inthe leading news papers having wide circulation. Details have also been updated on thewebsite of the Company simultaneously.
5. Environment Protection and Safety
Your Company is committed towards protection and safety of environment. This isdepicted in overall HONDA Philosophy "BLUE SKIES FOR OUR CHILDREN" and isadopted by your Company also. All associates strive towards controlling emissionseffluents and waste disposal arising out of manufacturing processes product and services.Your Company has been achieving continuous improvement in safety performance through acombination of systems and processes as well as co-operation and support of allstakeholders.
A statement on environmental protection and safety conservation of energy technologyabsorption foreign exchange earnings and outgo is annexed as Annexure-B and forms part ofthis report.
6. Occupational Health & Safety
Your Company believes in Zero Harm'. The Company's vision is to improve healthand safety standards for the people working in the capacity of employees contractors orin any other role. Efforts are taken to minimize activities which may affect the healthand safety in work place or adversely impact the life of communities living near ourplant. To promote this we are encouraging the use of renewable resources as well asrecycled waste. Further steps are taken for optimum utilization of plant with leastdisposal of harmful gases in environment.
7. Indian Accounting Standards (IND AS)
Your Company has adopted IND-AS with effect from April 01 2017. The Ministry ofCorporate Affairs has made New Set of Accounting Standards mandatory for different typesof companies with different compliance dates vide notification dated 16thFebruary 2015 notifying the Companies (Indian Accounting Standard) Rules 2015. Pursuantto this effective first quarter of the Financial Year 2017-18 the reports shall beprepared in line with the requirements of IND-AS.
8. Extract of Annual Return
Pursuant to section 92(3 ) of the Companies Act 2013 (the Act') and rule 12(1)of the Companies (Management and Administration) Rules 2014 extract of Annual Return isAnnexed as Annexure-C and forms part of this report.
9. Details of Board Meetings
Minimum four Board meetings are held annually. In case of business exigencies orurgency of matters resolutions are passed by circulation. Compliance reports of all lawsapplicable to the Company are reviewed by the Board quarterly.
The Board is given presentations / briefed on areas covering operations of the Companybusiness strategy and risk management practices before approving the quarterly / annual
financial results ofthe Company.
The agenda and notes thereon are circulated to Directors in advance and in the definedagenda format. All material information is incorporated in the agenda for facilitatingmeaningful and focused discussions at the meeting. Where it is not practicable to attachany document to the agenda i.e. the document which contains price sensitive informationand in respect of which consent of the Board of Directors is obtained for providing thesame at a shorter notice of less than 7 days it is placed before the meeting withspecific reference to this effect in the agenda.
The Company Secretary records minutes of proceedings of each Board and Committeemeeting. Draft minutes are circulated to Board/Board Committee members for their comments.The minutes are entered in the Minutes Book within 30 days from the conclusion of themeeting.
During the year under review four Board Meetings were held as per the followingdetails:
Resolutions by Circulation were passed on August 23 2016 and December 27 2016.
All statutory and other important items/ information were placed before the Board forapproval/review.
10. Committees of the Board
The details of composition of the Committees of the Board i.e. Audit Committee;Stakeholders Relationship Committee; Nomination and Remuneration Committee; CorporateSocial Responsibility Committee; Board Committee on Financial Matters; and Risk ManagementCommittee brief terms of reference thereof and details of meetings held and attended bythe Members during the year are provided in the Corporate Governance Report forming parthereof.
11. Managing the Risks of Fraud Corruption and Unethical Business Practices
The Company has formulated following policies with a view to adhere to ethicalstandards in order to ensure integrity transparency independence and accountability indealing with all stakeholders:
a.) Vigil Mechanism / Whistle Blower Policy
As per the provisions of Section 177(9) of the Companies Act 2013 read with Rulesthereof and Regulation 4(2)(d) (iv) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and in line with the commitmentof the Company to highest standards of ethical moral and legal business conduct andtransparent approach the Vigil Mechanism/ Whistle Blower Policy in the name of BusinessEthics Proposal Line (BEPL) has been established.
For the effective implementation of the policy the Company has constituted a BusinessEthics Committee
(BEC) comprising of senior executives/directors to provide an opportunity to allDirectors Associates Vendors Customers to access BEC in good faith in case theyobserve an unethical or improper practice in the Company.
The detailed policy is posted on the Company's website at https://www.hondasielpower.com.
b.) Risk Management Policy
A key factor in determining a Company's capacity to create sustainable value is thelevel of risk that the Company is willing to take (at strategic and operational levels)and its ability to manage them effectively.
For effective and efficient management of risk and to address challenges the Companyhas formulated Risk Management Policy. The Company has also set up a Risk ManagementCommittee to monitor the risks and their mitigating actions within the purview of the saidpolicy and current risk management best practices.
To facilitate the achievement of the Company's objectives operational effectivenessand efficiency protection of people and assets informed decision-making and compliancewith applicable laws and regulations the Company during the period under reviewdeveloped a risk Management Manual forming part of the Risk Management Policy to reviewthe adequacy and effectiveness of the aforementioned policy and management procedures forproviding a sound internal control framework over the Company's major business processes(including but not limited to financial insurance legal HR and IT processes).
Risk Management Policy of the Company may be accessed at Company's website at the link
12. Directors' Responsibility Statement
Pursuant to the requirement of clause (c) of sub-section (3) ofSection 134 oftheCompanies Act 2013 your Directors confirm that:
(a) 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 theCompanies Act 2013 have been followed and there are no material departures from thesame;
(b) Accounting policies have been selected and applied consistently and judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the profit of theCompany for the year ended on that date;
(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) The annual accounts have been prepared on a going concern' basis;
(e) Internal Financial Controls have been laid down and are being followed by theCompany and that such Internal Financial Controls are adequate and are operatingeffectively; and
(f) Proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems are adequate and operating effectively.
13. Particulars of loans guarantees or investments made under Section 186 of theCompanies Act 2013The Company has not made any loans guarantees or investments underSection 186 of the Companies Act 2013 during the year under review.
i) Statutory Auditors
The term of office of M/s. B S R & Co. LLP Chartered Accountants StatutoryAuditors of the Company will expire with the conclusion of forthcoming Annual GeneralMeeting of the Company. Resolution for appointment of M/s. Price Water House CharteredAccountants LLP (FRN 012754N/ N500016) as Statutory Auditors of the Company in place ofthe M/s. B S R & Co. LLP being the retiring Auditors pursuant to Section 139 of theCompanies Act 2013 forms part of the Notice.
M/s. B S R & Co. LLP over many years have successfully met the challenge that thesize nature of the industry and scale of the Company's operations pose for Auditors andhave maintained the highest level of governance rigor and quality in their audit. TheBoard places on record its appreciation for the services rendered by M/s. B S R & Co.LLP as the Statutory Auditors of the Company.
The Report given by the Auditors on the Financial Statements of the Company is part ofthe Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the Auditors in their Report.
ii) Cost Auditors
In terms of the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors of theCompany has on the recommendation of the Audit Committee approved the appointment of M/sRakesh Singh & Co. Cost Accountants as Cost Auditors of the Company for the FinancialYear 2017-18 at a remuneration as mentioned in the Notice convening 32ndAnnual General Meeting for conducting the audit of the cost records maintained by theCompany subject to the approval of the Members on the remuneration to be paid to the CostAuditor. M/s Rakesh Singh & Co. Cost Accountants have vast experience in the field ofcost audit and have conducted the audit of the cost records of the Company for the pastseveral years.
A certificate from M/s Rakesh Singh & Co. has been received to the effect thattheir appointment as Cost Auditors of the Company if made would be in accordance withthe limits specified under Section 141 of the Companies Act 2013 and Rules framedthereunder.
iii) Secretarial Auditor and Secretarial Audit Report
The Board had appointed M/s Tanuj Vohra & Associates Company Secretaries to carryout Secretarial Audit under the provisions of Section 204 of the Companies Act 2013 forthe financial year 2016-17.
There were no qualifications reservations or adverse remarks given by SecretarialAuditors of the Company. The detailed report on the Secretarial Audit is annexed asAnnexure-D to this Report.
15. Related Party Transactions
In line with the requirements of the Companies Act 2013 and Listing Regulations allrelated party transactions are entered into on arm's length basis in the ordinary courseof business.
Accordingly no transactions are being reported in Form AOC-2 in terms of Section 134of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014.
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015prior approval of the Audit Committee is obtained for all related party transactions.Omnibus approval is obtained for un-foreseen transactions. A report on the transactionsspecifying the nature value and terms and conditions of the same done during the quartervisa-vis the approval granted are presented to the Audit Committee on a quarterly basisfor its review. The transactions which are likely to cross materiality threshold asprescribed are placed before the Members for their approval.
The Related Party Transactions Policy as approved by the Board may be assessed at theCompany's website at the weblink: https://www.hondasielpower.com .
16. Details in respect of adequacy of Internal Financial Controls with reference to theFinancial Statements
The Company has Internal Financial Controls (IFC) framework commensurate with thesize scale and complexity of its operations. The framework has been designed to providereasonable assurance with respect to recording and providing reliable financial andoperational information complying with applicable laws safeguarding assets fromunauthorized use and embezzlement executing transactions with proper authorization andensuring compliance with corporate policies.
The systems standard operating procedures and controls are implemented by the Companyreviewed by the Internal Auditors whose findings and recommendations are placed before theAudit Committee. The Internal Auditors develop an annual audit plan based on the riskprofile of the business activities. The Internal Audit plan is approved by the AuditCommittee which also reviews compliance to the plan. The Internal Auditors monitor andevaluate the efficacy and adequacy of internal control systems in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. Based on the report of internal audit function process owners undertakecorrective action(s) in their respective area(s) and thereby strengthen the controls.Significant audit observations and corrective action(s) thereon are presented to the AuditCommittee. The Audit Committee reviews the reports submitted by the Internal Auditors ineach of its meeting.
The controls based on the prevailing business conditions and processes have beentested during the year and no reportable material weakness in the design or effectivenesswas observed. The framework on IFC over Financial Reporting has been reviewed by theinternal and external auditors.
17. Corporate Social Responsibility initiatives
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) Committee and statutory disclosures with respect to the CSRCommittee and an Annual Report on CSR Activities forms part of this Report as Annexure-E.
The CSR Policy may be accessed on the Company's website at the linkhttps://www.hondasielpower.com .
18. Criteria for appointment of Directors and remuneration to be paid to Directors KeyManagerial Personnel and other employees
Your Company has in place policies on Criteria for Appointment of Directors' andRemuneration Policy for Directors KMPs and all other employees of the Company'.
The policies inter-alia requires the Directors to be of high integrity with relevantexpertise and experience so as to have a diverse Board. The Policies further lay down thepositive attributes/ criteria which the Nomination and Remuneration Committee takes intoconsideration while recommending the candidature for the appointment as Director.
Policy on Criteria for appointment of Directors' and Remuneration to bepaid to Directors Key Managerial Personnel (KMP) and other employees etc.' is annexed tothis Report as Annexure-F.
19. Criteria of Independence
The Nomination and Remuneration Committee assesses the independence of Directors at thetime of appointment / reappointment pursuant to the criteria laid down by the Company inline with the requirements of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Determination of independence is beingreassessed when any new interests or relationships are disclosed by a Director.
20. Declaration by Independent Directors
The Board of your Company consists of Dr. Dharam Vir Kapur Mr. Ravi Vira Gupta Mr.Manoj Arora and Ms. Alka Marezban Bharucha as Independent Directors. These Directors haveconfirmed that they fulfil all the requirements as stipulated in Section 149(6) of theCompanies Act 2013 so as to qualify themselves to be appointed as Independent Directorsunder the provisions of the Companies Act 2013 and the Rules thereunder.
21. Directors and Key Managerial Personnel (KMP)
i) Retirement by Rotation
In accordance with the provisions of the Companies Act 2013 and applicable Regulationsissued by the Securities & Exchange Board of India Mr. Yoshifumi Iida (DIN 07136925)Managing Director designated as President & CEO of the Company will retire byrotation at the forthcoming Annual General Meeting (AGM') and being eligible offershimself for reappointment. The Board recommends his re-appointment.
Necessary resolution for the re-appointment of Mr. Yoshifumi Iida and disclosure interms of the Secretarial Standard 2 the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 are given in the Notice convening the Annual GeneralMeeting.
As per the confirmations received from Mr. Iida he is not disqualified for beingappointed as Director as specified in Section 164(2) (a) and (b) of the Companies Act2013.
ii) Revision in remuneration
Subsequent to the recommendation of the Nomination and Remuneration Committee on May15 2017 revised remuneration to be paid to Mr. Yoshifumi Iida President & CEO andMr. Hiroyoshi Sugimizu Whole Time Director of the Company has been approved by the Boardof Directors on May 15 2017. Your Board recommends the revised remuneration of Mr.Yoshifumi Iida and Mr. Hiroyoshi Sugimizu for your approval.
Re-appointment and revision in remuneration
The Board of Directors in its Meeting held on February 10 2017 consideredre-appointment of Mr. Vinay Mittal as the Whole Time Director of the Company with effectfrom April 01 2017 for a period of five years subject to the approval of the Members atthe Annual General Meeting
of the Company on the existing terms and conditions as approved by the Members intheir Meeting held on August 112016.
Subsequently the Board of Directors in its Meeting held on May 15 2017 on therecommendation of Nomination and Remuneration Committee at its Meeting held on May 152017 approved revision in remuneration of Mr. Vinay Mittal from 01.04.2017 to 31.03.2018(both days inclusive).
As per the confirmations received from Mr. Mittal he is not disqualified for beingappointed as Director as specified in Section 164(2) (a) and (b) of the Companies Act2013.
Your Board recommends re-appointment of Mr. Vinay Mittal as the Whole Time Director ofthe Company for a further period of 5 years with effect from April 01 2017. Revision inremuneration of Mr. Vinay Mittal from 01.04.2017 to 31.03.2018 (both days inclusive) asper the details provided in the Notice convening the Annual General Meeting is alsorecommended for your approval.
22. Board/Directors' Evaluation
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations"). The performance of the Board was evaluated on the basis of thecriteria such as the Board composition and structure effectiveness of Board processesinformation and functioning etc. The performance of the committees was evaluated on thebasis of the criteria such as the composition of Committees effectiveness of Committeemeetings etc. The Board and the Nomination and Remuneration Committee reviewed theperformance of the individual Directors on the basis of the criteria such as thecontribution of the individual Director to the Board and Committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated. Performance evaluation of independent directors was done by the entire Boardexcluding the Independent Director being evaluated.
The review concluded by affirming that the Board as a whole as well as all of itsMembers individually and the Committees of the Board continued to display commitment togood governance ensuring a constant improvement of processes and procedures. It wasfurther acknowledged that every individual Member and Committee of the Board contributeits best in the overall growth of the organization.
23. Explanations or comments on qualifications reservations or adverse remarks ordisclaimers made by the Auditors in their reports.
There were no qualifications reservations or adverse remarks by the Auditors in theirrespective reports.
The Company has not accepted any deposits from the public/ members under Section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 duringthe year.
25. Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
26. Sweat Equity
The Company has not issued any Sweat Equity Shares during the year under review.
27. Bonus Shares
No Bonus Shares were issued during the year under review.
28. Employees Stock Option Scheme
The Company has not provided any Stock Option Scheme during the year under review.
29. Significant and material orders passed by the regulators
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations.
30. Corporate Governance
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the same. The new Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 have strengthened the governance regime in thecountry. Your Company is in compliance with the governance requirements provided under thenew law and had proactively adopted many provisions of the new law ahead of time. Aseparate section on Corporate Governance is annexed to this report as Annexure-G.
The Auditors' Certificate certifying the Company's compliance with the requirements ofCorporate Governance in terms of the Listing Regulations is annexed as Annexure-J. andforms part of the Boards' Report.
31. Sexual Harassment of Women at Workplace
The Company has zero tolerance towards sexual harassment at the workplace and to thisend has adopted a policy in line with the provisions of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.
All employees (permanent contractual temporary trainees) are covered under the saidpolicy. An Internal Complaints Committee (ICC) has also been set up to redress complaintsreceived on sexual harassment.
During the Financial Year under review one complaint of sexual harassment was filedwith the Company and same is being investigated by ICC and final report alongwith itsfindings shall be submitted to Business Ethics Committee for further action if any.
32. Code of Conduct and Ethics
The Board of the Company has adopted a Code of Conduct and Ethics for the Directors andSenior Executives of the Company. The object of the Code is to conduct the Company'sbusiness ethically and with responsibility integrity fairness transparency and honesty.The Code sets out a broad policy for one's conduct in dealing with the Company fellowDirectors and Employees and in the environment in which the Company operates. The Code isavailable on the Company's Corporate websitewww.hondasielpower.com ). A declaration signedby President & CEO of the Company with regard to the compliance with the Code by theMembers of the Board and Senior Executives is annexed as Annexure-H and forms part hereof.
33. Particulars of Employees
Particulars of employees and the ratio of the remuneration of each director to themedian employee's remuneration and other details in terms of Section 197 of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are annexed as Annexure-K hereof. Particulars of employees underSection 197(12) read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. However in terms of Section136(1) of the Companies Act 2013 the Report and Accounts are being sent to the membersand others entitled thereto excluding this statement. The details are available forinspection by the Members at the Registered Office of the Company during working hours onworking days for a period of 21 days before the ensuing Annual General Meeting. However acopy of the Statement shall be made available to any member on demand.
34. Material changes and commitments affecting the financial position of the Companyafter 31st March 2017
There were no material changes and commitments affecting thefinancial position of theCompany after 3151 March 2017.
Your Directors wish to thank and acknowledge with gratitude the co-operationassistance and support received from the Central Government State Government of UttarPradesh Company's Bankers Shareholders Dealers Vendors Indian and Japanese Promotersof the Company and other Business Associates in the management of affairs of the Company.
The Directors also wish to place on record their sincere appreciation and gratitudetowards the contribution made by every employee of the Company.
The portable generator business continues to be impacted adversely due toimprovement in power situation across the country. However adverse weather conditions andGovernment institutional business helped recover sales during the year.
Government focus on "Digital India" and endeavour to transform to aless cash economy implies need for 24x7 connectivity and thereby uninterrupted power. Yourcompany is making efforts to get its range of Emission Compliant gensets listed forregular Government and Institutional business. Superior technology and advanced featureslike the unique "Fuel Injection Technology" (FI) in the 7KVA range helpcustomers to achieve savings on their fuel bill and cater to the demand fornicheapplications.
The Government of India plans to expand and integrate many social initiatives.Many of these are related to Information Technology Education and Rural FinancialInclusion. The success of these initiatives require investment in power back up as well.Your company has been making efforts to associate and offer its products to support suchendeavours.
The newly introduced emission compliant models are exclusively petrol run. Whileyour Company is promoting the fuel efficiency feature of these generators fluctuatingpetrol prices are a cause of concern.
Power deficit has shown a declining trend and the demand of gensets in urbanareas has declined.
Demand for our generators is expected to continue for application based salesunder inclement weather conditions and the need for uninterrupted power. Further therural market offers opportunities for growth.
GENERAL PURPOSE ENGINES AND WATER PUMPING SETS
Total Engine and Water Pump business registered a growth over the previous year.Engine business sales in particular
were impressive due to good response for Sprayer application usage and support forAgriculture and Horticulture sectors from various State Governments.
Honda advanced technology; Over Head Valve (OHV) engines fuelled by Petrol arebeing increasingly accepted due to their fuel efficiency compactness and environmentfriendly features. This year your company introduced a new 2HP Petrol Engine. The newoffering has received a good response from channel partners. Key usage is for horticultureand construction applications.
Engine sales to Original Equipment Manufacturers (OEM) have grown over theprevious year for Agriculture centered products such as Knapsack Sprayers. We see the OEMbusiness as a major pillar of our business in the future.
Water pump business was challenging and declined due to demonetization impactduring the agricultural season (November-December) and subsidy process change in keymarkets of Eastern India.
OHV engine based Water Pump sales continue with their upward trend and inalignment with your Company's efforts to contribute to environment friendly products forthe rural markets.
In its endeavour to reach closer to the end customer your Company conductedextensive demos in rural areas targeting the farming community. This helped spreadawareness about our products and show case their utility for farm operations. Incrementalsales have accrued.
Farm mechanization increasing farm incomes Government support and scarcity offarm labour are triggers for increasing demand for our engines.
The OHV petrol run engine based Water Pumps and Engine thereof are expected toboost demand in areas where kerosene availability is scarce. Government Support schemesand subsidies will help us leverage our presence in these segments.
Unfavourable monsoon subsidy disbursal and allocations.
Agriculture sector is expected to continue receiving support from theGovernment.
Considering the competitive cost structure in India the OEM market for agriculturaland construction segments is also developing. Your Company is looking at increasing itspresence in these segments by working with small manufacturers. Applications such as hightree and knap sack sprayers are gaining popularity and your Company is working veryclosely with select good quality assemblers to increase volumes and counter low pricedimported products.
Honda Brush cutters have been able to provide an affordable and efficientmechanized solution for farm activities like de- weeding and harvesting. Honda offers itsenvironment friendly cutting edge "4 Stroke" technology based fuel efficientproducts for such usage.
Honda models are registering promising growth and acceptability across thecountry.
Your company introduced a Petrol run New 2HP Tiller this year
and the product has received an encouraging response from vegetable farmers.
New tiller attachments for multiple applications that boost farm productivitywere introduced. Tiller demand for initial land preparation and de-weeding is steadilygrowing amongst progressive farmers.
Overall Export business declined over the previous year due to drop in keymarkets of the Middle East Africa and South America.
Generator sales contribution continues to be the highest amongst all exportproduct categories. Business from North American and European markets has beenencouraging.
The new Mini Tiller F300 has been exported to Asian markets such as IndonesiaTaiwan and Korea. Initial reports being positive repeat business is expected in thefollowing year.
Price competitiveness in emerging markets is an area of concern.
Your company is making efforts to diversify its export mix with petrol fuelledWater Pumps and Tillers.
RISKS AND AREAS OF CONCERN
Risk Management is an integral part of the Company's business strategy. The Companyduring the period under review developed a risk Management Manual forming part of theRisk Management Policy to review the adequacy and effectiveness of the aforementionedpolicy and management procedures for providing a sound internal control framework overthe Company's major business processes (including but not necessarily limited tofinancial insurance legal HR and IT processes).
The Risk Management Committee of the Board assists the Board in its oversight ofvarious risks. The Risk Management Committee reviews compliance with risk policiesmonitors risk tolerance limits reviews and analyses risk exposures related to specificissues and provides oversight of risk across the organization. The Company has a Boardapproved Operational Risk Management framework.
INTERNAL CONTROLS AND SYSTEMS
Your Company has a proper and adequate system of Internal Controls. An extensiveprogramme of internal audits and management reviews supplements the process of internalcontrols. The Company maintains appropriate policies procedures and systems to ensureorderly and efficient conduct of its business including adherence to Company's policiessafeguarding of its assets prevention and detection of frauds and errors accuracy andcompleteness of accounting records. The Internal Control System has been designed toensure that the financial and other records are reliable for preparing financial and otherstatements and for maintaining accountability of assets.
The Audit Committee of the Board of Directors approves and reviews audit plans for theyear based on internal risk assessment. Audits are conducted on an ongoing basis andsignificant deviations are brought to the notice of the Audit Committee following whichcorrective action is recommended for implementation. All these measures facilitate timelydetection of any irregularity and early remedial steps.
The Company's internal control over financial reporting was effective as of March 312017 with no deficiency.
During the year 2016-17 the net sales was ' 69412 Lakh as against ' 66786 Lakh in theprevious year. This represents an increase of 3.9% in terms of value over previous year.
Profit before Tax and Exceptional Items for the year was? 8717 Lakh as against ' 7507Lakh in 2015-16.
Winning hearts and creating harmony is our principal objective. Today's businessscenario is extremely dynamic in terms of technological advancements customerexpectations and environmental regulations which demands steady propulsion in theapproach. Successful implementation of any business strategy thrives around involvement ofhuman capital in the organization's innovation and growth expedition blended withtechnology. The Company is committed to take on the challenges and making it an agile anda self reliant organization and best place to work.
As organizations grow people join in that journey of success and get nurtured within.Availability of talent is extremely vital to any growing organization. Your companyceaselessly focussed on careers development plans and worked upon succession planning toease any prospective void of talent. Critical roles identification withenduring vision ofsuccession is instigated at middle management level and is being driven meticulously tospark the latent aptitude to take up higher roles in the hierarchy. Scientific assessmentcentres are used to explicitly identify and plan the leadership and functional competence.
Experiential learning easily imprints the existing paradigm of an individual's thoughtprocess. Your company initiated experiential learning workshops for junior management toleave a long lasting constructive impact on their working styles imbibing the spirit ofteam work and Honda way of working.
Joy of creation is at the core of Honda philosophy. Best ideas are generated at thegrass root level. Your company always foster new ideas and is committed to nurture thatculture. New Honda Circle (NHC) is a format to give a platform for associates to givewings to their creativity and to glide through routine challenges with structured problemsolving approach towards a fruitful outcome. "Ideas inspiring change" with thistheme 8th NHC India convention was successfully organised in the month ofSeptember 2016 where 22 best circles from all Honda group companies suppliers anddealers participated and presented their work. Further the winning team participated inworld convention organized in China.
The Company believes in timely appraisal of policies and procedures to enhance theirefficacy. Compliance to procedures guides us towards intended purpose. In Financial Year2016-17 the Company implemented central compliance manager tool an online system totrack monthly quarterly and yearly statutory compliances.
The Company always maintains a conducive and an open environment for any dialogue.Generating more harmony in the process a works committee is actively participating inconcluding the wages settlement by way of bipartite discussions. Employee engagement hasalways been in our philosophy to create equilibrium within. The Company celebrated theannual sports day family day and women's day to invigorate the associates.
The Company as on March 312017 had 1015 associates. INFORMATION TECHNOLOGY
Information Technology plays a major role in the success of business. Your company iscomprehensively embracing information technology to leverage its potential and sailthrough the changes. Oracle E-Business Suite R12.2.4 is successfully implemented and weare now able to use additional features available in R12 version. Your company alreadystarted testing Oracle E-Business Suite for GST framework as per Government direction totransit from current tax system by July 2017. Embracing future customer needsdevelopments are in process to equip field staff with handy mobile apps to infiltrate thecurrent trends in the market ROI comparative study and prospective customer base withquick response time.
Statements in this Management Discussion and Analysis Report describing the Company'sobjectives projections estimates and expectations may be forward lookingstatements' within the meaning of applicable laws and regulations. Actual results mightdiffer substantially or materially from those expressed or implied. Important developmentsthat could affect the Company's operations include significant changes in political andeconomic environment in India and key markets abroad tax laws litigation labourrelations and interest costs.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
(c) Foreign Exchange Earnings and Outgo
During the year the total foreign exchange used was ' 22600.91 lakh and the totalforeign exchange earned was ' 28527.43 lakh.
Honda Siel Power Products Limited CIN: L40103DL2004PLC203950 409 DLF Tower B JasolaCommercial Complex New Delhi-110025
We have examined the relevant registers records and documents maintained and madeavailable to us by Honda Siel Power Products Limited ("the Company") for theperiod commencing from 1st April 2016 to 31st March 2017 for theissuance of Secretarial Audit Report for the financial year 2016-17 required to be issuedunder Section 204 of the Companies Act 2013 read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.
Our examination was limited to procedures and implementation thereof adopted by theCompany for ensuring the various compliances but the maintenance of secretarial recordsis the responsibility of the management of the Company. Our responsibility is to expressan opinion on these secretarial records based on our audit.
We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Webelieve that the processes and practices we followed provide a reasonable basis for ouropinion and the compliance of the provisions of Corporate and other applicable laws rulesand regulations is the responsibility of the management. Our examination was limited tothe verification of procedures on test basis.
Secretarial Audit Report is neither an assurance as to the future viability of theCompany nor of the efficacy or effectiveness with which the management has conducted theaffairs of the Company.
FOR THE FINANCIAL YEAR ENDED ON 31st MARCH 2017
[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]
Honda Siel Power Products Limited CIN : L40103DL2004PLC203950 409 DLF Tower B
Jasola Commercial Complex
New Delhi - 110 025
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Honda Siel Power ProductsLimited (hereinafter called "the Company"). Secretarial Audit was conducted in amanner that provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.
Based on our verification of the Company's books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on 31st March 2017complied with the statutory provisions listed hereunder and also that the Company hasproper board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter:
We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31st March2017 according to the provisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contract (Regulation) Act 1956 (SCRA') and the rules madethereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-Laws framed thereunder;
(iv) The Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act'):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
(d) The Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities )Regulations 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with theclient;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares )Regulations 2009;
(h) The Securities and Exchange Board of India (Buy Back of Securities) Regulations1998; and
(vi) Other laws as specifically applicable to the Company:-
(a) The Explosives Act 1884 and Rules made thereunder;
(b) The Boilers Act 1923 and Rules made thereunder;
(c) The Petroleum Act 1934 and Rules made thereunder; and
(d) The Electricity Act 2003 and Rules made thereunder.
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by the Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with Bombay Stock ExchangeLimited (BSE) and National Stock Exchange of India Limited (NSE).
We further report that during the period under review the Company has complied with theprovisions of the Act Rules Regulations Guidelines Standards etc. mentioned above.
We further report that the Board of Directors of the Company is duly constituted withproper balance of Executive Directors Non-Executive Directors and Independent Directors.The changes in the composition of the Board of Directors that took place during the periodunder review were carried out in compliance with the provisions of the Act.
We further report that adequate notice is given to all directors to schedule the BoardMeetings agenda and detailed notes on agenda were sent at least seven days in advance anda system exists for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the meeting. Decisionscarried through by the Board do not have any dissenting views and hence no relevantrecordings were made in the minutes book maintained for the purpose.
We 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 framed thereunder.
We further report that during the audit period under review there were no specificevents/actions in pursuance of the above referred laws rules regulations guidelinesstandards etc. having a major bearing on the Company's affairs.
This is to state that the implementation and monitoring of CSR Policy is in compliancewith CSR objectives and Policy of the Company.
Annexure - E to Board's Report
Annual Report on CSR Activities of the Company
This is to state that the implementation and monitoring of CSR Policy is in compliancewith CSR objectives and Policy of the Company.
Yoshifumi Iida President & CEO
Chairman CSR Committee
ANNEXURE - F TO BOARD'S REPORT
Policy on Remuneration to be paid to Directors Key Managerial Personnel and otheremployees and criteria for Appointment of Directors
In pursuance to Section 178 of the Companies Act 2013 the Nomination and RemunerationCommittee has formulated Remuneration Policy ("the policy").
The objective of the policy is to ensure that Executive/Non-Executive Directors and KeyManagerial Personnels are sufficiently compensated for their performance.
Remuneration Policy Non-Executive Independent Directors
Non-Executive Independent Directors are appointed for their professional expertise intheir respective fields in individual capacity and receive sitting fees for attending themeeting of the Board and Committees thereof as approved by the Board from time to time.
Executive/Whole Time Directors
The Committee shall recommend Remuneration of Whole Time Directors which will be againrecommended by the Board and finally approved by the Shareholders.
The Company pays remuneration by way of salary perquisites and allowances (fixedcomponent) and variable pay to Whole Time Directors. Salary is paid within the rangeapproved by the Shareholders. Annual increments effective 1st April each year(or at any other time as may be required) as recommended by the Nomination andRemuneration Committee and recommended by the Board within the prescribed ceiling isfurther approved by the Shareholders.
Perquisites and retirement benefits are paid according to the Company policy asapplicable to all employees.
The remuneration paid to Executive/Non-Executive Directors is determined keeping inview the industry benchmark and the relative performance of the Company to the industryperformance. This is further benchmarked so as to attract and retain the right talent forthe job.
Key Managerial Personnel and Other Employees
The remuneration of Key Managerial Personnel and other employees largely consists ofbasic salary perquisites allowances and performance incentives. Perquisites andretirement benefits are paid according to the Company policy subject to prescribedstatutory ceiling.
The components of the total remuneration vary for different levels and are governed bythe industry pattern qualification & experience / merits and performance of eachemployee. The Company while deciding the remuneration package takes into considerationcurrent employment scenario and remuneration package as is prevailing in the industry.
The annual variable pay of Key Managerial Personnel and employees is linked to theperformance of the Company in general for the relevant year and measured against Company'sobjectives fixed in the beginning of the year.
This Remuneration Policy shall apply to all future employment agreements with KeyManagerial Personnel of the Company and Directors.
This Remuneration Policy as recommended by the Nomination and Remuneration Committeeis approved by the Board of Directors on this 12th day of September 2014.
Criteria for Appointment of Directors director's qualification and evaluation criteria
The composition and strength of the Board of Directors (the "Board") of theCompany is subject to the provisions of the Companies Act 2013 Listing Agreement withthe Stock Exchanges and Articles of Association of the Company.
Within the defined parameters as above the Board determines the size and compositionof the Board.
The Nomination and Remuneration Committee of the Board (the "Committee") isresponsible for evaluating the qualifications of each candidate to be appointed asDirector on the Board of the Company and of those Directors who are to be nominated forelection by Shareholders at each annual Shareholder's meeting.
The qualification criteria set forth herein below is designed to describe the qualitiesand characteristics desired for the Board as a whole and for Board members individually.
Director Qualification Review Procedures
A determination of a Director's qualifications to serve on the Board shall be made bythe Board upon the recommendation of the Committee prior to nominating a Director forelection at the Company's next annual meeting. In addition with respect to each Directorcandidate considered for appointment to the Board between annual meetings the Committeeshall evaluate each Director candidate and recommend to the Board for their appointment.
The Nomination and Remuneration Committee shall evaluate each Director and Directorcandidate under the Director Qualification Criteria set forth herein.
Director Qualification Criteria- General
It is not mandatory to establish specific minimum age education years of businessexperience or specific types of skills for Board members but in general it is expectedfrom an Independent Director to possess appropriate skills experience and knowledge inone or more fields of finance law management sales marketing administrationresearch corporate governance technical operations or other disciplines related to thecompany's business and to have ample experience and a proven record of professionalsuccess leadership and the highest level of personal and professional ethics integrityand values. In its evaluation the Committee shall consider the Board size and compositionof the Board according to the following guidelines:
With respect to Board composition as a whole the Board will maintain composition ofthe Directors pursuant to applicable laws rules and regulation and the IndependenceStandards set forth below;
Additional Qualification Review Criteria
The Committee shall also consider whether each Director candidate and each Directorpossesses the following:
The highest level of personal and professional ethics integrity and values;
An appreciation of the Company's mission and purpose
The ability to exercise objectivity and independence in making informed businessdecisions;
The willingness and commitment to devote the time necessary to fulfill his/ herduties;
The ability to communicate effectively and collaborate with other Board membersto contribute effectively to the diversity of perspectives that enhances Board andCommittee deliberations including a willingness to listen and respect the views ofothers; and
The skills knowledge and expertise relevant to the Company's business withextensive experience at a senior leadership level in a comparable company or organizationincluding but not limited to relevant experience in manufacturing internationaloperations finance accounting legal strategic planning supply chain technology andmarketing.
The Committee shall also consider its policies with respect to mandatory retirementage change in employment status as well as all other relevant facts and circumstances inmaking its recommendations to the Board.
INDEPENDENT DIRECTORS- STANDARD OF INDEPENDENCE
The Board has established the following independence review procedures and criteria toassist it and the Committee evaluate the independence of Directors who have been nominatedfor election at each annual meeting and of Director candidates prior to their appointmentto the Board.
It is expected that an independent Director shall:
(1) uphold ethical standards of integrity and probity;
(2) act objectively and constructively while exercising his/ her duties;
(3) exercise his/ her responsibilities in a bona fide manner in the interest of thecompany;
(4) devote sufficient time and attention to his/ her obligations towards the companyfor informed and balanced decision making;
(5) not allow any extraneous considerations that will vitiate his/ her exercise ofobjective independent judgment in the paramount interest of the company as a whole whileconcurring in or dissenting from the collective judgment of the Board in its decisionmaking;
(6) not abuse his/ her position to the detriment of the company or its shareholders orforte purpose of gaining direct or indirect personal advantage or advantage for anyassociated person;
(7) refrain from any action that would lead to loss of his/ her independence;
(8) where circumstances arise which make an Independent Director lose his/herindependence the Independent Director must immediately inform the Board accordingly;
(9) assist the company in implementing the best corporate governance practices.
Role and functions:
The independent Director/s shall:
(1) help in bringing an independent judgment to bear on the Board's deliberationsespecially on issues of strategy performance risk management resources keyappointments and standards of conduct;
(2) bring an objective view in the evaluation of the performance of Board andmanagement;
(3) scrutinize the performance of management in meeting agreed goals and objectives andmonitor the reporting of performance;
(4) satisfy themselves on the integrity of financial information and that financialcontrols and the systems of risk Management are robust and defensible;
(5) safeguard the interests of all stakeholders particularly the minorityshareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of Executive Director/s KeyManagerial Personnel and Senior Management and have a prime role in appointing and wherenecessary recommend removal of Executive Director/s Key Managerial Personnel and SeniorManagement;
(8) moderate and arbitrate in the interest of the company as a whole in situations ofconflict between management and shareholder's interest. Duties :
The independent Director/s shall :
(1) undertake appropriate induction and regularly update and refresh their skillsknowledge and familiarity with the company;
(2) seek appropriate clarification or amplification of information and wherenecessary take and follow appropriate professional advice and opinion of outside expertsat the expense of the company;
(3) strive to attend all meetings of the Board of Directors and of the Board Committeesof which he/she is a Member;
(4) participate constructively and actively in the Committees of the Board in whichthey are Chairpersons or Members;
(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed actionensure that these are addressed by the Board and to the extent that they are notresolved insist that their concerns are recorded in the minutes of the Board meeting;
(7) keep themselves well informed about the company and the external environment inwhich it operates;
(8) not to unfairly obstruct the functioning of an otherwise proper Board or Committeeof the Board;
(9) pay sufficient attention and ensure that adequate deliberations are held beforeapproving related party transactions and assure themselves that the same are in theinterest of the company;
(10) ascertain and ensure that the company has an adequate and functional vigilmechanism and to ensure that the interests of a person who uses such mechanism are notprejudicially affected on account of such use;
(11) report concerns about unethical behaviour actual or suspected fraud or violationof the company's code of conduct or ethics policy;
(12) acting within his/ her authority assist in protecting the legitimate interests ofthe company shareholders and its employees; not disclose confidential informationincluding commercial secrets technologies advertising and sales promotion plansunpublished price sensitive information unless such disclosure is expressly approved bythe Board or required by law.
Independence Review Procedures Annual Review
Determinations of Director's independence will be made by the Board for each Directoron an Annual basis.
Individual Director - Independence Determinations If a Director nominee is consideredfor election to the Board between annual meetings a determination of independence uponthe recommendation of the Committee shall be made by the Board prior to such appointment.
All determinations of independence shall be made on a case-to-case basis for eachDirector after consideration of all the relevant facts and circumstances and the standardsset forth herein. The Board reserves the right to determine that any Director is notindependent even if he or shesatisfies the criteria set forth above.
Notice of Change of Circumstances
Each Director has an affirmative obligation to notify the Company of any change incircumstances that may put his/ her independence at issue. If so notified the Committeeshall re-evaluate such Directors independence as promptly as practicable and makea recommendation to the Board with respect to such Director's independence.
The Company shall disclose in the Annual Financial Statement in Board's Report astatement indicating the matter in which formal annual evaluation has been made by theBoard of its own performance and that of its committees and individual Directors.
Annexure- G to Board's Report
1. Company's Philosophy on Code of Governance
Corporate Governance ensures fairness transparency and integrity of the Management.The Company believes that it is imperative to manage the business and its affairs in themost transparent manner with a firm commitment to our values. Sound Corporate Governanceis critical for enhancing and retaining investor trust and thus seeks to ensure that itsperformance goals are met with integrity. The Company maintains highest levels oftransparency accountability and good Management practices through the adoption andmonitoring of corporate strategies goals and procedures to comply with its legal socialand ethical responsibilities. The Company is always working towards building trust withshareholders employees customers suppliers and all other stakeholders based on theprinciples of good Corporate Governance.
The Company strives to foster a corporate culture in which high standards of ethicalbehaviour individual accountability and transparent disclosures are ingrained in all itsbusiness dealings and shared by its Board of Directors Management and Employees at alllevels.
The Company has set to itself the objective of expanding its capacities and becomingglobally competitive in its business. The Company is committed to meet the aspirations ofall the stakeholders. This is also embodied in the corporate vision of the Company whichstates that "Honda Siel Power Products Limited would like to be a Company WhichSociety would want to exist."
The Directors fully endorse and support the essentials of Corporate Governance andaccordingly herein below give a true and fair report on Corporate Governance.
2. Board of Directors
The Board of Directors is at the core of Corporate Governance practices. The Board isentrusted with the ultimate responsibility of management general affairs direction andperformance of the Company and has been vested with the requisite powers authoritiesandduties. Your Company firmly believes that Board Independence is essential to bringobjectivity and transparency in the management and in the dealing of the Company.
The Company has established systems and procedures to ensure that its Board is wellinformed and well equipped to fulfill its overall responsibilities and to provideManagement with the strategic direction needed to create long term shareholders value.
The Board of your Company is broad-based and diversified consisting of eight Members.The Board has an ideal composition. It consists of three Executive Directors and FiveNon-Executive Directors including a Woman Director. Four Non-Executive Directors areIndependent
i.e. they do not have any other material pecuniary relationship or transactions withthe Company its Promoters its Management or related persons except receiving sittingfees for attending the meetings of the Board and committees thereof which in thejudgement of the Board will not affect the independence of judgement of the saidDirectors. The Board Members possess the skills experience and expertise necessary toguide the affairs of the Company.
None of the Independent Directors of the Company serves as an Independent Director inmore than seven listed Companies/ three Companies in case he/she is Whole Time Director inany listed company.
Particulars of the Directors who are being appointed / re-appointed at the ensuingAnnual General Meeting (AGM') in terms of the Secretarial Standard 2 issued by theInstitute of Company Secretaries of India (Secretarial Standard) the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (the Regulations) are providedin the notice convening the AGM.
There is a well organised system for seeking Board approval which facilitates andprovides room for sound and informed decision making by the Board and its Committees.Agenda and other relevant reports are circulated at least seven days ahead of the meeting.The quantum and quality of information supplied by the management to the Board goes wellbeyond the minimum requirements stipulated under Companies Act 2013 Secretarial Standardand the Regulations. Where expedient the Board also approves resolutions by way ofcirculation between two successive Board meetings.
During the year under review four Board Meetings were held on May 20 2016 August112016 November 05 2016 and February 10 2017. Resolutions by Circulation were passedon August 23 2016 and December 27 2016. All statutory and other important items/information were placed before the Board for approval/review.
The composition of the Board of Directors attendance of the Directors at the BoardMeetings and Annual General Meeting number of Directorships in Indian Public LimitedCompanies and Membership of Committee(s) (Audit and Stakeholders Relationship Committee)of the Board of such Companies are as follows:
a. Directorships held by Directors as mentioned above do not include AlternateDirectorship Directorships of Foreign Companies Section 8 Companies and Private LimitedCompanies.
b. In accordance with Regulation 27 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Membership / Chairmanship ofAudit Committee and Stakeholders Relationship Committee of Public Limited Companies havebeen considered.
c. None of the Directors is a member of more than 10 Board Level Committees of Publiclimited Companies in which they are Directors nor is Chairman of more than 5 suchCommittees.
d. There has been no inter-se relationship between or among directors of the Company.
Dr. D. V. Kapur Independent Director and Chairman of the Audit Committee who is alsoChairman of Nomination and Remuneration Committee and of Stakeholders' RelationshipCommittee attended the Annual General Meeting of the Company.
The Company does not pay any remuneration to its Non-Executive / Independent Directorsexcept ' 40000/- per Meeting as sitting fees for attending Meetings of the Board and ofits Committees. No commission on the net profit of the Company is paid to any Director.There are no pecuniary relationships or transactions of the Non- Executive Directorsvis-a-vis the Company.
One-third of the Directors who are liable to retire by rotation retire every year andare eligible for re-election as prescribed under the Companies Act 2013 (the Act) and interms of the Articles of Association of the Company.
Familiarization Programme for Independent Directors The Company believes that a Boardwhich is well informed / familiarized with the Company and its affairs can contributesignificantly to effectively discharge its role of trusteeship in a manner that fulfilsstakeholders' aspirations and societal expectations.
In pursuit of this the Directors of the Company are updated periodically on theCompany's operations and other information including those pertaining to statutes /legislations and economic environment and on matters affecting the Company to enable themto take well-informed and timely decisions.
Further the familiarization programme for Independent Directors in terms of Regulation25(7) of the Regulations is uploaded on the website of the Company and can be accessedthrough the following link: www.hondasielpower.com .
Meeting of Independent Directors
During the year the Independent Directors (IDs) met once on November 05 2016 withoutthe presence of Non-Independent Directors and members of the Management. At this meetingthe IDs inter-alia evaluated the performance of the Non-Independent Directors and theBoard of Directors as a whole evaluated the performance of the Chairman of the Board anddiscussed aspects relating to the quality quantity and
timeliness of the flow of information between the Company the Management and theBoard.
Committees of the Board
The Board has constituted six Committees namely:
Stakeholders Relationship Committee;
Nomination and Remuneration Committee;
Corporate Social Responsibility Committee;
Board Committee on Financial Matters; and
Risk Management Committee
Each of these Committees functions within the defined terms of reference and theminutes of the Committee Meetings are put up to the Board for noting at the subsequentMeeting. The role and composition of these Committees including the number of meetingsheld during the Financial Year and the attendance of its Members are provided below:
i. Audit Committee
The primary objective of the Committee is to monitor and provide an effectivesupervision of the Management's financial reporting process to ensure accurate and timelydisclosures with the highest levels of transparency integrity and quality of financialreporting. The Committee is also responsible for evaluation of Internal Financial ControlSystem Risk Management Performance of Statutory and Internal Auditors and Internal AuditFunctions.
Composition of the Audit Committee and terms of reference meet with the requirements ofRegulation 18 of the Regulations and provisions of the Act. The terms of reference of theAudit Committee as approved by the Board are available on our website atwww.hondasielpower.com .
The Chief Financial Officer Statutory Auditors Internal Auditors and Cost Auditorsattend the meetings of Audit Committee. Company Secretary acts as the Secretary to theCommittee. During the Financial Year 2016-17 Audit Committee met four times on May 202016; August 112016; November 05 2016 and February 10 2017. The Board accepted all therecommendations made by the Audit committee. Constitution of the Committee and attendanceof the members at the meetings were as under:
In terms of Section 178 of the Act and the Regulations the Company has constituted theNomination and Remuneration Committee. The Committee mainly discharges the duties relatedto recommendation regarding nomination of Directors to the Board formulating criteria fordetermining qualifications attributes and independence of Directors formulation ofcriteria for performance of Directors and further submission of report thereon to theBoard.
The remuneration paid to the executive Director is determined keeping in view his/herprofessional qualification relevant industry experience size of the Company and currentremuneration standards for such senior executive positions in the relevant industry.Perquisites and retirement benefits are paid according to the Company's policy asapplicable to the employees.
The Committee further coordinates and oversees the annual evaluation of the performanceof the individual Directors.
In compliance with requirements of the Act the constitution terms of reference roleand scope of Committee are in line with those prescribed by the Act and Regulation 19 ofRegulations and are available on our website at www.hondasielpower.com . The Committeecomprises of three NonExecutive Directors out of which two are independent Directors. TheChairman of the Committee is an Independent Director.
The Company Secretary acts as the Secretary to the Committee.
During the year under review the Committee met on May 20 2016 and February 10 2017.
Constitution of the Committee and attendance of the Members at the meetings were asunder:
Performance Evaluation Criteria
The Nomination and Remuneration Committee has laid down the criteria for performanceevaluation of Independent Directors and other Directors Board as a whole and theCommittees thereof. The criteria for performance evaluation cover the areas relevant totheir functioning as Independent Directors or other Directors Member of Board orCommittees of the Board.
The Nomination and Remuneration Committee has evaluated the performance of eachDirector for the Financial Year ended March 31 2017. The evaluation of the performance ofeach Director was based on level of participation in meetings understanding the roles andresponsibilities understanding the strategic issues and challenges in the Company.
The Independent Directors at their meeting also discussed the performance of theNon-Executive Directors including the Chairman of the Board. Based on the above broadparameters the effectiveness of the Board and its Committees was found satisfactory.
The performance evaluation of Independent Directors was done by the entire Board ofDirectors excluding Independent Director being evaluated. Broad parameters for reviewingthe performance of Independent Directors amongst other include participation at theBoard/Committee meetings understanding their roles and responsibilities and business ofthe Company effectiveness of their contribution/ commitment effective management ofrelationship with stakeholders integrity and maintaining of confidentiality exercise ofindependent judgment in the best interest of the Company ability to contribute to andmonitor corporate governance practice adherence to the code of conduct for IndependentDirectors bringing independent judgement during Board deliberations on strategyperformance risk management etc.
The evaluation of the Performance of Board was based on Board composition experienceand competencies understanding of business and competitive environment quality ofdiscussions at the Board Meetings time spent by the Board on the Company's long termgoals and strategies. Details of remuneration paid to Directors for the year 2016-17
A. Executive Directors
The details of the remuneration paid to the Executive Director(s) during the year2016-17 were as under:
*Re-appointed as Whole Time Director of the Company by the Board of Directors for afurther period of five years i.e. w.e.f 01.04.2017 to 31.03.2022 subject to approval byShareholders at the forthcoming Annual General Meeting.
B. Non-Executive Directors
The Non-Executive Directors receive sitting fees for attending the meeting of the Boardand Committees thereof.
Details of sitting fees paid during the year 2016-17 for attending the Meetings ofBoard of Directors and of its Committees were as under:
There are no pecuniary relationships or transactions of the Non-Executive Directorsvis-a-vis the Company.
The remit of the Committee is to consider and resolve the grievances of the securityholders of the Company including complaints relating to transfer of sharesconsolidation splitting transmission (except for cases of transmission where the heirsof the deceased shareholder do not produce full documentary evidence of their title toshares) re-materialization of shares endorsement on Fully Paid share certificates whichhave further been sub-delegated by the Committee to the Company Secretary of the Company.
Composition of the Stakeholders Relationship Committee and terms of reference meet withthe requirements of Regulation 20 of Regulations and provisions of the Act.
During the Financial Year 2016-17 the Committee met four times on May 20 2016; August112016; November 05 2016 and February 10 2017. Composition of the Committee andattendance of the members at the meetings were as follows:
The Company Secretary acts as the Secretary to the Committee.
Resolutions by Circulation were passed on April 26 2016 June 13 2016 September 202016 September 30 2016 January 30 2017 March 10 2017 and March 30 2017.
Ms. Sunita Ganjoo Company Secretary is the Compliance Officer for complying with therequirements of Securities & Exchange Board of India (Prohibition of Insider Trading)Regulations 2015 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
Investor Grievance Redressal
As on March 312017 your Company had 13463 investors. During the year under reviewthe status of complaints was as follows:
iv. Corporate Social Responsibility Committee
The Committee discharges the duties stipulated under Section 135 of the Companies Act2013 which includes formulation and recommendation to the Board a Corporate SocialResponsibility (CSR) Policy indicating the activities to be undertaken by the Company asper Schedule VII of the Act; recommendation of the amount of expenditure to be incurred;and monitoring the CSR Policy of the Company.
During the year under review Corporate Social Responsibility Committee met on February10 2017.
Composition of the Committee and attendance of the members at the meeting is as under:
The Company Secretary acts as the Secretary to the Committee.
v. Board Committee on Financial Matters
The terms of reference inter-alia includes opening and closing of bank accountsinvestment of surplus funds authorization to Company's personnel for operation of Bankaccounts and for pre-authentication of the Invoices under Central Excise Act & Rules.
The Board Committee on Financial Matters met once during the year on July 16 2016.Attendance of the Members at the meeting was as follows:
The Company Secretary acts as the Secretary to the Committee.
The Company has constituted Risk Management Committee for ensuring better CorporateGovernance practices. The roles and responsibilities of the Committee are as prescribedunder Regulation 21 of the Regulations. The role of the Committee also includesmonitoringand review of risk management plan and reporting the same to the Board of Directorsperiodically as it may deem fit.
During the Financial Year the Committee met once on February 012017. Attendance ofthe members at the meeting was as follows:
3. Code of Conduct
Guided by the fundamental belief of "Respect for the Individual" and"The Three Joys" ("The Joy of Buying" "The Joy of Selling""The Joy of Creating") the Company has revised the Honda Conduct Guidelines asthe "HSPP Code of Conduct" that serves as a guide for the business actions in aglobal complex and changing environment. The Code sets forth Company's commitment to theprinciples of business ethics and transparency in all areas of activity and establishes aset of principles and guidelines for conduct designed to ensure ethical and responsiblebehaviour.
Further the Company's Board has laid down a Code of Conduct for all Board Members anddesignated Senior Management of the Company. The code of conduct is available on thewebsite of the Company www.hondasielpower.com . All Board Members and Senior Management
personnel have affirmed compliance with the Code of Conduct. A declaration signed bythe Chief Executive Officer to this effect is attached to this report.
The Company formulated a Code of Conduct to regulate monitor and report trading byinsiders to deter the insider trading in the securities of the Company based on theunpublished price sensitive information. The Code envisages procedures to be followed anddisclosures to be made while dealing in the securities of the Company. During the yearunder review there has been due compliance with Securities and Exchange Board of India(Prohibition of Insider Trading) Regulations 2015.
4. General Body Meetings
The last three Annual General Meetings of the Company were held as under:
No resolution was passed through Postal Ballot during the year 2016-17. The Company ason the date of this report is not envisaging to pass any resolution though Postal Ballot.
5. Means of Communication
1. The quarterly half-yearly and annual financial results of the Company are publishedin leading newspapers in India which includes Financial Express Jan Satta and BusinessStandard. The Company has sent these financial results to the Stock Exchanges withinthirty minutes of closure of the meeting in which the Board of Directors of the Companyapproved the same.
2. The financial results of the Company are displayed on the Company's websitewww.hondasielpower.com and website of National Stock Exchange of India Ltd. (www.nseindia.com ) BSE Limited (www.bseindia.com ). The Company's website also displaysthe official news releases.
3. The Company made no presentations to the Analysts during the Financial Year 2016-17.
4. Annual Report containing inter-alia Audited Annual Accounts Board's ReportAuditors' Report and other important information is circulated to Members and othersentitled thereto. The Management Discussion & Analysis Report forms part of the AnnualReport and is provided at Annexure-A of the Board's Report.
6. General Shareholders' Information
i. 32nd Annual General Meeting
iii. Dividend Details
Unclaimed dividends up to financial year 1994-95 have been transferred to the GeneralRevenue Account of the Central Government and for the Financial Years 1995-96 to 2008-09to Investor Education and Protection Fund constituted by the Central Government. Detailsof unclaimed dividend as on March 312017 are given hereunder:
iv. Listing on Stock Exchanges and Stock Codes
The names and addresses of the Stock Exchanges on which the equity shares of theCompany are listed and the respective stock codes are as under:
Listing fees for the year 2017-18 has been paid to BSE and NSE respectively. v. StockMarket Data
Monthly high and low quotations as well as the volume of shares traded at BSE and NSEwere as under:
vii. Registrar and Share Transfer Agents
The Company has appointed M/s Mas Services Ltd. as its Registrar and Share TransferAgent (RTA). Share transfer in physical form and other communications regarding sharesdividends change in address etc. may be addressed to:
Mr. Narender Rastogi
Mas Services Limited
Unit: Honda Siel Power Products Limited
T-34 2nd Floor Okhla Industrial Area Phase - II
New Delhi - 110 020
Ph:- 011-26387281/82/83 Fax:- 011-26387384
email:- firstname.lastname@example.org website : www.masserv.com
viii. Investors' Service and Share Transfer System
The Company has a system of attending to and redressing all investors' relatedgrievances/correspondences within a period of 7 to 15 days from the date of receipt of thesame. The investors can personally contact or send their grievance/correspondence eitherto RTA at their address or to the Secretarial Department of the Company at the followingaddress:
Honda Siel Power Products Limited
Secretarial & Legal Department
Plot No. 5 Sector 41 (Kasna) Greater Noida Industrial Development Area
Distt. Gautam Budh Nagar U.P. -201 310.
Phone Nos: 0120-2590211 2341055-59; Email : email@example.com
The shares for in physical mode received for transfer by the Company/RTA aretransferred expeditiously provided that the documents are complete and ownership ofshares under transfer is not under dispute. The share certificates duly endorsed arereturned immediately. Confirmation in respect of the request for dematerialization ofshares is sent to the respective depositories NSDL/CDSL within 15 days. The Companyobtains a certificate of compliance with the share transfer formalities as required underRegulation 40(9) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 on half yearly basis from a Company Secretaryin practice and files a copy of the certificate with the Stock Exchanges.
ix. Distribution of shareholding as on March 31 2017
x. Pattern of shareholding as on March 31 2017
xi. Dematerialization of shares and liquidity
97.90% of total equity capital is held in dematerialised form with NSDL and CDSL as onMarch 31 2017. During the year (i.e. from
01-04-2016 to 31-03-2017) 154 share certificates involving 6193 shares weredematerialized by the shareholders representing 0.06% of the total share capital of theCompany.
Demat ISIN in NSDL and CDSL : INE634A01018
xii. The Company has not issued any GDRs / ADRs / Warrants or any convertibleinstruments in the past and hence as on March 312017 the Company does not have anyoutstanding GDRs / ADRs / Warrants or any convertible instruments.
xiii. During the period under review the Company has not dealt in any commodityhedging activities and there are no Commodity price risks undertaken by the Company.
xiv. Plant l ocations
Plot No. 5 Sector 41 (Kasna)
Greater Noida Industrial Development Area
Distt. Gautam Budh Nagar U.P. -201 310.
(i) Related parties and transactions with them as required under Accounting Standard 18and Regulation 23 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 are furnished under Note No. 34 of Notesto Financial Statement' for the year ended March 312017.
(ii) The above transactions have no potential conflict with the interest of theCompany.
(iii) There has not been any non-compliance penalties structures imposed on theCompany by Stock Exchange or SEBI or any statutory authority on any matter related tocapital markets during the last three years.
(iv) The Company promotes ethical behaviour in all its business activities and has awhistle blower/vigil mechanism in the name of Vigil Mechanism / Business Ethics ProposalLine & Business Ethics (BEPL) in place. All the employees of the Company through thismechanism are free to report violation of laws rules regulations or unethical conduct ofany employee of the Company.
(v) The Company has complied with all mandatory requirements as stipulated inSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
(vi) The Company does not have any subsidiary Company.
(vii) The policy framed for the dealing with Related Party Transactions is displayed onthe website of the Company at the link: www.hondasielpower.com
8. The status of adoption of the non-mandatory requirements as prescribed in Regulation27(1) of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is as under:
The Company is in the regime of unqualified financial statements.
Separate Posts of Chairman and CEO
The Company has appointed separate persons to the post of Chairman and of ManagingDirector/CEO.
Reporting of Internal Auditor
The Internal Auditors on a quarterly basis report directly to the Audit Committee ofthe Board.
9. The Company has complied with all the applicable Corporate Governance requirementsas specified in Regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) ofRegulation 46 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 with zero non-compliance.
10. Quarterly Compliance Report
The Company has been submitting the Compliance Report on Corporate Governance onquarterly basis to the Stock Exchanges within 15 days from the close of the relevantquarter. It is also regularly uploaded on the website of the Company.
11. Compliance with Code of Conduct
A declaration by the President & CEO that all Directors and Senior Managementpersonnel have affirmed compliance with the Code of Conduct of Board of Directors andSenior Management for the year ended March 312017 is annexed as Annexure-H.
12. CEO/CFO Certification
In terms of Regulation 17(8) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board of Directors have
reviewed the certificate submitted by the Chief Executive Officer (CEO) and ChiefFinancial Officer (CFO) of the Company certifying various covenants about financial/ cashflow statements internal controls financial reporting etc. The certificate is annexedas Annexure-I.
13. Compliance Certificate of Practicing Company Secretary
The Company has obtained a Certificate from Practicing Company Secretary regardingcompliance of conditions of Corporate Governance as stipulated in Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015. TheCertificate is annexed as Annexure-J.
ANNEXURE - H TO BOARD'S REPORT
CERTIFICATE AND DECLARATION
I Yoshifumi lida in my capacity as President & CEO of Honda Siel Power ProductsLimited do hereby confirm and declare that as stipulated under Regulation 34(3) read withSchedule V(D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 to the best of my knowledge and belief Members of the Board of Directors and SeniorManagement personnel of the Company have affirmed compliance as on March 312017 withthe provisions of Code of Conduct as adopted by the Company.
This declaration has been issued on the basis of acknowledgement and confirmation withrespect to the compliance with the provisions of Code of Conduct of the Company receivedfrom respective members of Board of Directors and Senior Management.
For Honda Siel Power Products Limited
Yoshifumi Iida President & CEO
We Yoshifumi lida President & CEO and Vinay Mittal Whole Time Director and ChiefFinancial Officer of Honda Siel Power Products Limited hereby declare and confirm-A. Thatwe have reviewed Financial Statements and the Cash Flow Statement for the year and that tothe best of our knowledge and belief :
1. these statements do not contain any materially untrue statement or omit any materialfact or contain statements that might be misleading;
2. these Statements together present a true and fair view of the company's affairs andare in compliance with existing Accounting Standards applicable laws and regulations.
B. That there are to the best of our knowledge and belief no transactions enteredinto by the Company during the year which are fraudulent illegal or violative of theCompany's Code of Conduct.
C. That we accept responsibility for establishing and maintaining internal controls forFinancial Reporting. We have evaluated the effectiveness of Internal Control Systems ofthe Company pertaining to Financial Reporting and we have disclosed to the Auditors andthe Audit Committee deficiencies in the design or operation of such Internal Controls ifany of which we are aware and the steps we have taken or propose to take to rectify thesedeficiencies.
D. That we have indicated to the Auditors and the Audit Committee:
1. significant changes in internal control overfinancial reporting during the year;
2. significant changes in accounting policies during the year and that the same havebeen disclosed in the notes to the Financial Statements; and
3. instances of significant fraud of which we have become aware and the involvementtherein if any of the management or an employee having a significant role in theCompany's Internal Control System over Financial Reporting.
This certificate has been issued incompliance with the provisions of Regulation 17(8)of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
ANNEXURE - J TO BOARD'S REPORT
To the Members of Honda Siel Power Products Limited
I have examined the compliance of conditions of Corporate Governance by Honda SielPower Products Limited for the year ended March 31 2017 as stipulated under Regulation34(3) read with Schedule V of the Securities & Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
The compliance of the conditions of Corporate Governance is the responsibility of themanagement. My examination was limited to the procedure and implementation thereof adoptedby the Company for ensuring the compliance of the conditions of Corporate Governance. Itis neither an audit
nor an expression of the opinion on the financial statements of the Company.
In my opinion and to the best of my information and according to the explanations givento me I certify that the Company has complied with the conditions of Corporate Governanceas stipulated in the above mentioned Regulations . I state that no investor grievance waspending for a period exceeding one month against the Company as per the records maintainedby Shareholders'/Investors' Relations Committee.
I further state that such compliance is neither an assurance as to the future viabilityof the Company nor its efficiency or effectiveness with which the management has conductedthe affairs of the Company.
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