Your Directors have pleasure in presenting the Thirty Second Annual Report and theAudited Financial Statements for the year ended March 31 2017.
The highlights of financial results of the Company for the year under review are givenbelow:
| || ||(Rs. In Lacs) |
|Particulars ||For the year ended March 31 2017 ||For the year ended March 31 2016 |
|Revenue from operations (gross) ||215283 ||179820 |
|Less : Excise Duty ||18125 ||15766 |
|Revenue from operations (net) ||197158 ||164054 |
|Other Income ||574 ||178 |
|Total Revenue ||197732 ||164232 |
|Profit before finance cost depreciation and tax ||17281 ||12451 |
|Finance Cost ||413 ||1012 |
|Depreciation and amortization expenses ||5081 ||4555 |
|Profit before Tax ||11787 ||6884 |
|Tax expense ||3682 ||1886 |
|Profit for the year ||8105 ||4998 |
Your Directors recommend a dividend of Rs. 1.50 per Equity Share for the year endedMarch 31 2017. This is subject to the approval of the Members at the ensuing AnnualGeneral Meeting.
On October 01 2015 Johnson Controls Inc. and Hitachi Appliances Japan completed aglobal joint venture and commenced the operations of "Johnson Controls-Hitachi AirConditioning". Johnson Controls-Hitachi Air Conditioning India Limited is asubsidiary of Johnson Controls- Hitachi Air Conditioning. Consequent to the above changethe name of the India unit has been changed from Hitachi Home & Life Solutions (India)Limited to Johnson Controls-Hitachi Air Conditioning India Limited on August 19 2016.
Through this joint venture the Company has combined the rich heritage and innovativetechnology of Hitachi with the industry leading expertise and global network of JohnsonControls. The partnership is aimed at addressing the cooling needs of the consumers in afaster smarter and much more efficient way than ever before. The Company's customers willbenefit from its world class R&D centres where researchers work tirelessly to provideinnovative solutions and quality products that are designed to meet every expectation.
The Company's business falls within a single business segment i.e. Cooling Products.The Company manufactures a wide range of products in this segment starting from Room AirConditioners (which includes Inverter and Fixed Speed Split ACs along with Window ACs) toCommercial Air Conditioners (which includes VRF (Variable Refrigerant Flow) SystemsDuctable Air Conditioners Chillers and Telecom Air Conditioners). The Company is not justlimited to making Air Conditioners but is also into the trading of Refrigerators and AirPurifiers.
Johnson Controls-Hitachi Air Conditioning India Limited is amongst the topair-conditioning companies in India. It has a strong nationwide distribution networkconsisting of 5 regional offices 23 branch offices more than 200 exclusive sales andservice dealers over 8000 sales points and 1400 service points. In order to serve itscustomers even better the Company also has 24 Company owned and operated Hitachicustomer care centres (HCS) which are spread pan India.
Johnson Controls-Hitachi Air Conditioning India Limited believes in simplifying lifewhich is why the company constantly innovates brings in world-class technologiesintroduces newer concepts and incorporates advanced features in its products to make lifeas comfortable as it can get.
INDUSTRY STRUCTURE AND DEVELOPMENTS
As per our estimates Air conditioning market has grown approximately by 8% in volumeterms in 2016-17 compared to the previous fiscal year.
Growth in Room air conditioning is driven by macro factors such as growing middleclass steady increase in disposable incomes and increasing urbanization. Within Room airconditioning segment Split ACs are expected to have higher growth than Window ACprimarily due to increasing focus on energy efficiency. This push is expected to bestronger in the coming years leading to faster adoption of energy saving technologies suchas inverter driven compressors.
In the commercial air conditioning segment VRF is expected to continue to show stronggrowth as the buying focus shifts from upfront cost to life cycle costs. Government'sfocus on infrastructure development is expected to provide boost to this line of business.In addition to the Room AC and Commercial AC the company also trades premiumrefrigerators and air purifiers in the home appliance business.
ROOM AIR CONDITIONERS (RAC)
The Year 2016-17 was a good year for Indian HVAC Industry. Rapidly increasingdisposable income combined with low market penetration and increasing temperature duringthe summers threw open a considerable growth opportunity for this segment. After adifficult period of 2 years this year the industry witnessed good growth in the RACsegment by around 8% where in Split AC Segment grew by around 10% with a slightcontraction in the Window AC segment. Presently the Company enjoys around 11% volumemarket share in the Indian AC industry. During 2016-17 the Company also registered aconsiderable ~20+ % year-on-year (YoY) growth in sales of Room ACs which was higher thanthe industry's growth. This growth was a result of various initiatives taken under theProduct Strategy coupled with strong channel support and expansion in various newmarkets.
In its current product line-up Company offers 36 new models of Room air Conditionerswith 108 SKUs which include 2 3 4 and 5 Star rated fixed speed ACs and Inverter ACs with2 3 4 and 5 Star rating. Hitachi's range of Split Air Conditioners consists of'Kashikoi' Range 'Neo' 'I Connect' 'Zunoh' 'Toushi' 'Star Sumo' and 'ACE Reidan'. Its'Kashikoi' range has industry leading technologies like 'I See' 'I sense' 'I clean'Tropical Inverter Compressor etc.
During this period Company promoted 'I Clean Plus' Technology. Earlier 'I Clean'technology was available in only few Models but last year the Company introduced it in 34 and 5 star rated Split AC models as well. Apart from 'I Clean Plus' promotion theCompany also promoted Star Rated Inverter ACs to create more and more awareness about thebenefits of a 5 Star Tropical Inverter Technology enabled ACs in its marketing campaign.Introduction of new Split AC range called 'Toushi' 'Waza' and 'Ridaa' was a strategicdecision to gain market share in Mid price segment.
In window AC segment the Company has more than 10 Models in 2 3 4 and 5 Star ratingcategory which offers unique technologies like Twin Motor Hot & Cold Auto Climateetc.
In addition to product range diversification channel enhancement was also a part ofthe Company's strategy which helped in increasing its base in Tier II and Tier III towns.Channel correction and channel expansion helped the brand in geffing better extraction.The Company also focussed on its tie-up with e-retail partners to gain share on leadinge-retail portals.
COMMERCIAL AIR CONDITIONERS
2016-17 was a challenging year for Commercial Air Conditioner segment because ofdemonetization. Demonetization left an impact on Commercial AC business as the demand ofcommercial AC products suddenly dropped and several new projects were put on hold postdemonetization. Initially the industry was under pressure and was forced to drop pricesto liquidate the products in stock. But later on the situation improved. As per ourestimates despite such critical scenario the Packaged AC market has grown approximatelyby 3% while the Company could clock around 8% growth in Packaged AC segment. This growthin market share was a result of Company's focus on dealer expansion which helped it inachieving higher growth as compared to the industry. To help the Company in furthergaining market share in March a new range of ductable AC series named as 'Toushi' wasintroduced which has been competitively priced with additional specifications. Recentlythe Company also booked a few big orders which will be invoiced in next Financial Year.Overall the Packaged AC segment has given good growth to the Company and with theintroduction of the new product series it is expected that this segment will contributemore.
During the period the Company continued its focus on the Set free VRF Category andimproved its business through channel development. Despite Demonetization which affectednew order booking and product pricing the Company's VRF segment registered a growth ofaround 73% over industry's growth of around 11% in VRF Segment (HP Basis). VRF productsegment is expected to grow in future rapidly and thus it is a category where the Companyis working on its various aspects which will impact the growth of this product's businesslike product development technology enhancement channel expansion brand promotion etc.The Company is planning to launch new models with large footprint by third quarter ofFinancial Year 2017-18. The Company is confident that with the inclusion of these newproducts in its current range it will be able to fulfil consumer needs in a better wayand grow its business exponentially.
The chiller segment witnessed a slow offtake in industry owing to postponement ofseveral commercial projects and slower growth rate of the infrastructure development. Theeconomic crisis impacted the Chiller trading business drastically and it de-grew by 74%but the Chiller manufacturing and S&S business grew by 58%. The situation is improvinggradually with favourable economic reforms and measures. Chiller trading business isexpected to grow with single digit figures in the coming fiscal.
APPLICATION-BASED AIR CONDITIONERS
Besides regular air conditioning products the Company also has special productcategories like Telecom which are developed to meet niche requirement of cooling fortelecom products. The Company enjoys first-mover advantage in providing this uniquecooling solution and is an industry leader in this segment. During FY 2016-17 the Companyhas grown by 31% in this product category. However this segment's growth is entirelydependent upon the growth of highly competitive telecom industry which is presentlystruggling to maintain its margins.
Exports is the new business category for the Company that started two years back.During the first year of operation the Company exported to Sri Lanka Indonesia andBangladesh. However the offtake was on a lower side. During fiscal 2016-17 exportsbusiness witnessed a 128% growth in Split AC business over last year. Newer geographiesnamely UAE Middle-East and Nepal also added to its list. With the in-roads into these newcountries the Company expects to increase its exports in the years to come.
The Company has Frost free range of refrigerators which come in 250+ Itr capacity. Theyare aesthetically superior and come with consumer convenience focused technologies thuscreating a niche for themselves. These products are high on quality and reliabilitymaking the brand more premium and desirable. At present the refrigerator range consistsof 2-door 3-Door 4-door and 6-door refrigerators which comes with unique colour optionsto match the customer's lifestyle and interiors. Apart from Refrigerators the Companyalso has a range of air purifiers to purify polluted air and create a healthy environment.The air purifier category also witnessed a good Year-on-Year growth and its demand isexpected to increase steadily in coming years.
While the Company continued to provide cooling solutions to customers through itsproducts and projects business it also laid an equal emphasis on the service segment. Asa result of its good services the Company could successfully retain its client base andservice as a business has witnessed consistent growth over the past two years and isexpected to witness similar growth going ahead. The Company continues to invest towardstraining of the human resource and their technical skills to ensure growth stability.
After sales service has always been a top priority for the Company. Customer considersafter sale services as one of the key criteria for selecting any product and hence it'sthe Company's continuous endeavour to provide best-in-class after sale service experience.The Company undertook several initiatives to improve the customer satisfaction indexwhich has shown a healthy growth year-on-year. Apart from the Company-owned HCS centresthe Company also launched Hitachi iCare Service App. The app allows a customer to registertheir product take demo register complaint and track complaint status thus avoidinglengthy waiting time on calls to register complaint. The Company will continue to focus oncustomer services as a key differentiator for its future business growth.
A good quality product is the backbone of any organization and for Hitachi's businessits product is its core.
The Company has invested time and again in its manufacturing facility and has triedto develop products which can meet the expectations of Indian consumers. In the samedrive it is focused to become the most operationally competent organisation.
Recently JCMS (Johnson Control Manufacturing System) program was launched with a mottoto become the "Most Operationally Capable Company". JCMS is a structuredmanufacturing operation model which helps plants to achieve manufacturing excellence. Thislean manufacturing system is based on four foundations namely - customer focus organizearound pull stable production environment and zero tolerance to waste. This manufacturingsystem ensures an organisation wide involvement starting from top leadership to every oneworking at the shop floor level.
The Company aims to improve significantly at the operational level by implementation ofthis system.
Alongwith its focus on lean manufacturing safe working environment is also a priorityfor the Company. The Company is taking various steps and activities in conducting aneducational drive within the plant so that safety is ensured for everyone. The Company hastaken many steps to enhance safety standards by strengthening machine guarding and othersafety related activities as well.
This year the Company has invested into automation of machines by adding pick &place robots in injection moulding machines and Copper pipe bending machines. This ensureshigher quality standards and better productivity.
The Company has also upgraded electrical supply line of 11KV with express feeder linedirectly from electric substation to the plant. This ensures round the clock availabilityof power to the Company. For energy savings LED lights are being installed in the Companyin phased manner. Old Halogen lights and CFL lights are being replaced with the energyefficient lights.
For water conservation and recharging the Company has installed rain water harvestingsystem.
With all these initiatives at manufacturing side the Company is committed tomanufacture world class products which can set standards in the Air Conditioner Industry.
RESEARCH AND DEVELOPMENT
Today Hitachi is considered a technologically superior brand which is a result of itsadvanced Research and Development facility and team.
To combat competition and excel in the segment of Split ACs the Company's Research andDevelopment department has worked tirelessly to develop new and innovative products whichcan meet the demands of Indian consumers.
The Company has launched the 6.1 ISEER Split Inverter Air Conditioner in the Indianmarket.
The Company has also developed DFET (Dual Flow Expansion Technology) and launched 5star rated machine in 2.0 TR capacity which is the only 5 star rated model in India inits class and introduced inverter type 'Spacemaker' models for telecom sector which save30% more power as compared to the conventional 'Spacemaker' Model.
Additionally two APF Labs upto 3 TR capacity for room Air conditioners were alsoinstalled. These labs have NABL accreditation too.
OPPORTUNITIES AND OUTLOOK
1. The Government's Smart City Project is going to be a big opportunity for AirConditioners' and Home Appliances' manufacturers. This Project will give growth toproducts which are built with smart technologies and are environment friendly.
2. Increasing standards of Bureau of Efficiency Energy (BEE) for energy efficiency inproducts is an opportunity for companies who have large line-up of energy efficientproducts.
3. Awareness about energy efficient products and its impact on environment isincreasing amongst customers so the demand of Inverter Products and high Star rated ACsis expected to grow.
4. Affluent class customer base is increasing who are potential buyers of 5 Star Fixedspeed and Inverter ACs so the demand of High end ACs is expected to increase in comingyears.
5. E-Retail is increasing in India which is a good opportunity for Brands to increasesales through online portals. With e-retailing reach of products will be much better andconvenient for customers.
RISKS CONCERNS AND CHALLENGES
1 Increasing standards of Energy Efficiency is leading to higher raw material cost andincrease in manufacturing cost for products.
2 To keep pace with changes in technology and for upgradation of features hugeinvestment is required.
3 Window AC segment growth is almost constant and demand for Window AC is de-growingdue to reducing price gaps between Split AC and Window AC.
4 Electricity consumption in India is a big concern. The growth of Air Conditionermarket and penetration is highly dependent on availability of electricity.
5 Hike in the cost of import components like compressor copper and depreciation ofIndian rupee against USD is impacting the margins on product sales.
The Company's Human Resources are amongst the best in the Industry. Company believes inholistic development of employees to help them perform better with enthusiasm. Great careis taken to provide employees with an environment that is a healthy mix of flexibility andtarget orientation. The Company's policies and practices are employee friendly and arewell valued by employees. As the Industry is growing at a rapid pace so are Company'sstrategic Human Resource activities which are focused entirely on attracting developingand retaining the best talent in the market. With an aim to be ahead of competition focuson the future and leverage on the skill set currently available many new HR initiativeshave been taken by the Company.
The total Strength of employees (Staff and Operators) of the Company was 1444 as onMarch 31 2017. To be ahead of the competition the Company has focused on strategicrecruitment for business-specific positions. The Company believes in being future-readyand hence has a strong focus on augmenting its manpower strength in critical businessareas having direct impact on the bottom-line. The Company also focuses on introducingyoung fresh and dynamic talent to various business functions on a regular basis and as apart of this a robust pool of 24 Engineering & Management Trainees were recruitedduring the year under review from premier educational institutions across India.
To create leaders for the future the efforts have to be made today. With thisphilosophy in mind the Company continuously strives to incorporate ever-evolving employeespecific practices that not only fulfil its requirements but also inspire them to lead theorganization to greater heights. Through merit-based reward structure competency specificlearning opportunities and market based salary benchmarking the Company strives toprovide employees with a conducive environment of 'Recognition Mentoring and Rewards'.
Learning & Development:
The Company is fully committed towards developing highly motivated competent andengaged workforce. For the same lot of investment was made in 2016-17 for providingopportunities to employees of all categories for Learning & Development. Competencydevelopment is a very critical area of focus and the Company has conducted variousTechnical & Behavioral learning programmes for various categories of employees acrossthe hierarchy.
Initiatives such as the 'Shikhar Leadership Management Program'for TalentAssessment & Development of the Leadership Team were taken. Two phases of programmesof 'Shikhar - Leading Self' and 'Shikhar - Leading Others' have been conducted for thisgroup. The 'Samarthya - Management Development Program' focused on Competency Assessmentand Inter-functional Learning of Middle Management Team.
Company completed the detailed assessment through various simulations and a 360Assessment process. Extensive programs like 'Utthan'- A program for Self-Development forOperators the 'Kaushalya' program for Technical Skill Development of Field Techniciansand a dedicated Soft Skill Development program for Hitachi Profile Communicators (HPC)& other Dealer Employees are some of the steps taken by the Company towardsdeveloping its Human Capital and making them 'future ready'.
The Company has kept conscious efforts towards creation of a gender diverse workforce.Various steps have been taken by the Company to create a safe rewarding and facilitativework environment for female employees. Steps such as availability of dedicatedresidential areas and transportation facilities at specific locations creation of robustpolicies specific to female employees and creation of an exclusive Company-wide WomenForum have been taken to attract and encourage gender diversity in the workforce. Variousactivities such as gender sensitization workshops women empowerment workshopsself-defence workshops and exclusive networking activities have been conducted as a partof the Women Forum.
The long-awaited Goods and Services Tax Act is expected to be implemented by 1st ofJuly 2017. The decade-long reform is set to be adopted by all States and UnionTerritories of India. Most of the mass-consumption goods have been taxed at a lower ratesand some essential food commodities have been exempted. However Air Conditioners andRefrigerators have been put in the highest tax bracket of 28%. This may lead to marginalincrease in price of products of the company in short run. However with the stabilizationof GST input credit mechanism and other processes we expect this price rise toneutralize.
With introduction of GST an over-all positive impact is expected on the GDP of thecountry. This may be beneficial for the consumer goods industry as a whole in long run.
The Company is fully committed for smooth GST roll-out and is in the final process ofcompleting the necessary modalities to migrate into GST regime.
INTERNAL CONTROL AND SYSTEMS
The Company has an adequate system of internal control to ensure that all the assetspertaining to Company are safeguarded and protected. Internal Audit has also been donethrough external Auditors at plant as well as at all the branches of the Company as perthe detailed scope defined and approved by the Audit Committee. The Internal Audit isplanned to substantiate and review the adequacy of controls and laid down procedures &systems.
Observations of Internal Auditors and the detailed plan of action is reviewed anddiscussed at the meetings of the Audit Committee.
2016-17 being first complete fiscal year post Joint Venture it has put in placeseveral changes in its policies and processes to align its functioning with globalpractices such as SOX compliances whereby the Company developed control and monitoringmeasures in crucial business processes with an objective to eliminate or reduce riskelements in day to day business activities.
Pursuant to the provisions of Section 139 of the Companies Act 2013 Members of theCompany at the Annual General Meeting held on July 25 2016 appointed M/s. PriceWaterhouse & Co. Chartered Accountants LLP (Firm Registration No. 304026E / E300009)as Auditors of the Company to hold office from the conclusion of Annual General Meetingheld on July 25 2016 till the conclusion of the sixth consecutive Annual General Meeting.Accordingly requisite resolution for ratification of Appointment of M/s. Price Waterhouse& Co. Chartered Accountants LLP as Auditors from the conclusion of Annual GeneralMeeting to be held in 2017 to the conclusion of next Annual General Meeting forms part ofthe notice convening the AGM.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures;
b) Such accounting policies selected and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit of theCompany for that period;
c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities
d) Annual accounts have been prepared on a going concern basis;
e) Internal financial controls which are to be followed by the Company have been laiddown and that such internal financial controls are adequate and were operatingeffectively; and
f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
The Board has carried out an annual evaluation of the performance of the Board AuditCommittee Stakeholder Relationship Committee Nomination and Remuneration CommitteeExecutive Committee Vigil Mechanism Committee and CSR Committee.
The Board has also carried out annual evaluation of the performance of individualDirectors who were evaluated considering levels of their engagement and contributionsafeguarding the interests of the Company and its minority shareholders etc. Theperformance evaluation of the Chairman and the Non-Independent Directors were carried outby the Independent Directors at their separate meeting.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has established a Vigil Mechanism process as an extension of the Company'sCode of Conduct whereby an employee director customer vendor or associate of theCompany can disclose his genuine doubt in good faith to any member of Vigil MechanismCommittee about unethical behavior actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy so that appropriate action can be taken tosafeguard the interest of the Company. In exceptional cases a complaint can be reportedby a complainant to a Chairperson of Audit Committee. This mechanism is overseen by theAudit Committee.
DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2012 READ WITH RULE 5 OFCOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:
|Name of Director and Key Managerial Personnel (KMP) ||Designation ||% increase in remuneration of director and KMP ||Ratio of the remuneration of director to the median remuneration of the employees of the Company for the financial year |
|Mr. Shinichi lizuka (Upto May 30 2016) ||Chairman ||Nil ||NA |
|Mr. Franz Cerwinka (From May 30 2016) ||Chairman ||Nil ||NA |
|Mr. Atsushi Ohtsuka ||Managing Director ||Note 1 ||Note 1 |
|Mr. Gurmeet Singh ||Managing Director ||Note 2 ||Note 2 |
|Mr. Vinay Chauhan ||Executive Director ||5% ||15:1 |
|Mr. Varghese Joseph ||Executive Director ||Note 3 ||13:1 |
|Mr. Ashok Balwani ||Independent Director ||Note 4 ||0.39:1 |
|Mr. Devender Nath ||Independent Director ||Note 4 ||0.55:1 |
|Ms. Indira Parikh ||Independent Director ||Note 4 ||0.36:1 |
|Mr. Mukesh Patel ||Independent Director ||Note 4 ||0.81:1 |
|Mr. R S Mani ||Independent Director ||Note 4 ||0.21:1 |
|Mr. Ravindra Jain ||Independent Director ||Note 4 ||0.55:1 |
|Mr. Vinesh Sadekar ||Independent Director ||Note 4 ||0.29:1 |
|Mr. Anil Shah ||CFO & Executive Director ||Note 5 ||Note 5 |
|Mr. Parag Dave ||Company Secretary ||19% ||3:1 |
Note 1: Mr. Atsushi Ohtsuka ceased to be a Managing Director on January 31 2017
Note 2: Mr. Gurmeet Singh appointed as Managing Director on February 01 2017
Note 3: Mr. Varghese Joseph appointed as an Executive Director on August 01 2015
Note 4: Siffing fees payable to Independent Directors for attending various meetingremained same.
Note 5: Mr. Anil Shah was retired as an Executive Director with effect from September03 2016
Comparison of remuneration against Company's performance
|- Increase in remuneration of each KMP ||As mentioned in above table |
|- Increase in total remuneration of all KMP ||Total remuneration of KMP increased by 43% |
|Percentage increase in the median remuneration of employees in the financial year; ||22% |
|No. of permanent employees on the rolls of Company; ||1444 |
|Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the ||- Average % increase in the salaries of employees other than the managerial personnel 14% |
|percentage increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||- Average % increase in the managerial remuneration 25% |
We hereby affirm that the remuneration given to all the employees Directors and KMP isas per the Remuneration policy of the Company.
RISK MANAGEMENT SYSTEM
Company has implemented Enterprise Risk Management (ERM) system to identify assessmonitor and mitigate the various risks associated with the Company.
Risks are identified and then classified into different categories such as StrategicOperational Business risk and Risk related to act of god. Then score based on level andsignificance of risk is given and subsequently risk mitigation steps are taken.
Every quarter a statement identifying new risks and updation on pre-identified risksalong with their mitigation process or counter measures taken are reported before theAudit Committee.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNEDDURING THE YEAR UNDER REVIEW:
Mr. Shinichi lizuka has ceased to be a Chairman of the Company with effect fromMay 30 2016.
Mr. Franz Cerwinka has been appointed as a Chairman of the Company with effectfrom May 30 2016.
Mr. Atsushi Ohtsuka has ceased to be a Managing Director of the Company witheffect from January 31 2017.
Mr. Gurmeet Singh has been appointed as a Managing Director of the Company witheffect from February 1 2017.
Mr. Anil Shah CFO & Executive Director has retired on 3rd September 2016upon Superannuation. He ceased to be an Executive Director of the Company with effect from3rd September 2016. Company continued to avail his services as Chief Financial Officer.
No Independent Director has been re-appointed by passing a Special Resolutionduring the year under review.
INTERNAL FINANCIAL CONTROL:
Internal Financial Control plan adopted by the Company is adequate with reference tothe Financial Statement.
1. Conduct of its business by adherence to Company's policies.
2. Safeguarding of assets.
3. The accuracy and completeness of the accounting records Prevention and detection offrauds and errors and timely preparation of reliable financial information.
1. Number of meetings of the Board: Five meetings of the Board of Directors ofthe Company were held during the year under review on
May 30 2016 July 25 2016 October 24 2016 January 23 2017 and January 31 2017.
2. Members of the Audit Committee are as under:
a. Mr. Mukesh Patel - Chairman
b. Mr. Devender Nath - Member
c. Mr. Ravindra Jain - Member
3. The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.
4. Details about the Policy on Corporate Social Responsibility (CSR) and projectsimplemented by the Company during the year under review as required under Section134(3)(o) 135(2) read with Companies (Corporate Social Responsibility Policy) Rules 2014have been provided as Annexure A.
5. Formal Appointment and Evaluation Policy of the Board of Directors and SeniorManagement of the Company which has been formulated and recommended by Nomination andRemuneration Committee and adopted by Board of Directors covering appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters provided under Section 178(3) is attached asAnnexure B.
6. No commission paid to any Director of the Company so no disclosure is required tobe made under Section 197(14).
7. The details forming part of the extract of the Annual Return in form MGT 9 asprovided under sub-Section (3) of section 92 is annexed as Annexure C.
8. No loan was granted by the Company to any person to purchase or subscribe to fullypaid-up shares of the Company.
9. Secretarial Audit Report: Pursuant to the provisions of Section 204 of the CompaniesAct 2013 the Report of the Secretarial Auditors is annexed as Annexure D.
10. There is no fraud reported by Auditors under Section 143(12) of the Companies Act2013 during the year under review.
11. Particulars of loans investments or guarantees under section 186: Company has notgranted any loans secured or unsecured to companies firms or other parties coveredunder Section 186. Company has not made any investment in securities of other BodyCorporate. Company has given guarantee of Rs. 1500 lacs against the credit facilitiesavailed by dealers.
12. There is no subsidiary associate and joint venture Company so no disclosure isrequired on the performance and financial position of each of the subsidiaries associatesand joint venture companies in Form AOC 1.
13. There is no Company which has become or ceased to be its subsidiary joint ventureor associate Company during the year.
14. During the year Company has not accepted deposits covered under Chapter V.
15. There is no qualification reservation or adverse remark or disclaimer made by theAuditors in their report.
16. There is no qualification reservation or adverse remark or disclaimer made by theCompany Secretaries in practice in their Secretarial Audit Report.
17. There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
18. Details of complaints relating to sexual harassment during the year under review:Received during the year: Nil; Pending as on 31st March 2017: Nil.
19. Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 relating to Conservation of energytechnology absorption and foreign exchange earnings and outgo is given as Annexure E tothis report.
20. Statement showing particulars of employees under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached with thisAnnual Report.
21. Contract or arrangement under Section 188(1): There were no contracts orarrangements entered by the party falling under Section 188(1). Particulars of contractsor arrangements with related parties are provided in Form AOC 2 as Annexure F.
22. Policy on dealing with Related Party Transactions has been disclosed on Company'swebsite and a weblink is as under: http://www.jci-hitachi.in/cms/materials/ef34acdlff.pdf
23. Revision in Accounts or Board's Report: There are no revisions made in the Accountsor Board's Report.
24. Issue of Equity Shares with differential rights: There was no Equity Share issuedwith differential voting rights during the year under review.
25. Issue of Sweat Equity Shares: There was no issue of Sweat Equity Share during theyear under review.
26. Employee Stock Option and Employee Stock Purchase Schemes: No Employee Stock Optionand Employee Stock Purchase Schemes were launched during the year under review.
27. Disclosure under Regulation 34(3) read with Schedule V of the SEBI (ListingObligation and Disclosure Requirement) Regulations 2015:
a. The Equity Shares of the Company are not delisted or suspended during the year underreview.
b. Equity Shares of the Company are listed on the BSE Limited and the National StockExchange of India Limited.
c. Annual listing fees have been paid to both the stock exchanges mentioned above.
28. Dividend Distribution Policy is given as Annexure G to this report
Your Directors thank all Customers Suppliers Investors Bankers and otherstakeholders of the Company for their co-operation and continued support during the year.We look forward to their continued support in the future also.
We wish to place on record our sincere appreciation for the excellent work put in bythe employees of the Company at all levels.
| ||For and on behalf of the Board of Directors || |
|Place : Delhi ||Gurmeet Singh ||Vinay Chauhan |
|Date : May 23 2017 ||Managing Director ||Executive Director |