Mahindra CIE Automotive Limited
Your Directors present the 16th Annual Report of the Company together with the auditedfinancial statements of your Company for the Financial Year ended 31st March 2015.
A. FINANCIAL HIGHLIGHTS (STANDALONE)#
(Rs. in Million)
|PARTICULARS ||2014-15 ||2013-14 |
|Total Income ||16624.8 ||3929.9 |
|Profit before Interest Depreciation ||1531.8 ||587.8 |
|Exceptional Items and tax || || |
|Less: Depreciation ||688.7 ||282.9 |
|Profit before Interest Exceptional Items and tax ||843.1 ||304.9 |
|Less: Interest and Finance cost ||140.4 ||37.3 |
|Profit before Exceptional Items and Tax ||702.7 ||267.6 |
|Less: Exceptional items ||- ||- |
|Profit before tax ||702.7 ||267.6 |
|Profit for the year ||776.7 ||179.7 |
|Balance of Profit & Loss Account brought forward losses from earlier years ||(655.0) ||(834.7) |
|Adjustments related to merger & prior period depreciation ||1618.8 ||- |
|Profit / (Loss) carried to Balance Sheet ||1740.5 ||(655.0) |
During the year under review your Company registered a total income of Rs. 16624.8Million as against Rs. 3929.9 Million in the previous year and Profit before InterestDepreciation Exceptional items and tax of Rs.1531.8 Million as against Rs. 587.8 Millionin the previous year. The net profit for the year stood at Rs.776.7 Million as against anet profit of Rs. 179.7 Million over the previous year.
# Consequent to the effectiveness of the Integrated Scheme and Composites Scheme ofAmalgamation results for the Financial Year ended 31st March 2015 include the results ofthe amalgamated companies and hence are not comparable to those of the prior periods/ yearwhich do not include the results of the amalgamated companies.
Your Directors do not recommend any dividend for the year.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
B. OPERATIONAL HIGHLIGHTS
Your Company has focused on increasing Plant efficiency and developing value addedcomponents to mitigate the effect of declining volumes in its addressable market segments.Majority of MCIE s plants are located in the state of Maharashtra (around Pune andin Nashik) where power tariffs have increased in FY15.
The forgings and castings verticals have significant power costs and they have launchedprojects to improve efficiency in the usage of power. With the help of CIE the differentverticals of the India operations are developing new products and exploring entry intoWestern OEMs in India.
Mahindra Forgings Europe (MFE):
MFE has followed a two phase strategy to achieve a turnaround in profitability. In thefirst phase your company focused on cost reduction by improving productivity reducingheadcount and overtime. Most of this has been achieved and profitability is back on track.
Under the second phase of restructuring the management has focused on furtherimprovement in operational efficiencies by optimizing manufacturing locations and productportfolio wherein it has decided to close Jeco-Jellinghaus GMBHs operations in aphased manner over next 6 months by shifting machines & equipment to othermanufacturing locations of MFE and outsourcing most of the machining operations. No lossof revenue is expected. The management expects that this exercise will improve overalloperational efficiencies at MFE.
CIE Forgings Europe (CIEF):
CIEFs EBITDA margins are in line with the consolidated margins of the CIE groupworldwide. The strategic focus is to maintain profitability at these plants while growingwith the market.
Metalcastello supplies mainly to the off road market which has seen a steady drop involumes over the last few years leading to a drop in EBITDA%. A restructuring programinvolving headcount reduction and inventory write off has been implemented leading tosignificant improvement in EBITDA margins.
The focus is on increasing operational efficiencies and developing new customers andmachining facility.
C. SCHEME OF MERGER
The Board of Directors of the Company had at its meeting held on June 15 2013approved (a) the scheme of amalgamation of Mahindra Hinoday Industries Limited("MHIL") Mahindra Ugine Steel Company Limited ("MUSCO") MahindraGears International Limited ("MGIL") Mahindra Investments (India) PrivateLimited ("MIIPL") and Participaciones Internacionales Autometal Tres S.L.("PIA 3") with Mahindra CIE Automotive Limited (the Company or MCIE) (theIntegrated Scheme) AND (b) the scheme of amalgamation of Mahindra Composites Limited("MCL") with the Company ("Composites Scheme") (The Integrated Schemeand the Composites Scheme are together referred to as the "Schemes" and MUSCOMGIL MIIPL PIA3 and MCL are together referred to as "Transferor Companies").
Securities and Exchange Board of India ("SEBI") vide its observation lettersdated 7th March 2014 had conveyed its comments on the draft Integrated Scheme and thedraft Composites Scheme to the BSE Limited ("BSE"). Pursuant to the SEBIletters the BSE and the National Stock Exchange of India limited ("NSE") videtheir Observation letters both dated 7th March 2014 had conveyed their respectiveno-objections to file the Integrated Scheme and the Composites Scheme with theHonble High Court subject to certain conditions specified therein.
Court Convened Meetings for approval of the Schemes
Approval of the members was sought for each of the Integrated Scheme and the CompositesScheme pursuant to the provisions of Sections 391 to 394 of the Companies Act 1956 atthe separate meetings of the members held on 5th June 2014 convened as per thedirections of the Honble High Court of Judicature at Bombay received vide itsorders both dated 2nd May 2014.
The Schemes were approved by requisite majority of shareholders attending and voting atthe respective meetings.
Postal Ballot for Approval of the Schemes
In terms of SEBI circular No. CIR/CFD/DIL/5/2013 dated February 4 2013 read withcircular number CIR/CFD/DIL/8/2013 dated May 21 2013 ("SEBI Circulars") theCompany has obtained approval of the public shareholders of the Company to each of theIntegrated Scheme and the Composites Scheme through postal ballot and e-voting process.
Thereafter the Company filed petition seeking sanction of the Honble High Courtof Judicature of Bombay for each of the Integrated Scheme and the Composites Scheme.
The Honble High Court of Judicature of Bombay approved the Integrated Scheme andthe Composites Scheme on October 31 2014 and an authenticated copy of each of the saidorders were received by the Company on November 11 2014.
However the effectiveness of the Schemes was subject to certain conditions precedentas provided in the respective Scheme.
The Company and transferor Companies had complied with all such Conditions Precedentsand the certified copies of the respective court orders approving the Integrated Schemeand Composites Scheme were filed with the Registrar of Companies on December 10 2014 thedate on which schemes became effective.
Pursuant thereto the said Transferor Companies stand dissolved without winding-up witheffect from the effective date and entire business of the Transferor Companies has beentransferred to and vested in the Company with effect from the appointed date which isOctober 1 2013.
D. CHANGES IN SHARE CAPITAL AND ISSUE OF SHARES
Pursuant to the Integrated Scheme and the Composites Scheme on 2nd January 2015 theCompany has issued and allotted 229330519 equity shares of Rs. 10/- each fully paid-upto the Shareholders of Transferor Companies.
The above allotment also includes 6536 equity shares arising out of the consolidationof fractional entitlements which were allotted to KPM Business Solutions Private Limitedbeing the trustee nominated by the Company. The Trustee have sold said shares in the openmarket at the prevailing market prices and transferred the net proceeds thereof to theCompany for distributing the same to the Shareholders in proportion to their respectivefractional entitlements. The Company has paid the fractional entitlements (after deductionof applicable taxes and other expenses incurred) through NEFT/RTGS to those fractionholders whose bank account details were registered and dispatched the warrants toremaining fractional holders in February 2015.
Further in addition to the above in terms of the Composites Scheme 945 equity sharesof Rs. 10/- each were issued and kept in abeyance against the 1050 equity shares kept inabeyance by MCL the Transferor Company under the Composites Scheme.
During the year ended 31st March 2015 the Company has allotted 1305277 equityshares of face value of Rs. 10/- each pursuant to exercise of options under theCompanys Employee Stock Option Scheme.
Pursuant to the above as on 31st March 2015 the issued capital of the Company wasincreased to Rs. 3229772070 and subscribed and paid-up equity capital increased to Rs.3229762620/-.
Changes in Promoters Shareholding
Mahindra and Mahindra Limited ("M&M") and Participaciones InternacionalesAutometal Dos S.L ("PIA2") the promoters the Company were also shareholders incertain Transferor Companies.
Further Prudential Management and Services Pvt. Ltd. (Prudential) which was holdingshares in certain Transferor Companies became part of Promoter Group of the Company.
Pursuant to the Schemes 98735844 equity shares 64975298 equity shares and4784068 equity shares of Rs. 10 each were issued and allotted to PIA2 M&M andPrudential respectively.
As on 31st March 2015 PIA2 held 171767537 equity shares in the Company representing53.18% of the paid up equity capital and M&M held 65271407 representing 20.21% ofthe paid up equity capital and Prudential held 4784068 equity shares in the Companyrepresenting 1.48% of the paid up equity capital of the Company.
Employees Stock Option Scheme
Employees' Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensationcommittee of directors of the Company and was approved by the shareholders at the AnnualGeneral Meeting of the Company held on 25th July 2007. The Scheme has been effective from26th October 2007 and shall continue to be effective till terminated by Remuneration /Compensation Committee (now Nomination and Remuneration Committee).
The ESOS was amended vide special resolutions passed by the Shareholders in the 9thAnnual General Meeting held on 29th July 2008 and further amended by special resolutionspassed by the Shareholders in the 12th Annual General Meeting held on 2nd August 2011.
During the year pursuant to the Integrated Scheme and the Composites Scheme ofAmalgamation the Board of Directors of the Company amended the ESOS on 12th December2014 incorporating suitable clauses to grant the Options to the Eligible employees ofMUSCO and MCL who were holding Stock Options under the respective Schemes of MUSCO and MCL(now amalgamated and merged with the Company).
The exercise price payable for options granted by the Company to the Eligible Employeesof MUSCO and MCL were adjusted so that the total exercise price payable by such EligibleEmployees under the respective Stock Option Scheme of Transferor Companies is equivalentto the exercise payable for the options granted by the Company.
Total number of equity shares that can be issued under ESOS pursuant to exercise ofoptions was increased to 4620796. The increase of 227307 was pertaining to theequivalent number of options granted to eligible employees of MUSCO and MCL based on therespective share swap ratio provided under schemes in lieu of the outstanding stockoptions held by such employees under their respective employee stock option schemes whereeach option conferring on the employee a right to get one equity share of Rs.10/- each ofthe Company.
Voting rights on the shares issued to employees under the ESOS are either exercised bythem directly or through their appointed proxy.
No employee has been issued stock options during the year equal to or exceeding 1% ofthe issued capital of the Company at the time of grant.
The ESOS is in compliance with the SEBI (Share Based Employee Benefits) Regulations2014. The certificate issued by the Statutory Auditors of the Company to the effect thatthe Scheme has been implemented in accordance with the said Regulations and the resolutionpassed by the members will be placed before the shareholders at the ensuing Annual GeneralMeeting.
The information that a company is required to disclose in relation to ESOS under theCompanies Act 2013 and the details of the ESOS being implemented as specified by SEBIunder Clause 14 of the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 is uploaded on the website of the Company athttp://mahindraforgings.com/ investor-zone/investor-relation.html.
The information is also provided in the Note No. XXVI (3) of the Notes to FinancialStatements.
E. SUBSIDIARY COMPANIES
At the beginning of the Financial Year the Company has subsidiaries namely MahindraForgings International Limited Mauritius Mahindra Forgings Global Limited MauritiusStokes Group Limited U.K. Mahindra Forgings Europe AG Jeco Jellinghaus Gmbh StokesForgings Ltd. Stokes Forgings Dudley Ltd. Gesenkschmiede Schneider Germany FalkenrothUmformtechnik GmbH Germany Schoneweiss & Co. GmbH Germany
During the year consequent to the merger Mahindra Gear & Transmissions PrivateLimited (MGTPL) India Mahindra Gears Global Limited(MGGL) Mauritius and CIE GalforS.A. (Galfor) Spain became subsidiaries of the Company and Metalcastello SpA Italy (MC)(subsidiary of MGGL) CIE Legazpi S.A. Spain (subsidiary of Galfor) and UAB CIE LT ForgeLithuania (subsidiary of Galfor) and Crest Geartech Private Limited India (subsidiary ofMC) became step subsidiaries of the Company. None of the subsidiaries have been liquidatedor sold during the year.
No operating subsidiary of the Company is yet to commence operations as at end of theyear.
The performance and financial position of each of the subsidiaries included in theconsolidated financial statement is given in the Management Discussion and Analysis Reportattached to the Boards Report.
Further as required under Section 129(3) of the Companies Act 2013 read with theRules a statement containing the salient features of the financial statement of thesubsidiaries in prescribed form AOC-1 is attached to the Financial Statements. TheConsolidated Financial Statements of the Company and its subsidiaries as required underSection 134(1) of the Act prepared in accordance with Accounting Standard AS 21 forms apart of the Annual Report
In accordance with Section 136 of the Act the separate accounts in respect of each ofthe Subsidiaries are uploaded on the website of the Company and copies of the same shallbe provided to shareholders of the Company on receipt of request for such copies.
F. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operationsalong-with performance and financial position of each of the subsidiaries is provided inthe Management Discussion and Analysis Report which forms part of the Annual Report.
G. BOARD OF DIRECTORS AND COMMITTEES
During the year under review the Board on recommendation of Nomination andRemuneration Committee appointed Mr. Zhooben Bhiwandiwala as an Additional Director on29th July 2014 who was confirmed as Director at the Annual General Meeting held on 29thSeptember 2014.
The Board on recommendation of Nomination and Remuneration Committee proposed tomembers the appointments of Mr. Daljit Mirchandani (DIN: 00022951) Mr. Manoj Maheshwari(DIN: 00012341) Mr. Dhananjay Mungale (DIN: 00007563) Mr. Jose Ramon BerecibarMutiozabal (DIN: 06704914) Mr. Jose Sabino Velasco Ibanez (DIN: 06704932) Mr. Juan MariaBilbao (DIN: 06963805) and Ms. Neelam Deo (DIN: 02817083) as Independent Directors of theCompany. The members at the Annual General Meeting held on 29th September 2014 approvedtheir appointment as Independent Directors for a term of five years with effect from thatdate.
The Board on recommendation of Nomination and Remuneration Committee approvedre-appointment of Mr. K. Ramaswami as Managing Director of the Company for a furtherperiod of three years with effect from 4th October 2014 and approved his remuneration.
Mr. Jose Ramon Berecibar Mutiozabal (DIN: 06704914) resigned as Independent Director on15th October 2014. Thereafter Mr. Jose Ramon Berecibar Mutiozabal (DIN: 06704914) wasappointed as an Additonal Director (Non-executive non-Independent) who resigned asDirector with effect from 31st March 2015.
The Board on recommendation of Nomination and Remuneration Committee appointed Mr.Pedro Echegaray as an Additional Director on 21st October 2014 and also approved hisappointment and remuneration as Executive Director for a period of three years.
Further on recommendation of Nomination and Remuneration Committee Mr. Suhail Nathani(DIN: 01089938) was appointed as Independent Director at the meeting of Board held on12th December 2014 to fill-up the casual vacancy caused by the resignation of Mr. JoseRamon Berecibar Mutiozabal. In the same meeting Mr. Jose Ramon Berecibar Mutiozabal (DIN:06704914) was also appointed as an Additional Director (non-independent) of the Companyw.e.f. 12th December 2014.
The Board at its Meeting held on 11th February 2015 on recommendation of Nominationand Remuneration Committee approved appointment of Mr. Hemant Luthra as ExecutiveChairman and his remuneration for a period of three years with effect from 1st April2015.
Mr. Shriprakash Shukla (DIN: 00007418) was appointed as Additional Director of theCompany in the Board Meeting on 27th March 2014 w.e.f. 1st April 2015. Pursuant toSection 160 of the Companies Act 2013 the Company has received notice in writing from amember signifying the intention of the member to propose his candidature for the office ofDirector of the Company along with the deposit of one lakh rupees.
Mr. Jose Ramon Berecibar Mutiozabal ceased as director w.e.f. 31st March 2015consequent to his resignation from the Board.
On 27th March 2015 the Shareholders of the Company through postal ballot inter-aliaapproved
The Appointment of Mr. Suhail Nathani (DIN: 01089938) as an Independent Directorof the Company for five consecutive years commencing from 12th December 2014;
Regularised the appointment of Mr. Pedro Jesus Echegaray Larrea as Director ofthe Company
The Appointment and Remuneration of Mr. Pedro Jesus Echegaray Larrea (DIN:06713892) as Whole-time Director (Executive Director) of the Company for a period of threeyears w.e.f. 21st October 2014; and
The Appointment and Remuneration of Mr. Hemant Luthra (DIN: 00231420) as aWhole-time Director (Executive Chairman) of the Company for a period of 3 (three) yearsw.e.f. 1st April 2015.
The Appointment and Remuneration of Mr. K. Ramaswami as Managing Director of theCompany for a period of 3 (three) years w.e.f. 4th October 2014.
Further Mr. Antonio Maria Pradera Jauregui and Mr. Zhooben Bhiwandiwala Directors onthe Board are liable to retire by rotation at the ensuing general meeting pursuantprovisions of Section 152 of the Act and Articles of Association of the Company andoffered themselves for re-appointment.
Detailed profile of the Directors seeking re-appointment alongwith other details as maybe required are provided in the Corporate Governance Report which forms part of the AnnualReport.
The Company has received declarations from each of the Independent Directors confirmingthat they meet the criteria of Independence as provided in sub-section (6) of Section 149of the Companies Act 2013 and also in the Clause 49(II)(B) of the Listing Agreement.
Meetings of Board of Directors
The calendar of the Board/ Committee Meetings and the Annual General Meeting arecirculated to the Directors in advance to enable them to plan their schedule for effectiveparticipation at the respective meetings. Additional Board Meetings are convened by givingappropriate notice to address business exigencies. At times certain decisions are taken bythe Board/ Committee through circular resolutions.
The Board of Directors of the Company met eight times during the Financial Year ended31st March 2015 viz. 29th April 2014 two meetings held on 29th July 2014 29thSeptember 2014 21st October 2014 12th December 2014 11th February 2015 and 27thMarch 2015. The intervening gap between the Meetings was within the period prescribedunder the Companies Act 2013.
Details of attendance of meetings of the Board its Committees and the AGM are includedin the Report on Corporate Governance which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors met once during the year under review. The Meeting wasconducted in an informal manner without the presence of the Non-Independent Directors andmembers of management
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement the Board has carried out an annual performance evaluation of its ownperformance the individual directors as well as the evaluation of the working of itsCommittees.
The Company has formulated a Policy for performance evaluation of the Board as a wholeIndividual Directors Committees which also includes feedback to the Chairman.
A questionnaire based on criteria approved by the Committee for evaluation ofperformance of Board Committees of Board and Individual director was prepared. The Boardon recommendation of the Nomination and Remuneration Committee approved to obtain thefeedback of all the Directors on the said Questionnaire through electronic platform. AnIndependent Agency was appointed to provide the electronic platform. Web link of theelectronic platform along-with username and passwords of respective board members foraccessing such platform was forwarded by the Independent Agency.
The Board Members provided their feedback on the standard questionnaire through theelectronic platform. The members were also able to give qualitative feedback apart fromthe standard questionnaire.
The reports of feedback received from all Directors on performance evaluation ofindividual directors were shared with respective Directors and Chairman of the NominationCommittee. Nomination and Remuneration Committee evaluated the performance of allindividual directors based on the feedback so received.
The report of the feedback received from all the Directors on performance evaluation ofBoard and Committees of Board were shared with the Chairman of the Company. The Board onthe basis of feedback so received evaluated performance of its own and Committees ofBoard. Performance Evaluation of the Chairman of the Company was also carried out by theIndependent Directors of the Company taking into account feedback of all the Directorsincluding the Executive and Non-executive Directors.
Familiarisation Programme for Independent Directors
The details of programmes for familiarisation of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are given inthe Report on Corporate Governance and the same are also available on the website of theCompany at the link: http://mahindraforgings.com/investor-zone/investor-relation/governance.html
Policy on Appointment and Remuneration
In accordance with the provisions of Section 134(3)(e) of the Companies Act 2013("the Act") read with Section 178(2) of the Act and Clause 49 of the ListingAgreement the Company has formulated following policies which inter alia includes thecriteria for determining qualifications positive attributes and independence ofDirectors.
i. A policy on Appointment of Directors and Senior Management and succession planningfor orderly succession to the Board and the Senior Management
ii. A policy on remuneration of Directors Key Managerial Personnel and other employeesof the Company
The extract of the above policies are annexed as Annexure VII & VIIIrespectively and forms part of this Report.
Committees of the Board
Your Company has duly constituted the Committees required under the Companies Act 2013read with applicable Rules made thereunder and the Listing Agreement.
The Board of Directors of the Company has formed an Audit Committee which consist ofthe Independent Directors namely Mr. Daljit Mirchandani as the Chairman Mr. Jose SabinoVelasco Ibanez Mr. Manoj Maheshwari and Mr. Dhananjay Mungale. All the recommendations ofthe Audit Committee were accepted by the Board during the year under review.
The other Committees of the Board are:
i) Nomination and Remuneration Committee
ii) Stakeholders' Relationship Committee
iii) Corporate Social Responsibility Committee
iv) Allotment Committee
The details with respect to the composition powers roles terms of referenceMeetings held and attendance of the members at such Meetings of the relevant Committeesare provided in the Report on Corporate Governance of the Company which forms part of thisAnnual Report.
Directors Responsibility Statement
Pursuant to Sub-Section (5) of Section 134 of the Companies Act 2013 your Directorsbased on the representation received from the Operating Management and after due enquiryconfirm that:
(a) in the preparation of the annual accounts for the Financial Year ended 31st March2015 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year 2014-15and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care 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 directors had prepared the annual accounts for the Financial Year ended 31stMarch 2015 on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Report on Corporate Governance
Your Companys philosophy on Corporate Governance sets the goal of achieving thehighest level of transparency accountability in all its dealings with the stakeholdersemployees and the government. The practice of responsible governance has enabled yourCompany to achieve sustainable growth while meeting the aspirations of itsstakeholders and societal expectations. A report on Corporate Governance along witha Certificate from the Auditors of the Company regarding the compliance of conditions ofCorporate Governance as stipulated under Clause 49 of the Listing Agreement forms part ofthe Annual Report.
Vigil Mechanism / Whistle Blower Policy
The Company promotes ethical behaviour in all its business activities and hasestablished a vigil mechanism for Directors and Employees to report their genuineconcerns.
Your Company has formulated a policy known as "Whistle Blower Policy/ (Vigil)Mechanism" pursuant to Section 177 of the Companies Act 2014 read with Clause 49 ofthe Listing Agreement which provides a mechanism for employees and directors of theCompany to report concerns about unethical behaviour actual or suspected fraud orviolation of the companys code of conduct or ethics policy. This mechanism alsoprovide for adequate safeguards against victimisation of director(s) / employee(s) whoavail of the mechanism and also provide for direct access to the Chairman of the AuditCommittee in exceptional cases. The details of such Policy is explained in the CorporateGovernance Report and has been uploaded on the website of the Company;http://mahindraforgings.com/investor-zone/investor-relation/governance.html
Risk Management Policy
In terms of the requirement of the Act the Company has developed and implemented theRisk Management Policy and the Audit Committee of the Board reviews the same periodically.Your Company has also established procedures to periodically place before the Boardthe risk assessment and minimisation procedures being followed by the Company and stepstaken by it to mitigate the Risks.
Brief of the Policy and important element of risk which may threaten the existence ofthe Company are provided in the Management Discussion and Analysis Report.
Internal financial controls
Your Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. Review of the internal financial controlsenvironment of the Company was undertaken during the year which covered verification ofentity level control process level control and IT controls identification assessmentand definition of key business processes and analysis of risk control matrices etc.
Reasonable Financial Controls are operative for all the business activities of theCompany and no material weakness in the design or operation of any control was observed.The internal financial controls with reference to the Financial Statements arecommensurate with the size and nature of business of the Company.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
Your Company has always believed in providing a safe and harassment free workplace forevery individual working and endeavors to create and provide an environment that is freefrom discrimination and harassment including sexual harassment.
The Company has put in place a policy on Sexual Harassment" with aim toredress sexual harassment instances to create mechanism on redressal of such issues atworkplace and sensitises employees on how to report such offences to the committee or to asenior executive.
During the year 1 complaint was reported and the same was resolved as per theprovisions of Prevention of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. No Complaints were pending as at the end of theFinancial Year under review.
Key Managerial Personnel
The Board of Directors of the Company on recommendation of Nomination and RemunerationCommittee at its meeting held on 29th April 2014 appointed Mr. K. Jayaprakash as ChiefFinancial Officer of the Company. Post the Schemes of amalgamation became effective heceased to be Key Managerial Personnel of the Company with effect from 12th December 2014and on the recommendation of Nomination and Remuneration Committee re-designated him asChief Financial Officer of the Forgings Castings and Magnetics Products Divisions of theCompany.
Thereafter the Board of Directors of the Company on recommendation of Nomination andRemuneration Committee and the Audit Committee appointed Mr. Sanjay Joglekar as ChiefFinancial Officer of the Company with effect from 12th December 2014.
Further the Board appointed Mr. Romesh Kaul as Chief Executive CompositesDivision and Mr. Ajit Lele as Chief Executive Stamping Division with effect from12th December 2014
Mr. Ajit Lele retired at the end of Financial Year and ceased to be Key ManagerialPersonnel.
Mr. Krishnan Shankar continues to be Company Secretary and Head Legal of theCompany.
Particulars of Employees
As required under Section 197(12) of the Act and Rule 5 of Companies (Appointment andRemuneration of Managerial Remuneration) Rules 2014 the ratio of the remuneration of eachdirector to the median remuneration of employees of the Company and other details asprescribed therein are provided as Annexure V to this Report.
The Company has employees who were in receipt of remuneration not less than Rs.6000000/- per annum during the year ended 31st March 2015 or employee who were employedfor a part of the Financial Year and were in receipt of remuneration of not less than Rs.500000/- per month during any part of the said year or employees who were employedthroughout the Financial Year or part thereof. Statement of Particulars of such employeesis provided as Annexure VI to this report
The Companies do not have employees who were employed throughout the Financial Year orpart thereof was in receipt of remuneration in that year which in the aggregate or asthe case may be at a rate which in the aggregate is in excess of that drawn by themanaging director or whole-time director or manager and holds by himself or along with hisspouse and dependent children not less than two percent of the equity shares of thecompany.
Industrial Relations generally remained cordial and harmonious throughout the year.
The Management Discussion and Analysis Report give an overview of the developments inHuman Resources/Industrial Relations during the year.
J. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security are given is providedin the note no. X & XIII of the notes to the Financial Statements.
K. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the Financial Yearwere on an arms length basis and were in the ordinary course of businessaccordingly the disclosures pursuant to Section 134(3)(h) read with Rule 8(2) of theCompanies (Accounts) Rules 2014 in Form AOC-2 is not applicable.
L. PUBLIC DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its employees during theyear under review.
Mahindra Ugine Steel Company Limited (MUSCO) merged with the Company with effect from10th December 2014. During the year an amount of Rs. 87725 in the aggregate consistingof matured fixed deposits and interest pertaining to MUSCO which remained unpaid orunclaimed for a period of seven years has been duly transferred to Investor Education andProtection Fund. As on 31st March 2015 there were no unpaid or unclaimed matured depositsand interest thereon.
The Company has not made any loans and advances in the nature of loans to subsidiariesand associates and no loans and advances in the nature of loans were given where there isno repayment schedule or repayment beyond seven years or no interest or interest belowSection 186 of the Companies Act 2013 hence disclosure pursuant to Clause 32 of theListing Agreement not required.
M. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the integrated Scheme and the Composites scheme Mahindra Ugine SteelCompany Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Companyduring the year under review. Both MUSCO and MCL had unclaimed dividends which are nowtransferred in the Books of the Company. Pursuant to the provisions of the InvestorEducation Protection Fund (Uploading of information regarding unpaid and unclaimed amountslying with companies) Rules 2012 the Company has uploaded the details of said unpaid andunclaimed amounts now lying with the Company on the website of the Company at http://mahindraforgings.com/investor-zone/others/documents.html
Under the Companies Act 1956 dividends that are unclaimed for a period of seven yearsare required to be transferred to the Investor Education and Protection Fund (IEPF)administered by the Central Government. Pursuant to the provisions of Section 205C of theCompanies Act 1956 and Investor Education and Protection Fund (Awareness and Protectionof Investors) Rules 2001 MUSCO which is now merged with the Company had transferred anamount of Rs. 552413 being unclaimed dividend for Financial Year ended on 31st March2007 to the IEPF no claim lies against the Company in respect of these dividends.
Your Companys vision on sustainability is "Continuously improve ourcapability by integrating environmental social and economic aspects in operations forcreating better tomorrow than today". In line with its vision the Company hasidentified and implemented various projects for reduction in waste energy and GHGemissions to achieve the targets set under its Sustainability Road map.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business practices among allstakeholders is key to perpetual growth. The Company continues its initiatives to generatethis awareness among employees who are the most important internal stakeholders of theorganisation. This awareness campaign was taken to the external stakeholders suppliersand vendors.
Safety Health and Environment Performance
Your Company has a Safety Occupational Health and Environmental (SH&E) policy onoccupational health safety and environmental protection through which every employee ismade responsible for the observance of the measures designed to prevent accidents damageto occupational health and avoidable environmental pollutants.
Safety and Health
The Safety Committee of the Company meets periodically to review the status of safetyissues and reporting of accidents if any. Various initiatives such as emergency mockdrills and advanced fire protection system for improving the Safety have been taken.Common Guarantee Safety Scheme (CGSP) has been initiated as a step forward to focus onsafety.
Safety week and Fire Service day are being celebrated. Safety Audits/Inspection alongwith Safety awareness training on safety is conducted.
Your Companys plant continues to improve their well being of all its personnel byorganising Occupational Health Examination Camps Periodic Health Check-ups etc.
Since the last few years your Company has been focusing external certifications forachieving world class environmental standards.
All plants of the Company except Zaheerabad Plant are certified for EHSMS certificationusing ISO 14001 and BS OHSAS 18001 standards. The OHSAS system aims to eliminate orminimise risk to employees and other interested parties who may be exposed to OccupationalSafety risks in the Company. Sustainable development is promoted through sharing of bestpractices in the fields of Safety Occupational Health & Environment.
The highlights of different initiatives taken by the Company at its various Plants forhealth safety environment and sustainability are as under:
Safety Incident status safe workplace awareness and stakeholderengagement were areas of focus this year at our plants. Noteworthy is that in most of ourplants no incidents were reported. Plants have made significant improvement in reducingnon reportable and first aid injuries by focusing on specific areas of operations toremove the occurrence of such incidents in the future. Your company is expanding theactivities related to safety training and is including the other stakeholders as aresponsible organization.
Resource Consumption - Specific energy and water consumption at your company hasreduced variably across our plants. The Plants have made consistent progress in waste towealth water conservation rain water harvesting energy saving and social developmentprojects.
Standards and Certifications - All our plants are certified individually forOHSMS and EMS by agencies of international repute.
Green Infrastructure - Noteworthy for your Company is that we have developed astate of the art new facility at Zaheerabad for Stampings which is now commerciallyoperational wherein green building principles have been incorporated right from thedesign stage.
Corporate Social Responsibility (CSR)
Your Company has constituted a CSR Committee in accordance with Section 135 of theCompanies Act 2013 it has developed and implemented the policy on Corporate SocialResponsibility.
Further your Company encourages its employees to participate in the Employee SocialOptions (ESOPs) program to drive positive change in society through Health checkupcamps tree plantation vocational guidance to school children in the nearby schools etc.
During the year under review the employees of your Company participated in variouseducation and health related programs in local communities.
As part of its initiatives under CSR the Company has further undertaken projects in theareas of Rural Development Infrastructure Education Health and Water. These projectsare in accordance with Schedule VII of the Companies Act 2013.
The Company was required to spent an amount of Rs. 4.94million towards CSR during theFinancial Year. Accordingly Company has undertaken various CSR projects in and around thevillages where plants of the Company are located. Total expenditure planned on theseprojects was above Rs. 5 Million. Few of the projects like Developing garden on GramPanchayat land Lake Cleaning & Tree Plantation and Tar Road Project are underprogress and will be completed during the Financial Year commencing from 1st April 2015.Pursuant to the provisions of the Companies Act 2013 the Company shall ensure that itspends in every Financial Year at least 2% of its average net profits calculated as perthe provisions of the Act made during the 3 immediately preceding financial years inpursuance of its Corporate Social Responsibility Policy.
The CSR Policy of the Company is hosted on the Companys website athttp://mahindraforgings.com/investor-zone/investor-relation/governance.html and a briefoutline of the CSR Policy and the CSR initiatives undertaken by the Company during theyear as prescribed under the Companies (Corporate Social Responsibility Policy) Rules2014 is annexed herewith as "Annexure I".
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to energy conservation technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rule 2014 are provided in Annexure IVto this Report.
O. EXTRACT OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 an extract of the Annual Return as at 31st March 2015 forms part of thisreport as Annexure II.
Messrs. B. K. Khare & Co. Chartered Accountants Mumbai (Firm Registration No.105102W) the Statutory Auditors of the Company hold office till the conclusion of theforthcoming Annual General Meeting (AGM) and are eligible for re-appointment.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Rulesframed thereunder. Pursuant to the provisions of Section 139 of the Companies Act 2013and the Rules framed thereunder it is proposed to appoint Messrs. B. K. Khare & Co.as the Statutory Auditors of the Company from the conclusion of the forthcoming AGM tillthe conclusion of the next AGM.
As required under the provisions of Section 139(1) of the Companies Act 2013 theCompany has received a written consent from Messrs. B. K. Khare & Co. CharteredAccountants to their re-appointment and a certificate to the effect that theirre-appointment if made would be in accordance with the Companies Act 2013 and the Rulesframed thereunder and that they satisfy the criteria provided in Section 141 of theCompanies Act 2013 read with Rule 4(1) of the Companies (Audit and Auditors) Rules 2014and that they are not disqualified for reappointment. .
The Auditors Report does not contain any qualification reservation or adverseremark and notes thereto are self explanatory and does not require any explanations.
Secretarial Audit Report
The Board has appointed Mr. Sachin Bhagwat Practising Company Secretary Pune asSecretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year2014-15. Pursuant to the provisions of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Inaccordance with the provisions of Sub-section (1) of Section 204 the Secretarial AuditReport for the Financial Year 2014-15 is appended to this Report as Annexure III.
The report does not contain any qualification reservation or adverse remark and notesthereto are self explanatory and does not require any explanations.
Cost Audit Report
Messrs. Dhananjay V. Joshi & Associates Cost Accountants Pune (Firm RegistrationNumber 000030) conducted the audit of Cost Accounting Records maintained by the Companyfor the Financial Year 2013-14 and submitted their report to the Central GovernmentMinistry of Corporate Affairs New Delhi.
The Board of Directors upon recommendation of the Audit Committee appointed Messrs.Dhananjay V. Joshi & Associates Cost Accountants Pune as the Cost Auditors of theCompany to conduct the Audit of the Cost Accounting Records maintained by the Company forthe Financial Year commencing from 1st April 2015. The Cost Auditors shall forward theirreport to the Central Government Ministry of Corporate Affairs New Delhi for theFinancial Year 2014-15 within the prescribed time.
It is proposed to re-appoint Messrs. Dhananjay V. Joshi & Associates CostAccountants Pune as the Cost Auditors of the Company to conduct the Audit of the CostAccounting Records maintained by for Company for the Financial Year commencing from 1stApril 2015. As required under the provisions of Section 148 of the Act read with rulesmade thereunder the Company has obtained a written confirmation from M/s. Dhananjay V.Joshi & Associates to the effect that they are eligible for reappointment as CostAuditors under the said Sections. The Audit Committee has also received a certificate fromthe Cost Auditor certifying their independence and arms length relationship with theCompany.
As per the provisions of the Companies Act 2013 the remuneration payable to the CostAuditor is placed before the Members in the ensuing Annual General Meeting for theirratification.
Q. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the Financial Year 2014-15 there are no significant and material orders passedby the regulators or courts or tribunals that would impact the going concern status of theCompany and its future operations.
Your Directors wish to place on record their sincere appreciation to the Bankers of theCompany Companys customers vendors and investors for their continued supportduring the year.
The Directors also wish to place on record their appreciation for the dedication andcontribution made by employees at all levels and look forward to their support in futureas well.
| ||For and on behalf of the Board |
| ||Hemant Luthra |
| ||Chairman |
| ||DIN: 00231420 |
|Date: 27th July 2015 || |
|Place: Mumbai || |