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Munjal Showa Ltd.

BSE: 520043 Sector: Auto
NSE: MUNJALSHOW ISIN Code: INE577A01027
BSE 15:49 | 19 Jan 283.30 2.60
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NSE 15:43 | 19 Jan 283.05 1.85
(0.66%)
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281.00

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287.00

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OPEN 280.00
PREVIOUS CLOSE 280.70
VOLUME 11633
52-Week high 312.00
52-Week low 184.10
P/E 18.40
Mkt Cap.(Rs cr) 1,133
Buy Price 283.30
Buy Qty 56.00
Sell Price 0.00
Sell Qty 0.00
OPEN 280.00
CLOSE 280.70
VOLUME 11633
52-Week high 312.00
52-Week low 184.10
P/E 18.40
Mkt Cap.(Rs cr) 1,133
Buy Price 283.30
Buy Qty 56.00
Sell Price 0.00
Sell Qty 0.00

Munjal Showa Ltd. (MUNJALSHOW) - Director Report

Company director report

Dear Members

Your Directors have great pleasure in presenting the 32nd Annual Report together withthe Audited Statement of Accounts for the financial year ended March 312017.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company's Financial Results for the year under review areas follows:

(Rs. In lakhs)
Year Ended 31.03.17 Year Ended 31.03.16
Sales and other Income 147575.77 150713.70
Profit before Interest Depreciation & Tax 11071.86 11727.49
Financial Cost 5.39 12.19
Depreciation 2906.21 2929.84
Profit before Tax 8160.26 8785.45
Provision for Taxation 2505.07 2670.22
Profit after Tax 5655.19 6115.23
Net Profit brought forward 18554.25 16364.50
Profit available for appropriation 24209.44 22479.73
Dividend (Recommended) 1599.80 1599.80
Dividend Tax (Net) 325.68 325.68
Transfer to General Reserve 2000.00 2000.00
Surplus Available 20283.96 18554.25

OPERATIONS & STATE OF THE COMPANY'S AFFAIRS

The Company has achieved a sales turnover including other income of Rs. 147575.77lakhs vis-a-vis Rs. 150713.70 lakhs in the previous year. The profit before tax in thecurrent year was at Rs. 8160.26 lakhs as compared to Rs. 8785.45 lakhs in the previousyear.

CREDIT RATING

The Company's financial discipline and prudence is reflected in the credit ratingsascribed by CRISIL rating agency as given below:

INR 6850 Long-Term Loans AA/Stable (Reaffirmed)
INR 3000 Cash Credit AA/Stable (Reaffirmed)
INR 4350 Letter of Credit CRISIL A1 +
INR 225 Bank Guarantee CRISIL A1 +
INR 600 Commercial Paper Programme CRISIL A1 +

TRANSFER TO GENERAL RESERVE

The Board has transferred an amount of Rs. 2000 lakhs to General Reserve beforerecommending the final dividend. The balance amount of Rs. 20283.96 lakhs (Previous yearRs. 18554.25 lakhs) will be retained as surplus in the statement of Profit and Loss.

DIVIDEND

Your directors are pleased to recommend a dividend of 200 per cent (i.e. Rs. 4/- Perequity share of Rs. 2/- each fully paid up) for the financial year ended March 31 2017amounting to Rs. 1599.80 lakhs Dividend will be tax free in the hands of shareholders asthe Company will bear the dividend distribution tax of Rs. 325.68 lakhs. The dividend ifapproved at the Annual General Meeting shall be payable to the shareholders registered inthe books of the Company and the beneficial owners whose names are furnished by thedepositories determined with reference to the book closure from August 12 2017 to August24 2017 (both days inclusive).

SHARE CAPITAL & DEBENTURES

The authorized share capital of the Company is Rs. 150000000 (Fifteen crores rupeesonly) divided into 75000000 equity shares of Rs. 2 each. The paid up Share Capital as onMarch 31 2017 was Rs. 79992500 (Seven crore ninety nine lakhs ninety two thousand fivehundred rupees only).

During the year under review the Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity. The Company has not accepted orrepaid any Debentures Preference Share Bond and Security during the financial year andnone of the Directors of the Company hold any shares or security of the Company. TheCompany does not have any Debentures Preferential Shares as on March 312017.

FINANCE

Cash and cash equivalent as at March 312017 was Rs. 621.19 lakhs. The Companycontinues to focus on judicious management of its working capital. Receivablesinventories and other working capital parameters were kept under strict check throughcontinuous monitoring.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The company has neither given any guarantee nor provided any security covered under theprovision of Section 186 of the Companies Act 2013. The Company has made investments inMutual funds and given loan/advance to its vendors during ordinary course of business.Please refer note numbers 10 and 12 to the financial statements. As per policy of loans toemployees of the Company during the year the Company provided an interest free loanamounting to Rs. 40000/- to Mr. Saurabh Agrawal-Company Secretary & Key ManagerialPerson of the Company and the loan amount was fully repaid to Company by Mr. SaurabhAgrawal as on March 312017.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report alongwith Certificate of the Auditors of your Company pursuant to SEBI (LODR) Regulations2015 have been included in this Report as Annexure-A. Your Company has been practicingthe principles of good Corporate Governance over the years.

In terms of regulation 17(8) of SEBI (LODR) Regulations 2015 Certificate of CEO/CFOis also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all theDirectors and members of Senior Management of your Company. The Board of Directorssupports the broad principles of Corporate Governance. In addition to the basic governanceissues the Board also lays strong emphasis on transparency accountability and integrity.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the Financial Year under review your Company has transferred unpaid/unclaimeddividend amounting to Rs. 5.22 Lakhs for FY 2008-09 to the Investor Education andProtection Fund (IEPF) of the Central Government of India.

AUDITORS

M/s S.R. Batliboi & Co. LLP Chartered Accountants Gurugram the Auditors of theCompany appointed at 29th Annual General Meeting for a period of 3 years up to the dateof the 32nd Annual General Meeting of the Company are now liable to retire. So M/s S.R.Batliboi & Co. LLP will retire at the ensuing General Meeting of the Company.

Thus on the recommendations of the Audit Committee and after due deliberation andconsideration the Board recommends the appointment of M/s Deloitte Haskins & SellsLLP Chartered Accountants Gurugram (Firm Registration no. 117366W/W-100018) as theStatutory Auditors of the Company in place of retiring auditors for five years who willhold the office upto the conclusion of the 37th Annual General Meeting subject to theratification of appointment by shareholders at every annual general meeting.

The Report given by the Auditors M/s S.R. Batliboi & Co. LLP CharteredAccountants Gurugram on the financial statements of the Company for the financial year2016-17 is part of the Annual Report. There are no qualifications reservation adverseremark observations comments or disclaimer given by the Auditors in their Report.

Further with regard to section 134(3)(ca) of the Companies Act 2013 no frauds havebeen reported by the auditors under section 143(12) of the said Act.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Satyender Kumar & Associates a proprietorship firm of CompanySecretaries to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit Report is annexed herewith as Annexure B. There are no qualificationsreservation adverse remark observations comments or disclaimer given by the Auditors intheir Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pursuant to Section 134(3)(m) of the Companies Act 2013 and the rulesmade thereunder regarding Conservation of Energy Technology Absorption and ForeignExchange earnings & outgo are given in Annexure-C which forms part of Board's Report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12of the Companies (Management and Administration) Rules 2014 is appended as an Annexure-Dto this Report.

PARTICULARS OF EMPLOYEES

The statement of particulars of employees as per Section 197 of the Companies Act 2013read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 for the year ended March 312017 is annexed hereto and forms part of thisReport. Annexure-E

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As part of its initiatives under Corporate Social Responsibility (CSR) the Company hasundertaken projects in the areas of Education Livelihood Health Water and Sanitation.These projects are largely in accordance with Schedule VII of the Companies Act 2013.Please refer Annexure-F to

Board's Report

The Company was required to spend Rs.184.83 lakhs under Corporate Social Responsibilityactivities (CSR). The Company has spent 185.03 lakhs on CSR Activities during thefinancial year 2016-2017.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report.

ENVIRONMENT COMPLIANCE

We believe that "waste is a precious resource kept in a wrong place". Wefurther believe that "there is no waste as per the law of the nature". Hencefrom the solid waste like Iron & Steel from old scrap machines we are collecting theraw material and we are manufacturing "Lean and Low cost" machines with aphilosophy of Easy to run Easy to maintain Easy to clean and Zero accident by meetingall the quality and productivity standard. Everything is done in-house starting fromdesign up to finishing of the machine. This concept of reuse of metallic waste is highlyappreciated by CII ACMA and international experts of our Japanese Collaborator. ByRegular training for workers and staff to prevent accident related to mechanicalelectrical chemical physiological and psychological safety the Company has made"Zero incidents" as acceptable standard. Hazard Identification and RiskAssessment (HIRA) is our primary focus to mitigate and prevent the abnormalities. Becauseof our dedicated and committed efforts in continual improvement of Safety Health andEnvironment area we had received two National Awards from Ministry of Labour andEmployment Government of India for safety. The Company is a regular member of HaryanaEnvironment Management Society.

The Company has started Green Vendor Development Programme (GVDP) since 2009-10. Theaim of the project is to conserve water and energy Minimize generation of wasteterminate hazardous chemicals with non-hazardous chemicals minimize carbon foot print andgenerate pollution prevention awareness throughout the plant and to achieve 100 per centlegal compliance. The Company is rigorously improving to create a better place for ournext generation.

TOTAL PRODUCTIVE MAINTENANCE

The Company has taken up the journey of Total Productive Maintenance (TPM) with thehelp of JIPM (Japan Institute of Plant Maintenance) Japan and CII TPM Club India. Majorobjectives of TPM are to increase (PQCDSME) Productivity to improve Quality to reduceCosts to ensure in time Delivery to increase Safety to increase profitability to buildMorale and to protect environment by formation of small cross functional work groups andto improve overall Plant efficiency. The other objectives are to procure and installmaintenance free plant and machinery; and to achieve zero defects zero break down zerolosses and zero accidents. In nutshell TPM is to identify various types of Losses &converts them into Profit.

We have achieved TPM Excellency Award "Category A" for Gurugram and ManesarPlants in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance.We have been awarded by JIPM TPM Excellence Consistency Award for both Gurugram &Manesar Plants in the year 2013. Now we have started TPM Journey in our Haridwar Plantalso & we had TPM Kick-Off Ceremony in November 2015.

Lean TPM Activities:

We have clubbed TPM with lean manufacturing system. Our Company has conducted LeanManufacturing System (Value Stream Mapping) Work Shop through JMAC Japan. We haveconverted huge & complicated machines by using TPM & Lean Concepts. These machinesconsume very less Electricity occupy less space take very less inputs like consumablesmanpower tools oils compressed air less set-up time less cycle time etc. Thesemachines are 10S Machines (Safe Simple Small Slim Speed Smart Sturdy Superb Sushil& Sunder and help us in reducing Cost of manufacturing.So far we are able tomanufacture more than 700 machines In-House with Lean TPM Concept inclusive of many CNCMachines.

ISO/TS 16949 ACCREDITATION

Your Company's manufacturing facilities located at Gurugram Haridwar and Manesarcontinue to maintain and uphold the prestigious ISO/TS 16949:2009 ISO 14001:2004 andOHSAS 18001: 2007

(Occupational Health & Safety Assessment Series) certifications from reputedleading Indian and International Certification Institutions. These certifications help incontinuous improvements besides emphasis being laid on prevention of defects reductionof wastes and variation in supply chain management.

LISTING

The shares of your Company are listed at The National Stock Exchange of India Limitedand BSE Limited and pursuant to clause C (9) (d) of Schedule V SEBI (LODR) Regulations2015 the Annual Listing fees for the year 2017-18 has been paid to them well before thedue date i.e. April 30 2017. Annual Custody/Issuer fee for the year 2017-18 has been paidby the Company to NSDL and CDSL.

HUMAN RESOURCES

Promoting Human Resources management is the strength of our Company and over a periodof time we have changed our vision of employees from "Human ResourcesManagement" to "Human Capital Management".

Your Company believes that employees form the fulcrum of growth and differentiation forthe organization. The Company recognizes that people are its principal assets and that itscontinued growth is dependent upon the Company's ability to attract and retain qualitypeople. The total headcounts were 3058 at the end of the year as compared to 3451 of theprevious year. The Company encourages long-term commitment to the Company by rewarding itspeople for the opportunities they create and the value generated for customers andshareholders. The Company conducts several employee engagement and training programmes toupgrade the skills of the workforce and generate specialist in quality maintenance andmanufacturing.

Many initiatives have been taken to support business through organizational efficiencyprocess change support and various employee engagement programmes which have helped theorganization achieve higher productivity levels. A significant effort has also beenundertaken to develop leadership as well as technical/ functional capabilities in order tomeet future talent requirement.

BUSINESS RISK MANAGEMENT

The Company has a Risk Management Policy to identify evaluate business risks andopportunities. This framework seeks to create transparency minimize adverse impact on thebusiness objectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting.

The Company regularly conducts a study to develop a comprehensive 360 view on theopportunities risks and threats to the business. These include areas such as markettrends new competition changing customer preferences disruptions in supplies productdevelopment talent management etc.

The Board has identified following risks:-

Intensifying Competition Declining margins Imposition of strict environmental /safety / regulatory regulations Increase in raw material/component prices Dependence onCollaborators Over dependence on limited user segment base Economic downturn Risk ofnatural or manmade disasters Product liability / recall Single vendor dependence forcritical components Investment risks in expansion projects Sales Catering only toDomestic Market Over Dependence on few customers base Retention & development ofpersonnel and Inappropriate addressing of customer grievances. We through qualitativeproducts and brand image import only in case of cost advantage regular improvement inproductivity controls over overhead and labour cost through a robust control ofapprovals internal audit of environmental safety and

regulatory compliance localization of components insurance TS 16949 certificationTPM certification regular development of alternate vendors where only single sourcecapturing customer complaints and response to them have effective risk mitigating plans.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism policy to deal with instance of fraud andmismanagement if any. The details of the Policy is explained in the Corporate GovernanceReport and also posted on the website of the Company.

The website link is given below:

http://www.munjalshowa.net/wp-content/uploads/2015/05/Vigil-Mechanism-Whistle-Blower-Policy2.pdfRECOMMENDATION OF THE AUDIT COMMITTEE

During the year all the recommendations of the Audit Committee were accepted by theBoard.

CHANGES IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the Company during the FinancialYear 2016-17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the period 2016-17 Mrs. Charu Munjal was the director liable to retire byrotation. And Mrs. Charu Munjal being eligible had offered herself for re-appointmentbefore the shareholder at 31st Annual General Meeting of the Company. Shareholderconfirmed her appointed at the 31st Annual General Meeting of the Company.

During the period 2016-17 Mr. Pankaj Munjal was appointed as Independent Director ofthe Company at the 31st Annual General Meeting of the Company.

Mr. Yogesh Chander Munjal was re-appointed as Managing Director of the Company for afurther period of five years with effect from September 012016 to August 312021 at the31st Annual General Meeting of the Company.

The Board of Directors in its meeting held on May 19 2017 after recommendation ofNomination and Remuneration Committee recommended to the shareholders variation in theTerms of Appointment of Mr. Yogesh Chander Munjal w.e.f. September 12017.

Mr. Ashok Kumar Munjal (DIN 00003843) non-executive director of the Company is liableto retire by rotation at the ensuing Annual General Meeting. Mr. Ashok Kumar Munjal beingeligible has offered himself for re-appointment.

Mr. Ashok Kumar Munjal aged about 66 years old serves as the Managing Director ofSunbeam Auto Private Limited. Mr. Munjal has 33 years of experience in the field ofengineering industry investment finance and auto component. He is holding the positionof directorship in fourteenth Companies including Munjal Showa Limited. Mr. Munjal is aCommerce and Law Graduate from Punjab University Chandigarh. He does not hold any sharein the Company. He is the Member of Audit Committee and Share Transfer/ StakeholderRelationship Committee of the Company. He is also the member of the Audit Committee ofOrient Craft Limited.

Your directors recommend his re-appointment at the ensuing Annual General Meeting.

Mr. Shigeki Kobayashi was appointed as an additional director in the Company w.e.f.October 26 2016. The Board also appointed him as a Joint Managing Director of the companysubject to the approval of the shareholders at the ensuing general meeting. On therecommendations of Nomination and Remuneration Committee the Board recommends hisappointment before the shareholder at the 32nd General Meeting of the Company. The briefprofile is given in the explanatory statement of the AGM Notice. The Board also recommendsthe variation in terms of appointment of Mr. Shigeki Kobayashi before the shareholders.

Mr. Masanao Matsui (DIN 00340218) has resigned as Director of the Company w.e.f May 192017. The Board placed its appreciation for the valuable services rendered by Mr. MasanaoMatsui during his tenure as Director of the Company.

Mr. Teruyoshi Sato (DIN07825074) has been appointed as an additional director of theCompany w.e.f May 19 2017. The detailed profile is given in the explanatory statement ofthe AGM Notice. The Board recommends his appointment before the shareholder at the 32ndGeneral Meeting of the Company.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations 2015.

The following employees were designated as whole-time key managerial personnel of theCompany:

a. Mr. Yogesh Chander Munjal- Managing Director

b. Mr. Shigeki Kobayashi- Joint Managing Director

c. Mr. Pankaj Gupta- Chief Financial Officer.

d. Mr. Saurabh Agrawal- Company Secretary

The information under rule 5(1) of Companies (Appointment & Remuneration) Rules2014 is given in Annexure D-1

The Board appointed Mr. Devi Singh as Chairman of the Company w.e.f. May 20 2016. Dueto pre-occupancy Mr. Devi Singh resigned from the post of chairmanship w.e.f. October 262016 and continued to act as an Independent Director of the Company.

After resignation of Mr. Devi Singh the Board of Directors appointed Mr. YogeshChander Munjal Executive Director and Managing Director as the Chairman of the Company.The Board also appointed Mr. Devi Singh as new Member of the Audit Committee and Mr.Shigeki Kobayashi as Member of the CSR Committee and Share Transfer/StakeholdersRelationship Committee.

The Company appreciates the dedicated and valuable guidance given by all the Directorsof the Company.

COMMITTEES OF THE BOARD

Currently the Board has five committees: the Audit Committee the Nomination andRemuneration Committee the Corporate Social Responsibility Committee the Share Transfer/Stakeholders Relationship Committee the Risk Management Committee (non-mandatorycommittee). A detailed note on the composition of the Board and its committees is providedin the corporate governance report section of this Annual Report.

SUBSIDIARY COMPANIES JOINT VENTURES OR ASSOCIATE COMPANIES

The Company neither has any Subsidiaries joint ventures or associate companies nor anycompany has become or ceased to be its Subsidiaries joint ventures or associate companiesduring the year.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out an annual performance evaluation of its own performancethe directors individually as well as the evaluation of the other committees of the Boardi.e. Audit Committee Nomination & Remuneration Committee and Share T ransfer/Stakeholders Relationship Committee. The manner in which the evaluation has been carriedout has been explained in the Corporate Governance Report.

REMUNERATION POLICY AND REMUNERATION TO THE DIRECTORS

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration.The Nomination and Remuneration Policy has been included in this Report asAnnexure-G.

The details of remuneration sitting fee etc. paid to directors are given in CorporateGovernance Report. (Please refer point no. IV of Corporate Governance Report)

BOARD DIVERSITY POLICY

The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors.

The Board Diversity Policy is available on our website

Web-link:http://www.munjalshowa.net/wp-content/uploads/2016/02/Boards-Diversity-Policy.pdf MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year four Board Meetings and four Audit Committee Meetings were convened and held. Thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe Meetings was within the period prescribed under the Companies Act 2013 and SEBI(LODr) Regulations 2015. (Please refer point no. I & II of Corporate GovernanceReport)

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 134(3)(c) & (5) ofthe Act which is to the best of their knowledge and belief and according to theinformation and explanations obtained by them:

a. that in the preparation of the annual accounts for the Financial Year ended March312017 the applicable accounting standards have been followed along with properexplanation relating to material departures;

b. that appropriate accounting policies have been selected and applied consistently andjudgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the State of Affairs as at March 312017 and of the Profit of yourCompany for the Financial Year ended March 312017;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of your Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts for the Financial Year ended March 31 2017 have beenprepared on a going concern basis;

e. that the Directors have laid down Internal Financial Controls which were followed bythe Company and that such Internal Financial Controls are adequate and were operatingeffectively; and

f. that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by the Company during the financialyear with related parties were on arm's length basis and were in the ordinary course ofbusiness. During the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material. Hence requirement ofForm AOC-2 as required under section 188(1) of the Companies Act 2013 is not applicableto the Company.

All transactions with related parties were placed before Audit Committee and Auditcommittee has given omnibus approval for repetitive and foreseen transactions. The Boardalso noted these transactions on

quarterly basis. The details of related party transactions are given in note number 27and 27A of Financial Statements.

The Company has developed a policy on Related Party Transactions. The policy on RelatedParty Transactions as approved by the Board is uploaded on the Company's website. And thelink of such policy is given below:

http://www.munjalshowa.net/wp-content/uploads/2016/02/Related-Party-Policy-of-MSL.pdfNone of the Directors has any pecuniary relationships with the Company.

EXPLANATIONS OR COMMENTS BY THE BOARD ON QUALIFICATION RESERVATION OR ADVERSE REMARKOR DISCLAIMER MADE

The observations of the Auditors in their report read with the notes to accounts areself-explanatory and do not require any specific comments. However as pointed out by theAuditors in annexure to their report at point number vii(a) the slight delay in paymentof undisputed statutory dues in few cases was on account of finalization of accountsbeyond the due date of statutory dues and the same were paid with interest.

There is no other qualification reservation or adverse remark comment observation ordisclaimer made by the auditor in his report and the company secretary in practice in hissecretarial audit report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a comprehensive system of internal control to safeguard the Company'sassets against any loss from unauthorized use and ensure proper authorization of financialtransactions.

The Company has internal control systems commensurate with the size and nature of thebusiness and has experienced personnel positioned adequately in the organization to ensureinternal control processes and compliances. The Company takes abundant care in designingreviewing and monitoring regularly the working of internal control systems and theircompliances for all important financial internal control processes. The Audit findings arereported on quarterly basis to the Audit Committee of the Board headed by a Non-executiveIndependent Director.

The Company has robust ERP systems based on SAP platform. This ensures high degree ofsystems based checks and controls.

The Company maintains a system of internal controls designed to provide a high degreeof assurance regarding the effectiveness and efficiency of operations the reliability offinancial controls and compliance with laws and regulations.

The Companies Act 2013 has introduced under Section 143(3)(i) stating that thestatutory auditors of the Company shall include in his audit report whether the companyhas adequate internal financial controls system in place and the operating effectivenessof such controls in addition to the reporting by Board of Directors in director'sresponsibility statement. The concept of reporting on internal financial controls is stillnew in India. This new reporting requirement has thrown up many challenges. The Companyhas developed the internal financial control processes and that was vetted by the internalauditors during the year. The same has also been verified by the statutory auditors andwho have reported that all the material Internal financial controls exist during thefinancial year 2016-17.

The Company with the help of reputed professionals has developed a compliance tool forthe purpose of legal compliance of all the applicable Acts to the Company.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

4. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

SEXUAL HARASSMENT POLICY

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

Various workshops or awareness programme w.r.t. sexual harassment has been carried outduring the F.Y. 2016-17.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and supportextended to the Company by Government of India State Governments of Haryana andUttarakhand other local authorities bankers suppliers customers and other stakeholderswhose continued support has been a source of strength to the Company. The continueddedication and sense of commitment shown by the employees at all levels during the yeardeserve special mention.

The Directors also place on record their appreciation for the valuable assistance andguidance extended to the Company by Showa Corporation Japan and for the encouragement andassurance which our collaborator has provided from time to time for the growth anddevelopment of the Company.

The Directors also take this opportunity to express their deep gratitude for thecontinued co-operation and support received from its valued shareholders.

POLICIES

We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 mandated the formulation of certain policiesfor all listed companies. All our corporate governance policies are available on ourwebsite i.e. http://www.munjalshowa.net/

Policy Web-link
Policy for Determination of Materiality of Information or Events http://www.munjalshowa.net/wp-content/ uploads/2016/02/Policy-for-Determination-of- Materiality-of-Information-or-Events.pdf
Boards Diversity Policy http://www.munjalshowa.net/wp-content/ uploads/2016/02/Boards-Diversity-Policy.pdf
Corporate Social Responsibility Policy http://www.munjalshowa.net/wp-content/ uploads/2015/05/Corporate-Social-Responsibility- Policy1.pdf
Vigil Mechanism / Whistle Blower Policy http://www.munjalshowa.net/wp-content/ uploads/2015/05/Vigil-Mechanism-Whistle-Blower- Policy2.pdf
Nomination And Remuneration Policy http://www.munjalshowa.net/wp-content/ uploads/2015/05/Nomination-And-Remuneration- Policy1.pdf
Records and Archives Management Policy http://www.munjalshowa.net/wp-content/ uploads/2016/02/Records-and-Archives- Management-Policy.pdf
Related Party Policy http://www.munjalshowa.net/wp-content/ uploads/2016/02/Related-Party-Policy-of-MSL.pdf
CODE OF INTERNAL PROCEDURES AND CONDUCT FOR REGULATING MONITORING AND REPORTING OF TRADING BY INSIDERS http://www.munjalshowa.net/wp-content/ uploads/2015/05/CODE-OF-INTERNAL- PROCEDURES-AND-CONDUCT-FOR- REGULATING-MONITORING-AND-REPORTING- OF-TRADING-BY-INSIDERS.pdf
CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL http://www.munjalshowa.net/wp-content/ uploads/2016/02/Code-of-conduct.pdf

 

For and on behalf of the Board
Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal
Date: May 19 2017 (Chairman & Managing Director) (Director)
(DIN 00003491) (DIN 00004463)
B-175 Greater Kailash Part I A-224 Ist Floor Defence Colony
New Delhi 110048 New Delhi 110024

ANNEXURE ‘C' TO BOARD'S REPORT CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO

(A) CONSERVATION OF ENERGY-

(i) The steps taken or impact on conservation of energy;

The Company is making continuous efforts to conserve and optimize energy whereverpracticable by economizing on fuel and power

The following new initiatives were taken to conserve energy during the year 2016-17

1. Provided 200KW VFD's on Air Compressor Motors in all the Plants

2. Provide Machine Auto-Stop Timers on all manual machines & activated timers inCNC & VMS.

(ii) The steps taken by the company for utilizing alternate sources of energy;

The Company uses Sate Power Board Electricity and Generators. Your Company has startedthe solar power plant for Gurugram and Manesar Plant. The Company is trying to reduceEnergy for using LED Lights and Solar Water Heater etc.

(iii) The capital investment on energy conservation equipments is given below

Description of Machines Amount (in INR)
SOLAR ROOF TOP POWER150KWP 8722500.00
SOLAR ROOFTOPPOWER 100KWP 5815000.00
Total 14537500.00

(B) TECHNOLOGY ABSORPTION

(I) THE EFFORTS MADE TOWARDS TECHNOLOGY ABSORPTION;

New product Technology absorption Indigenization of CKD Parts

(II) THE BENEFITS DERIVED LIKE PRODUCT IMPROVEMENT COST REDUCTION PRODUCT DEVELOPMENTOR IMPORT SUBSTITUTION;

Process/product improvements for consistency of performance Supply to the existingcustomers for their new models

Future plan of action

Our efforts will be focused on catering the requirement of our existing customers fortheir new models and indigenization of various components.

(III) IMPORTED TECHNOLOGY

Your Company has absorbed the technology received from collaborator Showa CorporationJapan continuously. As in the past the Company has successfully implementedindigenization of various components as an import substitution in order to fulfill thecontinuous demand of the customers for price reduction with the prior approval of ourcollaborators on quality issues. The cost reduction was possible because of materialreduction standardization application engineering product engineering &manufacturing and reduction in manufacturing cycle time.

In the last five years the Company has imported various drawings with right to use forgetting the orders from existing and new customers for their new models.

Expenditure on Research and Development

Capital Rs. NIL
Recurring Rs. 10421774/-
Total Rs. 10421774/-

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

Activities relating to exports initiatives taken to increase exports development ofnew export markets for product and services and export plans

The Company is not doing any export directly to those countries where our collaboratorM/s Showa Corporation has manufacturing base. However the Company has started exportingcertain components to Showa/its joint ventures/ its associates wherever they find ourprice competitive. Further the Company is catering to the requirement of Shock AbsorbersStruts and Window Balancers for export models of Hero MotoCorp Limited Honda Motorcyclesand Scooter India Pvt. Limited and for Maruti Suzuki India Limited.

Total Foreign Exchange used and earned

The foreign exchange earnings during the year were Rs. 5225799/- and foreign exchangeoutgo during the year was Rs. 375060046/-. Details of earnings from exports and foreignexchange outgo on account of imports Technician fee royalty travelling &conveyance interest expense design & drawings & miscellaneous expenses are shownin Note numbers 33 34 and 37 of Notes to Accounts.

For and on behalf of the Board
Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal
Date: May 19 2017 (Chairman & Managing Director) (Director)
(DIN 00003491) (DIN 00004463)
B-175 Greater Kailash Part I A-224 Ist Floor Defence Colony
New Delhi 110048 New Delhi 110024

ANNEXURE D-1' TO BOARD'S REPORT

Statement of Disclosure of Remuneration under Section 197 of the Companies Act 2013 andRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014

THE RATIO OF THE REMUNERATION OF EACH DIRECTOR TO THE MEDIAN REMUNERATION OF THEEMPLOYEES OF THE COMPANY FOR THE FINANCIAL YEAR 2016-2017

S.NO. NAME Designation RATIO
1. Yogesh Chander Munjal Managing Director 111.42
2. Isao Ito* Joint Managing Director 33.62#
3. Shigeki Kobayashi** Joint Managing Director 32.35#

The Company pays only sitting fees to Non-Executive Directors.

*lsao Ito ceased to be the Director and Joint Managing Director of the Company w.e.f.September 30 2016.

** Mr. Kobayashi was appointed as Joint Managing Director w.e.f. October 26 2016.

# The Calculation of median is part of the year as figures were available for part ofthe year.

THE PERCENTAGE INCREASE IN REMUNERATION OF EACH DIRECTOR CHIEF FINANCIAL OFFICERCHIEF EXECUTIVE OFFICER COMPANY SECRETARY OR MANAGER IF ANY IN THE FINANCIAL YEAR2016-2017

The changes made in the remuneration of each director chief financial officer chiefexecutive officer company secretary or manager in the financial year is as follows:-

S. No. Name Designation Percentage Change
1. Mr. Yogesh Chander Munjal Managing Director -2.69
2. Mr. Isao Ito* Joint Managing Director NA#
3. Mr. Shigeki Kobayashi** Joint Managing Director NA#
4. Mr. Pankaj Gupta Chief Financial Officer 9.25
5. Mr. Saurabh Agrawal Company Secretary 15.99

*lsao Ito ceased to be the Director and Joint Managing Director of the Company w.e.f.September 30 2016.

** Mr. Kobayashi was appointed as Joint Managing Director w.e.f. October 26 2016.

# The Calculation is not feasible as the figures were available for part of the year.

THE PERCENTAGE INCREASE IN THE MEDIAN REMUNERATION OF EMPLOYEES IN THE FINANCIAL YEAR2016-17: 38.91 THE NUMBER OF PERMANENT EMPLOYEES ON THE ROLLS OF COMPANY

There were 1465 employees on the rolls of the Company as on March 312017 as comparedto 1596 employees as on March 312016.

AVERAGE PERCENTILE INCREASE ALREADY MADE IN THE SALARIES OF EMPLOYEES OTHER THAN THEMANAGERIAL PERSONNEL IN THE LAST FINANCIAL YEAR AND ITS COMPARISON WITH THE PERCENTILEINCREASE IN THE MANAGERIAL REMUNERATION AND JUSTIFICATION THEREOF AND POINT OUT IF THEREARE ANY EXCEPTIONAL CIRCUMSTANCES FOR INCREASE IN THE MANAGERIAL REMUNERATION

The average percentile increase in the salaries of employees was around 18.19% and thepercentile decrease in the managerial remuneration for the year was 0.54. The Companyexcept Managing Director and Joint Managing Director gives general increase to all itspermanent employees after every three years as per the practice followed by the Companyafter making wage agreements with its permanent workers for three years. The last increasewas effective from July 2016. Apart from this the Company gives 3 to 5 percent every yearon the basis of the individual employee's performance.

It is hereby affirmed that the remuneration paid is as per the Remuneration Policy forDirectors Key Managerial Personnel and other Employees.

For and on behalf of the Board
Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal
Date: May 192017 (Chairman & Managing Director) (Director)
(DIN 00003491) (DIN 00004463)
B-175 Greater Kailash Part I A-224 1st Floor Defence Colony
New Delhi 110048 New Delhi 110024

ANNEXURE-E TO BOARD'S REPORT

STATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT2013 READ WITH RULE5 (2) & (3) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014 FOR THE YEARENDED MARCH 31 2017

A. Details of top ten employee except Managing Directors:

SI. No Name Desig nation Gross Remu neration (Rs.) Nature of employment Qualification Experi ence (Years) Nature of duties Date of Commencement of Employment Age (Years) last employment held before joining the Company designation Percentage/ Nos. of Equity Share Whether any such employee is a relative of any director or manager of the company
1. HIROAKI NISHIDA Tech nical Advisor Rs. 4405540 Contrac tual Graduate in Mechanical Engineering 20 Technical 01-10-2014 38 Showa Corporation Japan NIL NO
2. RAJIV SHARMA V.P Rs. 3707453 Permanent Employee B.Tech (Mech) 33 Sr. Mgt- Gu- rugram Plant Head 01.05.2015 56 Tennaco Automotive NIL NO
3. ASHUTOSH SRIVASTAVA VP Rs. 3559864 Permanent Employee B.tech (Mech) 27 Sr. Mgt- Purchase Department Head 14.11.2005 57 M/s SarojPvt Ltd NIL NO
4. SANJAY KUMAR SHARMA A. V.P Rs. 3028349 Permanent Employee BE 26 Sr. Mgt- Haridwar Plant Heard 10-10-2008 50 Thia Summit NIL NO
5. ARUN KUMAR SHARMA VP Rs. 3023924 Permanent Employee B.S.C (Mech) 40 Sr. Mgt- Produc- tion Head 25.11.1988 59 M/s Punjab Tractors Ltd NIL NO
6. RAKESH KUMAR VASHIST VP Rs. 2842970 Permanent Employee B.S.C (Chem) 36 Sr. Mgt- Paint Shop Head 03.10.1997 56 Birla Yamaha Ltd Dehradhun NIL NO
7. MANOJ KUMAR SAXENA VP Rs. 2822997 Permanent Employee Diploma (Mech) 35 Sr. Mgt- Quality Head 19.12.1986 56 Diamond Spring NIL NO
8. PANKAJ GUPTA V.P & C.EO. Rs. 2754741 Permanent Employee CA CS & CMA 27 Sr. Mgt. Head Finance and Accounts 27.09.1994 51 Omega Brigh Shows Pvt Ltd 5 NO
9. K. CHAKRA- VORTY A. V.P Rs. 2420092 Permanent Employee PG (DIP) & BCOM(HONS) 37 Commer cial 16.5.1990 57 Bharat Gears Ltd NIL NO
10 HIDE- NOBU YAMADA Tech nical Advisor Rs. 2203370 Contrac tual Graduate in Automobile Electric 11 Technical 13-10-2016 36 Showa Corporation Japan NIL NO

Note: 1. Gross remuneration shown above is subject to tax and comprises salaryincluding arrears allowances rent medical reimbursements leave travel benefits leaveencashment provident fund superannuation fund & gratuity.

B. Details of the Employee who was in receipt of remunerationnot less than Rs. 1.02 Cr.per annum or not less than Rs. 8.50 Lakhs per annum as the case may be.

SI. No Name Design ation Gross Remuneration (Rs.) Nature of employment Qualific ation Experi ence (Years) Nature of duties Date of Commencement of Employment Age (Yea rs) last employment held before joining the Company designation Percentage/ Nos. of Equity Share Whether any such employee is a relative of any director or manager of the company
Employed throughout the period and in receipt of remuneration not less than Rs. 1.02 Cr. per annum
1 Yogesh Chander Munjal Managing Director Rs. 44925596 Contractual B. Arch. 53 Overall management of the affairs of the Company 01.09.1986 77 Chief Executive- Rockman Cycle Inds. Ltd. NIL No
Employed for a part of the financial year and in receipt of remuneration not less than Rs. 8.50 Lakhs per annum
2 Isao Ito* Joint Managing Director Rs. 13554283 Contractual Graduate 34 Overall management of the affairs of the Company 24.05.2013 53 Showa India Private Limited NIL No
3 Shigeki Kobayashi Joint Managing Director Rs. 13043099 Contractual Graduate 35 Overall management of the affairs of the Company 26.10.2016 53 Showa India Private Limited NIL No

*lsao Ito ceased to be the Director and Joined Managing Director of the Company w.e.f.September 30 2016.

NOTES

1. Information has been furnished on the basis of employees employed throughout thefinancial year who were in receipt of remuneration for that year which in the aggregatewas not less than Rs. 1.02 Cr per annum (Rs. 8.50 Lakhs p.m.) and for employees who workedfor a part of the Financial Year who were in receipt of remuneration for any part of theyear. And none of the Employee who was in receipt of remuneration in excess of that drawnby the Managing Director or whole time director or manager and holds by himself or alongwith his spouse and dependent children not less than 2% of the equity shares of theCompany

2. Gross remuneration includes Salary Commission Company's contribution to ProvidentFund and Superannuation Fund Medical Reimbursement Monetary Value of Perquisites &value of Rent Free Accommodation.

3. The above employees are not related to any Director of the Company.

4. The appointment is contractual as per the policy/rules of the Company.

5. Terms and conditions are as per the Appointment Letter given to the appointee fromtime to time.

6. All the employees have adequate experience to discharge the responsibilitiesassigned to them.

For and on behalf of the Board
Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal
Date: May 19 2017 (Chairman & Managing Director) (Director)
(DIN 00003491) (DIN 00004463)
B-175 Greater Kailash Part I A-224 1st Floor Defence Colony
New Delhi 110048 New Delhi 110024

ANNEXURE G' TO BOARD'S REPORT NOMINATION AND REMUNERATION POLICY

Our policy on the appointment and remuneration of directors and key managerialpersonnel provides a framework based on which our human resources management aligns theirrecruitment plans for the strategic growth of the Company. The nomination and remunerationpolicy is provided herewith pursuant to Section 178(4) of the Companies Act and Clause49(IV)(B)(4) of the Listing Agreement. The policy is also available on our website:

http://www.munjalshowa.net/wp-content/uploads/2015/05/Nomination-And-Remuneration-Policy1.pdf

1. Preamble

The Nomination and Remuneration Policy of Munjal Showa Limited (the"Company") is designed to attract motivate improve productivity and retainmanpower by creating a congenial work environment encouraging initiatives personalgrowth team work and inculcating a sense of belongingness and involvement besidesoffering appropriate remuneration packages and superannuation benefits.

2. Objective

2.1 The policy provides a framework for remuneration paid to the members of the Boardof Directors ("Board") Key Managerial Personnel ("KMP") SeniorManagement Personnel ("SMP") and other employees.

2.2 To make recommendations to the Board for the appointment removal and performanceevaluation of directors.

2.3 To maintain the level and composition of remuneration so that it is reasonable andsufficient to attract retain and motivate directors of the quality required to run theCompany successfully.

2.4 To ensure that the relationship of remuneration to performance is clear and meetsappropriate performance benchmarks.

3. Effective Date of the Policy

This policy shall be effective from the date of approval by the Board or any amendmentmade thereof from time to time.

4. Regulatory provisions under which the policy has been formulated:

4.1 Section 178 of the Companies Act 2013

4.2 Clause 49 of the Listing Agreement

5. Definitions

5.1 Act means the Companies Act 2013 and Rules framed there under as amended from timeto time.

5.2 Board or Board of Directors in relation to a company means the collective body ofthe directors of the Company.

5.3 Company means Munjal Showa Limited.

5.4 Director means directors appointed to the Board of the Company.

5.5 Independent Director means a director referred to in Section 149 (6) of theCompanies Act 2013

5.6 Key Managerial Personnel in relation to a company means:

5.6.1 Chief Executive Officer or the Managing Director and Joint Managing Director

5.6.2 Whole time Director

5.6.3 Chief Financial Officer

5.6.4 Company Secretary

5.6.5 Such other officer as may be prescribed

5.7 Nomination and Remuneration Committee or Committee shall mean a Committee of Boardof Directors of the Company constituted in accordance with the provisions of Section 178of the Companies Act 2013 and Clause 49 ofthe Listing Agreement.

5.8 Policy means Nomination and Remuneration Policy.

5.9 Remuneration means any money or its equivalent given or passed to any person forservices rendered by him and includes perquisites as defined under the Income-tax Act1961.

5.10 Senior Management means personnel of the Company who are members of its coremanagement team excluding the Board of Directors including Functional Heads.

6. Interpretation of the Policy

Terms that have not been defined in this Policy shall have the same meaning assigned tothem in the Companies Act 2013 Listing Agreement and/or any other SEBI Regulation(s) asamended from time to time.

7. Role of Committee

7.1 Formulating framework or policy for remuneration terms of employment includingservice contracts policy for pension arrangements and reviewing it on periodic basis.

7.2 Formulate the criteria for determining qualifications positive attributes andindependence of a Director and recommend to the Board relating to the remuneration forthe Director key managerial personnel and other employees.

7.3 To recommend to the Board on Remuneration payable to the Directors Key ManagerialPersonnel and Senior Management in order to maintain a balance between fixed and incentivepay reflecting short and long term performance objectives appropriate to the working ofthe Company and its goals.

7.4 To retain motivate and promote talent and to ensure succession planning for longterm sustainability of talented managerial persons and competitive advantage.

7.5 Formulating terms for cessation of employment and ensure that any payments made arefair to the individual and the Company.

7.6 To create appropriate performance benchmarks in order to maintain a justifiedrelationship between performance and remuneration.

7.7 Term /Tenure

7.7.1 Managing Director /Whole time Director etc:

The Company shall appoint or re-appoint any person as its Executive Chairman ManagingDirector or Executive Director for a term not exceeding five years at a time. Nore-appointment shall be made earlier than one year before the expiry of term.

7.7.2 Independent Director:

An Independent Director shall hold office for a term up to five consecutive years onthe Board of the Company and will be eligible for re-appointment on passing of a specialresolution by the Company and disclosure of such appointment in the Board's report.

No Independent Director shall hold office for more than two consecutive terms of uptomaximum of 5 years each but such Independent Director shall be eligible for appointmentafter expiry of three years of ceasing to become an Independent Director. Provided that anIndependent Director shall not during the said period of three years be appointed in orbe associated with the Company in any other capacity either directly or indirectly.

At the time of appointment of Independent Director it should be ensured that the numberof Boards on which such Independent Director serves is restricted to seven listedcompanies as an Independent Director and three listed Companies as an Independent Directorin case such person is serving as a Whole time Director of a listed company or such othernumber as may be prescribed under the Act.

7.8 Evaluation

The Committee shall carry out evaluation of performance of every Director KMP and SMPat regular interval (yearly or as deemed fit).

The generic criteria for evaluation can be as follows:

• Profitability

• New Alliances / New Launches

• CAGR of the organization

• Business volumes

• Company turnover

• Customers feedback (Internal and External)

• Shareholders interest

7.9 Removal

Due to reasons for any disqualification mentioned in the Act or under any otherapplicable Act rules and regulations there under and Articles of Association of theCompany the Committee may recommend to the Board with reasons recorded in writingremoval of a Director and SMP subject to the provisions and compliance of the said Actrules and regulations.

7.10 Retirement

The Director KMP and SMP shall retire as per the applicable provisions of the Act andthe prevailing policy of the Company. The Board will have the discretion to retain theDirector KMP and SMP in the same position / remuneration or otherwise even afterattaining the retirement age for the benefit of the Company.

7-A. Appointment of Director And Senior Management

7-A.1. The Committee shall identify and ascertain the integrity qualificationexpertise and experience of the person for appointment as Director and Senior Managementlevel and recommend to the Board his / her appointment .

7-A.2. Appointment of Independent Directors is subject compliance of provisions ofsection 149 of the Companies Act 2013 read with schedule IV and rules thereunder

7-A.3. The Company shall not appoint or continue the employment of any person asWhole-time Director who has attained the age of seventy years. Provided that the term ofthe person holding this position may be extended beyond the age of seventy years with theapproval of shareholders by passing a special resolution based on the explanatorystatement annexed to the notice for such motion indicating the justification for extensionof appointment beyond seventy years.

8. Constitution of Committee

The Remuneration and Compensation Committee of the Board of Directors shall be named asNomination and Remuneration Committee (NRC). Members of the Committee shall be appointedby the Board and shall comprise of three or more non-executive Directors out of which notless than one-half shall be independent directors.

8.1 Composition of Committee

8.1.1 Members

8.1.1.1 The Committee shall comprise at least three (3) Directors all of whom shall benon-executive Directors and at least half shall be Independent.

8.1.1.2 The Board shall reconstitute the Committee as and when required to comply withthe provisions of the Companies Act 2013 and applicable statutory requirement.

8.1.2 Chairperson

8.1.2.1 Chairman of the Committee shall be an Independent Director.

8.1.2.2 Chairperson of the Company may be appointed as a member of the Committee butshall not Chair the Committee.

8.1.2.3 In the absence of the Chairman the members of the Committee present at themeeting shall choose one amongst them to act as Chairman.

8.1.2.4 Chairman of the Nomination and Remuneration Committee shall be present at theAnnual General Meeting or may nominate some other member to answer the shareholders'queries.

8.2 Frequency of Meetings

The meeting of the Committee shall be held at such regular intervals as may berequired.

8.3 Quorum

Minimum two (2) members shall constitute a quorum for the Committee meeting.

8.4 Minutes of Committee Meeting

Proceedings of all meetings must be minutes and signed by the Chairman of the Committeeat the subsequent meeting. Minutes of the Committee meetings will be tabled at thesubsequent Board and Committee meeting.

8.5 Voting

8.5.1 Matters arising for determination at Committee meetings shall be decided by amajority of votes of Members present and voting and any such decision shall for allpurposes be deemed a decision of the Committee.

8.5.2 In the case of equality of votes the Chairman of the meeting will have a castingvote.

9. Committee Members' Interest

9.1 A member of the Committee is not entitled to be present when his or her ownremuneration is discussed at a meeting or when his or her performance is being evaluated.

9.2 The Committee may invite such executives as it considers appropriate to bepresent at the meetings of the Committee.

10. Applicability of Policy:

10.1 Directors (Executive and Non Executive)

10.2 Key Managerial Personnel

10.3 Senior Management Personnel

10.4 Other Employees as may be identified by the Committees from time to time

Any departure from the policy can be undertaken with the approval of the Board ofDirectors.

11. Remuneration

Total remuneration comprises of:

11.1 A fixed base salary -

Set at a level aimed at attracting and retaining executives with professional andpersonal competence showing good performance towards achieving Company goals.

11.2 Variable Pay/ Performance Linked Incentive -

A performance appraisal is carried out annually and promotions /increments/ rewards aredecided by CMD based on the appraisal and recommendation of the concerned Whole TimeDirector where applicable.

11.3 Perquisites /Allowances -

In the form of house rent allowance / accommodation furnishing allowancereimbursement of medical expenses conveyance telephone LTA etc.

11.4 Retirement Benefits -

Contribution to PF superannuation gratuity etc. as per Company Rules

11.5 Severance payments -

In accordance with terms of employment and applicable statutory requirements if any

11.6 Remuneration to Managing / Whole time / Executive / Managing Director and SMP -

The Remuneration / Compensation / Commission etc. to be paid to Director / ManagingDirector shall be governed as per provisions of the Companies Act 2013 and rules madethere under or any other enactment for the time being in force.

11.7 Remuneration to Non - Executive / Independent Director -

The Non - Executive Independent Director may receive remuneration / compensation /commission as per the provisions of Companies Act 2013.

11.8 Sitting Fees -

The amount of sitting fees shall be subject to ceiling / limits as provided underCompanies Act 2013 and rules made there under or any other enactment for the time beingin force as may be decided by the Board of Directors of the Company from time to time.

11.9 ESOP

Pursuant to the provisions of the Act an Independent Director shall not be entitled toany stock option of the Company. Only such employees of the Company and its subsidiariesas approved by the Nomination and Remuneration Committee will be granted ESOPs.

12. Policy for Appointment and Removal of Director and SMP

12.1 Appointment of Directors and senior management personnel and cessation of theirservice are subject to approval of the NRC and Board of Directors.

12.2 Remuneration of CFO and other senior management personnel is decided by theChairman & Managing Director (CMD) on the recommendation of the Whole Time Directorconcerned where applicable broadly based on the Remuneration Policy in respect of WholeTime Directors.

13. Review and Amendment

13.1 The NRC or the Board may review the Policy as and when it deems necessary.

13.2 The NRC may issue the guidelines procedures formats reporting mechanism andmanual in supplement and better implementation to this Policy if it thinks necessary.

13.3 This Policy may be amended or substituted by the Board as and when required.

13.4 This Policy shall be hosted on the Company's website.

13.5 The right to interpret this Policy vests in the Board of Directors of the Company.

14. Disclosures

Appropriate disclosures shall be made in the Board's Report of the Company.

15. Deviations from the Policy

Deviations on elements of this policy in extraordinary circumstances when deemednecessary in the interests of the Company will be made if there are specific reasons todo so in an individual case.

For and on behalf of the Board
Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal
Date: May 19 2017 (Chairman & Managing Director) (Director)
(DIN 00003491) (DIN 00004463)
B-175 Greater Kailash Part I A-224 Ist Floor Defence Colony
New Delhi 110048 New Delhi 110024