Your Directors are pleased to present the 32nd Annual Report of the Company togetherwith the audited financial statements for the year ended March 31 2017.
| || |
| ||Current year ||Previous year ||Current year ||Previous year |
|PARTICULARS ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
| ||( Rs. in Lacs) ||( Rs. in Lacs) ||( Rs. in Lacs) ||( Rs. in Lacs) |
|Gross Profit before financial charges and depreciation ||17035 ||15453 ||17034 ||15461 |
|Less: Financial Charges ||4222 ||4172 ||4222 ||4172 |
|Less: Depreciation ||8791 ||8636 ||8799 ||8650 |
|Less: Exceptional Items ||3103 || ||3103 || |
|Net profit before Taxation ||919 ||2645 ||910 ||2639 |
|Less: Taxation itmes ||(485) ||244 ||(485) ||244 |
|Profit after Taxation ||1404 ||2401 ||1395 ||2395 |
|Add: Profit brought forward ||20658 ||19086 ||20599 ||19032 |
|Profit Available for appropriation ||22062 ||21487 ||21994 ||21427 |
|Less: Proposed Dividend* || ||480 || ||480 |
|Less:- Tax on Dividend* || ||99 || ||99 |
|Less:- Transfer to General Reserves ||150 ||250 ||150 ||250 |
|Balance carried over to Balance Sheet ||21912 ||20658 ||21844 ||20598 |
* As per Companies (Accounting Standards) Amendments Rules 2016
Your Company had an unfortunate fire incident in one of the plants of the Companysituated at Manesar Haryana on May 29 2016. The fire was controlled however it severelyimpacted the building stocks and plant & machinery. With all-round support andconcerted efforts by the Company Manesar Plant has now been formally re-opened on March29 2017 after the fire incident. The Assets were adequately insured with reinstatementclause and a claim has been made with the insurance company. An interim amount has beenreceived from the insurance company against the claim lodged. Special/urgent actions torestart supplies to customers post fire accident has temporarily resulted into additionalcosts during the year under review which have been included in Exceptional Items.
During the financial year ended March 31 2017 your Company recorded a gross turnoverof Rs.1751 crores during the year as against Rs. 1480 crores in the previous yearclocking an increase of around 18%. Your Company is continuing with focussed approach inbuilding capacities introduction of efficient technologies in manufacturing process newproduct development and localization in line with Company's growth plans. The sales ofpassenger vehicles has registered a growth of 9.23% in 2016-17 whilst our volume of airconditioning systems has grown by 18%. The growth has happened due to industry growthaddition of new customers and localization. The performance of the Company is alsodiscussed in Management Discussion and Analysis as stipulated under Regulation 34 of theListing Regulations with the Stock Exchanges which forms part of the Directors' Report.
EXPANSION AND FUTURE PROSPECTS
Your Company anticipates continued strong growth in the automobile sector due to stableGlobal economic factors 'Make in India' initiative and fuel prices. Your Company is alsoworking to expand sales by catering to the demand from existing and new automobilesmanufacturers in India. In the current year the Company is planning for capacityexpansion at Gujarat to cater to the increased demand from existing and new automobilesmanufacturers.
The Company's Tool Engineering Centre at Noida has enabled to focus on in-housedevelopment of all Molds/Dies required for new product development.
The Company expects growth in coming years due to increased share of business from itsexisting customers and expansion of business in new business domains like bus and rail airconditioning truck refrigeration and radiators. Kindly refer to Management Discussion& Analysis and Corporate Governance Report which forms part of this report.
Your Company has earned a net profit (after tax) of Rs. 1404 Lacs as against Rs. 2401Lacs in the previous year. The Directors are pleased to recommend a dividend of Rs.0.50per share i.e. 25% on the paid-up equity share capital of the Company for the financialyear ended March 31 2017 as against Rs. 0.80 per share i.e. 40% declared in the previousyear. The dividend if approved by the Members at the ensuing Annual General Meetingshall absorb a sum of Rs. 361 Lacs (approx) including of dividend tax.
TRANSFER TO RESERVES
Your Company proposes to transfer Rs. 150 Lacs to the General Reserves.
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There were no material changes and commitments which affect the financial position ofthe Company subsequent to the date of financial statement.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
i) During the year under review the following changes took place in the Board of yourCompany:
a) Mr. Y. Makino resigned as Nominee Director (Representative of Denso CorporationJapan) with effect from August 8 2016
b) Mr. Y. Kajita resigned as an Alternate Director (Alternate to Mr. Y. Makino) witheffect from August 8 2016
c) Mr. Y. Iida was appointed as Nominee Director (Representative of Denso CorporationJapan) with effect from August 8 2016
d) Mr. T. Nagata was appointed as an Alternate Director (Alternate to Mr. Y. Iida) witheffect from August 8 2016
e) Mr. T. Nagata resigned as an Alternate Director (Alternate to Mr. Y. Iida) witheffect from March 29 2017
f) Mr. K. Yamauchi was appointed as an Alternate Director (Alternate to Mr. Y. Iida)with effect from March 29 2017
ii) Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. KenichiAyukawa Non Executive Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment. The brief resume ofMr. Kenichi Ayukawa as required under the Listing Regulations is provided in the Notice ofthe 32 nd Annual General Meeting of the Company.The requisite resolution pertaining to theappointment/re-appointment appears at the respective items of the Notice along with theStatement and recommended to the Members for approval.
iii) Pursuant to the provisions of Section 203 of the Companies Act 2013 Mr. RakeshArora was appointed as Company Secretary with effect from August 8 2016 in place of Mr.Hemant K. Agarwal Dy. Company Secretary who resigned from the position of Dy. CompanySecretary.
iv) Declaration from Independent Director: The Company has received necessarydeclaration(s) from all the Independent Directors of the Company as laid down underSection 149(7) of the Companies Act 2013 confirming that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013 and the ListingRegulations.
v) Board Evaluation: In compliance with the provisions of the Companies Act2013 the Board has formulated a framework inter alea for a formal mechanism ofevaluation of its performances as well as that of its committees and individual Directorsincluding the Chairman of the Board. Nomination & Remuneration Committee has approvedthe evaluation formats for the Board Executive & Non Executive Directors and Chairmanof the Company considering qualification expertise attributes and various parametersbased on which evaluation of the Board has to be carried out by the Company.
vi) Board Meeting: The Board of Directors met six times during the financialyear 2016-17 the details of which are given in the Corporate Governance Report that formspart of this Annual Report. The intervening gap between any two meetings was within theperiod prescribed under the Companies Act 2013.
vii) Policy on Directors' appointment and remuneration: The policy of the Companyon Directors' appointment and remuneration including criteria for determiningqualifications positive attributes and other matters are available on the website of theCompany.
The Composition of Audit Committee of the Company is described in Corporate GovernanceReport as stipulated under Listing Regulations which forms part of the Directors' Report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134 (5) of the Companies Act 2013 your Directors herebyconfirm that:
(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) The Directors have 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 and ofthe profit and loss of the Company for that period;
(c) The Directors have 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 have prepared the annual accounts on a going concern basis;
(e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
SUBSIDIARIES AND JOINT VENTURES
During the financial year under review THAI SUBROS LIMITED Subsidiary Company inThailand did not carry out any business operations and the company incurred a loss of THB6.73 Lacs as against THB 5.28 lacs in the previous year. The Company is examining otheroptions and will accordingly decide upon the future course of action.
During the financial year under review the financial performance of Denso SubrosThermal Engineering Centre India Limited a Joint Venture achieved gross revenues of Rs.1559.58 Lacs as against Rs.1469.34 Lacs during the previous financial year a increaseof Rs. 90.24 lacs over the last year. The Company earned a profit of Rs. 13.98 Lacs duringthe year as against profit of Rs.11.23 Lacs in last year. Your Company is holding 26%share in this Joint Venture.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsread with Accounting Standard AS-27 on Financial Reporting for Interest in Joint Venturesyour Directors have pleasure in attaching the Audited Consolidated Financial Statementswhich form a part of the Annual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
The information in terms of Section 134(3)(m) of the Companies Act 2013 read withrelevant rules is annexed herewith as Annexure-1 and forms integral part of this report.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of annual return in Form MGT-9is annexed as Annexure-2 to this report and forms integral part of this Report.
AUDITORS AND AUDITOR'S REPORT
Statutory Auditors: M/s. V.K. Dhingra & Co. Chartered Accountants hold officeuntil the conclusion of the ensuing annual general meeting. The Auditors' Report to theMembers for the year under review does not contain any qualification. As per theprovisions of Section 139 of the Companies Act 2013 the Board has recommended theappointment of M/s Price Waterhouse Chartered Accountants LLP Chartered Accountant asStatuary Auditors of the Company from the conclusion of the 32nd Annual General Meeting(AGM) till the conclusion of 37th AGM for approval of the Members.
The observations of the Auditors and the relevant notes on accounts areself-explanatory and therefore do not call for any further comments. The Auditors' Reportdoes not contain any qualification or adverse remark.
Cost Auditors: The Company has appointed M/s. Chandra Wadhwa & Company CostAccountants as Cost Auditors of the Company to conduct the audit of cost recordsmaintained by the Company for the financial year 2017-18. The ratification of remunerationpayable to Cost Auditors for the financial year 2017-18 is being sought from the Membersof the Company at the ensuing Annual General Meeting.
Secretarial Auditors: The Company has appointed M/s. RSM & Co. CompanySecretaries as Secretarial Auditors to conduct the audit of secretarial and relatedrecords of the Company for the financial year ended March 31 2017. The Secretarial AuditReport for the financial year ended March 31 2017 is annexed herewith as Annexure-3 andthe same is self-explanatory. The said Secretarial Audit Report does not contain anyqualification or adverse remark.
During the year under review your Company has neither invited nor accepted anydeposits from the Public.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
No significant material orders were passed by the Regulators or Courts or Tribunalsimpacting the going concern status and Company's operations in future.
INTERNAL FINANCIAL CONTROLS
The adequacy of Internal Financial Controls is discussed in Management Discussion andAnalysis as stipulated under the Listing Regulations with the Stock Exchanges whichforms part of the Directors' Report.
LOANS GUARANTEES OR INVESTMENTS
The Company has not made any transaction relating to inter-corporate loans andinvestment during the year.
CORPORATE SOCIAL RESPONSIBILITY
The Company has formulated a Corporate Social Responsibility (CSR) Policy to undertakeCSR initiatives as specified in Schedule VII of the Companies Act 2013. The Company hasconstituted a robust and transparent governance structure to oversee the implementation ofCSR Policy in compliance with the requirements of Section 135 of the Companies Act2013.The Annual Report on CSR activities is annexed herewith as Annexure - 4 and formsintegral part of this Report.
One meeting of the Risk Management Committee was held during the year and the Committeehas formulated the risk management framework identified the elements of various risks anddevised a risk mitigation plan. The implementation of the ERM framework has progressedwell during the financial year under review.
Pursuant to Section 177(9) of the Companies Act 2013 the Company has established aVigil Mechanism for directors employees suppliers contractors and other stakeholders ofthe Company. The same is also intended to cover the Whistle Blower Policy under the aspectof Listing Regulations. The purpose and objective of this Policy is to cover seriousconcerns that would have a larger impact on image and values of the Company due toincorrect financial reporting or serious improper conduct. The Whistle Blower Policy hasbeen placed on the website of the Company www.subros.com.The Statutory Auditors CostAuditors or Secretarial Auditors of the Company have not reported any frauds to the AuditCommittee or to the Board of Directors under Section 143(12) of the Companies Act 2013and rules made thereunder. 19
The Company has in place a Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. The Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. No Complaint received under the Policy during the year.
RELATED PARTY TRANSACTIONS
The Board of Directors has formulated a Related Party Transaction Policy fordetermining material related party transactions. The Related Party Transaction Policy isavailable on the website of the Company. A statement of all particulars of Contracts orArrangements with related parties referred to in Section 188(1) of the Companies Act2013 duly approved by the Board of Directors is annexed herewith as Annexure-5 and formsintegral parts of the Report.
The Equity Shares of your Company continue to be listed on BSE Limited (BSE) NSELimited (NSE) and Delhi Stock Exchange Limited (DSE). The listing fees for the year2016-17 have been paid to the said stock exchanges except to DSE as Securities andExchange Board of India has withdrawn the recognition granted to DSE on November 19 2014.
The annual performance of the Board its Committees and each Director has been carriedout for 2016-17 in accordance with the framework. It is opinioned that the Company's Boardcomposition structure processes and working procedure are well laid. The Board membershave adequate expertise drawn from diverse industries like Banking Administration andTechnical & bring specific competencies relevant to the Company's business.Information flow from Management to the Board and Committees are timely and of acceptablequality. The Board deliberations and participation of members were found to be quitesatisfactory and the Board's overall functioning is effective.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure in respect to remuneration and other details as per the provisions ofSection 197(12) of the Companies Act 2013 read with Rule 5(1) of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are provided in the Annexure- 6 tothis Report.
Disclosure in respect to remuneration and other details as per the provisions ofSection 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in theAnnexure to this Report having regard to the provisions of the first proviso to Section136(1) of the Companies Act 2013 the Annual Report excluding the said statement ofemployees under Section 197(12) of Companies Act 2013 is being sent to the Members of theCompany. The said information is available for inspection at the registered office of theCompany during working hours and any Member interested in obtaining said statement maywrite to the Company Secretary at the registered office of the Company.
The approval of the Shareholders was sought on the proposal to issue Secured RedeemableNon-Convertible Debentures on private placement basis for an aggregate amount of Rs. 150crores vide Postal Ballot notice dated March 29 2017 details of which are given in theCorporate Governance Report which forms part of this Report.
ICRA has reaffirmed the Long Term and Short Term Ratings at [ICRA] A+ and [ICRA] A1+.The outlook on the long-term rating is "Stable".
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
The Company is committed to maintain the highest standards of corporate governance. TheCompany has complied with the corporate governance requirements as stipulated under theListing Regulations. A report on Corporate Governance along with a Certificate from theAuditors of the Company regarding compliance on the conditions of corporate governancepursuant to Listing Regulations is annexed herewith and forms integral part of thisreport.
Your Board of Directors wishes to convey their appreciation to all the employees fortheir enormous efforts as well as their collective contribution to the Company'sperformance. Your Directors acknowledge with gratitude the co-operation and supportextended by Company's bankers Canara Bank Kotak Mahindra Bank & other Banks and theManagement of our collaborators Denso Corporation and Suzuki Motor Corporation Japan fortheir continued support. Your Directors also take this opportunity to convey heartfeltgratitude to the Company's valued customers particularly Maruti Suzuki India LimitedTata Motors Limited Mahindra & Mahindra Limited Renault Nissan Automotive India Pvt.Ltd and Force Motors Limited for the trust and confidence reposed by them in theManagement for their unstinted co-operation and support provided to the Company. Last butnot the least the Board wishes to thank all Members vendors and business associates fortheir continuous support and confidence reposed in the Company.
| ||For and on behalf of Board of Directors |
| ||RAMESH SURI |
|Place: New Delhi ||Chairman |
|Dated: 23 rd May 2017 ||(DIN: 00176488) |