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Talbros Automotive Components Ltd.

BSE: 505160 Sector: Auto
NSE: TALBROAUTO ISIN Code: INE187D01011
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VOLUME 19272
52-Week high 307.35
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P/E 29.50
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OPEN 270.00
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VOLUME 19272
52-Week high 307.35
52-Week low 119.45
P/E 29.50
Mkt Cap.(Rs cr) 326
Buy Price 0.00
Buy Qty 0.00
Sell Price 263.80
Sell Qty 20.00

Talbros Automotive Components Ltd. (TALBROAUTO) - Director Report

Company director report

Dear Members

The Directors are pleased to present the 59th Annual Report of your company along withAudited Accounts and the Auditors’ Report thereon for the Financial Year ended 31stMarch 2016.

FINANCIAL HIGHLIGHTS

(Rs in lacs)
Particulars: Year Ended March 31 2016 Year Ended March 31 2015
Net Revenue from Operations 31008.52 31083.89
Profit before Interest and Depreciation 3646.56 4051.65
Less : Interest 1662.48 1753.95
Depreciation 814.10 803.04
Profit before Tax before Exceptional Item 1169.98 1494.66
Exceptional Item 0.00 (186.86)
Profit before Tax and after Exceptional Item 1169.98 1307.80
Less: Provision for Taxation 232.00 276.00
Provision for Deferred Tax 358.39 32.80
MAT Credit Entitlement (232.00) -
Less: (Excess)/ Short provision of tax for earlier years written back/provided (6.88) 1.15
Profit after Tax 818.48 997.85
Add: Balance Brought forward from last year 5751.88 5026.91
Profit available for appropriations 6570.36 6024.76
Appropriations:
Proposed Dividend 185.18 185.18
Tax on Dividend 37.70 37.70
Transfer to General Reserve 50.00 50.00
Balance carried forward 6297.48 5751.88
Total 6570.36 6024.76

FINANCIAL REVIEW

During the financial year 2015-16 there was robust growth in demand for Commercial andPassenger Vehicles. Goods carriers have seen turn around after general election 2014 withthe Govt. focusing strongly on infrastructure development. Mining in mineral productionindustry has also seen turn around and it is estimated that both these industries willtake goods carriers segment at above 15% growth rate for the current year. Last two yearsseveral macro economic factors such as falling interest rates and decreasing fuel pricebrought increased end customers attention and in turn demand. The similar trend isexpected to continue for next couple of years.

The Utility Vehicles segment maintained its growth rates due to regular new productlaunches and is expected to do even better in next couple of years with launch of productslike Hundai Creta Maruti Brezza and Mahindra KUV.

The Tractor segment showed a negative growth. This segment is directly dependent onMonsoon due to its major agriculture use. Last two years India witnessed a consecutiveMonsoon deficit which lead to drastic drop in Tractors sale.

Tractors segments are expected to grow at a fast pace compensating for last two yearsdue to good Monsoon projected for next two years.

Two wheelers segment grew at around 12% primarily by strong demand for scooter in UrbanMarkets.

Comparative production of vehicles in different segments over three years has been asfollows.

(Production in Nos.)

Segment Sub segment 2013-14 (Nos.) 2014-15 (Nos.) Growth 2015-16 (Nos.) Growth
Commercial LCVs - Goods Carriers 432102 383155 -11.33% 390979 2.04%
Vehicles LCVs - Passenger Carriers 45136 46585 3.21% 50654 8.73%
M & HCVs - Goods Carriers 180451 219193 21.47% 286994 30.93%
M & HCVs - Passenger Carriers 41175 49365 19.89% 54187 9.77%
Passenger Passenger Cars 2311972 2422158 4.77% 2519444 4.02%
Vehicles Utility Vehicles 563986 626296 11.05% 711830 13.66%
Vans 196693 172965 -12.06% 182585 5.56%
Three Wheelers Goods Carrier 96872 103647 6.99% 99816 -3.70%
Passenger Carrier 733248 845372 15.29% 834134 -1.33%
Tractors Tractors 696801 612994 -12.03% 571565 -6.76%
Two wheelers Mopeds 732210 755345 3.16% 737886 -2.31%
Motor cycles/ Step- Throughs 12471488 13011219 4.39% 12816012 -1.50%
Scooter/ Scooterettee 3676193 4722747 28.5% 5275888 11.71%

Source: Society of Indian Automobile Manufacturers

NEW INITIATIVES

In Financial year 2015 your company had a healthy mix of 67% from OEM business 19%from Exports and balance from the aftermarket. Your Company has moved closer to its majortechnology up-gradation at its Gasket Division. The dedicated line for manufacturing HeatShields adopting latest technology acquired through Sanwa Packaging Co. Ltd. a well-knownJapanese company has been successfully installed. It is a natural extension to theGaskets; it’s a new product line and a new initiative by Talbros.

Your Company is 100% asbestos free and this initiative that the management took isenabling exports to grow in the coming years. In the gasket business your Company hasvision to take exports up from 13% currently to about 20% over next three years. Inaddition the existing capacity for producing Gaskets was improved and increased byinternal efficiency building which has resulted in capacity enhancement of about 20%.

Initiation taken during the year 2015-16 on product diversification towards Heatshields and new technology oriented products further enhanced by discussing with customersregarding future product line they will be introducing and the requirements in terms ofproducts as well as specifications which need to be developed were initiated and many ofthese products will be introduced in the market in financial year 2016-17.

Further introduction of new technologies in financial year 2015-16 were taken up withthe International OEM customers who have accepted TALBROS for their future supplies whichwill enhance growth in exports significantly in upcoming years. The Company has ordersfrom the markets of US Turkey Italy and is working closely with new customers inAmerica Turkey Iran and Mexico.

On the other side at Forging Plant your company is currently looking at restructuringthe business through various strategic options to be able to generate newer growthdrivers.

The revenue for Forging Division in 2015-16 is H6238 lacs against sales value of H6843lacs in 2014-15. The reason for lower sales in 2015-16 was largely on account of theslowdown induced across the European markets.

For its Forging Division at Bawal the Company added a new customer like Ognibene inexport and VECV & Amul Industries in domestic. The Company embarked on variousinitiatives to reduce costs. It expects to optimize the running expenses by TPMinitiative.

Going ahead the Company expects this division to grow at a CAGR of around 20% in thenext couple years. It is proposed to optimize product mix to improve export share 65- 70%over next couple of years.

With focus on enhancing yield and optimizing efficiency we expect a good performanceduring the current financial year for this division.

FUTURE OUTLOOK

A good monsoon and a pick up in the pace of the economic recovery should augur well forauto volumes.

The improvement in macroeconomic indicators is promising. The drive of the governmenton development of infrastructure; generation of employment lower fuel cost control overinflation rationalization of tax structure through GST introduction Automotive Industryto be the engine of "Make in India" which is a welcome step; are all goodindicators.

Also there is focus on promoting mobility promoting India as a preferred destinationfor every segment of the automotive value chain defining a road map for implementingpolicies & regulations and we as part of the industry have great expectations from thesame. Overall it is expected that the Auto Sector too would be the beneficiary of suchmeasures. Revival of infrastructure and mining sectors will also give significant boost toAuto Sector growth. In addition to this revival of monsoon after 2 years is a positivefactor especially towards the growth in two wheeler & tractor segment.

It is expected that the overall auto segment would grow by 13 to 14 % PassengerVehicles sales to grow by 6% to 7% Overall CV segment to grow by 13% to 14% Two Wheelersto grow by 14% to 15% and Scooters segment to grow by 27% to 28% Tractors to grow by 20%to 21%.

Your management has continued its strong focus on internal process improvementsenhanced productivity and skill-assessment and up gradation of its workforce so as to be asmart nimble and proactive organization.

DIVIDEND & TRANSFER TO RESERVES

Your Directors are pleased to recommend 15% dividend for the year 2015-16 subject tothe approval of members at the ensuing Annual General Meeting. The total outgo on accountof dividend (including Dividend Distribution Tax) for the financial year 2015-16 will beH222.88 lacs. Also the Directors have proposed to transfer an amount of H50.00 lacs toGeneral Reserve.

TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of provisions of Section 125 of the Companies Act 2013 the unclaimed finaldividend pertaining to the financial year 2007-08 amount aggregating to H580793/- hadbeen transferred to the "Investor Education and Protection Fund" established bythe Central Government.

The Company shall transfer the unclaimed dividend for the year 2008-09 to InvestorEducation and Protection Fund on or before 27th October 2016 upon completion of 7 yearsfrom the date of transfer of said dividend into the Unclaimed Dividend Account incompliance with the provisions of Section 125 of the Companies Act 2013.

The shareholders who have not encashed their dividend warrants for the financial year2008-09 or any subsequent year are requested to lodge their claims for revalidation ofdividend warrants. The Company is specifically intimating those members who have so farnot claimed the unpaid dividend for the year 2008-09.

SHARE CAPITAL

The paid up capital of the company as on 31st March 2016 was H1234.563 lacs. Duringthe year under review the company did not issue any class or category of shares EmployeeStock Options Convertible securities and consequently no change in the capital structuresince previous year.

FIXED DEPOSIT SCHEME

The Fixed Deposit Scheme of the Company continued during the year. Deposits acceptedfrom the public amounted to H668.78 Lacs as on 31st March 2016.

As on 31st March 2016 105 fixed deposits aggregating to H39.47 Lacs matured forpayment but were neither claimed nor renewed by the depositors.

BOARD MEETINGS

During the financial year ended 31st March 2016 six (6) meetings of the Board ofDirectors were held on the following dates:

• 24th April 2015

• 22nd May 2015

• 12th August 2015

• 13th November 2015

• 12th December 2015

• 11th February 2016

The gap between any two meetings was not more than 120 days as mandated under theprovisions of Section 173 of the Companies Act 2013.

DIRECTORS

Your directors intrinsically believe in the philosophy of Corporate Governance and arecommitted to it for the effective functioning of the Board.

No Director resigned from the Company during the reporting period.

KEY MANAGERIAL PERSONNEL

As on date company has following key managerial personnel in compliance with theprovisions of section 203 of the Companies Act 2013.

1. Mr. Umesh Talwar - Vice Chairman & Managing Director

2. Mr. Naveen Gupta - Chief Financial Officer

3. Mrs. Seema Narang - Company Secretary

During the year Mr. Rajeev Paal Gupta resigned from the position of Chief ExecutiveOfficer w.e.f 01.08.2015 and Mr. Manvinder Singh Ajmani resigned from the position ofChief Financial Officer w.e.f 16th May 2016.

All directors key managerial personnel and senior management have confirmed to complywith the company’s Code of conduct.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 yourDirectors hereby state and confirm:

a) That in the preparation of the annual accounts the applicable accounting standardshave been followed and that no material departure was made for the same;

b) That 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 of the Company for the period ended on March 31 2016;

c) That Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) That Directors have prepared the annual accounts on a going concern basis;

e) That the directors have laid down internal financial control to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

f) That Directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

DECLARATION GIVEN BY INDEPENDENT DIRECTOR UNDER SECTION 149(6)

The independent Directors have confirmed and declared that they fulfill the criteria ofindependence as per the provisions of Section 149(6) of the Companies Act 2013 and are notdisqualified to act as an Independent Director. The Board is also of the opinion theIndependent Directors fulfill the independence requirement in strict sense and areeligible to continue as independent Directors of the company.

DIRECTORS RETIRING BY ROTATION

In accordance with the provisions of Companies Act 2013 and the Articles of Associationof the company Mr. Varun Talwar (DIN 00263984) and Mr. Anuj Talwar (DIN 00628063) retireby rotation and being eligible offer themselves for reappointment.

Details of the proposal for their re- appointment are mentioned in the explanatorystatement annexed to the notice of the 59th Annual General Meeting. The board recommendstheir re-appointment.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.

AUDIT COMMITTEE

The Audit Committee held four (4) meetings during the year. The members of the AuditCommittee are:-

Name of Director Category
Mr. V. Mohan Chairman Independent Director
Mr. Naresh Talwar* Member Non- Executive Director
Mr. Anil Kumar Mehra Member Independent Director
Mr. Rajive Sawhney Member Independent Director
Mr. Amit Burman Member Independent Director
Mr. Vidur Talwar** Member Non- Executive Director
Mr. Anuj Talwar** Member Executive Director

* Resigned from the Audit Committee w.e.f 12th December 2015 and

** Appointed as members of the Audit Committee w.ef. 12th December 2015.

The Chief Financial Officer Statutory Auditors and the Internal Auditor of the Companyare permanent invitees to the meetings of the Audit Committee. It is a practice of theCommittee to extend an invitation to Cost Auditor to attend the meeting as and whenrequired.

Mrs. Seema Narang Company Secretary is the Secretary of the Audit Committee.

RELATED PARTY DISCLOSURES

Related party transactions are reviewed and approved by Audit committee and are alsoplaced before the Board for necessary approval. The Company has developed standardoperating procedures for the purpose of identification and monitoring of suchtransactions.

There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other related parties which may have apotential conflict with the interest of the Company at large.

The contracts or arrangements of the Company with related parties during the periodunder review referred to in Section 188(1) of the Companies Act 2013 were in ordinarycourse of business and on arms’ length basis and in accordance with theshareholders’ approval by way of special resolution. During the year Company had notentered into any contract/ arrangement/ transactions with related parties which could beconsidered material in accordance with the related party transaction policy of theCompany.

The board has approved policy for related party transactions in terms of provision ofRegulation 23 of SEBI (Listing Obligation & Disclosure Requirements) Regulations 2015which is available on company’s website at following link:http://www.talbros.com/investors/investor-corporate/ related-party-policy/

The prescribed Form AOC- 2 giving particulars of contracts or arrangements with relatedparties referred to in subsection (1) of section 188 is attached as Annexure I.

INTERNAL FINANCIAL CONTROL

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.

Company has appointed M/s. Mazars Advisory Private Limited for carrying out theassignment of Internal Control over Financial Reporting.

REMUNERATION POLICY & BOARD EVALUATION

The Board on the recommendation of the Nomination & Remuneration Committee forselections and appointments of Directors senior management and decides theirremuneration after reviewing their qualifications positive attributes independence ofdirectors board diversity. Remuneration Policy of the company is based on the fundamentalprinciples of payment for performance potential growth and aligning remuneration withthe longer term interests of the Company and its shareholders promoting a culture ofmerit recognition and creating a linkage to corporate and individual performance. Thecriteria for performance evaluation of directors cover the areas relevant to theirfunctioning as member of Board or its Committees thereof. The manner in which theperformance evaluation of the board and its committees thereof the chairman and thedirectors individually has been carried out has been explained in the Corporate GovernanceReport.

CORPORATE GOVERNANCE

A Certificate from the Statutory Auditors regarding compliance of the conditions ofCorporate Governance as per the requirement of SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 is enclosed as part of Corporate Governance Report.

The Board of Directors support the concept of Corporate Governance and having regard totransparency accountability and rationale behind the decisions have made properdisclosures separately under the heading "Corporate Governance".

MANAGEMENT DISCUSSION AND ANALYSIS

As required under the listing SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 MD&A is enclosed and is part of this Report.

RISK MANAGEMENT POLICY

Risk management forms an integral part of management policy and is an ongoing processintegrated with operations.

The Company has formulated a policy and process for risk management. The company hasset up a core group of leadership team which identifies assesses the risks and thetrends exposure and potential impact analysis at different level and lays down theprocedure for minimization of the risks. Risk management forms an integral part ofmanagement policy and is an ongoing process integrated with operations.

Company has identified various strategic operational and financial risks which mayimpact company adversely; however management believes that the mitigation plans foridentified risks are in place and may not threaten the existence of the company.

VIGIL MECHANISM

Pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 avigil mechanism for directors and employees to report genuine concerns has beenestablished.

Details of establishment of vigil mechanism/ whistle blower are disclosed in theCorporate Governance Report.

The policy on vigil mechanism is available on the company’s website atwww.talbros.com.

During the year under review no employee was denied access to the Audit Committee.

LISTING OF SHARES

The Equity Shares of the Company are listed on the BSE Limited (BSE) Mumbai andNational Stock Exchange of India Limited.

Pursuant to the notification of the regulations your Company has entered into newListing Agreement with the BSE Limited (BSE) Mumbai on 25th February 2016 and withNational Stock Exchange on 19th February 2016 as mandated under the said regulations.

CORPORATE SOCIAL RESPONSIBILITY

Talbros Automotive Components Ltd. (TACL) has formulated Corporate SocialResponsibility (CSR) policy which encompasses its philosophy and guides its sustainedefforts for supporting socially useful programs for welfare and sustainable development ofthe weaker sections of the society specially the children and contributed to SaveraAssociation Talwar Foundation and other NGO committed for attending to education andnutrition needs of the underprivileged children. Your company also contributed to thePrime Minister’s Relief Fund to support their projects for welfare of the society.

As per Section 134(3)(o) of the Companies Act 2013 and the Companies (CorporateSocial Responsibility) Rules 2014 read with various clarifications issued by the Ministryof Corporate Affairs the Company has undertaken activities as per the CSR Policy(available on the company’s website www.talbros.com) and further details of the CSRactivities are contained in the Annexure - II forming part of this Report.

AUDITORS AND AUDITORS REPORT

Statutory Auditors

The Audit Committee has recommended to the Board the re-appointment of M/s. S.N.Dhawan & Co. Chartered Accountants Statutory Auditors of the Company and CMRS &Associates Chartered Accountants Auditors for the Pune Plant as statutory auditors ofthe Company from the conclusion of the ensuing Annual General Meeting till the conclusionof 60th Annual General Meeting to be held in the year 2017 and the necessary resolutionfor appointment as statutory auditors is being placed before the shareholders at the 59thAnnual General Meeting.

All observations made in the Auditors’ Report and notes to the accounts areself-explanatory and do not call for any further comments under Section 134 of theCompanies Act 2013.The Auditor’s Report does not contain any qualification oradverse remarks.

Secretarial Auditors

The Board has re-appointed Mrs. Kiran Sharma (membership no. 4942 & certificate ofpractice no. 3116) a practicing Company Secretary for carrying out secretarial audit interms of the provisions of Section 204 of the Companies Act 2013 for the financial year2016-17.

Secretarial audit report for the financial year ended 31st March 2016 as provided byM/s. Kiran Sharma & Associates Practicing Company Secretary is annexed to this Reportas Annexure - III. The report does not contain any qualification or adverse remarks.

Cost Auditors

The Board of Directors on recommendation of the Audit Committee has re-appointed M/sVijendra Sharma & Co. Cost accountants (Firm Registration No. 00180) as Cost Auditorsof the Company for the Financial Year 2016-17 for conducting the audit of the costrecords maintained by the Company subject to the ratification of the remuneration to bepaid to the Cost Auditor by the shareholders in ensuing Annual General Meeting.

A certificate from them has been received to the effect that their appointment as CostAuditors of the Company if made would be in accordance with the limits specified underSection 141 of the Companies Act 2013 and rules framed there under.

REPORT ON PERFORMANCE AND FINANCIAL POSITION OF JOINT VENTURE COMPANIES

Your company has three joint ventures (JVs) with Nippon Leakless Corpn. Japan MarugoRubber Industries Japan and Sistemi Sospensioni S.p.A Italy. These joint venturecompanies are created with an objective to use advanced technology know-how andscientific management techniques for production of various auto parts.

The Gasket division of the Company and Nippon Leakless Talbros constitutes almost 73%of revenues of the Company. On the domestic OEM front fresh orders for all the three newmodels of Maruti Suzuki launched during the last financial year including the S-CrossBaleno and Vitara Brezza were received.

Magneti Marelli Talbros Chassis Systems joint venture signed with Sistemi SospensioniS.p.A won orders from large OEMs in the UK for exports and within India. The Company hadalready started supplying components to Bajaj for its revolutionary Bajaj Qute (RE60quadricycle) that is being shipped to export markets. At this JV the Company has a strongorder book in the pipeline for the next two years both on the exports and domestic front.

Talbros Marugo Rubber continues to progress well. The Company had new orders fromMaruti Suzuki and Isuzu Motors which provides medium to long-range revenue security. TheCompany also began exports of anti-vibration products to Japan. In a key developmentCompany was able to export bushes to Polaris- US for their all-terrain vehiclesindicating global compliance levels achieved for this product basket within a short periodof time.

The details of investment made in JVs and revenue from operation of these JVs are givenherein under:

S. No JV NAME PARTNER COMPANY EQUITY EQUITY 2015-16 (Rs in Lacs) 2014-15 (Rs in Lacs)
STAKE INVESTMENT VALUE AS AT 31.03.16 ( H in Lacs) INVESTMENT MADE DURING THE 15-16 (H in Lacs) REVENUE FROM OPERATIONS PAT REVENUE FROM OPERATIONS PAT
1 NIPPON LEAKLESS TALRBOS PRIVATE LIMITED NIPPON LEAKLESS CORPORATION JAPAN 40.000% 480.00 Nil 10398.92 1109.87 10269.98 1521.20
2 MAGNETI MARELLI TALBROS CHASSIS SYSTEMS PVT. LTD SISTEMI SOSPENSIONI S.P.A ITALY 50.000% 1178.00 475.00 6111.00 -497.31 6425.03 -307.71
3 TALBROS MARUGO RUBBER PRIVATE LTD MARUGO RUBBER INDUSTRIES LTD. JAPAN 49.999% 850.00 NIL 2081.48 -85.44 1275.28 -80.58

Statement pursuant to Section 129(3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures as on 31st March 2016 in Form AOC-1 is annexed to thisReport as Annexure IV.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT AND FOREIGNEXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of Section 134(3)(m) of The Companies Act 2013read with Rule 8(3) of The Companies (Accounts) Rules 2014 statement showing particularswith respect to Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo are annexed hereto as Annexure - V and form part of this report.

PARTICULARS OF EMPLOYEES AND RATIO OF DIRECTOR REMUNERATION TO MEDIAN EMPLOYEES’REMUNERATION

As required by the provisions of Section 197 of the Companies Act 2013 read with Rule5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thenames and other particulars of employees are set out in the Annexure-VI to this Report andforms part of this report. The ratio of the remuneration of each director to the medianemployee’s remuneration and other details in terms of Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are forming part of this report as Annexure -VII.

The Board of Directors wishes to express their appreciation to all the employees fortheir outstanding contribution to the operations of the Company during the year. It is thecollective spirit of partnership across all sections of employees and their sense ofownership and commitment that has helped the Company to grow.

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form MGT-9 is enclosed as a part of this report incompliance with Section 134(3) of the Companies Act 2013 as Annexure VIII.

ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the support given by our customers shareholdersemployees financial institutions and banks and all other stakeholders and we lookforward to their continued support.

For and on behalf of the Board
Sd/- Sd/-
Place: New Delhi Umesh Talwar Varun Talwar
Date: May 21 2016 Vice Chairman & Managing Director Joint Managing Director

Annexure - I

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm’s length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not at arm’s length basis

All transaction are entered on Arm’s length Basis and hence no details to be givenhere.

2. Details of material contracts or arrangement or transactions at arm’s lengthbasis

Name(s) of the related party & nature of relationship Nature of contracts/ Arrangement/ transactions Duration of the contracts/ agreements/ transactions Salient terms of the contracts or arrangements or transactions including the value if any: Date(s) of approval by the Board if any: Amount paid as advances if any:
QH Talbros Limited (Associate Company) QH Talbros Limited (Associate Company) Agreement for sale of Company’s products. 01.04.2014 to 31.03.2017 Maximum amount of sale upto Rs. 24.00 Crores in one financial year. 26.05.2014 Nil
Trademark License Agreement 01.04.2014 to 31.03.2023 1% of gross replacement sales for its trademark & distribution network in each financial year during the period of contract. 26.05.2014 Nil
Nippon Leakless Talbros Private Limited (Joint Venture Company) Purchase and/ or Sale Agreement of Tyre Sealant and other production inputs. 01.04.2014 to 31.03.2017 Maximum amount of sale upto Rs. 4.00 Crores in one financial year. 26.05.2014 Nil
Nippon Leakless Talbros Private Limited (Joint Venture Company) Sale/ Purchase Agreement of gaskets to each other. 01.04.2014 to 31.03.2017 Maximum amount of sale upto Rs. 2.00 Crores in one financial year. 26.05.2014 Nil
Talbros Marugo Rubber Private Limited (Joint Venture Company) Sale of Services 01.04.2014 to 31.03.2017 Rs. 40.00 Lacs p.a 26.05.2014 Nil
Magneti Marelli Talbros Chassis Systems Private Limited (Joint Venture Company) Lease Agreement 27.03.2012 to 26.03.2017 Rs. 7.42 Lacs p.m. The rent is subject to an escalation @ 5% p.a. starting from 2013 and upto 2017 over and above the rent applicable in the immediately preceding year. 13.02.2012 Nil
Magneti Marelli Talbros Chassis Systems Private Limited (Joint Venture Company) Investment 01.04.2015 to 31.03.2016 Rs. 4.75 Crores 22.05.2015 Nil
Mrs. KumKum Talwar (Relative of key managerial personnel) Rent Agreement 01.10.2013 to 30.09.2016 Rs. 10.00 Lacs per annum 14.08.2012 Nil

 

For and on behalf of the Board
Sd/- Sd/-
Place: New Delhi Umesh Talwar Varun Talwar
Date: May 21 2016 Vice Chairman & Managing Director Joint Managing Director

Annexure - II

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the company’s CSR policy including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes. CSR activities of Talbros is focused to:
• Promote employment enhancing vocational skills for employability of youth.
• sustain efforts for supporting socially useful programs for welfare and sustainable development of the weaker sections of the society specially the children.
• Any other project or aid which the committee considers suitable for the welfare of society or humanity at large within the purview of Schedule VII (Section 135) or as authorized by Government. Talbros Automotive Components Limited’s CSR Policy is in compliance with the provisions of Companies Act 2013. The brief outline of the company’s CSR policy including overview of projects or programmes proposed to be undertaken are placed on the Company’s website www.talbros.com/csr-policy-2/
2. The composition of the CSR Committee. Mr. Umesh Talwar Chairman
Mr. Amit Burman Independent Director
Mr. Navin Juneja Director and Group CFO
3. Average net profit of the company for last three financial years. H86068996.00
4. Prescribed CSR Expenditure (2% of the amount as in item 3 above) H1721380.00
5. Details of CSR spent during the financial year:
(a) Total amount spent for the financial year H1722000.00
(b) Amount unspent if any None
(c) Manner in which the amount spent during the financial year Detailed below

(c) Manner in which the amount spent during the financial year is detailed below:

(1) (2) (3) (4) (5) (6) (7) (8)
Sr. No CSR project or activity identified Sector in which the Project is covered Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs were undertaken. Amount outlay (budget) project or programs wise (H In Lacs) Amount spent on the projects or programs Sub-heads: (1) Direct expenditure on projects or programs (2) Overheads Cumulative Expenditure up to the reporting period ( H In Lacs) Amount Spent Direct or through implementing agency* H ( In Lacs)
(Rs In Lacs)
1. Donation/ Contribution received for Prime Minister’s National Relief Fund Socio- Economic Development and Relief PMNRF Prime Minister’s Office New Delhi -110011 361000/- 361000/- 361000/- Spent through Prime Minister’s National Relief fund
2. Savera Association (Children’s Education &Healthcare) Health & Education Basti Vikas Kendra G Block Sriniwaspuri Delhi-110065 500000/- 500000/- 500000/- Implementing Agency - Savera Association
3. Talwar Foundation Children Education & Women Empowerment B-4 Greater Kailash-I New Delhi-110048 750000/- 750000/- 750000/- Implementing Agency - Talwar Foundation
4. Madras Esplande Round Table 30 Trusts Children Education Shantiniketan AK 106 New No. AK24 Shanthi Colony 10th Main Road Anna Nagar Chennai-600 040 100000/- 100000/- 100000/- Implementing Agency - Madras Esplande Round Table 30 Trusts
5. Janki Social Welfare Society Children Education Hayatpur Garhi Road Railway Station Garhi Harsaru Distt. Gurgaon Haryana 11000/- 11000/- 11000/- Implementing Agency - Janki Social Welfare Society

 

For and on behalf of the Board
Sd/- Sd/-
Place: New Delhi Umesh Talwar Varun Talwar
Date: May 21 2016 Vice Chairman & Managing Director Joint Managing Director

Annexure - III

Form No. MR-3 SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]

To

The Members

TALBROS AUTOMOTIVE COMPONENTS LIMITED

14/1 DELHI MATHURA ROAD P.O. AMAR NAGAR FARIDABAD HARYANA- 121003

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by TALBROS AUTOMOTIVE COMPONENTSLIMITED (hereinafter called the company). Secretarial Audit was conducted in a manner thatprovided me a reasonable basis for evaluating the corporate conducts/ statutorycompliances and expressing my opinion thereon.

Based on my verification of the TALBROS AUTOMOTIVE COMPONENTS LIMITED books papersminute books forms and returns filed and other records maintained by the company and alsothe information provided by the Company its officers agents and authorizedrepresentatives during the conduct of secretarial audit I hereby report that in myopinion the company has during the audit period covering the financial year ended on31.03.2016 Complied with the statutory provisions listed hereunder and also that theCompany has proper Board-processes and compliance-mechanism in place to the extent in themanner and subject to the reporting made hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords maintained by TALBROS AUTOMOTIVE COMPONENTS LIMITED for the financial year endedon 31.03.2016 according to the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made there under;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade there under;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2015*;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999*;

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008*;

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding compliance of the Companies Act and dealingwith client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009;* and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998;*

* Not applicable because company did not carry out the activities covered by theregulations/ guidelines during the audit period.

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreements entered into by the Company with NSE & BSE;

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above

I further report that

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views arecaptured and recorded as part of the minutes.

I/ we further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable labor environmental and industrial laws rules regulations andguidelines.

I further report that during the audit period:

There were no instance of:

a. Public/ right/ preferential issue of shares/ debentures/ sweat equity etc.

b. Redemption/ buy-back of securities.

c. Major decisions taken by the members in pursuance to Section 180 of Companies Act2013.

d. Merger/ Amalgamation/ reconstruction etc.

Sd/-
KIRAN SHARMA
Place: New Delhi FCS No. 4942
Date: 19.05.2016 C P No. 3116

Annexure - IV

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014)

Statement containing salient features of the financial statement ofsubsidiaries/associate companies/joint ventures

Part "A": Subsidiaries

Not Applicable to the company as there is no subsidiary.

Part "B": Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures

Sr. No Name of Associate/Joint Ventures Nippon Leakless Talbros Pvt Ltd. Joint Ventures Magneti Marelli Talbros Chassis Systems Pvt. Ltd. Talbros Marugo Rubber Pvt. Ltd. Associates QH Talbros Ltd. Talbros International Ltd.
1 Latest Audited Balance Sheet date 31.03.2016 31.03.2016 31.03.2016 31.03.2015 31.03.2015
2 Details of Associates / Joint Ventures where shares held by the Company
Total shares issued by the Associates/ Joint Venture 12000000 23560000 17000002 3000000 5000000
Number of shares held by the company 4800000 11780000 8500000 177962 543484
Amount of Investment in Associates/ Joint Venture (in Rs) 48000000 117800000 85000000 3245680 37500332
Extend of Holding % in the Associates/ Joint Venture 40.00% 50.00% 49.99% 5.93% 10.87%
3 Description of how there is significant influence Joint Venture

No Significant influence

4 Reason why the associate/joint venture is not consolidated Consolidated Shareholding is less than the threshold limit for Consolidation
5 Net worth attributable to Shareholding as per latest audited Balance Sheet (in Rs) 152357199 67880858 64752467 65229892 11693645
6 Profit/Loss for the year After Tax (in Rs) 110987182 (49730824) (8543876) 94168287 22882647
i. Considered in consolidation 44394873 (24865412) (4271938) - -
ii. Not considered in consolidation 66592309 (24865412) (4271938) - -

Annexure - V

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

[Section 134(3) (m) of Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014]

A) Conservation of energy

i) The steps taken or impact on conservation of energy

- Installed timer to all machines having motor below than 10 HP to eliminate powerconsumption of machine during idle time.

- Remove excess AC tonnage from C-200 cabin from 8.5 to 5.5 Ton.

- Removal of excess AC tonnage from EDP department from 4 ton to 2.5 ton.

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

Solar energy option is being seriously looked into for future initial study has beencompleted and will be initiated during financial year 2016-17.

Conventional lights replaced with LED lights.

iii) The capital investment on energy conservation equipments

H22.00 lacs.

B) Technology absorption

i) The efforts made towards technology absorption

- Developing Post Coating Technology with Sanwa Packing Industry of Japan throughTechnical Assistance Agreement.

- Developing Heat Shield Technologies with Sanwa Packing Industry of Japan throughTechnical Assistance Agreement.

- Installed state of the art heat shield manufacturing facility.

- Development of high performance sealing technologies and materials to meet therequirement of new generation engines.

ii) The benefits derived like product improvement cost reduction product developmentor import substitution

- Developed New Sealing products for new platform engines ( BS-IV emission complaints).

- Introduced Heat Shields for OEM customers for their new engines/vehicles.

- Reduction in cost of Multi Layer Steel gaskets through Post Coating.

iii) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)-

(i) The details of technology imported - Technology for Manufacture of Heat-Shield

(ii) The year of import - 2011

(iii) Whether the technology been fully absorbed – As our Heat Shield project hasbeen set up the technology absorption is happening.

(iv) If not fully absorbed areas where absorption has not taken place and the reasonsthereof and - NA

(v) the expenditure incurred on Research and Development - H196.49 Lacs

C) Foreign exchange earnings and Outgo:

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.

(Rsin lacs)
Particulars: 2015-16 2014-15
Foreign Exchange Earnings 5989.29 7091.59
Foreign Exchange Outgo (Imports) 6124.98 6080.80

Particulars as per Form A (Applicable for Forging Division only)

( Rs in lacs)
Current year Previous Year
Power & Fuel Consumption
1. Electricity
a) Purchased from Caparo Power Ltd.
Unit consumed (In Lacs) 6.13 91.44
Total Amount (In Lacs) 60.12 1099.35
Rate H/Unit 9.81 12.02
b) Own Generation
Through Captive Power Plant (HFO Based)
Furnace Oil H/Litre 17.94 44.28
Unit (KHW in lacs) 85.32 1.91
Total amount (In H) 519.32 26.21
Cost H/Unit 6.09 13.72
c) Purchased from DHBVNL
Unit Consumed (In Lacs) 9.27 0.47
Total Amount (In Lacs) 84.67 14.37
Cost H/Unit 9.13 30.57

 

For and on behalf of the Board
Sd/- Sd/-
Place: New Delhi Umesh Talwar Varun Talwar
Date: May 21 2016 Vice Chairman & Managing Director Joint Managing Director

Annexure - VI

STATEMENT SHOWING PARTICUALRS OF EMPLOYEES PURSUANT TO THE PROVSIONS OF SECTION 197(12)OF THE COMPANIES ACT 2013 READ WITH RULE 5(2) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.

Persons employed for a part of the year ended March 31st 2016 who were in receipt ofthe remuneration which in the aggregate was not less than H5 00000/- p.m.

Sr. No Employee Name Designation Gross Remuneration (in H) Qualification Total Exp. in Yrs. Date of Commencement of Employment Age in Yrs Last Employer & Designation held
1 Mr. Rajeev Pal Gupta* CEO 3665386/- BE Executive Manage- ment Programme 31 20.05.2013 52 COO Subros Ltd.

* Remuneration for 4 months only i.e 01-04-2015 to 31-07-2015.

Annexure - VII

DETAILS PURSUANT TO THE PROVISIONS OF SECTION 197(12) OF THE COMPANIES ACT 2013 READWITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014.

Relevant clause u/r 5(1) Prescribed Requirement Particulars
(i) Ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year - Ratio of the remuneration of Mr. Umesh Talwar to the median remuneration of the employees – 42:1
- Ratio of the remuneration of Mr. Anuj Talwar -15:1
(ii) Percentage increase in remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year. - Mr. Manvinder Singh Ajmani (CFO)- 7%
- Mrs. Seema Narang (CS)- 8%
(iii) Percentage increase in the median remuneration of employees in the financial year. 9.90%
(iv) Number of permanent employees on the rolls of company 621
(v) Explanation on the relationship between average increase in remuneration and company performance Average increase in remuneration – 9.02%
Average decrease in Profit before Tax – 10.54%

 

(vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company KMP Remu. Company
(in lacs) Performance
(PBT) ( in lacs)
Mr. Manvinder Singh Ajmani 49.24 1169.98
Mrs. Seema Narang 19.78
Mr. Rajeev Pal Gupta* 36.65

*remuneration for the period 01-04-2015 to 31-07-2015

(vii) Variations in the market capitalisation of the company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year. Variations in the market capitalisation
- Market capitalisation as at 31st March 2015 – H174.01 Crores
- Market capitalisation as at 31st March 2016 – H109.88 Crores
- Variations in the PE Ratio
- PE Ratio as at 31st March 2015 : 17.44
- PE Ratio as at 31st March 2016 : 13.42