To the Members
Your Directors are pleased to present the Fifty-Sixth Annual Report with the AuditedStatements of Accounts for the year ended 31st March 2017.
| ||Year ended 31.03.2017 ||Year ended 31.03.2016 |
| ||R in Lacs ||R in Lacs |
|Gross Profit before Finance Costs Depreciation and Tax ||3538.54 ||2787.65 |
|Less: Finance Costs ||513.37 ||697.84 |
|Depreciation ||1257.74 ||1251.49 |
|Profit before Tax ||1767.43 ||838.32 |
|Less: Provision for tax || || |
|Current Tax ||380.00 ||180.00 |
|MAT credit entitlement ||(83.95) ||(172.98) |
|Deferred Tax (Charge)/Credit ||286.68 ||283.35 |
|Profit after Tax ||1184.70 ||547.95 |
|Add: Balance brought forward from previous year ||1168.43 ||998.51 |
|Amount available for appropriations ||2353.13 ||1546.46 |
|Appropriations: || || |
|Proposed Dividend* || ||231.00 |
|Tax on proposed dividend* || ||47.03 |
|Transfer to General Reserves || ||100.00 |
|Balance carried to Balance Sheet ||2353.13 ||1168.43 |
| ||2353.13 ||1546.46 |
*As per Accounting Standard 4(Revised) provision for Proposed Dividend is no longerrequired to be made in the financial statements.
OPERATIONS: Automotive Division:
The sales of Commercial Vehicles segment in which your Company is focused progressedwell upto October 2016 registering a good growth of 7% however thereafter it wasstrongly affected by demonetization and further by the mandatory shift to introduction ofBharat Stage IV norms. Retail sales of Commercial Vehicles further slowed down as buyersdelayed their decision to purchase vehicles in the anticipation of savings in purchaseprice through introduction of GST.
The Commercial Vehicle Industry registered a modest growth of 3% for the year.
The sales of tractors was more encouraging than commercial vehicles however theeffects of demonetization and introduction of GST hampered the annual numbers. TheDomestic Industry grew at healthy rate of 16%.
The commercial vehicle and tractor industries are more prone to cyclic effect and theCompanys sale was in line with the cyclic effect of these two segments.
The Company has taken steps to ensure continuous growth in sales in other segments. Theefforts put in by the Company have started giving positive results as shown below:
For 2017-18 monsoon is expected 96% of the normal. Government initiatives in thebudget for rural economic growth and the GST implementation planned from July 2017 shouldbring good market conditions across all the segments though we expect some disruptionduring the first half of this year.
Industrial and Big Bearing Division:
There are more than 2000 bearings in this segment. The applications for the bearingssupplied are very critical and therefore the bearings need to pass through many qualityand approval processes at the users end leading to long validation period. Due to thisthe users are reluctant to change over from their current source of supply posing anadditional challenge for entry for new customers. The Company has initiated many plans tomitigate the various challenges faced with sales and production of the bearingsmanufactured in this Division. While the process is slow these bearings are graduallybeing accepted by customers and the sales trend is positive.
The trend in sales of industrial bearings is shown below:
SALE OF SHARES:
During the year under review the Company has sold its entire 2.5% equity stake inNSK-ABC Bearings Private Ltd. to NSK India Sales Company Pvt. Ltd. pursuant to the termsof a the Share Purchase Agreement.
The Board of Directors at its meeting held on 4th July 2017 has approved the merger ofthe Company into Timken India Limited through a Scheme of Amalgamation and Arrangements.
The Scheme is subject to the approval of the shareholders and creditors of ABC BearingsLimited approval of the regulatory authorities and the sanction of the National CompanyLaw Tribunal.
During the year the Company has not accepted any fixed deposits under the CompaniesAct 2013.
Your Company continues to enjoy the TS 16949 as well as the ISO 140001 certifications.The Original Equipment customers continue to repose their confidence withself-certification status for the Company.
DIRECTORS RESPONSIBILITY STATEMENT:
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutorycost and secretarial auditors and the reviews performed by the Management and the relevantBoard Committees including the Audit Committee the Board is of the opinion that theCompanys internal financial controls were adequate and effective during the yearended 31st March 2017. Accordingly pursuant to Section 134(5) of the Companies Act2013 based on the above and the representations received from the Operating Managementthe Board of
Directors to the best of their knowledge and ability confirm that: i. in thepreparation of the annual accounts the applicable accounting standards have been followedand that there were no material departures therefrom; ii. they have in the selection ofthe accounting policies consulted the statutory auditors and have applied theirrecommendations consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at31st March 2017 and of the profit of the Company for the year ended on that date; iii.they have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; iv.they have prepared the annual accounts on a going concern basis; v. they have laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively during the year ended 31st March2017; and vi. proper system has been devised to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively duringthe year ended 31st March 2017.
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. P.M.Patel retires by rotation and being eligible offer himself for reappointment. Necessaryresolution is being proposed for his reappointment as Director at the ensuing AnnualGeneral Meeting of the Company. A brief resume and particulars relating to him are givenseparately under the report on Corporate Governance.
Mr. S. S. Patel was appointed as Additional Executive Director at the Board Meetingheld on 19.10.2016. Necessary resolution is being proposed for his appointment as Directorat the ensuing Annual General Meeting of the Company. A brief resume and particularsrelating to him are given separately under the report on Corporate Governance.
An ordinary resolution is proposed to appoint Mr. S. S. Patel as Executive Director fora period of 3 years with effect from 20th September 2017.
Special Resolutions are proposed to reappoint Mr. S. M. Patel Executive Chairman andMr. P. M. Patel Managing Director for a period of three years with effect from 2nd May2017 and 1st August 2017 respectively. A brief resume and particulars relating to themare given separately under the report on Corporate Governance.
KEY MANAGERIAL PERSONNEL (KMP):
Pursuant to provisions of Sections 2(51) and 203 of Companies Act 2013 read with Rule8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014following persons are acting as KMP as on 31st March 2017:
Mr. P.M. Patel Managing Director
Mr. S.K. Choudhary Chief Financial Officer
Mr. S.B. Desai Company Secretary
None of the Key Managerial Personnel has resigned during the year ended 31st March2017.
FORMAL ANNUAL EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation 25(4) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the IndependentDirectors have carried out annual performance evaluation of the Board of Directors as awhole and have come to the conclusion that the Board meets expectations.
INDEPENDENT DIRECTORS DECLARATION:
The Company has received the declarations in the prescribed format from eachIndependent Director confirming that they meet the criteria of independence as envisagedin the provisions of Section 149 of the Companies Act 2013 read with Regulation 16 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee comprises of Mr. S. M. Patel ChairmanMr. T. M. Patel and Mr. Jal R. Patel are members which is as per Section 135 ofCompanies Act 2013. Your Company has formulated a Comprehensive CSR policy in line withthe Companies Act 2013. In line with the CSR policy the following activities areundertaken by the Company:
Shouldering Education Responsibility.
In this field we are supporting an English Medium School in rural area of Gujaratwhich has an enrolment of approximately
We provide facility for outdoor and indoor sports and activities through aSports Complex at Bharuch.
For the Youth:
An Academy is established to coach youngsters in cricket and other outdoor sport.
Providing shelter and food to the needy in disaster situation.
We have established facility for processing part of the waste generated by theCompany to produce organic fertilizer. We assist neighbouring establishments to set upsuch facilities. The fertilizer produced is not only used by the Company but also publicat large and whoever requires the same.
The Annual Report on CSR activities in accordance with the Companies (Corporate SocialResponsibility) Rules 2014 is set out as "Annexure (A)".
AUDITORS: Statutory Auditors:
The term of existing auditor viz. M/s. Parikh & Shah Chartered Accountants willexpire at the conclusion of ensuing 56th Annual General Meeting pursuant to the provisionsof Section 139(2) of the Companies Act 2013. The Board proposes to appoint M/s. Chokshiand Chokshi LLP Chartered Accountants bearing Firm Registration No. 101872W-W100045 asthe Statutory Auditors as recommended by Audit Committee for a term of 5 years commencingfrom the conclusion of 56th Annual General
Meeting till the conclusion of 61st Annual General Meeting subject to ratification byMembers in each Annual General Meeting. As required under the provisions of Section 139and Section 141 of the Companies Act 2013 the Company has received a written certificatefrom the Statutory Auditors to the effect that their appointment if made would be inconformity with the limits specified in the said Section.
A proposal seeking appointment of M/s. Chokshi and Chokshi LLP Chartered Accountantsas the statutory Auditors of the Company is provided as a part of the Notice convening theensuing 56th Annual General Meeting.
Mr. D.M. Dalal a Practising Company Secretary was appointed as Secretarial Auditorto carry out Secretarial Audit of the Company. In terms of provisions of Section 204 ofthe Companies Act 2013 a Secretarial Audit Report has been annexed to this Report Annexure"(B)".
M/s. B.J.D. Nanabhoy & Co. Cost Accountants were appointed as Cost Auditors tocarry out the audit of the cost records of the Company for the Financial Year ended 31stMarch 2017. Based upon the declaration on their eligibility consent and terms ofengagement your Directors propose their re-appointment for the year ending 31st March2018.
Explanation or Comments on disqualifications reservations adverse remarks ordisclaimers in the auditors
There have been no disqualifications reservations adverse remarks or disclaimers inthe auditors reports requiring explanation or comments by the Board.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is set out as Annexure "(C)"to this Report.
RELATED PARTY TRANSACTIONS:
During the financial year 2016-17 the Company has entered into transactions with arelated party as defined under Section 2(76) of the Companies Act 2013 read withCompanies (Specification of Definitions Details) Rules 2014 all of which were in theordinary course of business and on arms length basis and in accordance with theprovisions of the Companies Act 2013 read with the Rules issued thereunder andRegulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. Further there were no transactions with related party which qualify as materialtransactions under the Listing Regulations. The transactions with related party werereviewed and approved by the Audit Committee. The policy on Related Party Transactions asapproved by the Board is posted on the Companys website.
In terms of provisions of Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 Form AOC-2 is set out in Annexure"(D)".
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT-9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as Annexure"(E)" to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the names of the top ten employees in terms of remuneration drawn andemployees drawing remuneration in excess of the limits set out in the said rules formingpart of this report is given in the Annexure to this Report. However pursuant toprovisions of Section 136(1) of Companies Act 2013 all reports and accounts are sent toall the shareholders of the Company except this annexure. Any shareholder interested ininspecting this report can visit our registered office or write to the Company Secretaryfor a copy of it.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) rules 2014 have been appended to this Report Annexure"(F)".
MANAGEMENTS DISCUSSION AND ANALYSIS:
Pursuant to Regulation 34 read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 detailed review of operations performance andfuture outlook of the Company is covered under separate Annexure to this report asManagements Discussion and Analysis Annexure "(G)".
A separate Section on Corporate Governance is included in the Annual Report inaccordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015along with Auditors Certificate confirming the compliance of conditions on
Corporate Governance and the same is annexed thereto Annexure "(H)".
The Audit Committee comprises of Mr. Jal R. Patel Chairman Mr. Nalin M. Shah and Mr.S.M. Patel are members. Further details relating to the Audit Committee are provided inthe Corporate Governance Report which forms part of this report.
The Board has accepted all the recommendations made by Audit Committee during the year.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has established a Vigil Mechanism/Whistle Blower Policy for Directors andEmployees to report their concerns about unethical behavior actual or suspected fraud orviolation of the Companys Code of Conduct. The Audit Committee oversees the vigilmechanism complaints. During the year no complaints were received under vigil mechanismpolicy. The Vigil Mechanism/ Whistle Blower Policy is available on Companys websiteat http://www.abcbearings.com/index.php/whistle-blower-policy/.
POLICY ON NOMINATION AND REMUNERATION:
The Companys policy on Nomination and Remuneration is framed with objectives asunder:
1. To formulate criteria and advise the Board in matters of determining qualificationscompetencies positive attributes and independence of Directors and policies relating totheir appointment and removal;
2. To review corporate goals and objectives to set norms of performance evaluation andto lay out remuneration principles for Directors KMP and Senior Management linked totheir effort performance and contribution towards achievement of organisational goals;
3. To evaluate performance and give recommendations to the Board on remunerationpayable to the Directors KMP and Senior Management; and
4. To review and recommend to the Board measures to retain and motivate talentincluding KMP and Senior Management Personnel with a view to ensuring long termsustainability and competitiveness of the organisation.
Criteria and Qualification for Nomination and Appointment:
A person to be appointed as Director KMP or at Senior Management level should possessadequate and relevant qualification expertise and experience for the position that he/sheis being considered for. The Nomination and Remuneration Committee
(NRC) will evaluate whether qualification expertise and experience possessed by aperson is sufficient/satisfactory for the concerned position and the NRC will makeappropriate recommendations to the Board of Directors.
Policy on Remuneration:
1. The remuneration (including revisions) to Directors is recommended by NRC to theBoard for approval. The remuneration (including increments) to the Directors sorecommended by NRC to the Board should be within the limits under the Companies Act 2013read with the Rules thereunder and as approved by the shareholders of the Company.
2. None of the Directors (including Independent Directors) shall be entitled to anystock option of the Company.
3. While determining Remuneration to KMP Senior Management Personnel and otheremployees the Company encourages superior performance. The objective is to set the totalremuneration at levels to attract motivate and retain high-calibre and high potentialpersonnel in a competitive market.
During the year five Board Meetings four Audit Committee Meetings three Nominationand Remuneration Committee Meeting one Corporate Social Responsibility Committee Meetingand thirteen Stakeholders Relationship Committee Meeting were convened and held. Thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe Board meetings was within the period prescribed under the Companies Act 2013.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY COMPANY:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has in place Sexual Harassment Policy in line with the requirement of TheSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under the policy. No complaints have been received by the Committee during theyear.
The Directors wish to place on record their deep sense of appreciation for thecommitted services of the employees of the Company at all levels. The Directors alsoexpress their sincere appreciation for the assistance and co-operation received fromBanks Customers and Dealers during the year.
| ||For and on behalf of the Board |
|Place : Mumbai ||S. M. PATEL |
|Date : 4th August 2017 ||Chairman |
| ||DIN : 00012036 |