To the members of Atul Auto Limited
Your Directors have pleasure in presenting the 29th Annual Report along with theaudited financial statements for the year ended 31st March 2017.
1. Financial Results
The financial performance of the Company for the year ended 31st March 2017 issummarized below:
|Particulars ||2016-17 ||2015-16 |
|Revenue from Operations ||47533 ||53104 |
|Other Income ||252 ||131 |
|Total Income ||47785 ||53235 |
|Total Expenses ||42133 ||46082 |
|Profit before Tax (PBT) ||5652 ||7153 |
|Exceptional Item ||- ||- |
|Profit before Tax after Exceptional Item ||5652 ||7153 |
|Less: Current Tax ||1878 ||2435 |
|Deferred Tax ||42 ||(22) |
|Profit after Tax (PAT) ||3732 ||4740 |
|Opening Balance in Profit and Loss Account ||12111 ||9231 |
|Amount available for appropriations ||15842 ||13971 |
|Appropriations || || |
|Interim Dividend Declared ||603 ||603 |
|Tax on Interim Dividend ||123 ||123 |
|Proposed Dividend ||329 ||548 |
|Tax on Proposed Dividend ||67 ||112 |
|Transfer to General Reserve ||373 ||474 |
|Balance carried to Balance Sheet ||14347 ||12111 |
|Earnings per Share (Rs.) ||17.01 ||21.60 |
2. Operating Results and Business Operations
During the year under review the Company's business cycle faced new economic andindustry related challenges confronted with all and come out with following results(standalone):
Number of vehicles sold decreased by 11.61% to 38795 (Previous year 43893)
Revenue from operation decreased by 10.49% to Rs.47533 Lacs (Previous yearRs.53104 Lacs)
Export revenue increased by 42.85% to Rs.2610 Lacs (Previous year Rs.1827Lacs)
Profit before depreciation nance cost other income exceptional items and tax(PBDIT) decreased by 21.54 % to Rs.5986 Lacs(Previous year Rs.7629 Lacs)
Profit before tax (PBT) decreased by 21% to Rs.5652 Lacs (Previous yearRs.7153 Lacs)
Tax expense decreased by 6.90% to Rs.1920 Lacs (Previous year Rs.2413 Lacs)
Profit after tax (PAT) decreased by 21.27% to Rs.3732 Lacs (Previous yearRs.4740 Lacs)
The highlights of consolidated results with performance of the associate company aredescribed in this report separately.
3. Transfer to Reserve
Your Directors propose to transfer Rs.373 Lacs to the General Reserve out of amountavailable for appropriation and an amount of Rs.14347 Lacs is proposed to be retained insurplus in the Statement of Profit and Loss.
During the financial year 2016-17 your Company declared and paid an interim dividendof Rs.2.75 (Rupees two and paisa Seventy Five Only) per equity share of the face value ofRs.5 (Rupees Five Only) each in the month of November 2016. In addition to that yourDirectors recommend payment of Rs.1.50 (Rupees One and Paisa Fifty Only) per equity shareof the face value of Rs.5 (Rupees Five Only) each as nal dividend for the financial year2016-17 subject to the approval of the shareholders at the ensuing AGM. If approved thetotal dividend (interim plus nal dividend) for the financial year 2016-17 will be Rs.4.25(Rupees Four and Twenty Five Paisa only) per equity share of the face value of Rs.5(Rupees Five Only) each as against the total dividend of Rs.5.25 (Rupees Five and paisaTwenty Five Only) per equity share of the face value of Rs.5 (Rupees Five Only) paid forthe previous financial year 2015-16.
The Company has maintained its dividend payout ratio for the year inclusive of dividenddistribution tax at 30.08% which was 29.25% in the previous year. The total dividend(interim plus nal dividend) pay-out (including dividend distribution tax) for thefinancial year 2016-17 will be Rs.1123 Lacs.
The nal dividend if declared will be paid to those shareholders who hold shares as onFriday 22nd September 2017.
5. Public Deposits
During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modi cation(s) orre-enactment(s) for the time being in force).
6. Loans Guarantees and Investments
During the year under Report the Company has not given any loans or provided guaranteeor security to any person or body corporate beyond the limit as prescribed under Section186 of the Companies Act 2013.
The Company has provided the corporate guarantee of total amounting to Rs.50 Crores infavour of Yes Bank and IDBI Bank for Rs.25 Crores each guarantying the repayment of CashCredit facility in case of default by Khushbu Auto Finance Limited. Khushbu Auto FinanceLimited is the only Associate Company of Atul Auto Limited having business of nancingautomobile vehicles.
We continue to be debt-free and maintain suf cient cash to meet our strategicobjectives. We understand that the liquidity in the Balance Sheet has to balance betweenearning adequate returns and the need to cover financial and business risks. Liquidityenables us to make a rapid shift in direction if there is a market demand. We believethat our working capital is suf cient to meet our current requirements. As on 31st March2017 we had liquid assets of Rs.5710 lacs as against Rs. 1282.50 lacs at the previous yearend. These funds comprise cash bank balance and investment in liquid mutual funds.
8. Capital Expenditure
The Company has made the expenditure for the initial development of the land purchasedat Bhayla Bavla near Ahmedabad for future expansion. The Company incurred a capitalexpenditure of Rs. 791 Lacs (Rs.1079 Lacs in the previous year). The entire capitalexpenditure was funded out of internal accruals only.
9. Consolidated Financial Results
Your Directors have pleasure in enclosing the Consolidated Financial
Statements in addition to the standalone financial statements pursuant to Section129(3) of the Companies Act 2013 (Act) and SEBI Listing Regulations. As per AccountingStandard 23 the investment in Khushbu Auto Finance Limited is accounted for using theequity method of accounting after initially being recognized at cost.
10. Subsidiaries Joint Ventures and Associate Companies
The Company does not have any Subsidiary or Joint Venture.
Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014 a statement containing salient features of the financialstatements of the Company's subsidiaries Associates and Joint Ventures in Form AOC-1 isattached to the consolidated financial statements of the Company.
The Company is having an Associate Company namely Khushbu Auto Finance Limited("KAFL") a Non-Banking Finance Company. The highlights of the consolidatedfinancial results and performance of the associate company are as under:
KAFL has revived the business of the Company and to meet the requirement of workingcapital has raised equity share capital of Rs.25.80 Crores during the year; Rs.3 Cr by wayof Preferential Allotment and Rs.22.80 Cr by way of Right Issue.
Considering the risk associated in the investment in KAFL its return performance oflast few years future plans and risk appetite of Atul Auto limited the Board ofDirectors has invested Rs.6.82 Cr by subscribing 6824000 equity shares of Rs.10/- eachat Rs.10/- per share and thus the share of the Company in capital of KAFL reached to 30%which was 49.91% last year.
KAFL registered with RBI as Asset Finance Company (AFC) is currently in thebusiness of nancing of three wheelers and two wheelers.
KAFL has a network of 18 service points as on 31st March 2017 covering GujaratHaryana Andhra Pradesh and Telangana.
During FY 2016-17 KAFL disbursed loan of Rs.2334.38 Lacs to 1572 customers.
11. Credit rating
The CRISIL has reaffirmed his rating as CRISIL "A" with stable outlook forthe cash credit facility of Rs.15 Crores approved to the Company by IDBI Bank Limited. Therating continues to re ect the Company's above-average financial risk pro le marked bylow gearing above average debt protection metrics improving market share establisheddistribution network and ef cient working capital management.
12. Award and Recognition
4insight Inc. in partnership with CNBC Bajar and Akila recognized entrepreneurialexcellence of Saurashtra based business houses by awarding "Saurashtra RatnaAwards". Atul Auto Limited has been awarded with "Saurashtra Ratna" Awardfor its outstanding contribution in Auto Industry by Mr. Vijay Rupani Honorable ChiefMinister of Gujarat State in the award ceremony held at Rajkot on evening of 8th April2017.
Your Directors are pleased to inform that the Company has launched electric threewheelers (Green Vehicles). All the vehicles of the Company have been approved by theAutomotive Research Association of India (ARAI). The Company sells its vehicles under thebrand names "Atul Shakti" "Atul Gem" "Atul Gemini" and"Atul Elite".
14. Quality initiative
We continue our journey of delivering value to our customers through significantinvestments in quality programs. The Company has designed its operational cycle with astrong insistence of maintaining and further improving the quality of the product. TheCompany takes reviews directly from the customers on the regular basis and the productrelated requirements of the customers are duly intimated to Research and Developmentdepartment for the improvements and innovations. The Company also obtains the reviews ofthe dealers who are in constant touch of the Customers of the vehicles. Your Directorsunderstands that the quality of the product is the base of business.
15. Management Discussion And Analysis
The Management Discussion and Analysis forms an integral part of this report and givesdetails of the overall industry structure economic developments performance and state ofaffairs of your Company.
16. Directors and Key Managerial Personnel
The Independent Directors of your Company are not liable to retire by rotation. Mr.Vijay K Kedia Director is liable to retire by rotation at the ensuing AGM pursuant to theprovisions of Section 152 of the Companies Act 2013 read with the Companies (Appointmentand Quali cation of Directors) Rules 2014 and the Articles of Association of your Companyand being eligible have offered himself for reappointment.
All the directors of the Company have confirmed that they are not disquali ed frombeing appointed as directors in terms of Section 164 of the Companies Act 2013.
There was no change in the Key Managerial Personnel during the year.
17. Committees of the Board
The Board of Directors has the following Committees:
I. Audit Committee
II. Nomination and Remuneration Committee
III. Stakeholders' Relationship Committee
IV. Corporate Social Responsibility Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
18. Declaration of independence
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under 149(6) of the CompaniesAct 2013 read with Rules issued there under as well as Regulation 16(1)(b) of the ListingRegulations (including any statutory modi cation(s) or re-enactment(s) for the time beingin force).
19. Performance Evaluation
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a structured questionnaire was preparedafter taking into consideration the various aspects of the Board's functioningcomposition of the Board and its Committees culture execution and performance of speci cduties obligations and governance.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
20. Policy on Directors' appointment and remuneration
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members. ThePolicy is available on the website of the Company.
21. Disclosure Relating to Remuneration of Directors Key Managerial Personnel andparticulars of Employees
The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modi cation(s) orre-enactment(s) for the time being in force).
Except Managing Director and Whole-time Directors there is no employee in the Companywho have been paid the remuneration in excess of the limit speci ed in rule 5(2)(i) and(ii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
None of the employees of the Company was in receipt of remuneration in financial year2016-17 which in the aggregate or as the case may be at a rate which in the aggregateis in excess of that drawn by Managing Director or Whole-time Director or Manager andholds by himself or along with his spouse and dependent children not less than twopercent of the equity shares of the company.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report as Annexure [A].
22. Numbers of meetings of Board
The Board met six times during FY 2016-17 the details of which are provided in theCorporate Governance Report. The gap between any two meetings was within the periodprescribed by the Companies Act 2013 and the SEBI Listing Regulation.
23. Directors' Responsibility Statement
Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 the Directorsbased on the information and representations received from the operating managementconfirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures from the same;
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 suf cient care to the best of their knowledgeand ability for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;
d) the directors have prepared the annual accounts on a going concern basis; and
e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively.
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and such systems were adequate and operating effectively.
24. Extract of the Annual Return
The details forming part of the extract of the Annual Return as on 31st March 2017 inForm MGT - 9 in accordance with Section 92(3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 are set out herewith as Annexure[B] to this report.
25. Human Resource and Industrial Relations
The Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of business. The Company has a structured induction process atallocations and management development programs to upgrade skills of managers
The Company is committed to nurturing enhancing and retaining top talent throughsuperior Learning & Organizational Development. This is a part of Corporate HRfunction and is a critical pillar to support the organization's growth and itssustainability in the long run.
26. Health Safety and Environment
The Company is taking continuous steps and also developing environment friendlyprocesses for effective resource management with speci c focus to energy water and basicraw materials. Monitoring and periodic review of system regarding health safety andenvironment is done on a continuous basis with emphasis and focus given to safety atworkplace.
27. Conservation of energy research and development technology absorption foreignexchange earnings and outgo
The particulars of conservation of energy research and development technologyabsorption and foreign exchange earnings and outgo in terms of Section 134 of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 for the year ended 31stMarch 2017 are annexed to this report as Annexure [C].
28. Corporate Social Responsibility
Your Company has always laid emphasis on progress with social commitment. We believestrongly in our core values of empowerment and betterment of not only the employees butalso our communities. Following this principle the Company had laid the foundation of acomprehensive approach towards promoting and facilitating various aspects of oursurrounding communities.
The Company has undertaken projects in the area of promoting education promotinghealth care sanitation etc. These projects are in accordance with Schedule VII of theCompanies Act 2013 and the Company's CSR policy. The Report on CSR activities as requiredunder the Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed asAnnexure [D] and forms an integral part of this Report.
The Board has approved a policy for Corporate Social Responsibility and same has beenuploaded on the website.
29. Corporate Governance
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with certi cate from the Auditors on its compliance forms anintegral part of this report.
30. Secretarial Standards of ICSI
Pursuant to the approval given on 10th April 2015 by the Central Government to theSecretarial Standards speci ed by the Institute of Company Secretaries of India theSecretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings(SS-2) came into effect from 1st July 2015. The Company is in compliance with the same.
31. Indian Accounting Standards
Your Company shall adopt Indian Accounting Standards ('Ind AS') with effect from 1stApril 2017 pursuant to Ministry of Corporate Affairs noti cation dated 16th February2015 notifying the Companies (Indian Accounting Standards) Rules 2015. Theimplementation of IND AS in 2017 will be a major change process and the Company is wellpositioned to ensure a smooth transition.
32. Auditors' and Auditors' Report
M/s. Maharishi & Co Chartered Accountants (FRN: 124872W) who are StatutoryAuditors of the Company hold office up to the ensuing Annual General Meeting. Pursuant toSection 139(2) of the Companies Act 2013 the Company is required to rotate StatutoryAuditors.
The Company is in search of new auditors to comply with the statutory requirements. TheAudit Committee has been in the process of scrutinizing and interviewing few firms. Oncethe screening process completes the Audit Committee will recommend the names of the firmsof Chartered Accountants or Individual Chartered Accountants for the appointment asStatutory Auditor/s of the Company to the Board of Directors with its rationales. In turnafter the assessing the pro le the Board of Directors will recommend the same to theshareholders in ensuing Annual General Meeting.
There is no Audit quali cation for the year under review. The statutory auditors havenot put any adverse remark reservation or disclaimer that the Board need to reply.
In terms of provisions of Section 204 of the Companies Act 2013 read with Rules madethereunder the Company has reappointed CS Bunty Hudda (CP No. 11560) to undertake theSecretarial Audit of the Company for the financial year 2016-17. The Secretarial AuditReport is attached to this Report as Annexure [E].
There is no secretarial audit quali cation for the year under review.
The Company is not required to get its cost records audited for thefinancial year2016-17.
33. Internal Financial Controls
The Board has adopted policies and procedures for ensuring the orderly and ef cientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliablefinancialdisclosures.
34. Related Party Transactions
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 and the Rules made thereunder are not attracted. Thusdisclosure in Form AOC-2 in terms of Section 134 of the Companies Act 2013 is notrequired. Further there is no material transaction with any related party during the yearunder review. The Company has developed a framework through Standard Operating Proceduresfor the purpose of identi cation and monitoring of such Related Party Transactions.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval of the Audit Committee was obtained for transactionswhich are of repetitive nature. Transactions entered into pursuant to omnibus approval areaudited by the Audit Committee and a statement giving details of all Related PartyTransactions are placed before the Audit Committee and the Board for review and approvalon a quarterly basis.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company. Your Directors draw attention of the members toNote no. 42 to thefinancial statement which sets out related party disclosures for theyear under review.
35. Vigil Mechanism
The Company has adopted a Whistle Blower Policy as part of vigil mechanism to provideappropriate avenues to the Directors and employees to bring to the attention of themanagement any issue which is perceived to be in violation of or in con ict with the Codeof Business Principles of the Company. The details of the same have been described in moredepth in Corporate Governance Report.
Any incidents that are reported are investigated and suitable action taken in line withthe whistle blower policy. The Whistle Blower Policy is also available on your Company'swebsite.
36. Risk management
Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.
Some of the risks that the Company is exposed to are: Financial Risk Commodity PriceRisk Regulatory Risk Human Resource Risk Strategic Risk etc.
37. Other Disclosures:
Few statutory disclosures the Company are required to be disclosed are as under:
The paid up Equity Share Capital as at 31st March 2017 stood at Rs.10.97 Crore. Duringthe year under review the Company has not issued shares with differential voting rightsnor has granted any stock options or sweat equity. As on 31st March 2017 none of theDirectors of the Company hold instruments convertible into equity shares of the Company.
The Company has not paid any commission to any of its Directors and hence provision ofdisclosure of commission paid to any Director as mentioned in Section 197(14) is notapplicable.
There has been no instance of any revision in the Board's Report or the financialstatement hence disclosure under Section 131(1) of the Act.
During the year under review there were no cases led pursuant to the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
There have been no material changes /commitments affecting the financial position ofthe company which have occurred between the end of the financial year of the company towhich thefinancial statements relate and the date of the report.
Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work solidarity cooperation anddedication during the year.
Your Directors sincerely convey their appreciation to customers shareholders vendorsbankers business associates regulatory and government authorities for their continuedsupport.
For and on behalf of the Board
of Atul Auto Limited
(J J Chandra)
Chairman and Managing Director
Shapar (Dist. Rajkot)
May 13 2017