The Board of Directors are pleased to present Thirty First Annual Report along with theaudited financial statements for the financial year ended March 31 2019.
The financial performance of the Company on standalone basis for the year ended March31 2019 is summarized below:
| || ||(Rs. in Lacs except EPS) |
|Particulars ||2018-19 ||2017-18 |
|Revenue from Operations ||66676 ||56933 |
|Other Income ||687 ||257 |
|Total Income ||67363 ||57190 |
|Operating Costs ||58528 ||49679 |
|Profit Before Depreciation Interest Exceptional Items and Tax (PBDIT) ||8835 ||7511 |
|Depreciation & Amortization Expense ||554 ||526 |
|Profit before Interest Exceptional Items and Tax ||8281 ||6985 |
|Interest ||86 ||42 |
|Exceptional Items ||- ||- |
|Profit before Tax (PBT) ||8195 ||6943 |
|Tax Expense ||2883 ||2324 |
|Profit after Tax (PAT) ||5312 ||4619 |
|Other Comprehensive Income ||-3 ||18 |
|Total Comprehensive Income for the period ||5309 ||4637 |
|Opening Balance in Profit and Loss Account ||18216 ||14702 |
|Appropriations || || |
|Dividend ||1152 ||933 |
|Tax on Dividend ||236 ||190 |
|Balance carried to Balance Sheet as Retained Earnings ||22137 ||18216 |
|Earnings per Share (Rs.) ||24.21 ||21.05 |
FINANCIAL REVIEW AND HIGHLIGHTS
The Company has performed well during the financial year 2018-19 and reached to the newscale of business operations. The Highlights of the Company's financial performance(Standalone) for the year ended March 31 2019 are as under:
The Company has sold 50049 vehicles in FY 2018-19 in compare to 42744 inprevious year. Thus the Company has achieved the growth of 17.09%.
The Company has achieved highest ever turnover in FY 2018-19 i.e. Rs.66135Lacs.
Revenue from operations increased by 17.11% to Rs.66676 Lacs (Previous yearRs.56933 Lacs)
Export revenue increased by 59.93% to Rs.6405 Lacs (Previous year Rs.4005Lacs)
PBDIT increased by 17.63% to Rs.8835 Lacs (Previous year Rs.7511 Lacs)
Profit before tax (PBT) increased by 18.03% to Rs.8195 Lacs (Previous year Rs.6943 Lacs)
Net Profit (PAT) increased by 15% to Rs. 5312 Lacs (Previous year Rs. 4619Lacs)
The highlights of consolidated results with performance of associate and subsidiarycompany are described in this report separately.
During the financial year 2018-19 the Board of Directors of the Company declared andpaid an interim dividend of Rs.2.75 (Rupees two and Seventy Five Paisa Only) per equityshare of the face value of Rs.5.00 (Rupees Five Only) each in the month of November 2018.In addition to that your Directors recommend payment of Rs.1.25 (Rupee One and TwentyFive Paisa Only) per equity share as nal dividend for the financial year 2018-19 subjectto the approval of the shareholders at the ensuing AGM. If approved the total dividend(interim plus nal dividend) for the financial year 2018-19 will be Rs.4.00 (Rupees FourOnly) (80%) per equity share as against the total dividend of Rs.5.25 (Rupees Five andPaisa Twenty Five Only) (105%) per equity share paid for the previous financial year2017-18.
The dividend payout ratio for the year inclusive of dividend distribution tax decreasedto 20% considering the future need of the fund for capital expenditure like capacityexpansion investment for e-vehicle investment to meet with BS VI norms etc. The totaldividend (interim plus nal dividend) pay-out (including dividend distribution tax) for thefinancial year 2018-19 will be Rs.1058 Lacs.
The final dividend if declared will be paid to the shareholders within thirty daysfrom the date of AGM.
CONSOLIDATED FINANCIAL STATEMENTS
As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred to as "Listing Regulations") andapplicable provisions of the Companies Act 2013 read with the Rules issued thereunderthe Consolidated Financial Statements of the Company for the financial year 2018-19 havebeen prepared in compliance with applicable Accounting Standards and on the basis ofaudited financial statements of the Company its subsidiary and associate company asapproved by the respective Board of Directors.
In accordance with Section 136 of the Act the financial statements of the subsidiaryand associate companies are available for inspection by the members at the RegisteredOffice of the Company during business hours on all days except Saturdays Sundays andpublic holidays upto the date of the AGM. Any member desirous of obtaining a copy of thesaid financial statements may write to the Company Secretary at the Registered Office ofthe Company. The financial statements including the CFS and all other documents requiredto be attached to this report have been uploaded on the website of the Company athttps://atulauto.co.in/annual-reports.aspx.
PERFORMANCE OF SUBSIDIARIES ASSOCIATE COMPANIES AND
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.
Khushbu Auto Finance Limited
The Company is having an Associate Company namely Khushbu Auto Finance Limited("KAFL") a Non-Banking Finance Company categorized as Investment and CreditCompany (NBFC-ICC) earlier Asset Finance Company (AFC). KAFL is primarily in the businessof financing of automobile vehicles. KAFL aggressively provides the finance to thecustomers of Atul Auto Ltd in the regions where other financers are not easily available.
During the financial year 2018-19 KAFL disbursed loan of Rs.9896.68 Lacs to 6592customers. The Asset Under Management (AUM) of the Company as on March 31 2019 wasRs.13980 Lacs in compare to Rs.11470 Lacs as on March 31 2018. During FY 2018-19 theCompany has generated operational revenue of Rs.3098 Lacs in compare to last year ofRs.1533 Lacs. KAFL has registered Profit before Tax of Rs.1063 Lacs in FY 2018-19 incompare to Rs.474 Lacs in previous year. The profit after tax decreased to Rs.764 Lacsfrom Rs.861 Lacs in previous year.
KAFL is currently focusing on establishing the network and infrastructure throughDirect Branch Operations as well as through Income Distribution Partner (IDP) and tie-upwith Dealers for collection. KAFL has presence in various locations in state of GujaratHaryana Andhra Pradesh Telangana Punjab and Karnataka through Direct Branch Operations/IDPs.
KAFL is having a Wholly Owned Subsidiary namely Sanand Home Finance Limited with anobject of housing finance activities. The business will be commenced only after obtainingthe required license from regulatory authority.
Atul Green Automotive Private Limited
Atul Auto Limited is having Wholly Owned Subsidiary namely Atul Green AutomotivePrivate Limited with an object of exploring opportunities in providing e-mobility andgreen energy.
The Company has incorporated it with the initial investment of Rs.1 Lac as an initialequity share capital on February 12 2018. This Company is planning to commence itsbusiness operations in financial year 2019-20.
The Company does not have any material subsidiary.
The Company does not have any joint venture.
LOANS GUARANTEES AND INVESTMENTS
Particulars of the loans given investment made or guarantee given pursuant to section186 of the Companies Act 2013 and the purpose for which the loan or guarantee orinvestment is proposed to be utilized by the recipient of the loan or guarantee areprovided in Note Nos. 5 12 and 28 to the Standalone Financial Statements.
No security has been provided during the year 2018-19.
We continue to maintain debt-free status for scal 2019 too. We understand that theliquidity in the Balance Sheet has to balance between earning adequate returns and theneed to cover financial and business risks. Liquidity enables us to make a rapid shift indirection if there is a market demand. As on March 31 2019 we had liquid assets ofRs.1892 lacs as against Rs.6181 lacs at the previous year end. These funds comprise cashbank balance and investment in liquid mutual funds.
The Company has pre-approved bank credit facilities of Rs.1500 Lacs from IDBI BankLimited and $3.50 Million from EXIM Bank in the form of cash credit working capitaldemand loan and pre/ post shipment credit to meet the requirement of working capital infuture.
The Company has made the expenditure for plant and building at Bhayla Bavla nearAhmedabad for future expansion. The Company incurred total capital expenditure Rs.6983Lacs (including Capital work-in progress and advance for capital good amounting toRs.5710 Lacs) whereas in previous year it was Rs.899 Lacs (including Capital-work-inprogress and advance for capital goods amounting to Rs.425 Lacs). The entire capitalexpenditure was funded out of internal accruals only.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The term of three Independent Directors namely Mr. Hakubhai Lalakiya Mr. HasmukhbhaiAdhvaryoo and Mr. Hemantkumar Bhatt expires on August 11 2019. The Board places on recordits deep sense of gratitude and appreciation for their immense contribution strategicguidance provided during his tenure as an Independent Director and members of variouscommittees of the Company.
The Company has received the letter from National Stock Exchange of India Limited("NSE") on July 17 2019 asking for the clarification in respect ofnon-compliance due to continuance of directorship of Mr. Hasmukhbhai Adhavryoo from April01 2019 even if his age is more than 75 years. The Company has submitted theclarification to NSE with the proof of ordinary resolution passed in 28th AGM on September16 2016 with special majority in respect of extension of his term upto August 11 2019.
The Company has conveyed the matter to Mr. Hasmukhbhai Adhavryoo who has voluntarilygiven his resignation on July 17 2019 with reason that there would not be any furthernon-compliance if it is there. The Board Meeting of the Company has accepted the saidresignation at its meeting held on July 20 2019. The Board has also decided to ratifycontinuance of directorship of Mr. Hasmukhbhai Adhvaryoo for the period April 01 2019 toJuly 17 2019 by passing special resolution in the forthcoming AGM of the company and thesame has been proposed at item no. 7.
On the basis of recommendations of the Nomination and Remuneration Committee the Boardof Directors has appointed Ms. Aarti J Juneja Mr. Mohanjit Singh Walia and Mr. JaichanderSwaminathan as Independent Directors (Additional) of the Company to ll the casual vacancywho will hold office till the ensuing AGM. The Nomination and Remuneration Committee hasrecommended the regularization of office of all three Independent Directors in upcomingAGM. The Company has in terms of Section 160(1) of the Act received in writing a noticefrom Member(s) proposing their candidatures for the office of Directors. The brief proles of them are annexed to the notice of AGM.
Mr. Jayantibhai J Chandra Chairman and Managing Director of the Company is liable toretire by rotation at the ensuing AGM to comply with the provisions of Section 152 of theCompanies Act 2013 read with the Companies (Appointment and Qualification of Directors)Rules 2014 and the Articles of Association of your Company and being eligible has offeredhimself for reappointment. The Independent Directors of Company are not liable to retireby rotation as per provisions of section 149(13) of the Companies Act 2013.
All the directors of the Company have con rmed that they are not disquali ed from beingappointed as directors in terms of Section 164 of the Companies Act 2013. The Company hasreceived declarations from all the Independent Directors con rming that they meet thecriteria of independence as prescribed under 149(6) of the Companies Act 2013 read withRules issued there under as well as Regulation 16(1)(b) of the Listing Regulations(including any statutory modi cation(s) or re-enactment(s) for the time being in force).
The details of policy on Directors' Appointment its remuneration including criteriafor determining quali cations positive attributes independence of a director and othermatters provided under subsection (3) of section 178; and performance evaluation has beendescribed in detail in the report on Corporate Governance of the Company which forms andintegral part of the report.
There was no change in the Key Managerial Personnel during the year.
NUMBERS OF MEETINGS OF BOARD
The Board met four times during financial year 2018-19 the details of which areprovided in the Corporate Governance Report. The gap between any two meetings was withinthe period prescribed by the Companies Act 2013 and the SEBI Listing Regulation.
COMMITTEES OF THE BOARD
The Board of Directors has the following Committees:
(a) Audit Committee
(b) Nomination and Remuneration Committee
(c) Stakeholders' Relationship Committee
(d) 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.
The Nomination and Remuneration Policy of the Company empowers the Nomination andRemuneration Committee to formulate a process for evaluating the performance of IndividualDirectors Committees of the Board and the Board as a whole.
In terms of the requirement of the Companies Act 2013 and the Listing Regulations anannual performance evaluation is undertaken. The details of the evaluation processparameters etc. are set out in the Corporate Governance Report which forms a part of thisAnnual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 theDirectors based on the information and representations received from the Board ofDirectors con rm that:
a) in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards had been followed and there are no materialdepartures from the same;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at March 31 2019 and of the Profit of the companyfor that period;
c) they have taken proper and sufficient care to the best of their knowledge andability 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) they have prepared the annual accounts on a going concern basis;and
e) they have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and are operating effectively duringthe financial year ended March 31 2019.
f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively throughout thefinancial year ended March 31 2019.
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 outlook operationalperformance and state of affairs of your Company.
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with Certificate from the Auditors on its compliance forms anintegral part of this report.
AUDITORS' AND AUDITORS' REPORT
M/s. Kamlesh Rathod & Associates Chartered Accountants (ICAI Firm Registration No.117930W) were appointed as statutory auditors of the Company at twenty ninth AGM to holdoffice upto thirty forth AGM. M/s. Kamlesh Rathod & Associates have con rmed that theyare not disquali ed from continuing as Auditors of the Company.
The Auditors' Report for the financial year ended March 31 2019 on the financialstatements (Standalone and consolidated) of the Company is a part of Annual Report. Theauditors' report does not contain any quali cation reservation or adverse remark.
The Board of Directors of the Company has appointed CS Bunty Hudda (CP No. 11560) toundertake the Secretarial Audit of the Company for the financial year 2018-19. TheSecretarial Audit Report for the financial year ended March 31 2019 is set out inAnnexure [A] to this report. The Secretarial Audit Report does not contain any qualication reservation or adverse remark.
The Company is not required to get its cost records audited for the financial year2018-19.
REPORTING OF FRAUDS BY AUDITORS
During the year under review the Statutory Auditors and Secretarial Auditors have notreported any instances of frauds committed in the Company by its Officers or Employees tothe Audit Committee or Central Government under section 143(12) of the Companies Act2013 details of which needs to be mentioned in this Report.
INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct 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 reliable financialdisclosures.
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 complies with the policy on related party transactions whileidenti cation and monitoring it.
All transactions with related parties were reviewed and approved by the Audit Committeeand are in accordance with the Policy on Related Party Transactions formulated by theCompany. There are no materially significant related party transactions that may havepotential conflict with interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for review and approval. Omnibus approval of the Audit Committee was obtained fortransactions which are of repetitive nature. Transactions entered into pursuant to omnibusapproval are audited by the Audit Committee and a statement giving details of all RelatedParty Transactions are placed before the Audit Committee and the Board for review andapproval on a quarterly basis.
The details of the related party transactions as per Indian Accounting Standards (INDAS) - 24 are set out in Note No. 35 to the Standalone Financial Statements of the Company.
EXTRACT OF THE ANNUAL RETURN
The extract of annual return in Form MGT-9 as required under Section 92(3) of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 is appended as an Annexure [B] to this Annual Report. The Annual Return isalso available on the website of the Company athttps://atulauto.co.in/annual-reports.aspx.
EMPLOYEE AND RELATED DISCLOSURES
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) orreenactment(s) for the time being in force).
Details of employee as per Rule 5(2) & 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are available at the Registered Officeof the Company during working hours 21 days before the Annual General Meeting and shallbe made available to any Shareholder on request. Such details are also available on yourCompany's website https://atulauto.co.in/annual-reports.aspx.
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 [C].
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 promotingeducation promoting health care ensuring environment sustainability eradicating hungerand poverty etc. These projects are in accordance with Schedule VII of the Companies Act2013 and the Company's CSR policy. The Report on CSR activities as required under theCompanies (Corporate Social Responsibility Policy) Rules 2014 is annexed as Annexure [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 at https://atulauto.co.in/corporate-governance-reports.aspx.
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 conflict with theInternal Rules/ Code of Conduct of the Company. The details of the same have beendescribed in more depth in Corporate Governance Report.
The Company has established system for reporting investigation and suitable action inline with the whistle blower policy. The Whistleblower Policy is also available on yourCompany's website at weblink https://atulauto.co.in/corporate-governance-reports.aspx.
The CRISIL has reaf rmed his rating as CRISIL "A" with stable outlook for thecash credit facility of Rs.15 Crores approved to the Company by IDBI Bank Limited. Therating continues to reflect the Company's above-average financial risk pro le marked bylow gearing above average debt protection metrics improving market share establisheddistribution network and efficient working capital management.
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 endedMarch 31 2019 are annexed to this report as Annexure [E].
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. TheCompany is not required to constitute Risk Management Committee as per regulation 21 ofthe Listing Regulations.
Some of the risks that the Company is exposed to are: Financial Risk Commodity PriceRisk Regulatory Risk Human Resource Risk Strategic Risk etc.
SECRETARIAL STANDARDS OF ICSI
Pursuant to the approval given on April 10 2015 by the Central Government to theSecretarial Standards specified by the Institute of Company Secretaries of India (ICSI)the Secretarial Standards on
Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effectfrom July 1 2015. The Company is in compliance with the same.
INDIAN ACCOUNTING STANDARDS
The Company adopted Indian Accounting Standards (Ind AS) from April 1 2017.Accordingly the financial statements have been prepared in accordance with Ind AS as perthe Companies (Indian Accounting Standards) Rules 2015 as amended and notified undersection 133 of the Act and other relevant provisions of the Act.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In accordance with the applicable provisions of the Companies Act 2013 read with theInvestor Education and Protection Fund (Accounting Audit Transfer and Refund ) Rules2016 ("IEPF Rules") all unclaimed dividends are required to be transferred bythe Company to the IEPF after completion of seven (7) years. Further according to IEPFRules the shares on which dividend has not been claimed by the shareholders for seven (7)consecutive years or more shall be transferred to the demat account of the IEPF Authority.The details relating to amount of dividend transferred to the IEPF is provided in theGeneral Shareholders Information section of this Annual Report.
Few statutory disclosures the Company are required to be disclosed are as under:
The paid up Equity Share Capital as at March 31 2019 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 March 31 2019 none of theDirectors of the Company hold instruments convertible into equity shares of the Company.
The Board of Director of the Company does not propose any amount for transfer to thereserve for the financial year ended March 312019.
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).
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.
The Managing Director of the Company has not received any remuneration or commissionfrom any of Companies' subsidiary;
There has been no instance of any revision in the Board's Report or the financialstatement 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 the financial statements relate and the date of the report. There has been nochanges in the nature of the business of the Company.
All the recommendations made by the Audit Committee were accepted by the Board ofDirectors.
The Company does not have any scheme or provision of money for the purchase of its ownshares by employees/ Directors or by trustees for the benefit of employees/ Directors.
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)
August 26 2019