Board of Directors of your company has great pleasure in presenting to you their 37thAnnual Report and the audited statement of accounts for the year ended March 312017.
FINANCIAL PERFORMANCE SUMMARY (As per IN DAS)
Rs. in Lakhs
|A. FINANCIAL RESULTS: ||2016/17 ||2015/16 |
|Revenue from Operation (including Excise duty) ||50059.06 ||43664.94 |
|Total Expenditure ||47008.70 ||41164.96 |
|Operating Profit ||3050.35 ||2499.98 |
|Other Income ||779.85 ||684.38 |
|Earnings before Interest Tax Depreciation and Amortization ||3830.20 ||3184.36 |
|Finance Cost ||24.96 ||38.42 |
|Cash Profit ||3805.24 ||3145.94 |
|Provision for Depreciation & Amortization ||561.60 ||537.24 |
|Profit before Tax (before OCI) ||3243.64 ||2608.70 |
|Provision for Tax (net) ||1145.74 ||913.65 |
|Profit for the year from continuing operations ||2097.90 ||1695.05 |
|Other Comprehensive Income (net of taxes) ||(1.74) ||(41.96) |
|Total Comprehensive Income for the year ||2096.16 ||1653.09 |
|Balance in P&L A/c brought forward from the previous year ||8465.93 ||8134.59 |
|Profit available for appropriation ||10562.09 ||9787.68 |
|B. APPROPRIATIONS: || || |
|Equity Dividend || || |
|Interim ||321.08 ||160.54 |
|Final ||802.70 ||802.70 |
|Corporate Dividend Tax ||228.81 ||193.21 |
|Transfer to General Reserve ||- ||165.30 |
|Balance carried to retained earnings ||9209.50 ||8465.93 |
The Company has not transferred any amount to the General Reserve out of the amountavailable for appropriations.
The Company has paid an Interim Dividend of 50% (t 5/- per Equity Share) to theshareholders on February 232017.
The Board of Directors has recommended a Final Dividend of 125% (<? 12.50 per equityshare) to the Equity shareholders.
Thus the aggregate dividend for the year works out to 175% (Previous year 150%).
The paid up Equity Share Capital as on 31st March 2017 was Rs 642.16 lakhs. During theyear under review the Company has not issued any shares.
The bus segment has continued to maintain its dominance in contributing to yourcompany's revenue and profit. Proportion of bus division's revenue in total revenue of thecompany clocked 87% during the year under review. Large portion of our workforce isoperating in the bus segment at Goa. Operations at the pressings division under pressureshowed a marginal decrease as compared to last year.
Your Company's Total Revenue including other income (net of excise) for the financialyear 2016-17 crossed the key milestone of Rs. 475.21 crores reflecting a growth of 12%over the previous financial year. The Company's profit before tax (after OCI) during thefinancial year 2016-17 was at Rs. 32.41 crores as against Rs. 25.45 crores in thepreceding financial year. Net profit after tax (after OCI) stood at Rs. 20.96 crores ascompared to Rs. 16.53 crores in the preceding financial year. During FY 2016-17 yourCompany sold highest number of buses (5925 numbers) so far sold in any of previousfinancial years.
Operations of the Company and business overview have been discussed in more detail inthe Management Discussion and Analysis forming part of this report.
Bus Body Segment
Revenue from Bus Segment increased by 14.6% at Rs. 404.10 Crores in FY 2016-17 ascompared Rs. 352.61 crores in the preceding financial year. In FY 2016-17 5925 buseswere sold as compared to 4960 buses in preceding financial year which is an increase of965 buses. This is the highest number of buses manufactured so far in any of the previousfinancial year.
Out of the 5925 buses sold during the financial year 2016-17 2153 buses were forExport Application which was lower by 19% as compared to the preceding financial year.The major factor in reduction of Export Application buses was reduced demand from MiddleEast caused by the economic slowdown as a result of drop in Oil Prices. The Company ableto grow its topline with the range of school bus introduced in the last year and ordersreceived from State Transport Undertaking.
Sheet metal business is relatively in sync with the automobile industry and isdependent on the progress of the same. The segment is necessarily capital incentive whichis presently having over capacity with respect to current industry demand. Sheet Metalbusiness showed marginal decrease during the financial year 2016-17. Revenue (exclusive ofmiscellaneous income) from this segment has shown decrease from Rs. 64.30 crores(2015-16) to Rs. 62.83 crores with a decline of 2.28% in the given financial year.
The Company has been striving to grab new orders from Tata Motors-Dharwad & PuneTata Cummins- Phaltan & Jamshedpur and similar other customers which will help inincreasing the Sheet Metal Division's capacity utilization in the financial year 2017-18.
Share of pressings business in the overall revenue of the Company has decreased from15.42% in FY 2015-16 to 13.45% in FY 2016-17.
As a result of ongoing endeavour of rationalising and rightsizing the workforce theemployee cost remain 9.58% of net sale revenue beside increase in salaries & wage andoverall strength of permanent employees came down to 565 as on 31st March 2017 against 572on 31st March 2016. Industrial Relations with staff and workmen across the Plant at GoaJejuri and Dharwad continued to be cordial.
CORPORATE SOCIAL RESPONSIBILITY
The key focus areas of the ACGL's CSR program are women empowerment support of thedifferently abled education public health and environment. These projects are largely inaccordance with Schedule VII of the Companies Act 2013.
Brief outline of the CSR Policy:
In ACGL Corporate Social Responsibility (CSR) philosophy revolves around engagementsin socially relevant activities for the under-privileged sections of the society. TheCompany believes in inclusive growth to facilitate creation of a value-based and empoweredsociety through continuous and purposeful engagement of society around. Our commitment toCSR is focused on initiatives that make a constructive contribution to the community andencourage sustainable development.
A policy on CSR has been formulated by the Corporate Social Responsibility Committee(CSR Committee) and adopted by the Board of Directors. The contents of this policy areavailable on the website of the Company.
Your Company is committed to allocate at least 2% of its average Net Profits madeduring the three immediately preceding financial years calculated in accordance with theprovisions of the Act and the Rules made thereunder towards Corporate SocialResponsibility projects. The Company would undertake one or more of the activities whichrelate to schedule VII of the Act as its projects for CSR activities.
Composition of the Committee:
As per Section 135 (1) of the Companies Act 2013 the Company has constituted aCorporate Social Responsibility Committee. The composition of the Committee as on date isas under:
|Mr Shrinivas V Dempo ||Chairman |
|Mr Steven A Pinto ||Member (upto 06.12.2016) |
|Mr P F X D'Lima ||Member (upto 06.12.2016) |
|Dr Vaijayanti Pandit ||Member |
|Mr Yatin Kakodkar ||Member (w.e.f.07.12.2016) |
|Mr O V Ajay ||Member |
The Annual Report on CSR activities for FY 2016-17 is annexed as "AnnexureA".
Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (LODR) and SEBI circular dated October 13 2015 a freshListing Agreement has been executed by the Company with BSE Limited within the prescribedtime limit. A separate section on Corporate Governance forming part of the Directors'Report and Auditors' certificate regarding compliance of conditions of CorporateGovernance have been included in the Annual Report.
Borrowings of the Company in the form of Cash Credits as at end March 2017 stood atRs. 239.12 lakhs (previous year Rs. 290.34 lakhs). Cash and bank balance stood at Rs.200.14 lakhs (previous year Rs. 178.39 lakhs).
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment Resignation and Retirement of Directors:
During the year Mr PFX D'Lima retired as Independent Director of the Company effectiveDecember 7 2016 on reaching the retirement age as per the Governance Guidelines adoptedby the Board. Mr Abhijit Gajendragadkar Non Executive Director resigned from the servicesof the Company effective November 30 2016. The Directors wish to place on record theirdeepest appreciation of the tremendous contribution made by Mr D'Lima and MrGajendragadkar in the success achieved by the Company during their association.
Mr Yatin Kakodkar has been appointed as Additional (Independent) Director on the Boardof the Company effective December 7 2016. Pursuant to the provisions of Section 161 ofthe Act and the Articles of Association of the Company Mr Kakodkar vacates office and iseligible for appointment as Independent Director of the Company. In compliance with theProvisions of the Section 149 read with Schedule IV of the Act the appointment of MrYatin Kakodkar as Independent Director for a term of five years is being placed beforethe Members in General Meeting for their approval. As per the Provisions of the Section149 of the Act he will not be liable to retire by rotation. Members are requested torefer to Item No.5 of the Notice of the Annual General Meeting for details.
Mr Abhay Bawale has been appointed as Additional (Non Executive) Director on the Boardof the Company effective June 26 2017. Pursuant to the provisions of Section 161 of theAct and the Articles of Association of the Company Mr Abhay Bawale vacates office and iseligible for appointment as Non-Executive Non Independent Director of the Company whoseoffice shall be liable to retirement by rotation.
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149 (6) of the Act and Regulation 16(1) (b) of the Listing Regulations. In the opinion of the Board they fulfill theconditions of independence as specified in the Act and the Rules made there under and areindependent of the management.
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Mr Ravindra Pisharody and Mr Abhay Bawale retire by rotationand are eligible for re-appointment.
Members are requested to refer to Item No.3 5 and 6 of the Notice of the AnnualGeneral Meeting for details.
Key Managerial Personnel:
In terms of Section 203 of the Act The following are the Key Managerial Personnel(KMP) of the Company;
|Sr No ||Name of the KMP ||Designation |
|1 ||O V Ajay ||CEO & Executive Director |
|2 ||Raghwendra Singh Butola ||Chief Financial Officer |
|3 ||Pravin Satardekar ||Company Secretary |
The Board of the Company has adopted Governance Guidelines on Board Effectiveness. TheGovernance Guidelines cover aspects related to composition and role of the Board Chairmanand Directors Board diversity Definition of Independence Director Term Retirement Ageand Committees of the Board. It also covers aspects relating to nomination appointmentinduction and development of Directors Director Remuneration Subsidiary oversight Codeof Conduct Board Effectiveness Review and Mandates of Board Committees.
Procedure for Nomination and Appointment of Directors:
The Nomination and Remuneration Committee (NRC) is responsible for developingcompetency requirements for the Board based on the industry and strategy of the Company.Board composition analysis reflects in-depth understanding of the Company including itsstrategies environment operations financial condition and compliance requirements.
The NRC conducts a gap analysis to refresh the Board on a periodic basis includingeach time a Director's appointment or reappointment is required. The Committee is alsoresponsible for reviewing and vetting the CVs of potential candidates vis--vis therequired competencies and meeting potential candidates prior to making recommendations oftheir nomination to the Board. At the time of appointment specific requirements for theposition including expert knowledge expected is communicated to the appointee.
Criteria for Determining Qualifications Positive Attributes and Independence of aDirector:
The NRC has formulated the criteria for determining Qualifications Positive Attributesand Independence of Directors in terms of provisions of Section 178 (3) of the Act andRegulation 19 read with Part D of Schedule II of the LODR.
Independence: In accordance with the above criteria a Director will be considered asan 'Independent Director' if he/she meets with the criteria for 'Independent Director' aslaid down in the Act and Regulation 16 (1)(b) of the LODR.
Qualifications: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is alsoensured that the Board has an appropriate blend of functional and industry expertise.While recommending the appointment of a Director the NRC considers the manner in whichthe function and domain expertise of the individual will contribute to the overallskill-domain mix of the Board.
Positive Attributes: In addition to the duties as prescribed under the Act theDirectors on the Board of the Company are also expected to demonstrate high standards ofethical behavior strong interpersonal and communication skills and soundness of judgment.Independent Directors are also expected to abide by the 'Code for Independent Directors'as outlined in Schedule IV to the Act.
Annual Evaluation of Board Performance and Performance of its Committees and ofDirectors:
Pursuant to the applicable provisions of the Act and the Listing Regulations the Boardhas carried out an annual evaluation of its own performance performance of the Directorsas well as the evaluation of the working of its Committees.
The NRC has defined the evaluation criteria procedure and time schedule for thePerformance Evaluation process for the Board its Committees and Directors.
The Board's functioning was evaluated on various aspects including inter alia degreeof fulfillment of key responsibilities Board structure and composition establishment anddelineation of responsibilities to various Committees effectiveness of Board processesinformation and functioning.
Directors were evaluated on aspects such as attendance and contribution at Board/Committee Meetings and guidance/support to the management outside Board/ CommitteeMeetings. In addition the Chairman was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and motivating and providing guidance to the Managing Director/CEO/WholeTime Director.
Areas on which the Committees of the Board were assessed included degree of fulfillmentof key responsibilities adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of the Chairmanand the Non Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Board as a whole. The NRC also reviewed the performance ofthe Board its Committees and of the Directors.
The Chairman of the Board provided feedback to the Directors on an individual basis asappropriate. Significant highlights learning and action points with respect to theevaluation were presented to the Board.
The Company has adopted a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and ListingRegulations.
The philosophy for remuneration of Directors Key Managerial Personnel and all otheremployees of the Company is based on the commitment of fostering a culture of leadershipwith trust. The Remuneration Policy of the Company is aligned to this philosophy.
The NRC has considered the following factors while formulating the Policy:
i) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
ii) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
iii) Remuneration to Directors Key Managerial Personnel and Senior Management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals.
It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company. Details of theRemuneration Policy are given in the Corporate Governance Report.
Board and Committee Meetings
The Meetings dates are circulated in advance to the Directors. During the year FiveBoard Meetings and Four Audit Committee Meetings were convened and held. There have beenno instances during the year when recommendations of the Audit Committee were not acceptedby the Board.
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Act and the Listing Regulations.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultant including audit of internal ?nancial controlsover ?nancial reporting by the statutory auditors and the reviews performed by Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Company's internal financial controls were adequate and effective duringthe financial year 2016-17.
Accordingly pursuant to Section 134 (3) (c ) and 134(5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:
i) In the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
ii) 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 fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;
iii) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act 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 down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
vi) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet. (This does not include advances against supply of spare parts and scrap notappropriated against supply of goods or provision of services within a period of 365 daysfrom the date of acceptance of such advance- Kindly Refer section V of the MGT 9).
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of loans/guarantees/investments have been disclosed in the financialstatements. The said loans/guarantees/investments are within the limits stipulated in theSection 186 (2) of the Companies Act 2013.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under Section 197 (12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedas "Annexure B". The information required under Rule 5 (2) and (3) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is providedin the Annexure forming part of the Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGOINGS
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of TheCompanies (Accounts) Rules 2014 is annexed as "Annexure C".
(1) Statutory Auditors
The Company had appointed M/s. Deloitte Haskins & Sells LLP Chartered AccountantsMumbai (ICAI firm registration no.117366W/W-100018) as Statutory Auditors from theconclusion of the 36th Annual General Meeting till conclusion of 37th Annual GeneralMeeting. Thus the Auditors M/s. Deloitte Haskins & Sells LLP will be retiring atthe forthcoming Annual General Meeting.
Deloitte Haskins & Sells LLP (DHS) Chartered Accountant (ICAI Firm Registration no.117366W/W-100018) Mumbai had been the Statutory Auditors of the Company since FY 2007-08and at 36th AGM held on August 1 2016 had completed 9 years of audit assignment.Considering the transition period of 3 years for appointment of DHS was available underthe Act the Company appointed DHS as the Statutory Auditors of the Company at the AGMheld on August 1 2016 to hold office from the conclusion of the 36th AGM till theconclusion of the 37th AGM of the Company to be held in the year 2017. The transitionperiod of 3 years available under the Act will get over at the forthcoming AGM.
Accordingly the term of DHS expires at the conclusion of the forthcoming AGM hence itis proposed to appoint M/s B S R & Co. LLP Chartered Accountants (ICAI firmregistration no. 101248W/W-100022) (BSR) as the Statutory Auditors of the Company for aperiod of 5 years commencing from the conclusion of 37th AGM till the conclusion of 42ndAGM to be held in the calendar year 2022 subject to ratification of their appointment ateach AGM to be held after 37th AGM.
As per the requirement of the Act BSR have confirmed that the appointment if madewould be within the limits specified under Section 141 (3) (g) of the Act and that theyare not disqualified to be appointed as Statutory Auditors in terms of the provisions ofSection 139 and 141 of the Act and the Companies (Audit & Auditors) Rules 2014.Members are requested to approve the appointment of BSR and authorise the Board ofDirectors to fix their remuneration.
(2) Cost Audit
Cost audit for the financial year 2016-17 is not applicable to the Company.
(3) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed Mr Shivram Bhat a Practicing Company Secretary Membership no. 10454 to undertake the Secretarial Audit of the Company for FY 2016-17. TheReport of the Secretarial Auditor is annexed herewith as "Annexure D".
The Statutory Auditors' Report and the Secretarial Audit Report for the financial yearended March 31 2017 do not contain any qualification reservation adverse remark ordisclaimer.
THE EXTRACT OF THE ANNUAL RETURN FILED WITH MCA
Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in form MGT 9 is annexed as"Annexure E".
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder. The Policy aims toprovide protection to employees at the workplace and prevent and redress complaints ofsexual harassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to inquire into complaints of sexual harassment and recommendappropriate action.
The Company has not received any complaint of sexual harassment during the financialyear 2016-17.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy to deal with instances of fraud andmismanagement if any. The details of this Policy are explained in the CorporateGovernance Report and also posted on the website of the Company. It is affirmed that nopersonnel of the Company has been denied access to the Audit Committee.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
However Members attention is drawn to the Statement on Contingent Liability formingpart of the Financial Statement.
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the financial year were incompliance with the applicable provisions of the Companies Act 2013 ('the Act') and theListing Regulations.
Tata Motors Limited (TML) is a "Related Party" of the Company under ListingRegulations. The transactions with TML exceed the materiality threshold as prescribedunder regulation 23 of LODR. The Members at their 35th Annual General Meeting held onJuly 31 2015 have accorded their approval to the Board of Directors to enter into suchmaterial contracts/arrangements/transactions with Tata Motors Limited.
All Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is put in place for the transactions whichare repetitive in nature. A statement of all Related Party Transactions is placed beforethe Audit Committee for its review on a quarterly basis specifying the nature value andterms and conditions of the transactions.
The Company has adopted a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Company's website at the web link: http://www.acglgoa.com.Details of the transactions with Related Parties are provided in the accompanyingfinancial statements. There were no transactions during the year which would require to bereported in Form AOC 2.
The Board has laid down a clear Risk Policy to identify potential business risks andinstall effective mitigation processes to protect Company's assets and business risks.Risk Assessment and minimization plan are reviewed by the Risk Management Committee of theBoard on a periodic basis.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under Listing Regulations isprovided as an Annexure to this Report.
Your Directors would like to place on record their sincere appreciation for the supportand assistance extended by the Company's suppliers bankers and business associates. YourDirectors are thankful to the esteemed shareholders for their continued support and theconfidence reposed in the Company and its Management. The Directors wish to place onrecord their appreciation for the support and guidance provided by its parent companyTata Motors.
The Directors place on record their sincere thanks for the help and support receivedfrom Government of Goa and related Government and semi-Government agencies. Your Directorsacknowledge the unstinted service rendered by the employees of the Company at all levelstowards its overall success.
| ||On behalf of the Board of Directors |
|Place : Panaji Goa. ||Shrinivas Dempo |
|Date : June 28 2017 ||Chairman |