To the Members
Your Directors have the pleasure in presenting the 39th Annual Report on the businessand operations of your Company together with the Audited Statements of Accounts for thefinancial period ended March 31 2020:
| || ||(Rs. in million) |
|Particulars ||2019-2020 ||2018-2019 |
|Total Revenue ||9596.81 ||19420.02 |
|Profit before depreciation & tax ||971.76 ||2314.97 |
|Less : Depreciation amortization & Loss on assets discarded ||372.22 ||461.86 |
|Tax expenses ||188.20 ||637.61 |
|Profit for the year after tax ||411.34 ||1215.50 |
|Other comprehensive income for the year net of tax ||(5.04) ||(28.51) |
|Total comprehensive income for the year ||406.30 ||1186.99 |
|Balance of Profit from Previous Year ||4658.87 ||3717.82 |
|Less: Dividend ||385.36 ||204.00 |
|Dividend Distribution tax on Dividend ||79.21 ||41.94 |
|Effect of adoption of Ind AS 116 (net of taxes) ||6.76 ||- |
|Profit available for appropriation ||4593.84 ||4658.87 |
The Board by passing resolution by circulation on 2nd of March 2020 declared aninterim dividend for the year 2019-20 of INR 6/- per Equity Share (i.e. 60%) of the facevalue of INR 10/- aggregating to INR 90.67 million excluding Dividend Distribution Tax.
The Board at its meeting held on 26th May 2020 is pleased to recommend a dividend ofRs.0.80/- per Equity Share of the face value of Rs.10/- each for the financial year ended31st March 2020 subject to the approval of shareholders at the ensuing Annual GeneralMeeting to be held on Wednesday 19th August 2020.
The total amount of Dividend aggregates to Rs.1.21 million excluding DividendDistribution Tax.
The register of members and share transfer books will remain closed from 14th August2020 to 19th August 2020 (both days inclusive) for the payment of final dividend to theshareholders of the Company for the year ended on 31st March 2020.
The Dividend will be paid to members within 30 days from the date of declaration ofdividend to the Members whose names appear in the Register of Members as on 13th August2020.
Transfer of unpaid or unclaimed amount to Investor Education and Protection Fund (IEPF)
Pursuant to provisions of the Companies Act 2013 the declared dividends whichremained unpaid or unclaimed for a period of seven years shall be transferred by theCompany to the Investor Education and Protection Fund (IEPF) established by the CentralGovernment.
Pursuant to Section 124(6) of the Companies Act 2013 read with Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 asamended all shares in respect of which dividend has not been paid or claimed for sevenconsecutive years or more shall be transferred by the Company to the IEPF.
Accordingly the Company has sent notice to the respective shareholders who have notclaimed their dividend for seven consecutive years or more and the newspaper advertisementstating the same has been published in the newspapers.
In terms of the provisions of the Companies Act 2013 and Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 a sum ofRs.507980/- which is unpaid/unclaimed dividends pertaining to the FY 2011-12 wastransferred to the Investor Education and Protection Fund during the year.
The list of equity shareholders whose shares are transferred to IEPF can be accessed onthe website of the Company at below mentioned link: www.autoaxle.com/Annual_reports. aspxunder the head IEPF Transfers
Performance of the Company
The total income for the financial year under review was Rs.9596.81 million as againstRs.19420.02 million for the previous financial year. The Profit before tax (PBT) wasRs.619.78 million for the financial year under review as against Rs.1853.11 millionfor the previous financial year.
The paid up Equity Share Capital as on 31st March 2020 stood at Rs.151.12 million.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock options nor sweat equity.
Your Company has not accepted any deposits under Chapter V of the Companies Act 2013during the year.
Transfer to Reserve
The company has not proposed any amount to be transferred to the General Reserve.
The equity shares of the Company are listed with BSE Limited and National StockExchange of India Limited. There are no arrears on account of payment of listing fees tothe Stock Exchanges.
Directors & Key Managerial Personnel:
As on 31st March 2020 there were seven (7) Directors on the Board of your Companyconsisting of four (4) Independent Directors one (1) Executive Director and two (2)Non-Executive Directors of whom one is the Chairman.
During the year under review the following changes have taken place in the Board ofDirectors of the Company:
1. Dr. Muthukumar N. (DIN: 06708535) has resigned from the position of whole timeDirector of the Company with effect from 14th August 2019 due to his personal reason.
2. Mr. Srinivasan Kumaradevan (DIN: 08107660) has been appointed as an additionaldirector designated as Senior Vice President and Whole-time Director of the Company w.e.f.14th August 2019 for a period of five years subject to the approval of Members at theforth coming Annual General Meeting (AGM) of the Company.
In terms of the provisions of the Companies Act 2013 Dr. B. N. Kalyani Director ofthe Company retires by rotation at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment.
Notice under section 160 of the Companies Act 2013 received from a member of thecompany proposing candidature of Mr. Srinivasan Kumaradevan. The company has received fromMr. Srinivasan Kumaradevan i) consent in writing to act as a Director in Form DIR-2pursuant to Rule 8 of the Companies (Appointment & Qualification of Directors) Rules2014 and ii) intimation in Form DIR-8 pursuant to terms of the Companies (Appointment& Qualification of Directors) Rules 2014 to the effect that he is not disqualifiedas per section 164(2) of the Companies Act 2013 before his appointment;
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence and that there has been nochange in the circumstances which may affect their status as independent director duringthe year as prescribed under sub-section (6) of Section 149 of the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations and Disclosure requirements)Regulations 2015.
Further the names of the Independent Directors of the Company have been included in theData bank maintained by the Indian Institute of Corporate Affairs of Independent directorsas per the provisions of the Companies Act 2013 and the rules made thereunder.
The Companies Act 2013 states that a formal Annual Evaluation needs to be made by theBoard of its own performance and that of its committees and individual Directors.Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 mandates that the Board shall monitor and review the Board evaluationframework. Pursuant to these provisions the Company has developed a framework for theBoard evaluation. The framework includes evaluation on various parameters such asinformation flow Board dynamics decision making company performance and strategy Boardand committee's effectiveness and peer evaluation.
The evaluation of all the Directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board.
During the year 2019-20 Independent Directors met on 10th February 2020 discussedand reviewed the below:
Performance of Non Independent Directors
Performance of the Chairman
Performance of the Board Committees
Discussed on the quality quantity and timeliness of flow of information betweenthe Company management and the Board Members.
Overall performance of the Company.
Familiarization program for the Board Members
Your Company has in place a structured induction and familiarization programme for allits Directors including Independent Directors and new appointee(s) to the Board. Throughsuch programs the Directors are briefed on the background of your Company their rolesrights responsibilities nature of the industry in which it operates business modeloperations ongoing events etc.
The Board members are provided with the necessary documents brochures reports andinternal policies to enable them to familiarize with the Company's procedure and practice.
Periodic presentations are made at the Board Meetings Board Committee Meetings andIndependent Directors Meetings on business and overall performance updates of the Companybusiness strategy and risk involved.
The details of programs for Familiarization for Independent Directors are posted on thewebsite of the Company and can be accessed at: www.autoaxle.com/Directors.aspx
Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors make the followingstatements:
(a) in the preparation of the annual accounts for the year ended 31st March 2020 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
(b) we 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 as at 31st March 2020 and of the profit of thecompany for the year ended on that date;
(c) we 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;
(d) we have prepared the annual accounts on a going concern basis;
(e) we have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively;
(f) we have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
Auditors & Auditors' Report
a. Statutory Auditors
M/s. S R Batliboi & Associates LLP Chartered Accountants [Firm Registration No.:101049W/ E300004] is holding the position of Statutory Auditor of the Company.
The Auditors' Report does not contain any qualification reservation or adverseremarks.
Further no frauds have been reported by the Auditors in their reports.
b. Internal Auditor
The Audit Committee and the Board of Directors recommend for the re-appointment of M/sPrice Waterhouse Coopers Services LLP as Internal Auditors of the Company for theFinancial Year 2020-21.
c. Secretarial Auditor
Pursuant to the provisions of the Section 204 of the Companies Act 2013 and the rulesmade there under and based on the recommendations of the Audit Committee CS Pracheta MPracticing Company Secretary has been appointed to conduct Secretarial Audit of theCompany's secretarial and other related records for the Financial year 2019-20.
The Secretarial Audit Report for the financial year ended 31st March 2020 in form MR-3is appended to this report under Annexure A
Explanation for observations made under Secretarial Audit Report:
As per reason mentioned in Annexure-G
Internal Financial Control
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.
During the year such controls were tested and no reportable material weaknesses in thedesign or operation were observed.
Corporate Governance is about maximizing the value and to ensure fairness to all itsshareholders. Your Company is renowned for its exemplary governance standards and believethat sound corporate governance is critical to enhance and retain investor trust. YourCompany ensures that performance is driven by integrity.
The Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 have strengthened thegovernance regime in the country and your Company is in compliance with the governancerequirements provided under the law both in letter and spirit. The Board also exercisesits fiduciary responsibilities in the widest sense of the term.
Your Company has in place all the statutory committees required under the law. Detailsof the Board Committees along with their terms of reference composition and meeting ofthe Board and its Committees held during the year are provided in the Corporate GovernanceReport which is presented in a separate section forming part of the Annual Report.
A Certificate from CS. Pracheta M. Practicing Company Secretary confirming compliancewith the conditions of Corporate Governance as stipulated under the aforesaid Regulation34(3) Schedule V (E) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is attached to the Corporate Governance Report.
Meetings of the Board
During the financial year the Board met four times details of which are provided inthe Corporate Governance Report. The maximum interval between any two meetings did notexceed 120 days as prescribed under the Companies Act 2013.
Committees of the Board
Your Company has the following committees which have been established as a part of thecorporate governance practices and are in compliance with the requirements of theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirement) Regulations 2015.
Nomination and Remuneration Committee
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
Risk Management Committee
The details with respect to the compositions roles number of meetings held during theyear is detailed in the corporate governance report of the Company which forms a part ofthis Board's Report.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134 of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 are appended as Annexure -B to this report.
Particulars of Remuneration of Directors & certain specified employees:
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 theratio of remuneration of each Director to the median of the employees' remuneration astatement containing the names of top ten employees in terms of remuneration drawn andevery employee who is employed throughout the financial year and was in receipt of aremuneration of Rs.102 lakh per annum or more and of every employee who is employed partof the financial year was in receipt of remuneration of Rs.8.50 lakh or more per month isappended as Annexure - C.
Extract of Annual Return 2019-20
The detail forming part of the extract of Annual Return in MGT-9 is appended asAnnexure D to this report. The Annual Return is also available at www.autoaxle.com.
Particulars of Loans Guarantees or Investment under section 186 of the Companies Act2013
Particulars of loans covered under section 186 of the Companies Act 2013 form part ofthe notes to the financial statement provided in this Annual Report. These loans areprimarily granted for furtherance of business of the borrowing companies.
Your Company has not given any guarantee or provided any security in connection with aloan to any other body corporate or persons and has not made any investment in thesecurities of any other body corporate.
Policy on Directors' Appointment & Remuneration
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and separate its functions of governance andmanagement. On 31st March 2020 the Board consisted of seven members one of whom isexecutive or whole-time director two are non executive directors and four are independentdirectors out of whom one is an Independent Woman Director.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management Personnel and their remuneration.
The Nomination and Remuneration policy is appended as Annexure - E to this report andis also available on Company's website at www.autoaxle.com/Policy.aspx.
Particulars of contracts or arrangements with Related Parties (RPT)
The related party transactions that were entered into during the financial year were inthe ordinary course of business and on the arm's length basis.
All related party transactions are placed before the Audit Committee and also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basisfor the transactions which are foreseen and of repetitive nature.
For transactions with Meritor HVS (India) Limited the Company has obtainedshareholders' approval at their 37th Annual General Meeting held on 13th August 2018 fortransaction value annually of Rs. 30000 million p.a for a period of five (5) financialyears starting from 1st April 2019.
Further all transactions entered into pursuant to the omnibus approval so granted arereviewed and a statement giving details of all related party transactions is placed beforethe Audit Committee and the Board of Directors for their approval on a quarterly basis.
In accordance with the requirements of the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 your Company has formulated a Policy on Related Party Transactions which is alsoavailable on Company's website at www.autoaxle.com/Policy.aspx.
Related Party disclosures as per Indian Accounting Standards (Ind AS) -24 have beenprovided in Note No. 36 to the financial statement.
The particulars on RPTs in AOC 2 is annexed to the Report as Annexure F.
Risk Management System
The Company has a robust risk management framework comprising risk governance structureand defined risk management processes. The risk governance structure of the Company is aformal organisation structure with defined roles and responsibilities for risk management.
The processes and practices of risk management of the Company encompass riskidentification classification and evaluation. The Company identifies all strategicoperational and financial risks that the Company faces by assessing and analysing thelatest trends in risk information available internally and externally and using the sameto plan for risk activities.
The Company has set up a Risk Management Committee to review the risks faced by theCompany and monitor the development and deployment of risk mitigation action plans and thestatus is updated to the members of the Audit Committee and the Board of Directors onquarterly basis.
Corporate Social Responsibility (CSR):
The Company has been carrying out various Corporate Social Responsibility (CSR)activities. These activities are in terms of section 135 read with Schedule VII of theCompanies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014.During the year the Company has spent Rs.25.26 million on various CSR activities.
The Annual Report on CSR activities that includes details about the CSR policydeveloped and implemented by the Company and CSR initiatives taken during the year isappended to the Report as Annexure G.
State of Company's Affairs
Discussion on state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis (MDA). MDA for the year under review as stipulated underSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is presented in a separate section forming part of the Annual Report.
Management Discussion and Analysis Report
Pursuant to Regulation 34(2)(e) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Management Discussion andAnalysis Report is presented in a separate section forming part of the Annual Report.
Business Responsibility Report
A detailed Business Responsibility Report in terms of the provisions of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is available as a separate section in the Annual Report.
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177 of the Companies Act 2013 andRegulation 22 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015. Under the policy the Directors and Employeesare free to report any violation of the applicable laws and regulations and the code ofconduct of the Company. The reportable matters are to be disclosed to the Audit Committee.During the year under review the Company has not received any complaints under the saidmechanism.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
Your Company has always believed in providing a safe workplace for every individualworking in Company's premise through various interventions and practices. The Companyalways endeavours to create and provide an environment that is free from discriminationand harassment including sexual harassment.
In terms of provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has formulated a Policy to preventSexual Harassment of Women at Workplace. The Company has also constituted InternalComplaints Committee as required under the said enactment. During the year under reviewthere were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Significant or Material Orders
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.
Material Changes and Commitments if any affecting the Financial Position of theCompany
There were no adverse material changes or commitments occurred after 31st March 2020which may affect the financial position of the Company or may require disclosure.
Subsidiaries Joint Ventures and Associates
Your Company does not have any subsidiary joint venture nor any associates.
Change in the nature of business
There is no change in the nature of business of your Company.
The Company has complied with the applicable secretarial standards.
Awards and Recognition
During FY 2019-20 your company received recognitions from the followingbodies/customers as listed below:
1. Recognised for our support at all times and awarded us with the BEST SUPPORTFOR VEHICLE OFF ROAD (VOR)' in September 2019 by TATA Motors
2. Appreciated and rewarded with Gold Award for Business Alignment by Ashok Leyland
3. Received recognition from VOLVO towards Specialty Vehicle Build & Support'in November 2019
4. Upgraded from B to A in VECV KATA' initiative in October 2019
5. Got certified by Union of Japanese Scientists & Engineers (JUSE) through QualityCircle Forum of India (QCFI) for Implementing best 5S practices which was re-certified byQCFI in December 2019
6. Bagged seven Gold Awards and three Silver Awards during Chapter Convention onQuality Concept (CCQC-2019) in May 2019
7. Won distinguish award for Allied Case Study Presentation and Excellence Award forKaizen Model Presentation during National Convention on Allied Concepts at Varanasi inDecember 2019
8. Bagged third place in district-level Safety Quiz & Safety Skit competitionorganised by Deputy Director of Factories & Boilers department Karnataka
Maintenance of Cost records
The maintenance of cost records as specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 is required by the Company andaccordingly such accounts and records are made and maintained
Your Directors wish to convey their gratitude and place on record their appreciationfor the employees at all levels for their hard work cooperation and dedication during theyear. Your Directors sincerely convey their appreciation to customers shareholdersbankers business associates regulatory and government authorities for their continuedsupport.
Your Directors wish to place on record their appreciation for the continuedco-operation and support extended by Kalyani Group Pune and Meritor Inc. USA
| ||For and on behalf of the Board of Directors |
|Place : Pune ||B.N. Kalyani |
|Date : 26th May 2020 ||Chairman |