For the year ended March 31 2019
To the Members
Your Directors have pleasure in presenting the 58th [Fifty-Eighth] AnnualReport on the business and operations of the Company together with the audited financialstatements for the Financial Year ended March 31 2019.
1. FINANCIAL HIGHLIGHTS
The financial performance of the Company on standalone and consolidated basis for theFinancial Year ended March 31 2019 as compared to previous year is summarised in thefollowing table:
In Rs. Million
|Particulars || |
| ||31-Mar~19 ||31~Mar~18 ||31-Mar~19 ||31~Mar~18 |
|Total Income ||66860.07 ||54916.37 ||103485.26 ||85566.79 |
|Exports Revenue ||37258.44 ||29711.73 ||73539.84 ||61230.68 |
|Net Profit || || || || |
|Profit for the year before Taxation and Exceptional item ||16230.78 ||12638.75 ||16103.56 ||12915.87 |
|Share of [loss]/ Profit of associates and Joint Venture ||- ||- ||[113.75] ||[3.78] |
|Add / [Less]: Exceptional item ||- ||[1332.05] ||- ||[954.48] |
|Provision for Taxation: || || || || |
|Current Tax ||5350.68 ||4161.42 ||5742.68 ||4318.49 |
|Deferred Tax ||167.29 ||72.33 ||[78.83] ||99.44 |
|Profit for the year ||10712.81 ||7072.95 ||10325.96 ||7539.68 |
|Less: Non-controlling interest ||- ||- ||4.23 ||[84.76] |
|Profit for the year attributable to equity holders of parent ||10712.81 ||7072.95 ||10321.73 ||7624.44 |
|Items of other Comprehensive Income for the year [Net of tax] ||[121.25] ||202.71 ||[118.15] ||251.19 |
|Total ||10591.56 ||7275.66 ||10203.58 ||7875.63 |
|Balance of Profit from Previous year ||34083.21 ||29429.22 ||33676.24 ||28493.30 |
|Profit available for Appropriation ||44674.77 ||36704.88 ||43879.82 ||36368.93 |
|Appropriations: || || || || |
|Interim Dividend on Equity Shares ||1163.97 ||931.18 ||1163.97 ||931.18 |
|Tax on above dividend ||239.26 ||189.56 ||239.26 ||189.56 |
|Final Dividend on Equity Shares ||1163.97 ||1163.97 ||1163.97 ||1163.97 |
|Tax on above dividend ||239.26 ||236.96 ||239.26 ||236.96 |
|Transferto General Reserve ||100.00 ||100.00 ||100.00 ||100.00 |
|Adjustment during the year ||- ||- ||- ||71.02 |
|Surplus retained in Statement of Profit and Loss ||41768.31 ||34083.21 ||40973.36 ||33676.24 |
The Board in its meeting held on November 2 2018 declared an interim dividend of Rs.2.50 per equity share [i.e.125%] of the face value of Rs. 2/- each aggregating to Rs.1163.97 Million plus applicable taxes thereon.
Based on the Company's performance the Directors are pleased to recommend for approvalof the members a final dividend of Rs. 2.50 per equity share [i.e. 125%} of the face valueof Rs. 2/- each. The final dividend on equity shares if approved by the members wouldinvolve a cash outflow of Rs. 1163.97 Million plus a dividend tax of Rs. 239.26 Million.
The total dividend for the financial year ended March 31 2019 including the proposedfinal dividend would aggregate to Rs. 2806.46 Million inclusive of the dividend tax.
The dividend payout has been determined in accordance with the Dividend DistributionPolicy of the Company.
Pursuant to Regulation 43A of the 5EBI [Listing Obligations and DisclosureRequirements] Regulations 2015 the Company had adopted the Dividend Distribution Policywhich is attached as Annexure "A" to this report and is also available on theCompany's website at: www.bharatforge.com/investors/corporate-governance/policies .
During the year under review the Company proposes to transferRs. 100.00 Million to theGeneral Reserve.
An amount of Rs. 41768.31 Million is proposed to be retained as surplus in the Profitand Loss account.
4. PERFORMANCE OF THE COMPANY
The financial year 2018-19 has been a record year for your Company with strong revenueand profit growth. In the financial year 2018-19 the revenue of the Company increased by21.75% and Profit after Tax increased by 51.46% as compared to the last financial year2017-18 on a standalone basis. Domestic revenue increased by 17.45% to Rs. 29601.64Million as compared to last year of Rs. 25204.64 Million. Whereas export revenue grew by25.4% to Rs. 37258 Million as compared to last year of Rs. 29712 Million. The BalanceSheet of your Company continued to become stronger with the improvement in all the keyfinancial ratios as compared to the last financial year 2017-18. ROCE [Net of Cash] haswitnessed sharp growth of 24.7% despite significant new capacity creation and strategicinitiatives on e-mobility.
On a consolidated basis the Company its subsidiaries and joint venture companiesachieved revenue of Rs. 103485 Million as against Rs. 85566.79 Million a growth of20.94%. Under International business the Company recorded highest revenue from heavyvehicle business in LY 2018-19 at Rs. 15912 Million. The passenger vehicle segment hasbeen on a positive growth from the last five years from Rs. 420 Million in LY 2013-14 toRs. 4875 Million in LY 2018-19. Witnessing another good year for Oil & Gas Industryin North America in the LY 2018-19 the Company recorded highest ever revenues fromIndustry segment at Rs. 16471 Million.
During the year your Company has set-up a facility viz. "The Centre for LightWeighting Technology" at Nellore Andhra Pradesh. The facility is expected to beoperationalized by the third quarter of the financial year 2019-20. The facility willmanufacture critical light weight components in Aluminum. The Company has also undertakenan expansion of its forging and machining capacity at Baramati Pune. This will cater therequirements of Automotive and Industrial market globally.
5. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013
Particulars of loans guarantees and investments covered under Section 186 of theCompanies Act 2013 forms part of notes to the financial statement provided in thisAnnual Report.
6. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts or arrangements entered into by the Company with Related Parties are atarm's length basis and are in the ordinary course of business.
Pursuant to Section 134 of the Companies Act 2013 read with Rule 8 of the Companies[Accounts] Rules 2014 the particulars of transactions with related parties are providedin Lorm AOC-2 which is annexed as Annexure "B" to this report. Related Partydisclosures as per Ind AS 24 have been provided in Note 39 to the financial statement.
The Related Party Transaction Policy has been amended in line with the requirements of5EBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations 2018 andadopted effective from April 1 2019. The revised policy as approved by the Board has beendisplayed on the Company's website at: www.bharatforge.com/investors/corporate-governance/policies .
During the year under review the Company has not accepted any deposit under Chapter Vof the Companies Act 2013.
8. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed.
9. RISK MANAGEMENT
The Company has a robust risk management framework comprising risk governance structureand defined risk management processes. The Board of Directors of the Company has formed aFinance and Risk Management Committee to frame implement and monitorthe risk managementplan forthe Company. The committee is responsible for reviewing the risk management planand ensuring its effectiveness. The Audit Committee has additional oversight in the areaof financial risks and controls. The major risks identified by the businesses andfunctions are systematically addressed through mitigating actions on a continuing basis.The development and implementation of risk management policy has been covered in theManagement Discussion and Analysis [MDA] which forms part of this report.
10. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no adverse material changes or commitments occurred after March 31 2019which may affect the financial position of the Company or may require disclosure.
11. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
12. STATE OF COMPANY'S AFFAIRS
Discussion on state of affairs of the Company has been covered as part of theManagement Discussion and Analysis [MDA]. MDA for the year under review as stipulatedunder Regulation 34 of SEBI [Listing Obligations and Disclosure Requirements] Regulations2015 is presented in a separate section forming part of this Annual Report.
13. SHARE CAPITAL
The paid-up Equity Share Capital of the Company as on March 31 2019 stood at Rs.931.27 Million.
During the year under review the Company has not issued shares with the differentialvoting rights nor has granted any stock options or sweat equity. As on March 31 2019none of the Directors of the Company hold instruments convertible into equity shares ofthe Company.
14. TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUNDCIEPF')
Pursuant to the provisions of the Companies Act 2013 and Investor Education andProtection Fund Authority [Accounting Audit Transfer and Refund] Rules 2016 [IEPFRules] the declared dividends which remained unpaid or unclaimed for a period of 7[seven] years and shares thereof shall be transferred by the Company to the InvestorEducation and Protection Fund [IEPF] established by the Central Government.
Accordingly during the year the Company has transferred the unpaid or unclaimeddividend for a period of 7 [seven] years from the date they became due for paymentalongwith the shares thereof to IEPF. The shareholders have an option to claim theirshares and / or amount of dividend transferred from IEPF. No claim shall be entertainedagainst the Company for the amounts and shares so transferred.
The list of equity shareholders whose shares are transferred to IEPF can be accessed onthe website of the Company at below mentioned link:www.bharatforge.com/investors/shareholders-information/unclaimed-dividend
The Company has sent notices to respective shareholders who have not claimed dividendfor 7 [seven] consecutive years and whose shares are liable to be transferred to IEPFduring the financial year 2019-20. The newspaper advertisement stating the same has alsobeen published in the newspapers. The list of equity shareholders whose shares are liableto be transferred to IEPF can be accessed on the website of the Company at below mentionedlink: www.bharatforge.com/investors/shareholders-information/unclaimed-dividend
15. EXTRACT OF ANNUAL RETURN
In accordance with Section 134[a] of the Companies Act 2013 an extract of theAnnual Return of the Company in Form MGT-9 is appended as Annexure "C" to thisReport.
16. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act 2013 Directors confirm that:
a. in preparation of the annual accounts for the financial year ended March 31 2019the applicable Accounting Standards have been followed and there were no materialdepartures;
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 as on March 31 2019 and of the profit of theCompany for that period;
c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. they have prepared the annual accounts on a going concern basis;
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; and
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
17. DIRECTORS AND KEY MANAGERIAL PERSONNEL [KMP)
In terms of provisions of the Companies Act 2013 and the Articles of Association ofthe Company Mr. B. P. Kalyani [DIN : 00267202] and Mr. Kishore Saletore [DIN : 01705850]Directors of the Company retire by rotation at the ensuing Annual General Meeting andbeing eligible have offered themselves for re-appointment.
During the year the Board of Directors of the Company re-appointed Mr. Amit B. Kalyani[DIN : 00089430] as the Executive Director of the Company for a period of 5 [five] yearscommencing from May 11 2019. Further at the Board Meeting held on May 20 2019 Mr. AmitB. Kalyani has been re-designated as a Deputy Managing Director of the Company. Theappointment is subject to approval of the shareholders. Accordingly the resolution forre-appointment of Mr. Amit B. Kalyani forms part of Notice convening the 58thAnnual General Meeting ["AGM"].
As per the Retirement Policy for Non-Executive Directors of the Company Mr. NareshNarad [DIN : 02737423] and Dr. T. Mukherjee [DIN : 00004777] retired from the Board of theCompany from the closure of working hours on March 31 2019. The Board places on recordits sincere appreciation of the contribution made by Mr. Naresh Narad and Dr. T. Mukherjeeduring their tenure with the Company.
Mr. P. G. Pawar Mr. 5. M. Thakore Mrs. Lalita D. Gupte Mr. Vimal Bhandari and Mr. P.H. Ravikumar were appointed as Non- Executive Independent Directors for a period of 5[five] years from September 4 2014. Based on the recommendation of the Nomination andRemuneration Committee their re-appointment for a second term of 5 [five] years isproposed at the ensuing AGM for the approval of the Members by way of special resolution.
Further the Board of Directors in its meeting held on June 21 2019 appointed Mr.Dipak Mane [DIN : 01215889] and Mr. Murali Sivaraman [DIN : 01461231] as AdditionalIndependent Directors of the Company. The said appointment is till the ensuing AnnualGeneral Meeting. The Directors have proposed to appoint Mr. Dipak Mane and Mr. MuraliSivaraman as Independent Directors of the Company for the period of 5 [five] consecutiveyears; which is subject to approval of the shareholders of the Company. Accordingly theresolutions for appointment of Mr. Dipak Mane and Mr. Murali Sivaraman forms part ofNotice convening the 58th Annual General Meeting.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149of the Companies Act 2013 and Regulation 25 of SEBI [Listing Obligations and DisclosureRequirements] Regulations 2015.
The disclosures pertaining to Directors being appointed/re-appointed as requiredpursuant to Regulation 36 of the SEBI Listing Regulations given in the explanatorystatement to the Notice convening the 58th Annual General Meeting of theCompany for reference of the shareholders.
18. NUMBER OF MEETINGS OF THE BOARD
The Board met 4 [Four] times during the year. Also a separate meeting of IndependentDirectors was convened as prescribed under Schedule IV of Companies Act 2013 was heldduring the year under review. The details of meetings of Board of Directors are providedin the Report on Corporate Governance that forms part of this Annual Report. The maximuminterval between any two meetings did not exceed 120 days as prescribed under theCompanies Act 2013.
19. BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act SEBIListing Regulations and the Guidance Note on Board Evaluation issued by the Securities andExchange Board of India on May 24 2017. The performance of the board was evaluated by theboard after seeking inputs from all the directors on the basis of criteria such as theboard composition and structure effectiveness of board processes information andfunctioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc. In a separate meeting of independent directorsperformance of non-independent directors the Chairman of the Company and the board as awhole was evaluated taking into account the views of executive directors andnon-executive directors.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.
In the board meeting that followed the meeting of the independent directors and meetingof Nomination and Remuneration Committee the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.
20. FAMILIARISATION PROGRAMME
The Company on a regular basis makes detailed presentations to the entire Boardincluding Independent Directors on the Company's operations and business plans strategyglobal and domestic business environment and the business model of its respectivebusinesses. Such presentations are made by the senior management/leadership team/functionheads so that the Independent Directors can have direct interaction with them. The Boardmembers are provided with necessary documents/ brochures reports and internal policies toenable them to familiarise with the Company's procedures and practices.
The Independent Directors were also briefed regularly on the R&D and Innovationinitiatives in the Company.
The details of programmes for familarisation for Independent Directors are posted onthe website of the Company and can be accessed at:www.bharatforge.com/assets/pdf/investor/familiarisation-programme-for-independent-directors
21. BUSINESS RESPONSIBILITY REPORT
The 5EBI [Listing Obligations and Disclosure Requirements] Regulations 2015["Regulation"] mandates inclusion of the Business Responsibility Report [BRR] asa part of Annual Report of Top 500 Listed entities based on market capitalization. Incompliance with the Regulation we have provided the BRR as a part of this Annual Report.
22. INFORMATION PURSUANTTO RULES OFTHE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014
|Sr. No. ||Information Required ||Input |
|1 ||The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year ||Please refer Annexure "D" |
|2 ||The percentage increase in remuneration of each director Chief Linancial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year; ||Please refer Annexure "D" |
|3 ||The percentage increase in the median remuneration of employees in the financial year ||18.60% |
|4 ||The number of permanent employees on the rolls of Company ||4711 |
|5 ||Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||Percentage increase in salaries of managerial personnel at 50th Percentile is: 15.16% Percentage increase in salaries of non- managerial personnel at 50th Percentile is: 16.91% |
| || ||The increase in remuneration is not solely based on Company performance but also includes various other factors like individual performance experience skill sets academic background industry trends economic situation and future growth prospects etc. besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration. |
|6 ||Affirmation that the remuneration is as per the remuneration policy of the Company. ||The remuneration paid to the Directors is as per the Remuneration policy of the Company. |
|7 ||Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee who- ||Please refer Annexure "E" |
| ||[i] if employed throughout the financial year was in receipt of remuneration for that year which in the aggregate was not less than one crore and two lakh rupees; || |
| ||[ii] if employed for a part of the financial year was in receipt of remuneration for any part of that year at a rate which in the aggregate was not less than eight lakh and fifty thousand rupees per month; || |
| ||[iii] if employed throughout the financial year or part thereof was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate which in the aggregate is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children not less than two percent of the equity shares of the Company. || |
23. NOMINATION AND REMUNERATION POLICY
During the year the Company has revised the Nomination and Remuneration Policy inaccordance with the SEBI [Listing Obligations and Disclosure Requirements] [Amendment]Regulations 2018. The salient features of the Policy and changes therein are set out inthe Corporate Governance Report which forms part of this Annual Report.
The said Policy of the Company inter alia provides that the Nomination andRemuneration Committee shall formulate the criteria for appointment of Directors on theBoard of the Company and persons holding Senior Management positions in the Companyincluding their remuneration and other matters as provided under Section 178 of theCompanies Act 2013 and SEBI Listing Regulations. The Policy is also available on theCompany's website at: www.bharatforge.com/ investors/corporate-governance/policies
24. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Company hasimplemented several best Corporate Governance practices as prevalent globally. The reporton Corporate Governance as stipulated under the SEBI [Listing Obligations and DisclosuresRequirements] Regulations 2015 forms an integral part of this Annual Report. Therequisite certificate from the Practicing Company Secretary confirming compliance with theconditions of Corporate Governance is attached to the report on Corporate Governance.
25. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
During the year under review the Board approved acquisition of 35.26% stake in TevvaMotors [Jersey] Limited Jersey. Tevva Motors is the world's leading developer of ElectricRanged Extended Vehicles [EREVs] and also developing sophisticated software for autonomousvehicle pollution management in urban and in environmentally sensitive locations.
As on March 31 2019 the Company has 22 [Twenty Two] subsidiaries [including step downsubsidiaries] and 2 [Two] Associate Companies. In accordance with Section 129 of theCompanies Act 2013 the Company has prepared the consolidated financial statement whichforms part of this Annual Report. Further a statement containing salient features of thefinancial statements of our subsidiaries in the prescribed Form AOC-1 is presented in aseparate section forming part of the financial statements.
Pursuant to Section 136 of the Companies Act 2013 the audited financial statementsincluding the consolidated financial statements and related information of the Company andseparate audited accounts in respect of subsidiaries are available on the website of theCompany at: http://bharatforge.com .
The Policy on Material Subsidiaries has been amended in line with the requirements ofthe SEBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations 2018and adopted w.e.f. April 1 2019. The key changes include inter-alia the definition ofmaterial subsidiary. Pursuant to revised Policy and as per consolidated audited FinancialStatements for the year ended March 31 2019 Bharat Forge CDP GmbH Bharat ForgeInternational Limited and Bharat Forge Global Holding GmbH have become materialsubsidiaries of the Company.
26. AUDIT COMMITTEE
The Audit Committee comprises of Mr. P. G. Pawar- Chairman of the Committee andIndependent Director Mr. S. M. Thakore - Independent Director Mr. P. H. Ravikumar -Independent Director and Mr. P. C. Bhalerao - Non-Executive Director.
All the recommendations made by the Audit Committee were deliberated and accepted bythe Board during the financial year 2018-19.
A. Statutory Auditors and Audit Report
At the 56th Annual General Meeting of the Company held on August 10 2017M/s. S R B C & CO LLP Chartered Accountants Pune [Firm Registration No.324982E/E300003] were appointed as Statutory Auditors to hold office upto the conclusionof the 61st Annual General Meeting of the Company to be held in the year 2022subject to ratification of appointment at every Annual General Meeting. However theCompanies [Amendment] Act 2017 published in the Gazette of India on January 3 2018omitted first proviso to Section 139 of Companies Act 2013 which provided forratification of appointment of Statutory Auditors by members at every AGM. The saidamendment has been effective from May 7 2018.
In view of the above at the 57th Annual General Meeting of the Company heldon August 9 2018 the members of the Company ratified the appointment of M/s. S R B C& CO LLP Chartered Accountants Pune [Firm Registration No. 324982E/E300003] asStatutory Auditors of the Company upto the conclusion of the 61st AnnualGeneral Meeting of the Company to be held in the year 2022 and the Statutory Auditors arenot liable for ratification at every Annual General Meeting.
The Auditor's Report for FY 2018-19 does not contain any qualification reservation oradverse remark. The Auditor's Report is enclosed with the Financial Statements in thisAnnual Report.
B. Secretarial Auditor and the Audit
The Board has appointed M/s. SVD & Associates Company Secretaries Pune toconduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report forthe financial year ended March 31 2019 is appended as Annexure "F" to thisreport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.
Further as required under Section 204 of the Companies Act 2013 and Rules thereunderthe Board has appointed M/s. SVD & Associates Company Secretaries Pune to conductSecretarial Audit for the financial year 2019-20.
C. Cost Auditors
The Board of Directors on the recommendation of Audit Committee has appointed M/s.Dhananjay V. Joshi & Associates Cost Accountants Pune [Firm Registration No. :00030] as Cost Auditors to audit the cost accounts of the Company for the financial year2019-20. As required under the Companies Act 2013 a resolution seeking Member's approvalfor the remuneration payable to the Cost Auditors forms part of Notice convening the 58thAnnual General Meeting.
The Cost Audit report for the Financial Year 2017-18 was filed with the Ministry ofCorporate Affairs on October 8 2018.
D. Reporting of fraud by auditors
During the year under review the Auditors of the Company have not reported any fraudas specified under Section 143 of the Companies Act 2013 to the Audit Committee.
28. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
The Company has been carrying out various Corporate Social Responsibility [CSR]activities. These activities are carried out in terms of Section 135 read with ScheduleVII of the Companies Act 2013 as amended from time to time and the Companies [CorporateSocial Responsibility Policy] Rules 2014.
The brief outline of the Corporate Social Responsibility [CSR] policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year underreview are set out in Annexure "G" of this report in the format prescribed inthe Companies [Corporate Social Responsibility Policy] Rules 2014. For other detailsregarding the CSR Committee please refer to the Corporate Governance Report which is apart of this report. The CSR policy is also available on the Company's website at thelink: www.bharatforge.com/investor/policy
29. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace [PreventionProhibition and Redressal] Act 2013 and the Rules made thereunder for prevention andredressal of complaints of sexual harassment at workplace. All women associates[permanent temporary contractual and trainees] as well as any women visiting theCompany's office premises or women service providers are covered under this Policy.
During the year under review no complaints were received by the Committee constitutedunder the Sexual Harassment of Women at Workplace [Prevention Prohibition and Redressal]Act 2013 which has been resolved.
30. VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy wherein the Employees / Directors /Stakeholders of the Company are free to report any unethical or improper activity actualor suspected fraud or violation of the Company's Code of Conduct. The policy provides fora mechanism to report such concerns to the Audit Committee through specified channels.This mechanism provides safeguards against victimisation of Employees who report underthe said mechanism. During the year the Whistleblower Policy was amended and adoptedw.e.f. April 1 2019 in line with SEBI [Listing Obligations and Disclosure Requirements][Amendment] Regulations 2018 enabling employees to report instances of leak ofUnpublished Price Sensitive Information [UPSI].
During the year under review the Company has not received any complaints under thesaid mechanism. The Whistle Blower Policy of the Company has been displayed on theCompany's website at the link: www.bharatforge.com/investors/corporate-governance/policies
31. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134[m] of theCompanies Act 2013 read with Rule 8 of the Companies [Accounts] Rules 2014 are appendedas Annexure "H" to this report.
32. GREEN INITIATIVES
The Company supports and pursues the "Green Initiative'' of the Ministry ofCorporate Affairs Government of India. The Company has effected electronic delivery ofNotice of Annual General Meeting and Annual Report to those Members whose e-mail IDs areregistered with the Company / Depository Participants. The Companies Act 2013 and theunderlying rules as well as Regulation 36 of Securities and Exchange Board of India[Listing Obligations and Disclosure Requirements] Regulations 2015 permit thedissemination of financial statements and annual report in electronic mode to the Members.
For members who have not registered their email addresses physical copies are sent inthe permitted mode.
Your Directors are thankful to the Members for actively participating in the GreenInitiative and seek your continued support for implementation of the green initiative.
33. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company complies with all applicable Secretarial Standards issued by the Instituteof Company Secretaries of India.
Your Directors would like to express their sincere appreciation of the positiveco-operation received from the Central Government the Government of MaharashtraFinancial Institutions and the Bankers. The Directors also wish to place on record theirdeep sense of appreciation for the commitment displayed by all executives officersworkers and staff of the Company resulting in the successful performance of the Companyduring the year.
The Board also takes this opportunity to express its deep gratitude for the continuedco-operation and support received from its valued shareholders.
The Directors express their special thanks to Mr. B. N. Kalyani Chairman and ManagingDirector for his untiring efforts for the progress of the Company.
For and on behalf of the Board of Directors
B. N. KALYANI
Chairman and Managing Director
Pune: June 21 2019
DIVIDEND DISTRIBUTION POLICY
The Securities and Exchange Board of India ['SEBI'] vide notification dated July 82016 has amended the SEBI [Listing Obligations and Disclosure Requirements] Regulations2015 ['SEBI LODR'] whereby it has become mandatory for top five hundred listed companies[based on their market capitalization calculated as on 31st day of March everyyear to formulate Dividend Distribution Policy and make appropriate disclosures in termsof SEBI LODR in their Annual Reports and on the Company's website.
Accordingly based on the parameters prescribed by SEBI the Company has adopted thisPolicy titled "Dividend Distribution Policy of Bharat Forge Limited" ["ThePolicy"].
2. PURPOSE AND APPLICABILITY
This Policy reflects the intent of the Company to reward its shareholders by sharing aportion of its distributable profits after retaining sufficient funds for its futuregrowth initiatives and maintaining the financial soundness of the Company. The purpose ofthis Policy is also to lay down criteria to be considered by the Board of Directors of theCompany ["The Board"] in taking decision for recommending dividend to itsshareholders for any financial year.
This Policy shall deem to have come into force with effect from the date written hereinbelow.
This Policy shall not apply to:
a] determination and declaration of dividend on preference shares if any issued or tobe issued by the Company since dividend on preference shares will always be as per theterms of issue approved by the Shareholders;
b] distribution of dividend in kind i.e. by issuance of fully or partly paid-up bonusshares [whether equity or preference shares] or other securities;
c] distribution of cash [i] as an alternative to payment of dividend if anypermissible under the Companies Act 2013 ["The Act"]; [ii] by way of buy-backof equity shares; [iii] reduction in share capital of the Company; and [iv] on account offraction entitlement due to sub-division split of securities or any other similar suchcorporate action by the Company.
For the purpose of this Policy the term "Dividend" means distributableprofits of the Company which are available for distribution in accordance with theprovisions of Clause 4 below to the equity shareholders in proportion to the amountpaid-up on equity shares held by them. The term "Dividend" also includes InterimDividend.
4. STATUTORY/OTHER REQUIREMENTS
The Board is expected to adhere to the following while making recommendations to theShareholders for their approval on dividend payout during any financial year:
a] Companies Act 2013 and applicable rules thereunder;
b] SEBI [Listing Obligations and Disclosure Requirements] Regulations 2015 as amendedfrom time-to-time;
c] Any other applicable laws for the time being in force; and
d] Financial covenants as may be stipulated by lenders of the Company.
5. THE INTERNAL AND EXTERNAL FACTORS THAT SHALL BE CONSIDERED FOR DECLARATION OFDIVIDEND
5.1 The Board of the Company shall take a decision to declare dividend after takinginto account the following internal and external factors:
A. Internal Factors:
The Board shall among others consider the following Indicative internal factors[which are illustrative and not exhaustive] while taking a decision for declaration ofdividend:
a] The un-consolidated profits of the Company made during the year;
b] Obligations towards the creditors;
c] Business Plans;
d] Expansion plans;
e] Corporate Restructuring plans;
f] Scheme of arrangement if any; or
g] Any other factors which can have possible material financial implications on theCompany.
B. External Factors :
In addition to the above the Board shall among others consider the followingindicative external factors [which are illustrative and not exhaustive] while taking adecision for declaration of dividend:
a] Macro-economic environment;
b] Indian/Global Capital Markets;
c] Industry outlook [domestic as also global] for business in which Company operates;
d] Change in taxation laws and economic/trade policies/global trade agreements;
e] Geo-political reasons or
f] Any other external factors which can have a material financial implications on theCompany.
5.2 Circumstances under which the Board of the Company may or may not recommend /declare dividend :
Subject to the criteria and other provisions of this Policy the Board may in itsabsolute discretion decide not to recommend / declare any dividend for any financial yearincluding for the reason such as inadequate un-consolidated profits after tax or thegrowth initiatives of the Company do not warrant distribution of profits.
5.3 Financial parameters that shall be considered while declaring dividend :
In cases where the Board considers it appropriate to declare Interim Dividend then forthe purposes of declaring Interim Dividend the Board shall consider un-consolidatedprofit aftertax [PAT] and overall financial projections for the unexpired potion of thefinancial year. In cases where the Board considers it appropriate to recommend finaldividend for declaration then for the purposes of declaration of final dividend theBoard shall consider un-consolidated profit after tax Interim Dividend declared if anyand earnings that the Board deems appropriate to be carried to reserves to maintainfinancial health and to fund growth initiatives of the Company. Considering these aspectsincluding the other criteria laid down in this Policy the Board shall endeavor tomaintain an annual dividend payout range of 15% to 35% of the un-consolidated profit aftertax of the Company.
6. MANNER OF DIVIDEND PAYOUT
6.1 Final Dividend:
a] The Board shall recommend final dividend usually in the Board Meeting that considersand approves the annual financial statements of the Company.
b] The final dividend if any that the Board may consider shall factor InterimDividend if any that it might have declared during the applicable financial year.
6.2 Interim Dividend:
a] The Board may declare Interim Dividend at its complete discretion in line with thisPolicy based on distributable profits arrived at on quarterly or half-yearly financialresults of the Company.
b] In case no Final Dividend is declared Interim Dividend paid during the year ifany will be regarded as Final Dividend for confirmation of shareholders in the AnnualGeneral Meeting.
7. MANNER OF UTILISATION OF RETAINED EARNINGS
The Board may consider retained earnings considering weighted average cost of capitalin application for growth initiatives if any and increase in stakeholder's value fromlong term perspective. The decision of utilization of the retained earnings of the Companywill among other be based on the following factors:
a] Strategic and long term plans of the Company;
b] Organic and in-organic growth opportunities available to the Company;
c] Non-fund based needs of the Company its subsidiaries and Joint Ventures which mayrequire the Company to have a healthy consolidated balance sheet;
d] Decision for issue of bonus buy-back etc.; and
e] Any other criteria which the Board of the Company may consider appropriate.
8. PARAMETERS TO BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARES
Presently the Company has only one class of shares i.e. equity shares. As and when itproposes to issue any other class of shares this policy shall be accordingly modified ifnecessary to cover such other class of securities.
The Company shall disclose the Policy on its website and a web link thereto shall beprovided in the Annual Report.
10. SCOPE AND LIMITATION
In the event of any conflict between the provisions of this Policy and 5EBI LODR or theAct or any other statutory enactments rules [collectively "Laws"] theprovisions of Laws shall prevail over this Policy.
11. AMENDMENTS AND UPDATIONS
To the extent any change/amendment is required in terms of any applicable law or changein regulations the regulations shall prevail over this Policy. In such a case theprovisions in this Policy would be modified in due course to make it consistent with suchamended law and the amended policy shall be placed before the Board for noting andnecessary ratification.
12. REVIEW OF POLICY
The Board of Directors will review the policy periodically and consider modifyingamending deleting any of the provisions of this Policy. If the Board at any timeproposes to declare dividend[s] on the basis of criteria other than those specified inthis Policy or proposes to modify any of the criteria then it shall disclose suchchanges along with the rationale for the same to the Shareholders on the Company's websiteand in the Annual Report.
This Policy does not purport to or solicit investment in the Company's securities northis Policy purports to provide any kind of assurance to Shareholders of any guaranteedreturns [in any form] for investments in the Company's equity shares.