(SECTION 134 OF THE COMPANIES ACT 2013)
TO THE MEMBERS
The Directors are pleased to present the 46th Annual Report and theAudited Financial Statements for the year ended 31 March 2018.
| || || |
| || |
Financial year ended
|Financial Results || |
|Revenue from operations and other income (gross) || |
|Profit before finance costs and depreciation and amortisation expense || |
|Finance costs || |
|Depreciation and amortisation expense || |
|Profit/(loss) before tax || |
|Less: Tax expense/(benefit) || |
|Profit/(loss) after tax || |
|Other comprehensive income || |
|Total comprehensive income || |
|Statement of other equity || || |
|Opening balance || |
|Add: Profit/(loss) for the year || |
|Add: Preferential issue of equity shares (net of share issue expenses) || |
|Closing balance || |
In order to conserve the resources and make them available for growthinitiatives of the Company the directors of the Company have decided not to recommend anydividend on equity shares of the Company for the year ended 31 March 2018.
The continued growth momentum especially in the agricultural sectorlead to a steady demand from Domestic OEM's and Overseas customer(s). This resultedin growth of 18% in revenue from operations during the year ended 31 March 2018 vis a visprevious year.
Higher volumes led to better absorption of fixed costs and resulted inbetter EBIDTA margins; which was partially offset due to additional costs incurred to meetcustomer requirements. Further employee benefits expense has increased on account ofrevision in statutory limit of maximum gratuity.
Profit after tax for the year ended 31 March 2018 was
` 6.30 crores against loss of ` 1.46 crores in previous year.
During the year outflow on account of Voluntary Retirement Schemecompensation was ` 1.16 crores.
During the year the Company has availed the term loan of ` 80 croresfrom KKR India Financial Services Private Limited (KKR). This was primarily used forrepayment of existing term debts augmentation of long term working capital and capitalexpenditure. The Company has repaid ` 49.78 crores of existing borrowings to financialinstitutions and banks.
Interest free unsecured loan of ` 5.00 Crores infused by promoter inthe previous year was fully repaid during the year.
During the year 325000 equity shares of face value
` 10/- each was allotted to promoter at a price of
` 157.32 per share (including a premium of ` 147.32 per share)aggregating to ` 5.11 crores on Preferential Allotment basis.
In order to support volume growth as a result of increase in offtake bycustomers across the segments the Company embarked on capital expenditure program in FY2017-18. Most of the machines/equipment are in place and thus enabled the Company toregister significant increase in turnover. In the coming year the Company envisages asimilar growth in volumes. As a result the Company has drawn up fresh plans forinvestment in capex and allied infrastructure. The capex plan shall be financed by way ofa mix of equity debt and internal accruals.
ADOPTION OF INDIAN ACCOUNTING STANDARDS ("IND AS")
The Company has adopted Indian Accounting Standards ("IndAS")and accordingly these financial statements have been prepared in accordance with the sameas required under section 133 of the Companies Act 2013 read with rules made there under.The date of transition to Ind AS is
01 April 2016. These financial statements for the year ended 31March 2018 are the Company's first Ind AS financial statements. The impact oftransition has been accounted for in the opening reserves and the comparative periodfigures have been reinstated accordingly.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed analysis of the Company's operations in terms ofperformance in markets manufacturing activities business outlook risks and concernsforms part of the Management Discussion and Analysis a separate section of this report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) read with 134(5) of the Companies Act2013 your Directors confirm that:-
(a) in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;
(b) the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at 31 March 2018and of the profit and loss of the Company for the period ended on that date;
(c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concernbasis;
(e) the directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
(f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
RELATED PARTY CONTRACTS AND ARRANGEMENTS
The contracts or arrangements of the Company with related partiesduring the period under review referred to in Section 188(1) of the Companies Act 2013were in ordinary course of business and on arm's length basis. During the year theCompany had not entered into the contract/arrangement/transaction with related partieswhich could be considered material in accordance with the related party transaction policyof the Company. The said policy as approved by the Board in terms of provisions ofRegulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 ("the Regulations") is available on the website of the Company i.e.www.bharatgears.com under the linkhttp://bharatgears.com/documents/related_partyfitransaction_ policy.pdf.
The prescribed form AOC-2 of the Companies (Accounts) Rules 2014 isenclosed as Annexure -"A" to this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
During the period under review the Company has not made any loanguarantee or investment in terms of provisions of Section 186 of the Companies Act 2013.
During the year Mr. S.G. Awasthi ceased to be a Director of theCompany pursuant to his resignation w.e.f. 09 August 2017.
The tenure of Mr. Sameer Kanwar as Joint Managing Director of theCompany shall be expiring on 31 May 2018. The Board of Directors of the Company in itsmeeting held on 30 May 2018 has re-appointed Mr. Sameer Kanwar as Joint Managing Directorof the Company for a further period of 3 (Three) years w.e.f. 01 June 2018 subject to theapproval of shareholders at the ensuing Annual General Meeting of the Company.
Mr. N.V. Srinivasan had been appointed as an Additional Director of theCompany w.e.f. 03 November 2017 till the conclusion of the ensuing Annual GeneralMeeting.
Therefore in terms of Section 152 of the Companies Act 2013 it hasbeen proposed to appoint Mr. N.V. Srinivasan as Non-Executive Director at the ensuingAnnual General Meeting (AGM) of the Company upto the conclusion of the next Annual GeneralMeeting (AGM) of the Company in the Calendar year 2019.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2017-18 5 (Five) Board Meetings were held onthe following dates:-
23 May 2017;
09 August 2017;
03 November 2017;
31 January 2018; and
26 March 2018
The gap between any two meetings was not more than one hundred twentydays as mandated under the provisions of Section 173 of the Companies Act 2013 andRegulation 17(2) of the Regulations.
In terms of provisions of Section 149(7) of the Companies Act 2013all the Independent Directors of the Company have furnished a declaration to theCompliance Officer of the Company at the meeting of the Board of Directors held on 30 May2018 stating that they fulfill the criteria of Independent Director as prescribed underSection 149(6) of the Companies Act 2013 and are not being disqualified to act as anIndependent Director.
In terms of the Regulation 25(7) of the Regulations the Company hasadopted a familiarization programme for the Independent Directors to familiarize them withworking of the Company nature of the industry in which the Company operates businessmodel of the Company their roles rights responsibilities and other relevant details.The details of familiarization programme during the Financial Year 2017-18 are availableon the official website of the Company i.e. www.bharatgears.com under the link i.e.http://bharatgears.com/documents/details-of-familiarization-programme-for-independent-director-FY17-18.pdf.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In terms of provisions of Section 178 of the Companies Act 2013 readwith Regulation 19 of the Regulations a policy relating to remuneration for theDirectors Key Managerial Personnel and other employees has been adopted by the Board ofDirectors of the Company in pursuance of its formulation and recommendation by theNomination and Remuneration Committee thereby analyzing the criteria for determiningqualifications positive attributes and independence of a Director. The said policy isannexed as Annexure -"B" to this report and is also available on thewebsite of the Company i.e. www.bharatgears.com under the link http://bharatgears.com/documents/company_policy_onfiremuneration.pdf .
The Board of Directors of the Company has established a framework forthe evaluation of its own performance and individual Directors of the Company inconsultation with the engaged consultant and fixed certain parameters covering theevaluation of the Chairman
Executive Directors Non-executive Directors and Independent Directorson the basis of which the evaluation is being carried out on annual basis in terms ofprovisions of the Companies Act 2013 and the Regulations.
During the year under review the Board of Directors at its meetingheld on 26 March 2018 have carried out the evaluation of its own performance andIndependent Directors of the Company and the Independent Directors in their separatemeeting held on even date have evaluated the performance of the Chairman andNon-Independent Director(s) of the Company respectively in accordance with the frameworkapproved by the Board.
KEY MANAGERIAL PERSONNEL
The following Directors/Officials of the Company have been designatedas Key Managerial Personnel (KMP) of the Company by the Board of Directors in terms ofprovisions of Section 203 of the Companies Act 2013 and the Regulations:
1. Mr. Surinder Paul Kanwar Chairman & Managing Director
2. Mr. Sameer Kanwar Joint Managing Director
3. Mr. Milind Pujari Chief Financial Officer
4. Mr. Prashant Khattry Head (Legal) & Company Secretary
No Key Managerial Personnel (KMP) of the Company has resigned duringthe financial year ended 31 March 2018.
DISCLOSURES UNDER THE COMPANIES (APPOINTMENT
& REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
Details pertaining to remuneration as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are enclosed as Annexure -"C" tothis report.
PARTICULARS OF EMPLOYEES
Information regarding employees in accordance with the provisions ofRule 5(2) and Rule 5(3) of the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 is given in Annexure- "D" to this Report.
A robust and integrated enterprise risk management framework is inexistence under which the common prevailing risks in the Company are identified the risksso identified are reviewed on periodic basis by the Audit Committee and themanagement's actions to mitigate the risk exposure in a timely manner are assessed.
A risk management policy under the above said enterprise riskmanagement framework as approved by the Board has been adopted by the Company and beingreviewed on yearly basis.
CORPORATE SOCIAL RESPONSIBILITY
In terms of provisions of Section 135 of the Companies Act 2013 theCorporate Social Responsibility Committee ("CSR Committee") is in existence tomonitor the Corporate Social Responsibility Policy of the Company as approved by the Boardand the said policy is available on website of the Company i.e. www.bharatgears.com.
The CSR Committee comprises of Mr. Surinder Paul Kanwar Mr. SameerKanwar and Mr. Rakesh Chopra.
During the Financial Year 2017-18 the provisions of Section 135 of theCompanies Act 2013 were not applicable on the Company since the Company does not fallunder the conditions necessary for complying with CSR provisions. Hence no amount wasrequired to be spent during the year.
The Audit Committee comprises of Mr. Rakesh Chopra Mr. V.K. Pargal andMs. Hiroo Suresh Advani.
During the year Mr. S.G. Awasthi (the erstwhile member of Committee)ceased to be a member of the Committee due to his resignation with effect from 09 August2017. Pursuant to his resignation Ms. Hiroo Suresh Advani has been inducted as a memberof the Committee on
01 September 2017 accordingly the Audit Committee had beenreconstituted.
INTERNAL COMPLAINTS COMMITTEE FOR PREVENTION OF SEXUAL HARASSMENT
Pursuant to Section 21 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 read with Rule 14 of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Rules 2013 theCompany has constituted Internal Complaints Committee (ICC) at all its Units (i.e.Faridabad Mumbra and Lonand) where any grievance of sexual harassment at workplace can bereported.
The Company has also adopted a policy on Prevention of SexualHarassment at workplace. The objective of the policy is to provide its women employees aworkplace free from harassment/discrimination and every employee is treated with dignityand respect. The said policy is available on the website of the Company i.e.www.bharatgears.com under the link http://bharatgears.com/documents/policy-for-prevention-of-sexual-harassment.pdf.
During the year under review ICC of all units of the Company has notreceived any complaint pertaining to sexual harassment of women at workplace.
SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANIES
During the year under review no Company has become or ceased to besubsidiary joint venture or associate of the Company.
During the year under review the Company did not accept any deposits.
Investor Education and Protection Fund (IEPF)
In terms of provisions of Section 124(5) of the Companies Act 2013read with the lnvestor Education and Protection Fund (IEPF) Authority (Accounting AuditTransfer and Refund) Rules 2016 as amended the Unclaimed Final Dividend pertaining tothe Financial Year 2009-10 amount aggregating to ` 124013.00 (Rupees One Lac Twenty FourThousand Thirteen Only) had been transferred to the "Investor Education andProtection Fund" established by the Central Government.
Further in terms of provisions of Section 124(6) of the Companies Act2013 read with the Investor Education & Protection Fund (IEPF) Authority (AccountingAudit Transfer and Refund) Rules 2016 ("the Rules") and the Investor Education& Protection Fund (IEPF) Authority (Accounting Audit Transfer and Refund) AmendmentRules 2017 ("the Amended Rules") the Company is required to transfer theequity shares in respect of which dividends have remained unclaimed for a period of sevenconsecutive years to the IEPF Account established by the Central Government and astatement containing such details are required to be filed with the Ministry of CorporateAffairs (MCA).
In pursuance of the above pursuant to the transfer of the unclaimeddividend for the year 2009-10 to the IEPF on 27 August 2017 i.e. upon completion of sevenyears from transfer of dividend into unclaimed dividend account 43669 (Forty ThreeThousand Six Hundred Sixty Nine) Equity Shares relating to such dividend on which thedividend has not been claimed for the consecutive seven years since 2009-10 have beentransferred into demat account of IEPF Authority.
The unclaimed dividend for the year 2010-11 is proposed to betransferred to the Investor Education and Protection Fund (IEPF) on 24 August 2018 i.e.upon completion of seven years from the transfer of said dividend into unclaimed dividendaccount. Subsequently the equity shares relating to such dividend on which the dividendhas not been claimed for the consecutive seven years since 2010-11 (net of the sharesalready transferred) shall also be transferred into IEPF.
In terms of the Rules dated 05 September 2016 and the Amended Rulesdated 28 February 2017 the necessary communications have been made to the respectiveshareholders whose shares are required to be transferred to the IEPF during the FinancialYear 2018-19 so as to enable them to claim their dividend attached to such shares beforesuch dividend and shares are transferred to IEPF and further the necessary information inthis regard is available on the website of the Company i.e. www.bharatgears.com for theconvenience of the shareholders.
The Equity shares once transferred into IEPF can only be claimed by theconcerned shareholder from IEPF Authority after complying with the procedure prescribedunder the Rules and the Amended Rules.
PREFERENTIAL ISSUE OF EQUITY SHARES
During the year under review the Company has issued 325000 (ThreeLakhs Twenty Five Thousand) Equity Shares to Mr. Surinder Paul Kanwar Chairman andManaging Director of the Company on preferential basis in terms of provisions of Section42 & 62 and such other applicable provisions of the Companies Act 2013 read with therules framed thereunder and Chapter VII of the SEBI (Issue of Capital and DisclosureRequirements) Regulations 2009.
RE-CLASSIFICATION OF SHARE CAPITAL
In terms of provisions of Section 61 64 and other applicableprovisions if any of the Companies Act 2013 (including any amendment thereto orre-enactment thereof) and the rules framed there under provisions of Articles ofAssociation (AOA) SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and such other rules/regulations as applicable the Board of Directors of the Companyin its meeting held on
26 March 2018 has considered and approved the re-classification ofShare Capital of the Company as per the following details subject to the approval ofShareholders in the ensuing Annual General Meeting:
Cancellation of 1000000 (Ten Lacs) Cumulative
Redeemable Convertible or Non-Convertible Preference Shares of ` 100/-(Rupees Hundred) each and creation/addition of 10000000 (One Crore) Equity Shares of `10/- (Rupees Ten) each in lieu thereof.
Pursuant to said re-classification the Authorised Share Capital of theCompany shall be ` 250000000/- (Rupees Twenty Five Crores) divided into:
? 20000000 (Two Crores) Equity Shares of ` 10/- (Rupees Ten)each;
? 500000 (Five Lacs) Cumulative Redeemable Convertible orNon-Convertible Preference Shares of ` 100/- (Rupees Hundred) each.
The Statutory Auditors M/s S R B C & CO LLP (SRBC) CharteredAccountants (ICAI Registration No. 324982E/ E300003) had been appointed as StatutoryAuditors of the Company in the 45th Annual General Meeting held on 09 August 2017 for aperiod of 5 (Five) years in terms of provisions of Section 139 of the Companies Act 2013to hold office from the 45th AGM to the 50th AGM in the calendar year 2022.
REPORT ON FINANCIAL STATEMENTS
The report of M/s S R B C & CO LLP (SRBC) Chartered Accountants(ICAI Registration No. 324982E/E300003) the Statutory Auditors of the Company on thefinancial statements of the Company for the year ended 31 March 2018 is annexed to thefinancial statements in terms of provisions of Section 134(2) of the Companies Act 2013.The observations of the Auditors in their report are self-explanatory and/or explainedsuitably in the Notes to the Financial Statements. The report of the Statutory Auditorsdoes not contain any qualification reservation or adverse remark which needs anyexplanation or comment of the Board.
The Board has appointed M/s AGB & Associates Practicing CompanySecretaries as Secretarial Auditor for the Financial Year 2017-18 in terms of provisionsof Section 204 of the Companies Act 2013. The Secretarial Audit Report of the Company forthe financial year ended 31 March 2018 in the prescribed form MR-3 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure-"E" to this report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark which needs any explanation or comment of theBoard.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company has a proper and adequate system of internal financialcontrols which includes the policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to 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 financialinformation. During the year such controls were tested and no material weakness in thedesign or operations were observed.
During the year under review the Company had not been mandatorilyrequired to get its Cost Records audited in terms of provisions of Section 148 of theCompanies Act 2013 read with the Companies
(Cost Records and Audit) Amendment Rules 2014 notified by the Ministryof Corporate Affairs (MCA) on
31 December 2014 as the Industry under which the Company falls hasbeen exempted from the Cost Audit under the said rules.
The Company is committed to maintain the quality standards of CorporateGovernance. The Report on Corporate Governance as stipulated under Schedule V(C) of theRegulations forms part of this Report.
The requisite Certificate of Compliance from Statutory Auditors M/s SR B C & CO LLP (SRBC) confirming compliance with the conditions of CorporateGovernance is attached to this Report.
In terms of provisions of Section 177 of the Companies Act 2013 theCompany has established an effective mechanism called Vigil Mechanism (Whistle BlowerMechanism). The mechanism under the Policy has been appropriately communicated within theorganisation. The purpose of this policy is to provide a framework to promote responsiblewhistle blowing by employees or by any other person who avails such mechanism. It protectsemployees or any other person who avails such mechanism wishing to raise a concern aboutserious irregularities unethical behavior actual or suspected fraud within the Companyby reporting the same to the Audit Committee.
Protected disclosure can be made by the whistle blower in a closed andsecured envelope or sent through e-mail to the Compliance Officer.
During the year under review no employee was denied access to theAudit Committee.
The policy on vigil mechanism is available on the website of theCompany i.e. www.bharatgears.com under the linkhttp://bharatgears.com/documents/policy_on_vigil_ mechanism.pdf.
RECONCILIATION OF SHARE CAPITAL AUDIT
As per the directive of the Securities and Exchange Board of India(SEBI) the Reconciliation of Share Capital Audit is undertaken by a firm of PracticingCompany Secretaries on quarterly basis. The audit is aimed at reconciliation of totalshares held in CDSL NSDL and in physical form with the admitted issued and listedcapital of the Company.
The Reconciliation of Share Capital Audit Reports as submitted by theAuditor on quarterly basis were filed with the National Stock Exchange of India Limited(NSE) through NSE Electronic Application Processing System (NEAPS) and with BSE Limited(BSE) through BSE Listing Centre where the original shares of the Company are listed.
LISTING OF SHARES
The Equity Shares of the Company are listed on the BSE Limited Mumbaiand National Stock Exchange of India Limited Mumbai.
DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT 2013
Except as disclosed elsewhere in the Annual Report there have been nomaterial changes and commitments which can affect the financial position of the Companybetween the end of financial year and the date of this report.
CONSERVATIONOF ENERGYTECHNOLOGYABSORPTION FOREIGN EXCHANGE EARNINGS& OUTGO
The information in accordance with the provisions of Section 134(3)(m)of the Companies Act 2013 read with the Rule 8 of the Companies (Accounts) Rules 2014 isgiven in Annexure-"F" to this Report.
In terms of provisions of Section 92(3) of the Companies Act 2013 readwith the Companies (Amendment) Act 2017 and the relevant rules made thereunder a copy ofthe Annual return as prescribed under Section 92 of the Companies Act 2013 as amendedshall be made available on the website of the Company www.bharatgears.com under the linkhttp://bharatgears. com/documents/annual-returns-2017-18.pdf.
There were no instances of any significant and material orders passedby the regulators or courts or tribunals impacting the going concern status andCompany's operations in future.
During the year under review industrial relations in the Companycontinued to be cordial and peaceful.
The Board of Directors thank the shareholders for their continuedsupport and they would like to place on record their appreciation for the dedicatedservices rendered by the Employees at all levels.
The Directors wish to convey their gratitude to the FinancialInstitutions Banks Customers Suppliers and Collaborators for the assistance andconfidence reposed by them in the Company.
For and on behalf of the Board of Directors
Surinder Paul Kanwar
Place: Mumbai Chairman and Managing Director
Date: 30 May 2018 DIN: 00033524