(Section 134 of the Companies Act 2013)
TO THE MEMBERS
The Directors are pleased to present the 48th Annual Report and the AuditedFinancial Statements for the year ended 31 March 2020.
| ||Financial year ended |
|Financial Results ||31.03.2020 ||31.03.2019 |
|Revenue from operations and other income (gross) ||468.00 ||599.15 |
|Profit before finance costs and depreciation and amortisation expense ||23.51 ||63.18 |
|Finance costs ||21.65 ||21.97 |
|Depreciation and amortisation expense ||26.68 ||21.76 |
|Profit/(Loss) before tax ||(24.82) ||19.45 |
|Less: Tax expense/(benefit) ||(6.04) ||6.92 |
|Profit/(Loss) after tax ||(18.78) ||12.53 |
|Other comprehensive income ||(0.72) ||(1.86) |
|Total comprehensive income ||(19.50) ||10.67fi |
|Statement of other equity || || |
|Opening balance ||80.35 ||69.68 |
|Add: Total comprehensive income ||(19.50) ||10.67 |
|Add: Share premium on rights issue ||10.54 ||- |
|Less: Dividend ||(1.12) ||- |
|Closing balance ||70.27 ||80.35 |
In view of losses for the year the directors of the Company have decided not torecommend any dividend on equity shares of the Company for the year ended 31 March 2020.
Indian automotive industry witnessed unprecedented slowdown with a lowest growth ratein last two decades. Demand was affected across segments in F20. As a result revenue fromoperations for the year has decreased by 22% in comparison to the corresponding year.
EBITDA margins for the year have been impacted on account of lower absorption of fixedcosts due to drop in volumes. Higher capital investment led to higher depreciation andresultant incremental borrowings have led to higher interest costs.
Loss after tax for year ended 31 March 2020 was Rs. 18.78 crores against profit aftertax of Rs. 12.53 crores in previous year.
During the year the Company has availed disbursement of the term loan of Rs. 25.00crores from KKR India Financial Services Limited (KKR) to part finance Company's existingcapital expenditure programme. The company has repaid Rs. 21.16 crores of existingborrowings to Lenders.
1163262 Equity shares were issued to existing shareholders on rights basis in theratio of 1:7 at a price of Rs. 105 per share amounting to Rs. 12.21 crores. Issue openedon 15 April 2019 and closed on 30 April 2019. Issue was oversubscribed by 1.61 times.Allotment to the eligible applicants was done on 10 May 2019.
INDIAN ACCOUNTING STANDARDS ("IND AS")
The financial statements for the year ended 31 March 2020 have been prepared inaccordance with the Indian Accounting Standards ("Ind AS") as required undersection 133 of the Companies Act 2013 read with rules made there under as amended.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed analysis of the Company's operations in terms of performance in marketsmanufacturing activities business outlook risks and concerns forms part of theManagement 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 Act 2013 yourDirectors confirm that:-
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31 March 2020 and of the Profitand Loss of the Company for the period ended on that date;
(c) the directors had 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) the directors had prepared the annual accounts on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
RELATED PARTY CONTRACTS AND ARRANGEMENTS
The contracts or arrangements of the Company with related parties during the periodunder review referred to in Section 188(1) of the Companies Act 2013 were in ordinarycourse of business and on arm's length basis. During the year the Company had not enteredinto the contract/arrangement/transaction with related parties which could be consideredmaterial in accordance with the related party transaction policy of the Company. Thusthere are no transactions which are required to be reported in the prescribed Form AOC-2of the Companies (Accounts) Rules 2014.
Further during the Financial Year 2019-20 there were no materially significantrelated party transactions entered into by your Company with the Promoters Directors KeyManagerial Personnel or other designated persons which might have potential confiict withthe interest of the Company at large.
As all the related party transactions are at arm's length price and in the ordinarycourse of business the same are placed before the Audit Committee for its approval. Therewas no related party transaction which requires approval of the Board. During theFinancial Year under review the Audit Committee has approved the related partytransactions through the omnibus mode in accordance with the provisions of the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. Related party transactions were disclosed to the Board on regular basis as per IndAS-24. Details of related party transactions as per Ind AS-24 may be referred to in theNotes forming part of the Financial Statements.
The policy on Related Party transactions asapproved by the Board in terms of provisionsof Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("the Regulations") is available on the website of the Companyi.e. www.bharatgears.com under the link http:// b h a r a t g e a r s . c o m / d o c u me n t s / r e l a t e d fi p a r t y fi transactionfipolicy.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
During the period under review the Company has not made any loan guarantee orinvestment in terms of provisions of Section 186 of the Companies Act 2013.
During the Financial Year 2019-20 the members of the Company vide their specialresolution(s) passed through Postal Ballot on 18 May 2019 approved the:
Continuation of Mr. V.K. Pargal as a Non-Executive Independent Directorw.e.f. 01 April 2019 till the end of his current tenure upto the conclusion of 48thAnnual General Meeting (AGM) of the Company in the Calendar Year 2020 in terms of theprovisions of Section 149 of the Companies Act 2013;
Continuation of Mr. N.V. Srinivasan as a Non- Executive Director liable toretire by rotation w.e.f. 01 April 2019 till the end of his current tenure upto theconclusion of the 47th Annual General Meeting (AGM) of the Company in theCalendar Year 2019 in terms of the provisions of Section 152 of the Companies Act 2013;in terms of Regulation 17 of the Regulations as amended the age of the said Directorsbeing more than seventy five years as on 01 April 2019.
Further the members of the Company vide their special resolution(s) passed at theirAnnual General Meeting held on 06 August 2019 approved the:
Re-appointment of Ms. Hiroo Suresh Advani as a
Non-Executive Independent Director on the Board of the Company for a further period of5 (Five) consecutive years upto the conclusion of the 52nd Annual GeneralMeeting (AGM) of the Company in the Calendar year 2024.
Re-appointment of Mr. N.V. Srinivasan as a Non-
Executive Director on the Board of the Company liable to retire by rotation upto theconclusion of the next Annual General Meeting (AGM) of the Company in the Calendar year2020. in terms of the applicable provisions of the Companies Act 2013 and theRegulations in read with Regulation 17 of the Regulations as amended the age of the saidDirectors being more than seventy five years at the commencement of/during theirrespective tenure.
The tenure of Mr. Surinder Paul Kanwar as Chairman and Managing Director of the Companyis expiring on 30 September 2020. The Board of Directors of the Company in its meetingheld on 28 June 2020 through audio visual means has re-appointed Mr. Surinder Paul Kanwaras Chairman and Managing Director of the Company for a further period of 5 (Five) yearsw.e.f.
01 October 2020 subject to the approval of shareholders at the ensuing Annual Meetingof the Company by way of special resolution in terms of the applicable provisions of theCompanies Act 2013 and the Regulations in read with the provisions of Section 196(3) ofthe Companies Act 2013 as the age of Mr. Surinder Paul Kanwar will be more than seventyyears during his proposed tenure.
IntermsoftheprovisionsofSection149oftheCompanies Act 2013 Mr. V.K. Pargal and Mr.Rakesh Chopra had been appointed as Non-Executive Independent Director at the AnnualGeneral Meeting (AGM) of the Company held on 31 July 2015 for a period of 5 (Five) Yearsupto the conclusion of the 48th AGM of the Company in the Calendar year 2020.
Therefore in terms of the provisions of Section 149 of the Companies Act 2013 it hasbeen proposed to re-appoint Mr. V.K. Pargal and Mr. Rakesh Chopra as Non-ExecutiveIndependent Director at the ensuing Annual General Meeting (AGM) of the Company for secondterm for a period of 5 (Five) Years upto the conclusion of the 53rd AGM of theCompany in the Calendar year 2025 by way of special resolution pursuant to the applicableprovisions of the Companies Act 2013 and the Regulations in read with Regulation 17 ofthe Regulations as amended the age of Mr. V.K. Pargal being more than seventy five yearsat the commencement of his proposed tenure.
A notice has been received from a member under Section 160 of the Companies Act 2013signifying their intention to propose Mr. V.K. Pargal and Mr. Rakesh Chopra as candidatefor the office of Non-Executive Independent Director of the Company.
Further in terms of the provisions of Section 152 of the Companies Act 2013 it hasbeen proposed to re-appoint Mr. N.V. Srinivasan as a Non-Executive Director liable toretire by rotation at the ensuing Annual General Meeting (AGM) of the Company upto theconclusion of the next Annual General Meeting (AGM) of the Company in the Calender Year2021 by way of special resolution pursuant to the applicable provisions of the CompaniesAct 2013 and the Regulations in read with Regulation 17 of the Regulations as amendedthe age of Mr. N.V. Srinivasan being be more than seventy five years at the commencementof his proposed tenure.
BOARD'S OPINION REGARDING INTEGRITY EXPERTISE AND EXPERIENCE (INCLUDING THEPROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR
The Board is of the opinion that the Independent Directors appointed during the yearunder review are person(s) of integrity and possess core skills/expertise/ competencies(including the proficiency) as identified by the Board of Directors as required in thecontext of Company's business(es) and sector(s) for the Company to function effectively.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2019-20 5 (Five) Board Meetings were held on the followingdates:-
30 May 2019;
02 July 2019;
06 August 2019;
14 November 2019; and
29 January 2020
The gap between any two meetings was not more than one hundred twenty days as mandatedunder the provisions of Section 173 of the Companies Act 2013 and Regulation 17(2) of theRegulations.
In terms of the provisions of Section 149(7) of the Companies Act 2013 read withRegulation 25(8) of the Regulations all the Independent Directors of the Company havefurnished a declaration to the Compliance Officer of the Company at the meeting of theBoard of Directors held on 28 June 2020 stating that they fulfill the criteria ofIndependent Director as prescribed under Section 149(6) of the Companies Act 2013 readwith Regulation 16(1)(b) of the Regulations and are not being disqualified to act as anIndependent Director. Further they have declared that they are not aware of anycircumstance or situation which exist or may be reasonably anticipated that could impairor impact their ability to discharge their duties with an objective independent judgmentand without any external infiuence.
In the opinion of the Board all the Independent Directors fulfill the conditionsspecified in the Companies Act 2013 read with the Rules made thereunder and theRegulations and are independent of the management.
In terms of Regulation 25(7) of the Regulations the Company has adopted afamiliarization programme for the Independent Directors to familiarize them with workingof the Company nature of the industry in which the Company operates business model ofthe Company their roles rights responsibilities and other relevant details. The detailsof familiarization programme during the Financial Year 2019-20 are available on theofficial website of the Company i.e. www.bharatgears.com under the link i.e. http://bharatgears.com/documents/details-of-familiarization-programme-for-Independent-directors-FY-19-20.pdf
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL (KMP) ANDSENIOR MANAGEMENT PERSONNEL
IntermsoftheprovisionsofSection178oftheCompanies Act 2013 read with Regulation 19 ofthe Regulations Nomination and Remuneration Committee (NRC') has formulated apolicy relating to appointment and determination of the remuneration for the DirectorsKey Managerial Personnel and Senior Management Personnel which has been adopted by theBoard of Directors of the Company. The NRC has also developed the criteria for determiningthe qualifications positive attributes and independence of Directors and for makingpayments to the Executive and Non-Executive Directors of the Company.
Your Directors affirm that the remuneration paid to the Directors Key ManagerialPersonnel Senior Management Personnel and other employees is as per the Nomination andRemuneration Policy of your Company.
During the year under review additions have been made in the Role of the NRC in theNRC Policy in reference to the SEBI (Listing Obligations and Disclosure Requirements)(Amendment) Regulations 2018. The salient features of the Nomination and RemunerationPolicy are as under:
Formulation of the criteria for determining qualifications positive attributes andindependence of a Director.
Identification of persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in the Nomination and Remuneration policy.
Recommendation to the Board for appointment and removal of Director KMP and SeniorManagement Personnel. Formulation of the criteria for devising a policy on diversity ofBoard of Directors.
Deciding that whether to extend or continue the term of appointment of the IndependentDirector on the basis of the report of performance evaluation of Independent Directors.
Recommendation to the Board all remuneration in whatever form payable to seniormanagement.
The said policy is available on the website of the Company i.e. www.bharatgears.comunder the link http://bharatgears.com/documents/nominationfiandfiremunerationfipolicyfiBGL.pdf
The Nomination and Remuneration Committee has established a framework for theevaluation process of performance of the Board its Committees and Individual Directorsand the same was adopted by the Board.
During the year under review the Board of Directors at its meeting held on 29 January2020 have carried out the evaluation of the performance of Independent Directors and theirindependence criteria and the Independent Directors in their meeting held on even datehave evaluated the performance of the Chairman and Non-Independent Directors and the Boardas a whole and also assessed the quality quantity and timeliness of flow of informationbetween the Board and Company management.
KEY MANAGERIAL PERSONNEL
The following Directors / Officials of the Company have been designated as KeyManagerial Personnel (KMP) of the Company by the Board of Directors in terms of theprovisions of Section 203 of the Companies Act 2013 and the Regulations:
1. Mr. Surinder Paul Kanwar Chairman and Managing Director
2. Mr. Sameer Kanwar Joint Managing Director
3. Mr. Milind Pujari Chief Financial Officer
4. Mr. Prashant Khattry Head (Legal) and Company Secretary
No Key Managerial Personnel (KMP) of the Company has resigned during the financial yearended 31 March 2020.
DISCLOSURES UNDER THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014
Details pertaining to remuneration as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are enclosed as Annexure -"A" to this report.
PARTICULARS OF EMPLOYEES
Information regarding employees in accordance with the provisions of Rule 5(2) and Rule5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure- "B" to this Report.
A robust and integrated enterprise risk management framework is in existence underwhich the common prevailing risks in the Company are identified the risks so identifiedare reviewed on periodic basis by the Audit
Committee and the management's actions to mitigate the risk exposure in a timely mannerare assessed.
A risk management policy under the above said enterprise risk management framework asapproved by the Board has been adopted by the Company.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 of the Companies Act 2013 the CorporateSocial Responsibility Committee("CSRCommittee")isinexistencetomonitortheCorporate Social Responsibility Policyof the Company as approved by the Board and the said policy is available on website of theCompany i.e. www.bharatgears.com under the linkhttp://bharatgears.com/documents/CSRfiPolicyfiBGL.pdf.
The CSR Committee comprises of Mr. Surinder Paul Kanwar Mr. Sameer Kanwar and Mr.Rakesh Chopra.
The role of the Corporate Social Responsibility Committee includes:
(a) Formulation and recommendation to the Board a Corporate Social ResponsibilityPolicy (CSR Policy) which shall indicate the activities to be undertaken by the company asspecified in Schedule VII of the Companies Act 2013 ("the Act").
(b) Monitoring the Corporate Social Responsibility Policy of the Company from time totime.
(c) Recommendation of the amount of expenditure to be incurred on the activitiesreferred to in clause (a) above.
(d) Instituting a transparent monitoring mechanism for implementation of the CSRprojects or programs or activities undertaken by the Company.
During the Financial Year 2019-20 CSR policy has been modified by adding area ofactivities to be undertaken as CSR activities with regard to the amendments to ScheduleVII of the Companies Act 2013.
Your Company has spent Rs. 359750/- (Rupees Three Lakhs Fifty Nine Thousand SevenHundred Fifty Only) during the Financial Year 2019-20 out of the required CSR amount ofRs. 1194000/- (Rupees Eleven Lakhs Ninety Four Thousand Only) for the Financial Year2019-20 and Rs. 360000/- (Rupees Three Lakhs Sixty Thousand Only) which remained unspentfor the Financial Year 2018-19 and recommended by the CSR committee to be spent in theFinancial Year 2019-20.
The Current year has witnessed an unprecedented slowdown with a lowest growth rate inlast two decades in the Indian automotive industry which has badly impacted your Company'sturnover and profits also. Therefore the CSR committee in its meeting held on 29 January2020 has deferred spending on patrolling vehicles to the Local Police for creatingawareness in traffic management and has approved spending over preventive health campproject involving provision of health camp(s) for the benefit of community residing inthe region of District of Faridabad (Haryana) and other nearby areas in alignment with itsCSR Policy for "Promotion of Education Health and Rural Development" so as tobenefit a larger part of the society in partnership with Medihelp Foundation a NonGovernment Organization providing assistance to underprivileged in healthcare.
The report on CSR activities with other details in terms of the provisions of Rule 8 ofthe Companies (Corporate Social Responsibility) Rules 2014 for the Financial Year 2019-20is enclosed as Annexure-"C" to this report.
Further the balance unspent amount may be spent in the next financial year on the CSRactivities as required under Schedule VII of the Companies Act 2013 in case thefinancial condition permits.
The Audit Committee comprises of Mr. Rakesh Chopra Mr. V.K. Pargal and Ms. HirooSuresh Advani.
During the year under review Mr. Surinder Paul Kanwar had been inducted as a member ofthe Audit Committee on 01 April 2019 and ceased to be a member of the Committee w.e.f. 06August 2019. Accordingly the Audit Committee had been reconstituted.
Further the details on the Audit Committee and its terms of reference etc. have beenfurnished in the Corporate Governance Report forming part of this Report. During the yearunder review all recommendations of the Audit Committee were accepted by the Board ofDirectors of the Company unanimously.
INTERNAL COMPLAINTS COMMITTEE FOR PREVENTION OF SEXUAL HARASSMENT
Pursuant to Section 21 of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 read with Rule 14 of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Rules 2013 the Company hasconstituted Internal Complaints Committee (ICC) at all its Units (i.e. Faridabad Mumbraand Lonand) where any grievance of sexual harassment at workplace can be reported.
The Company has also adopted a policy on Prevention of Sexual Harassment at workplace.The objective of the policy is to provide its women employees a workplace free fromharassment/discrimination and every employee is treated with dignity and respect. The saidpolicy is available on the website of the Company i.e. www.bharatgears.com under the linkhttp:// bharatgears.com/documents/policy-for-prevention-of-sexual-harassment.pdf
During the year under review ICC of all units of the Company has not received anycomplaint 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 be subsidiary jointventure 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 the provisions of Section 124(5) of the Companies Act 2013 read with thelnvestor Education and Protection Fund (IEPF) Authority (Accounting Audit Transfer andRefund) Rules 2016 and further amendments thereto the Unclaimed Final Dividendpertaining to the Financial Year 2011-12 amount aggregating to Rs. 299751.00 (Rupees TwoLakhs Ninety Nine Thousand Seven Hundred Fifty One Only) and 8922 (Eight Thousand NineHundred Twenty Two) Equity Shares had been transferred to the "Investor Education andProtection Fund" established by the Central Government. For detailed informationplease refer the Corporate Governance Report forming part of this report.
RIGHTS ISSUE OF EQUITY SHARES
In terms of Letter of Offer dated 30 March 2019 the Company has issued and allotted1163262 (Eleven Lakhs Sixty Three Thousand Two Hundred Sixty Two) Equity Shares of facevalue of Rs. 10/- (Rupees Ten) each at a price of Rs. 105/- (Rupees One Hundred Five) eachto the existing equity shareholders of the Company on 10 May 2019 in the ratio of 1:7i.e. 1 (One) Rights Equity Share for every 7 (Seven) fully paid up Equity Shares held ason record date i.e. 03 April 2019. The proceeds of the said Issue have been used to partfinance the Identified Equipment.
Pursuant to the said Issue the paid-up Equity Share Capital of the Company stands atRs. 93060950/-(Rupees Nine Crores Thirty Lakhs Sixty Thousand Nine Hundred Fifty Only)comprising of 9306095 (Ninety Three Lakhs Six Thousand Ninety Five) Equity Shares offace value of
Rs. 10/- (Rupees Ten) each.
INCREASE IN AUTHORISED SHARE CAPITAL
With a view to raise further equity funds in the near future for the long termrequirements of the Company the Authorised Equity Share Capital of the Company has beenincreased as per the following details pursuant to the approval of the Shareholders of theCompany at the Annual General Meeting of the Company held on 06 August 2019 in terms ofthe provisions of Section 13 61 64 and other applicable provisions if any of theCompanies Act 2013 (including any amendment thereto or re-enactment thereof) and therules framed there under provisions of the Articles of Association (AOA) of the CompanySEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and such otherrules/regulations as applicable:
Creation/addition of 10000000 (One Crore)
Equity Shares of Rs. 10/- (Rupees Ten) each.
Pursuant to said increase the Authorised Share Capital of the Company has beenincreased to 350000000/- (Rupees Thirty Five Crores) divided into:
20000000 (Two Crores) Equity Shares of Rs. 10/- (Rupees Ten) each; and
1500000 (Fifteen Lakhs) Cumulative Redeemable Convertible orNon-Convertible Preference Shares of Rs. 100/- (Rupees Hundred) each.
PROPOSAL FOR AQUISITION OF XLERATE DRIVELINE INDIA LIMITED (XDIL)
During the year under review as a part of the growth strategy of the Company both bymeans of organic and inorganic approach the Shareholders of the Company in their AnnualGeneral Meeting held on 06 August 2019 considered and approved the proposal ofacquisition of Xlerate Driveline India Limited (XDIL) from Raunaq EPC InternationalLimited (REIL) a Company within the Group for a total consideration of Rs. 94200000/-(Rupees Nine Crores Forty Two Lakhs Only) in one or more tranches.
Subsequently the Board of Directors of the Company in its meeting held on 14 November2019 decided to defer the proposal of acquisition of XDIL from REIL due to adverse marketconditions and further concentrating on cost cutting measures to overcome the prolongsubdued automotive market and further not moving ahead with the acquisition.
The Board had informed REIL that it may re-consider the said proposal in future as andwhen the market conditions gets improved as it may deem fit in the best interest of theCompany.
Further due to sustaining slowdown in the Automotive Components Industry the Boarddeffered the said proposal and informed REIL for the same.
The Statutory Auditors M/s S R B C & CO LLP (SRBC) Chartered Accountants (ICAIRegistration No. 324982E/ E300003) had been appointed as Statutory Auditors of the Companyin the 45th Annual General Meeting held on 09 August 2017 for a period of 5(Five) years in terms of the provisions of Section 139 of the Companies Act 2013 to holdoffice 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 RegistrationNo. 324982E/E300003) the Statutory Auditors of the Company on the financial statements ofthe Company for the year ended 31 March 2020 is annexed to the financial statements interms of provisions of Section 134(2) of the Companies Act 2013. The observations of theAuditors in their report are self-explanatory and/or explained suitably in the Notesforming part of the Financial Statements. The report of the Statutory Auditors does notcontain any qualification reservation or adverse remark which needs any explanation orcomment of the Board.
The Board has appointed M/s TVA & Co. LLP Practicing Company Secretaries asSecretarial Auditor for the Financial Year 2019-20 in terms of the provisions of Section204 of the Companies Act 2013 and Regulation 24A of the SEBI (Listing Obligations andDisclosure Reguirements) Regulations 2015. The Secretarial Audit Report of the Companyfor the Financial Year ended 31 March 2020 in the prescribed form MR-3 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure-"D"to this report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark which needs any explanation or comment of the Board.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company has a proper and adequate system of internal financial controls whichincludes the policies and procedures for ensuring the orderly and efficient conduct of itsbusiness including adherence to the
Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information. During the year such controls were testedand no material weakness in the design or operations were observed.
COST RECORDS AND AUDIT
During the year under review the Company has been mandatorily required to maintain thecost records as specified by the Central Government under sub-section (1) of section 148of the Companies Act 2013 and accordingly such accounts and records are made andmaintained.
IntermsoftheprovisionsofSection148oftheCompanies Act 2013 read with the Companies(Cost Records and Audit) Rules 2014 as amended M/s M.K. Kulshrestha & AssociatesCost Accountants Ghaziabad has conducted the audit of the cost records of all the 3(Three) plants of the Company viz. Mumbra (Maharashtra) Lonand (Maharashtra) andFaridabad (Haryana) for the year ended 31 March 2020.
Further on recommendation of the Audit Committee the Board of Directors of theCompany in its meeting held on 28 June 2020 has approved the appointment of M/s M.K.Kulshrestha & Associates Cost Accountants Ghaziabad as Cost Auditors of the Companyto conduct the audit of the cost records of all the 3 (Three) plants of the Company viz.Mumbra (Maharashtra) Lonand (Maharashtra) and Faridabad (Haryana) for the year ending 31March 2021.
The Company is committed to maintain the quality standards of Corporate Governance. TheReport on Corporate Governance as stipulated under Schedule V(C) of the Regulations formspart of this Report.
The requisite Certificate of Compliance from Statutory Auditors M/s S R B C & COLLP (SRBC) confirming compliance with the conditions of Corporate Governance is attachedto this Report.
VIGIL MECHANISM/WHISTLE BLOWER MECHANISM
In terms of the provisions of Section 177 of the Companies Act 2013 and theRegulations the Company has established an effective mechanism called Vigil Mechanism(Whistle Blower Mechanism). The mechanism under the Policy has been appropriatelycommunicated within the organisation. The purpose of this policy is to provide a frameworkto promote responsible whistle blowing by employees or by any other person who avails suchmechanism. It protects employees or any other person who avails such mechanism wishing toraise a concern about serious irregularities unethical behavior actual or suspectedfraud within the Company by reporting the same to the Audit Committee.
Protected disclosure can be made by the whistle blower in a closed and secured envelopeor sent through e-mail to the Compliance Officer.
During the year under review no compliant has been received and no employee was deniedaccess to the Audit Committee.
The functioning of the Whistle Blower Mechanism/Vigil Mechanism existing in the Companyis reviewed by the Audit Committee on Annual basis.
The policy on vigil mechanism is available onthe website of the Company i.e.www.bharatgears.com under the link http://bharatgears.com/documents/policyfionfivigilfimechanism.pdf
RECONCILIATION OF SHARE CAPITAL AUDIT
In terms of Regulation 76 of the SEBI (Depositories and Participants) Regulations2018 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 Report(s) as submitted by the Auditor onquarterly basis were filed with the National Stock Exchange of India Limited (NSE) throughNSE Electronic Application Processing System (NEAPS) and with BSE Limited (BSE) throughBSE 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 Mumbai and the NationalStock 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 no material changesand commitments which can affect the financial position of the Company between the end offinancial year and the date of this report.
ESTIMATION OF UNCERTAINTIES RELATING TO THE GLOBAL HEALTH PANDEMIC FROM COVID-19
The Company's operations have been impacted by the unprecedented COVID-19 pandemicwhich resulted in an interruption to the production due to the shutdown of all its plantfacilities and offices due to the nationwide lockdown. The Company has since obtainedrequisite permissions and restarted its manufacturing plants and its offices.
The Company has incurred loss before tax during the current year amounting to Rs.2482.25 lacs primarily owing to the lower volumes due to continuing slowdown in theautomotive industry finance costs and depreciation. The Company has a positive net worthof Rs. 7957.41 lacs and a net current asset position of Rs. 2198.18 lacs. The Company hasoutstanding term loans amounting to Rs. 10542.20 lacs as at 31 March 2020 out of whichRs. 2311.61 lacs is due for repayment in next year.
The Company is adopting several cost reduction measures to address the liquidity crunchwhich may arise due to the impact of the slowdown in industry and pandemic and to maintainsufficient operational cashflows to ensure uninterrupted fulfilment of its ordersfrom customers. The Company has sought moratorium from lenders and is also in discussionswith lenders for the restructuring of term loans.
The Company had made an assessment of the impact of the pandemic on its operations andthe carrying value of current and non-current assets based on the internal and externalsources of information and indicators of economic forecasts existing as at the date ofapproval of these financial statements. Based on such assessment the Company is confidentof recovering the carrying value of these assets as at 31 March 2020.
The estimates used for assessing the carrying value of assets and liabilities at 31March 2020 during the COVID-19 pandemic may undergo a change as these are dependent onthe improvement in the economy and automotive sector. The Company will continue to monitorany material changes to future economic conditions and the consequent impact on itsbusiness if any.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO
The information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-"E"to this Report.
In terms of the provisions of Section 134(3)(a) read with Section 92(3) of theCompanies Act 2013 and the relevant rules made thereunder a copy of the Annual return asprescribed under Section 92 of the Companies Act 2013 as amended shall be made availableon the website of the Company www.bharatgears.com under the linkhttp://bharatgears.com/documents/bgl-annual-return-2019-20.pdf
COMPLIANCE OF SECRETARIAL STANDARDS
During the period under review the Company has duly complied with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India.
There were no instances of any significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.
During the year under review industrial relations in the Company continued to becordial and peaceful.
The Board of Directors thank the shareholders for their continued support and theywould like to place on record their appreciation for the dedicated services rendered bythe Employees at all levels.
The Directors wish to convey their gratitude to the Financial Institutions BanksCustomers Suppliers and Collaborators for the assistance and confidence reposed by themin the Company.
|For and on behalf of the Board of Directors || |
|Chairman and Managing Director ||Surinder Paul Kanwar |
|Dated: 28 June 2020 ||DIN: 00033524 |