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Bharat Wire Ropes Ltd.

BSE: 539799 Sector: Metals & Mining
NSE: BHARATWIRE ISIN Code: INE316L01019
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OPEN 26.00
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VOLUME 100
52-Week high 79.50
52-Week low 23.10
P/E
Mkt Cap.(Rs cr) 117
Buy Price 26.00
Buy Qty 100.00
Sell Price 30.00
Sell Qty 500.00

Bharat Wire Ropes Ltd. (BHARATWIRE) - Director Report

Company director report

Dear Members

The Directors of your Company are pleased to present the 32nd AnnualReport and the Audited Financial Statements for the Financial Year ("F.Y.")ended March 31 2018.

1. FINANCIAL PERFORMANCE

The performance of the Company is summarized below:

(Amount in Rs. in Lakhs)

Particulars 2017 - 18 2016 - 17
Income from Business Operations 16791.99 7107.39
Other income 2072.90 325.16
Total Revenue 18864.90 7432.56
Profit before Interest Depreciation and Taxes 3783.74 934.79
Less: Interest 2518.43 254.20
Less: Depreciation 1234.79 388.52
Profit before Tax 30.52 292.07
Less: Extra-ordinary Item (Goodwill - -
Written Off)
Less: Current Income Tax 2.80 89.95
Less: Minimum Alternative Tax (2.80) (89.95)
Credit Entitlement
Less: Deferred Tax 5.61 48.05
Profit after Tax 24.91 244.02
Other Comprehensive Income / (Expenses) for the Year Net of Tax (11.43) (0.82)
Total Comprehensive Income for the Year Net of Tax 13.49 243.20

Note: Previous year's figures have been regrouped / reclassified wherever necessary tocorrespond with the current year's classification / disclosure.

2. HIGHLIGHTS OF THE FINANCIAL SUMMARY

The total revenue of the Company for F.Y. 2017-18 at Rs. 18864.90 Lakhs washigher by 153.81% over the previous year's revenue (Rs. 7432.56 Lakhs). The profit aftertax of the Company was Rs. 24.91 Lakhs 89.79% lower than the previous year's profit aftertax (Rs. 244.02 Lakhs).

3. COMPANY'S STATE OF AFFAIRS

Bharat Wire Ropes Limited the (the "Company" or "BWR")is one of the largest manufacturers of Wire Wire Ropes Stranded Wires and Slings inIndia with an increasing global presence catering more than 30 countries globally. TheCompany exports its varied products to USA Singapore Australia South Africa KuwaitNew Zealand Vietnam Bangladesh and Nepal. The Company is committed to increase itsefficiency and productivity.

4. SHARE CAPITAL

The Paid-up Share Capital of the Company as on March 31 2018 was Rs. 449522480/-consisting of 44952248 Equity Shares of Rs. 10 each. The shares of the Company arelisted on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE)since April 1 2016.

During the F.Y. 2017-18 the Members of the Company has passed an ordinary resolutionon May 15 2018 through Postal Ballot to increase the Authorised Capital of the Companyfrom Rs. 500000000/- (Rupees Fifty Crores) divided into 50000000 (Five Crores)equity shares of Rs. 10/- (Rupees Ten) each to Rs. 520000000/- (Rupees Fifty TwoCrores) divided into 52000000 (Five Crores Twenty Lakhs) equity shares of Rs. 10/-(Rupees Ten) each. There was no change in the Paid-up Share Capital during the year underreview.

5. RESERVES AND DIVIDEND

We propose to transfer Rs. 242.33 Lakhs to ‘ESOP Reserve' with respect toOptions granted to the employees of your Company under the ‘Bharat Wire Ropes LimitedEmployee Stock Option Plan 2017'.

With a view to conserve the resources of the Company your Directors do not recommendpayment of any dividend on Equity Shares for the F.Y. ended March 31 2018.

6. MEETINGS OF THE BOARD

During the period under review the Board of Directors met 6 (Six) times viz. on May 272017 September 9 2017 October 17 2017 December 8 2017 February 14 2018 and March9 2018 the additional details of which are given in the Corporate Governance Reportannexed herewith.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Murarilal Mittal (DIN: 00010689) was re-appointed as Managing Director ofthe Company by the Board of Directors at its Meeting held on October 17 2017 for a termof 5 years w.e.f. October 17 2017. His appointment is subject to approval by Shareholdersat 32nd Annual General Meeting ("AGM"). His re-appointment isbeing placed for your approval at AGM.

Mr. Anthony D'Souza (DIN: 06707269) Independent Director of the Companyresigned from the office of Director w.e.f. October 17 2018 due to his disqualificationunder Section 164(2) of the Companies Act 2013.

Mr. Ajai Kumar (DIN: 02446976) was appointed as an Additional Director(Independent Director) w.e.f. October 17 2017 and resigned from the office of Directorw.e.f. April 6 2018.

Mr. Sanjiv Swarup (DIN: 00132716) was appointed as an Additional Director(Independent Director) of the Company w.e.f. April 28 2018 to hold the office up to theconclusion of ensuing AGM. Based on the recommendation of the Nomination and RemunerationCommittee the Board has recommended that Mr. Sanjiv Swarup be appointed as an IndependentDirector by the Members for a term of 5 (five) consecutive years. His appointment is beingplaced for your approval at AGM.

The Company has received declarations from Mr. Sanjiv Swarup confirming that he meetthe criteria of independence prescribed under the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (the "Listing Regulations").

Mr. Supratik Chatterjee (DIN: 06934992) Chairman & Independent Director ofthe Company resigned from the office of Director w.e.f. May 31 2018.

8. DIRECTOR RETIRING BY ROTATION

In accordance with the provisions of the Companies Act 2013 (the "Act")and in terms of the Memorandum and Articles of Association of the Company Mr. Sumit KumarModak (DIN: 00983527) Mr. Sushil Sharda (DIN: 03117481) and Mr.Venkateswararao Kandikuppa (DIN: 06456698) are liable to retire by rotation at theensuing AGM and being eligible has offered themselves for re-appointment. Theirre-appointment is being placed for your approval at the AGM. The Members of the Companymay wish to refer to the accompanying Notice of the 32nd AGM of the Companyfor a brief resume of above mentioned Directors.

9. DECLARATION BY INDEPENDENT DIRECTORS

Your Company has received declaration from all the Independent Directors under Section149(7) of the Act stating that they meet the criteria of independence as laid down inSection 149(6) of the Act.

10. AUDIT COMMITTEE

The details pertaining to the composition of the Audit Committee are included in theCorporate Governance Report which is a part of this report.

11. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 of the Act read with Rule 12 of the Companies(Management and Administration) Rules 2014 the extracts of Annual Return in Form MGT-9is annexed as ‘Annexure A' to this Report.

12. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Your Company has complied with the Corporate Governance requirements under the Act andas stipulated under the Listing Regulations. A separate section titled ‘CorporateGovernance Report' under the Listing Regulations along with a certificate from theStatutory Auditors confirming the compliances and ‘Management Discussion andAnalysis' are annexed and form part of this Annual Report.

13. SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto ‘Meetings of the Board of Directors' and ‘General Meetings' respectivelyhave been duly followed by the Company.

14. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Act the Board of Directorsto the best of their knowledge and ability submits that:

(a) In the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

(b) The directors have 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 March 31 2018 and of the profitand loss of the Company for the year ended on that date;

(c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(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 those internal financial controls were adequate and were operatingefficiently; 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.

15. AUDITORS

Statutory Auditors

M/s. Sureka Associates Chartered Accountants Mumbai (Firm Registration No.: 110640W)were appointed as Statutory Auditors of the Company from the conclusion of Annual GeneralMeeting held on September 30 2014 for a term of 5 (five) years to hold the office untilthe conclusion of the Annual General Meeting to be held in the year 2019 subject toratification by the Members at every Annual General Meeting if so required under the Act.The requirement to place the matter relating to appointment of Auditors for ratificationby Members at every Annual General Meeting is done away vide notification dated May 72018 issued by the Ministry of Corporate Affairs New Delhi. Accordingly no resolution isproposed for ratification of appointment of Auditors.

M/s. Sureka Associates have expressed their willingness to continue as StatutoryAuditors of the Company and have submitted a certificate confirming that their appointmentin accordance with Section 139 read with Section 141 of the Act.

The Independent Auditors' Report of M/s. Sureka Associates on the Financial Statementsof the Company for the Financial Year 2017-18 is a part of the Annual Report. There are noqualifications reservations or adverse remarks or disclaimers made by M/s. SurekaAssociates in their Report dated May 30 2018.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s. Abhishek Lakhotia and Co. Practicing Company Secretaries (Membership number: F9082;Certificate of Practice number: 10547) to undertake the Secretarial Audit of theCompany for the financial year ended March 31 2018. The Secretarial Audit Report isannexed as Annexure B'.

There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Abhishek Lakhotia and Co. in their Secretarial Audit Report dated May 30 2018 onthe Secretarial and other related records of the Company for F.Y. 2017-18.

16. POLICY FOR DETERMINING DIRECTORS' ATTRIBUTES AND REMUNERATION OF DIRECTORSKEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT EMPLOYEES

Pursuant to Section 178 of the Act the Board has devised Nomination and RemunerationPolicy for determining director attributes and remuneration of Directors Key ManagerialPersonnel and Senior Management Employees. The Board Diversity and Remuneration Policyhas been framed to encourage diversity of thought experience knowledge perspective ageand gender in the Board and to ensure that the level and composition of the remunerationof Directors Key Managerial Personnel and all other employees are reasonable andsufficient to attract retain and motivate them to successfully run the Company. The saidPolicy is available on the website of the Company and can be accessed at the web link:www. bharatwireropes.com.

17. PERFORMANCE EVALUATION OF BOARD COMMITTEES AND DIRECTORS

The evaluations of the Chairman Directors the Board and the Committees of the Boardwere undertaken by the Board of Directors. The performance of the Board was assessed onselect parameters related to roles responsibilities and obligations of the Board andfunctioning of the Committees including assessing the quality quantity and timeliness offlow of information between the Company's Management and the Board that is necessary forthe Board to effectively and reasonably perform their duties. The evaluation criteria forthe Directors were based on their participationcontribution and offering guidance to andunderstanding of the areas which were relevant to them in their capacity as members of theBoard. The evaluation of Committees were based on contribution to decisions of the BoardIndependence of the Committee from the Board Effectiveness of the Committee etc.

18. BUSINESS RISK MANAGEMENT

Your Company has laid down Risk Management Policy to identify risks inherent in thebusiness operations of the Company which provides guidelines to define measure reportcontrol and mitigate the identified risks. An enterprise-wide risk management framework isapplied so that effective management of risks can be done. Risk is an integral part ofevery employee's job. The Audit Committee and Risk Management Committee plays an importantrole in evaluation of the risk management systems. The Policy is devised foridentification of elements of risks and procedures for reporting the same to the Board.The Board reviews the business plan at regular intervals and develops the Risk ManagementStrategy which shall encompass laying down guiding principles on proactive planning foridentifying analyzing and mitigating all the material risks both external and internalviz. Environmental Business Operational Financial and others.

19. CORPORATE SOCIAL RESPONSIBILITY

Your Company does not fall under the criteria of undertaking Corporate SocialResponsibility activities as per the Section 135 of the Act.

20. DEPOSITS

Your Company did not hold any public deposit at the beginning of the year nor has itaccepted any public deposits during the year under review.

21. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to the financial statements provided in this Annual Report.

22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered and executed during the year underreview were at arms' length basis. There were no material contracts or arrangements ortransactions with related parties therefore Form AOC-2 does not form part of this report.

Policy on Materiality of and dealing with Related Party

Transaction of the Company is available on the website of the Company and can beaccessed at the web link: www.bharatwireropes.com.

23. VIGIL MECHANISM

Your Company has established a Vigil Mechanism for its Directors and employees toreport their genuine concerns or grievances. The said mechanism encompasses the WhistleBlower Policy and provides for adequate safeguards against victimization of persons whouse the mechanism.

It also provides direct access to the Chairman of the Audit Committee in appropriateand exceptional cases. The Vigil Mechanism and Whistle Blower Policy are available on theCompany's website (www.bharatwireropes.com).

24. DETAILS REGARDING BHARAT WIRE ROPES LIMITED EMPLOYEES TO CKOPTION PLAN2017("BWR ESOP 2017")

Your Company has formulated the Bharat Wire Ropes Limited Employee Stock Option Plan2017 ("BWR ESOP 2017") for grant of Stock Options to certain employeesof the Company. BWR ESOP 2017 was approved by the Members pursuant to the SpecialResolution passed through Postal Ballot on March 22 2017. As on March 31 2018 YourCompany has granted 2098500 number of options to employees so far.

25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There were no significant/material orders passed by the regulators or courts ortribunals impacting the going concern status of your Company and its future operations.

26. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO

The information pertaining to conservation of energy technology absorption Foreignexchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 is as under:

(A) Conservation of Energy :

Steps taken for utilizing alternate source of energy:

The Company has taken every necessary step for conservation of energy by installing LEDlights at plant buildings and offices which consumes 80% less electricity as compared tothe traditional lighting arrangements. Energy efficient utility equipment like pump andCompressor are controlled by Variable frequency drives which saves 20 to 30 percentelectricity.

Steps taken for conservation of energy:

The Company has installed Energy efficient transformer in order to reduce the loss forpower transformation on our projects. Total loss (no load loss and full load loss) isreduces to 1% from 3%.

Automatic power factor panel has been installed to control power factor automatically.The Company receives 8% incentive p.a. on its total bill by the Electricity Board.

(B) Technology Absorption: Online process monitoring:

Your Company has taken initiative for real time process data monitoring through IoT(Internet of Things). We are now monitoring various processes data like machine speedtemperature length job card target length through IoT. All data generated are savedlocally and on cloud based server. Auto generated reports are published and sent torequired department/person through auto mail.

Energy management software:

Your Company has developed in house Energy Management System and software to monitorreal time energy consumption in Plant. Benefit of this system is to monitor and controlenergy consumption of each and every machine and process.

There have been no other technology changes in the Company during the year underreview but the Company is under process to bring more technological revolution byinstalling high end technology for its new plant in MIDC Chalisgaon Maharashtra.

(C) Foreign exchange earnings and outgo:

(Amount in Rs.)

Sr. No. Particulars 2017-18 2016-17
1. Foreign Exchange Earnings 515260841 36063641
2. Value of Direct Import (C. I. F. Value) 215721318 1264372928
3. Expenditure in Foreign Currency 26908540 49342450

27. COMPLIANCE WITH PROVISIONS OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company is committed to uphold and maintain the dignity of women employees and anInternal Complaints Committee has been formed for each location of the Company under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

The Company has framed ‘Sexual Harassment Policy of Bharat Wire Ropes Limited' toprevent sexual harassment of women at work place. No case of Sexual harassment wasreported to the Internal Complaints Committee during the year under review.

28. PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow.

The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the F.Y. 2017-18:

Name of the Directors Ratio to the median Remuneration
Non-Executive Directors N.A. as they have only received sitting fees for attending meetings of the Board and its Committees during the F.Y. 2017-18
Executive Directors
Mr. Murarilal Mittal 27.34
(Managing Director)
Mr. Mayank Mittal 25.77
(Jt. Managing Director)
Mr. Sushil R. Sharda 12.40
(Whole-Time Director)
Mr. Sumit Kumar Modak 12.96
(Whole-Time Director)
Mr. Venkateswararao 6.96
Kandikuppa
(Whole-Time Director)

(i) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary in the financial year:

Directors Chief Financial Officer and Company Secretary % increase in remuneration in the financial
Non-Executive Directors N.A. as they have only received sitting fees for attending meetings of the Board and its Committees during the F.Y. 2017-18
Mr. Murarilal Mittal 41.59
(Managing Director)
Mr. Mayank Mittal 68.67
(Jt. Managing Director)
Mr. Sushil R. Sharda 21.74
(Whole-Time Director)
Mr. Sumit Kumar Modak 14.94
(Whole-Time Director)
Mr. Venkateswararao (3.79)
Kandikuppa
(Whole-Time Director)
Mr. Mahender Singh Arora 61.74
(Chief Executive Officer)
Mr. Rakesh Kumar Jain 8.31
(Chief Financial Officer)
Mr. Shailesh Rakhasiya 15.92
(Company Secretary &
Compliance Officer)

(ii) The percentage increase in the median remuneration of employees in the financialyear:

Particulars 2016-17 2017-18 %
(Rs.) (Rs.) Increase
Median remuneration of employees per annum all 254964 292622 14.77

(iii) The number of permanent employees on the rolls of Company: There were 512(Five Hundred and Twelve) permanent employees as on March 31 2018.

(iv) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average increase in the salaries of employees excluding Managerial Personnel duringFinancial Year 2017-18 was 9.61%. The average increase in the Remuneration of ManagerialPersonnel during the Financial Year 2017-18 was 36.96%. The increase in the remunerationof Managerial Personnel was due to the increase in the remuneration of Managing Directorand Whole-Time Director which was based on Company's Performance and their IndividualPerformance.

(v) Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms remuneration is as per the remuneration policy of the Company.

29. MATERIAL CHANGES AND COMMITMENTS

Your Company has entered into understanding and arrangement with Bridon Bekaert RopesGroup Limited ("Bridon") for 5 years wherein Bridon shall be sourcingropes of various configuration from your Company for their global requirements and yourCompany will be representing Bridon in Indian markets for special ropes which are notpresent in the manufacturing range of Bharat Wire Ropes Limited. Both the companies willexplore jointly all avenues of quantum increase in business share in the respective domainby exchanging expertise and knowledge wherever necessary.

During the F.Y. 2017-18 the Members of the Company has passed an ordinary resolutionon May 15 2018 through Postal Ballot to increase the Authorised Capital of the Companyfrom Rs. 500000000/- (Rupees Fifty Crores) divided into 50000000 (Five Crores)equity shares of Rs. 10/- (Rupees Ten) each to Rs. 520000000/- (Rupees Fifty TwoCrores) divided into 52000000 (Five Crores Twenty Lakhs) equity shares of Rs. 10/-(Rupees Ten) each. There was no change in the Paid-up Share Capital during the year underreview.

There were no other material changes or commitments affecting the financial position ofyour Company which haveoccurred between March 31 2018 and May 30 2018 being the date ofthis report.

30. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS

Your Company has a robust internal control system commensurate with the size and scaleof its operations.

Roles and responsibilities are clearly defined and assigned. Standard operatingprocedures are in place by way of built in controls in ERP system and have been designedto provide a reasonable assurance. A reputed Chartered Accountants firm has also beenengaged for internal audit covering all units and business operations. The AuditCommittee reviews the adequacy and effectiveness of internal control systems and providesguidance for further strengthening them. Apart from having all policies procedures andinternal audit mechanism in place your Company also periodically engages outside expertsto carry out an independent review of the effectiveness of various business processes. Theobservations and good practices suggested are reviewed by the Management and AuditCommittee and appropriately implemented with a view to continuously strengthen internalcontrols.

31. ACKNOWLEDGEMENT

The Board of Directors place on record their sincere thanks to its bankers businessassociates consultants and various Government Authorities for their continued supportextended to your Company during the year under review. The Directors gratefullyacknowledge the support and confidence reposed by the shareholders on your company.

On behalf of Board of Directors of
Bharat Wire Ropes Limited
Murarilal Mittal Venkateswararao Kandikuppa
Managing Director Whole-time Director
DIN: 00010689 DIN: 06456698
Date: May 30 2018
Place: Mumbai