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Cummins India Ltd.

BSE: 500480 Sector: Engineering
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OPEN 642.00
VOLUME 11092
52-Week high 1043.80
52-Week low 611.75
P/E 26.17
Mkt Cap.(Rs cr) 17,497
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 642.00
CLOSE 637.30
VOLUME 11092
52-Week high 1043.80
52-Week low 611.75
P/E 26.17
Mkt Cap.(Rs cr) 17,497
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cummins India Ltd. (CUMMINSIND) - Director Report

Company director report

The Directors take pleasure in presenting the Fifty-Sixth Annual Report together withthe audited financial statements for the year ended March 31 2017. With the challengingeconomic conditions of the previous year continuing into 2016 your Company has focused onimproving productivity eliminating waste re-aligning the cost structure and increasingmarket share.


On a standalone basis: -

During the Financial Year 2016-17 revenue from operations was Rs. 542875 Lacs ascompared to Rs. 508806 Lacs during the previous year (6.70% higher). Profit after taxdecreased to Rs. 73463 Lacs from Rs. 75430 Lacs recorded for the previous year (2.61%lower).

On a consolidated basis: -

During the Financial Year 2016-17 revenue from operations was Rs. 545779 Lacs ascompared to Rs. 509940 Lacs during the previous year (7.03% higher). Profit after taxincreased to Rs. 73627 Lacs from Rs. 72132 Lacs recorded for the previous year (2.07%higher).

Financial Summary: -

Standalone Consolidated
2016 - 1 7 2015-16 2016 - 1 7 2015-16
(Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)
Profit before taxation 90824 91038 84301 79937
Net Profit for the year after tax 73463 75430 73627 72132
Tax on dividend 7901 7901 7901 7901
Dividend 38 8 0 8 38808 3 8 8 0 8 38808


Your Directors have recommended a final dividend of Rs. 9/- per equity share of Rs. 2/-each fully paid-up in addition to the interim dividend of Rs. 5/- per equity share of Rs.2/- each fully paid-up share declared on February 1 2017 aggregating to Rs. 14/- (i.e.700%) per equity share of Rs. 2/- each fully paid-up share for the year ended March 312017 (last year Rs. 14/- per equity share i.e. 700%). The final dividend payout is subjectto approval of the Members at the ensuing annual general meeting.

The paid up share capital of the Company is Rs. 554400000/- divided in to 277200000equity shares of Rs. 2/- each. Your Company has not come out with any issue (publicrights or preferential) during the year.


Your Board is pleased to provide details of the following subsidiary joint venturesand associate companies as on March 31 2017: -

a) Cummins Sales & Service Private Limited (CSSPL):

CSSPL (formerly known as Cummins Svam Sales & Service Private Limited) awholly-owned subsidiary of the Company focuses on sales of Cummins engines partsaccessories and providing service support to engines and genrators in parts of NorthernIndia close to the National Capital Region (NCR). CSSPL generated a revenue of Rs.7922.34 Lacs from its operations for the year ended March 31 2017 as compared to Rs.7514.07 Lacs during the previous year (5.43% higher).

b) Cummins Research and Technology India Private Limited (CRTI):

The revenue from operations of Cummins Research and Technology India Private Limited(CRTI) a 50:50 joint venture between Cummins Inc. USA and your Company for the yearended March 31 2017 was nil as compared to Rs. 3084 Lacs during the previous year. CRTIwas formed in 2003 with an intent to provide information technology enabled mechanicalengineering development services primarily to Cummins Inc. USA its subsidiaries andjoint ventures in all parts of the world. Effective April 1 2016 CRTI closed itsoperations and your Board of Directors decided that the activity carried out by CRTI foryour Company shall be undertaken in-house by absorbing the appropriate number ofemployees from CRTI in your Company. This has further enabled your Company to enhanceefficiency optimize the response time reduce administrative procedures and avoidduplication of efforts. In short there has been simplicity in running the same activitiesin a more effective manner.

c) Valvoline Cummins Private Limited (VCPL):

VCPL a 50:50 joint venture with Valvoline International Inc. USA a global leader inlubricants and engine oils generated a revenue of Rs. 125374 Lacs from its operationsfor the year ended March 31 2017 as compared to Rs. 116897 Lacs during the previousyear.

d) Cummins Generator Technologies India Private Limited (CGT):

Your Company owns 48.54% shareholding in the Associate Company namely CGT which is inthe business of design manufacturing marketing sales and service of alternators andrelated spare parts. CGT generated a revenue of Rs. 60245 Lacs from its operations forthe year ended March 31 2017 as compared to Rs. 53622 Lacs during the previous year(12.35% higher).

Your Company announces consolidated financial results on an annual basis. As requiredunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015consolidated financial statements of the Company its subsidiary joint ventures andassociate prepared in accordance with the applicable Indian Accounting Standards (Ind AS)notified under the Companies (Indian Accounting Standards) Rules 2015 as amended formpart of the Annual Report and are reflected in the consolidated financial statements ofthe Company.

Further a statement containing the salient features of the financial statement ofsubsidiaries associate companies and joint ventures in the prescribed Form AOC-1 isappended as Annexure ‘1' which forms part of this Report.

The Company will make the said financial statements and related detailed information ofCSSPL available upon request by any member of the Company. These financial statements willalso be kept open for inspection by any Member at the Registered Office of the Company andof CSSPL. Pursuant to the provisions of Section 136 of the Companies Act 2013 thefinancial statements of the Company consolidated financial statements along with relevantdocuments and separate audited accounts in respect of CSSPL are available on the websiteof the Company.


Currently the manufacturing plants of your Company operational at the Megasite atPhaltan are the HHP Rebuild Center Phaltan MidRange Upfit Center (PMUC) and the IndiaParts Distribution Center at the Domestic Tariff Area and the Low Horsepower Generator setplant at the Special Economic Zone (SEZ).

Based on sustained lower demand and in order to optimize costs and better utilizeexisting resources it was decided to outsource manufacturing of ‘C' series enginesand ‘B' series natural gas engines by way of contract manufacturing and to shiftcertain activities resources and operations to other existing factories of Cummins groupcompanies operating at Phaltan which resulted in the closure of PMUC operations. After theclosure the partially empty plant has been made available for Cummins Technologies IndiaPrivate Limited on rental basis at arm's length basis.

While the common facilities such as the crche administration office and healthcenter commenced operations since August 2014 a training center for employees includingan auditorium with a seating capacity of 250 people became functional since June 2015.

The other training center that had commenced operations in December 2015 at theMegasite is the technical training center. With a capacity to train more than 550engineers and 300 customers annually to service High Horsepower Heavy duty and MidRangemechanical engines generator sets and complex components that make up these products thetraining center will further enhance your Company's capability to provide world-classservice experience to the end-user.

In addition to the manufacturing and related facilities a residential campus to housePhaltan based employees of your Company in a high quality safe and clean environment nearthe Megasite has also been established. This facility comprises of four buildings with 240rooms a cafeteria and a club house. Your Company is also setting up 625 KW Roof Top Solarpower plant which will power the plant with Green Power. This solar plant will beoperational in the year 2017.


Other than the unsecured loan given to Cummins Technologies India Private Limited(which is a subsidiary of Cummins Inc. USA) in 2011 in compliance with the thenapplicable Companies Act 1956 and Rules thereunder no other loan or guarantee was givenor investment was made by your Company during the Financial Year 2016-17.


Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as Annexure‘2' which forms part of this Report.

The Policy on materiality of related party transactions and dealings with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: ‘'.


Your Company continued to undertake various energy conservation initiatives during theyear some of which are given below:

Kothrud Engine Plant (KEP) Pune:

Improved LUX level and reduction in energy consumption of illuminationdevices by 50%;

• Reduction of monthly energy consumption of street lights without affectingpresent light condition;

• Achieved energy savings on lighting load by giving automatic control of lightsand ACs in conference rooms and stores;

• Achieved energy savings by improving the MSEDCL power transformation efficiencyfrom 97% to 99.5% with improved power quality;

• Achieved energy savings by improving efficiency by installation of 2.5 MVAenergy efficient transformer;

• Achieved energy savings by controlling operation of test cell blowers as pernumber of test cells in operation;

• Reduction of monthly energy consumption of AHU without affecting present aircirculation condition;

• Reduction of average electricity consumption from 88853 kWh to 79968 kWh permonth (10% reduction) in heat treatment operations;

• 10% reduction in electricity consumption per SMH in NHNT/ K6 block; and

• Use of energy review tool and energy balance tool for identifying energy savingprojects.

The Plant continued implementation of the following initiatives: -

- Replacement of 46 nos. of 400 watt Metal Halide Lamps in the KV engine AssemblyTest Paint area by 100 watt LED lamps;

- Reduction of power consumption of ventilation blowers of U4 Power House;

- Reduction of power consumption of water pumps for U4 Power House;

- Energy savings achieved by closing air ball valves in shop and assembly testing areawhen machine is not in use;

- Improved LUX level and energy efficiency of illumination devices in NH NT Assembly. (2 x 36 watt lamps replaced by 20 watt LED tubes - 46 nos.); and

- Replacement of Cummins Technical Center India (CTCI) transformer by energy efficienttransformer.


All these initiatives resulted in savings of 7.26 Lacs units of electricity Rs. 58lacs saving of energy cost and GHG emission. reduction of 595 tons of CO2

Phaltan Midrange Upfit Center Phaltan:

On account of downsizing of activities at PMUC no specific initiatives wereundertaken.

Power Generation Business Unit Plant Pirangut and Phaltan SEZ:

Reduction of power consumption from test cell lighting by replacing 216 wattT5 tube fitting with 100 watt LED fitting which will result in 53% power saving w.r.t. toconsumption;

• Reduction of power consumption from test cell blower which resulted in 11% powersaving w.r.t. consumption;

• Reduction of power consumption from shop lighting by replacing 216 watt T5 tubefitting with 100 watt LED fitting (46 nos.); and

• Reduction of power consumption during the Unplugged Challenge by 9500 kWh.

Distribution Business Unit Plants (Erandwane Pune and HHP Rebuild Center Phaltan):

Replacement of street light from 96 CFL to 34 LED fittings. (Total 26 Nos.)

• Installation of control system for cooling tower fan motor of temperaturecontrol system.

• Installation of HULs fans (2 Nos.) in the stores area.

• Assigned responsibilities to individuals for air conditioning to shut off inbreak times.

India Parts Distribution Center Phaltan:

Provision of individual switches for lamps of inbound and outboundworkstations. Previously there was one master switch so even if only one workstation isoperational lamps of all workstations would remain ON;

• Half yearly service of AHU initiated resulting into overall air flow and thuseffectiveness; and

• Periodic service of air compressor initiated resulting into less restriction inthe suction line and improved efficiency.


All these intiatives were taken towards the energy improvement which will deliver theresult in terms of energy conservation in the year 2017.


Your Company is committed to introducing new products and improving existing productsto have better performance levels lower life cycle costs excellent safety recyclabilitycharacteristics meet stringent emission norms and specific needs of the Indian customer.The Technical Center of your Company continues in this endeavour by indigenizingcomponents and developing the next generation of components and systems in collaborationwith the parent company - Cummins Inc. USA.

In order to improve technical productivity new methodologies and technologies havebeen introduced and enhancements in capabilities are being continuously pursued to reducethe costs associated with new product development and customer support. An example of thisis the enhanced use of analysis-led design computer models that help minimize hardwaretesting and therefore accelerate product development cycle times. Continued implementationof Six Sigma initiatives have resulted in significant cost savings and improved operatingefficiency.

To ensure the health and safety of employees the Technical Center also pursued severalinitiatives to help drive towards the goal of zero-recordable incidents.

A. New Product Development: -

The following new Products were developed as part of the above initiatives during theyear:-

1. Key Industrial engine product families to support the growing IndustrialBusiness.

2 Key Marine engine product families to support the increasing commercial MarineBusiness.

3. Fundamental electronics capability to help develop products that comply with onboard diagnostics legislation.

4. Further enhancement of non-diesel product development capability.

B. Benefits derived as a result of the above activities are: -

1. Enhanced development capabilities through use of electronic tools and simulationsoftware to control the engine performance and combustion process.

2. Enhanced capability to tailor engine designs to improve the value propositionfor customers through delivering superior power output fuel economy and transientresponse and reduced emissions.

3. Product and component availability to meet the new emission norms ahead ofimplementation.

4. More safe recyclable reliable durable and performance-efficient products andcritical components.

5. Component indigenization capability was improved through enhanced testcapability rig test and flow bench development and availability.

6. Significant enhancements in measurement capability were made to pursue businessopportunities in non-diesel markets to serve both the rural and international communities.

C. Future plans include: -

1. Developing local ‘fit for market' solutions to meet upcoming emissionregulations local and rural market needs.

2. Technological innovation to add value to the products in the areas of alternatefuels recycle / re-use and hybrid engines.

3. Continued expansion of the product range to serve the local and global marketneeds.

4. Providing energy-efficient solutions to reduce carbon footprint and improverecyclability.

5. Continued focus on indigenization and partnering with suppliers for wasteelimination initiatives.

6. Alternate source development for various engine components.

7. Expanding the coverage of our engine development for the Power Generationmarket.

D. Your Company continues to draw benefits from Cummins Inc.'s technicalcapabilities and advanced technology.

With continued support from Cummins Inc. USA your Company is committed to developadvanced fuel-efficient and emission-compliant engines that work on a variety of fuelsources and comply with forthcoming domestic and global emission regulations to helpreduce Greenhouse Gas emission whilst also enabling the products to deliver superiorperformance reliability durability and recyclability.

E. Expenditure on R & D:-

The total expenditure on R & D was as follows:-

2016-2017 2015-2016
(Rs. in Lacs) (Rs. in Lacs)
Capital 3 9 5 1
Recurring 3067 2510
Total 3462 2511
Total R&D expenditure as a percentage of total sales turnover 0.65% 0.51%


Your Company continues to be a net foreign exchange earner. During the year underreview your Company exported 6209 engines and 9954 generator sets thereby achievingtotal export earnings of Rs. 152219 Lacs.

Foreign exchange earnings and outgo (including royalty dividend etc.) during the yearunder review were as follows:-

2016-2017 2015-2016
(Rs. in Lacs) (Rs. in Lacs)
(a) Earnings 163131 171357
(b) Outgo – 93683 82640
- Raw Materials / Components 56894 48038
- Capital Equipment 1712 229
- Others 35077 34373


The Management Discussion and Analysis Report and the Corporate Governance Report whichforms part of this Report is appended as Annexure ‘3' and ‘4'respectively.

The Company has obtained a Certificate from Practicing Company Secretary confirmingcompliance with conditions of the Code of Corporate Governance as stipulated in Schedule Vof the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and thesame is appended as Annexure ‘5' which forms part of this Report.


Extract of the annual return as prescribed under Section 92(3) of the Companies Act2013 is appended as Annexure ‘6' which forms part of this Report.


Business Risk Evaluation and Management is an ongoing process within the Organization.The Company has a robust risk management framework to identify monitor and minimize risksas also identify business opportunities. As a process the risk associated with thebusiness are identified and prioritized based on severity likelihood and effectiveness ofcurrent detection. Such risks are reviewed by the senior management on a quarterly basis.Process owners are identified for each risk and metrics are developed for monitoring andreviewing the risk mitigation through Six Sigma Projects.

Audit and Risk Management Committee of the Board of Directors of your Company assiststhe Board in (a) overseeing and approving the Company's enterprise wide risk managementframework; and (b) overseeing that all the risks that the organization faces such asstrategic financial credit market liquidity security property IT legalregulatory reputational and other risks have been identified and assessed and there is anadequate risk management infrastructure in place capable of addressing those risks.


Details of internal financial control and its adequacy are included in the ManagementDiscussion and Analysis Report which is appended as Annexure ‘3' and formspart of this Report.


Your Company is committed to fostering a physically and psychologically safe integritybased respectful inclusive high performance culture that breaks down hierarchies andorganizational boundaries and engages the full talents of our diverse employees todelight all our stakeholders (employees customers partners shareholders supplierscommunities) consistently.

The Company has a ‘Whistle Blower Policy' which inter alia provides adequatesafeguards against victimization of persons who may blow the whistle. In addition theCompany also has constituted an Internal Complaints Committee (under the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013) and an EthicsCommittee comprising of senior executives of the Company. Protected disclosures can bemade by a whistle blower through an email or dedicated telephone line or letter to theChairman & Managing Director of the Company or Letter to the Chairman of Audit andRisk Management Committee. Whistle Blower Policy may be accessed on the Company's websiteat the link: ‘'. Details ofnumber of complaints filed and resolved by the Internal Complaints Committee during theyear are provided in the Business Responsibility Report of the Company.


All members of the Board and Senior Management have affirmed compliance to the Code ofConduct for the Financial Year 2016-17. A declaration signed by the Chairman &Managing Director affirming compliance with the Company's Code of Conduct by the Board ofDirectors and Senior Management for the Financial Year 2016-17 as required underRegulation 26(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is included in the Corporate Governance Report which is appended as Annexure‘4' and forms part of this Report.


Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit and Risk ManagementCommittee the Board is of the opinion that the Company's internal financial controls wereadequate and effective during the Financial Year 2016-17.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:

(i) in the preparation of the annual accounts for the year ended March 31 2017the applicable accounting standards have been followed and there was no material departurefrom the same;

(ii) they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2017 and of the profit for theperiod April 01 2016 to March 31 2017;

(iii) 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;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectivelyduring the year; and

(vi) they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.


a) Changes in the composition of the Board of Directors:

During the year Mr. Edward Pence (DIN: 06577765) resigned as a Director of theCompany with effect from August 4 2016 due to change in his profile at Cummins Inc. USAand consequently Mr. J. M. Barrowman (DIN: 00668324) ceased to be an Alternate Directorfor Mr. Edward Pence from August 4 2016.

The Board at its meeting held on August 4 2016 noted the presence of Ms. SuzanneWells (DIN: 06954891) in India during August 1 2016 to August 4 2016 and consequentcessation of Ms. Nicole McDonald (DIN: 07369062) as an Alternate Director of Ms. Wellseffective August 1 2016. The Board confirmed appointment of Ms. McDonald as an AlternateDirector for Ms. Wells effective August 5 2016 upon return of Original Director (Ms.Wells) to the USA.

The Board at its meeting held on October 26 2016 appointed Mr. Norbert Nusterer(DIN: 07640359) as an Additional Director of the Company and Mr. J. M. Barrowman (DIN:00668324) as an Alternate Director to Mr. Nusterer effective October 26 2016.

The Board at its meeting held on February 2 2017 noted the presence of Mr. NorbertNusterer (DIN: 07640359) in India during January 31 2017 to February 1 2017 andconsequent cessation of Mr. J. M. Barrowman (DIN: 00668324) as an Alternate Director ofMr. Nusterer effective January 31 2017. The Board confirmed appointment of Mr. Barrowmanas an Alternate Director for Mr. Nusterer effective February 2 2017 upon return ofOriginal Director (Mr. Nusterer) to the USA.

The Board at its meeting held on February 2 2017 noted the presence of Ms. SuzanneWells (DIN: 06954891) in India during January 31 2017 to February 3 2017 and consequentcessation of Ms. Nicole McDonald (DIN: 07369062) as an Alternate Director of Ms. Wellseffective January 31 2017. The Board confirmed appointment of Ms. McDonald as anAlternate Director for Ms. Wells effective February 4 2017 upon return of OriginalDirector (Ms. Wells) to the USA.

In accordance with the Companies Act 2013 and Articles of Association of the CompanyMs. Suzanne Wells Director of the Company retires by rotation and is eligible forre-appointment.

The details of number of meetings of the Board etc. are provided in the CorporateGovernance Report which is appended as Annexure ‘4' and forms part of thisReport.

b) Committees of the Board:

The Board of Directors have constituted following committees in order to effectivelycater its duties towards diversified role under the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015: -

• Audit and Risk Management Committee;

• Stakeholders Relationship Committee;

• Nomination and Remuneration Committee; and

• Corporate Social Responsibility Committee.

Cummins India Limited

Details of the constitution terms of references of each Committee and number ofmeetings attended by individual director etc. are provided in the Corporate GovernanceReport which is appended as Annexure ‘4' and forms part of this Report.

c) Policy on Director's Appointment and Remuneration:

The Policy of the Company on Director's Appointment and Remuneration includingcriteria for determining qualifications positive attributes independence of thedirectors and other matters provided under Section 178 (3) of the Companies Act 2013adopted by the Board is appended as Annexure ‘7' which forms part of thisReport. Details of the remuneration paid to the Board of Directors are provided in theCorporate Governance Report. We affirm that the remuneration paid to the Directors is asper the terms laid down in the Nomination and Remuneration Policy of the Company.

d) Board Performance Evaluation Mechanism:

Pursuant to the provisions of the Companies Act 2013 and Regulation 34 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout the annual performance evaluation of its own performance and the Directorsindividually as well as the evaluation of the working of its Committees. Details of theevaluation mechanism is provided in the Corporate Governance Report which is appended as Annexure‘4' and forms part of this Report.

e) Familiarization Programme for Independent Directors:

The Independent Directors of the Company are associated with the Company for many yearsand are very familiar with the Company. During the year the Management provided variousdocuments background notes etc. to have a better insight of the Company. The Chairman& Managing Director also has a one-to-one discussion with the newly appointedDirectors. Details of initiatives for the Director to understand the Company its businessand the regulatory framework in which the Company operates and equip him / her toeffectively fulfil his / her role as a Director of the Company. The details offamiliarisation programmes imparted are available at‘'.

f) Declarations from the Independent Directors:

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under both theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.


The details in accordance with the provisions of Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Amendment Rules 2016 is appended as Annexure ‘8' which forms partof this Report.

A statement containing the details as prescribed under Rule 5(2) and Rule 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedfrom time to time forms part of this Report. Any shareholder interested in obtaining acopy of the statement may write to the Company Secretary at the Registered Office of theCompany.


Industrial relations at the Company's plants continue to be cordial.



At the Annual General Meeting held on August 4 2016 M/s. S R B C & CO LLP (FirmRegistration No. 324982E) were appointed as statutory auditors of the Company to holdoffice till the conclusion of Sixtieth Annual General Meeting. In terms of the Section139(1) of the Companies Act 2013 the appointment of auditors shall be placed forratification at every Annual General Meeting. Accordingly the appointment of M/s. S R B C& CO LLP as statutory auditors of the Company is placed for ratification by theshareholders. M/s. S R B C & CO LLP have informed the Company vide letter dated April27 2017 that their appointment if made would be within the limits prescribed underSection 141 of the Companies Act 2013.

There are no qualifications reservations or adverse remarks or disclaimers made by theauditors in the Audit Report for the year 2016-17.


Dr. K. R. Chandratre Company Secretary in Practice was appointed to conduct thesecretarial audit of the Company for the Financial Year 2016-17 as required under Section204 of the Companies Act 2013 and the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. The Secretarial Audit Report in Form MR-3 for FinancialYear 2016-17 is appended as Annexure ‘9' which forms part of this Report. TheSecretarial Audit Report does not contain any qualification reservation or adverseremark.


Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the cost audit recordsmaintained by the Company in respect of its manufacturing activity is required to beaudited. Your Directors on the recommendation of the Audit and Risk Management Committeeappointed M/s. Ajay Joshi and Associates Pune to audit the cost accounts of the Companyfor the Financial Year 2017-18 on a remuneration of Rs. 9.5 Lacs plus taxes as applicableand re-imbursement of out of pocket expenses. As required under the Companies Act 2013the Members' ratification for the remuneration payable to M/s. Ajay Joshi and AssociatesCost Auditors is being sought at the ensuing Annual General Meeting.


Your Company is an early adopter of the Corporate Social Responsibility (CSR)initiatives. Corporate Responsibility is one of the six core values of your Company whichfocuses on ‘serving and improving the communities in which we live'. Your Companyworks with ‘Cummins India Foundation' towards three broad focus areas viz. HigherEducation Energy & Environment and Social Justice & Infrastructure.

Details about the CSR Policy and initiatives taken by the Company during the year areavailable on our website‘'. The Annual Report onour CSR Activities is appended as Annexure ‘10' which forms part of thisReport.


As stipulated under the Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Business Responsibility Report describes theinitiatives taken by the Company from environmental social and governance perspectivewhich forms part of the Annual Report.


Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a. Change in Key Managerial Personnel during the year; b. Details relating to depositscovered under Chapter V of the Companies Act 2013; c. Issue of equity shares withdifferential rights as to dividend voting or otherwise; d. Issue of shares (includingsweat equity shares) to employees of the Company under any scheme;

e. Neither the Managing Director nor the Whole-time Directors of the Company receivedany remuneration or commission from any of its subsidiaries; f. No frauds were reported byauditors under Section 143(12) of the Companies Act 2013;

g. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations (however Membersattention is drawn to the Statement on Contingent Liabilities commitments in the notesforming part of the Financial Statement); and

h. No material changes and commitments occurred during April 1 2017 till the date ofthis Report which would affect the financial position of your Company.


Your Directors would like to express their sincere appreciation for the assistance andco-operation received from financial institutions banks government authoritiescustomers vendors and members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the committed services by theCompany's executives staff and associates.

On behalf of the Board of Directors
Anant J. Talaulicar
Place : Pune Chairman & Managing Director
Date : June 29 2017 DIN: 00031051