Your Directors are pleased to present their 43rd Annual Report together with theAudited Statement of Accounts of the Company for the year ended 31st March 2018.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended 31st March 2018 were asfollows:
| || |
(Rs in Lacs)
| ||Consolidated ||Standalone |
|Particulars ||Year Ended 31 March 2018 ||Year Ended 31 March 2017 ||Year Ended 31 March 2018 ||Year Ended 31 March 2017 |
|Gross Revenue ||140842 ||153918 ||56895 ||53143 |
|Less: Excise duty ||872 ||3308 ||642 ||2640 |
|Net Revenue ||139970 ||150610 ||56253 ||50503 |
|Less: Cost of material and increase/decrease in stock ||71961 ||83804 ||26877 ||22937 |
|Less: Employee benefit expenses ||24838 ||22958 ||8178 ||6718 |
|Less: Other Expenses ||29932 ||27320 ||12089 ||11128 |
|EBITDA ||13239 ||16528 ||9109 ||9720 |
|EBITDA Margin ||9.46% ||10.97% ||16.19% ||19.25% |
|Add: Other Income ||578 ||576 ||647 ||1588 |
|Less: Finance Charges ||7442 ||7836 ||6328 ||6162 |
|Less: Depreciation and Amortisation Expense ||5644 ||5282 ||2875 ||2816 |
|Less: Exceptional Expense ||- ||426 ||- ||314 |
|Profit before tax ||731 ||3560 ||553 ||2016 |
|Profit before tax margin ||0.52% ||2.36% ||0.98% ||3.99% |
|Less: Tax expense ||659 ||1598 ||174 ||484 |
|Profit After Tax ||72 ||1962 ||379 ||1532 |
|Profit After Tax margin ||0.05% ||1.30% ||0.67% ||3.03% |
|Add: Other Comprehensive Income/(Losses) ||2226 ||(2138) ||(142) ||(20) |
|Profit for the year ||2298 ||(176) ||237 ||1512 |
|Profit available for appropriation ||2298 ||(176) ||237 ||1512 |
|Balance carried to Balance Sheet ||2298 ||(176) ||237 ||1512 |
Note: Previous years' figures have been recast wherever necessary.
FY2018 was a year of important reforms in the Indian economy including the Goods &Service Tax (GST). While in the short term it faced temporary challenges ofimplementation on a long-term basis it will lead to improved business environment andrenewed investment opportunities. Recent regulatory changes coupled with our strategy ofrationalizing product mix resulted in a subdued business performance. Consolidated netsales for FY2018 decreased by 7.06% to Rs139970 lacs as compared to Rs 150610 lacs inFY2017.
Consolidated EBITDA (excluding other income) for FY2018 decreased by 19.9% to Rs13239lacs as compared to Rs. 16528 lacs during the same period last year. This EBITDA(excluding other income) included an impact of Rs 957 lacs on account of unfavorableforeign exchange variations. After adjusting for this impact EBITDA (excluding otherincome) for the year would have been Rs14196 lacs representing a decline of 14.1%compared to FY2017. EBITDA (excluding other income) margin for the year under review was9.4% compared to 10.9% in FY2017. On account of the implementation of GST our workingcapital utilization increased leading to higher short-term borrowings and finance chargeson a y-o-y basis.
The Aerospace & Defence segment recorded a revenue growth of 3.1% to reach Rs35634 lacs compared Rs 34569 in FY2017. Continuing order book execution led tosubstantial revenue growth in Q4 FY2018. Further ramp up of phase
2 Airbus orders started resulting in stabilization of overall operations. SegmentEBITDA was Rs 8143 lacs compared with from Rs10473 lacs in FY2018. While Indiaoperations registered a 11.5% growth in revenue UK performance increased by 17% onconstant currency basis.
During the year the Aerospace & Defence segment continued its focus on productinnovation and advanced technology platform. The division announced commercial productionof Airbus A330 Long Range FTBs to be manufactured in India and the UK during the life ofthe program. The Company successfully started the ramp up of phase 2 of Airbus ordersputting in place a state-of-the-art infrastructure and achieved a full-scaleindustrialization of the entire value chain. Further the Company became the sole supplierof major sub-assemblies for Bell 407 helicopter cabins.
Hydraulics segment continued its strong performance during Q4 and FY2018 mainly onaccount of better order off takes. Revenues for this segment increased by 12.4% to Rs31111 lacs compared to Rs 27683 lacs in the same period last year. One-time impact oflong term union wages revision led FY2018 EBITDA to decline by 6.8% to Rs 3712 lacs. Witha recent established sales office in the US the Company expects to expand further in theNorth American markets. With improved farm sentiment and infrastructure investments thissegment is expected to remain strong.
With a focus on margin expansion low margin products rationalization continued for theAutomotive and Metallurgy business during FY2018. Adoption of such rationalizationstrategy impacted the financials performance during the year but resulted in significantimprovement in EBITDA during the last quarter of FY2018. Revenue for this segment was
Rs 73225 lacs representing a decline of 17.1% compared to same period last year.Segment EBITDA was Rs1849 compared to Rs 2939 in FY2017. New order ramp up and newmachining facility in Germany expected to drive growth for this division going forward.
As of March 31 2018 the Company had an authorized share capital of Rs2500 lacsdivided into 20000000 equity shares of Rs10/- each and Rs500 lacs divided into 500000redeemable cumulative preference shares of Rs100/- each. During the year under reviewthere was no change in the Company's issued subscribed and paid-up equity share capital.As of 31st March 2018 the Company had issued subscribed and paid-up equity sharecapital of Rs 634.14 lacs divided into 6341443 equity shares of Rs10/- each.
TRANSFER TO RESERVES
During the year under review your Directors do not propose to transfer any amount toGeneral Reserve.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has duly complied with the provisions of Section 186 of the Companies Act2013 during the year under review. The details of loans availed by the Company during theyear under review are mentioned in the notes to accounts that form part of this AnnualReport.
During the year under review your Directors do not propose to declare any dividendsdue to poor economic conditions and paucity of profits.
During the year under review your Company incurred capital expenditure of Rs7085 lacsfor physical infrastructure and
Rs218 lacs for procurement of intangible assets. Significant investments have been madein building infrastructure state-of-the-art machinery design software data securityinformation systems and design and development activities; for the future benefits ofyour Company.
During the year under review the Company neither accepted any deposits nor there wereany amounts outstanding at the beginning of the year which were classified asDeposits' in terms of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposit) Rules 2014 and hence the requirement for furnishing of detailsof deposits which are not in compliance with the Chapter V of the Companies Act 2013 isnot applicable.
The Company has ten subsidiaries. Pursuant to Section 129(3) of the Companies Act 2013and Accounting Standard- 21 issued by the Institute of Chartered Accountants of IndiaConsolidated Financial Statements presented by the Company include the FinancialStatements of its Subsidiaries.
Consolidated Financial Statements forms part of this Annual Report. Statementcontaining the salient features of the Financial Statements of the Company's subsidiariesassociate(s) and joint venture(s) are enclosed as Annexure 1 in form AOC-1to this Annual Report.
In terms of provisions of Section 136 of the Companies Act 2013 the Company shallplace separate audited accounts of the Subsidiary Companies on its website at www.dynamatics.com
The structure of Dynamatic Technologies Limited and its subsidiaries as on March 312018 is appended hereunder :
JKM Research Farm Limited India (JRFL) is a wholly owned subsidiary of theCompany. It continues to be the Research & Development facilitator to the Company. Itoperates a unique facility for testing and analysing complete tractor aggregates andsystems.
JKM Erla Automotive Limited India (JEAL) continues to be a wholly owned subsidiaryof the Company.
JKM Ferrotech Limited India (JFTL) is a subsidiary of Dynamatic Technologies. JFTLis into the manufacturing of ferrous alloy and castings having its operations inGummidipoondi Tamil Nadu. This subsidiary has expertise in producing High Si-Moautomotive components and is certified to the highest quality standards specified by theAutomotive Industry.
JKM Automotive Limited (JAL) is a wholly owned subsidiary of JKM Erla AutomotiveLimited.
JKM Global Pte. Limited Singapore is a wholly owned subsidiary of the Company. Itcontinues to be a holding company for the overseas businesses.
Dynamatic Limited UK (DLUK) is a subsidiary of your Company having aerospace andhydraulics units at Bristol and Swindon.
Yew Tree Investments Limited Bristol UK is a wholly owned subsidiary of DynamaticLimited UK.
Dynamatic LLC US is a subsidiary of Dynamatic Limited UK.
JKM Erla Holdings GmbH Germany (JKM Erla GmbH) is engaged in the business ofsetting up automotive components processing/manufacturing units.
Eisenwerk Erla GmbH Germany (Eisenwerk) is a subsidiary of the Company. Eisenwerkhas been in business for over many years and is a preferred supplier to leading globalOEMs such as Audi BMW Borg Warner Turbo Emission Systems Volkswagen and Daimler. Thecapabilities of this subsidiary includes high precision complex metallurgical productsfor automotive engines and turbochargers.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Inductions Re-appointments Retirements & Resignations
During the year under review the Board of Directors at their meeting held on 09thAugust 2017 appointed Mr. Arvind Mishra as Additional Director of the Company.
Mr. Raymond Keith Lawton (DIN:01687605) stepped down from the Board Directors of theCompany with effect from 19th July 2017.
Mr. Vijai Kapur (DIN:00056415) and Mr. Krishnaswamy Srinivasapuram (00056250)ceased to be with effect from 13th August 2017.
Mr. Arvind Mishra has been appointed as Executive Director and Global Chief Operatingofficer Hydraulics & Head of Homeland Security.
Mr. Hanuman Kumar Sharma (DIN:07012725) stepped down from the Board Directors of theCompany with effect from 14th February 2018.
Mr. Chalapathi P has been appointed as a Chief Financial Officer of the company witheffect from 13th December 2017.
Mr. Sirish Saraf (DIN:0001918219) vacated the office of Directorship under section 167read with 164(2)(a) of Companies Act 2013.
Mr. James Tucker Non-Executive Director of the Company would retire by rotation inaccordance with section 152 of the Companies Act 2013 and being eligible offers himselffor reappointment.
None of the Directors of the Company except Mr. Sirish Saraf are disqualified frombeing appointed as Directors as specified under Section 164 of the Companies Act 2013.
Details of all the Directors have been covered in Corporate Governance Report whichforms part of the Annual Report.
Declaration by Independent Directors
All Independent Directors of the Company meet the criteria of Independence laid down inSection 149(6) of the Companies Act 2013. In line with the provisions of section134(3)(d) of the Companies Act 2013 the declaration from Independent Directorsconfirming their independence in terms of section 149 of the Companies Act 2013 have beenobtained.
Key Managerial Personnel (KMP)
During the year under review the Company has designated following personnel as KMPs asper the definition under Section 2(51) and Section 203 of the Act:
UEE Mr. Udayant Malhoutra CEO & Managing Director
UEE Mr. P S Ramesh Executive Director & COO - Aerospace India
UEE Mr. Arvind Mishra has been appointed as Executive Director and Global ChiefOperating officer Hydraulics & Head of Homeland Security.
UEE Mr. Naveen Chandra P Head Legal Compliance and Company Secretary
UEE Mr. Chalapathi P has been appointed as a Chief Financial Officer of the companywith effect from 13th December 2017.
The Company prepares a Board and allied committee meeting calendar and circulates toall the directors in advance for their concurrence. During FY2018 seven meetings of theBoard of Directors were held.
Details of the composition of the Board and its Committees and of the Meetings heldattendance of the Directors at such Meetings and other relevant details are provided inthe Corporate Governance Report. These Board meetings were held during the FY2018 and notmore than one hundred and twenty days had intervened between two consecutive meetings ofthe Board.
COMMITTEES OF BOARD OF DIRECTORS
The Board has seven committees viz; the Audit and Risk Management Committee Nominationand Remuneration Committee Stakeholders' Relationship Committee Technology &Strategy Development Committee Finance Committee Corporate Social ResponsibilityCommittee and Independent Directors' Committee. Details of all the Committees of Board ofDirectors as per the Secretarial Standard-1 as issued by the Institute of CompanySecretaries of India have been disclosed in the Corporate Governance Report. The Board hasaccepted most of the recommendations made by all the Committees of Board of Directorsduring the year under review.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
An appropriate induction for new directors and ongoing training for all directorsensure high corporate governance in the Company. Dynamatic conducts induction programmefor every new independent director to provide them an opportunity to build anunderstanding about Dynamatic its businesses and the markets and regulatory environmentin which it operates; familiarize with its management and its operations so as to gain aclear understanding of their roles and responsibilities and contribute significantlytowards the growth of the Company. They have full opportunity to interact with SeniorManagement Personnel and are provided all the documents required and sought by them forenabling them to have a good understanding of the Company its various operations and theindustry in which it operates. Dynamatic Technologies firmly believes that a Board whichis well informed /familiarised with the Company can contribute significantly toeffectively discharge its role of trusteeship in a manner that fulfils stakeholders'expectations.
During the year under review the Company had carried out familiarisation programme forIndependent Directors by organizing workshop at Auto unit Eisenwerk Erla GmbH Germany;Aerospace unit Dynamatic Limited Bristol UK and Hydraulics unit Dynamatic LimitedSwindon UK.
In pursuit of this the Directors are updated on a continuing basis on developments inthe corporate and industry scenario including those pertaining to regulatory and economicenvironment to enable them to take well informed and timely decisions. The details of thefamiliarisation programme may be accessed on the Company's corporate website (www.dynamatics.com/investor.html)
PARTICULARS OF REMUNERATION OF DIRECTORS KMP AND EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules isattached as Annexure 2 which forms part of this report. Disclosures pertaining toremuneration and other details as required under Section 197(12) of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as Annexure 2 which forms part of this report.
DIVERSITY IN THE BOARD
The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the policy on appointment continuation and cessation of Directors whichsets out the approach to diversity in the composition of the Board.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Companies Act 2013 states that a formal annual evaluation needs to be performed bythe Board of its own performance various committees of the Board and that of theindividual directors. Schedule IV of the Companies Act 2013 states that the performanceevaluation of independent directors shall be done by the entire Board excluding thedirector being evaluated.
The evaluation of all the directors and the Board as a whole was carried out based onthe criteria and framework adopted by the Board as explained in the Corporate GovernanceReport. The Board of Directors expressed their satisfaction with the evaluation process.
The philosophy for remuneration of directors KMP and all other employees of theCompany is based on the commitment of fostering a culture of leadership with trust.Furthermore the Company believes in providing an opportunity that has a strong linkage toand reinforces the performance culture of the Company. The remuneration policy is alignedto this philosophy. The Company has laid down remuneration policy which is designed toattract motivate retain manpower and improve productivity by creating a congenial workenvironment encouraging initiative personal growth and teamwork besides offeringappropriate remuneration package. Pursuant to the applicable provisions of the CompaniesAct 2013 and the Listing Regulations the Board in consultation with its Nomination& Remuneration Committee has formulated a framework containing inter-alia thecriteria for performance evaluation of the entire Board of the Company and IndividualDirectors including Independent Directors. The said policy has been enclosed as Annexure3.
Members can download the complete remuneration policy on the Company's website (www.dynamatics.com/investor.html).
CORPORATE SOCIAL RESPONSIBILTY (CSR)
Dynamatic Technologies Ltd has strengthened its objectives of CSR and created a SkillDevelopment Initiative Team to develop skills in trainees with ITI / Diploma and inserving workers from aerospace industry who volunteer to enhance their skill levels. Theteam also focuses in upgrading the technical skills in operations such as sheet metalforming material handling painting and NDT etc.
To accomplish this task in earnest your company adopted ITI Devanahalli under PPPprogram and has developed and introduced special curriculum in Aerospace Fitter Trade totrain the students in structural assembly techniques such as drilling reaming rivetingand sealant application. Classes for the ITI trainees were conducted in some existingtrades to provide basic introduction to aerospace technology and certain soft skills.
During the current year an exclusive Building along with a Borewell to provide drinkingwater was constructed and state-of- the-art teaching aids tools and materials wereacquired to create a new Skill Development Center at ITI Devanahalli.
This new Skill Development Center at ITI Devanahalli has adequate Training Rooms fortheory classes Workshop practices and Rest Rooms for the trainee students. The requiredinfrastructure such as Compressor and Generator have been procured and installed. TheBuilding is fully furnished and was inaugurated on 12th December 2017 by the amidstdesignatories and CEO & MD of Dynamatic Technologies Ltd. ITI authorities from theState Government IMC Chairman and Members and other industry partners were present onthe occasion.
Total amount spent for various CSR activities for ITI Devanahalli was over Rs 7 lakh.
RISK MANAGEMENT POLICY
Risk management forms an integral part of the management system and determines the risksituation in business processes and organizational units. Risk management provides theorganization at all levels with an instrument for detecting risks early and taking stepsto eliminate reduce and consciously deal with risks The Company has a robust process inplace to identify key risks across the Group and prioritise relevant action plans tomitigate these risks. The Audit & Risk Management Committee has been entrusted withthe responsibility to assist the Board members about the risk assessment and itsminimization procedures which includes discussing the management submissions on risksprioritising key risks and approving action plans to mitigate such risks. The Policysuggests framing an appropriate response action for the key risks identified so as tomake sure that risks are adequately compensated or mitigated.
The main objectives of the said policy are.
i. To ensure that all the current and future material risk exposures of DynamaticTechnologies are identified assessed quantified appropriately mitigated and managed;
ii. To establish a framework for Dynamatic Technologies' risk management process and toensure company-wide implementation;
iii. To ensure systematic and uniform assessment of risks related with each of theunits of Dynamatic Technologies;
iv. To enable compliance with appropriate regulations wherever applicable through theadoption of best practices; and
v. To assure business growth with financial stability.
The said policy has been uploaded on Company's website
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Company has adopted a Vigil Mechanism Policy through which all stakeholdersincluding Directors and employees may report unethical behavior malpractices wrongfulconduct fraud violation of the Company's code of conduct without fear of reprisal.Details of complaints received and the action taken are reviewed by the Audit & RiskManagement Committee. During the year under review the Company / Committee has notreceived any such complaint. The functioning of the vigil mechanism is reviewed by theAudit & Risk Management Committee from time to time. The policy on vigil mechanism maybe accessed on the Company's website (https://www. dynamatics.com/investor.html)
POLICY FOR SAFETY AND WELL BEING OF WOMEN
To motivate our Women work force Women's Day was celebrated with full gusto in all theDivisions. In keeping with our resolve to ensure zero incidents of sexual harassment atworkplace provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and redressalof complaints of sexual harassment at workplace are being strictly adhered to. Awarenessprogrammes and workshops are held periodically to educate all employees. There have beenno complaints of sexual harassment received during the year. Work on construction of aCrche in Aerospace Division has commenced and likely to be completed by end May 2018.
M/s. B S R & Co. LLP Chartered Accountants are the Statutory Auditors of theCompany for a period of five years with effect from 14th August 2014. M/s. B S R &Co. LLP have confirmed to the Company that they are not disqualified under section 141 ofthe Companies Act 2013 or any other applicable provisions for the time being in forceand are eligible for continuing as statutory auditors of the Company. M/s. B S R
& Co. LLP have also confirmed to the Company that their appointment if madewould be within the limits prescribed under the Companies Act 2013.
The report of the Statutory Auditors along with notes to Schedules is enclosed to thisreport. The observations made in the Auditors' Report are self-explanatory and thereforedo not call for any further comments. The Auditor's Report does not contain anyqualification reservation or adverse remark.
As per Section 148 of the Act the Company is required to have the audit of its costrecords conducted by a Cost Accountant in practice. M/s Rao Murthy & Associates whowere appointed as Cost Auditors of the Company for the FY2018 conduct cost auditspertaining to relevant products prescribed under the Companies (Cost Records and Audit)Rules 2014 as amended from time to time.
The Internal Audit function is responsible for assisting the Audit
& Risk Management Committee on an independent basis with a full status of the riskassessments and management. M/s. Ernst & Young LLP were appointed as InternalAuditors of the Company for the FY2018.
The Company had appointed Mr. R Vijayakumar Company Secretary in practice inBangalore to conduct its Secretarial Audit for the financial year ended 31st March 2018.The Secretarial Auditors have submitted their report confirming compliance by the Companyof all the provisions of the applicable corporate laws. The Report does not contain anyqualification reservation or adverse remark. The Secretarial Audit Report is annexed as Annexure4 to this report.
M/s BVS & Associates Chartered Accountants are the Tax Auditors of the Company.The Tax Auditor's Report does not contain any qualification reservation or adverseremark.
INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY
According to Section 134(5)(e) of the Companies Act 2013 the term Internal FinancialControl (IFC) means the policies and procedures adopted by a company for ensuring theorderly and efficient conduct of its business including adherence to the company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
The Company has a well-placed proper and adequate internal financial control systemwhich ensures that all assets are safeguarded and protected and that the transactions areauthorised recorded and reported correctly. The Company's internal financial controlsystem also comprises due compliances with Company's policies standard operatingprocedures and audit and compliance by an in-house internal audit division supplementedby internal audit checks from M/s. Ernst &Young LLP the Internal Auditors andvarious transaction auditors.
The Internal Auditors independently evaluate the adequacy of internal controls andconcurrently audit the majority of the transactions in value terms. Independence of theaudit and compliance is ensured by direct reporting to the Audit & Risk ManagementCommittee of the Board. A CEO and CFO Certificate forming part of the CorporateGovernance Report further confirms the existence and effectiveness of internal controlsand reiterates their responsibilities to report deficiencies to the Audit & RiskManagement Committee and rectify the same. During the year such controls were tested andno reportable material weaknesses in the design or operation were observed.
Events Subsequent to the Date of the Financial Statements
There were material changes / commitments affecting the financial position of thecompany between March 31 2018 and the date of Board's Report.
The Board at its meeting held on 28th February 2018 had approved the Divestment ofAutomotive and wind Farm business located at Chennai and Coimbatore. The shareholders hadapproved the proposal of Divestment through postal ballot process. Mr. Vijay Kumar(practicing Company Secretary had issued the scrutinizer report dated 16th May 2018 anddeclared the resolution passed with requisite majority and the same is made available onthe website of the Company.
Change in the Nature of Business if any
The Company continues to focus on its key business segments and looks for selectivegrowth / expansion opportunities. There was no change in the nature of business during theyear under review. State of the affairs of the Company and future plan of action andoutlook is discussed in this report.
Significant & Material Orders Passed by the Regulators
During the year under review no significant / material orders were passed by theregulators or the Courts or the Tribunals impacting the going concern status and theCompany's operations in future.
Demat Suspense Account unclaimed shares
As on 31st March 2018 there are 22 members holding 1161 equity shares of Rs10/-each lying in the escrow account due to non-availability of their correct particulars. Adetailed note in this regard is provided in the Corporate Governance Section under"Suspense Account for the unclaimed shares". The voting rights on these sharesshall remain frozen till the rightful owner of such shares claims the shares.
Extract of the Annual Return
Pursuant to the provisions of section 92(3) of the Companies Act2013 and rule 12(1) ofthe Companies (Management and Administration) Rules 2014 an extract of annual return ismade part of this Annual Report.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the year 2017-2018 toNSE and BSE where the Company's Shares are listed.
Consolidated Financial Statements
The Directors have pleasure in attaching the Consolidated Financial Statements preparedby the Company in accordance with the relevant Accounting Standards issued by theInstitute of Chartered Accountants of India which form part of the Annual Report.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act 2013 all contracts andarrangements with related parties under Section 188(1) of the Act entered into by theCompany during the financial year were in the ordinary course of business and on an arm'slength basis.
As per the Listing Regulations all related party transactions are placed before theAudit & Risk Management Committee for approval. Prior omnibus approval of the Audit& Risk Management Committee has been obtained for the transactions which are offoreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval are presented to the Audit & Risk Management Committee by way of a statementgiving details of all related party transactions. The Company has developed a RelatedParty Transactions Manual for the purpose of identification and monitoring of suchtransactions. Particulars of Contracts or Arrangements with Related parties referred to inSection 188(1) is disclosed in Form AOC- 2 as Annexure 6.
ENVIRONMENTAL PROTECTION MEASURES
Your Company continuously strives to reduce our environmental footprint whileenhancing livelihood of people across our product value chain. Accordingly the Company hasadopted a number of measures to improve in the field of environment safety and health.Measures like standard operating procedures training programmes for all levels ofemployees regarding resource conservation environment protection and housekeeping havebeen conducted. Sustainable living is a part of long-term business strategy of theCompany.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGOING
The information relating to conservation of energy and technology absorption areappended hereunder:
Conservation of Energy
All our facilities in India and abroad are built with the environment in mind and theprocesses are designed for efficiency energy conservation and to ensure that no waste istransmitted into the environment. The industrial complexes are highly energyefficient and completely non-polluting. This is being systematized and quantifiable byimplementing ISO 14000.
Research & Development plays a vital role in developing and adopting newtechnologies to enhance our operational efficiencies. The Company owns the world's besthydraulic technologies. The Company has added technology from Plessey through theacquisition of Dynamatic Limited UK in 2007.
The Aerospace & Hydraulics units in India & the UK; Automotive units in Indiaand Germany work together in resolving engineering challenges leading to better synergiesacross the group.
Research & Development (R&D)
R&D and Innovation continues to be an integral part of the Company's growthstrategy business profitability sustainability and as a part of its contribution towardsthe building of the Nation. Dynamatic Science Lab created by consolidating variousresearch and technology functions helps to enhanced value delivery by leveraging skillsand competencies to create new business opportunities. The Company's Research &Development is actively driven by a Board level committee constituted as theTechnology & Strategy Development Committee.
The Technology & Strategy Development Committee of the Board provides direction tothe Company's R&D strategy and on key issues pertaining to R&D technology. TheCommittee regularly reviews and updates the skills and competencies required thestructure and the processes needed to ensure that the R&D initiatives of today resultin products necessary for the sustained and long term growth of the Company.
Expenditure on Research & Development (Rs in lacs)
|Particulars ||31st March 2018 ||31st March 2017 |
|A. Capital ||69 ||52 |
|B. Revenue ||486 ||635 |
|Total ||555 ||687 |
FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars of foreign exchange earnings and outgo are as follows:
| || ||(Rs in lacs) |
|Particulars ||31st March 2018 ||31st March 2017 |
|a. Total Foreign Exchange Earned ||26602 ||24460 |
|b. Total Foreign Exchange Used ||11338 ||8562 |
|U Import of Raw materials components stores and spares ||9750 ||8154 |
|U Foreign Travel ||100 ||41 |
|U Interest ||33 ||169 |
|U Capital Expenditure ||1303 ||93 |
|U Others ||152 ||105 |
MANAGEMENT'S DISCUSSION & ANALYSIS REPORT
Pursuant to regulations 34 of the Listing Regulations Management's Discussion &Analysis Report for the year is presented in a separate section forming part of the AnnualReport.
Corporate Governance is a set of principles processes and systems which govern acompany. The Company believes that an effective corporate governance practices provides astrong foundation for a successful enterprise. The key principles on which a soundCorporate Governance system is based are independence transparency accountabilityresponsibility compliance ethics values and trust. Corporate Governance enables anorganization to perform efficiently and ethically generate long term wealth and createvalue for all its stakeholders.
Dynamatic Technologies is committed to maintain the best standards of CorporateGovernance and adopted many ethical and transparent governance practices even before theywere mandated by law. The Company has always strived towards building trust withshareholders employees customers suppliers and other stakeholders based on theprinciples of good corporate governance. Strong leadership and best-in-class corporategovernance practices are considered one of the major strength of the Company.
A detailed report on Corporate Governance pursuant to the requirements of Regulation34 of the Listing Regulations forms part of the Annual Report. The certificate from thePracticing Company Secretary confirming compliance of the Corporate Governance norms asstipulated in the Listing Regulations is also included in the Annual Report.
The list of the promoters is disclosed for the purpose of the SEBI (SubstantialAcquisition of Shares and Takeovers) Regulations 2011.
Mr. Udayant Malhoutra is the promoter of the Company within the definition ofPromoter' for the purpose of regulations 2(1)(s) of the SEBI (SubstantialAcquisition of Shares and Takeovers) Regulations 2011.
Details of the promoter group are appended as under:
|No. ||Name of the entity / person |
|1. ||JKM Holdings Private Limited |
|2. ||Udayant Malhoutra and Company Private Limited |
|3. ||JKM Offshore India Private Limited |
|4. ||Wavell Investments Private Limited |
|5. ||Mrs. Barota Malhoutra |
|6. ||Vita Private Limited |
|7. ||Christine Hoden (India) Private Limited |
|8. ||Primella Sanitary Products Private Limited |
|9. ||Greenearth Biotechnologies Limited |
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the section 134 (5) of the Companies Act 2013 the Board of Directors tothe best of knowledge and belief and according to the information and explanationsobtained by them hereby confirm that:
a. In the preparation of accounts for the financial year ended
March 31 2018 the applicable Accounting Standards have been followed with properexplanation relating to material departures if any.
b. We have selected such accounting policies and applied them consistently and madejudgments and estimates that were reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theProfit & Loss Account of the Company for the year under review.
c. We have taken proper and sufficient care for the maintenance of adequate records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities.
d. We have prepared the accounts for the financial year ended March 31 2018 on agoing concern' basis.
e. We have laid down internal financial controls to be followed by the company and thatthe internal financial controls are adequate and are operating effectively.
f. We have devised proper systems to ensure compliance with the provisions of allapplicable laws and the systems are adequate and operating effectively.
g. Transfer of amounts to Investor Education and Protection
Pursuant to the provisions of the Companies Act 2013 (as amended from time to time)dividends and shares which remained unclaimed for a period of seven years have beentransferred by the Company to the Investor Education and Protection Fund.
The Company believes that human resources are critical for the overall success of theorganization and ensures to undertake best efforts for maintaining a cordial relationshipwith the employees. Dynamatic's focus has always been to acquire nurture and develop thebest talent to prepare them for leadership roles within the organization. Variousinitiatives to improve the skills of its employees though training initiatives are ongoingexercise at the Company. Such initiatives are important to ensure job enrichmentengagement and accountability for performance career progression reward recognition andwelfare of the employees. Your Company has an excellent track record of cordial andharmonious industrial relations and over the years not a single man-day has been lost onaccount of labor unrest
Your Directors would like to wish their sincere appreciation to the investorsfinancial institutions and banks for their continued support during the year. YourDirectors would like to thank the regulatory authorities and government authorities andagencies for their continued guidance and support. Your Directors also wish to place onrecord their deep sense of appreciation to employees and executives at all levels fortheir efforts and dedication. Their hard work and commitment has enabled the Company to beon the forefront of the industry. We also take this opportunity to thank all our customerswithout whom our success story would not have been possible.
|For and on behalf of the Board of Directors || |
|Udayant Malhoutra ||P S Ramesh |
|CEO & Managing Director ||Executive Director |
|DIN : 00053714 ||& COO Aerospace India |
| ||DIN: 05205364 |
|Place : Bangalore || |
|Date : 29 May 2018 || |