Your Directors have pleasure in presenting the Seventy Third AnnualReport of the Company along with Company's audited financial statements (standaloneand consolidated) for the financial year ended on March 31 2019.
|Financial Results || || |
| || ||(Rs. crores) |
|Particulars ||Year ended on March 31 2019 ||Year ended on March 31 2018 |
|Gross Revenue ||6277.21 ||5075.38 |
|Excise Duty ||- ||20.85 |
|Net Revenue ||6277.21 ||5054.53 |
|Profit from continuing operations before Interest Depreciation Exceptional Items & Tax ||814.14 ||616.63 |
|Finance Cost ||18.48 ||28.57 |
|Profit from continuing operations before Depreciation Exceptional Items & Tax ||795.66 ||588.06 |
|Depreciation & Amortisation ||85.37 ||72.48 |
|Profit from continuing operations before Exceptional Items & Tax ||710.29 ||515.58 |
|Exceptional Item ||10.91 ||(6.76) |
|Profit from continuing operations before Tax ||721.20 ||508.82 |
|Tax Expense ||237.52 ||164.10 |
|Profit ||483.68 ||344.72 |
|Profit / (Loss) from discontinued operations before Tax ||1.89 ||- |
|Tax Expense of discontinued operations ||0.66 ||- |
|Profit / (Loss) from discontinued operations after Tax ||1.23 ||- |
|Net profit for the period ||484.91 ||344.72 |
|Appropriations for the year: || || |
|Dividends ||(23.90) ||(17.93) |
|Tax on dividends ||(5.04) ||(3.74) |
|Dividend received on share held by beneficiary trust* ||6.73 ||5.59 |
* for more information please refer note 45 of the notes to accounts ofstandalone financial statement
The brief highlights of the Company's performance (Standalone) forthe financial year ended March 31 2019 are:-
Net Revenue of the Company for FY 2019 of ` 6277.21 crores washigher by 24.19% over the last year (` 5054.53 crores in FY 2018)
Profit from continuing operations before Interest DepreciationExceptional Items & Tax stood at ` 814.14 crores
Profit from continuing operations before Tax (PBT) stood `721.20 crores and Profit from continuing operations After Tax (PAT) stood at ` 483.68crores. Net profit for the stood at ` 484.91 crores
Your Company sold 96412 tractors during the year under reviewas against 80417 tractors sold during the last financial year
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred as the"SEBI Listing Regulations") the Management Discussion and Analysis is set outin this Annual
Report and provides a detailed analysis on the performance ofindividual businesses and their outlook.
Based on the Company's performance your Directors are pleased torecommend for approval of the members a
Dividend of ` 2.50 per Equity Share (25%) on the face value of ` 10/-each aggregating ` 22.22 crores (exclusive of tax on dividend) for the financial yearended March 31 2019 except on the equity shares held by Escorts Benefitand Welfare Trust(EBWT). The dividend payout is subject to the approval of members at the ensuing AnnualGeneral Meeting (AGM).
The dividend payout for the period under review has been formulated inaccordance with shareholders' aspirations and the Company's DividendDistribution Policy to pay sustainable dividend linked to long-term growth objectives ofthe Company to be met by internal cash accruals.
During the year the Dividend Distribution Policy was amended tospecify the Dividend Range. The amended policy is available on our website athttps://www.escortsgroup.com/templates/ escortsgroup home/images/pdf/Dividend-Distribution-Policy.pdf
Employee Stock Option Scheme
The Scheme is in line with the SEBI (Share Based Employee Regulations2014 ("SBEB Regulations") and there Benefits) have been no material changes tothe schemes during the year 2018-19. The Scheme has been implemented financial inaccordance with the SBEB Regulations and the resolutions passed by the members. Theauditors certificate would be available at the Annual General Meeting for inspection bymembers. The details as required to be disclosed under the SBEB Regulations would beavailable on the Company's website at www.escortsgroup.com.
During the year ended March 31 2019 Mr. Rajan Nanda Chairman andManaging Director of the Company passed away on August 5 2018. The Board of Directors intheir meeting held on August 7 2018 had appointed Mr. Nikhil Nanda Managing Director asthe Chairman of the Company w.e.f. August 7 2018.
Further Mr. Ravi Narain Independent Director of the Company hadresigned from the Board of Directors of the Company w.e.f. May 1 2019 in view of theorder passed by SEBI in the matter of National Stock Exchange of India Limited.
In accordance with the provisions of Companies Act 2013 (hereinafterreferred as "the Act") and Articles of Association of the Company Ms. NitashaNanda Whole-time Director and Mr. G.B. Mathur Director retire by rotation at the ensuingAGM and being eligible offers themselves for re-appointment.
The Company has on the recommendation of Nomination and
Remuneration Committee (NRC) and in accordance with the provisions ofthe Act and SEBI Listing Regulations co-opted Mr. Shailendra Agrawal as an AdditionalDirector on the Board of the Company and designated as the Executive Director w.e.f. March22 2019 liable to retire by rotation subject to approval of the members at the AGM. Heshall hold office as Director of the Company upto the date of ensuing AGM and is eligiblefor appointment as a Director. His appointment is appropriate and in the best interest ofthe Company.
The Board of Directors on the recommendation of NRC in their meetingheld on May 7 2019 co-opted Mr. Sunil Kant Munjal as an Additional and IndependentDirector on the Board of the Company. He shall hold office as Director of the Company uptothe date of ensuing AGM.
The Board of Directors on the recommendation of NRC in their meetingheld on May 7 2019 on the basis of the report of performance evaluation had recommendedthe re-appointment of Ms. Nitasha Nanda as Whole-time Director for a period of 5 yearsw.e.f. January 16 2020 and Mr. D.J. Kakalia as an Independent Director for a furtherperiod of 5 years for approval of members of the Company at the ensuing AGM.
Pursuant to the applicable provisions of the Act your directors areseeking appointment of Mr. Shailendra Agrawal as an Executive Director w.e.f. March 222019 for a period of 5 years and Mr. Sunil Kant Munjal as an Independent Director for aperiod 5 years and re-appointment of Ms. Nitasha Nanda as Whole-time Director w.e.f.January 16 2020 for a period of 5 years and Mr. D.J. Kakalia as an Independent Directorfor a period of 5 years.
The brief resumes and other disclosures relating to the Directors whoare proposed to be appointed/ re-appointed as required to be disclosed pursuant toRegulation 36 of the SEBI Listing Regulations and Clause 1.2.5 of the Secretarial Standard2 are given in the Annexure to the Notice of the 73rd AGM.
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet with criteria of independence asprescribed under sub-section (6) of Section 149 of the Act and under Regulation 16(1)(b)of SEBI Listing Regulations. The policy for selection of directors and determiningdirectors independence is attached as Annexure A and forms an integral partof this Report.
The Company has devised a Policy for performance evaluation of
Independent Directors Board Committees and other individual
Directors which includes criteria for performance evaluation of theNon-Executive and Executive Directors. In accordance with the Policy a process ofevaluation was followed by the Board for its own performance and that of its Committeesand individual
Directors. The remuneration policy for directors key managerialpersonnel and other employees is annexed as Annexure B and forms an integralpart of this Report.
Your Directors recommend the appointment/ re-appointment of the abovesaid Directors at the ensuing AGM.
The Company has devised a process where various presentations/ programsare being conducted to make them familiarise with various developments at Industry levelnew business initiatives and organisation strategies etc.
The details of programme for familiarisation of Independent Directorswith the Company their roles rights responsibilities in the Company nature of industryin which the Company operates business model of the Company and related matters are putup on the website of the Company www.escortsgroup.com.
The Company recognises and embraces the importance of a diverse boardin its success. We believe that a truly diverse board will leverage differences inthought perspective knowledge skill regional and industry experience cultural andgeographical background age ethnicity race and gender which will help us retain ourcompetitive advantage.
Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo
The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed under Section134(3)(m) of the Act read with Companies (Accounts) Rules 2014 are provided asAnnexure C and forms an integral part of this Report.
Corporate Governance is about maximising shareholders value ethicallyand sustainable. At Escorts the goal of corporate governance is to ensure fairness forevery stakeholder. We believe strong corporate governance is critical to enhancing andretaining investor trust. We also endeavor to enhance long term shareholder value andrespect minority rights in all our business decisions.
Your Company reaffirms its commitment to the good corporate governancepractices and has adopted the Code of Business Conduct which has set out the systemsprocesses and policy conforming to international standards. Pursuant to Regulation 34(3)of the SEBI Listing Regulations Corporate Governance Report and Auditors'Certificate regarding conditions of Corporate Governance are enclosed as Annexure D and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSRa key business process for sustainable development of the society. The initiatives aim atenhancing welfare measures of the society based on the immediate and long term social andenvironmental consequence of its activities.
The Company intends to undertake other need-based initiatives incompliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Company's websitewww.escortsgroup.com under Investors Information Section. During the year the Company hasspent ` 6.13 crores (2.07%) of the average net profits of last three financial years CSRactivities.
The Annual Report on CSR activities is enclosed as
Annexure E and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordancewith the Act and Indian Accounting Standard (IND AS) - 110 applicable to the ConsolidatedFinancial Statements read with IND AS-28 on Accounting for Investments in Associates andIND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute ofChartered Accountants of India. The Audited Consolidated Financial Statements along withthe Auditors' Report thereon are annexed with this Report.
Subsidiaries Joint Ventures and Associate Companies
The statement in Form AOC-1 containing salient features of financialstatements of subsidiaries associate and joint venture companies prepared in accordancewith Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules 2014 forms anintegral part of this Report. The Consolidated Financial Statements presented by theCompany include the financial results of its subsidiaries associate and joint venturecompanies.
During the financial year ended on March 31 2019 the Company hasinfused additional equity capital in Escorts Crop Solutions Limited subsidiary of theCompany. The details of the said investment/ disinvestment is provided in the note 6(i) ofthe Notes to Accounts of the Standalone Financial Statements of the Company.
The Company has also entered into two Joint Ventures with Japanesecompanies during the year i.e. with Tadano Limited and Kubota Corporation. The Company hasalso made an investment of ` 29.40 crores being 49% stake in the Equity Capital of TadanoEscorts India Private Limited being the Joint Venture of your Company with Tadano LimitedJapan and ` 60 crores being 40% stake in the Equity Capital of Escorts Kubota IndiaPrivate Limited being the Joint Venture of your Company with Kubota Corporation Japan. ofThe Company will make available the Annual Accounts of its subsidiaries associate andjoint venture companies and related information to the members of the Company who may beinterested in obtaining the same. The annual accounts of its subsidiaries associate andjoint venture companies will also be kept open for inspection at the Registered Office ofthe Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company duringthe financial year with related parties were in the ordinary course of business and on anarm's length basis. During the year the Company had not entered into any contract/arrangement/ transaction with related parties which could be considered material inaccordance with the policy of the Company on the materiality of related partytransactions. on
The particulars of contracts or arrangement with related partiesreferred to in Section 188(1) of the Act in the prescribed Form AOC-2 is appended as Annexure F to this report.
The Policy on materiality of related party transactions and dealingwith related party transactions may be accessed on the Company's website www.escortsgroup.comunder Investors Information Section.
Your Directors draw attention of the members to Note 47 in the notes toaccounts in the standalone financial statement and to Note 46 in the notes to accounts inthe consolidated financial statement which sets out related party disclosures.
Auditors and Auditors' Report Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read withCompanies (Audit and Auditors) Rules 2014 the shareholders of the Company in the 71stAGM held on September 21 2017 had appointed M/s Walker Chandiok & Co LLP CharteredAccountants New Delhi (Firm Registration No. 001076N/ N500013) as Statutory Auditors ofthe Company for a period of 5 years i.e. upto the conclusion of AGM to be held in the year2022.
In accordance with the Companies (Amendment) Act 2017 enforced on May7 2018 by MCA the appointment of Statutory Auditors is not required to be ratified Theobservations and comments given by M/s. Walker Chandiok & Co LLP CharteredAccountants Statutory Auditors in their report read together with notes to Accounts forthe year ended March 31 2019 are self-explanatory and hence do not call for any furthercomments under Section 134 of the Act.
The Statutory Auditors of the Company have not reported any fraud asspecified in Section 143(12) of the Act.
The Board of Directors of the Company has re-appointed M/s. RamanathIyer and Co. Cost Accountants New Delhi (Firm Registration No. 000019) Cost Auditors ofthe Company under Section 148 of the Act for conducting the audit of cost records for thefinancial year 2019-20.
The due date of filing the Cost Audit Report for the year ended onMarch 31 2018 was September 30 2018 and the same had been filed on September 13 2018.
The Board of Directors of the Company had appointed M/s. Jayant Guptaand Associates Practicing Company
Secretary to conduct secretarial audit of the Company for the financialyear 2018-19.
The Secretarial Audit Report for the financial year ended March 312019 is enclosed as Annexure G and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors intheir report are self-explanatory and hence do not call for any further comments underSection 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and AssociatesPracticing Company Secretary to conduct secretarial audit of the Company for the financialyear 2019-20.
The Risk Management Committee of the Board has been entrusted with theresponsibility to assist the Board in (a) overseeing and approving the Company'senterprise wide risk management framework; and (b) Overseeing that all the risks that theorganisation faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderlyand efficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of fraud error reportingmechanisms bymembersat every AGM. the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls forensuring the orderly and efficient conduct of its business. During the year such controlswere tested and no reportable material weakness in the design or operation was observed.
Meetings of the Board
Ten meetings of the Board of Directors were held during the year. Forfurther details please refer Report on Corporate
Governance annexed as Annexure D to this Report.
For constitution and other details of the Audit Committee please referReport on Corporate Governance annexed as
Annexure-D to this Report.
All the recommendations made by the Audit Committee were accepted bythe Board.
Extracts of Annual Return
In terms of provisions of Section 92 of the Act read with the Companies(Management and Administration) Rules 2014 the extracts of Annual Return in Form MGT-9is enclosed as Annexure H and forms an integral part of this Report. TheAnnual Return for Financial Year 2017-18 is also available on the Company's websiteat www.escortsgroup.com.
The Company has adopted a Whistle Blower Policy establishing vigilmechanism for Directors and Employees to report their concerns about unethical behavioractual or suspected fraud or violation of the Company's Code of Conduct. Themechanism provides for adequate safeguards against victimisation of effected Director(s)and Employee(s). In exceptional cases
Directors and Employees have direct access to the Chairman of the AuditCommittee. It is affirmed that no personnel of the Company has been denied access to theAudit Committee. The Whistle Blower Policy is available on Company's website.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/sKarvy Fintech Private Limited (earlier Karvy Computershare Private Limited) Registrar andShare Transfer Agents from the following address:-
M/s Karvy Fintech Private Limited Karvy Selenium Tower B Plot No.31-32 Gachibowli Financial District Nanakramguda Hyderabad-500032 Telangana
All correspondence may kindly be sent to the above address only.
Particulars of Loans given Investments made Guarantees given andSecurities provided
Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilised by the recipient has been given elsewhere in the Annual Report andforms an integral part of this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementshowing the names and other particulars of the employees drawing remuneration in excess ofthe prescribed limits are available with the Company Secretary. Having regard to theprovisions of Section 136(1) of the Act the Annual Report excluding the aforesaidinformation is being sent to the members of the Company. Any member interested inobtaining such particulars may write to the Company Secretary of the Company and the samewill be furnished on request.
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as Annexure Iand forms an integral part of this Report.
The Company has not accepted/ renewed any Fixed Deposit during thefinancial year and as such no amount of principal or interest was outstanding as of theBalance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 readwith IEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 (theRules') all unpaid or unclaimed dividends are required to be transferred by theCompany to the IEPF established by the Central Government after the completion of sevenyears.
Further according to the rules the shares in respect of whichdividend has not been paid or claimed by the shareholders for seven consecutive years ormore shall also be transferred to the demat account created by the IEPF Authority.Accordingly the Company was required to transfer the unclaimed and unpaid dividends andshares as per the requirements of the IEPF rules details of which are provided on ourwebsite.
As on March 31 2019 no unclaimed deposits are pending for transfer toInvestor Education and Protection Fund.
During the year the credit rating of the Company have been upgraded asunder:
ICRA Limited has upgraded the long-term rating from "ICRAA+"/ Positive to "ICRA AA-"/ Stable and short-term rating reaffirmed"ICRA A1+".
India Ratings has upgraded the long-term rating from INDA+'/ Positive to IND AA-'/ Positive and short-term rating reaffirmed"IND A1+".
CRISIL has assigned long term rating "CRISIL AA-"/ Stable andshort term rating "CRISIL A1+".
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financialposition of theCompany subsequent to the close of the Fiscal 2019 till the date of this report.
Prevention of Sexual Harassment
The Company has zero tolerance for sexual harassment at workplace andhas adopted a policy on Prevention Prohibition and Redressal of Sexual Harassment atWorkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder for preventionand redressal of complaints of sexual harassment at workplace. The Company is committed toproviding equal opportunities without regard to their race caste sex religion colournationality disability etc. All women associates (permanent temporary contractual andtrainees) as well as any women visiting the Company's office premises or womenservice providers are covered under this Policy. All employees are treated with dignitywith a view to maintain a work environment free of sexual harassment whether physicalverbal or psychological.
The Company has also complied with provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors further state that during the year under review therewere no cases filed pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
The Company is in compliance with all the applicable SecretarialStandards.
Business Responsibility Report (BRR)
The SEBI Listing Regulations mandate the inclusion of BRR as part ofthe Annual Report for top 500 listed entities based on market capitalisation.
In compliance with the SEBI Listing Regulations the BRR describing theinitiatives taken by the Company from an environmental social and governance perspectiveis enclosed as Annexure J and forms an integral part of this Report.
Directors' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act withrespect to Directors' Responsibility Statement your Directors to the best of theirknowledge and ability hereby confirm that:
(i) in the preparation of the annual accounts for the year ended March31 2019 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed alongwith proper explanation relating tomaterial departures;
(ii) the Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31 2019and of the profit and loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) the Directors have prepared the annual accounts for financial yearended March 31 2019 on a going concern' basis;
(v) the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
(vi) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividendvoting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time
Directors of the Company receive any remuneration or commission fromany of its subsidiaries.
5. No significant or material orders Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future. Howevermembers attention is drawn to note 34 on Commitments and Contingencies in the Notesforming part of the financial statement.
Your Directors would like to express their sincere appreciation of thepositive co-operation received from the Central Government the Government of Haryana andUttaranchal and Karnataka Financial Institutions and the Company's BankersCustomers Dealers and all other business associates.
The Directors also wish to place on record their deep sense ofappreciation for the commitment displayed by all executives officers workers employeeunions and staff of the Company resulting in the successful performance of the Companyduring the year.
The Board also takes this opportunity to express its deep gratitude forthe continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Chairman & Managing Director
Place: Faridabad Date: May 7 2019