Your Directors are pleased to present the 65 Annual Report and AuditedFinancial Statement of Accounts for the financial year ending 31 March 2020.
[Rs. in lacs]
|Particulars ||1 April 2019 to 31 March 2020 ||1 April 2018 to 31 March 2019 |
|Gross Sales (including other operating income) ||106639.22 ||131897.90 |
|Other income ||2476.05 ||2849.34 |
|Total Income ||109115.27 ||134747.24 |
|Operating profit before finance charges depreciation and exceptional item ||12654.72 ||21868.40 |
|Finance Charges ||482.00 ||874.30 |
|Depreciation ||8862.75 ||8151.33 |
|Exceptional items ||- ||- |
|Net Profit before tax ||3309.97 ||12842.77 |
|Provision for the Taxation: || || |
|Current Tax ||1242.33 ||4231.16 |
|Less: Deferred Tax ||(916.02) ||360.76 |
|Profit after tax ||2983.66 ||8250.85 |
|Other comprehensive income (net of taxes) ||(912.04) ||304.12 |
|Total Comprehensive income ||2071.62 ||8554.97 |
|Profit brought forward from last year ||39970.26 ||31415.29 |
|Surplus / (loss) carried forward to Balance sheet ||42041.88 ||39970.26 |
During the financial year the Gross sale of the Company was Rs.106639.22 lakhs as against Rs. 131897.90 lakhs for the financial year ended 31 March2019. The Total income of the Company was Rs.109115.27 lakhs as against Rs.134747.24lakhs for the financial year ended 31 March 2019.
During the year under review the Company made a net profit after taxof Rs. 2071.62 lakhs as against the net profit after tax of Rs. 8554.97 lakhs for thefinancial year ended 31 March 2019. No amount is proposed to be transferred to generalreserves. An amount of Rs. 2071.62 lakhs is proposed to be retained in the Statement ofProfit and Loss.
In view of requirement of funds for the operations of the Company nodividend is recommended for the financial year ended 31 March 2020.
NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE
The details of the number of Board and Audit Committee meetings heldand attended by directors/members and composition of Audit Committee of the Company areset out in the Corporate Governance Report which forms part of this Report as Annexure-1.
The report inter alia includes the list of credit ratings obtainedalong with any revisions thereto for all debt instruments of such entity or any fixeddeposit programme or any scheme or proposal of the entity involving mobilization of funds.
DIRECTORS ' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(3)(c) of the Companies Act2013 with respect to Directors' Responsibility Statement it is hereby confirmedthat:
(a) in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;
(b) the directors have selected such accounting policies and appliedthem consistently and made judgments 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 ended 31 March2020;
(c) the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a going concernbasis;
(e) the directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
(f) the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
DECLARATION OF INDEPENDENT DIRECTORS
The Company has received declarations from all the IndependentDirectors confirming the independence as per the criteria prescribed under section 149(6)of Companies Act 2013 read with the Schedules and Rules made thereunder as well asRegulation 16(1)(b) and 25 (8) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
NOMINATION & REMUNERATION POLICY
The Board has on the recommendation of the Nomination &Remuneration Committee adopted a policy for selection and appointment (including thecriteria for determining qualifications positive attributes independence of directors)and remuneration of Directors including Independent Directors Key Managerial PersonnelSenior Management Personnel and other employees. The Nomination & Remuneration Policyis attached as Annexure - 2.
EXPLANATIONS OR COMMENTS ON AUDITOR'S QUALIFICATION / RESERVATION/ADVERSE REMARKS/ DISCLAIMER
There is no reservation or observation or qualification or adverseremark or disclaimer of Auditors' including Secretarial Auditors' of the Companyin their report.
During the period under review the Company witnessed the following:
- Letter of Offer dated December 30 2019 was issued by theManager to the Open Offer of Tenneco Inc.' (i.e M/s CKP Financial ServicesPrivate Limited) to the eligible shareholders of the Company on behalf of the TennecoInc. (i.e the Acquirer') and Persons Acting in Concerts (PACs'). Therecommendation on the Open Offer was given by the Committee of Independent Directors ofthe Company. The Tender Offer was opened from January 6 2020 to January 17 2020 and 657shareholders had tendered their shares in the Open Offer comprising 12145391 Equityshares. Post closure of the Tendering period/Open offer IEH FMGI Holdings LLC held12145391 Equity shares of the Company i.e 21.83% of the voting share capital of theCompany. The relevant disclosures as required by law had been made from time to time tothe stock exchanges where the securities of the Company are listed.
- Due to outbreak of COVID-19 the Company had shut down its plantssituated at Bangalore Patiala and Bhiwadi including its offices in the concerned Stateswith effect from 23rd March 2020 in compliance with the respective State Governmentdirections/notifications. Subsequently the plants began to operate partially in the monthof May 2020 by adhering to the directions guidelines and permissions issued by theappropriate Government Authorities with respect to COVID-19.
No other material change which could affect the financial position ofthe Company occurred between the end of the financial year of the Company and the date ofthe Board Report.
LOANS AND INVESTMENTS
During the Financial Year ended 31 March 2020; no Loan Investment andGuarantee u/s 186 of the Companies Act 2013 was made by the Company.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the financial year 2019-20 the Company has entered into relatedparty transactions in terms of the Companies Act 2013 read with rules made thereunder andregulation 23 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 which were in the ordinary course of businessand on arms' length basis.
During the financial year 2019-20 there were no transactions withrelated parties which qualified as material transactions in accordance with the Company'sPolicy under the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 and accordingly the disclosure of RelatedParty Transactions in Form AOC-2 is not applicable. Pursuant to Regulation 33 (3)(g) ofthe SEBI (Listing Obligations a n d D i s c l o s u r e R e q u i r e m e n t s)Regulations 2015 the disclosure of Related Party Transactions will be uploaded on thewebsite of your Company (www.federalmogulgoetze india.net) on half yearly basis.
The transaction with promoter/ promoter group entities holding 10percent or more shareholding are disclosed as notes to the financial statement (Note No.38) other than which there are no other transactions.
The Directors state that that applicable Secretarial Standard'si.e. SS-1 and SS-2 relating to "Meeting of the Board of Directors" and"General Meetings" respectively have been duly followed by the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The information on conservation of energy technology absorption andforeign exchange earnings and outgo as stipulated under Section 134 of the Companies Act2013 read with rules made thereunder is set out herewith as Annexure-3 to this Report.
RISK MANAGEMENT POLICY
The Company operates in an environment which is affected by variousrisks some of which are controllable while some are outside the control of the Company.Therefore pursuant to the requirements of the Companies Act 2013 and Regulation 21 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhas constituted a Risk Management Committee. The Company has also developed andimplemented the Risk Management Policy covering the process of identifying assessingmitigating reporting and review of critical risks impacting the achievement ofCompany's objectives or threaten its existence.
The Risk Management Committee of the Company consisting of Mr. VinodKumar Hans as Chairman Dr. Khalid Iqbal Khan and Mr. Manish Chadha as membersperiodically reviews the robustness of the Risk Management Policy. The periodical updateon the risk management practices and mitigation plan of the Company and subsidiary arepresented to the Audit Committee and Board of Directors. The Audit Committee and Boardperiodically review such updates and findings and suggest areas where internal controlsand risk management practices can be improved. More details on Risk Management indicatingdevelopment and implementation of Risk Management Policy including identification ofelements of risk and their mitigation are covered in Management Discussion and Analysissection which forms part of this Report.
There are no risks which in the opinion of the Board threaten theexistence of the Company. However some of the risks which may pose challenges are set outin the Risk Management Policy of the Company.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations 2016 theCompany in its Board Meeting held on 29th July 2016 had approved the Dividend DistributionPolicy. The Dividend Distribution Policy of the Company is attached herewith as Annexure-4to this Report.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors at its meeting held on 09th May 2014 approvedthe Corporate Social Responsibility (CSR) Policy for the Company pursuant to theprovisions of Section 135 of the Companies Act 2013 read with rules made there under onthe recommendations of the CSR Committee. The Company has constituted Corporate SocialResponsibility (CSR) Committee. Presently the committee comprises the following members:-
1) Mr. Vinod Kumar Hans Chairman
2) Dr. Khalid Iqbal Khan Member
3) Mr. KN Subramaniam Member
4) Mr. K C Sundareshan Pillai Member
5) Ms. Nalini Jolly Member
The Corporate Social Responsibility Committee is required to institutea transparent monitoring mechanism for implementation of CSR projects or programs oractivities undertaken by Company. Pursuant to the provisions of Companies Act 2013 theCompany is required to spend atleast 2% of the average profits of the company during theprevious 3 financial years on CSR activities. Therefore the Company has incurred thetotal allocated budget of Rs. 248.98 lakhs on the CSR activities approved by CSR Committeeand the Board of Directors.
The activities and initiatives undertaken by the Company during thefinancial year 2019-20 on CSR activities have been detailed in the Annual Report on CSRactivities in accordance with the Companies (Corporate Social Responsibility Policy)Rules 2014. The policy on Corporate Social Responsibility and Annual Report on CSRactivities are attached herewith as Annexure- 5 & 6 to this Report.
In accordance with the provisions of section 135 of the Companies Act2013 the Board has approved an amount of Rs. 198.17 lakhs for spending on CSR activitiesduring the financial year 2020-21.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Presently the Board consists of nine (9) directors comprising of Mr.K.N. Subramaniam Chairman and Non-executive Independent Director; Mr. Vinod Kumar HansWhole-time Managing Director; Dr. Khalid Iqbal Khan Whole Time Director-Legal &Company Secretary; Mr. Manish Chadha CFO & Finance Director Mr. Rajesh SinhaWhole-time Director; Mr. Sunit Kapur Non-Executive Director; Mr. Stephen Shaun MerryNon-Executive Director Mr. K C Sundareshan Pillai Non-executive Independent Director andMs. Nalini Jolly Non-Executive Woman Independent Director.
In accordance with Article 109 of the Articles of Association of theCompany Mr. Sunit Kapur and Dr. Khalid Iqbal Khan are retiring by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for reappointment.
Mr. Mahendra Kumar Goyal resigned as Non-executive Independent Directorfrom the Board with effect from close of business hours on 31st October 2019 due toother pre-occupation and there were no other material reasons for his resignation.
The term of office as Non-executive Independent Director of Mr. MukulGupta expired with effect from close of business hours on 12th February 2020.Accordingly Mr. Gupta ceased to be Non-executive Independent Director on the Board of theCompany from the said date.
Ms. Janice Ruskey Maiden resigned as Non-executive Director from theBoard with effect from 26th June 2020. Mr. Stephen Shaun Merry was appointed asNon-Executive Director on the Board with effect from 26th June 2020 subject to approvalof the shareholders.
The Board places on record its sincere a p p r e c i a t i o n f o rThe v a l u a b l e contributions made by Mr. Mahendra Kumar Goyal Mr. Mukul Gupta andMs. Janice Ruskey Maiden in all areas of Board's functioning during their respectivetenures as Directors of the Company.
Mr. K.C. Sundareshan Pillai was reappointed as Independent Director fora second term with effect from 16th December 2019 subject to approval of the shareholdersat the ensuing AGM of the Company on 22nd September 2020.
Mr. Krishnamurthy Naga Subramaniam was re-appointed as IndependentDirector for a second term with effect from 13th February 2020 subject to approval ofthe shareholders at the ensuing AGM of the Company on 22nd September 2020.
The Company has received the declaration from all the independentdirectors of the Company that they meet the legal criteria of independence.
SUBSIDIARY AND ASSOCIATE COMPANY
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5of Companies (Accounts of Companies) Rules 2014 a statement containing salient featuresof financial statement of subsidiary i.e. Federal-Mogul TPR (India) Limited forms part ofthe consolidated financial statements attached as Annexure-7. The financial statements ofthe subsidiary company and related information are available for inspection at theRegistered Office of the subsidiary company during business hours on all days exceptSaturdays Sundays and public holidays upto the date of the Annual General Meeting (AGM)as required under Section 136 of the Companies Act 2013. Any member desirous of obtaininga copy of the said financial statements may write to the Company Secretary at theRegistered Office of the Company. The financial statements including the consolidatedfinancial statements financial statements of subsidiary and all other documents requiredto be attached to this report have been uploaded on the website of your Company(www.federalmogulgoetze india.net).
The performance and financial position of the subsidiary company i.e.Federal-Mogul TPR (India) Limited have been explained in its Board Report which formspart of annual report.
As at 31 March 2020 your Company had no unclaimed fixed deposits. Nofresh/ renewed deposits were invited or accepted during the financial year.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL
There are no significant/material orders passed by the Regulators orCourts or Tribunals impacting the going concern status of the Company and its operationsin future.
FORMAL ANNUAL EVALUATION BY BOARD
In terms of provisions of the Companies Act 2013 read with Rules madethereunder and Regulation 19 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors hadevaluated the effectiveness of the Board. Accordingly the performance evaluation of theBoard each Director and the Committees was carried out for the financial year ended 31stMarch 2020. The evaluation of the Directors was based on various aspects which interalia included the level of participation in the Meetings knowledge and skillsunderstanding of their roles and responsibilities business of the Company along with theethics and integrity. The evaluation of the Board and committees was inter alia based onthe aspects like Structure of the Board or Committee processes being followed to achievethe objectives effectiveness fulfillment of roles and responsibilities efficiency anddirection etc.
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
The Company has an Audit Committee headed by a Non-executiveIndependent Director inter-alia to oversee the Company's financial reporting processdisclosure of financial information performance of statutory and internal auditorsfunctions internal control systems related party transactions investigation relating tosuspected fraud or failure of internal audit control to name a few as well as otherareas requiring mandatory review as per Regulation 18(3) of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
The powers of the Audit Committee inter-alia include seekinginformation from any employee directing the Company's internal Audit function obtainingoutside legal or other professional advice and investigating any activity of the Companywithin the Committee's terms of reference.
The Company has a well-defined internal control system which aims atprotection of Company's resources efficiency of operations compliances with the legalobligations and Company's policies and procedures.
MANAGEMENT DISCUSSION AND ANALYSIS:
( a ) Industry structures and developments
Automotive Industry globally as well as in India is one of the keysectors of the economy. Demographically and economically India's automotive industryis well-positioned for growth servicing both domestic demand and increasingly exportopportunities. Due to its deep forward and backward linkages with several key segments ofthe economy automotive industry has a strong multiplier effect and acts as one of thedrivers of economic growth.
The auto industry is highly competitive consisting of organized aswell as unorganized sectors and is highly fragmented with a significant number of smalland medium-sized companies because of which the business rules are changing to meet thetough competition prevailing in the industry. Innovation technological upgradation andcost saving hold the key to success to meet the expectations of the exigent competitivecircumstances. The Indian auto component industry has been navigating through a period ofchallenges.
During the financial year 2019-20 the industry produced a total26362282 vehicles including Passenger Vehicles Commercial Vehicles Three Wheelers TwoWheelers and Quadricycle as against 30914874 in April-March 2019 registering ade-growth of -14.7 percent over the same period last year.
The domestic sale of Passenger Vehicles declined by 17.9 percent inApril-March 2020 over the same period last year. The overall Commercial Vehicles segmentdeclined by 28.8 percent in April-March 2020 as compared to the same period last year.Medium & Heavy Commercial Vehicles (M&HCVs) declined by 42.5 percent and LightCommercial Vehicles declined by 20.1 percent in April-March 2020 over the same period lastyear.
Three Wheelers domestic sales declined by 9.2 percent in April- March2020 over the same period last year. Within the Three Wheelers Passenger Carrier &Goods Carrier sales declined by 8.3 percent and 13.3 percent respectively in April-March2020 over April-March 2019.
Two Wheelers sales registered de-growth at 17.8 percent in April-March2020 over April-March 2019. Within the Two Wheelers segment Scooters declined by (-) 16.9and Motorcycles declined by 17.5 percent while Mopeds declined by 27.6 percent inApril-March 2020 over April-March 2019.
In April-March 2020 overall automobile exports increased by 2.95percent. Two Wheelers Segments registered a growth of 7.3 percent and Three wheelersdeclined by 11.5 percent while Passenger Vehicles were flat at 0.2 percent and CommercialVehicles declined by 39.2 percent in April-March 2020 over the same period last year.
The year under review witnessed an overall slowdown in the economyliquidity crunch the crisis in the non-banking finance companies (NBFC) sector almostdrying up credit for dealers and customers. Nearly half the vehicles sold in ruralmarkets a segment that has been witnessing a higher growth rate in comparison to urbanmarkets are financed by NBFCs. The increase in third party insurance road tax and safetyregulations the consequent hike in the cost of vehicle acquisition uncertainty arisingout of inventory liquidation prior to the BS-VI transition and expectations of a possibleGST reduction were the primary reasons for the prolonged slowdown this year.
Currently there is uncertainty on the pace of recovery but Managementis making sure that the organization remains fully energized during the period and readyto bounce back on the next opportunity.
(b) Opportunities and Threats
The parent company continues to support the Company with its technicalexpertise. With widely recognized brands superior technology strong distribution networkand a committed team of employees the Company is well positioned to take advantage of theopportunities and withstand the market challenges.
Major regulatory interventions such as the accelerated transition fromBS IV to BS VI adoption of electric vehicles safety rules and stringent vehiclestandards are leading to a shift in vehicle technology. This is creating significantchallenges and your Company perceives these challenges as potential opportunities.
Your Company competes with many independent manufacturers anddistributors of component parts. Management continues to develop and execute initiativesto meet the challenges of the industry and to achieve its strategy for sustainable globalprofitable growth.
There are limited sets of customers in our business that is theautomobile manufacturers. Competition is intense as we compete with suppliers both in theorganized and unorganized segments. Technical edge specialization innovation andnetworking will determine the success of the Company in this competitive environment.Further the policies of the Government play a key role in the development of theautomobile sector. Your Company has been employing the practices to proactively map theimpact of its activities on its performance and profitability from economic environmentand social perspectives.
C) Segment wise or product wise performance
The Company deals principally in only one segment i.e. automotivecomponents. Therefore segment-wise performance is not applicable. The Company is interalia engaged in the manufacturing and sale of Pistons Piston rings Pins valve seats andguides the performance whereof is as under:
Rs. In lacs
|Details of finished goods sold ||31 March 2020 ||31 March 2019 |
|Pistons Piston rings and pistons pins ||91883.61 ||115311.90 |
|Valve train and Structural components ||11614.69 ||12561.06 |
The impact of COVID-19 situation has devastated the auto industry withpinching effects on the Indian auto industry.
Rural wages and rising unemployment contributed to low demand for goodsand services. Uncertainty in employment impacted consumer investor and corporateconfidence. There has been a significant downturn in the demand for new vehicles forcingautomakers to substantially cut production. Auto component industry is fully dependent onthe automotive industry. The future is fairly unpredictable. Market sentiments areunpleasant.
The recovery in vehicle demand will also be drawn out due to thepandemic's deep and enduring impact on the economy which is expected to take fewyears to return to pre-COVID-19 levels. The recovery in vehicle production is set to begradual and not necessarily linear. Given the uncertainty of the current situation theforecast risks largely skew to the downside the Management expects double digit volumedecline in Indian automobile industry during the year 2020-21.
During the current difficult situation your Company has been minutelyreviewing every element of cost and has been continuously working on cash conservation andelimination/deferment of cost wherever possible.
The Company will endeavor to revitalize in near future as consumersregain confidence and vehicle demand improves. To remain competitive in the challengingand demanding environment the benchmark has to be high in anticipation of the stated andunstated need of the customers and markets.
(e) Risks and concern
The Company operates in an environment which is affected by variousrisks some of which are controllable while some are outside the control of the Company.However the Company has been taking appropriate measures to mitigate these risks on acontinuous basis. Some of the risks that are potentially significant in nature and needcareful monitoring are listed hereunder:
Pandemic: Significant deterioration in demand due to COVID-19 hasemerged as a major business risk.
Economic slowdown: Slowdown in the Indian and global economy due tothe outbreak of COVID-19 is likely to adversely impact the auto industry in the medium andshort-term.
Raw material prices: Our profitability and cost effectiveness maybe affected due to change in the prices of raw materials and other inputs.
Foreign Currency Risks: Exchange rate fluctuations may have anadverse impact on the Company Technical Intensive Industry: The automobile industry is atechnical intensive industry and thus faced with a constant demand for new designsknowledge of nascent technology to meet market requirements.
Increasing competition: Increasing competition in the autoequipment sector may put some pressure on the market share.
(f) Adequacy of Internal Control Systems
The Company has an Audit Committee headed by a non-executiveindependent director inter-alia to oversee the Company's financial reporting processdisclosure of financial information performance of statutory and internal auditorsfunctions internal control systems related party transactions investigation relating tosuspected fraud or failure of internal audit control to name a few as well as otherareas requiring mandatory review as per provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 with the stock exchanges. The powers of theAudit Committee inter-alia include seeking information from any employee directing theCompany's internal Audit function obtaining outside legal or other professionaladvice and investigating any activity of the Company within the Committee's terms ofreference.
The Company has a well-defined internal control system which aims atprotection of Company's resources efficiency of operations compliances with thelegal obligations and Company's policies and procedures.
( g ) Discussion on financial performance with respect to operationalperformance.
The required information forms part of the Board's Report and themembers may refer the same.
(h) Significant changes in Financial Ratios
The key financial ratios are given as below:
|Ratio ||FY 2019-20 ||FY 2018-19 ||Explanation to significant change wherever applicable |
|Debtors Turnover ||5.17 ||6.04 ||- |
|Inventory Turnover ||5.45 ||6.79 ||- |
|Interest Coverage Ratio ||5.34 ||16.22 ||Low Volume/mix during the year due to Auto sector slowdown |
|Current Ratio ||1.90 ||1.61 ||- |
|Debt Equity Ratio ||- ||0.09 ||Due to zero debts during the year |
|Operating Profit Margin (%) ||2.36 ||10.53 ||Due to lower business volume and mix impacted the profits during the year |
|Net Profit Margin (%) ||1.90 ||6.35 ||Due to lower business volume/ mix in current year after the impacted the profits during the year. |
|Fixed assets turnover ratio ||2.01 ||2.50 ||- |
|Working capital turnover ratio ||5.46 ||8.71 ||Due to lower business volume |
The details of return on net worth at standalone and consolidatedlevels are given below:
|Particulars ||Standalone 2020 ||Standalone 2019 ||Consolidated 2020 ||Consolidated 2019 |
|Return on net worth (%) ||2.81 ||19.27 ||3.97 ||18.97 |
(i) Material developments in Human Resources / Industrial Relationsfront including number of people employed With the acquisition of Federal-Mogul byTenneco the focus of Learning and Development (L&D) was primarily on identifying andbuilding synergies in the L&D processes and programs. Skill building in technical andfunctional areas continued to remain a priority and internal trainers capability buildingwas done through Train The Trainer' programs to drive this agenda. The unionsettlements in Bangalore and Patiala concluded successfully.
The total number of salaried and hourly employees (permanent) as atMarch 31 2020 stood at 3363.
The Consolidated Financial Statements of the Company for the financialyear 2019-20 are prepared in compliance with applicable provisions of the Companies Act2013 Indian Accounting Standards (Ind AS) under the historical cost convention on theaccrual basis except for certain financial instruments which are measured at fair valuesand the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. The Consolidated Financial Statements have been preparedon the basis of Audited Financial Statements of the Company and its subsidiary company asapproved by their respective Board of Directors.
AUDITORS AND AUDITORS' REPORT
At the 62 AGM of the Company M/s. Walker Chandiok & Co. LLPChartered Accountants (Firm Registration No. 001076N/N500013) New Delhi were appointedas the Statutory Auditors' as per section 139 142 and other applicable provisionsif any of the Companies Act 2013 read with Companies (Audit and Auditors) Rules 2014to hold office till the conclusion of the 67 AGM of the Company to be held in the calendaryear 2022.
The written consent to such appointment and a certificate from M/sWalker Chandiok & Co. LLP Chartered Accountants (Firm Registration No.001076N/N500013) have been received to the effect that the appointment is in accordancewith the conditions prescribed under Rule 4 of the Companies (Audit and Auditors) Rules2014 and they satisfy the criteria specified under Section 141 of the Companies Act 2013read with Rule 4 of Companies (Audit & Auditors) Rules 2014.
The Board has duly examined the Statutory Auditors' Report to theaccounts which is self-explanatory.
The Board on the recommendation of the Audit Committee has approvedthe appointment of M/s. Sanjay Gupta & Associates Cost Accountants as Cost Auditorfor the financial year ending March 31 2021. The Cost Auditors will submit their reportfor the financial year ending 31 March 2021 on or before the due date.
In accordance with the provisions of Section 148 of the Companies Act2013 read with rules made thereunder since the remuneration payable to the Cost Auditorsis required to be ratified by the shareholders the Board recommends the same for approvalby shareholders at the forthcoming AGM.
The Company had appointed M/s. Deepika Gera Company Secretaries NewDelhi to conduct its Secretarial Audit for the financial year ended March 31 2020. TheSecretarial Auditors have submitted their report confirming compliance by the Company ofall the provisions of applicable corporate laws. The Report does not contain anyqualification reservation or adverse remark. The Secretarial Audit Report is annexed asAnnexure-8 to this report. The Board has reappointed M/s. Deepika Gera CompanySecretaries New Delhi as Secretarial Auditor of the Company for FY 2020-21.
A Secretarial Compliance Report for the financial year ended 31stMarch 2020 on compliance of all applicable SEBI Regulations and circulars/ guidelinesissued thereunder was obtained from M/s Surinder Vashishtha & Associates and wasaccordingly submitted to both the stock exchanges i.e BSE Limited and National StockExchange Limited. The said report is annexed as Annexure-9 to this report.
CORPORATE GOVERNANCE REPORT
The Company is committed to good corporate governance practices. TheBoard endeavors to adhere to the standards set out by the Securities and Exchange Board ofIndia (SEBI) corporate governance practices and accordingly has implemented all themajor stipulations prescribed.
A detailed corporate governance report in line with the requirements ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 regarding the corporate governance practices followed by the Company anda certificate of compliance from Mr. Surinder Vashishtha Proprietor of SurinderVashishtha & Associates Company Secretary forms part of this Report as Annexure-10.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return in form MGT-9 as per section 134(3)(a) ofthe Companies Act 2013 read with rule 12 of the Companies (Management &Administration) Rules 2014 is attached as Annexure-11 to this report.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as per Regulation 34 of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 detailing the various initiatives of the Company is attached as Annexure - 12.
COMMITTEES OF DIRECTORS
The Company has following committees of Directors:
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders ' Relationship Committee;
4. Corporate Social Responsibility Committee;
5. Share Transfer Committee;
6. Risk Management Committee
The composition of Audit Committee Nomination & RemunerationCommittee Stakeholders' Relationship Committee Risk Management Committee andCorporate Social Responsibility Committee has been disclosed in corporate governancereport forming the part of this report.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITOR'S UNDER SECTION 143 (12 ) O F THE COMPANIES ACT 2013
Pursuant to Section 134(3)(ca) no incident of fraud has been reportedby the Auditors of the Company under section 143(12) of the Companies Act 2013.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company is committed to highest standards of ethical moral andlegal business conduct. Accordingly the Board of Directors has formulated a WhistleBlower Policy which is in compliance with the provisions of Section 177(10) of theCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015. The policy provides for a framework andprocess whereby concerns can be raised by its employees against any kind ofdiscrimination harassment victimization or any other unfair practice being adoptedagainst them.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an anti-sexual harassment Policy and anInternal Complaints Committee in line with the requirements of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. Internal ComplaintsCommittee has been set up to redress the complaints received regarding sexual harassment.All employees (permanent contractual temporary trainees) are covered under the policy.The following is a summary of sexual harassment complaints received and disposed offduring the year 2019-20.
No. of complaints received: Nil
No. of complaints disposed off: Nil
During the year the Company carried out awareness programmes onprevention of sexual harassment at work place.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Directors place on record their deep appreciation for the contributionmade by the employees of the Company at all levels. Our industrial relations continue tobe cordial.
The information required under Section 197 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of Directors/ employees of your Company is set out in Annexure 13 & 14to this Report.
The employee relations have remained cordial throughout the year andindustrial harmony was maintained. Measures for the safety training and development ofthe employees continued to receive top priority.
However the workers at the Bangalore plant of the Company went on tooldown strike though the plant was still running through non-unionized workers and the saidstrike continued until 3rd October 2019. The relevant disclosures as required by law hadbeen made from time to time to the stock exchanges where the securities of the Company arelisted.
Further on 16th December 2019 the Company signed the laboursettlement with the trade union at the Bangalore plant of the Company for a period of four(4) years effective 1st January 2019.
The total number of permanent salaried and hourly paid employees as atMarch 31 2020 stood at 3363.
SAFETY HEALTH AND ENVIRONMENT PROTECTION
The Company sustained its initiatives to maintain a pollution freeenvironment by reduction/ elimination of waste optimum utilization of power andpreventive maintenance of equipment's and machineries to keep them in good condition.Safety and health of the people working in and around the manufacturing facilities is thetop priority of the Company and we are committed to improve this performance year afteryear.
Your Directors acknowledge with sincere gratitude the co-operation andassistance extended by the Bank(s) Customers Dealers Vendors promoters shareholders Government Authorities and all the other business associates during the yearunder review. The Directors also wish to place on record their deep sense of gratitude forthe committed services of the Executives staff and workers of the Company.