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Force Motors Ltd.

BSE: 500033 Sector: Auto
NSE: BAJAJTEMPO ISIN Code: INE451A01017
BSE 00:00 | 26 Mar 1656.30 4.10
(0.25%)
OPEN

1659.00

HIGH

1697.00

LOW

1646.60

NSE 05:30 | 01 Jan Force Motors Ltd
OPEN 1659.00
PREVIOUS CLOSE 1652.20
VOLUME 15779
52-Week high 3238.00
52-Week low 1300.00
P/E 12.95
Mkt Cap.(Rs cr) 2,183
Buy Price 1646.00
Buy Qty 20.00
Sell Price 1656.30
Sell Qty 217.00
OPEN 1659.00
CLOSE 1652.20
VOLUME 15779
52-Week high 3238.00
52-Week low 1300.00
P/E 12.95
Mkt Cap.(Rs cr) 2,183
Buy Price 1646.00
Buy Qty 20.00
Sell Price 1656.30
Sell Qty 217.00

Force Motors Ltd. (BAJAJTEMPO) - Director Report

Company director report

To

The Members

The Directors are pleased to present the 59th Annual Report together with the auditedfinancial statements and the consolidated audited financial statements for the FinancialYear ended on 31st March 2018.

1. Financial Results

(Amounts in Lakh)

Standalone
Particulars 2017-18 2016-17
Rs. Rs.
Revenue from Operations (Gross)* 353101 349457
Other Income 6113 8494
Gross Profit (Profit before
Depreciation & Taxes) 32949 34808
Depreciation 12926 11308
Profit before Taxes (Net) 20023 23500
Provision for Taxation (Net) 5328 5508
Profit After Tax 14695 17992
Other Comprehensive Income/(Loss) 229 (216)
Comprehensive Income for the year 14924 17776
Proposed Dividend 1318 1318
Tax on proposed Dividend 271 268
Balance in Retained Earnings 137074 123828
Consolidated
Particulars 2017-18 2016-17
Rs. Rs.
Revenue from Operations (Gross)* 353136 349495
Other Income 6113 8494
Gross Profit (Profit before
Depreciation & Taxes) 32984 34845
Depreciation 12926 11308
Profit before Taxes (Net) 20058 23537
Provision for Taxation (Net) 5337 5519
Profit After Tax 14721 18018
Other Comprehensive Income/(Loss) 229 (216)
Comprehensive Income for the year 14950 17802
Attributable to :
(a) Equity holders of the Company 14941 17793
(b) Non Controlling Interest 9 9
Transfer to General Reserve 6 6
Proposed Dividend 1318 1318
Tax on proposed dividend 271 268
Balance in Retained Earnings 137251 123992

* Post the applicability of Goods and Services Tax (GST) with effect from 1st July2017 revenue from operations is required to be disclosed net of GST. Accordingly therevenue from operations for the year ended 31st March 2018 is not comparable with theprevious year.

Considering the reserve position of the Company the Board of Directors of your Companydecided not to transfer further amount from the profits for the Financial Year underreport to General Reserve.

The Audited Consolidated Financial Statements in accordance with the Companies Act2013 (‘the Act') and Indian Accounting Standard 110 on Consolidated FinancialStatements is provided in this Annual Report.

2. State of Company's Affairs and Future Outlook

After the turbulence in the business environment caused by the three transitions of

- the installation of the GST regime

- the demonetisation of November 2016 and

- the nation-wide standardisation of BS-IV emission.

The Company's business environment and business processes have stabilised. The Companyis now regularly producing BS-IV vehicles which are well accepted in the market. Theadaption of GST by the country has enabled the Company to smoothen its inward and outwardlogistics in so far as virtually all its depots could be eliminated. Company to Companytransactions - between the factory and our dealers have now become the norm. There isthus greater ease of business.

The plants of the Company are functioning well. Continuous improvements inmanufacturing processes and efforts to refine the work culture are yielding the desiredbenefits.

The proportion of Company's sales value derived from ‘vehicle manufacturing andselling' on the one hand and ‘components -engines axles manufacturing' for MercedesBenz and BMW on the other hand continues to be nearly the same. Both activities arepositive and the outlook is optimistic.

The Company has continued its efforts to achieve BS-VI capable engines in time for allits vehicles. Currently the understanding based on the Government of India'spronouncements is that vehicles manufactured after 1st of April 2020 will necessarily becompliant of BS-VI whereas vehicles manufactured prior to 1st of April 2020 even if theyare BS-IV compliant will be sellable post 1st April 2020. This is a very tight programmeand any pre-emption caused by any regulatory phenomena will create considerable problemsand result in disruption in production and sale.

Various projects that the Company has been working on such as successor product to theTraveller and to the Trax platforms as also development of new larger capacity busesand a range of small commercial vehicles are progressing well.

3. Change in Nature of Business if any

During the year under review there is no change in the nature of business of theCompany.

4. Dividend

The Board recommended dividend at Rs. 10 per share for the year under report in itsmeeting held on 29th May 2018.

The details of the dividend and shares transferred to the Investor Education andProtection Fund during the year under review are covered in the Report of CorporateGovernance.

5. Share Capital

The paid up equity share capital as on 31st March 2018 was Rs. 131762620. There wasno public issue rights issue bonus issue or preferential issue etc. during the periodunder review. The Company has not issued any shares with differential voting rights orgranted stock options or sweat equity during the period under review.

6. Extract of Annual Return

The extract of Annual Return as on 31st March 2018 pursuant to the provisions ofSection 92 of the Act and Rules framed thereunder in Form MGT-9 is annexed to thisreport.

7. Number of Meetings of the Board of Directors

During the Financial Year 2017-18 there were six meetings of the Board of Directors ofthe Company held on 11th May 2017 20th July 2017 13th September 2017 9th November 201723rd January 2018 and 20th March 2018.

8. Particulars of Loans Guarantees or Investments

The Company has not given any loans guarantees or made investments under Section 186of the Act during the year under review. Particulars of investments made upto the previousfinancial year by the Company are provided in the Financial Statement attached to thisReport.

9. Particulars of Contracts or Arrangements with Related Party

All Related Party Transactions (‘RPT's) entered during the year were on arm'slength basis. There were no material related party contract(s) or arrangement(s) ortransaction(s) during the year under review as defined under Regulation 23 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (‘the Listing Regulations').

During the Financial Year 2017-18 pursuant to Section 177 of the Act and Regulation 23of the Listing Regulations all RPTs were placed before the Audit Committee for itsrequisite approval. The policy on materiality of RPTs as approved by the Board isavailable on the Company's website www.forcemotors.com.

10. Explanation / Comments on any Qualification of Auditors

There are no qualifications reservations or adverse remarks made either by theStatutory Auditors or by the Company Secretary in Practice (Secretarial Auditor) in theirrespective audit reports.

11. Material Changes and Commitments

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the Financial Year i.e. 31st March 2018 andthe date of Report.

12. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo Conservation of Energy

The energy conservation efforts are steadily maintained through various projects andare yielding significant financial benefits as was explained last year.

The company is gearing up the Pithampur plant as a zero discharge plant whichobjective should be achieved in the current year.

Technology Absorption

The Company has been working closely with technology houses such as IDIADA MIRA EDAGTechnocad DSD Drive System Designs Magna and others to obtain selective specialistinputs on technology in its progress for development of new vehicles tractors enginestransmissions etc. The projects being carried out at the Company's enhanced R&Dfacilities with the strengthened R&D teams are progressing satisfactorily. TheCompany continues to derive the benefit of the technical consultancy and expertise fromDr. Manfred Duernholz and Dr. Rolf Bacher. The Company has already created an extendeddesign facility which is now fully operative for housing the design teams connected withthe Traveller and Trax platforms.

A new lab is being set up for noise vibration harshness engineering (NVH). It isexpected to be commissioned in the last quarter of the current calendar year.

The expenditure on the R & D for new products including the expenditure onProjects and Tool Engineering was 5.66 % of the operational turnover of the Company forthe year under report. The Company continues to maintain its emphasis on researchdevelopment and tool engineering activities.

Particulars 2017-18 2016-17
(Rs.) (Rs.)
Capital Expenditure on R&D 15792 5855
Revenue Expenditure on R&D 4176 5494
Total R&D Expenditure 19968 11349
Total Income 359214 357951
% of total R&D Expenditure to
Total Income 5.56 3.17
Revenue from Operations 353101 349457
% of total R&D Expenditure to
Revenue from Operations 5.66 3.25

Foreign Exchange Earnings and Outgo

The foreign exchange earned by the Company during the year under review was Rs.3680Lakh as against Rs. 5071 Lakh during the previous year.

Total foreign exchange outflow during the year under review was Rs. 117118 Lakh ascompared to Rs. 85365 Lakh during the previous year.

13. Subsidiary Company

Tempo Finance (West) Private Limited is a subsidiary of the Company. The Board ofDirectors of the Company has reviewed the affairs of the Subsidiary Company. As perSection 129 of the Act the Company has prepared the Consolidated Financial Statements ofthe Company and the Subsidiary Company which forms part of the Annual Report. A statementcontaining the salient features of the Financial Statement of the Subsidiary Company inthe prescribed format AOC-1 forms part of the Audited Financial Statement of the Company.

A copy of the Audited Financial Statements of Subsidiary Company will be made availableto the members of the Company seeking such information. The Audited Financial Statementsof Subsidiary Company will be kept for inspection by any member at the Registered Officeof the Company on all working days (10.00 a.m. to 3.30 p.m.) upto the date of the ensuingAnnual General Meeting. These financial statements and Policy on Material Subsidiaries isplaced on the Company's website www.forcemotors.com.

14. Joint Venture

The Company has entered into Joint Venture Agreement with MTU Friedrichshafen GmbH aSubsidiary Company of Rolls-Royce Power Systems AG to form an Indian Joint VentureCompany for producing engines (for power generation and rail application) and completepower generation systems including associated spare parts - for both the Indian and theglobal markets. A Joint Venture Company named ‘Force MTU Power Systems India PrivateLimited' has been incorporated on 7th August 2018.

The Company plans to build a dedicated production facility under this joint ventureat Chakan Pune.

15. Risk Management

The Company has in place a comprehensive Risk Management framework - to identifymonitor review and take all necessary steps towards mitigation of any risk elements whichcan impact the business health of the Company on a periodic basis.

All the identified risks are managed through continuous review of business parametersby the Management and the Board of Directors are also informed of the risks andconcerns.

16. Directors and Key Managerial Personal

Mr. Vinay Kothari Director of the Company retires by rotation and being eligibleoffers himself for re-appointment.

All the necessary information pertaining to Mr. Vinay Kothari Director retiring byrotation is a part of the Statement attached to the notice dated 26th July 2018.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Act the following are the KeyManagerial Personnel of the Company : a) Mr. Prasan Firodia Managing Director b) Mr.Sanjay Kumar Bohra Chief Financial Officer c) Mr. Kishore P. Shah Company Secretary

17. Declaration of Independent Directors

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Act so as to qualifythemselves to be continued as Independent Directors under the provisions of the Act andthe relevant Rules.

18. Details of Significant and Material Orders Passed by the Regulators or Court orTribunal

There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operation in future for theyear under report. As reported earlier petition challenging the decision of the Hon'bleHigh Court of Judicature at Bombay in respect of change in the name of the Company isstill under consideration of the Hon'ble Supreme Court of India.

19. Adequacy of Internal Financial Controls

M/s. Capri Assurance & Advisory Services Chennai and M/s. Jugal S. RathiChartered Accountants Pune are the Internal Auditors of the Company. The internalfinancial controls are adequate with reference to the financial status size andoperations of the Company.

20. Fixed Deposits

The details of deposits accepted / renewed during the year under review are furnishedhereunder :

Sr. No. Particulars Nos. Amount
(Rs. in Lakh)
a) accepted or renewed during the year* 6 27.00
b) remained unpaid or unclaimed as at the end of the year (31st March 2018)** 15 12.55
c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved.
i) at the beginning of the year Nil Nil
ii) maximum during the year Nil Nil
iii) at the end of the year Nil Nil

* The deposits which were accepted or renewed during the Financial Year 2017-18 wererepaid during the same Financial Year.

** Includes 5 nos. fixed deposits amounting to Rs. 60000 which are matured claimedbut have been withheld on the instructions of Statutory Authorities (CBI) and will be paidupon their approval.

21. Corporate Social Responsibility (CSR)

The Annual Report on the CSR activities of the Company pursuant to Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 is annexed to this report.

22. Audit Committee

The Audit Committee of the Company consists of Mr. Pratap Pawar Mr. Arun Sheth Dr.Indira Parikh Mr. Vinay Kothari and Mr. Sudhir Mehta. Of the above the IndependentDirectors viz. Mr. Pratap Pawar Mr. Arun Sheth and Dr. Indira Parikh form the majority.

The Company has established a vigil mechanism formulated a Whistleblower Policy andthe Committee would oversee the genuine concerns expressed by the employees and otherDirectors. The Company has also provided adequate safeguards against victimization ofemployees and Directors who express their concerns. The mechanism provides direct accessto the Chairman of the Audit Committee in exceptional cases. The details of the mechanism/ policy are disclosed on the website of the Company www.forcemotors.com.

23. Policy on Directors Appointment and Criteria

The Company's Policy relating to appointment of Directors payment of managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Act is available on thewebsite of the Company www.forcemotors.com.

24. Formal Annual Evaluation of the Performance of Board / Committees and Directors

Information on the manner in which formal annual evaluation is made by the Board ofits own performance and the directors is given in the Report on Corporate Governance.

25. Corporate Governance

The Company has taken all necessary steps to implement the provisions of theRegulations and a detailed report on the various matters including the Auditors' Reporton Corporate Governance is attached to this Report.

26. Business Responsibility Report

As required under Regulation 34(2) of the SEBI Listing Regulations 2015 the Companyhas presented its Business Responsibility (BR for brevity) Report for the financial year2017-18 which is part of this Annual Report.

27. Details of Directors and Employees' Remuneration

The information required pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided upon request. In terms of Section 136 of theAct the Report and the Accounts are being sent to the members and others entitledthereto excluding the information on employees' particulars which is available forinspection by the members at the Registered Office of the Company (Time : 10.00 a.m. to3.30 p.m.) on working days up to the date of ensuing Annual General Meeting. If anymember(s) is / are interested in obtaining a copy thereof such member(s) may write to theCompany Secretary in this regard.

28. Disclosure on Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013

The Company has adopted Anti Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees as defined under the said Act are coveredunder this policy. Awareness programs were carried out against sexual harassment. Therewere no complaints received during the year under review.

29. Details of Frauds Reported by Auditors

There are no frauds against the Company reported by the Auditors for the period underreport.

30. Directors' Responsibility Statement

The Directors of your Company to the best of their knowledge and belief and accordingto the information and explanations obtained by them make the following statements interms of Section 134 (3) (c) of the Act : a) in the preparation of the Annual FinancialStatements for the year ended 31st March 2018 the applicable accounting standards havebeen followed along with proper explanation relating to material departures; b) for theFinancial Year ended 31st March 2018 such accounting policies as mentioned in the Notes tothe Financial Statements have been applied consistently and judgments and estimates thatare reasonable and prudent have been made so as to give a true and fair view of the stateof affairs of the Company and of the profit of the Company for the year ended 31st March2018; c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; d)the Annual Financial Statements have been prepared on a going concern basis; e) thatproper internal financial controls were followed by the Company and that such internalfinancial controls are adequate and were operating effectively; f) that proper systems toensure compliance with the provisions of all applicable laws were in place and that suchsystems were adequate and operating effectively.

31. Secretarial Standards of the ICSI

The Company is in compliance with the Secretarial Standards on the Meetings of Board ofDirectors (SS-1) and General Meetings (SS-2) as issued and amended by the Institute ofCompany Secretaries of India ('the ICSI').

32. Statutory Auditor

The Shareholders at the 58th Annual General Meeting appointed M/s. Kirtane &Pandit LLP Chartered Accountants (Firm Registration No. 105215W/W100057) Pune as theStatutory Auditors of the Company for a period of five years i.e. upto the conclusion of63rd Annual General Meeting subject to ratification by the members at each interveningAnnual General Meeting. In view of the amendment to Section 139 through the Companies(Amendment) Act 2017 notified on 7th May 2018 ratification of auditors' appointment isno longer required. However as required under Section 142 of the Companies Act 2013 aproposal is put up for approval of members for authorising the Board of Directors of theCompany to fix Auditors' remuneration for the Financial Year 2018-19 and thereafter. Themembers are requested to approve the same.

33. Cost Accountant

The Board of Directors of the Company has appointed M/s. Joshi Apte & AssociatesCost Accountants Pune for verification and review of the Cost Records of the Companyfor the Financial Year 2018-19. You are requested to ratify the remuneration to be paid tothem.

34. Secretarial Audit Report

Mr. I. U. Thakur Company Secretary in Practice having Membership No. FCS 2298 wasappointed to conduct the Secretarial Audit of the Company for the Financial Year 2017-18as required under Section 204 of the Act and Rules made there under. The Secretarial AuditReport in Form MR-3 for the Financial Year 2017-18 is annexed to this report.

35. Industrial Relations

The industrial relations at all the Plants of the Company have been cordial during theyear.

36. Appreciation

The Directors express their gratitude to the Dealers Suppliers and Banks for theirsupport and express their warm appreciation of the sincere co-operation and dedicatedwork by the employees of the Company.

For and on behalf of the Board of Directors
Force Motors Limited
Abhaykumar Firodia
Chairman
DIN: 00025179
Pithampur 26th July 2018
Registered Office :
Mumbai-Pune Road Akurdi Pune - 411 035.
CIN: L34102PN1958PLC011172
Website: www.forcemotors.com
Phone: (Board) +91 20 2747 6381
E-mail: compliance-officer@forcemotors.com