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G S Auto International Ltd.

BSE: 513059 Sector: Auto
NSE: N.A. ISIN Code: INE736H01024
BSE 16:00 | 24 Sep 9.90 0.40
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NSE 05:30 | 01 Jan G S Auto International Ltd
OPEN 9.95
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VOLUME 13691
52-Week high 16.45
52-Week low 3.40
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
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Sell Price 0.00
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OPEN 9.95
CLOSE 9.50
VOLUME 13691
52-Week high 16.45
52-Week low 3.40
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

G S Auto International Ltd. (GSAUTOINTL) - Director Report

Company director report

For the Year Ended March 31 2020:

Dear Members

Your Directors have immense pleasure in presenting the 46th Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended March31 2020:-

1. Financial Results :The Summary of financial results is given below:-

(Rs Lakhs)

Year ended March 31 2020 Year ended March 31 2019
Revenue from Operations 8391.57 15391.00
Profit before Depreciation Interest & Tax (PBDIT) & before exceptional items 527.61 806.72
Less: Depreciation & Amortization 419.95 428.66
Profit/(Loss) before 107.66 378.06
Interest and Taxes (PBIT)
Interest & Financial expenses 455.16 466.91
Profit/(Loss) before Tax (PBT) (347.50) (88.85)
Less: - Provision for Tax
- Current 0.00 0.00
- Deferred Tax (82.78) (14.39)
Profit/(Loss) after Tax (PAT) for the year (264.72) (74.46)
Add/ Less: Other comprehensive income 40.08 5.40
Total Comprehensive Income for the year (224.64) (69.06)
Earnings per Share (Rs.)
- Basic & Diluted (1.82) (0.51)
Dividend per Share (Rs.) - -

2. Industry Scenario & Highlights/Performance of the Company:

During FY20 demand for CVs nose-dived to multi-year low as domestic sales dipped 29%y-o-y. Within CV sub segments M&HCVs sales declined 42% y-o-y and LCVs declined 20%y-o-y in FY20. The improved turnaround time post GST increased availability of trucks byan estimated 40%-45% in some of the routes across the country. Additionally as pervarious industry estimates the excess capacity created out of increase in axle load normwas expected to get absorbed in about 2-3-year period had the economy sustained highergrowth (7%-8% GDP growth). However as the economy continued to slowdown demand for CVsremained weak. Furthermore prevalence of tight vehicle financing environment as NBFCsface credit squeeze added to the challenges. During last quarter of FY20lower-than-anticipated pre-buying prior to BSVI transition and COVID-19 outbreak dampenedthe sales.

COVID-19 pandemic induced slowdown

India's GDP grew 3.1% in Q4FY20 the slowest rate in 11 years indicating slowingeconomy amid COVID-19 led lockdown. Core sectors manufacturing and construction contracted1.4% and 2.2% respectively during Q4FY20 on account of the lockdown imposed in March2020.

Also Gross Fixed Capital Formation (GFCF) which is a proxy for investment activity haswitnessed sharp drop during FY20 on account of tepid demand. The investment rate measuredas GFCF as a percentage of GDP fell to 26% in Q4FY20 the lowest in the past 8 years.

With outbreak of COVID-19 pandemic economic activities across the country remaindisrupted since March 2020 due to lockdown.

The Future outlook and Measure required for improvement

The Indian CV industry continues to exhibit cyclicality as witnessed in the last twodecades but the slump witnessed in FY20 was sharp and historic. During FY20 CVs salesvolume after growing briskly in the last few years declined 29% y-o-y to 7.2 lakh unitsagainst selling more than 10 lakh units for the first time during FY19 as a series ofevents and factors hit the brakes on the industry growth.

The industry needs revival measures that address both short-term and long-term demand.Despite no direct stimuli to boost CV demand being announced under ‘AtmanirbharBharat' package reforms being carried out in certain sectors are expected to improve CVsdemand in the medium term. Measures including commercialization of coal miningintroduction of seamless composite exploration-cummining-cum production regime forminerals liquidity boost to NBFCs and measures to improve agriculture and allied sectorsinfrastructure could have a positive impact on CVs demand in medium term. Demand revivalcould be hastened in case of implementation of long due scrappage policy reduction in GSTrates from the current 28% along with substantial economic measures including government'spush towards additional infrastructure projects.

During the year under review there is decline in the overall performance of thecompany inspite of better product mix and lower capacity utilization on account ofrecession in the Auto sector especially commercial vehicle segment resulting in sluggishdemand for commercial vehicles and affecting the auto component manufacturing units. Therevenue from operations has decreased to Rs. 8391.57 lakhs as compared to revenuefrom operations of Rs. 15391.00 lakhs of the previous year.

During the year your company has earned profit before depreciation & amortizationInterest & taxes (PBDIT) of Rs. 527.61 Lakhs (6.29% of Net Income) as comparedto previous year's profit before depreciation & amortization Interest & taxes(PBDIT) of Rs. 806.71 lakhs (5.24% of Net Income) with an overall increase in themargin by 1.05% as compared to previous year. The increase in the EBIDTA margin is mainlyon account of increase in the prices of its products and better product mix so tocompensate the prices of its raw material and allied products and services. Afterprovision for depreciation and amortization of Rs. 419.95 lakhs (previous year ofRs. 428.66 lakhs) Interest & financial expenses of Rs 455.16 lakhs(previous year of Rs. 466.91 lakhs) the company has earned a marginal loss beforetaxes of Rs. 347.50 lakhs as compared to the previous year's loss before taxes(PBT) of Rs. 88.85 lakhs.

After negative provision for taxation & deferred tax of Rs. 82.77 lakhs(previous year Rs.14.39 lakhs) there was a loss of Rs. 264.72 lakhs as compared toprevious year's loss after tax of Rs. 74.46 lakhs. The overall performance of thecompany has declined but seems to be in the line with industry trend and looking into theslowdown in the economy within the country as well as international level.

3. Foreign Exchange Earnings:

During the year your company has not paid net foreign exchange as compared to lastyear payment of Rs.316.90 Lakhs (mainly on account of repayment of its long termliability from financial institution).

4. Quality:

The Company has retained its ISO/TS 16949 certifications for its QualityManagement System.

5. Dividend:

During the period under review and in view of the loss during the year the Board hasdecided not to recommend any dividend for the financial year 2019-2020.

6. Reserves:

During the period under review no amount was transferred to reserves.

7. Management Discussion and Analysis Report:

In terms of the provisions of Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and

Analysis Report is presented in a separate section forming part of the Annual Report.

8. Adequacy of Internal Control:

The Company has a proper and adequate system of internal control to ensure that allassets are safeguarded properly utilized and protected against loss from un-authorizeduse or disposition and those transactions are authorized and recorded by the concerneddepartments properly and reported to the Audit Committee/ Board effectively.

The Company has also in place adequate internal financial controls with reference tofinancial statements. Such controls are tested from time to time and no reportablematerial weakness in the design or operation has been observed so far.

9. Cash Flow Statement:

In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Cash Flow Statement for the year endedMarch 31 2020 is annexed hereto.

10. Share Capital:

The paid-up share capital of the Company as at March 31 2020 is Rs. 7.25 Crores. TheCompany currently has no outstanding shares issued with differential rights sweat equityor ESOS.

11. Subsidiary Joint Venture and Associate

Companies:

The company does not have any subsidiary.

12. Names of the Companies which have become

Subsidiary Joint Ventures or Associate Companies during the year:

No Companies have become Subsidiary Joint Venture or Associate Company during theyear.

13. Obligation of Company under the Sexual

Harassment of Women at Workplace (Prevention Prohibition And Redressal) Act 2013:

In terms of provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has formulated a Policy to preventSexual Harassment of Women at Workplace. During the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace Prevention Prohibition andRedressal) Act 2013.

14. Vigil Mechanism:

The Company has established a Vigil Mechanism and a Whistle Blower Policy in accordancewith the provisions of the Act and Listing Regulations. Disclosures can be made by awhistle- blower through an email or a letter to the Chairman of the

Audit Committee. The Vigil Mechanism Policy can be a c c e s s e d a t t h e C o m p an y ' s w e b s i t e www.gsgroupindia.com.

15. Research And Development:

The Company is developing certain machineries (Special purpose Machines) as per itsvarious in house production process requirements along with for the requirements of itsgroup Companies as & when required under its Research & Development Centre.

16. Human Resource Development:

The Company has a team of able and experienced professionals and is always followingthe policy of Creating a healthy environment and work culture resulting into harmoniousinter-personal relations.

17. Risk Management:

The Board of Directors has constituted Business Development and Risk ManagementCommittee of the Company which has been entrusted with the responsibility to assist theBoard to look out for the new ventures/new business opportunities for the long termgrowth of the Company keeping in mind the future prospect of auto component business& overall automotive industry as a whole and with regard to the identificationevaluation and mitigation of operational strategic and environmental risks efficientlyand effectively.

18. Directors and Key Managerial Personnel (KMPs):

In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of association of the Company Mrs. Amarjit Kaur Ryait Executive Directorretires by rotation at the at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment.

Mr. Iqbal Singh Independent Director stepped down from the Board due to preoccupation. The Board of Directors on the recommendation of the Nomination andRemuneration Committee has appointed Mr. Mohit Bansal as an Additional Director in thecapacity of Independent Director. He will hold office up to the ensuing Annual GeneralMeeting. His appointment as an Independent Director will be subject to the approval ofshareholders.

During the period under review Mr. Neeraj Tuli resigned from the position of ChiefFinancial Officer of the Company and was relieved from his duties on November 14 2019.The Board of Directors in its meeting held on April 27 2020 appointed Mr. Deepak Chopraas Chief Financial Officer and Key Managerial Personnel of the Company.

The Company has received declarations from all the Independent Directors of the Companythat each of them meets the criteria of independence as provided in Section 149(6) of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and there has been no change in the circumstances which may affect theirstatus as independent director during the year.

In the opinion of the Board the independent directors possess appropriate balance ofskills experience and knowledge as required.

19. Board Evaluation:

The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board in the following manner:

Sr. Performance Performance evaluation
No. evaluation of performed by
1. Board and individual directors Board after seeking inputs from all directors
2. Board Committees Board seeking inputs from all committee members
3. Individual Directors Nomination and Remuneration committee
4. Non-independent directors Board as a whole and the Chairman Separate meeting of independent directors after taking views from executive directors.
5. Board its Committees and individual Directors At the board meeting held after the meeting of the independent directors based on evaluation carried out as above.

20. Number of Meetings of the Board:

The Board met five times during the financial year the details of which are given inthe Corporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013.

21. Familiarization Program for Independent

Directors:

To familiarize the new inductees with the strategy operations and functions of ourCompany the senior management personnel make presentations to the inductees about theCompany's strategy operations product offerings markets organization structurefinance human resources technology quality facilities and risk management. The detailsof such familiarization programmes for Independent Directors are posted on the website ofthe Company www.gsgroupindia.com.

22. Committees of the Board:

Currently the Board has four committees: the Audit

Committee Nomination and Remuneration Committee Stakeholders' Relationship Committeeand Business Development and Risk Management Committee. All committees consist of acombination of Independent as well as non independent directors as stipulated under theprovisions of the Companies Act 2013.

A detailed note on the Board and its Committees is provided under the CorporateGovernance Report section in this Annual Report. The composition of the committees andcompliances as per the applicable provisions of the Act and Rules are as follows:

Name of the Committee Composition of the Committee Highlights of Duties responsibilities and activities.
Audit Committee Mr. Sharwan Sehgal Chairman The Company has adopted the Vigil Mechanism for directors and employees to report concerns about unethical behavior actual or suspected fraud or violation of the Company's Code of Conduct and Ethics.
Mr. Avinash Sharma
Mr. Jasbir Singh Ryait
*Mr.Iqbal Singh
In accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company has formulated policies on related party transactions and material subsidiaries. The policies are available on the website www.gsgroupindia.com.
Nomination and **Mr. Pardeep Sehgal Chairman The committee overseas and administers executive compensation reviews the compensation program to align both short term and long term compensation with business objectives and to link compensation with the achievement of measurable performance goals.
Remuneration Mr. Sharwan Sehgal
Committee Mr. Upkar Singh Ahuja
Mr. Avinash Sharma
The Nomination and Remuneration Committee has framed the Nomination and Remuneration Policy. A copy of the policy is appended as Annexure II
Stakeholders Relationship Committee **Mr. Pardeep Sehgal Chairman The committee reviews and ensures redressal of investor grievances.
Mr. Sharwan Sehgal
Mr. Avinash Sharma The committee noted that all the grievances of the investors have been resolved during the year.
Mr. Upkar Singh Ahuja
Business Development and Risk Management Committee **Mr. Harkirat Singh Ryait Chairman The purpose of Committee is to look out for the new ventures/new business opportunities for the long term growth
Mr. Jasbir Singh Ryait of the Company keeping in mind the future prospect of auto component business &overall automotive industry as a whole and with regard to the identification evaluation and mitigation of operational strategic and environmental risks efficiently and effectively.

*Resigned w.e.f. 27th April 2020. **Appointed w.e.f 31stJuly 2020.

23. Auditors Audit Report and Audited Accounts:

M/s Sukhminder Singh & Co. (ICAI Firm Registration No. 016737N) CharteredAccountants Ludhiana were appointed as Statutory Auditors in place of M/s

Nanda & Bhatia in 43 Annual General Meeting to hold office until the conclusion of47 Annual General Meeting (AGM). Pursuant to the Companies (Amendment) Act 2017 therequirement of ratification of appointment of the Auditors on yearly basis had beendispensed with.

The Auditors' Report read with the notes to the accounts referred to therein areself-explanatory and therefore do not call for any further comments. There are noqualifications reservations or adverse remarks made by the Auditors.

24. Cost Audit:

Pursuant to the provisions of Section 148 of the Companies Act 2013 M/s.PawanVerma& Co. Cost Accountants were appointed as the Cost Auditors to conduct auditof cost records.

25. Secretarial Audit:

Pursuant to the provisions of Section 204 and other applicable provisions if any ofthe Companies Act 2013 M/s. Bhupesh Gupta & Associates Practising CompanySecretaries were appointed as the Secretarial Auditor for auditing the secretarial recordsof the Company for the financial year 2019-20.

The Secretarial Auditors' Report in Form No. MR-3 as required under the Act for thefinancial year ended March 31 2020 is annexed hereto. There are no qualificationsreservations or adverse remarks made by the Secretarial Auditors. The Report forms part ofthis report as Annexure III.

26. Corporate Governance:

As per the requirement of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has complied with the requirements of Corporate Governancein all material aspects.

A report on Corporate Governance (Annexure- I) as stipulated under the ListingRegulations forms an integral part of this Report. The requisite certificate from theAuditors of the Company confirming compliance with the conditions of Corporate Governanceis attached to the report on Corporate Governance.

27. Deposits:

During the year under review the Company has not accepted any deposits and as such noamount of principal or interest on deposits from public was outstanding as on the date ofthe balance sheet.

28. Particulars of Loans Guarantees and

Investments:

The Company has not given any loans or guarantees or made investments in contraventionof the provisions of the Section 186 of the Companies Act 2013. The details of the loansand guarantees given and investments made by the Company are provided in the notes to thefinancial statements.

29. Related Party Transactions:

All related party transactions that were entered into during the financial year ifany were on arm's length basis and were in the ordinary course of Company's business. TheCompany has not entered into any contract arrangement or transaction with any relatedparty which could be considered as material within the meaning of Regulation 23 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

All the related party transactions are placed before the Audit Committee for approvalon a quarterly basis. Members may refer to Note 44 to the Financial Statements which setsout related party disclosures pursuant to Ind AS.

The Policy on dealing with related party transactions and the Policy for determiningmaterial subsidiaries as approved by the Board of Directors may be accessed on theCompany's website at www.gsgroupindia.com

30. Remuneration of Directors/ Employees and related analysis:

During the period under review no employee of the Company received salary in excess ofthe limits as prescribed under the Act. Accordingly no particulars of employees are beinggiven pursuant to Section 134 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

Other information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the company will be provided upon request.

31. Code of Conduct:

The Board has laid down a code of conduct for board members and senior managementpersonnel of the Company. The code incorporates the duties of independent directors aslaid down in the Companies Act 2013. The said code of conduct is posted on Company'swebsite www.gsgroupindia.com. The Board members and senior management personnel haveaffirmed compliance with the said code of conduct. A declaration signed by the Chairmanand Jt. Managing Director is given at the end of the Corporate Governance Report.

32. Significant and Material orders passed By the

Regulators or Courts:

There are no significant or material orders passed by any regulator tribunal or courtthat would impact the going concern status of the Company and its future operations.

33. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:

In accordance with the requirements of Section 134 of the Companies Act 2013statement showing particulars with respect to conservation of energy technologyabsorption and foreign exchange earnings and outgo is furnished as Annexure IV to thisreport.

34. Extract of Annual Return:

In accordance with the requirements of Section 92 (3) of the Companies Act 2013 andrule 12 (1) of the Companies (Management and Administration) Rules 2014 an extract ofAnnual Return in Form MGT-9 is furnished as Annexure No. V to this report. The same isalso available on the website of the Company www.gsgroupindia.com.

35. General:

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

a) There were no material changes and commitments affecting the financial position ofthe Company that has occurred between the end of the financial year of the Company and thedate of signing of this report.

b) Details of deposits.

c) Any fraud reported by the Auditors of the Company under Section 143(12) read withrule 13 of Companies (Audit and Auditors) Rules 2014.

d) Significant material orders passed by Regulators or Courts or Tribunls which impactthe going concern status and the Company's Operations in future.

36. Directors' Responsibility Statement

Your Directors confirm:

i. that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

ii. that your Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year March 31 2020 and of the loss of the Company for the financial year;

iii. that your Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that your Directors have prepared the annual accounts on a going concern basis; v.that your Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

vi. that your Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

37. Acknowledgements:

Your Directors place on record their sincere appreciation gratitude to the continuingpatronage and trust of our valued customers bankers financial institutions businessassociates shareholders and other statutory authorities who have extended their continuedsupport and encouragement to your Company. Your Directors wish to convey their deepappreciation to the dealers distributors of the Company for their achievements in thefield of sales and service and to suppliers and vendors and other business associates fortheir valuable support.

Your directors also place on record their sincere appreciation for the enthusiasm andcommitment of all its employees for the growth of the Company and look forward to theircontinued involvement and support.

Place: Ludhiana For and on behalf of the
Date: 26.08.2020 Board of Directors
sd/- sd/-
Jasbir Singh Ryait Harkirat Singh Ryait
Chairman & Executive Director
Jt. Managing Director DIN:07275740
DIN:00104979

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