The Directors have pleasure in presenting the twenty third annual report and theaudited accounts for the year ended 31st March 2019.
1. FINANCIAL HIGHLIGHTS
| || ||(? in lakhs) |
|Particulars ||Year ended 31.3.2019 ||Year ended 31.3.2018 |
|Sales and other income ||49102.23 ||45470.08 |
|Profit before financial costs depreciation and amortization expenses ||4022.15 ||4748.42 |
|Less : Finance costs ||178.37 ||111.17 |
|Depreciation ||938.54 ||719.13 |
|Profit before tax ||2905.24 ||3918.12 |
|Less : Provision for: || || |
|Income tax ||538.01 ||740.34 |
|Deferred tax ||185.86 ||(66.12) |
|Tax relating to earlier years ||(20.63) ||164.03 |
|Profit after tax ||2202.00 ||3079.87 |
|Other Comprehensive Income ||88.92 ||6.42 |
|Total Comprehensive income for the year ||2290.92 ||3086.29 |
|Appropriations: || || |
|First interim Dividend paid ||233.07 ||155.38 |
|Second interim Dividend paid ||233.07 ||310.76 |
|Balance carried to Balance Sheet ||1824.78 ||2620.15 |
|Total ||2290.92 ||3086.29 |
The Board of Directors of the Company (the Board) at its meeting held on 6thFebruary 2019 declared a first interim dividend of ? 3.00 per share (30%) for the year2018-19 absorbing a sum of ? 2.33 cr. The same was paid to the shareholders on 19th February2019.
The Board at its meeting held on 26th March 2019 declared a second interimdividend of ? 3.00 per share (30%) for the year 2018-19 absorbing a sum of ? 2.33 cr. Thesame was paid to the shareholders on 8th April 2019.
Thus the total amount of both dividends for the year ended 31st March 2019aggregated to ? 6.00 per share (60%) thereby absorbing a sum of ? 4.66 cr on 7769040equity shares of face value of ? 10/- each.
The Company has set-off its dividend distribution tax payable under Section 115-O(1A)of the Income Tax Act 1961 against the dividend distribution tax paid by its subsidiaryCompany viz. Harita Fehrer Limited on its dividend declared.
The board does not recommend any further dividend for the year under consideration.
3. SCHEME OF ARRANGEMENT
The Board at their meeting held on 14th February 2019 approved a draftComposite Scheme of Amalgamation amongst Harita Limited ("Transferor Company1") Harita Venu Private Limited ("Transferor Company 2") Harita CheemaPrivate Limited ("Transferor Company 3") Harita Financial Services Limited("Transferor Company 4") Harita Seating Systems Limited ("TransferorCompany 5") and Minda Industries Limited ("Transferee Company") and theirrespective shareholders ("Scheme").
The aforesaid Scheme under Section 230 to 232 of the Companies Act 2013 inter-aliaprovides for the following:
(i) Amalgamation of the Transferor Company
1 Transferor Company
2 Transferor Company
3 and Transferor Company
4 (collectively referred as "Transferor Companies") with the TransfereeCompany; and
(ii) Amalgamation of the Transferor Company
5 with the Transferee Company.
In consideration for amalgamation the shareholders of the Transferor Companies and theTransferor Company 5 (at the option exercised by the shareholder) shall receive equityshares or non-convertible redeemable preference shares of the Transferee Company for theproposed Scheme.
The Scheme is subject to necessary statutory and regulatory approvals under applicablelaws and the approval of the shareholders creditors and others.
The "Appointed Date" for the Scheme if approved will be 1st April2019.
4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Company provides complete seating solutions for driver and cabin seating forcommercial vehicles tractors and construction equipment as well as passenger seats forbuses across all segments and has established itself as a leader in these segments in thecountry.
INDUSTRY STRUCTURE AND DEVELOPMENTS
In 2018-19 the economy grew by 6.8% (revised series) as against 6.9% (revised series)previous year.
The following table highlights the segment wise industry sales in vehicle units for theyear 2018-19.
|Category ||2018-19 ||2017-18 ||Variance |
| ||(in Nos) ||(in Nos) ||(in %) |
|Medium and Heavy Commercial Vehicles (M & H CV) ||439164 ||384408 ||14.2 |
|Light Commercial Vehicles (LCV) ||667883 ||569010 ||17.4 |
|Buses - M & H CV ||47707 ||47827 ||(0.3) |
|Tractors ||893495 ||790673 ||13.0 |
[ Source: SIAM CRISIL internal estimates]
The Company registered sales at ? 477.60 Cr in 2018-19 as against ? 444.28 Cr in2017-18. During the year efficiency in supply chain was improved through inter-plantcoordination horizontal deployment of lean and other improvement initiatives across allplants.
These initiatives along with the implementation of various other cost reductionprojects across functions have enabled the Company to post a profit before tax of ? 29.05Cr in 2018-19.
OPPORTUNITIES AND THREATS
The Company has initiated new product development activities to maintain the leadershipposition in the tractor segment in the domestic market and grow the export market. TheCompany continues to strengthen its position in export markets and has won significant neworders from overseas customer. The supplies are scheduled in 2019-20. The Company also hasdeveloped high end pneumatic and mechanical suspension seats as platform productofferings. It continues to actively seek orders from global OEMs in the current year. As aleader in the bus passenger seats with a wide range of seats the Company has furtherstrengthened its position with new product launches in North India. The market has wellresponded to these new launches and the Company is gaining market share in this region.
A significant competitive threat is the entry of overseas manufacturers and the Indianbus body builders getting into seat manufacturing. The Company continues to invest instrengthening the design and testing capabilities to retain the market leadership status.
The Company aims to take advantage of the growing Tractor industry by offering platformproducts to leading tractor OEMs and thereby looks forward to win a large share ofdomestic sales. With respect to the CV OEMs the Company is taking steps to retain thesales growth by expanding customer base and increasing share of business in existingdomestic customers.
During the year the Company posted a growth of 9% in overall sales. The Company'ssales grew in the commercial vehicle segment and in the bus passenger seats better thanthe market growth. Export sales grew by 15% in current products and new productscustomers. In the case of domestic tractor segment the Company catered to the existingbase of customers and experienced 9% growth. The Company positively looks forward toimprove new product development lead time and effectively establish growth in domestictractor market in 2019-20.
AWARDS & RECOGNITION
The Company received the award for "Supplier of the Year" from TAFE duringthe year. Further the Company performance was recognised by John Deere with an award of"Partner" level recognition at their Global Vendor Conference.
BUSINESS OUTLOOK AND OVERVIEW
Indian economy is expected to grow at 6.5%-7.1% in 2019-20. The M&HCV segment isexpected to grow at 6% and LCV >3.5T segment at 7%. Bus segment is also expected togrow at 4% and tractor segment at 2% in 2019-20 (based on SIAM CRISIL and internalestimates).
RISKS AND CONCERNS
The Indian commercial vehicle industry has strong correlation with the agriculturalgrowth infrastructure development and the mining industry and is cyclical. The Company'spresence across the segments of auto industry will largely mitigate the segment specificrisks. The Company plans to develop additional products to maintain its growth plans. TheCompany has also put in place initiatives to improve product quality to support the growthplans.
The Rupee has depreciated sharply in the last year against the US dollar. There may notbe a major change in 2019-20 nor any further depreciation. The Company will continue totake suitable forex cover to mitigate the risk in foreign exchange fluctuations.
RISK MANAGEMENT POLICY
The Board has established a Risk Minimization Policy which formalizes the Company'sapproach to overview and manage material business risks. The policy is implemented througha top down and bottom up approach identifying assessing monitoring and managing keyrisks across the Company's business units. Risks and effectiveness of their management areinternally reviewed and reported regularly to the Board. The management has reported tothe Board that the Company's risk management and internal compliance and control systemsare operating efficiently and effectively in all material respects. The Board is satisfiedthat there are adequate systems and procedures in place to identify assess monitor andmanage risks. The Audit Committee also reviews reports by Members of the management teamand recommends suitable action. Risk Minimization Policy has been approved by the Board.
The Company has continued its focus on having best manufacturing processes andfacilities. It has also imparted training to key employees in an effort to reskill peopleand upgrade the manufacturing processes apart from improvements in the facility by meansof automation. Further improvements of Lean Manufacturing / Flow Management initiativeswill help the Company in containing manufacturing costs.
The Company's initiatives to introduce new refresh ideas in existing products was wellreceived by leading customers both in OEM and aftermarket segment.
The Company continues to take steps to improve further the quality of its products. TheFinal Product Audit (FPA) initiative taken by the Company has brought appreciation fromcustomers. The quality system at the factories aims at achieving total customersatisfaction through its focus on improving product quality. Consistently the Company hasbeen achieving improved Quality levels at the customer-end both in their line andwarranty quality.
The Company's plants are certified for IATF 16949. In addition the Quality laboratoryas well as the R&D test facility at the Company is certified by National AccreditationBoard for Testing and Calibration Laboratories (NABL) for conformance to ISO/IEC 17025.100% employee participation in the Company's improvement programmes like suggestionschemes quality control circle projects supervisory improvement team projects crossfunctional team projects and task force team projects continued successfully for the 18thyear in succession.
c. Focus on Vendor Development:
The Company continued its vendor development initiative through Visionary Small andMedium Enterprise programme.
INTERNAL CONTROL AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure that all theassets of the Company are safeguarded and protected against any loss and that all thetransactions are properly authorized and recorded. Information provided to management isreliable and timely. The Company ensures adherence to all statutes.
INTERNAL FINANCIAL CONTROL
The Company has an established internal financial control framework including internalcontrols over financial reporting operating controls and anti-fraud framework. Theframework is reviewed regularly by the management and tested by internal audit team andpresented to the audit committee. Based on the periodical testing the framework isstrengthened from time to time to ensure adequacy and effectiveness of InternalFinancial Controls.
KEY FINANCIAL RATIOS
|Particulars ||Unit of Measurement ||Standalone ||Consolidated |
| || ||2017-18 ||2018-19 ||2017-18 ||2018-19 |
|Interest || || || || || |
|Coverage Ratio ||Times ||36.25 ||17.29 ||58.43 ||20.42 |
|Debt Equity Ratio ||% ||14.60% ||23.65% ||14.50% ||17.76% |
|Operating || || || || || |
|Profit Margin ||% ||8.86% ||6.28% ||6.45% ||7.96% |
|Net Profit Margin ||% ||8.62% ||5.92% ||7.82% ||6.13% |
|Return on Net worth ||% ||30.08% ||18.35% ||36.04% ||24.80% |
Profit before tax in 2018-19 was ? 29.05 Cr as against previous year's ? 39.18 Crresulting in change in profit related ratios.
Working capital borrowing has increased during the year which has impacted the Interestcoverage and Debt equity ratios.
HUMAN RESOURCE DEVELOPMENT
The Company has achieved a good financial performance through the concerted andgoal-aligned efforts by employees across the hierarchy. The Company places on record itsdeep appreciation for the exemplary contribution of the employees at all levels.
The Company continued to induct fresh talent. The Company has upgraded the trainingneeds identification based on the role requirements and gaps in this identification areclosed by providing training to improve employee competencies. The Company's industrialrelations continue to be cordial.
As of 31st March 2019 the Company had 358 employees on its rolls.
Statements in the management discussion and analysis report describing the Company'sobjectives projections estimates expectations may be forward looking statements withinthe meaning of applicable Securities Laws and Regulations. Actual results could differmaterially from those expressed and implied. Important factors that could make adifference to the Company's operations include among other things economic conditionsaffecting the demand supply and price conditions in the markets in which the Companyoperates changes in government regulations tax laws and other statutes and incidentalfactors.
5. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 (theAct 2013) with respect to Directors' Responsibility Statement it is hereby stated that -
i. in the preparation of annual accounts for the financial year ended 31stMarch 2019 the applicable Accounting Standards had been followed along with properexplanation relating to material departures if any;
ii. the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year andprofit of the Company for the year under review;
iii. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv. the Directors had prepared the annual accounts for the financial year ended 31stMarch 2019 on a "going concern basis";
v. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
vi. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
6. CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR activities have already been textured into the Company's value system throughSrinivasan Services Trust (SST) established in 1996 with the vision of buildingself-reliant rural community. Over 23 years of service SST has played a pivotal role inchanging lives of people in rural India by creating self-reliant communities that aremodels of sustainable development. The Company is eligible to spend on their ongoingprojects / programs falling within the CSR activities specified under the Act 2013 asmandated by the Ministry of Corporate Affairs for carrying out the CSR activities.
The Committee formulated and recommended a CSR policy in terms of Section 135 of theAct 2013 along with a list of projects / programmes to be undertaken for CSR spending inaccordance with the Companies (Corporate Social Responsibility Policy) Rules 2014. Basedon the recommendation of the CSR Committee the Board has approved the projects /programmes carried out as CSR activities by SST constituting more than 2% of the averagenet profits of the Company made during the three immediately preceding financial yearstowards CSR spending for the financial year 2018-19 amounting to ? 52 Lakhs.
Presently SST is working in 5000 villages spread across Tamil Nadu KarnatakaMaharashtra Himachal Pradesh and Andhra Pradesh covering a population of about 31 lakhsand 7 lakh families. SST has focussed on the areas of economic development health careeducation environment and infrastructure in around 3000 villages so far. SST will focusin the other 2000 villages also so that all the areas are covered in the next 3 years.
As required under Section 135 of the Act 2013 read with Rule 8 of the Companies(Corporate Social Responsibility Policy) Rules 2014 the annual Report on CSR containingthe particulars of the projects / programmes approved and recommended by CSR Committee andapproved by the Board for the financial year 2018-19 are given by way of Annexure IVattached to this Report.
7. FINANCIAL PERFORMANCE AND POSITION OF THE SUBSIDIARY COMPANY
As on the date of this report Harita Fehrer Limited Chennai (HFRL) is the onlysubsidiary of the Company.
HFRL is a material un-listed Indian subsidiary in terms of Regulation 24 read withRegulation 16(1)(c) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) as the total turnover ofthe subsidiary exceeds 10% of the consolidated turnover of the Company.
During the year HFRL achieved a turnover of ? 548.80 cr and earned a profit after taxof ? 23.33 cr (before Other comprehensive Income). HFRL declared two interim dividends forthe year ended 31st March 2019 aggregating to ? 5.00 per share (50%) on20098040 equity shares of ? 10/- each absorbing a sum of ? 12.12 cr including dividenddistribution tax.
8. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company are prepared in accordance withthe provisions of Section 129 of the Act 2013 read with the Companies (Accounts) Rules2014 and Regulation 33 of the Listing Regulations along with a separate statementcontaining the salient features of the financial performance of the subsidiary. Theaudited consolidated financial statements together with Auditors' Report form part of theAnnual Report.
The audited financial statements in respect of the subsidiary Company will be madeavailable to the shareholders on receipt of a request from any shareholder and it hasalso been placed on the website of the Company. This will also be available for inspectionby the shareholders at the registered office during the business hours. The consolidatedprofit after tax of the Company and its subsidiary amounted to ? 40.23 cr for thefinancial year 2018-19 as compared to ? 49.13 cr in the previous year.
9. DIRECTORS & KEY MANAGERIAL PERSONNEL Independent Directors (IDs)
All IDs hold office for a fixed term and are not liable to retire by rotation.
At the Annual General Meeting (AGM) held on 6th August 2014 M/s HLakshmanan S I Jaffar Ali and C N Prasad were appointed as IDs for the first term of fiveconsecutive years from the conclusion of the Eighteenth AGM and to receive remuneration byway of fees reimbursement of expenses for participation in the meetings of the Board and/ or Committees and profit related commission in terms of applicable provisions of theAct 2013 as determined by the Board from time to time.
At the AGM of the Company held on 13th August 2018 Mr L Bhadri and MsSasikala Varadachari were appointed as IDs for the second term of three consecutive yearseffective 13th October 2018 and 22nd March 2019 respectively.Subject to the approval of Nomination and Remuneration Committee and Board M/s HLakshmanan S I Jaffar Ali and C N Prasad are proposed to be re-appointed for the secondterm of three consecutive years from 6th August 2019 as IDs of the Company interms of Section 149 of the Act 2013 on the same terms of appointment and remuneration byway of fees and profit related commission if any subject to approval of Shareholdersthrough Postal Ballot. On appointment each ID has acknowledged the terms of appointmentas set out in their letter of appointment. The terms cover inter alia the dutiesrights of access to information disclosure of their interest / concern dealing inCompany's shares remuneration and expenses insurance and indemnity. The IDs are providedwith copies of the Company's policies and charters of various committees of the Board.
In accordance with Section 149(7) of the Act 2013 all IDs have declared that they meetthe criteria of independence as provided under Section 149 (6) of the Act 2013 andRegulation 25 of the Listing Regulations.
The detailed terms of appointment of IDs is disclosed on the Company's website in thefollowing link www.haritaseating.com/PDF/HSSL-TermsofAppointmentofIDs.pdf
Separate meeting of Independent Directors:
During the year under review a separate meeting of IDs was held on 20thMarch 2019 and all the Independent Directors were present at the Meeting.
Based on the set of questionnaires complete feedback on Non-Independent Directors anddetails of various activities undertaken by the Company were provided to IDs to facilitatefor their review / evaluation.
a) Non-Independent Directors (Non-IDs)
IDs used various criteria and methodology practiced in Industry prescribed by NRC forevaluation of Mr Martin Grammer Non-ID Chairman of the Board and the Board as a whole.IDs evaluated the performance of Mr Martin Grammer individually through a set ofquestionnaires. They reviewed his interaction during the board meetings and strategicinputs given by him to improve the risk management internal controls and contribution tothe Company's growth.
IDs were satisfied fully with the performance of Mr Martin Grammer.
The IDs reviewed the performance of Chairman of the Board after taking in to accounthis performance and bench marked the achievement of the Company with industry under thestewardship of Chairman.
The IDs also placed on record their appreciation of Chairman's visionary leadershipsetting tone pace and opportunity for positive change and passion for constantimprovement and admired the high standards of integrity and probity quality and adequacyof leadership of Chairman and his versatile performance.
The IDs also endorsed that the Chairman is a very accomplished leader and isexceptionally well informed about the state of economy.
IDs also evaluated Board's composition size mix of skills and experience its meetingsequence effectiveness of discussion decision making follow up action so as to improvegovernance and enhance personal effectiveness of Directors. The evaluation process focusedon Board Dynamics and upon evaluation IDs concluded that the Board is well balanced interms of diversity of experience with expert in each domain viz. Banking FinanceOperations Legal Administration and International economy. The Company has a Board withwide range of expertise in all aspects of business.
The IDs unanimously evaluated the prerequisites of the Board viz. formulation ofstrategy acquisition & allocation of overall resources setting up policiesdirectors's election process and cohesiveness on key issues and satisfied themselves thatthey were adequate.
They were satisfied with the Company's performance in all fronts and finally concludedthat the Board operates with global best practices.
IDs have also ensured that the skills / expertise / competence of the Board ofDirectors are in line with the Company's business requirement to enable it to functioneffectively.
d) Quality Quantity and Timeliness of flow of Information between the CompanyManagement and the Board
All IDs have expressed their overall satisfaction with the support received from themanagement and the excellent work done by the management during the last year and alsorelationship between the top management and Board is smooth and seamless.
Directors appointment / re-appointment
In terms of the provisions of sub-section (6) read with explanation to Section 152 ofthe Act 2013 two-thirds of the total number of directors i.e. excluding IDs are liableto retire by rotation and out of which one-third is liable to retire by rotation at everyAnnual General Meeting.
Mr Martin Grammer Director is liable to retire by rotation at the AGM and beingeligible offers himself for re-appointment.
The Directors have recommended his reappointment. A brief resume of the Directorproposed to be re-appointed and other relevant information have been furnished in theNotice of AGM. Appropriate resolution for his reappointment is being placed for approvalof the shareholders at the AGM.
Key Managerial Personnel (KMP)
In terms of Section 2(51) and Section 203 of the Act 2013 Mr A G GiridharanPresident & CEO Mr S Jagannathan Chief Financial Officer and Ms N Iswarya LakshmiCompany Secretary are KMPs of the Company.
Nomination and Remuneration Policy
NRC reviews the composition of the Board to ensure an appropriate mix of abilitiesexperience and diversity to serve the interests of all shareholders and the Company.
Nomination and Remuneration Policy was approved by the Board at its meeting held on 22ndSeptember 2014 and amended from time-to-time in terms of Section 178 of the Act2013. The objective of such policy shall be to attract retain and motivate executivemanagement and devise remuneration structure to link to Company's strategic long termgoals appropriateness relevance and risk appetite. NRC will identify ascertain theintegrity qualification appropriate expertise and experience having regard to theskills that the candidate will bring to the Board / Company whenever the need arises forappointment of Directors / KMP.
Criteria for performance evaluation disclosures on the remuneration of directorscriteria of making payments to non-executive directors have been disclosed as part ofCorporate Governance Report attached herewith.
Evaluation of Directors and Committees
In terms of Section 134 of the Act 2013 and the Corporate Governance requirements asprescribed under the Listing Regulations the Board reviewed and evaluated all Directors(excluding the Director being evaluated) and various Committees viz. Audit CommitteeNomination and Remuneration Committee Corporate Social Responsibility Committee andStakeholders Relationship Committee based on the evaluation criteria laid down by the NRCi.e. through a set of questionnaires.
The performance of all Directors were assessed against a range of criteria such ascontribution to the development of business strategy and performance of the Companyunderstanding the major risks affecting the Company clear direction to the management andcontribution to the Board cohesion. The performance evaluation has been done by the entireBoard of Directors except the Director concerned being evaluated.
The Board noted that all Directors have understood the opportunities and risks to theCompany's strategy and are supportive to the direction articulated by the management teamtowards consistent improvement.
On the basis of the report of performance evaluation of directors the Board noted andrecorded that all the directors should extend and continue their term of appointment asDirectors / Independent Directors as the case may be.
Board delegates specific mandates to its Committees to optimize Directors' skills andtalents besides complying with key regulatory aspects.
- Audit Committee for overseeing financial Reporting;
- Risk Management Committee for overseeing the risk management framework;
- Nomination and Remuneration Committee for selecting and compensating Directors / KMPs/ SMPs;
- Stakeholders' Relationship Committee for redressing investors grievances; and
- Corporate Social Responsibility Committee for overseeing CSR initiatives andinclusive growth.
The performance of each Committee was evaluated by the Board after seeking inputs fromits Members on the basis of specific terms of reference its charter time spent by theCommittees in considering key issues quality of information received majorrecommendations / action plans and work of each Committee. The Board is satisfied withoverall effectiveness and decision making of all Committees. The Board reviewed eachCommittee's terms of reference to ensure that the Company's existing practices remainappropriate.
Recommendations from each Committee were considered and approved by the Board prior toits implementation wherever necessary and there were no items where the board had notaccepted any recommendation of any committee of the board in the relevant financial year.Details of Committees its charter functions are provided in the Corporate GovernanceReport attached to this Report.
Number of board meetings held
The number of Board meetings held during the financial year 2018-19 is provided as partof Corporate Governance Report prepared in terms of the Listing Regulations.
The Company at its twenty first AGM held on 9th August 2017 appointed M/sRaghavan Chaudhuri & Narayanan Chartered Accountants Bengaluru having Firm
Registration No. 007761S allotted by The Institute of Chartered Accountants of Indiaas statutory auditors of the Company to hold office for the first term of fiveconsecutive years from the conclusion of the said AGM at such remuneration in additionto applicable taxes out of pocket expenses travelling and other expenses as may bemutually agreed between the Board of Directors of the Company and the Auditors.
The Statutory Auditors will continue to hold office for the 3rd year in thefirst term of five consecutive years from the conclusion of this AGM. The Company hasobtained necessary certificate under Section 141 of the Act 2013 conveying theireligibility for being statutory auditors of the Company for the year 2019-20. TheAuditors' Report for the financial year 2018-19 does not contain any qualificationreservation or adverse remark and the same is attached with the annual financialstatements.
As require under Section 204 of the Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company is required to appoint aSecretarial Auditor for auditing secretarial and related records of the Company.
The Secretarial Audit Report for the year 2018-19 given by Ms B Chandra PracticingCompany Secretary Chennai is attached to this report. The Secretarial Audit Report doesnot contain any qualification reservation or other remarks. The Board at its meeting heldon 8th May 2019 has re-appointed Ms B Chandra Practising Company SecretaryChennai as Secretarial Auditor for carrying out the secretarial audit for the financialyear 2019-20.
11. CORPORATE GOVERNANCE
The Company has been practicing the principles of good governance over the years andlays strong emphasis on transparency accountability and integrity.
A separate section on Corporate Governance and a certificate from the statutoryauditors of the Company regarding compliance of conditions of Corporate Governance asstipulated under SEBI LODR Regulations 2015 forms part of this Annual Report.
The CEO & CFO of the Company have certified to the board on financial statementsand other matters in accordance with Regulation 17 (8) of the Listing Regulationspertaining to CEO/CFO certification for the financial year ended 31st March2019.
12. POLICY ON VIGIL MECHANISM
The Company has adopted a Policy on Vigil Mechanism in accordance with the provisionsof Act 2013 and Regulation 22 of the Listing Regulations which provides a formalmechanism for all Directors Employees and other Stakeholders of the Company to report tothe management their genuine concerns or grievances about unethical behaviour actual orsuspected fraud and any violation of the Company's Code of Business Conduct and Ethics.
The Code also provides a direct access to the Chairman of the Audit Committee to makeprotective disclosures to the management about grievances or violation of the Company'sCode. The Board at its meeting held on 8th May 2019 made certain amendments tothe Whistle Blower Policy for reporting any allegations of material nature on any leakageof Unpublished Price Sensitive Information.
The Policy is disclosed on the Company's website with the following linkwww.haritaseating.com/PDF/WhistleBlowerPolicy.pdf
13. PUBLIC DEPOSITS
The Company has not accepted any deposit from the public within the meaning of Section76 of the Act 2013 for the year ended 31st March 2019.
14. STATUTORY STATEMENTS
Information on conservation of energy technology absorption foreign exchange etc.
Information on conservation of energy technology absorption and foreign exchangeearnings and outgo are given in Annexure I to this report in terms of the requirements ofSection 134(3)(m) of the Act 2013 read with the Companies (Accounts) Rules 2014.
Material changes and commitments
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this report.
Significant and material orders passed by the Regulators or Courts or Tribunalsimpacting the going concern status of the Company
There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
Extract of the Annual Return in prescribed form is given as Annexure-II to this Reportin terms of the requirements of Section 134(3)(a) of the Act 2013 read with the Companies(Accounts) Rules 2014.
The same is available on the company's website in the following linkhttp://www.haritaseating.com/PDF/Annual_Return_2018-19.pdf
Details of employees receiving the remuneration in excess of the limits prescribedunder Section 197 of the Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed as a statement and given inAnnexure III. In terms of first proviso to Section 136(1) of the Act 2013 the AnnualReport excluding the aforesaid annexure is being sent to the shareholders of the Company.The annexure is available for inspection at the Registered Office of the Company duringbusiness hours and any shareholder interested in obtaining a copy of the said annexure maywrite to the Company Secretary at the Registered Office of the Company.
Comparative analysis of remuneration paid
A comparative analysis of remuneration paid to Directors and employees with theCompany's performance is given as Annexure V to this report.
Details of material related party transactions
Details of material related party transactions under Section 188 of the Act 2013 readwith the Companies (Meetings of Board and its Powers) Rules 2014 are given in AnnexureVI to this report in the prescribed form.
Details of loans / guarantees / investments made
During the year under review the Company had not granted any loans or guaranteescovered under Section 186 of the Act 2013.
Please refer note no.3 to Notes on accounts for the financial year 2018-19 for detailsof investments made by the Company.
Reporting of fraud
The Auditor's of the Company have not reported any fraud as specified under Section143(12) of the Act 2013.
Disclosure in terms of Sexual Harassment of Women at workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has Internal Complaints Committees as required under The Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
During the year under review there were no cases filed pursuant to the provisions ofSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
The Directors acknowledge the support and cooperation received from the promotersHarita Group and Mr Martin Grammer. The Directors thank the customers suppliersfinancial institutions and bankers for their valuable support and assistance.
The Directors wish to place on record their appreciation of the sincere efforts of allthe employees of the Company during the year under review.
The Directors also thank the shareholders for their continued faith in the Company.
| ||For and on behalf of the Board |
|Chennai ||H Lakshmanan |
|8th May 2019 ||Chairman |