To the members
Your Directors are pleased to present the Annual Report of your Company along withAudited Financial Statements for the financial year ended 31st March 2017.
The year 2016-17 was an eventful one. Against the backdrop of robust macro-economicstability the year was marked by two major domestic policy developments with far-reachingconsequences: the passage of the Constitutional amendment paving the way for implementingthe transformational Goods and Services Tax (GST) and the demonetization of the twohighest denomination currency notes following which 86% of the currency in circulationceased to be legal tender. The latter moderated economic growth during the year underreview.
The year also witnessed an unprecedented cost increase for the tyre industryparticularly natural rubber prices and other raw materials which are essentiallypetro-based products impacting production costs and margins.
The Company could partly abate the impact of this by widening its market reach launchof new products across categories and improving operating efficiencies.
Your Company alongwith its subsidiaries JK Tornel Mexico and Cavendish IndustriesLtd. (CIL) recorded a Consolidated Turnover of H8383.28 Crores with Profit After Tax atH381.06 Crores.
On a standalone basis the Company clocked a Turnover of Rs.6667.17 Crores. Profitafter Tax for the year was H332.13 Crores.
During the year the Company completed the acquisition of CIL. Consequent to thisacquisition the Company strengthened its leadership in the Truck/Bus Radials and enteredthe growing 2/3 Wheeler Tyre segment participating in the entire range of productportfolio in the automotive tyre market. This substantial capacity acquisition makes theCompany future-ready to capture growth in the Country's automotive sector.
It is heartening that operations of CIL turned around and the Company declared a profitin its very first year of operations after JK Tyre assumed management control. Thisis a yet another turnaround story in the history of JK Tyre the first being VikrantTyres followed by Tornel and CIL.
Technology is the backbone of Company's success; technology leadership resides at thecore of its R&D activities. To sustain leadership your Company created a hub oftechnology and continuous learning by setting up a new Centre of Excellence at Mysuruwith an outlay of RS.00 crores equipped with a state-of-the-art testing facility coupledwith skilled and professionally-qualified scientists and engineers relocated from othercampuses (Jaykaygram Faridabad and Chennai).
GST is expected to create a common Indian market improve tax compliance governanceinvestment and growth. Following the expected launch of GST from 1st July 2017 decliningdemonetization impact and availability of enhanced capacities the Company expects toreport healthy growth.
During the year under review your Company received several coveted awards forexcellence in the following areas:
Awarded Super Brand' for 2016-17 by Super Brand Council of India for sixtimes consecutively since 2004.
FICCI Corporate Social Responsibility Award 2015-16 in recognition ofcommendable work done as a socially responsible company.
CII National HR Excellence Award 2016 for significant achievement in HRexcellence.
Platinum Category Award 2016 by Indian Green Building Council (IGBC) for theChennai tyre plant.
Excellent Energy Efficient Unit Award for the Chennai tyre plant from CII duringthe 15th Energy Efficient Summit 2016.
Your Directors are pleased to recommend a dividend of Rs.2.50 per equity share of Rs.2each (i.e. 125%) on the equity share capital of H45.36 crores for the financial year ended31st March 2017. The dividend outgo will be Rs.68.25 crores (inclusive of a dividend taxof RS.1.55 crores).
The amount available for appropriation including surplus from the previous year stoodat Rs.621.71 crores. The Directors propose this to be appropriated as under:
( Rs. crores)
|General Reserve ||150.00 |
|Surplus carried to Balance Sheet ||471.71 |
|Total ||621.71 |
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2017 in the prescribed form MGT 9is attached as Annexure A' with this Report and forms a part of it.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2017 all contracts or arrangements ortransactions entered into by the Company with related parties were in the ordinary courseof business and on an arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 as applicable.
Further the Company did not enter into any contract or arrangement or transaction withrelated parties that could be considered material in accordance with the policy of theCompany on materiality of related party transactions. In view of the above disclosure inFORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on theCompany's website.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are furnished in the financialstatements.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The members of the Company re-appointed Dr. Raghupati Singhania as Chairman &Managing Director and Shri Bharat Hari Singhania as Managing Director of the Company forrespective terms of five years commencing 1st October 2016 at the Annual General Meeting(AGM) held on 2nd September 2016.
The members also appointed Shri Anshuman Singhania Whole-time Director and ShriShreekant Somany who were appointed as Additional Directors as Directors liable toretire by rotation at the said AGM.
Shri Arun K. Bajoria Director & President-International Operations retires byrotation and being eligible offers himself for re-appointment at the ensuing AGM.
Declarations have been received from all Independent Directors of the Company that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Further there were no changes in the KMP composition in terms of Section 203 of theCompanies Act 2013.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 are annexed to this Report as Annexure B' and forms a part of it.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordancewith the applicable accounting standards. The audited consolidated financial statementstogether with the Auditors' Report form a part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries andassociates included in the consolidated financial statements is presented in a separatesection in this Annual Report. Please refer to AOC-1 annexed to the financial statementsin the Annual Report.
Pursuant to the provisions of Section 136 of the Act the financial statements theconsolidated financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.
During the financial year under review Cavendish Industries Ltd. has become asubsidiary of the Company and Florence Investech Ltd. has ceased to be an Associate of theCompany. Except this no Company has become or ceased to be your Company's subsidiary orassociate during the said financial year.
Pursuant to the approval of members by means of a special resolution dated 22ndSeptember 2015 the Company has continued to accept deposits from the public inaccordance with the provisions of the Companies Act 2013 and rules thereunder.
The particulars with respect to deposits covered under Chapter V of the said Act forthe financial year ended 31st March 2017 are: (a) accepted during the year - H51.92crores; (b) remained unclaimed as at the end of the year - RS..83 crores; (c) default inrepayment of deposits or payment of interest thereon at the beginning of the year and atthe end of the year - Nil and (d) details of deposits which are not in compliance with therequirements of Chapter V of the said Act - Nil.
(a) Statutory Auditors and their Report
In accordance with the provisions of the Companies Act 2013 and rules thereunder M/sLodha & Co. Chartered Accountants were appointed Auditors of the Company to holdoffice from the conclusion of the 61st Annual General Meeting (AGM) held on 25th September2014 until the conclusion of the 64th AGM to be held in the year 2017. M/s Lodha &Co. will therefore not be eligible for re-appointment as the Auditors of the Company atthe forthcoming AGM. Accordingly being eligible appointment of M/s S. S. Kothari Mehta& Co. Chartered Accountants as Statutory Auditors of the Company is proposed for aterm of three years to hold office from the conclusion of the 64th AGM to be held in theyear 2017 until the conclusion of 67th AGM to be held in the year 2020 subject to theapproval of the Members at the AGM to be held in the year 2017 and further subject toratification of the appointment by the members at the respective AGMs to be held in thesubsequent years. The observations of the auditors in their report on accounts and thefinancial statements read with the relevant notes for the financial year ended 31stMarch 2017 are self-explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice asSecretarial Auditor to carry out the secretarial audit of the Company for the financialyear 2016-17. The Report given by him for the said financial year in the prescribedformat is annexed to this Report as Annexure C'. The secretarial audit report doesnot contain any qualifications reservations or adverse remarks.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2016 was conducted by M/s R.J.Goel & Co. Cost Accountants Delhi and as required the Cost Audit Report was dulyfiled with the Ministry of Corporate Affairs Government of India. The Audit of the costaccounts of the Company for the financial year ended 31st March 2017 is also beingconducted by the said firm.
PARTICULARS OF REMUNERATION
Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules 2014 are placed on theCompany's website www.jktyre.com as an annexure to the Directors' Report. A physical copyof the same will be made available to any shareholder on request as per provisions ofSection 136(1) of the said Act.
Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(2) and 5(3) of the said Rules which form part of the Directors' Reportwill be made available to any shareholder on request as per provisions of Section 136(1)of the said Act.
CORPORATE SOCIAL RESPONSIBILITY
Your Company aims to contribute to sustainable growth of the society at large. Towardsthis end the Company will continue responding to society's needs and demands in aholistic and decisive manner in the fields of environment conservation of naturalresources health education rural development among others.
The Company has a CSR policy in accordance with the provisions of the Companies Act2013 and rules made thereunder. The contents of the CSR policy are disclosed on thewebsite of the Company.
The annual report on the CSR activities undertaken by the Company during the financialyear under review in the prescribed format is annexed to this Report as AnnexureD'.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financialcontrols with reference to financial statements. No reportable material weaknesses wereobserved in the system during the previous fiscal. Further the Company has laid downinternal financial control policies and procedures which ensure accuracy and completenessof the accounting records and the same are adequate for safeguarding of its assets and forprevention and detection of frauds and errors commensurate with the size and nature ofoperations of the Company. The policies and procedures are also adequate for orderly andefficient conduct of business of the Company. The Company also has a robust managementinformation system for the timely preparation of reliable financial information.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review there were no significant and material orderspassed by the regulators or courts or tribunals that could impact the going concern statusof the Company and its future operations.
CHANGE IN THE NATURE OF BUSINESS
During the year under review there was no change in the nature of business.
SUSTAINABILITY & BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f ) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Sustainability & Business Responsibility Reportof the Company for the financial year ended 31st March 2017 in the prescribed formatgiving an overview of the initiatives taken by the Company from an environmental socialand governance perspective is given in a separate section of the Annual Report and forms apart of it.
Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 a Management Discussion and Analysis CorporateGovernance Report and Auditor's Certificate regarding compliance of conditions ofCorporate Governance are made a part of this Report as Annexures - E' &F'.
The Corporate Governance Report which forms part of this Report also covers thefollowing:
a) Particulars of the five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofdirectors.
c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.
e) Details regarding Risk Management.
f ) Dividend Distribution Policy.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat: a) in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the said Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and
f ) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.
Your Directors wish to place on record their appreciation for the continued support andcooperation received from various State Governments including those of Rajasthan MadhyaPradesh Karnataka Tamil Nadu Uttarakhand as well as the Governments of India andMexico. The Directors also thank the banks shareholders suppliers dealers and inparticular the valued customers for their trust and patronage.
Your Directors record their appreciation for the dedication and hard work put in byTeam-JK Tyre' which has enabled the Company to continue to grow stronger in thesechallenging times.
| ||On behalf of the Board of Directors |
|15th May 2017 ||Dr. Raghupati Singhania |
|New Delhi ||Chairman & Managing Director |