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Johnson Controls-Hitachi Air Condition. India Ltd.

BSE: 523398 Sector: Engineering
NSE: JCHAC ISIN Code: INE782A01015
BSE 00:00 | 10 Dec 1774.65 -15.35






NSE 00:00 | 10 Dec 1774.70 -6.85






OPEN 1700.00
52-Week high 2750.00
52-Week low 1505.00
P/E 53.66
Mkt Cap.(Rs cr) 4,825
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1700.00
CLOSE 1790.00
52-Week high 2750.00
52-Week low 1505.00
P/E 53.66
Mkt Cap.(Rs cr) 4,825
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Johnson Controls-Hitachi Air Condition. India Ltd. (JCHAC) - Director Report

Company director report


Dear Members

Your Directors have pleasure in presenting the Thirty Third Annual Report and theAudited Financial Statements for the year ended March 31 2018.


The highlights of financial results of the Company for the year under review are givenbelow:

( Rs In Million)
For the year ended March 31 2018 For the year ended March 31 2017
Revenue from operations (gross) 22582.7 20985.5
Other Income 73.9 67.8
Total Revenue 22656.6 21053.3
Profit before finance cost depreciation and tax 2062.6 1745.4
Finance Cost 19.8 43.9
Depreciation and amortization expenses 529.2 518.5
Profit before Tax 1513.6 1183.0
Tax expense 512.1 369.7
Profit for the year 1001.5 813.3


Your Directors recommend a dividend of Rs 1.50 per Equity Share for the yearended March 31 2018. This is subject to the approval of the Members at the ensuing AnnualGeneral Meeting.


On 1st October 2015 Johnson Controls Inc. and Hitachi Appliances Japanformed a global joint venture and commenced the operations under ‘JohnsonControls-Hitachi Air Conditioning' providing a whole range of customized and innovativeair conditioning products to global customers. Johnson Controls-Hitachi Air ConditioningIndia Limited is the subsidiary of the joint venture and a leading air conditioner Companyin India. Backed by an experience of over 30 years the Company offers reliable airconditioners to the customers at the right price to meet their expectations therebyfostering growth and innovation.

The business of the Company revolves within a single business segment i.e. CoolingProducts. Apart from manufacturing room and commercial air-conditioners the Company alsoforays into trading of Refrigerators Air Purifiers & Washing machines within thecountry. Additionally the Company has a total installed capacity of manufacturing 900000Room Air conditioners (in a single shift) 120000 Tons of Ductable units 9000 VRFs ODUand 300 Chillers per annum. The company also has a nationwide distribution networkconsisting of 5 regional offices 20 branch offices 203 exclusive sales and servicedealers and over 8000 sales points. The company provides aftermarket service through 1235service points.

With a strong belief in simplifying life Johnson Controls-Hitachi Air ConditioningIndia Limited adopts world-class technologies to constantly innovate and inculcate newerconcepts and advanced features in its products for a comfortable and relaxed life.


During the year under review the Air conditioning market has witnessed a steady growthof approximately 8% in terms of volume compared to the previous fiscal year as per ourestimates.

Macro factors such as growing middle class rising disposable incomes and standard ofliving increasing urbanization availability of financing options and construction ofhousing units are all anticipated to further spur the growth of air conditioning market inthe residential sector. The Government's energy efficiency program will lead to fasteradoption of energy saving air conditioners such as inverter AC's. This along with theintroduction of various schemes such as EMIs and discounts are expected to boost themarket for air conditioners in the coming years.

Regarding the Commercial air conditioning segment the transformation of the Indianretail market from being unorganized to organized has led to the construction of shoppingmalls retail stores and multiplexes not just in Tier-I cities but also in Tier-II andIII cities. This growth of the retail infrastructure would in turn increase the demandfor air conditioning systems in the years to come. Also the rapid commercial developmentsuch as coming up of new office spaces special economic zones (SEZs) and corporate hubsalong with the proliferation of organized retail outlets are also driving the demand forHVAC installations across the country in the Commercial air conditioning segment. VariableRefrigerant Flow (VRF) segment is expected to grow the fastest due to its energyefficiency modularity and ease of installation.



Room Air Conditioners

After a sluggish first half of the year 2017-18 owing to the rollout of GST the IndianHVAC Industry picked up pace in the second half. The RAC segment saw a shift towardsenergy-efficient models such as inverter/5- star ACs due to the increasing awareness oflife cycle costs over upfront costs among customers. Additionally as the 4-star and5-star rated ACs will operate only on inverter technology the Split AC market over thetime is expected to make transition to inverter technology. This new energy rating will beeffective 2018 onwards which will further accelerate the market.

The industry witnessed strong growth in the RAC segment of around 7% wherein the SplitAC Segment registered a considerable growth of around 10% with a slight contraction in theWindow AC segment. Presently the Company enjoys a significant 11% volume of market sharein the Indian AC industry. According to Motilal Oswal report the Indian RAC industrybeing at an inflection point is speculated to register a CAGR of 15% to 7.2m units inFY20. Despite demonetization-driven weakness the AC sales are expected to gainconsiderable momentum in FY18. During 2017-18 the Company registered a 24.5% year-on-year(YoY) growth in sales of Room ACs which was considerably higher than the overall industrygrowth rate. This growth was attributed to the various initiatives taken under the ProductStrategy coupled with strong channel support marketing and promotion support and dynamicexpansion in new markets.

Innovation has always been at the core of Hitachi. Propelled by this philosophy theCompany has introduced various unique and customer friendly products and technologies timeand again. With initiatives such as I-Care and technologies like Tropical InverterI-Clean Plus I-See I-Sense and Wi-Fi-enabled control system Hitachi's Room ACs havealways been offering expert and most innovative cooling solutions. Hitachi's inverter ACrange uses R-410A refrigerant which is eco-friendly thus ensuring minimum ozone layerdepletion. The star I-Clean Plus technology automatically cleans the AC's filter every 5hours. With unrestricted airflow the machine's energy efficiency remains factory freshthroughout its life time.

In its current lineup of products Hitachi offers approximately 36 new models of RoomACs with 108 SKUs. The Company's world-class and efficient design and development team areworking relentlessly on the development of new technologies with an aim to ease the lifeof its consumers. Besides designing and developing innovative products we also strive toeducate our customers bringing more power to them. In our marketing campaigns we areimparting more awareness about the benefits of a 5-star tropical inverter technologyenabled AC to the customers. In order to keep up with the rising demand of Split ACs inTier-II and Tier-III markets ‘Merai' is the new range launched during this period.These new stylish round-edge design models offer best-in-class features like 100% coolingcapacity which in turn ensures less energy consumption wide angle deflectors andpowerful air flow thus providing a long-lasting cooling experience across every corner ofthe room.

Moving progressively ahead on its endeavor to further increase the market share inIndia Hitachi upgraded its product range by launching various new models. The Company'scurrent product range consists of 2 3 4 and 5 Star rated fixed speed and inverter ACs.The Company's range of Split Air Conditioners consists of ‘Kashikoi' Range‘Neo' ‘I Connect' ‘Zunoh' ‘Toushi' ‘Star Sumo' ‘ACEReidan' ‘Waza' and ‘Ridaa'. Its ‘Kashikoi' range has industry leadingtechnologies like ‘I See' ‘I sense' ‘I clean' Tropical InverterCompressor etc. Aligned to the goal of providing efficient cooling to every Indian household the Company launched a campaign called "Every Home Deserves Hitachi InverterAC" to promote Hitachi inverter AC and make Hitachi brand more accessible andapproachable in mid segment level.

In Window AC segment the Company continued to have more than 10 Models in 2 3 4 and5 Star rating category offering technologies like Twin Motor Hot & Cold AutoClimate etc. Despite the shrinking Window AC market it gained considerable traction inthe Northern and Western India markets leading to a rise in demand. Besides this theCompany also focused on channel enhancement as a strategic move enabling it to expand itsoutreach in Tier II and Tier III towns. Special emphasis was laid on increasing theCompany's presence in e-commerce sector by collaborating with online retail platforms andmodern retail partners.

Commercial Air Conditioners

Despite a challenging phase of the Indian economy during 2017-18 owing todemonetization and implementation of GST which had a direct impact on the commercialbusiness the Company's Commercial Air Conditioning segment witnessed a remarkable growthduring this period. Hitachi's Packaged Air Conditioner category also registered asignificant growth of around 18% in the fiscal year. Channel expansion and Businessextraction strategies adopted by the Company were the two driving factors behind thegrowth. The Company continuously focused on exploring new business avenues leading to afar better growth in PAC business as compared to the industry growth. In the years tocome with the stabilization of the impact of demonetization and GST the Company isexpecting a robust growth resulting in increased profitability.

During the period the Company also saw a positive growth in the VRF systems primarilybecause of adoption of eco-friendly energy efficient air-conditioning and flexibility ofoperations. The Company also maintained its focus on Set-free VRF systems which isexpected to grow at CAGR of 14%. For further expansion in this category the Companyworked on various initiatives such as new product development new technology enhancementdevelopment of eco-friendly products channel expansion and marketing of this product. TheCompany's VRF segment registered a growth of 10% in the previous financial year whileduring this period the growth rate was 8% (HP Basis). The Company is confident that withthe inclusion of new products in the current VRF product range its commitment to provideenhanced technology drive to enhance channel availability it will be able to providebetter cooling solutions to customers and experience an exponential growth in set-free VRFcategory.

The Chiller business segment was impacted drastically due to the economic slowdownwitnessing a de-growth during the period. The Company's Chiller trading business declinedby 54.4% while the Chiller manufacturing business declined by 2.1%. With the normalizationof Demonetization and GST the Company expects the Chiller business segment to gaintraction and revive demand in the near future.

Application-Based Air Conditioners

The Company's special Air-conditioning product like Telecom AC has a huge dependenceon the growth of telecom industry. FY17-18 was a difficult year for the entire telecomindustry due to market disruptions. This year Hitachi's telecom tower AC categoryregistered a decline of around 32% over that of the last year. This situation is likely toimprove due to the rising demand and growing business of telecom in upcountry and ruralmarkets boosting the demand of telecom tower ACs.


The Company ventured into the export business segment 3 years back. In the last coupleof years the Company has started exporting to Sri Lanka Indonesia Bangladesh UAEMiddle-East and Nepal. However the business suffered due to change in govt. policiesowing to which exports declined by 24% mainly due to fall in the exports of Split ACs ascompared to last year. The Company expects to increase its exports business in the comingyears with much stabilized government policies in FY18-19.


The company has a strong business in the trading of premium range of Refrigerators andAir purifiers. The Company offers a range of premium refrigerators starting from 250 ltrcapacity. Being aesthetically superior and embedded with consumer convenience focusedtechnologies these products cater to the niche audience looking for good quality andreliable products. The Company's diversified and enhanced range of refrigerators makes thebrand more premium and desirable. Presently the refrigerator range consists of 2-door3-Door 4-door and 6-door refrigerators with unique colour options suitable to thecustomer's lifestyle and interiors. Hitachi's Refrigerator business grew by 24% in FY17-18and is expected to grow exponentially owing to the rising demand of big capacityrefrigerators.

Apart from Refrigerators the Company's range of Air Purifiers is developed to purifypolluted air and create a healthy environment. Though the air purifier category isexpanding at a much faster rate in India Hitachi's Air Purifier business declined by 19%primarily because of the availability of multiple low cost air purifier brands in themarket. The increasing level of air pollution in India is likely to generate awarenessabout quality of filters resulting in a steady demand of Air Purifiers in the upcomingyears.


The Company along with offering good quality products to customers has also givenutmost priority to good customer care and service.Realizing the importance of servicesegment the Company has undertaken multiple service-oriented initiatives during the yearlike free service camp customer delight program free product check-up in off seasondiscounted service in pre-summer multiple customer care touch points with queryescalation matrix. A combination of all these factors led the Company to successfullyretain its client base and provide service to more than 500000 customers. The Company hasgrown tremendously in this sector in FY17-18 and is expected to witness robust growth inthe future. The Company continues to invest in training of the human resources and upgradation of their technical skills to ensure growth stability.

During the year to improve the level of technical skills of its technicians companyalso started a major initiative which was in line with the Government's Skill Indiaproject. We inaugurated Engineering Excellence Centres (EECs) in Delhi and Chennai toprovide skilled manpower and professionally trained technical resources to employees ofJCH-IN and its dealers. We are very happy to see the positive response we are getting fromour channel partners and the participation we are getting from both our Hitachi's ServiceTeam and our Channel Partner's Service Teams. And we hope that this will bridge the gapthat the Indian HVAC industry has been facing till date by generating skilled taskforceand also generate employment avenues for all.


1. The Government's Smart City Project provides a lucrative opportunity for Smart AirConditioners' and Home Appliances' manufacturers. This Project will also boost the growthof energy efficient and environment friendly products.

2. Increasing standards of Bureau of Energy Efficiency (BEE) for energy efficiency inproducts and focus on promoting Inverter ACs is a huge opportunity for companies who havelarge lineup of energy efficient products.

3. Industry focus on energy efficient and Inverter technology products has prompted thecustomers in shifting to energy efficient inverter technology products.

4. Demand for energy efficient air-conditioning solutions is likely to spur due toincreased focused on curbing Global warming and increase in temperature.

5. Increasing acceptability of E-Retail market in India is likely to enhance salesthrough online portals. With e-retailing customers will be able to reach to the productsin a much better and convenient manner.

6. Growth of organized retail formats in Tier II and III towns is a good opportunityfor RAC category to deepen its market penetration.

7. Commercial and hospitality segments will contribute highest to the HVAC demand andlikely to grow at 10-11% till FY'22.


1. Increasing raw material cost impact the cost for products.

2. Continued investments into design and manufacturing are required to keep pace withupcoming technological changes and constant up gradation of its features.

3. De-growth in window AC segment is a big concern as the Company is one of the leadingbrands in Window AC segment. Reducing price gap between Split AC and Window AC isaffecting the margins of window AC sales.

4. Electricity consumption in India is a big concern. The growth of Air Conditionermarket and its penetration is highly dependent on availability of electricity.

5. Hike in the cost of import components like compressor copper and depreciation ofIndian rupee against USD is impacting the margins on product sales.


The Company operates in a highly competitive business environment which makes itabsolutely essential to recruit and retain talented and dynamic Human Resources. TheCompany always strives to provide all-round holistic development to its employeesenhancing their morale and motivation to perform better. In order to make the employeesfuture ready so that they can stay ahead of the competition various new HR initiativeshave been undertaken by the Company. During the year the Company has been adding morevalue to the HR processes and practices to fulfill its aim of becoming the best place towork for in the country.

JCH-IN's Human Capital

The total Strength of employees (Staff and Operators) of the Company was 1481 as onMarch 31 2018.

Diversity & Inclusion

To develop a culture of Diversity & Inclusion (D&I) across the organization hasbeen the mission of the Company since long backed by a strong belief in achievingoperational excellence growth and employee engagement as a result of this mission.Increased collaboration and empowering engagement with all employees of the organizationis highly essential to attain progress in the area of Diversity & Inclusion. Over thenext year several programs and initiatives are planned to imbibe the importance ofD&I mission among all the employees. As a part of the D&I activities the Companyhas also created a WISE (Women's Interaction Support and Engagement) Forum.

The International Women's Day 2018 was celebrated at the Company as Press for Progresstheme. This day was celebrated by conducting various activities like Workshop on BasicAwareness on Diversity

& Inclusion Workshop on Prevention Prohibition & Redressal of SexualHarassment of Women at Workplace and Outbound Training activities for all female workforceacross the organization.

Talent Retention

Retaining talent is highly important for any organization to ensure steady growth andtimely execution and achievement of organizational objectives. Various talent retentioninitiatives were conducted by the Company last year to ensure reduction in attritioneffectively.

For New Joiners programs like New Employee Orientation (NEO) and New EmployeeExperience Intervention (NEXINT) were rolled out to capture their early post-joiningfeedback. These initiatives enabled the Company to succeed in its agenda of helping newemployees to settle down in the organization and provide proper on boarding training tothem. Furthermore a High Growth Potential (HGP) Hotline process was streamlined to retaintalented employees with high potential from leaving the organization.

Industrial Relations

Amicable and friendly industrial relations throughout the organization are aprerequisite for overall growth and development. The Company has always endeavored tomaintain industrial harmony amongst its employees one example of it being timelynegotiations and closure of Charter of Demands (COD). Last year the COD of both theregistered unions of the Company were successfully completed for a period of 3 years.

JCMS – Empowered People

The Johnson Controls Manufacturing System or JCMS is the one way of manufacturing toattain world-class performance. The entire JCMS encompasses 9 principles which arerequired to be adhered to various stringent standards practices and processes that areessential to achieve various Maturity levels from Level 1 (Unmet) to Level 5(Distinguished). Out of these 9 principles one of the principles is Empowered People. Ledby the Human Resources department the Empowered People (EP) Principle caters to theIntegrated Goals High Performance Teams Employee Performance Assessment TalentManagement and Employee Engagement Strategy.

Learning & Development:

As part of our ongoing efforts in developing and enhancing skills of our employees andmaking them target oriented various initiatives have been rolled out for organizationaltalent development.

For the Senior Management Team – Under the "Shikhar" program 3 LeadingBusiness activities through the Learning Lab aligning the Senior Management team'sperformance in Leading the Business were carried out.

For the Middle Management Team – Under the "Samarthya" program theFunctional Overview for Business Alignment (FOBA) workshops were conducted to provide themInter-Functional learning.

For the Field Technicians – Under the "Kaushalya" program On-the-JobTrainings (OJTs) and Classroom Trainings (CRTs) were administered at pan-India locations.These trainings included basics of Product Installation Troubleshooting and CustomerHandling Skills.

Organizational Talent Review (OTR)

OTR is the comprehensive process for reviewing organizational talent. Variousactivities such as Succession Planning High Potential (HiPot) Identification andIndividual Development Plans (IDP) were carried out for the Management Team under thisprogram.

The overall objective of the OTR process is to ensure alignment between organization'sgrowth strategies and employee's skills and career aspirations and thereafter anticipatetalent needs fill talent gaps and offer development experiences to the employees thatsupport the business.


The Company has a well-defined and adequate internal control system commensurate to thesize of its business and the nature of industry it operates in. The Internal Controlsystem ensures safeguarding and protecting the assets of the Company. Internal Audit hasbeen conducted by external Auditors at plant as well as at all the branches of the Companywithin the detailed scope defined and approved by the Audit Committee. The Internal Auditis planned to substantiate and review the adequacy of internal controls and laid downprocedures & systems.

Observations of Internal Auditors and the detailed plan of action are reviewed anddiscussed at the meetings of the Audit Committee on a periodic basis.


Pursuant to the provisions of Section 139 of the Companies Act 2013 Members of theCompany at the Annual General Meeting held on July 25 2016 appointed M/s. PriceWaterhouse & Co. Chartered Accountants LLP (Firm Registration No. 304026E / E300009)as Auditors of the Company to hold office from the conclusion of Annual General Meetingheld on July 25 2016 till the conclusion of the sixth consecutive Annual General Meeting.


Your Directors confirm that:

a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures;

b) Such accounting policies selected and applied them consistently and made judgmentsand estimates that 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 of theCompany for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities

d) Annual accounts have been prepared on a going concern basis;

e) Internal financial controls which are to be followed by the Company have been laiddown and that such internal financial controls are adequate and were operatingeffectively; and

f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


During the year under review following changes have been made:

1. Mr. Gurmeet Singh Managing Director of the Company has been appointed as Chairmanof the Company effective from 30th January 2018. Subsequent to this change:

a. Mr. Gurmeet Singh holds position of Chairman & Managing Director of the Company.

b. Mr. Franz Cerwinka holds position of Non-Executive Non-Independent Director of theCompany.

2. Mr. Yoshikazu Ishihara has been appointed as a Director of the Company effectivefrom 30th January 2018.

3. Ms. Indira Parikh has been re-appointed as an Independent Director by passing aSpecial Resolution during the year under review.

4. Following Directors have tendered resignation as a Director of the Company:

a. Mr. Varghese Joseph has resigned as an Executive Director of the Company with effectfrom 30th January 2018.

b. Mr. Vinay Chauhan has resigned as an Executive Director of the Company with effectfrom 30th January 2018.

c. Mr. Devender Nath has resigned as an Independent Director of the Company with effectfrom 30th January 2018.

d. Mr. Ravindra Jain has resigned as an Independent Director of the Company with effectfrom 30th January 2018.

e. Mr. Ramachandran Subra Mani has resigned as an Independent Director of the Companywith effect from 30th January 2018.

f. Mr. Vinesh Sadekar has resigned as an Independent Director of the Company witheffect from 30th January 2018.

Board do place on record its sincere appreciation for Support Inspiration devotingvaluable time and the significant contribution of all above Independent Directors andExecutive Directors of the Company made during their tenure in development and progressof the Company by giving their mature advice and guidance.


The Board has carried out an annual evaluation of the performance of the Board AuditCommittee Stakeholder Relationship Committee Nomination and Remuneration CommitteeExecutive Committee Vigil Mechanism Committee and CSR Committee.

The Board has also carried out annual evaluation of the performance of individualDirectors who were evaluated considering levels of their engagement and contributionsafeguarding the interests of the Company and its minority shareholders etc. Theperformance evaluation of the Chairman and the Non-Independent Directors were carried outby the Independent Directors at their separate meeting.


The Company has established a Vigil Mechanism process as an extension of the Company'sCode of Conduct whereby an employee director customer vendor or associate of theCompany can disclose his genuine doubt in good faith to any member of Vigil MechanismCommittee about unethical behavior actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy so that appropriate action can be taken tosafeguard the interest of the Company. In exceptional cases a complaint can be reportedby a complainant to a Chairperson of Audit Committee. This mechanism is overseen by theAudit Committee.


Name of Director and Key Managerial Personnel (KMP) Designation % increase in remuneration of director and KMP Ratio of the remuneration of director to the median remuneration of the employees of the Company for the financial year
Mr. Gurmeet Singh Chairman and Managing Director 21.51 16.23 : 1
Mr. Franz Cerwinka Director NA NA
Mr. Yoshikazu Ishihara Director NA NA
Mr. Vinay Chauhan Executive Director Note 1 Note 1
Mr. Varghese Joseph Executive Director Note 1 Note 1
Mr. Ashok Balwani Independent Director Note 4 0.50 : 1
Mr. Mukesh Patel Independent Director Note 4 0.41 : 1
Ms. Indira Parikh Independent Director Note 4 0.15 : 1
Mr. Devender Nath Independent Director Note 2 0.50 : 1
Mr. R S Mani Independent Director Note 2 0.27 : 1
Mr. Ravindra Jain Independent Director Note 2 0.50 : 1
Mr. Vinesh Sadekar Independent Director Note 2 0.20 : 1
Mr. Rishi Mehta Chief Financial Officer Note 3 Note 3
Mr. Anil Shah Chief Financial Officer Note 3 Note 3
Mr. Parag Dave Company Secretary 10% 2.72:1


Note 1 : Mr. Vinay Chauhan and Mr. Varghese Joseph ceased to be an Executive Director with effect from January 30 2018.
Note 2 : Mr. Devender Nath Mr. R S Mani Mr. Ravindra Jain and Mr. Vinesh Sadekar ceased to be an Independent Director with effect from January 30 2018.
Note 3 : Mr. Anil Shah retired as a Chief Financial Officer and Mr. Rishi Mehta appointed as a Chief Financial Officer with effect from January 30 2018.
Note 4 : Sitting fees payable to Independent Directors for attending various meeting remained same.

Comparison of remuneration against Company's performance

- Increase in remuneration of each KMP As mentioned in above table

- Increase in total remuneration of all KMP Total remuneration of KMP decreased by6.85% due to resignation of Executive Directors

Percentage increase in the median remuneration of employees in the financial year 15%
No. of permanent employees on the rolls of Company 1481
Average percentage increase already made in the salaries of - employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial - remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration Average % increase in the salaries of employees other than the managerial personnel 19.34%
Average % increase in the managerial remuneration 21%

We hereby affirm that the remuneration given to all the employees Directors and KMP isas per the Remuneration policy of the Company.


Company has implemented Enterprise Risk Management (ERM) system to identify assessmonitor and mitigate the various risks associated with the Company.

Risks are identified and then classified into different categories such as StrategicOperational Business risk and Risk related to act of god. Then score based on level andsignificance of risk is given and subsequently risk mitigation steps are taken.

Every quarter a statement identifying new risks and updation on pre-identified risksalong with their mitigation process or counter measures taken are reported before theAudit Committee.


Internal Financial Control plan adopted by the Company is adequate with reference tothe Financial Statement.

1. Conduct of its business by adherence to Company's policies.

2. Safeguarding of assets.

3. The accuracy and completeness of the accounting records Prevention and detection offrauds and errors and timely preparation of reliable financial information.


1. Number of meetings of the Board: Four meetings of the Board of Directors of theCompany were held during the year under review on May 23 2017 August 08 2017 November07 2017 and January 30 2018.

2. Members of the Audit Committee are as under:

a. Mr. Mukesh Patel – Chairman

b. Mr. Ashok Balwani – Member

c. Ms. Indira Parikh – Member

3. The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.

4. Details about the Policy on Corporate Social Responsibility (CSR) and projectsimplemented by the Company during the year under review as required under Section134(3)(o) 135(2) read with Companies (Corporate Social Responsibility Policy) Rules 2014have been provided as Annexure A.

5. Formal Appointment and Evaluation Policy of the Board of Directors and SeniorManagement of the Company which has been formulated and recommended by Nomination andRemuneration Committee and adopted by Board of Directors covering appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters provided under Section 178(3) is attached asAnnexure B.

6. No commission paid to any Director of the Company so no disclosure is required tobe made under Section 197(14).

7. The details forming part of the extract of the Annual Return in form MGT 9 asprovided under sub-Section (3) of section 92 is annexed as Annexure C.

8. No loan was granted by the Company to any person to purchase or subscribe to fullypaid-up shares of the Company.

9. Secretarial Audit Report: Pursuant to the provisions of Section 204 of the CompaniesAct 2013 the Report of the Secretarial Auditors is annexed as Annexure D.

10. There is no fraud reported by Auditors under Section 143(12) of the Companies Act2013 during the year under review.

11. Particulars of loans investments or guarantees under section 186: Company has notgranted any loans secured or unsecured to companies firms or other parties coveredunder Section 186. Company has not made any investment in securities of other BodyCorporate. Company has given guarantee of Rs 150 Million against the creditfacilities availed by dealers.

12. There is no subsidiary associate and joint venture Company so no disclosure isrequired on the performance and financial position of each of the subsidiaries associatesand joint venture companies in Form AOC 1.

13. There is no Company which has become or ceased to be its subsidiary joint ventureor associate Company during the year.

14. During the year Company has not accepted deposits covered under Chapter V.

15. There is no qualification reservation or adverse remark or disclaimer made by theAuditors in their report.

16. There is no qualification reservation or adverse remark or disclaimer made by theCompany Secretaries in practice in their Secretarial Audit Report.

17. There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.

18. Details of complaints relating to sexual harassment during the year under review:Received during the year: 1; Pending as on 31st March 2018: 1.

19. Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 relating to Conservation of energytechnology absorption and foreign exchange earnings and outgo is given as Annexure E tothis report.

20. Statement showing particulars of employees under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached with thisAnnual Report.

21. Contract or arrangement under Section 188(1): There were no contracts orarrangements entered by the party falling under Section 188(1). Particulars of contractsor arrangements with related parties are provided in Form AOC 2 as Annexure F.

22. Policy on dealing with Related Party Transactions has been disclosed on Company'swebsite and a weblink is as under:

23. Revision in Accounts or Board‘s Report: There are no revisions made in theAccounts or Board‘s Report.

24. Issue of Equity Shares with differential rights: There was no Equity Share issuedwith differential voting rights during the year under review.

25. Issue of Sweat Equity Shares: There was no issue of Sweat Equity Share during theyear under review.

26. Employee Stock Option and Employee Stock Purchase Schemes: No Employee Stock Optionand Employee Stock Purchase Schemes were launched during the year under review.

27. Disclosure under Regulation 34(3) read with Schedule V of the SEBI (ListingObligation and Disclosure Requirement) Regulations 2015:

a. The Equity Shares of the Company are not delisted or suspended during the year underreview.

b. Equity Shares of the Company are listed on the BSE Limited and the National StockExchange of India Limited.

c. Annual listing fees have been paid to both the stock exchanges mentioned above.

28. Dividend Distribution Policy is given as Annexure G to this report

29. Company has complied with Secretarial Standards applicable to Company.


Your Directors thank all Customers Suppliers Investors Bankers and otherstakeholders of the Company for their co-operation and continued support during the year.We look forward to their continued support in the future also.

We wish to place on record our sincere appreciation for the excellent work put in bythe employees of the Company at all levels.

For and on behalf of the Board of Directors
Place : Ahmedabad Gurmeet Singh
Date : May 23 2018 Chairman & Managing Director