JTEKT India Ltd.
|BSE: 520057||Sector: Auto|
|NSE: JTEKTINDIA||ISIN Code: INE643A01035|
|BSE 10:51 | 19 Oct||113.30||
|NSE 10:39 | 19 Oct||112.15||
|Mkt Cap.(Rs cr)||2,251|
|Mkt Cap.(Rs cr)||2251.27|
JTEKT India Ltd. (JTEKTINDIA) - Director Report
Company director report
TO THE MEMBERS
Your Directors have pleasure in presenting their 34th Annual Reporttogether with audited accounts of the Company for the year ended 31st March 2018.
1) Financial Results
STANDALONE AND CONSOLIDATED PREFORMANCE OF THE COMPANY
(INR in Lakhs)
2) State of Affairs of the Company
Revenue from operations increased by 4.1% to INR 12122.46 million.PBDIT improved by 6.46% to INR 1433.18 million. The Company reported PAT of INR 308.10million. Improvement in profitability reflects the success of Company's e3orts incontrolling the fixed costs.
3) Change of Promoter and Name of the Company
During the year under review JTEKT Corporation Japan one of thePromoters of the Company acquired the complete stake of 25.12% held by Sona AutocompHolding Limited the Company's Indian Promoter. The said acquisition of shares hadtriggered an Open O3er' in terms of SEBI (Substantial Acquisition of Shares andTakeovers) Regulations 2011 and subsequent amendments thereto. Post conclusion of thesaid Open O3er the shareholding of JTEKT Corporation Japan increased to a level of70.45% and along with Maruti Suzuki India Limited the total Promoter Group shareholdingwas increased to 77.39%.
In order to bring public shareholding to the minimum threshold level of25% JTEKT Corporation Japan sold excess Promoters' shareholding of 2.39% by way ofO3er for Sale' (OFS) in accordance with the guidelines issued by Securities& Exchange Board of India in two tranches completed on 20th March 2018 and 9thApril 2018. The second OFS transaction concluded on 9th April 2018 received anexcellent response from the market with bids received were more than 6 times of the Issuesize.
JTEKT' is a registered Trade Mark owned by JTEKTCorporation Japan. JTEKT is a leading global brand having footprint spanning to almostall continents by having more than 149 subsidiaries worldwide. After the aforesaidtransaction your Company became subsidiary of JTEKT Corporation Japan and consequentlybecame a member of The "JTEKT Group". The brand "JTEKT" will bringinternational recognition to your Company and communicate one identity particularly toglobal customers of JTEKT Group. Accordingly to leverage on brand "JTEKT" thename of your Company has been changed from Sona Koyo Steering Systems Limited'to JTEKT India Limited' with effect from 7th April 2018.
Your directors are pleased to recommend a dividend of 50% on equityshare capital of the Company for the financial year 2017-18 same as last financial year.
(INR in Lakhs)r
6) Change of nature of Business (if any)
There has been no change in the nature of business of the Companyduring the financial year.
7) Share Capital
The Paid Up Equity Share Capital of the Company as at March 31 2018stood at INR 1987.42 lakhs. During the year under review the Company has not issued anyshares / securities. As on March 31 2018 none of the Directors of the Company holdinstruments convertible into equity shares of the Company.
8) Signi3cant and material Orders passed by the Regulators orCourts
There are no significant or material Orders passed by the Regulators orCourts that would impact the going concern status of the Company and its futureoperations.
9) Material changes and commitments if any a3ecting the3nancial position of the Company
There are no material changes and commitments a3ecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which financial statements relate and the date of the report.
10) Details in respect of adequacy of internal controls
The Company has an effective and reliable internal control systemcommensurate with its size and operations. The internal controls are aligned to globalstandards and processes while also adhering to local statutory requirements. The internalcontrols systems are supported through management reviews verification by internalauditors as well as verification by statutory auditors. Further the Audit Committee ofthe Board reviews the internal audit plan adequacy of internal controls systemsignificant audit observations and monitors the sustainability of remedial measures.
In addition to policies procedures and guidelines the internalcontrols system is facilitated by an automated "Compliance Manager Tool" whichenables self-assessment by process owners on status of all applicable regulatorycompliances and Internal Controls including controls relating to adherence tocompany's policies safeguarding of its assets prevention and detection of fraudsand errors accuracy and completeness of the accounting records and timely preparation ofreliable financial information. The status of each self-assessment is approved by animmediate superior. The status of self-assessment is periodically deliberated and reviewedby the Senior Management. Further the accuracy of sample self-assessments is verifiedthrough periodic internal audits.
The aforesaid internal control system provides high degree of assurancewith respect to effectiveness and e3ciency of operations adequacy and adherence ofinternal financial controls and compliances with laws and regulations.
11) Details and Performance of Subsidiary Companies / Associate Company
In terms of the provisions of Section 2(87) of the Companies Act 2013the Company has two subsidiaries namely JTEKT SONA Automotive India Limited (JSAI) andSona Fuji Kiko Automotive Ltd. (SFAL). However as per the provisions of new AccountingStandards - Ind-AS 110 JSAI is considered as an Associate Company for the purpose ofaccounting.
o JTEKT SONA Automotive India Limited (JSAI)
In JSAI the Company is holding 49% of the equity capital and controlsthe composition of the Board of Directors. This Company was established in technical andfinancial collaboration with JTEKT Corporation Japan with a business objective ofmanufacturing Column Type Electric Power Steering (C-EPS) Systems. The Plants of JSAI arelocated in Bawal (Haryana) and Chennai. During the year ended 31st March 2018 JSAI hasachieved total revenue of INR 58147.71 Lakhs and earned net profit of INR 3118.95 Lakhs.The Board of Directors of JSAI in their meeting held on 15th May 2018 has recommended adividend at the rate of 30% for the financial year ended on 31st March 2018. o Sona FujiKiko Automotive Limited (SFAL) In SFAL the Company is holding 51% of the Equity Capital.This Company was established in technical and financial collaboration with FUJI KIKO Co.Ltd. Japan with a business objective of manufacturing Columns / Column parts to beprimarily used in the manufacturing of C-EPS by JTEKT Sona Automotive India Limited. ThePlant of SFAL is located in Bawal Haryana. During the year ended 31st March 2018 SFALhas achieved total revenue of INR 8946.85 Lakhs and earned net profit of INR 952.42Lakhs. The Board of Directors of SFAL in their meeting held on 16th May 2018 hasrecommended a dividend at the rate of 30% for the financial year ended on 31st March2018.
During the year the Company has disposed o3 its entire investment inSona Skill Development Centre Limited (SSDCL) accordingly SSDCL ceased to be anAssociate Company of JTEKT India Limited with effect from 18th May 2017. The Board ofDirectors of the Company have vide resolution dated 9th February 2018 have approvedScheme of Amalgamation of involving JTEKT SONA Automotive India Limited (AmalgamatingCompany) and JTEKT India Limited (Amalgamated Company) and their respective shareholdersand creditors. The proposed merger is expected to bring business and operationalsynergies. The aforesaid Scheme was submitted to National Stock Exchange of India Limitedand BSE Limited for necessary approvals. The aforesaid Scheme has been returned by StockExchanges with an advice to re-submit the scheme post compliance with the provisions ofClause (I)(A)(3)(b) of Annexure I of SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March10 2017.
12) Subsidiary Companies Accounts
During the year the Board of Directors reviewed the Affairs of thesubsidiary and associate companies. In accordance with Section 129(3) of the CompaniesAct 2013 the consolidated financial statements of the Company forms part of the AnnualReport. Further a statement containing the salient features of the financial statement ofthe subsidiary and associate company in the prescribed Form AOC-1 is attached along withfinancial statement. The statement also provides the details of performance financialposition of the subsidiary and associate companies.
In accordance with Section 136 of the Companies Act 2013 the auditedfinancial statements including the consolidated financial statements and relatedinformation of the Company and audited accounts of each of its subsidiaries and associatecompany are available on Company's website www.jtekt.co.in. These documents willalso be available for inspection during business hours at Company's registered o3ce.The Company shall provide the copy of financial statements of its subsidiary and associatecompany to the shareholders upon their request.
In accordance with the Accounting Standard AS-110' onConsolidated Financial Statements read with Accounting Standard AS-28' onInvestment in Associates and Joint Ventures the Audited Consolidated Financial Statementsare provided in the Annual Report.
13) Extract of Annual Return
14) Corporate Social Responsibility
In compliance with Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 the Company has establishedCorporate Social Responsibility (CSR) Committee and statutory disclosures with respect tothe CSR Committee and an Annual Report on CSR Activities forms part of this Report asAnnexure II.
This year the Company partnered with Bharat Vikas Parishad (BVP) anon-political socio-cultural voluntary organisation registered as a Society. BVP iscurrently running over 1600 permanent projects with almost 400 of which includeHospitals Clinics Physiotherapy Centres Mobile Vans Pathology Labs Ultrasound Centresand Blood Banks.
As part of CSR Initiative the Company identified Vivekanand ArogyaKendra a diagnostic centre established by BVP which needed help in establishing thefacility. The Company financed the purchase of an Ambulance as well as a portableUltra-Sound Machine at a total cost of INR 25.62 lakhs. The ambulance is equipped withamenities that are crucial to deliver adequate emergency medical services addressing theneeds of immediate medical attention and critical care.
In the past few years the CSR Team of the Company identified projectsin the area of skill development. By using the services of Sona Skill Development Centre(Skill Centre) the team implemented several projects to impart vocational training tounderprivileged children. During FY 2018 the Skill Centre stopped conducting the skilldevelopment program and therefore the CSR
Team explored other CSR options. It took some time to conclude onPreventive Health Care as one of the areas of contribution. While the Company has startedmaking contribution in this area however due to constrain of time it was di3cult tofinalize other projects and hence the entire amount could not be deployed.
15) Number of meetings of the Board of Directors
The Board of Directors met 6 (six) times in the year ended 31st March2018. The details of the board meetings and the attendance of the Directors are providedin the Corporate Governance Report.
16) Nomination & Remuneration Committee and its policy
The Board of Directors had constituted a Nomination & RemunerationCommittee to review formulation of the criteria for determining qualifications positiveattributes and independence of a director and recommend to the Board a policy relating tothe remuneration of the directors key managerial personnel and other employees and suchother ancillary functions as may be required.
The Company follows a policy on remuneration of Directors and SeniorManagement Employees. The policy is approved by the Nomination & RemunerationCommittee and the Board.
17) Particulars of contracts or arrangements with related parties
The Company has entered into contracts / arrangements with the relatedparties in the ordinary course of business and on arm's length basis. Thusprovisions of Section 188(1) of the Act are not applicable.
However in terms of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all transactions with related parties which are ofmaterial in nature are subject to the approval of the Members of the Company.
18) Secretarial Audit Report
Pursuant to Section 204 of the Companies Act 2013 the Company hadappointed Mr. S.S Gupta Company Secretaries in Practice as its Secretarial Auditors toconduct the secretarial audit of the Company for the FY 2017-18. The Company provided allassistance and facilities to the Secretarial Auditors for conducting their audit. TheReport of Secretarial Auditors for the FY 2017-18 is annexed to this report as Annexure III. The report does not contain any qualification.
19) Risk Management Policy
The Board of Directors of the Company had constituted a Risk ManagementCommittee to oversee the risk management process in the Company.
The Company has laid down a well-defined risk management mechanismcovering the risk mapping and trend analysis risk exposure potential impact and riskmitigation process. A detailed exercise is being carried out to identify evaluate manageand monitoring of both business and non-business risks. The Risk Management Committeeperiodically reviews the risks and suggests the steps to be taken to control and mitigatethe same through a properly defined framework.
20) Corporate Governance
The Company has complied with the corporate governance requirementsunder the Companies Act 2013 and as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (hereinafter referred to as ListingRegulations'). A separate section on corporate governance under the ListingRegulations along with a certificate from the auditors confirming the compliance isannexed and forms part of this Annual Report.
21) Vigil Mechanism
The Company has established a vigil mechanism for Directors andemployees to report their genuine concerns. For details please refer to the CorporateGovernance Report attached to this Report.
The Securities of your Company are listed at National Stock Exchangeand Bombay Stock Exchange and the Company has paid the Listing Fee due to them.
During the year the Company has not invited any deposits covered underChapter V of the Companies Act 2013.
24) Loans Guarantees and Investments
During the year under review no loans guarantees and investments weremade by the Company under Section 186 of the Companies Act 2013 hence the said provisionis not applicable.
25) Directors & Key Managerial Personnel
As on 31st March 2018 your Company has nine (9) Directors consistingof four (4) Independent Directors (including one Woman Director) two (2) Non-executiveDirectors a Non-executive Chairman one Executive Director and an Executive ManagingDirector.
In terms of the definition of Independence' of Directors asprescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and Section 149(6) of the Companies Act 2013 and based on the confirmation /disclosures received from the Directors the following Non-Executive Directors were theIndependent Directors :-
1) Mr. Ravi Bhoothalingam
2) Lt.Gen.(Retd.) Shamsher Singh Mehta
3) Mr. Ramesh Suri
4) Mrs. Geeta Mathur
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed both under the Companies Act 2013 and Listing Regulations.
During the year under review Mr. Sunjay Kapur Mrs. Rani Kapur and Mr.Kiran Manohar Deshmukh have resigned from the Board of the Company and Mr. Seiho Kawakamiand Mr. Sudhir Chopra were appointed as additional directors by close of the businesshours of 18th May 2017. Further Mr. Hidekazu Omura and Mr. Kiyozumi Kamiki were elevatedto the position of Non-Executive Chairman and Managing Director respectively.
During the year one of the senior members of the Board Mr. Prem KumarChadha was ceased to be a director of the Company due to his sudden sad demise on 23rdJune 2017. Mr. Prasan Abhaykumar Firodia and Mrs. Ramni Nirula Independent Directors ofthe
Company have resigned from the Board of the Company effective from 31stMay 2017 and 30th October 2017 respectively.
Upon recommendations of Nomination and Remuneration Committee theBoard of Directors in their meeting held on 10th November 2017 have appointed Mrs. GeetaMathur as an Independent Woman Director on the Board of the Company.
Your Directors take this opportunity to place on record theappreciation of services rendered by Mr. Sunjay Kapur Mrs. Rani Kapur Mr. Kiran ManoharDeshmukh Mr. Prasan Kumar Firodia and Mrs. Ramni Nirula during their association with theCompany and also pay homage to the departed soul of Mr. Prem Kumar Chadha.
Further consequent upon resignation of Mr. Deshmukh the Board ofDirectors of the Company appointed Mr. Kiyozumi Kamiki Managing Director as one of thewhole time Key Managerial Personnel of the Company effective from the close of businesshours of 18th May 2017.
The Managing Director and Director (Corporate Affairs) & CompanySecretary of the Company have not received any remuneration or commission except SittingFee if any from any of the subsidiaries of the Company.
Pursuant to the provisions of Section 152(6) and Articles ofAssociation of the Company Mr. Toshiya Miki (DIN: 07505339) will retire by rotation atthe forthcoming Annual General Meeting and being eligible o3ers himself forreappointment.
26) Board Evaluation
The Company has devised a Policy for performance evaluation ofIndependent Directors the Board its Committees and other individual Directors whichinclude criteria for performance evaluation of the non-executive directors and executivedirectors. The performance evaluation of the Board its Committees and individualdirectors was conducted and the same was based on questionnaire and feedback from all theDirectors on the Board as a whole Committees and self-evaluation.
Based on the questionnaire and feedback the performance of everydirector was evaluated in the meeting of the Nomination and Remuneration Committee. Aseparate meeting of the independent directors was convened which reviewed the performanceof the Board (as a whole) the non-independent directors and the Chairman. Post the AnnualIndependent Directors' meeting the collective feedback of each of the IndependentDirectors was discussed by the Chairman of the Nomination & Remuneration Committeewith the Board's Chairman covering performance of the Board as a whole; performanceof the non-independent directors and performance of the Board's Chairman.
27) Audit Committee
The Audit Committee of Directors of the Company presently consists ofthe following members:
1) Mr. Ravi Bhoothalingam Chairman
2) Lt. Gen. (Retd.) Shamsher Singh Mehta Member
3) Mr. Kiyozumi Kamiki Member
4) Mrs. Geeta Mathur Member
More details on the Audit Committee are given in the CorporateGovernance Report.
28) Directors' Responsibility Statement
Pursuant to clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 the directors confirm that:
a) in the preparation of the annual accounts for the financial year2017-18 the applicable accounting standards have been followed along with properexplanation relating to material departures; b) the directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of Affairs ofthe Company at the end of the financial year and of the profit and loss of the Company forthat period; c) the directors have taken proper and su3cient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;d) the directors have prepared the annual accounts on a going concern basis; e) thedirectors have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and f )the directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
29) Statutory Auditors and their Report
As per Section 139 of the Companies Act 2013 read with the Companies(Audit and Auditors) Rules 2014 the members of the Company in its 33rd Annual GeneralMeeting held on 22nd August 2017 approved the appointment of M/s. B S R & Co. LLPChartered Accountants (ICAI Registration No - 101248W/W-100022) as the Statutory Auditorsof the Company for an initial term of 5 years i.e. from the conclusion of 33rd AnnualGeneral Meeting till the conclusion of 38th Annual General Meeting of the Company (subjectto ratification of the appointment by the members at every Annual General Meeting).
Accordingly the appointment of M/s. B S R & Co. LLP CharteredAccountants as Statutory Auditors of the Company is being placed before the shareholdersat the 34th Annual General Meeting for the ratification.
The Report given by M/s. B S R & Co. LLP Chartered Accountants onthe financial statements of the Company for the year 2018 is part of the Annual Report.There has been no qualification reservation or adverse remark or disclaimer in theirReport.
30) Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo.
A statement containing the necessary information on conservation ofenergy technology absorption foreign exchange earnings and outgo as required to begiven pursuant to provisions of Section 134 of the Companies Act 2013 read with therules made there under is annexed as Annexure IV and forms part of this report.
Disclosure pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided inAnnexure - V(a) to this Report.
A statement showing the details of employees of the Company who aredrawing salary as per the limits prescribed under rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 during the FinancialYear 2017-18 or part thereof is attached herewith as Annexure - V(b) to this Report.
Your Directors acknowledge with gratitude the co-operation and supportextended by JIN's customers namely Maruti Suzuki Mahindra & Mahindra TataMotors Honda Fiat India Toyota Kirloskar General Motors John Deere Club Car E-z-goRenault-Nissan and Isuzu the Financial Institutions Banks various agencies of theGovernment.
Your Directors also wish to place on record their sincere appreciationof the services rendered by all the employees of the Company and are thankful to theShareholders for their continued patronage.