1. FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2018
| || ||(Rs. in Lakhs) |
| ||2017-18 ||2016-17 |
|1.1. Forging Sales ||60091.09 ||46042.66 |
|1.2. Profit before exceptional items/ extraordinary items and Tax ||8191.36 ||5514.16 |
|1.3 Exceptional/Extraordinary Items ||17.21 ||0.25 |
|1.4 Profit Before Tax ||8208.57 ||5514.41 |
|1.5 Tax || || |
|For current year ||1500.00 ||1176.86 |
|Relating to previous years ||- ||80.91 |
|Deferred Tax ||(323.35) ||293.21 |
|MAT credit entitlement ||181.19 ||(378.81) |
| ||1357.84 ||1172.19 |
|Profit After Tax ||6850.73 ||4342.22 |
The Directors commend the employees for their commitment and contribution.
|2. DIVIDEND AND FINANCIAL RESULTS: || ||(Rs. in Lakhs) |
| ||2017-18 ||2016-17 |
|2.1. Profit After Tax ||6850.73 ||4342.22 |
|2.2. Balance in P & L Account ||244.71 ||244.20 |
|2.3. Profit available for appropriation ||7095.44 ||4586.42 |
|2.4. Transfer to General Reserve ||5400.00 ||3500.00 |
|2.5. Interim Dividend paid ||701.43 ||841.71 |
|2.6 Proposed Dividend ||701.43 ||- |
|2.7. Balance carried forward ||292.58 ||244.71 |
The Directors had declared a second Interim Dividend of 50% - Rs. 5/- per share of facevalue of Rs. 10/- each on 28 May 2018. The Directors earlier declared first InterimDividend of Rs. 5/- per share and the same was paid on 11 December 2017. With this thetotal Dividend for the year ended 31 March 2018 will aggregate to Rs. 10/- per share.The Directors do not recommend any final dividend for the year 2017-18.
3. HIGHLIGHTS OF THE COMPANY'S OPERATIONAL PERFORMANCE
3.1 The company continues to be one of the largest exporter of forgings from SouthIndia and has received 26 consecutive Annual Awards from The engineering Exports PromotionCouncil since 1989.
3.2 The company has crossed the Rs. 200 Crore mark for the first time in domesticsales Rs. 350 Crore mark in export sales and Rs. 600 Crore mark in overall sales.
3.3 The Company continues to be a net foreign exchange earner. The net foreign exchangeearnings during the current year were Rs. 277.30 crores.
3.4 The Company has retained its ISO 9001 and TS 16949 Certification for its QualityManagement.
3.5 The capital expenditure during the year was Rs. 100.90 Crores. Forgings andMachining capacity has been substantially increased in line with customer demand. Thecompany also produces Green energy in its Solar and in Wind farms.
3.6 DVS Industries (P) Ltd : Your Company has acquired DVS Industries (P) Ltd.
4. INDIAN ACCOUNTING STANDARD ( IND AS) IFRS CONVERGED STANDARDS
Pursuant to the notification of the Companies (Indian Accounting Standard) Rules 2015by the Ministry of Corporate Affairs ( MCA) on 16 February 2015 the company has adoptedIndian Accounting standards ( IND AS )
5. EXPENSES MADE MORE THAN 10 % OF THE TURNOVER
Raw Material - Rs. 285.57 crores (45.12%)
Personnel - Rs. 65.28 crores (10.31%)
6. MANAGEMENT DISCUSSION AND ANALYSIS : GLOBAL SCENE
1. Economic activity in 2017 ended on a high notegrowth in the second half of theyear was above 4 percent the strongest since the second half of 2010 supported by arecovery in investment. Outcomes exceeded the October 2017 World Economic Outlookforecasts in the euro area Japan the United States and China and continued to improvegradually in commodity exporters. Financial conditions remain supportive despite therecent volatility in equity markets and increases in bond yields following signs offirming inflation in advanced economies.
2. With broad-based momentum and expectations of a sizable fiscal expansion in theUnited States over this year and the next global growth is now projected at 3.9 percentfor 201819 a 0.2 percentage point upgrade for both years relative to the October2017 forecast.
3. Advanced economies are projected to grow at 2.5 percent in 2018 0.2percentage point higher than in 2017and 2.2 percent in 2019. In the United Statesgrowth is expected to rise from 2.3 percent in 2017 to 2.9 percent in 2018 beforemoderating slightly to 2.7 percent in 2019.
4. The recovery in the euro area is projected to pick up slightly from 2.3 percent in2017 to 2.4 percent this year before moderating to 2 percent in 2019.
5. Japan's growth is projected to moderate to 1.2 percent in 2018 (from a strongabove-trend out-turn of 1.7 percent in 2017) before slowing further to 0.9 percent in2019. The upward revision of 0.5 percentage point in 2018 and 0.1 percentage point in 2019relative to the October WEO reflects more favorable external demand prospects risingprivate investment and the supplementary budget for 2018. Japan's medium-term prospectshowever remain weak owing largely to a shrinking labor force.
6. In China growth is projected to soften slightly from 6.9 percent in 2017 to 6.6percent in 2018 and 6.4 percent in 2019. The forecast is higher (by 0.1 percentage pointin both 2018 and 2019) relative to the October WEO reflecting an improved external demandoutlook. Over the medium term the economy is projected to continue rebalancing away frominvestment toward private consumption and from industry to services but nonfinancial debtis expected to continue rising as a share of GDP and the accumulation of vulnerabilitiesclouds the medium-term outlook.
7. Growth in India is projected to increase from 6.7 percent in 2017 to 7.4 percent in2018 and 7.8 percent in 2019 (unchanged from the October WEO) lifted by strong privateconsumption as well as fading transitory effects of the currency exchange initiative andimplementation of the national goods and services tax. Over the medium term growth isexpected to gradually rise with continued implementation of structural reforms that raiseproductivity and incentivize private investment.
8. The Dow Jones Industrial Average (DJIA) has increased by approximately 19% becauseUS stock markets are seen as a haven for investment in a sea of gloom.
9. Commodities The Dow Jones Commodity Index (DJCI) has increased by 16% in thelast one year due to considerable revival of business sentiments in commodities. This isindicative of growth in various economies in both developed and developing countries.
10. At 3.8 percent global growth last year was 0.5% faster than in 2016 and thestrongest since 2011.
Two-thirds of countries accounting for about three-fourths of global output experiencedfaster growth in 2017 than in the previous year (the highest share of countriesexperiencing a year-over-year growth pickup since 2010). The preliminary outcome forglobal growth in 2017 was 0.2 percentage point stronger than forecast in the October 2017World Economic Outlook with upside surprises in the second half of 2017 in advanced aswell as emerging market and developing economies.
11. The Indian economy expanded 7.7 percent year-on-year in the first three months of2018 higher than a downwardly revised 7 percent advance in the previous quarter andbeating market forecasts of a 7.3 percent growth. It is the highest growth rate since thesecond quarter of 2016 boosted by a jump in investment.
12. During F18 the automotive industry posted growth rates of approximately 8% in thecar segment and 12% in the CV segment.
13. Steel prices have increased by about 31% compared to the lows in the previous year.
14. The INR ended the year higher by approximately 0.75% ending the year at a level ofRs. 65.05 per USD.
Please refer graph below. Further weakening of the INR is anticipated. However if FDIinflows are moderate the pressure on the INR will be relieved.
M M FORGINGS Achievements
15. The following were important developments witnessed during the year :
Domestic sales crossed record 200 crore mark!
Export sales crossed record 350 crore mark!
Total sales crossed record 600 crore mark!
Record production to near 50000 Tons!
Adding to the volume of existing parts were the new parts which weredeveloped in the last 2 years.
The company has posted a huge growth of 47% in domestic sales by thedevelopment of new parts.
Export sales also grew by a big margin of 31%.
Changes in steel prices which are in line with international markets aregenerally being passed on to customers as is the industry practice.
We are focusing on capacity utilisation to take advantage of the productioncapacities created in the last 3 years.
|Key financial ratios : || |
|Debtors Turnover ||109 days |
|Inventory Turnover ||4.59 |
|Interest Coverage Ratio ||9.84 |
|Current Ratio ||1.80 |
|Debt Equity Ratio ||0.57 |
|Operating Profit Margin (%) ||12.97% |
|Net Profit Margin (%) ||: 10.82% |
16. As highlighted in the Directors' Report Return On Net Worth is 17.07% and ReturnOn Capital Employed is 16.90%. The total outside liabilities to net worth stands at 1.23.
17. The details of segment-wise sales distribution are provided below:
Human Resources and Industrial Relations
18. Your company continues to focus on the development of its human resources toimprove its performance. The company currently has approximately 1660 employees. It istheir invaluable contribution that has primarily resulted in your company's position ofstrength in the industry. 19. Focus on a safe working atmosphere constantly evolvingsystems for recognition and reward consistent communication and imparting skills andtraining all these focused on meeting customer needs characterise the HRdevelopment of the Company.
20. Every year each plant of the Company celebrates Founder's Day' in a familyatmosphere with all employees and their household members.
21. Your Company provided necessary training on GST to the concerned and the ITdepartment in coordination with the implementation partner ensures smooth transformationto the GST platform.
Health Safety and Environment
22. The Company follows a policy of zero tolerance towards accidents. Whereverpossible visible controls and fail-safe systems are provided to ensure prevention ofaccidents. Regular communication periodic reviews of practices and training play a vitalrole in maintaining safety standards.
23. The Company ensures compliance with all pollution control regulations. Adequatepollution control equipments have been installed to treat effluents and to control airpollution.
24. The Company is a leading manufacturer of automotive components. Automotive industryis subjected to cyclical variations in performance and is very sensitive to policychanges. The market is very competitive. Prices of raw materials change based on supplyand demand. Margins remain under constant pressure. Any steep reduction in off-takeexposes the Company to high fixed costs.
25. A considerable portion of the customers of the Company are situated outside ofIndia. Hence demand for the Company's product is subject to the health of the globaleconomy.
26. The Company has spread its risks by increasing the geographic spread of itscustomer base. The Company proposes to improve capacity utilization in its existingfacilities. Working capital management will receive high priority.
M M FORGINGS forging ahead
27. Our goals in the coming months:
Focus on improving sales in keeping with market conditions.
Increase the production capacity to 100000 Tons.
Focus on cost reduction continuously - particularly on reducing energyconsumption and improving productivity.
Enhance IT systems with the continued development of the ERP system inplace.
Continue the evolution into green sources of energy in the coming months.
Reduce the impact on the environment.
1. IMF World Economic Output
2. The Economist
7. TRANSFER TO RESERVE
Transfer to General Reserve - Rs. 54 Crores
8. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The Company has made advance to the tune of Rs. 46.28 Crores to its Subsidiary CompanyDVS Industries Private Limited repayable at prevaling rates.
The details of the investments made by the company are given in the notes to thefinancial statements.
Both Shri Vidyashankar Krishnan Vice Chairman and Managing Director and Shri KVenkatramanan Jt Managing Director are being re-appointed for a period of five years witheffect from 1 September 2018. The profile of Directors form part of the notice.
10. DETAILS OF DIRECTORS OR KMP RESIGNED DURING THE YEAR NIL
11. BOARD AND COMMITTEE MEETING DATES
Details are provided in Annexure III of this Report.
12. DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE
BOARD ALONG WITH REASONS None
13. RISK MANAGEMENT
Your Company has implemented a mechanism for risk management and has formulated a RiskManagement Policy. The Policy provides for identification of risks and mitigationmeasures. The Audit Committee is informed on the risk assessment and minimizationsmechanism adopted by the Company.
14. RELATED PARTY TRANSACTION
The Company has formulated a policy on related party transactions and the same isuploaded on the Company's website.
All Related Party transactions that were entered into by the Company during thefinancial year 2017-18 were in compliance of Section 188 of the 2013 Act and the Rulesframed thereunder. There are no "Material" contracts or arrangement ortransactions at arm's length basis.
All Related Party transactions were placed before the Audit Committee for their priorapproval in accordance with the requirements of the SEBI LODR. The transactions enteredinto pursuant to such approval are placed periodically before the Audit Committee for itsreview.
There are no materially significant Related Party transactions made by the Company withPromoters Directors and Key Managerial Personnel which may have a potential conflictwith the interest of the Company at large.
For related party transactions refer Annexure 3 under the head Disclosures'
15. CORPORATE SOCIAL RESPONSIBILITY
A Board Level Committee of CSR has been constituted and the Board has adopted a CSRPolicy as recommended by the Committee. The thrust areas of CSR Policy are EradicatingHunger and Poverty Education Combating Diseases and Social Business Projects.
Your Company has fulfilled its obligation towards CSR by spending a sum of Rs. 131.36Lakhs during the year.Annual report on CSR has been provided in Annexure III of thisReport.
16. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In terms of provision of section 178 of the Companies Act 2013 read with Rulesprescribed a policy for the Directors KMP and other employees has been adopted by theBoard of Directors of the Company analyzing the criteria for determining qualificationspositive attributes and independence of a Director. The said Policy is given in Annexure 3under Nomination & Remuneration Committee.
17. PARTICULARS OF EMPLOYEES
The information required under the rules prescribed has been given in the annexureappended hereto and forms part of this Report.
18. PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES :
18.1 The ratio of remuneration of each Director to the median remuneration of theemployees:
|Name ||Ratio |
|Shri. N. Srinivasan ||4.15 : 1 |
|Shri V. Vaidyanathan ||2.21 : 1 |
|Shri A. Gopalakrishnan ||1.66 : 1 |
|Ms. Kavitha Vijay ||1.66 : 1 |
|Shri Vidyashankar Krishnan ||243.52 : 1 |
|Vice Chairman & Managing Director || |
|(Chief Executive Officer) || |
|Shri. K. Venkatramanan Joint Managing Director ||236.31 : 1 |
For this purpose sitting fees paid to the Directors have not been considered asremuneration 18.2 Percentage increase in remuneration of each Director KMP in thefinancial year:
|Name ||% Increase |
|Shri. N. Srinivasan ||- |
|Shri V. Vaidyanathan ||- |
|Shri A. Gopalakrishnan ||5.56 % |
|Ms. Kavitha Vijay ||- |
|Shri Vidyashankar Krishnan ||44.39 % |
|Vice Chairman & Managing Director || |
|(Chief Executive Officer) || |
|Shri. K. Venkatramanan Joint Managing Director ||45.32 % |
|Smt.J.Sumathi Company Secretary ||5.17 % |
|Shri.R.Venkatakrishnan CFO ||10.78 % |
18.3 Percentage increase in median remuneration of employees is 21.10 in the financialyear 2017-18
18.4 The number of permanent employees on the rolls of Company: 1589
18.5 Explanation of relationship between average increase in remuneration and companyperformance : PAT ( last year) - Rs. 4342.22 Lakhs PAT ( this year) - \Rs.6850.75 Lakhs Increase - 57.77 against which the average increase in remuneration is 24% 18.6 Comparison of remuneration of each KMP against performance of company
|Name ||Designation ||CTC in CTC ||% Increase ||PAT Rs. in Lakhs ||% in PAT |
|Vidyashankar Krishnan ||CEO ||44045674 ||44.39% || || |
|J.Sumathi ||Company Secretary ||1051310 ||5.17 % ||6850.75 ||57.77% |
|R.Venkatakrishnan ||CFO ||1570122 ||10.78 % || || |
18.7 Variation in market cap/net worth of company:
|Date ||Issued Capital (Shares) ||Closing market Price per share in Rs. ||EPS ||PE Ratio ||Market Capitalisation Rs. in Crores |
|31.03.2017 ||12070400 ||542 ||35.97 ||15.07 ||654.21 |
|31.03.2018 ||12070400 ||1038 ||56.76 ||18.29 ||1252.90 |
|Increase/ (Decrease) ||NIL ||496 ||20.79 ||3.22 ||598.69 |
|% of Increase/ (Decrease) ||NIL ||91.51 ||57.80 ||21.37 ||47.78 |
18.8 Justification of increase in managerial remuneration with that of increase inremuneration of other employees.
Average Increase in Remuneration for employees other than Directors and KMP is 2.1%Average Increase in Remuneration for KMP and Senior Management is 42.3% 18.9 Keyparameters for any variable remuneration of Directors:
Directors are paid Commission. However the overall managerial remuneration payable issubject to the provisions of the Companies Act 2013 18.10 Ratio of remuneration ofhighest paid Director to other employees who gets remuneration more than highest paidDirector. NOT APPLICABLE
18.11 Is remuneration is as per remuneration policy of the Company: YES
19 SIGNINFICANT MATERIAL ORDERS PASSED BY THE REGULATIONS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE: Not applicable
20 MATERAIL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OFTHE COMPANY WHICH HAS OCCURRED SINCE 31.03.2018 TILL THE DATE OF THE REPORT: Notapplicable
21 DIRECTORS RESPONSIBILITY STATEMENT:
The Directors have fulfilled their responsibility for the preparation of theaccompanying financial statements by taking all reasonable steps to ensure that -
21.1 In the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
21.2 The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31 March 2018 and Profit or Loss ofthe Company for that period ended on that date.
21.3 The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities.
21.4 The Directors had prepared the annual accounts on a going concern basis.
21.5 The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
21.6 The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
22 ESTABLISHMENT OF VIGIL MECHANISM
The Company has in place a vigil mechanism pursuant to which a Whistle Blower Policyhas been in vogue. The Whistle Blower Policy covering all employees and Directors ishosted on the Company's website.
A high level Committee has been constituted which looks into the complaints raised. TheCommittee reports to the Audit Committee and the Board.
23 ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company had laid down Internal Financial Controls and such internal financialcontrols are adequate with reference to the Financial Statements and were operatingeffectively.
It also ensures the orderly efficient conduct of its business including adherence toCompany's policies the safe guarding of its assets the prevention and detention offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information during the year such controls were testedand bi-material weakness in the operations were observed.
24 CORPORATE GOVERNANCE REPORT
The guidelines evolved by SEBI were applicable to the company. The company is committedto ethical management and excellence in performance. Details are provided in Annexure 3.
25 ANNUAL RETURN
An extract of Annual Return as on 31 March 2018 pursuant to Section 92 ( 3) of theCompanies Act 2013 and forming part of the report is attached separately.
26 A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEENMADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUALDIRECTORS;
1. Nomination and Remuneration Committee of the Board had prepared and sent through itsChairman draft parameterized feed back forms for evaluation of the Board IndependentDirectors and Chairman.
2. Independent Directors at a meeting without anyone from the non-independent Directorsand management considered/evaluated the Board's performance performance of the Chairmanand other non-independent Directors. Their meeting was held on 14 November 2017.
3. The Board subsequently evaluated performance of the Board the Committees andIndependent Directors (without participation of the relevant Director)
4. i) Observations of board evaluation carried out for the year:
The main inputs received from the Directors covering various aspects of the Board'functioning was with regard to adequacy of the composition of the Board and itsCommittees Board culture execution and performance of specific duties obligations andgovernance.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the NonIndependent Directors and Top Managerial Personnel were carried out by the IndependentDirectors. The Directors expressed their satisfaction with the evaluation process
ii) Previous year's observations and actions taken- NIL
iii) Proposed actions based on current year observations . NIL
27 FAMILIARISATION OF PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS
M M Forgings Limited has put in place a system to familiarise the independentDirectors about the company its products business and the on-going events relating tothe company.
Independent Directors of the Company are made aware of their role responsibilitiesand liabilities at the time of their appointment / re-appointment through a formalletter of appointment which also stipulates various terms and conditions of theirengagement.
They are also made aware of Company's Board and Board Committee framework policiesand procedures.
As part of Board discussions presentations on business of the Company are made tothe Directors from time to time.
Important announcements and press releases for various news related to the companyare forwarded to the Directors from the time to time.
Each member of the Board including the independent Directors have been givencomplete access to any information relating to the Company.
You may also view the company website www.mmforgings.com in this regard.
G R N K & Co. Chartered Accountant (FRN 016847S) have been appointed as theStatutory Auditors of the Company in the 71st Annual General Meeting held on 26 September2017. They will hold office for a period of five years
29. SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act 2013 the Company has appointedV.Shankar Practicing Company Secretary (C.P. No. 12974 ) as the Secretarial Auditor forthe financial year 2017-18 whose report of 28 May 2018 is attached separately to thisreport.
30. COST AUDITOR
Pursuant to the provisions contained in Rule 14 of the Companies ( Audit and Auditors)Rules 2014 Shri. S. Hariharan (CP No. 20864) has been appointed as Cost Auditor for thefinancial year 2018-19.
31 SUBSIDIARY COMPANY - DVS Industries Private Limited
Your company has acquired majority stake in DVS Industries Private Limited for cashconsideration who is a leading manufacturer of crank shafts automobile crank shafts anddiesel engines. This acquisition was decided in the Board Meeting held on 05 February2018.
With this acquisition your company will enhance synergies between it's wide rangingcapability in forgings and machining and DVS Industries long standing expertise will be anaddition in machining of crankshafts.
Incorporated in 1992 DVS Industries (with the paid-up share capital currently beingRs. 15929900/ and turn-over of Rs. 13.17 Crores in FY 2017) is a north Indian basedplayer with its manufacturing unit located in Pant Nagar Uttarakhand. DVS Industries iswell equipped with modern manufacturing facilities such as sophisticated in-house toolroom.
32 EXPLANATION TO AUDITOR'S REMARK
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditors and Company Secretary in practice in their reports respectively. TheStatutory Auditors have not reported any incident of fraud to the Audit Committee of theCompany in the year under review.
Employees have been encouraged to adhere to safety in all their activities in and outof the Company premises. Safety training at all levels have been provided by the Company.
The Company does not have any deposits. Fresh deposits are not being accepted by theCompany.
35 ENERGY TECHNOLOGY & FOREIGN EXCHANGE:
Disclosures as per requirements of Section 134 (3) of the Companies Act 2013 readwith the Companies (Accounts)) Rules 2014 with respect to Energy Conservation TechnologyAbsorption Research & Development and Foreign Exchange Earnings / Outgo are given inAnnexure
36 DECLARATION GIVEN BY INDEPENDENT DIRECTORS:
All the Independent Directors have given the necessary declarations to the Company asrequired under sub section (6) of Section 149 of the Companies Act 2013.
37 PROHIBITION AND REDRESSAL OF SEXUAL HARRASSMENT OF WOMEN AT WORK PLACE
During the year under review pursuant to the new legislation PreventionProhibition and Redressal of Sexual Harassment of Women at Workplace Act 2013' introducedby the Government of India which came into effect from 09 December 2013 the Company hasframed a Policy on Prevention of Sexual Harassment at Workplace. There were no casesreported during the year under review under the said Policy.
Your Directors would like to express their gratitude for the cooperation and continuedassistance received from Citibank N.A. DBS bank HDFC Bank Ltd and State Bank ofIndia.
Your Directors wish to record their appreciation for the exemplary services rendered bythe employees of the company. The results achieved would not have been possible but fortheir outstanding effort.
Above all the Directors thank the shareholders for their continued confidence in themanagement.
|Place : Chennai ||For and On behalf of the Board |
|Date : 28 May 2018 ||N. SRINIVASAN |
| ||Chairman |
Annexure I to the Directors' Report:
Information in accordance with the Companies (Disclosure of particulars in the reportof the Board of Directors) Rules 1988 and forming part of the report of the Directors forthe year ended 31 March 2018.
(A) CONSERVATION OF ENERGY:
1. Energy conservation methods undertaken:
1.1 Conservation of energy is a continuous process. We have spent around Rs. 20 lakhsto improve efficiency and saving on power consumption.
1.2 New buildings are set up with natural lighting and energy efficient LED lights.Energy efficient LED lights are also employed in existing buildings wherever replacementsoccur. We have spent around
Rs. 25 lakhs for LED lights.
1.3 Consumption of Light Diesel Oil and Furnace Oil is closely monitored to conserveenergy.
1.4 Extracting waste heat from forgings to reduce energy consumption in Heat Treatment.
2. Additional investment and proposals if any being implemented for the reduction inconsumption of energy: Optimising energy consumption. Close monitoring of PowerConsumption of Induction Billet Heaters to reduce power consumption.
3. Green Power : The Company has generated 267.78 lakh units from its Wind and 32.23lakh units from Solar farms equivalent to approximately 24714 tons of CO2 from Wind and2974 tons of CO2 Solar.
4. Impact of measures at 1 2 & 3 for reduction of energy consumption andconsequent impact on the cost of production of goods: It is not possible to determine thefigure.
| ||2017-18 ||2016-17 |
|1 ELECTRICITY || || |
|a. Purchased: || || |
|Units ||61727144 ||52822459 |
|Total Amount. (Rs.) ||510125424 ||392909174 |
|Rate / Unit (Rs.) ||8.26 ||7.44 |
|b. Own Generation: || || |
|Units ||164143 ||98489 |
|Units per ltr. ||3.03 ||2.47 |
|Cost / Unit (Rs.) ||21.92 ||22.07 |
|2 FUEL OIL || || |
|Quantity (in ltrs) ||2669009 ||1765063 |
|Total amount (Rs.) ||78638729 ||50675440 |
|Average Rate (Rs./ltr.) ||29.46 ||28.71 |
|3 CONSUMPTION PER UNIT OF PRODUCTION || || |
|a. Electricity Units ||1250 ||1446 |
|b. Fuel Oil Litres ||54 ||48 |
Note: No standards are available for comparison.
(B) TECHNOLOGY ABSORPTION:
RESEARCH AND DEVELOPMENT (R &D)
Specific areas in which R & D are carried out by the company:
1. R & D efforts in a manufacturing industry like ours is an ongoing process.Continuous efforts have been taken in various areas of the manufacturing activity.
2. Benefits derived as a result of the above R & D: It has not been possible todetermine the figure.
3. Future plan of action:
Continuous efforts are being put in by way of Research & Development in all theareas of manufacturing to reduce the cost of major inputs such as steel fuel power etc.
4. Expenditure on R & D: Not less than Rs. 100 lakhs though indirectly.
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:
1. Efforts in brief made towards technology absorption adaptation and innovation:
1.1. Continuous efforts are made on conservation of raw material by improving designand layout of dies.
1.2. The Company has upgraded its Quality Management Systems to TS 16949
2. Benefits derived as a result of the above efforts: 2.1. Reduction in raw materialconsumption.
2.2. With the accreditation to TS 16949 many new export customers are being developed.
2.3. Technology imported during the last 5 years: Nil
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO
|1 Activities relating ||Exports at Rs. 35559.47 lakhs form a significant part of the company's turnover (Rs. 29314.40 lakhs in 2016-17) |
|2 Initiatives taken to increase development of new export markets for products and services and export plan ||a. Vigorous efforts are taken by marketing department to locate new multinational customers in addition to the existing multinationals. |
| ||b. The Company has been consistently retaining the TS 16949 certification for its Quality Management system. |
|3 Total Foreign Exchange ||Earned: Rs. 3454626005 (Rs. 2835715074 IN 2016-17) |
| ||a. Used: Rs. 681592660 (Rs. 480155898 IN 2016-17) |
|Place : Chennai ||For and On behalf of the Board |
|Date : 28 May 2018 ||N. SRINIVASAN |
| ||Chairman |
ANNEXURE II FORMING PART OF THE REPORT OF THE DIRECTORS
(Information as per Section 217(2A) of the Companies Act 1956 read with Companies(Particulars of Employees) Rules1975 and forming part of the Report of the Directors forthe year ended 31.03.2018
|Sl. No ||Name ||Designation ||Remuneration ||Qualification ||Experience (years) ||Date of Joining ||Age ||Last Employment ||% of shares held in the Company |
|a) ||Employed throughout the year ||and were in || |
receipt of remuneration at a rate of not less than
1.05 crore per annum
| || |
|1 ||Shri Vidyashankar Krishnan DIN: 00081441 ||Vice Chairman and Managing Director ||44045674 ||B.E.M.S. ||28 ||25.06.1990 ||52 ||Nil ||11.27% |
|2 ||Shri. K.Venkatramanan ||Jt. Managing Director ||30503724 ||B.E. ||26 ||24.01.1992 ||48 ||Nil ||10.71% |
| ||DIN : 00823317 || || || || || || || || |
|b) ||Employed for a part of the year and were in receipt of remuneration at a rate of not less than 850000 per month || || |
| || || ||None || || || || || || |
1. Remuneration as shown above includes salarycommissionemployer's contribution toProvidend Fund and value of perquisites together with other allowances.
| ||For and on behalf of the Board |
|Place : Chennai ||N. SRINIVASAN |
|Date : 28 May 2018 ||Chairman |
Form AOC 2
(Pursuant to clause (h) of sub section (3) of section 134 of the Act and Rule 8(2 ) of the Companies ( Accounts) Rules 2014)
Form for disclosure of particulars of contracts / arrangements entered into by thecompany with related parties referred to in sub-section 91) of section 188 of theCompanies Act 2013 including certain arms length transactions under third provisothereto.
1. Details of contracts or arrangements or transactions not at arm's length basis - NIL
1.1 Name (s) of the related party and nature of relationship 1.2 Nature of contracts/arrangements/ transaction 1.3 Duration of the contracts / arrangements/ transactions
1.4 Salient terms of the contracts or arrangements or transactions including the valueif any 1.5 Justification for entering into such contracts or arrangements or transactions1.6 Date (s) of approval by the Board 1.7 Amount paid as advances if any:
1.8 Date on which the special resolution was passed in general meeting as requiredunder first proviso to section 188.
2. Details of material contracts or arrangements or transactions not at arm's lengthbasis - NIL
2.1 Name (s) of the related party and nature of relationship 2.2 Nature of contracts/arrangements/ transaction 2.3 Duration of the contracts / arrangements/ transactions
2.4 Salient terms of the contracts or arrangements or transactions including the valueif any 2.5 Date (s) of approval by the Board 2.6 Amount paid as advances if any:
|In terms of our Report of even date || |
|For GRNK & Co. ||N. Srinivasan Vidyashankar Krishnan ||V.Vaidyanathan |
|Chartered Accountants ||Chairman Vice Chairman and ||Director |
|FRN 016847S ||(DIN : 00116726) Managing Director (DIN : 00081441) (DIN : 00081792) |
|G R Naresh Kumar ||A. Gopalakrishnan ||Kavitha Vijay |
|Proprietor ||Director ||Director |
|Membership no. 215577 ||(DIN : 06414546) ||(DIN : 01047261) |
|Place : Chennai ||J.Sumathi ||R.Venkatakrishnan |
|Date : 28 May 2018 ||Company Secretary ||Chief Financial Officer |