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M M Forgings Ltd.

BSE: 522241 Sector: Engineering
NSE: MMFL ISIN Code: INE227C01017
BSE 13:18 | 27 Oct 318.80 5.85
(1.87%)
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311.45

HIGH

319.95

LOW

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NSE 13:19 | 27 Oct 319.95 4.15
(1.31%)
OPEN

315.00

HIGH

319.95

LOW

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OPEN 311.45
PREVIOUS CLOSE 312.95
VOLUME 4851
52-Week high 470.55
52-Week low 151.00
P/E 30.80
Mkt Cap.(Rs cr) 770
Buy Price 319.25
Buy Qty 1.00
Sell Price 319.50
Sell Qty 22.00
OPEN 311.45
CLOSE 312.95
VOLUME 4851
52-Week high 470.55
52-Week low 151.00
P/E 30.80
Mkt Cap.(Rs cr) 770
Buy Price 319.25
Buy Qty 1.00
Sell Price 319.50
Sell Qty 22.00

M M Forgings Ltd. (MMFL) - Director Report

Company director report

1. FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2019

( र in Lakhs)
2018-19 2017-18
1.1. Forging Sales 88736.91 60091.09
1.2. Profit before exceptional items/extraordinary items and Tax 10854.10 8191.36
1.3 Exceptional/Extraordinary Items 2.41 17.21
1.4 Profit Before Tax 10856.51 8208.57
1.5 Tax
For current year 2192.49 1500.00
Relating to previous years - -
Deferred Tax 522.03 (323.35)
MAT credit entitlement 6.95 181.19
2721.47 1357.84
Profit After Tax 8135.04 6850.73

The Directors commend the employees for their commitment andcontribution.

2. DIVIDEND AND FINANCIAL RESULTS:
( र in Lakhs)
2018-19 2017-18
2.1. Profit After Tax 8135.04 6850.56
2.2. Balance in P & L Account 292.62 244.72
2.3. Profit available for appropriation 8427.66 7095.48
2.4. Transfer to General Reserve 6700.00 5400.00
2.5. Interim Dividend paid 708.97 701.43
2.6 Proposed Dividend 708.97 701.43
2.7. Balance carried forward 309.72 292.62

On 28 May 2019 the Directors declared a second interim dividend of 25% र 2.5/ per share of face value of र 10/- each. The Directors earlier declaredfirst interim dividend of 25% - र 2.5/- per share of face value of र 10/- eachand was paid on 05 March 2019. The Directors do not recommend any final dividend for theyear 2018-19.

3. SHARE CAPITAL

Your Company has increased its authorised share capital from र 15Crores to र 30 Crores. The paid up capital has doubled from र 12.07 Crores to##Rs## 24.14 Crores due to issue of fully paid Bonus Shares in the ratio of 1:1.

4. HIGHLIGHTS OF THE COMPANY'S OPERATIONAL PERFORMANCE

4.1 The Company has recorded overall Revenue which crosses र 900crores.

4.2 For the first time in the history of the Company. PBT crossed thesignificant milestone of र 100 crores. 4.3 The Company has recorded PAT which standsat र 81 crores.

4.4 The Company continues to be a net foreign exchange earner. The netforeign exchange earnings during the current year were र 277.30 crores.

4.5 The Company has retained its ISO 9001 and TS 16949 Certificationfor its Quality Management.

4.6 The increase in domestic sales was 73% and increase in export saleswas 30%.

4.7 Overall sales has marked a growth rate of 48%

4.8 The capital expenditure during the year was र 289.17 crores.Forgings and machining capacity has been substantially increased in line with customerdemand. The company also produces green energy in its solar and wind farms.

4.9 The Company has acquired 100 % stake in DVS Industries (Private)Ltd and hence DVS Industries has become a wholly owned subsidiary company.

5. INDIAN ACCOUNTING STANDARD ( IND AS) IFRS CONVERGED STANDARDS

Pursuant to the notification of the Companies ( Indian AccountingStandard) Rules 2015 by the Ministry of Corporate Affairs ( MCA) on 16 February 2015 thecompany has adopted Indian Accounting standards ( IND AS ).

6. EXPENSES MADE MORE THAN 10 % OF THE TURNOVER

Raw Material ` 442.89 Crores (48.15%)
Personnel ` 87.49 Crores (9.51%)

7. MANAGEMENT DISCUSSION AND ANALYSIS : GLOBAL SCENE

1. After strong growth in 2017 and early 2018 global economic activityslowed notably in the second half of last year reflecting a confluence of factorsaffecting major economics. China's growth declined following a combination of neededregulatory tightening to rein in shadow banking and an increase in trade tensions with theUnited States. The euro area aconomy lost more momentum than expected as consumer andbusiness confidence weakened and car production in Geramany was disrupted by theintroduction of new emission standards; investment dropped in Italy as soverign spreadswidened; and external demand especially from emerging Asia softened. Elsewhere naturaldisasters hurt activity in Japan.

2. Conditions have eased in 2019 as the US Federal Reserve signaled amore accommodative monetary policy stance and markets became more optimistic about aUS-China trade deal but they remain slightly more restrictive than in the fall.

3. Global growth in 2019 is expected to slow to 2.6% reflectingweaker-than-expected trade and investment at the start of the year. Growth is projected togradually rise to 2.8% by 2021 predicated on continued benign global financing conditionsand a modest recovery in emerging market and developing economies.

4. In the United States growth is expected to decline to 2.3% in 2019and soften further to 1.9% in 2020 with the unwinding of fiscal stimulus.

5. Growth in the Euro area is set to moderate from 1.8% in 2018 to1.3%% in 2019 and recover to1.5% in 2020. Although growth is expected to recover in thefirst half of 2019 as some of the temporary factors that held activity back dissipatecarryover from the weakness in the second half of 2018 is expected to hold the 2019 growthrate down.

6. Japan's economy is set to grow by 1% in 2019. This revisionmainly reflects additional fiscal support this year including measures to mitigate theeffects of the planned consumption of tax rate increase in October 2019. Growth isprojected to moderate to 0.5% in 2020.

7. Economic growth in China despite fiscal stimulus and no furtherincrease in tariffs from the United States relative to those in force as of September2018 is projected to slow on an annualized basis in 2019 and 2020. This reflects weakerunderlying growth in 2018 especially in the second half and the impact of lingering tradetensions with the United States. The projection for 2019 is slightly stronger reflectingthe revised assumption on United States tariffs on Chinese exports while the projectionfor 2020 is slightly weaker as the underlying momentum in activity is more subdued.

8. In India growth is projected to pick up to 7.3% in 2019 and 7.5% in2020 supported by the continued recovery of investment and robust consumption amid a moreexpansionary stance of monetary policy and some expected impetus from fiscal policy.Nevertheless reflecting the recent revision to the national account statistics thatindicated somewhat softer underlying momentum growth forecasts have been revised downwardcompared with the October 2018 World Economic Outlook by 0.1% point for 2019 and 0.2%point for 2020 respectively.

9. The Dow Jones Industrial Average (DJIA) has increased byapproximately 7 because US stock markets are seen as a haven for investment in a sea ofgloom.

10. Commodities – The Dow Jones Commodity Index (DJCI) has comedown 2%.

11. As a result of these developments global growth is now projectedto be 2.6% in 2019 before gradually rising to 2.8 – 3% thereafter. The slowdownreflects weaker-than-expected trade and investments at the start of the year. Growth in2020 and beyond is predicted on continued benign global financing conditions and a modestrecovery in emerging market and developing economies.

INDIA

12. ndia's GDP is estimated to have increased 7.2% in F18 and 7%in F19. India's economy is projected to grow at 7.1% in F20 on the back of strongdomestic consumption and investment.

13. During F18 the automotive industry posted growth rates ofapproximately 0.5% in the car segment and 16% in the CV segment.

14. Steel prices have increased by about 4% compared to the lows in theprevious year.

15. The INR ended the year higher by approximately 5.75% ending theyear at a level of र 69.66 per USD. Please refer graph below. Further weakening ofthe INR is anticipated. However if FDI inflows are moderate the pressure on the INR willbe relieved.

M M FORGINGS – Achievements

16. The following were important developments witnessed during the year:

• ?Domestic sales crossed record र 420 crore mark!

• ?Export sales crossed record र 460 crore mark!

• ?Total forging sales crossed record र 880 crore mark!

• ?Overall sales reached record of र 919 crore mark!

• ?Record production to 64000 Tons!

• ?Adding to the volume of existing parts were the new partswhich were developed in the last 2 years.

• ?The company has posted a huge growth of 73% in domesticsales by the development of new parts. • ?Export sales also grew by 30%.

• ?Changes in steel prices which are in line withinternational markets are generally being passed on to customers as is the industrypractice.

• ?We are focusing on capacity utilisation to take advantageof the production capacities created in the last 3 years.

Key financial ratios :
Debtors Turnover : 82 days
Inventory Turnover : 4.52
Interest Coverage Ratio : 6.63
Current Ratio : 1.85
Debt Equity Ratio : 1.04
Operating Profit Margin (%) : 11.80%
Net Profit Margin (%) : 8.84%

17. As highlighted in the Directors' Report Return On Net Worthis 19.03% and Return On Capital Employed is 15.70% . Total Outside Liabilities to NetWorth stands at 1.76.

18. The details of segment-wise sales distribution are provided below:

Human Resources and Industrial Relations

19. Your company continues to focus on the development of its humanresources to improve its performance. The company currently has approximately 2064employees. It is their invaluable contribution that has primarily resulted in yourcompany's position of strength in the industry.

20. Focus on a safe working atmosphere constantly evolving systems forrecognition and reward consistent communication and imparting skills and training –all these focused on meeting customer needs characterise the HR development of theCompany.

21. Every year each plant of the Company celebrates‘Founder's Day' in a family atmosphere with all employees and theirhousehold members.

Health Safety and Environment

22. The Company follows a policy of zero tolerance towards accidents.Wherever possible visible controls and fail-safe systems are provided to ensureprevention of accidents. Regular communication periodic reviews of practices and trainingplay a vital role in maintaining safety standards.

23. The Company ensures compliance with all pollution controlregulations. Adequate pollution control equipments have been installed to treat effluentsand to control air pollution.

Risk Management

24. The Company is a leading manufacturer of automotive components.Automotive industry is subjected to cyclical variations in performance and is verysensitive to policy changes. The market is very competitive. Prices of raw materialschange based on supply and demand. Margins remain under constant pressure. Any steepreduction in off-take exposes the Company to high fixed costs.

25. A considerable portion of the customers of the Company are situatedoutside of India. Hence demand for the Company's product is subject to the health ofthe global economy.

26. The Company has spread its risks by increasing the geographicspread of its customer base. The Company proposes to improve capacity utilization in itsexisting facilities. 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 110000 Tons.

Focus on cost reduction continuously - particularly onreducing energy consumption and improving productivity. Enhance IT systemswith the continued development of the ERP system in place.

Reduce the impact on the environment.

Sources :

1. IMF World Economic Output

2. The Economist

8. TRANSFER TO RESERVE

Transfer to General Reserve - र 67 Crores

9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The company has made advance to the tune of र 84.05 Crores to itsSubsidiary Company DVS Industries Private Limited repayable at prevailing rates.

The details of the investments made by the company are given in thenotes to the financial statements. 10. DIRECTORS

There has been no change in the constitution of Board of Directorsduring the year under review - the structure of the Board remains the same.

Both Shri. Vidyashankar Krishnan Vice Chairman and Managing Directorand Shri. K Venkatramanan Jt. Managing Director were re-appointed for a period of fiveyears with effect from 1 September 2018. Shri. N Srinivasan Shri. V Vaidyanathan andShri. A. Gopalakrishnan were re appointed for a period of 5 years with effect from 01April 2019.

11. RETIRE BY ROTATION

Shri. Vidyashankar Krishnan will retire by rotation and being eligiblehas offered himself for re-appointment.

12. DETAILS OF DIRECTORS OR KMP RESIGNED DURING THE YEAR –NIL

13. BOARD AND COMMITTEE MEETING DATES

Details are provided in Annexure III of this Report.

14. DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOTACCEPTED BY THE BOARD ALONG WITH REASONS – None

13. RISK MANAGEMENT

Your Company has implemented a mechanism for risk management and hasformulated a Risk Management Policy. The Policy provides for identification of risks andmitigation measures. The Audit Committee is informed on the risk assessment andminimizations mechanism adopted by the Company.

14. RELATED PARTY TRANSACTION

The Company has formulated a policy on related party transactions andthe same is uploaded on the Company's website http://www.mmforgings.com/financials

All Related Party transactions that were entered into by the Companyduring the financial year 2018-19 were in compliance of Section 188 of the Companies Act2013 and the Rules framed thereunder. There are no "Material" contracts orarrangement or transactions at arm's length basis.

All Related Party transactions were placed before the Audit Committeefor their prior approval in accordance with the requirements of the SEBI LODR. Thetransactions entered into pursuant to such approval are placed periodically before theAudit Committee for its review.

There are no materially significant Related Party transactions made bythe Company with Promoters Directors and Key Managerial Personnel which may have apotential conflict with 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 hasadopted a CSR Policy as recommended by the Committee. The thrust areas of CSR Policy areEradicating Hunger and Poverty Education Combating Diseases and Social BusinessProjects.

Your Company has fulfilled its obligation towards CSR by spending asum of र 137.59 Lakhs during the year.

Annual report on CSR has been provided in Annexure III of this Report.

16. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

In terms of provision of section 178 of the Companies Act 2013 readwith Rules prescribed a policy for the Directors KMP and other employees has beenadopted by the Board of Directors of the Company analyzing the criteria for determiningqualifications positive attributes and independence of a Director. The said Policy isprovided in Company's website link http://www.mmforgings.com/financials.

17. PARTICULARS OF EMPLOYEES

The information required under the rules prescribed has been given inthe annexure appended 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 medianremuneration of the employees:

Name Ratio
Shri. Srinivasan. N 3.05 : 1
Shri. Vaidyanathan. V 1.63 : 1
Shri. A.Gopalakrishnan 1.22 : 1
Ms. Kavitha Vijay 1.22 : 1
Shri. Vidyashankar Krishnan 234.00 : 1
Shri. K.Venkatramanan 233.83 : 1

For this purpose sitting fees paid to the Directors have not beenconsidered as remuneration.

18.2 Percentage increase in remuneration of each Director KMP in thefinancial year:

Name % Increase
Shri. Srinivasan. N 1.92 %
Shri. Vaidyanathan. V -4.17 %
Shri. A.Gopalakrishnan -
Ms. Kavitha Vijay -
Shri. Vidyashankar Krishnan 34.45 %
Shri. K.Venkatramanan 7.95 %
Smt. J.Sumathi 7.95 %
Shri R.Venkatakrishnan 1.98 %

18.3 Percentage increase in median remuneration of employees is 64.60%in the financial year 2018-19.

18.4 The number of permanent employees on the rolls of Company : 2064

18.5 Explanation of relationship between average increase inremuneration and company performance : PAT - ( last year) - र 6850.56 Lakhs; PAT - (this year) - र 8135.07 Lakhs.

Increase 18.75% against which the average increase in remuneration is34%.

18.6 Comparison of remuneration of each KMP against performance ofcompany

Name Designation CTC % Increase PAT ##Rs## in Lakhs % in PAT
in `
Vidyashankar Krishnan CEO 57509798 31.08
J.Sumathi Company Secretary 1134894 7.95 8135.04 18.75
R.Venkatakrishnan CFO 1601283 1.98

18.7 Variation in market cap/net worth of company:

Date Issued Capital Closing market Price per share in ` EPS PE Ratio Market Capitalisation
(Shares) ` in Crores
31.03.2018 12070400 1038 56.76 18.29 1252.90
31.03.2019 12070400 1038.00 56.76 18.29 1252.91
31.03.2019 (post bonus issue) 24140800 544.00 33.73 16.13 1313.26
Increase / (Decrease) (post bonus issue) 12070400 -494 -23.03 -2.16 60.35
% of Increase / (Decrease) (post bonus issue) 100% -47.59% -40.57% -11.81% 4.82%

18.8 Justification of increase in managerial remuneration with that ofincrease in remuneration of other employees.

Average Increase in Remuneration for employees other than Directors andKMP is 35.90%. Average Increase in Remuneration for KMP and Senior Management is 31.10%.

18.9 Key parameters for any variable remuneration of Directors:

Directors are paid Commission. However the overall managerialremuneration payable is subject to the provisions of the Companies Act 2013.

18.10 Ratio of remuneration of highest paid Director to other employeeswho gets remuneration more than highest paid Director. – NOT APPLICABLE.

18.11 Is remuneration is as per remuneration policy of the Company:YES.

19 SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATIONS ORCOURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS INFUTURE: Not applicable.

20 MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THEFINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2019 TILL THE DATE OF THEREPORT:

Not applicable

21 DIRECTORS RESPONSIBILITY STATEMENT:

The Directors have fulfilled their responsibility for the preparationof the accompanying financial statements by taking all reasonable steps to ensure that -

21.1 In the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating tomaterial departures;

21.2 The Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company as at 31 March 2019and of the profit or loss of the company for that period ended on that date;

21.3 The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities;

21.4 The Directors had prepared the annual accounts on a going concernbasis.

21.5 The Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively.

21.6 The Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

22 ESTABLISHMENT OF VIGIL MECHANISM

The Company has in place a vigil mechanism pursuant to which a WhistleBlower Policy has been in vogue. The Whistle Blower Policy covering all employees andDirectors is hosted on the Company's web http://www.mmforgings.com/financials.

A high level Committee has been constituted which looks into thecomplaints raised. The Committee reports to the Audit Committee and the Board.

23 ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company had laid down Internal Financial Controls and such internalfinancial controls are adequate with reference to the Financial Statements and wereoperating effectively.

It also ensures the orderly efficient conduct of its businessincluding adherence to Company's policies the safe guarding of its assets theprevention and detention of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information during theyear such controls were tested and bi-material weakness in the operations were observed.

24 CORPORATE GOVERNANCE REPORT

The guidelines evolved by SEBI were applicable to the company. Thecompany is committed to ethical management and excellence in performance. Details areprovided in Annexure III.

25 ANNUAL RETURN

An extract of Annual Return as on 31 March 2019 pursuant to Section 92(3) of the Companies Act 2013 and forming part of the report is attached separately.

26 A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUALEVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS;

1. Nomination and Remuneration Committee of the Board had prepared andsent through its Chairman draft parameterized feed back forms for evaluation of the BoardIndependent Directors and Chairman.

2. Independent Directors at a meeting without anyone from thenon-independent Directors and management considered/evaluated the Board'sperformance performance of the Chairman and other non-independent Directors. Theirmeeting was held on 16 November 2018.

3. The Board subsequently evaluated performance of the Board theCommittees and Independent 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 aspectsof the Boards functioning was with regard to adequacy of the composition of the Board andits Committees Board culture execution and performance of specific duties obligationsand governance.

A separate exercise was carried out to evaluate the performance ofindividual Directors including the Chairman of the Board who were evaluated on parameterssuch as level of engagement and contribution independence of judgement safeguarding theinterest of the Company and its minority shareholders. The performance evaluation of theIndependent Directors was carried out by the entire Board. The performance evaluation ofthe Non Independent Directors and Top Managerial Personnel were carried out by theIndependent Directors. The Directors expressed their satisfaction with the evaluationprocess.

ii) Previous year's observations and actions taken - NIL

iii) Proposed actions based on current year observations - NIL

27 FAMILIARISATION OF PROGRAMME ARRANGED FOR INDEPENDENTDIRECTORS

• ?M M Forgings Limited has put in place a system tofamiliarise the independent Directors about the company its products business and theon-going events relating to the company.

• ?Independent Directors of the Company are made aware oftheir role responsibilities and liabilities at the time of their appointment /re-appointment through a formal letter of appointment which also stipulates variousterms and conditions of their engagement.

• ?They are also made aware of Company's Board and BoardCommittee framework policies and procedures.

• ?As part of Board Discussions presentations on business ofthe Company are made to the Directors from time to time.

• ?Important announcements and press releases for various newsrelated to the company are forwarded to the Directors from time to time.

• ?Each member of the Board including the independentDirectors have been given complete access to any information relating to the Company.

• ?You may also view the company websitehttp://www.mmforgings.com/financials in this regard.

28 AUDITORS:

G R N K & Co. Chartered Accountants (FRN 016847S) have beenappointed as the Statutory Auditors of the Company in the 71st Annual GeneralMeeting held on 26 September 2017. They will hold office for a period of five years.

There is no audit qualification reservation or adverse remark for theyear under review.

29. SECRETARIAL AUDIT REPORT

Pursuant to the requirements of the Companies Act 2013 the Companyhas appointed V.Shankar Practicing Company Secretary (C.P. No. 12974) as the SecretarialAuditor for the financial year 2018-19 whose report of 28 May 2019 is attached separatelyto this report.

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 asCost Auditor for the financial year 2019-20.

31 SUBSIDIARY COMPANY - DVS INDUSTRIES PRIVATE LIMITED

Your company has acquired 100 % majority stake in DVS IndustriesPrivate Limited for cash consideration who is a leading manufacturer of crank shaftsautomobile crank shafts and diesel engines.

With this acquisition your company will enhance synergies betweenit's wide ranging capability in forgings and machining and DVS Industries' longstanding expertise in machining of crankshafts.

Incorporated in 1992 DVS Industries (with the paid-up share capitalcurrently being र 15929900/ and turn-over of `18.06 Crores in FY 2018) is a NorthIndia based player with its manufacturing unit located in Pantnagar Uttarakhand. DVSIndustries is well equipped with robust manufacturing processes precision equipment inhouse tool room inspection facilities well trained personnel etc.

32 EXPLANATION TO AUDITOR'S REMARK

There are no qualifications reservations or adverse remarks ordisclaimers made by the Statutory Auditors and Company Secretary in practice in theirreports respectively. The Statutory Auditors have not reported any incident of fraud tothe Audit Committee of the Company in the year under review.

33 SAFETY

Employees have been encouraged to adhere to safety in all theiractivities in and out of the Company premises. Safety training at all levels have beenprovided by the Company.

34 DEPOSITS:

The Company does not have any deposits. Fresh deposits are not beingaccepted by the Company.

35 ENERGY TECHNOLOGY & FOREIGN EXCHANGE:

Disclosures as per requirements of Section 134 (3) of the CompaniesAct 2013 read with the Companies (Accounts)) Rules 2014 with respect to EnergyConservation Technology Absorption Research & Development and Foreign ExchangeEarnings / Outgo are given in Annexure

36 DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

All the Independent Directors have given the necessary declarations tothe Company as required under sub section (6) of Section 149 of the Companies Act 2013.

37 PROHIBITION AND REDRESSAL OF SEXUAL HARRASSMENT OF WOMEN ATWORK PLACE

During the year under review pursuant to the new legislation‘Prevention Prohibition and Redressal of Sexual Harassment of Women at WorkplaceAct 2013' introduced by the Government of India which came into effect from 09December 2013 the Company has framed a Policy on Prevention of Sexual Harassment atWorkplace. There were no cases reported during the year under review under the saidPolicy.

Disclosures in relation to the Sexual Harassment of Women in work place: No. of complaints filed during the year – 0 No of complaints disposed of during theyear – 0 No of complaints pending as on the end of the financial year - 0

38 ACKNOWLEDGEMENT:

Your Directors would like to express their gratitude for thecooperation and continued assistance received from Citibank N.A. DBS bank HDFC BankState Bank of India ICICI Bank and Federal Bank

Your Directors wish to record their appreciation for the exemplaryservices rendered by the employees of the company. The results achieved would not havebeen possible but for their outstanding effort.

Above all the Directors thank the shareholders for their continuedconfidence in the management.

For and On behalf of the Board
Place : Chennai Vidyashankar Krishnan
Date : 28 May 2019

Chairman of this meeting

(DIN 00081441)

Annexure I – to the Directors' Report:

Information in accordance with Section 134 of the Companies Act 2013and as per (requirement of Rule 8(3) of The Companies (Accounts) Rules 2014) and formingpart of the report of the Directors for the year 31 March 2019.

(A) CONSERVATION OF ENERGY:

1. Energy conservation methods undertaken:

1.1 Conservation of energy is a continuous process. We have spentaround र 50 lakhs to improve efficiency and saving on power consumption.

1.2 Buildings are set up with natural lighting and energy efficient LEDlights.

1.3 Consumption of Light Diesel Oil and Furnace Oil is closelymonitored to conserve energy.

1.4 Extracting waste heat from forgings to reduce energy consumption inHeat Treatment.

2. Additional investment and proposals if any being implemented forthe reduction in consumption of energy: Optimising energy consumption. Close monitoring ofPower Consumption of Induction Billet Heaters to reduce power consumption.

3. Green Power : The Company has generated 204.95 lakh units from itsWind and 28.01 lakh units from Solar farms equivalent to approximately 18915 tons of CO2from Wind and 2585 tons of CO2 in the year. from Solar totalling a saving of21500 tons of CO2

4. Impact of measures at 1 2 & 3 for reduction of energyconsumption and consequent impact on the cost of production of goods: It is not possibleto determine the figure.

2018-19 2017-18
1 ELECTRICITY
a. Purchased:
Units 76999739 61727144
Total Amount. (`) 655497733 510125424
Rate / Unit (`) 8.51 8.26
b. Own Generation:
Units 574488 164143
Units per ltr. 3.86 3.03
Cost / Unit (`) 20.22 21.92
2. FUEL OIL
Quantity (in ltrs) 3421846 2669009
Total amount (`) 141872470 78638729
Average Rate (`/ltr.) 41.46 29.46
3 CONSUMPTION PER UNIT OF PRODUCTION
a. Electricity Units 1215 1250
b. Fuel Oil Litres 54 54

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 anongoing process. Continuous efforts have been taken in various areas of the manufacturingactivity.

2. Benefits derived as a result of the above R & D: It has not beenpossible to determine the figure.

3. Future plan of action:

Continuous efforts are being put in by way of Research &Development in all the areas of manufacturing to reduce the cost of major inputs such assteel fuel power etc.

4. Expenditure on R & D: Not less than र 100 lakhs thoughindirectly.

TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:

1. Efforts in brief made towards technology absorption adaptationand innovation:

1.1. Continuous efforts are made on conservation of raw material byimproving design and layout of dies.

1.2. The Company has upgraded its Quality Management Systems to TS16949

2. Benefits derived as a result of the above efforts:

2.1. Reduction in raw material consumption.

2.2. With the accreditation to TS 16949 many new export customers arebeing developed.

2.3. Technology imported during the last 5 years: Nil

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

1 Activities relating Exports at र 46355.02 lakhs form a significant part of the company's turnover (` 35559.47 lakhs in 2017-18)
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 (` 3454626005 IN 2017-18) Earned: र 4911462532
a. Used: र 1214910723
(` 681592660 IN 2017-18)

 

For and On behalf of the Board
Place : Chennai Vidyashankar Krishnan
Date : 28 May 2019

Chairman of this meeting

(DIN 00081441)

ANNEXURE II FORMING PART OF THE REPORT OF THE DIRECTORS

(Information as per Section 217(2A) of the Companies Act 1956 readwith Companies (Particulars of Employees) Rules1975 and forming part of the Report of theDirectors for the year ended 31.03.2019

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 2400000 per annum
1 Shri Vidyashankar Krishnan Vice Chairman and Managing Director 57509798 B.E.M.S. 29 25.06.1990 53 Nil 11.27%
DIN: 00081441
2 Shri. K.Venkatramanan Jt. Managing Director 57467437 B.E. 27 24.01.1992 49 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

Note:

1. Remuneration as shown above includessalarycommissionemployer's contribution to Provident Fund and value of perquisitestogether with other allowances.

Form AOC – 2

(Pursuant to clause (h) of sub –section (3) of section 134 of theAct and Rule 8 (2 ) of the Companies ( Accounts) Rules 2014)

Form for disclosure of particulars of contracts / arrangements enteredinto by the company with related parties referred to in sub-section 91) of section 188 ofthe Companies Act 2013 including certain arms length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not atarm'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 transactionsincluding the value if any

1.5 Justification for entering into such contracts or arrangements ortransactions

1.6 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 meetingas required under first proviso to section 188.

2. Details of material contracts or arrangements or transactions not atarm's length basis - 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 transactionsincluding the value if 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. Vidyashankar Krishnan V.Vaidyanathan
Chartered Accountants

Chairman of this Meeting -

Director

FRN 016847S

Vice Chairman and Managing Director

(DIN : 00081792)
(DIN : 00081441)
G. R. Naresh Kumar Kavitha Vijay J.Sumathi
Proprietor

Director

Company Secretary

Membership no. 215577 (DIN : 01047261)
Place : Chennai R.Venkatakrishnan
Date : 28 May 2019

Chief Financial Officer

.