The Directors present their Report together with the audited financial statements ofyour Company for the Financial Year (FY) ended 31st December 2020.
A. FINANCIAL SUMMARY AND HIGHLIGHTS
(Rs in Million)
|PARTICULARS (STANDALONE) ||FY ended 31st December 2020* ||FY ended 31st December 2019* |
|Total Revenue ||21645 ||29271 |
|Profit before Interest Depreciation Exceptional Items and Tax ||2218 ||3780 |
|Less: Depreciation ||1084 ||1127 |
|Profit before Interest Exceptional Items and Tax ||1134 ||2653 |
|Less: Interest and Finance cost ||119 ||136 |
|Profit before Exceptional Items and Tax ||1015 ||2517 |
|Less: Exceptional items ||- ||(119) |
|Profit before tax ||1015 ||2636 |
|Profit after tax ||740 ||1723 |
During the Financial Year under review total standalone revenue of the Company droppedto Rs 21645 Million from Rs 29271 Million for previous year and Profit before InterestDepreciation Exceptional Items and Tax dropped to 2218 Million as against Rs 3780Million for the previous year. The profit before exceptional items & tax for theFinancial Year reduced to Rs 1015 Million in Financial Year 2020 from Rs 2517 Million inFinancial Year 2019. The drop-in revenue is mainly due to the impact caused by theCovid-19 pandemic.
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.
COVID19 the pandemic is not completely behind us. We need to conserve cash to meetunexpected operational requirements until we are sure that the Pandemic will no more haveany impact on business. We also need to conserve cash for any organic or inorganicopportunity that may come up. In view of this your directors do not recommend any dividendfor the financial year 2020.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
B. OPERATIONAL PERFORMANCE - THE COMPANY AND SUBSIDIARIES
The market demand at the start of 2020 remained sluggish continuing the trends fromthe second half of 2019. The effect of the Covid started being felt towards the end of Q12020 when many of the countries went into lockdown to counter the spread of the virus. Q22020 saw the impact of Covid induced downturn on MCIE's operations worldwide. Q3 and Q4 of2020 have seen a sharp recovery in India and a slow & steady one in Europe.
To counter the pandemic driven downturn the company initiated a program for costreduction and cash protection. Post the easing of lockdown restrictions the focus was onrenewing and continuing operations in a safe and sustainable manner. The reopening ofplants post lockdown was done in a manner that provides a safe working environment for theworkforce. All Safety protocols mandated by local authorities at the different plantlocations were followed. A much better than expected recovery in demand in the second halfof the year posed operational challenges which were overcome by the operating team.
In the case of the Indian operations efforts were accelerated to reduce the Break-Evenlevel of the plants to make them more efficient and future ready. The plants also focusedon improving capacity utilization through reduced outsourcing and by automation projectsto improve manpower productivity. Diversifying the customer base has also received sharperfocus especially to increase exports. In some of the business divisions the new ordergeneration was also aided by customers choosing to shift sourcing from China to India.
While some of the planned plant improvements were delayed the major activities plannedto improve operations were carried out. Among them was the plan to concentrate theactivities of the composites division at one location. Organisational improvements and newmanagement structures were also introduced at certain divisions to effectively sharpenmanagement bandwidth and focus.
In Europe the focus has been to restructure operations especially in Germany &Italy and bring them in line with the reduced demand post pandemic. The Europeanoperations benefited from government benefits of programs like Cassa Integrazione in Italyand similar programs in Germany & Spain wherein individual governments gave wagesupport equivalent to 70-80% of the cost of the employee for the days the plants wereshutdown.
The focus in Europe is to sustain & improve profitability in the face of a slowlyrecovering market demand.
Investor Relations (IR)
In this year Participaciones lnternacionales Autometal DOS S.L one of the promoter ofthe Company has increased its stake from 56.25% to 60.18%. With these investments CIE hasreiterated its belief and commitment in MCIE and the Indian market.
The Company also continuously strives for excellence in its Investor Relations("IR") engagement with International and Domestic investors through structuredconference-calls and periodic investor/analyst interactions like individual Meetingsparticipation in investor conferences quarterly earnings calls and analyst meet fromtime to time. It participated in several investors meets organized by reputed Global andDomestic Broking Houses during the year. Building a relationship of mutual understandingwith investor/analysts is of utmost importance and critical information about the Companyis available to all the investors by uploading all such information on the Company'swebsite.
C. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiary companiesprepared in accordance with the Companies Act 2013 (the Act) and applicable AccountingStandards along with all relevant documents and the Auditors' Report forms a part of theAnnual Report of 2020.
In accordance with section 136 of the Act separate accounts in respect of each of theSubsidiaries are uploaded on the website of the Company and is accessible at the web-link:http://www. mahindracie.com/investors/investor-relations/annual-report.html#subsidiaries-annual-report and soft copies of the same shall be provided toshareholders of the Company on request for such copies.
The subsidiary companies also continue to contribute to the overall growth of theCompany.
CIE Galfor S.A. registered consolidated revenue of 31200 Million (includes MFE &Metalcastello revenue) during the financial year ended 31st December 2020 as compared toRs 43123 Million in the previous year. The consolidated net profit after tax for thefinancial year under review was Rs 144 Million (including MFE & Metalcastello) ascompared to Rs 1700 Million in the previous year.
Aurangabad Electricals Limited registered a revenue from operations of '7268 Millionduring the year and the consolidated net profit after tax for the year stood at Rs 287Million.
The Company's consolidated total revenue from the continuing operations was Rs 60501Million in the financial year ended 31st December 2020 of which about 65% was derivedfrom the subsidiaries whereas about 35% was derived from operations of the Company.
As on 31st December 2020 the Company has 14 subsidiaries namely Stokes Group Limited(U.K.) CIE Galfor S.A. (Spain) CIE Legazpi S.A. (Spain) UAB ClE LT Forge (Lithuania)Mahindra Forgings Europe AG (Germany) Jeco Jellinghaus GmbH (Germany) GesenkschmiedeSchneider GmbH (Germany) Falkenroth Umformtechnik GmbH (Germany) Schoneweiss & Co.GmbH (Germany) Metalcastello S.p.A. (Italy) BF Precision Private Limited (India) BillForge de Mexico S de RL de CV (Mexico) Aurangabad Electricals Limited and AE DeutschlandGmbh.
In 2018 the Board of Directors of the Company after reviewing the business situationhad agreed with the proposed closure of Stokes Group Limited (Stokes) and the business wasclassified as dis-continued operations. Stokes has completely stopped its production inCY2019. During the year under review the Liquidation and Dissolution formalities of StokesForgings Limited and Stokes Forgings Dudley Limited were completed and these entitiesceased to exist in accordance with Laws applicable to these entities. The liquidation ofStokes shall be initiated in accordance with the Applicable Laws.
Jeco Jellinghaus GmbH has been operationally closed. AE Deutschland Gmbh is underliquidation and expected to be dissolved during CY2021 once all the formalities arecompleted.
All other subsidiaries are operational.
The Company had four Associate entities as on 31st December 2020 namely Clean Max DenebPower LLP Sunbarn Renewables Private Limited Gescrap India Private Limited and GalforEolica SL.
The Company has been taking various steps to optimize its power cost and to increasethe proportion of green energy in the total energy consumption of the Company at theplants of the Company. Accordingly during CY2019 the Company had invested in Clean MaxDeneb Power LLP to supply green captive power to factories of Bill Forge Division inBangalore. Further during the year under review the Company has entered into PowerPurchase Agreement with two more SPVs namely Sunbarn Renewables Private Limited (Sunbarn)and Renew Surya Alok Private Limited (Renew). Sunbarn will supply the green captive powerto plants of Forgings and Magnetic Products Division of the Company and Renew will supplygreen captive power to plant of Foundry Division of the Company.
All these entities shall be major contributors for use of renewable source of energy inoperation of the Company and will also result in savings in energy cost.
Gescrap India Private Limited (Gescrap India) is engaged in metal recycling and totalwaste management in India.
Galfor Eolica SL is an associate Company of CIE Galfor S.A.
A Report on the performance and financial position of each of the subsidiaries andassociate companies included in the Consolidated Financial Statement and theircontribution to the overall performance of the Company is provided in Note No. 41 of theConsolidated Financial Statements fo the Company and in Form AOC-1 attached to theFinancial Statements.
The Company has formulated a Policy for determining Material Subsidiaries and the samehas been uploaded on the website of the Company and is accessible at the web-link:http://www. mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct
ICRA Limited ("ICRA") the Credit Rating Agency have reaffirmed / assignedrating(s) to the Commercial Paper and Line of Credit of the Company. Details of creditrating is provided in the Corporate Governance Report.
The Company has not been identified as a "Large Corporate" as per thecriteria under SEBI Circular No. SEBI/HO/DDHS/ CIR/P/2018/144 dated November 26 2018.
D. INTERNAL FINANCIAL CONTROLS
The Company uses ERP System as a business enabler and also to maintain its books ofaccounts. The transactional controls built in ERP System provides segregation of dutiesappropriate level of approval mechanism and maintenance of supporting records. The Systemand the Standard Operating Procedures are reviewed by the management and strengthenwherever required. These systems and controls are audited by the Internal Auditors andtheir findings and recommendations are reviewed by the Audit Committee. Actions Plan isprepared by the management for all the Audit findings and recommendations which iscontinuously monitored on monthly basis and action taken report is reviewed by the AuditCommittee on quarterly basis. The Company continuously automates its processes to enhancethe controls.
The Company has in place adequate internal financial controls which commensurate withthe size scale and complexity of its operations. These controls have been assessed duringthe year under review taking into consideration the essential components of internalcontrols stated in the Guidance note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India. Based onthe results of such assessments carried out by the management no reportable orsignificant deficiencies no material weakness in the design or operation of any controlwas observed. Nonetheless the Company recognizes that any internal control framework nomatter how well designed has inherent limitations and accordingly regular audits andreview processes ensure that such system are re-enforced on an ongoing basis.
E. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operations ofthe Company along-with the performance and financial position of each of the subsidiariesis provided in the Management Discussion and Analysis which forms part of this AnnualReport.
F. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all transactions entered into with Related Parties of theCompany were in the Ordinary Course of Business and were transacted at arm's length basis.
Mahindra Vehicle Manufacturers Limited (MVML) is one of the Promoters of the Companywhich hold(s) more than 10% of the paid-up equity capital of the Company. The details ofthe transactions of the Company with MVML as required to be disclosed pursuant to Para Aof Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is disclosed at Note. No. 31 of the Notes to the Standalone Financial Statements.
Further the Company had entered into Material Related Party Transactions i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements of the Company with Mahindra & Mahindra Limited theholding company of MVML. These transactions were in the Ordinary Course of Business of theCompany and were at arm's length basis. The details of these transactions as required tobe provided under section 134(3)(h) of the Companies Act 2013 are disclosed in Form AOC-2as Annexure I and forms part of this Report.
The Policy on materiality of and dealing with Related Party Transactions as approved bythe Board is uploaded on the website of the Company and is accessible at the web-link:https://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct
Statutory Auditors and Auditor's report
The members of the Company at the 18th Annual General Meeting (AGM) had appointed PriceWaterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) as theStatutory Auditors of the Company to hold office from the conclusion of 18th AGM until theconclusion of the 23rd AGM of the Company to be held in the year 2022.
The Securities and Exchange Board of India ("SEBI") vide its order numberWTM/GM/DRA 1/83/2017-18 dated 10th January 2018 banned the firms practicing as CharteredAccountants in India under the brand and banner of Price Waterhouse (PW) to directly orindirectly issue any certificate of audit to listed companies or certificate in relationto any compliance of obligations of a listed companies for the period of two years.
Against the said order PW has filed an appeal before the Hon'ble Securities AppellateTribunal (Tribunal). The Tribunal vide its Order dated 9th September 2019 has Quashed theSEBI order restricting PW Bangalore and 10 other PW firms. SEBI has filed appeal againstthe Order of SAT before Hon'ble Supreme Court of India. Hon'ble Supreme Court has stayedthe Order of SAT to the extent it deals with the Jurisdiction of SEBI. The appeal ispending.
Price Waterhouse Chartered Accountants LLP Chartered Accountants have under Section139(1) of the Act and the Rules framed thereunder furnished a certificate of theireligibility and has confirmed that they are eligible to act as statutory auditor of theCompany for financial year 2021.
The Auditors' Report on the Financial Statement for the year ended 31st December 2020is unmodified i.e. it does not contain any qualification reservation or adverse remarkand notes thereto are self-explanatory and do not require any explanations.
The terms of appointment of statutory auditors have been amended in line with SEBIcircular CIR/CFD/CMD1/114/2019 dated 18th October 2019.
Secretarial Auditor and Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed Mr. Sachin Bhagwat Practicing Company Secretary (Certificate of Practice No.6029) as a Secretarial Auditor to undertake the Secretarial Audit of the Company for theFinancial Year ended 31st December 2020. The Secretarial Audit Report for the FinancialYear ended 31st December 2020 is appended to this Report as Annexure II. The report doesnot contain any qualification reservation or adverse remark.
Secretarial Audit of Material Unlisted Indian Subsidiary
Aurangabad Electricals Limited (AEL) a material subsidiary of the Company undertakessecretarial audit every year under Section 204 of the Companies Act 2013. The SecretarialAudit of AEL for the financial year ended 31st December 2020 was carried out pursuant toSection 204 of the Companies Act 2013 and Regulation 24A of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015. The Secretarial Audit Report submitted byMr. R. V. Pore Practicing Company Secretary (Certificate of Practice No. 1913) does notcontain any qualification reservation or adverse remark and the same is enclosed herewithas Annexure III.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year ended 31st December 2020for all applicable compliances as per Securities and Exchange Board of India Regulationsand Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report dulysigned by Mr. Sachin Bhagwat Practicing Company Secretary (Certificate of Practice No.6029) has been submitted to the Stock Exchanges within the prescribed timelines.
As per Section 148 of the Companies Act 2013 read with the Companies (Cost Recordsand Audit) Rules 2014 the Company is required to maintain cost records and accordinglysuch accounts and records are maintained.
The Board had appointed Messrs. Dhananjay V. Joshi & Associates Cost AccountantsPune (Firm Registration Number 000030) as Cost Auditor for conducting the audit of CostRecords of the Company for Financial year ended 31st December 2020.
In accordance with Section 148 of the Companies Act 2013 the Board of Directors ofthe Company on recommendation of the Audit Committee re-appointed Messrs. Dhananjay V.Joshi & Associates Cost Accountants Pune (Firm Registration Number 000030) as theCost Auditors of the Company to conduct the Audit of the Cost Accounting Recordsmaintained by the Company for the Financial Year ending 31st December 2021. Messrs.Dhananjay V. Joshi & Associates have confirmed that their appointment is within thelimits of section 141(3)(g) of the Companies Act 2013 and have also certified that theyare free from any disqualifications specified under section 141(3) read with Section148(5) of the Companies Act 2013.
As per the provisions of the Companies Act 2013 the remuneration payable to the CostAuditor is required to be placed before the Members in a General Meeting for theirratification. Accordingly a resolution seeking Members' ratification for the remunerationpayable to Messrs. Dhananjay V. Joshi & Associates Cost Auditors is included in theNotice convening the 22nd Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review the Statutory Auditors Cost Auditors and the SecretarialAuditor have not reported any instance of fraud committed in the Company by its Officersor Employees to the Audit Committee under section 143(12) of the Companies Act 2013details of which needs to be mentioned in this Report.
H. PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES
Particulars of investments made by the Company are provided in the Note No. 8 of theNotes to the Standalone Financial Statements.
Further disclosure required pursuant to Regulation 34(3) read with Part A of ScheduleV of the Listing Regulations in respect of loans or advances in the nature of loan givenby the Company to its Subsidiaries is provided at the end of this report.
The Company has not provided any guarantee or security to any person or entity and hasnot made any loans and advances in the nature of loans to firms/companies in whichdirectors of the Company are interested.
I. PUBLIC DEPOSITS
The Company has not accepted any deposits during the year under review.
J. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
The Company did not have any amounts which were required to be transferred to IEPFduring the financial year under review.
The Company had in February 2015 distributed the sale proceeds of fractional sharesarising out of issuance of shares pursuant to the Integrated Scheme and Composites Schemeof Amalgamation to the eligible shareholders as per their respective fractionalentitlements. Fractional Entitlements in respect of few shareholders is lying unclaimedwith the Company details thereof is uploaded on the website of the Company and isaccessible at the web-link: http://www.mahindracie.com/investors/downloads/documents.html#unclaimed-amounts and also on the website of IEPF viz.www.iepf.gov.in.
Details of all the unclaimed amounts transferred by the Company to IEPF in earlieryears is also available on the aforesaid link.
For any claims that are lodged with IEPF for unclaimed amounts the Company hasnominated Mr. Pankaj Goyal the Company Secretary of the Company as Nodal officer for thepurposes of verification of claims and coordination with Investor Education and ProtectionFund Authority as required under Investor
Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Amendment Rules 2016 as amended from time to time the Contact details of the nodalofficer are available on the website of the Company.
Key Managerial Personnel (KMP)
The following officers of the Company have been designated as the Key ManagerialPersonnel in accordance with Section 2(51) and Section 203 of the Companies Act 2013 readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:
1. Mr. Ander Arenaza - Executive Director
2. Mr. Manoj Menon - Executive Director and Chief Executive Officer - StampingsComposites Foundry Magnetics and Gears Divisions
3. Mr. Anil Haridass - Executive Director
4. Mr. Hari Krishnan - Chief Executive Officer - Forgings and Bill Forge Division ofthe Company
5. Mr. K. Jayaprakash - Chief Financial Officer
6. Mr. Pankaj Goyal - Company Secretary and Compliance Officer
Employees' Stock Option Scheme
The Company has in force the following Schemes which are covered under the provisionsof SEBI (Share Based Employee Benefits) Regulations 2014 ("SBEB Regulations"):
a) Mahindra CIE Automotive Limited - Employees' Stock Option Scheme (ESOS-2007)
b) Mahindra ClE Automotive Limited - Employees' Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercisedby the employees directly or through their appointed proxies.
During the year there have been no material changes to these schemes and no stockoptions were granted to the employees under the said schemes.
Both the schemes are in compliance with the SBEB Regulations. The Certificate issued bythe Statutory Auditors of the Company to the effect that the Schemes have been implementedin accordance with the said Regulations and the resolution passed by the members will beplaced before the shareholders at the ensuing Annual General Meeting.
The information as required to be disclosed in relation to ESOS under the CompaniesAct 2013 and the details of the ESOS being implemented as specified by SEBI underClause 14 of SBEB Regulations 2014 is uploaded on the website of the Company and isaccessible at the web-link:http://www.mahindracie.com/investors/downloads/documents.html#other-documents-and-disclosures
The said information is also provided in the Note No. 36 of the Notes to FinancialStatements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given inAnnexure IV to this Report.
Further as required under provisions of section 197(12) of the Companies Act 2013read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended a statement including the names and other details ofthe top ten employees in terms of remuneration drawn and the name of every employee whowere in receipt of remuneration not less than Rs 10200000/- per annum during the yearended 31st December 2020 or employee who were employed for a part of the Financial Yearand were in receipt of remuneration of not less than Rs 850000/- per month during anypart of the said year is annexed as Annexure V to this report.
During the year the Company has no employee who was employed throughout the FinancialYear or part thereof and was in receipt of remuneration which in the aggregate or as thecase may be at a rate which in the aggregate is in excess of that drawn by the managingdirector or whole-time director or manager and holds by himself or along with his spouseand dependent children not less than 2% of the equity shares of the Company.
The relationship between the Management and Worker's Union continued to remain cordial.
The Management Discussion and Analysis gives an overview of the developments in HumanResources/Industrial Relations during the year.
L. BOARD AND COMMITTEES
Retirement by rotation
Mr. Shriprakash Shukla (DIN: 00007418) and Mr. Jesus Maria Herrera Barandiaran (DIN:06705854) are liable to retire by rotation and being eligible have offered themselvesfor re-appointment at the 22nd Annual General Meeting (AGM) of the Company scheduled to beheld on 29th April 2021.
Detailed profile of the Directors seeking appointment/ re-appointment along with othernecessary details as may be required are provided in the in the Notice of 22nd AnnualGeneral Meeting of the Company.
Declaration of the Independent Directors
All the Independent Directors have confirmed that they meet the criteria as mentionedin Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Section 149(6) of the Companies Act 2013. The Independent Directorshave also confirmed that they are not aware of any circumstance or situation which existor may be reasonably anticipated that could impair or impact their ability to dischargetheir duties with an objective independent judgement and without any external influence.Further the Board after taking these declaration/disclosures on record and acknowledgingthe veracity of the same opined that the Independent Directors are persons of integrityand possess the relevant expertise and experience fulfils the conditions specified in theListing Regulations and the Act for appointment of Independent Directors and areIndependent of the Management.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors based onthe representation received from the Operating Management and after due enquiry confirmthat:
a) in the preparation of the annual accounts for the financial year ended 31stDecember 2020 the applicable accounting standards had been followed along with properexplanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for the financial year ended on 31st December 2020 ;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively during the financial year ended 31st December 2020;
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively duringthe financial year ended 31st December 2020.
Board Committee and Annual General Meeting
The Board of Directors of the Company met five times during the Financial Year ended31st December 2020 on 26th February 2020 23rd April 2020 21st July 2020 20thOctober 2020 and 10th December 2020.
Details of attendance of meetings of the Board its Committees and the AGM are includedin the Report on Corporate Governance which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors of the Company met on 26th February 2020 and 10th December2020 without the presence of the Chairman Executive Directors other Non-IndependentDirector(s) and any other Managerial Personnel.
During the year under review the Nomination and Remuneration Committee and IndependentDirectors have ascertained and reconfirmed that the deployment of"questionnaire" as a methodology is effective for evaluation of performance ofBoard its Committees and Individual Directors including non-independent Directors and theperformance evaluation of the Chairman respectively.
Accordingly feedback was sought on the structured questionnaire from all the Directorsof the Company through electronic platform provided by an Independent Agency coveringvarious aspects on performance evaluation of the Board Committees of Board IndependentDirectors Non-Independent Directors and the Chairman. A report aggregating the responsesof all the directors of the Company was generated by the system.
Performance Evaluation of Individual Directors
The reports of the performance evaluation of Individual Directors were shared withrespective Directors and Chairman of the Nomination and Remuneration Committee (NRC).Based on the same the NRC evaluated the performance of all individual directors.
The Independent Directors at their meeting separately evaluated the performance ofnon-independent Directors and the Chairman.
Performance Evaluation of the Board and Committees of Board
The report of the feedback received from all the Directors on performance evaluation ofBoard and Committees of Board was shared with the Chairman of the Company and the Chairmanof the respective Committees. The Board reviewed the reports and evaluated its ownperformance and performance of the Committees of the Board.
The Independent Directors at their meeting separately evaluated the performance of theBoard.
For details please refer to the Report on Corporate Governance which forms part ofthis Annual Report.
Familiarisation Programme for Independent Directors
The details of programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are given inthe Report on Corporate Governance. The familiarisation programme and other disclosures asspecified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is available on the website of the Company at the link:http://www.mahindracie.com/investors/downloads/documents.html#other-documents-and-disclosures.
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency the Company has adoptedthe following Policies which inter alia includes criteria for determining qualificationspositive attributes and independence of a Director.
i) Policy on Appointment of Directors Key Managerial Personnel and Senior ManagementEmployees and succession planning;
ii) Policy for the remuneration of Directors Key Managerial Personnel and otheremployees of the Company.
During the year under review the Board of Directors on the recommendation of theNomination and Remuneration Committee reviewed the said policy and have amended thepolicy inter alia to align it with the amendments in Listing Regulations and the Act.Salient features of these policies are enumerated in the Corporate Governance Report whichforms part of the Annual Report.
The Policies mentioned above are also uploaded on the website of the Company and isaccessible at the web-link:http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
Committees of the Board
The Company has duly constituted the Committees required under the Companies Act 2013read with applicable Rules made thereunder and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
The Committee comprises of four directors viz:
1) Mr. Dhananjay Narendra Mungale - Chairman
2) Mr. Manojkumar Madangopal Maheshwari
3) Mrs. Roxana Meda Inoriza
4) Mr. Alan Savio D'Silva Picardo
Mr. Zhooben Bhiwandiwala Non-Executive Director of the Company is a permanent inviteeat the Committee. All the Members of the Committee are Independent Directors and possessstrong accounting and financial management knowledge.
The Company Secretary is the Secretary to the Committee. All the recommendations of theAudit Committee were accepted by the Board during the financial year under review.
M. GOVERNANCE Corporate Governance
The Company believes in attainment of highest levels of transparency in all facets ofits operations and maintains an unwavering focus on imbibing good Corporate Governancepractices. The Company continues to strengthen its governance principles to generatelong-term value for its various stakeholders on a sustainable basis thus ensuring ethicaland responsible leadership both at the Board and at the Management levels.
A Report on Corporate Governance along with a Certificate from Mr. Sachin BhagwatPracticing Company Secretary (ACS Number - 10189 CP Number - 6029) and SecretarialAuditor of the Company regarding the compliance with the conditions of CorporateGovernance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of the Annual Report.
The Vigil Mechanism as envisaged in the Companies Act 2013 the Rules prescribedthereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is implemented through the Company's Whistle Blower Policy to enable the directorsemployees and all stakeholders of the Company to report genuine concerns to provide foradequate safeguards against victimisation of persons who use such mechanism and makeprovision for direct access to the Chairman of the Audit Committee. The detail of thePolicy is explained in the Corporate Governance Report and has been uploaded on thewebsite of the Company and is accessible at the web-link:http://www.mahindracie.com/investors/investor-relations/governance.html#whistle-blower.
The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this Policy. The Policy is gender neutral.
During the year under review there was no complaint of discrimination and harassmentincluding sexual harassment received by the committee.
Business Responsibility Report
The Business Responsibility Report (BRR) of the Company for the Financial Year 2020forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
The Company strongly believes that sustainable and inclusive growth is possible byusing the levers of environmental and social responsibility while setting aspirationaltargets and improving economic performance to ensure business continuity and growth.
The Board has constituted a Risk Management Committee which comprises of ExecutiveDirectors and Chief Executive Officer of the Company. The Committee also has permanentinvitees who are from Senior Management. The other details and terms of reference of theCommittee are covered under the Corporate Governance report which forms part of thisAnnual Report.
The Company has a well-defined risk management framework in place. The risk managementframework works at various levels. The Company has a robust organisational structure formanaging and reporting on risks. In terms of the requirement of the Act the Company hasdeveloped and implemented the Risk Management Framework. The Risk Management CommitteeAudit Committee of the Board as well as the Board reviews the risks periodically. TheCompany has also established procedures to periodically place before the Board the riskassessment and minimisation procedures being followed by the Company and steps taken by itto mitigate the Risks.
Important element of risk including risk which may threaten the existence of theCompany are provided in the Management Discussion and Analysis.
N. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Generation of shared value for the Company and for Society by integrating SocialEnvironmental and Governance principles into the business model business strategy andeveryday operations.
Safety and Health
The Company considers safety as a value and not just a priority. The focus continuousto be on increasing awareness about safety among the employees and improve the safetyculture.
Various initiatives were undertaken during the year to communicate importance of safetyto each of the employees. The Company has formed Apex Safety Council wherein all MCIEplants comes under one umbrella to integrate the safety systems and deploy safetypractices across plants. 14 (fourteen) Uniform Safety Standards were developed andLaunched in July 2020. These standards encompass all parts of operations. All plants areexpected to embrace all these standards to take forward the process of safety in moreformal assessable manner. The overall objective shall be to keep sensitizing the employeeson safety and work towards improving their attitude towards safety.
The Company has system to investigate all the accidents thoroughly and to takecorrective as well as preventive actions. During the year an increased focus has beengiven on reporting of near miss incidents analyzing first-aid injuries and takingpreventive measures.
All the plants of the Company have Occupational health and safety management system(OHSMS). During the year five plants of the Company upgraded the OHSMS certification toISO 45001-2018. Other plants which has ISO18001-2007 certification shall be upgraded toISO 45001:2018 in due course of time.
The Company's plants continue to improve well-being of all its personnel by organizingOccupational Health Examination Camps Periodic Health Check-ups and workplace monitoring.
The Company has been focusing external certifications for achieving world classenvironmental standards. All the plants will be upgrading their EMS to include therequirements of the revised international standard by June 2021.
A system of assurance has been implemented to track the environment consent conditionscompliance on monthly basis.
The highlights of different initiatives taken by the Company at its various plants forenvironment and sustainability are as under:
1) Water: All the plants have continued their efforts for water conservation. Duringthe year the Company has recycled about 25-% of the water for re-usage in the process andalso has re-used about 19-% of water for alternative applications like Gardening Diewashing etc. The Company has installed rain water harvesting at its Urse plant whichresulted in conservation of fresh water by 3.4% of their total consumption.
Further the Company has reduced its overall water consumption in CY2020 by 8% of itstotal consumption compared to CY2019.
2) Energy: Various projects were initiated by the Company for energy conservation likeUse of waste heat (Heat Recovery system) Replacement of old compressors by new efficientwith VFD cooling tower and blower pumps with new efficient VFD LED lighting arrestingair leakages IBH Coil modification Energy efficient compressors etc. Due to variousenergy savings initiatives the Company has reduced the energy consumption in CY2020 by15.89% as compared to CY2019 .
The Company continued its efforts to increase the proportion of green energy in thetotal energy consumption of the Company. The Company has installed roof top solar systemsat seven plants. The Company has also signed long term contracts to source green energyfrom captive generating plants through open access. Due to various efforts the Companyhas consumed 30.28% of total energy consumption through green energy sources.
3) Waste Management: Waste reduction efforts have been continued across all the plants.The plants are looking at waste management as waste to wealth opportunities.
Overall due to the combined efforts of all its Plants waste generation in CY2020 isreduced by 48% as compared to CY2019.
Corporate Social Responsibility (CSR)
The Company has constituted a CSR Committee in accordance with section 135 of theCompanies Act 2013 and has developed and implemented the policy on Corporate SocialResponsibility. The CSR Committee comprises of Mr. Kadambi Narhari (Chairman) Mr.Dhananjay Mungale Mr. Manoj Menon and Mr. Anil Haridass. In accordance with the CSRPolicy CSR Committee of the Board is responsible for monitoring the implementation of CSRPolicy from time to time. The CSR Committee is authorized to approve on recommendation ofthe Management the projects or programs to be undertaken the modalities of execution andimplementation schedule from time to time. The CSR thrust areas have been identified wherethe Company wishes to create equity and also had laid down guiding criteria for selectingprojects which includes sustainability social impact etc.
The Company was required to spend an amount of Rs 116.13 Million (including Rs 72.21Million unspent amounts of last year carried forward). The Company could spend an amountof Rs 71.12 Million during the year. The unspent amount in CY20 of Rs 45.01 Million hasbeen allocated to existing long term CSR project and would be spent in next 2-3 years.Implementation of these long term CSR Projects was delayed due to Covid-19 pandemic andrelated expenditure is deferred to next year. The implementation of these approvedprojects shall be on the track as the situation improves and although with some delaysthe Company is confident of achieving its social objective.
During the year the Company has made specific efforts to support / help the peopleincluding migrant labour affected by Covid-19 pandemic in the areas located aroundFactories of the Company by way of distribution of food packets sanitization kits (whichincludes Soap sanitizer masks and gloves) and creating awareness about Covid-19pandemic. Further the Company has participated in the initiatives undertaken by MahrattaChamber of Commerce Industries & Agriculture (MCCIA) for setting up Jumbo CovidCentre in Pune by way of providing financial assistance. The Company has also contributedto PM- CARES fund setup by the Central Government.
The Company reiterate its commitment to discharge its social obligation. The CSR thrustareas have been identified where the Company wishes to create equity and also lay downguiding criteria for selecting projects which includes sustainability social impact etc.The CSR Committee has confirms that the implementation and monitoring of CSR Policy isin compliance with CSR objectives and Policy of the Company.
The CSR Policy of the Company is hosted on the Company's website and is accessible atthe web-link:http://www.mahindracie.com/images/pdf/resources/Governance/csr-policy-mcie.pdf.
As prescribed under the Companies (Corporate Social Responsibility Policy) Rules 2014a brief outline of the CSR Policy CSR activities undertaken by the Company during theyear and the reason for not spending the entire CSR amount is provided in the AnnualReport on CSR Activities which is annexed herewith as Annexure VI.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to energy conservation technology absorption and foreignexchange earnings and outgo as required under section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are provided in Annexure VIIto this Report.
O. SECRETARIAL Issue of Shares
The Company has not issued any securities during the year under review.
Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2
The Company have devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively. During the year under reviewthe Company was in compliance with the Secretarial Standards i.e. SS-1 and SS- 2relating to "Meetings of the Board of Directors" and "GeneralMeetings" respectively.
Compliance with Downstream Investment conditionalities
The Company is a Foreign Owned and Controlled Company within the meaning of ForeignExchange Management (Transfer or Issue of Security by a Person Resident outside India)Regulations 2017 ("FDI Regulations"). All the Downstream Investments made bythe Company are in compliance with the conditionalities of Downstream Investmentstipulated in the FDI Regulations.
During CY2020 the Company has obtained a certificate form the Statutory Auditors ofthe Company for compliance with the FDI Regulations in respect of the downstreaminvestment made by the Company during CY2019 and except for delays in filings necessaryintimations/forms with RBI/DPIIT/SIA the Auditors have affirmed compliance withdownstream investment conditionalities by the Company.
Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act 2013copies of the Annual Returns of the Company prepared in accordance with Section 92(1) ofthe Act read with Rule 11 of the Companies (Management and Administration) Rules 2014 areplaced on the website of the Company and is accessible at the web-link:http://www.mahindracie.com/investors/downloads/documents.html.
Other Policies under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has framed a Policy fordetermination of Materiality for disclosure of events or information. The same has beenhosted on the website of the Company and is accessible at the web-link:http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has formulated adividend distribution policy which became effective from 1st January 2018 stipulatingfactors to be considered in case of Dividend declaration which forms part of this reportas Annexure VIII.
The same has also been hosted on the website of the Company and is accessible at theweb-link:http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
None of the Executive Directors (Whole-time Director or Managing Director) were inreceipt of any commission from the Company or any remuneration from the Subsidiaries ofthe Company.
The Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions/ events relating to these items during theyear under review:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of the Company underany Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and the Company's operation in future.
4. Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/ purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3) (c) of the Companies Act 2013).
The Directors wish to place on record their sincere appreciation to the Company'sCustomers Investors Vendors and to the Bankers for their continued support during theyear.
The Directors also wish to place on record their appreciation for the dedication andcontribution made by the employees at all levels and look forward to their support infuture as well.
For and on behalf of the Board of Directors
Mahindra CIE Automotive Limited
| ||Shriprakash Shukla |
| ||Chairman |
| ||DIN:00007418 |
|Date: 19th February 2021 || |
|Place: Mumbai || |