Your Directors present their Report together with the audited financialstatements of your Company for the Financial Year (fy) ended 31st December2021.
A. FINANCIAL SUMMARY AND HIGHLIGHTS
(Rs in Million)
|PARTICULARS (STANDALONE) ||FY ended 31st December 2021 ||FY ended 31st December 2020 |
|Total Revenue ||33081 ||21645 |
|Profit before Interest Depreciation Exceptional Items and Tax ||4461 ||2218 |
|Less: Depreciation ||1193 ||1084 |
|Profit before Interest Exceptional Items and Tax ||3268 ||1134 |
|Less: Interest and Finance cost ||122 ||119 |
|Profit before Exceptional Items and Tax ||3146 ||1015 |
|Exceptional items ||(128) ||- |
|Profit before tax ||3018 ||1015 |
|Profit after tax ||1103 ||740 |
During the Financial Year under review total standalone revenue of theCompany increased to Rs 33081 Million from Rs 21645 Million for previous year and it wasRs 29271 Million in the pre-covid year of 2019. Profit before Interest DepreciationExceptional Items and Tax increased to Rs 4461 Million as against Rs 2218 Million forthe previous year and Rs 3780 Million in FY 2019. The profit before exceptional items& tax for the Financial Year increased to Rs 3146 Million in Financial Year 2021 fromRs 1015 Million in Financial Year 2020 and Rs 2517 Million in Financial Year 2019.
There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company to which the financial statements relate and the date of this Report.
As per the Dividend Distribution Policy of the Company dividendpay-out would have to be determined based on available financial resources businessenvironment funds required for organic as well as inorganic growth and other factorswhich will ensure optimal shareholder return. Within these parameters the Company wouldendeavor to maintain a total dividend pay-out ratio of upto 25% of the annual consolidatedProfits after Tax (PAT) of the Company for the corresponding year.
Despite the pandemic the Company was able to deliver a goodoperational performance during the year under review. The Company has maintained low debtlevels despite difficult market conditions with good cash generation.
Your directors considering the good performance and strong cash flowsare pleased to recommend dividend of Rs 2.50/- (Two Rupees and Fifty Paise only) perordinary equity share of face value of Rs 10/- each for the financial year ended 31stDecember 2021 out of the accumulated balance of retained earnings representing theaccumulated surplus in the profit and loss account as at 31st December 2021.The equity dividend outgo for the Financial Year 2021 would absorb a sum of Rs 948Million.
Dividend will be payable subject to approval of members at the ensuingAnnual General Meeting and deduction of tax at source to those members whose names appearin the Register of Members as on Monday 18th April 2022.
Transfer to Reserves
The Board of your Company decided not to transfer any amount to theGeneral Reserve for the year under review.
B. OPERATIONAL PERFORMANCE - THE COMPANY AND SUBSIDIARIES
The market demand in the last two quarters of 2020 had seen a sharprecovery in India and a slow and steady one in Europe. The momentum in demand recoverycarried over to the start of 2021 but the upward trend was arrested as India faced adebilitating second wave of the pandemic in the second quarter of 2022. A similarresurgence happened in Europe in the last quarter of the year which further slowed downdemand. An acute shortage of semiconductor chips forced automotive OEMs to curtailproduction leading to significant drop in demand especially in the light vehicles segmentboth in India & Europe. The effect of this shortage was the most acute in the thirdquarter. The shortage is gradually easing but is likely to continue into the first half of2022. The year also saw a steep increase in input costs as steel mineral energy andshipping prices all saw large increases. The prices are stabilizing but at a high level.
The operating teams both in India & Europe were focused on managingthe twin issues of volatility in demand and increase in input costs. The challenge was tomake sure that the negative impact on profitability was minimized by working on optimizingcosts and improving operational efficiencies.
Process reengineering automation and digitization with a view toimprove operations continued to be the focus. Efforts continued to generate a strong orderbook and to have optimum capacity to service these orders. The castings plant was upgradedand plans to increase capacity were put in place at the aluminium magnetics and gearstechnologies. New plant launched at Hosur expected to commission in Q2CY2022.
Managing steep increases in steel and energy prices was the key focus.German operations continued to be a challenge. Gears business in Italy has shown goodgrowth with improved margins.
As battery electric vehicles (EVs) continued to grow in Europe effortswere directed to develop non engine parts and parts to be used in EVs and generate ordersfor these parts.
INVESTOR RELATIONS (IR)
The Company also continuously strives for excellence in its InvestorRelations ("IR") engagement with International and Domestic investors throughstructured conference- calls and periodic investor/analyst interactions like individualMeetings participation in investor conferences quarterly earnings calls and analystmeet from time to time. It participated in several investors meets organized by reputedGlobal and Domestic Broking Houses during the year. A large majority of these meetingswere virtual in deference to the prevailing social distancing norms. Efforts were made toensure that these virtual meetings were conducted in the most productive manner. Buildinga relationship of mutual understanding with investor/ analysts is of utmost importance andcritical information about the Company is available to all the investors by uploading allsuch information on the Company's website.
C. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiarycompanies prepared in accordance with the Companies Act 2013 (the Act) and applicableAccounting Standards along with all relevant documents and the Auditors' Report forms apart of the Annual Report of 2021.
Consolidated total revenue of the company including other income forthe financial year under review stood at Rs 84423 Million as against Rs 61050 Million inthe previous year and Rs 79409 Million in the pre-covid year of 2019. Profit beforeInterest Depreciation Exceptional Items and Tax increased to Rs 10613 Million asagainst Rs 5565 Million for the previous year and Rs 9963 Million in FY 2019. The profitbefore exceptional items & tax for the Financial Year increased to Rs 6766 Million inFinancial Year 2021 from Rs 1953 Million in Financial Year 2020 and Rs 6325 Million inFinancial Year 2019.
In accordance with section 136 of the Act separate accounts in respectof each of the Subsidiaries are uploaded on the website of the Company and is accessibleat the web-link: https://www.mahindracie. com/investors/investor-relations/annual-report.html and soft copies of the same shall be provided to shareholders of the Company onrequest for such copies.
The subsidiary companies continue to contribute to the overall growthof the Company.
CIE Galfor S.A. registered consolidated revenue of Rs 40590 Million(includes MFE & Metalcastello revenue) during the financial year ended 31stDecember 2021 as compared to Rs 31200 Million in the previous year. The consolidated netprofit after tax for the financial year under review was Rs 2330 Million (including MFE& Metalcastello) as compared to Rs 144 Million in the previous year.
Aurangabad Electricals Limited registered a revenue from operations ofRs 9646 Million during the year as compared to Rs 7268 Million in the previous year andthe net profit after tax for the year stood at Rs 685 Million as compared to Rs 287Million in the previous year.
The Company's consolidated revenue from the continuing operations wasRs 83867 Million in the financial year ended 31st December 2021 of whichabout 60.8% was derived from the subsidiaries whereas about 39.2% was derived fromoperations of the Company.
During the year the Company incorporated CIE Hosur Limited (CIE Hosur)as a wholly owned subsidiary of the Company. CIE Hosur will be engaged in the business ofmanufacturing auto components by making greenfield investment to leverage the emerginggrowth opportunities in mobility space. This will also help in ring fencing of businessand operational risks.
During the year the Liquidation and Dissolution formalities of AEDeutschland Gmbh were completed and it ceased to exist in accordance with ApplicableLaws.
As on 31st December 2021 the Company has 14 subsidiariesnamely Stokes Group Limited (U.K.) CIE Galfor S.A. (Spain) CIE Legazpi S.A. (Spain) UABClE LT Forge (Lithuania) Mahindra Forgings Europe AG (Germany) Jeco Jellinghaus GmbH(Germany) Gesenkschmiede Schneider GmbH (Germany) Falkenroth Umformtechnik GmbH(Germany) Schoneweiss & Co. GmbH (Germany) Metalcastello S.p.A. (Italy) BFPrecision Private Limited (India) Bill Forge de Mexico S de RL de CV (Mexico) AurangabadElectricals Limited (India) and CIE Hosur Limited (India).
In 2018 the Board of Directors of the Company after reviewing thebusiness situation had agreed with the proposed closure of Stokes Group Limited (Stokes)and the business was classified as dis-continued operations. Stokes has completely stoppedits production in CY2019. The liquidation of Stokes is expected to complete in accordancewith the applicable Laws during CY2022.
Jeco Jellinghaus GmbH has been operationally closed.
All other subsidiaries are operational.
The Company had five Associates as on 31st December 2021namely Clean Max Deneb Power LLP (Deneb) Sunbarn Renewables Private Limited (Sunbarn)Renew Surya Alok Private Limited (Renew) Gescrap India Private Limited (Gescrap) andGalfor Eolica SL. The Company does not have any joint-venture.
The Company has been taking various steps to optimize its power costand to increase the proportion of green energy in the total energy consumption of theCompany. The investments in Deneb Sunbarn and Renew are in furtherance of this objective.All these entities are major contributors for use of renewable source of energy inoperation of the Company and will also results in savings in energy cost.
Gescrap is engaged in metal recycling and total waste management inIndia. The investment is made with the objective of preventing disruption in supply/demandof scrap for the business divisions of the Company and to enhance transparency and addbest practices to scrap management in the group.
Galfor Eolica SL is an associate Company of CIE Galfor S.A.
A Report on the performance and financial position of each of thesubsidiaries and associate companies included in the Consolidated Financial Statement andtheir contribution to the overall performance of the Company is provided in Note No. 39of the Consolidated Financial Statements of the Company and in Form AOC-1 attached to theFinancial Statements.
The Company has formulated a Policy for determining MaterialSubsidiaries and the same has been uploaded on the website of the Company and isaccessible at the web-link: https://www.mahindracie.com/investors/investor-relations/governance.html#policies-and- code-of-conduct
ICRA Limited the Credit Rating Agency have reaffirmed / assignedrating(s) to the Commercial Paper and Line of Credit of the Company details of the sameis provided in the Corporate Governance Report.
The Company has not been identified as a "Large Corporate" asper the criteria under SEBI Circular No. SEBI/ HO/DDHS/cir/p/2018/144 dated 26thNovember 2018.
D. INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate internal financial controlscommensurate with the size and complexity of its operations. The internal controls ensurethe reliability of data and financial information to maintain accountability of assets.
Your Company uses ERP System as a business enabler and to maintain itsbooks of accounts. The transactional controls built in ERP System provide segregation ofduties appropriate level of approval mechanism
and maintenance of supporting records. It is further supplemented bydocumented policies guidelines and procedures. These are reviewed by the managementregularly and strengthened wherever required. These systems and controls are subject toaudit program arrived at basis risk review and approved by the Audit Committee. Actionplan is prepared by the management for all the audit findings and the same is reviewed bythe Audit Committee on quarterly basis.
The controls have been assessed during the year under review basisguidance note issued by the Institute of Chartered Accountants of India on Audit ofInternal Financial Controls over Financial Reporting. Based on the results of suchassessments carried out by the management no reportable or significant deficiencies nomaterial weakness in the design or operation of any control was observed. Nonetheless yourCompany recognizes that any internal control framework no matter how well designed hasinherent limitations and accordingly regular audits and review processes have been put inplace.
E. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and resultsof operations of the Company along-with the performance and financial position of each ofthe subsidiaries is provided in the Management Discussion and Analysis which forms part ofthis Annual Report.
F. CONTRACTS OR ARRANGEMENTS WITH RELATED
All transactions entered into with Related Parties of the Companyduring the year under review were in the Ordinary Course of Business and were transactedat arm's length basis.
The details of the transactions of the Company as required to bedisclosed pursuant to Para A of Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 are disclosed at Note No. 31 of the Notes to theStandalone Financial Statements.
Further the Company had entered into Material Related PartyTransactions i.e. transactions exceeding 10% percent of the annual consolidated turnoveras per the last audited financial statements of the Company with Mahindra & MahindraLimited (m&m). 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 PartyTransactions as approved by the Board is uploaded on the website of the Company and isaccessible at the web-link:
G. AUDITORS Statutory Auditors
The members of the Company at the 18th Annual GeneralMeeting (AGM) had appointed Price Waterhouse Chartered Accountants LLP (Firm RegistrationNo. 012754N/N500016) as the Statutory Auditors of the Company to hold office from theconclusion of 18th AGM for the period of 5 years until the conclusion of the 23rdAGM of the Company. Accordingly the present term of Price Waterhouse CharteredAccountants LLP as Statutory Auditors concludes at the conclusion of the ensuing AGM. TheBoard of Directors of the Company placed on record their appreciation for the servicesrendered by Price Waterhouse Chartered Accountants LLP as the statutory auditors of theCompany.
In accordance with provision of Section 139 of the Companies Act 2013read with Rules framed thereunder the Board of Directors of the Company on therecommendation of the Audit Committee proposed appointment of M/s B S R & Co. LLPChartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W - 100022) as Statutory Auditorsof the Company to hold office from the conclusion of ensuing 23rd AGM for aterm of consecutive five years till the conclusion of 28th AGM. The appointmentof B S R LLP as the statutory auditors of the Company is placed before the members forapproval at the ensuing AGM.
As required under provision of Section 139(1) of the Companies Act2013 the Company has received a written consent from B S R LLP for their appointment and acertificate to the effect that their appointment if made would be in accordance with theCompanies Act 2013 and the Rules framed thereunder and that they satisfy the criteriaprovided in Section 141 of the Companies Act 2013 read with Rule 4(1) of the Companies(Audit and Auditors) Rules 2014 and that they are not disqualified for appointment asstatutory auditors of the Company.
The members are requested to consider the appointment of statutoryauditors as aforesaid and fix their remuneration.
The Auditors' Report on the Financial Statement for the year ended 31stDecember 2021 is unmodified i.e. it does not contain any qualification reservationadverse remark or disclaimer and notes thereto are self-explanatory and do not require anyexplanations.
Secretarial Auditor and Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany had appointed Mr. Sachin Bhagwat Practicing Company Secretary (Certificate ofPractice No. 6029) Secretarial Auditor to undertake the Secretarial Audit of the Companyfor the Financial Year ended 31st December 2021. The Secretarial Audit Reportfor the Financial Year ended 31st December 2021 is appended to this Report as AnnexureII. The report does not contain any qualification reservation adverse remark ordisclaimer.
Secretarial Audit of Material Unlisted indian Subsidiary
Aurangabad Electricals Limited ("AEL") a material subsidiaryof the Company undertakes secretarial audit every year under Section 204 of the CompaniesAct 2013. The Secretarial Audit of AEL for the financial year ended 31stDecember 2021 was carried out pursuant to Section 204 of the Companies Act 2013 andRegulation 24A of the SEBI (Listing obligations and Disclosure Requirements) Regulations2015. The Secretarial Audit Report submitted by Mr. Rohit Kulkarni Practicing CompanySecretary (Certificate of Practice No. 16206) does not contain any qualificationreservation adverse remark or disclaimer and the same is enclosed herewith as AnnexureIII.
Annual Secretarial compliance report
The Company has undertaken an audit for the Financial Year ended 31stDecember 2021 for all applicable compliances as per Securities and Exchange Board ofIndia Regulations and Circulars/Guidelines issued thereunder. The Annual SecretarialCompliance Report duly issued by Mr. Sachin Bhagwat Practicing Company Secretary(Certificate of Practice No. 6029) has been submitted to the Stock Exchanges within theprescribed timelines A copy of the report has been uploaded on the website of the Companyand the same is accessible at the link : https://www.mahindracie.com/investors/downloads/documents.html#secretarial-compliance-report.
As per Section 148 of the Companies Act 2013 read with the Companies(Cost Records and Audit) Rules 2014 your Company is required to maintain cost recordsand accordingly such accounts and records are made and maintained.
The Board had appointed Messrs. Dhananjay V. Joshi & AssociatesCost Accountants Pune (Firm Registration Number 000030) as Cost Auditor for conductingthe audit of Cost Records of the Company for Financial year ended 31stDecember 2021.
In accordance with Section 148 of the Companies Act 2013 the Board ofDirectors of the Company on recommendation of the Audit Committee re-appointed Messrs.Dhananjay V. Joshi & Associates Cost Accountants Pune (Firm Registration Number000030) as the Cost Auditors of the Company to conduct the Audit of the Cost AccountingRecords maintained by the Company for the Financial Year ending 31st December2022. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment iswithin the limits of section 141(3)(g) of the Companies Act 2013 and have also certifiedthat they are free from any disqualifications specified under section 141(3) read withSection 148(5) of the Companies Act 2013.
As per the provisions of the Companies Act 2013 the remunerationpayable to the Cost Auditor is required to be placed before the Members in a GeneralMeeting for their ratification. Accordingly a resolution seeking Members' ratificationfor the remuneration payable to Messrs. Dhananjay V. Joshi & Associates Cost Auditorsis included in the Notice convening the 23rd Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review the Statutory Auditors Cost Auditors andthe Secretarial Auditor have not reported any instance of fraud committed in the Companyby its Officers or Employees to the Audit Committee under section 143(12) of the CompaniesAct 2013 details of which needs to be mentioned in this Report.
H. PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES
Particulars of investments made by the Company as required underSection 186 of the Companies Act 2013 are provided in the Note No. 8 of the Notes to theStandalone Financial Statements.
Further disclosure required pursuant to Regulation 34(3) read withPart A of Schedule V of the Listing Regulations in respect of loans or advances in thenature of loan given by the Company to its Subsidiaries is provided at the end of thisreport.
During the year under review the Company has not provided any guaranteeor security in connection with the loan to any other person or body corporate. Apart fromthe loans or advances in the nature of loans given to the subsidiaries of the Company theCompany has not provided any loans or advances in the nature of loans to any other personor body corporate including to any firms/body corporates in which directors of the Companyare interested. The particulars of loans given by the Company as required under Section186 of the Companies Act 2013 are provided in Note No. 8A of the Notes to the StandaloneFinancial Statements.
i. PUBLIC DEPOSITS
Your Company has not accepted any deposits during the year underreview.
j. transfer of amounts to investor education AND PROTECTION FUND
The Company was not required to transfer any amount to InvestorsEducation and Protection Fund (IEPF) during the financial year under review.
The Company had in February 2015 distributed the sale proceeds offractional shares arising out of issuance of shares pursuant to the Integrated Scheme andComposites Scheme of Amalgamation to the eligible shareholders as per their respectivefractional entitlements. Fractional Entitlements in respect of certain fraction holdershas been lying unclaimed with the Company details thereof are uploaded on the website ofthe Company and is accessible at the web-link:
https://www.mahindracie.com/investors/downloads/documents.html#unclaimed-amountsand also on the website of IEPF viz. www.iepf.gov.in. The same is due for transfer to IEPFon 14th February 2022 and shall accordingly be transferred to IEPF in duecourse of time.
Details of all the unclaimed amounts transferred by the Company to IEPFin earlier years is also available on the aforesaid link.
For any claims that are lodged with IEPF for unclaimed amounts theCompany has nominated Mr. Pankaj Goyal the Company Secretary of the Company as Nodalofficer for the purposes of verification of claims and coordination with InvestorEducation and Protection Fund Authority as required under Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Amendment Rules 2016.The Contact details of the nodal officer are available on the website of the Company.
Key Managerial personnel (kmp)
During the financial year under review the following officers of theCompany have been designated as the Whole-time Key Managerial Personnel in accordance withSection 203 of the Companies Act 2013 read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:
1. Mr. Ander Arenaza - Executive Director
2. Mr. Manoj Menon - Executive Director and Chief Executive Officer -Stampings Composites Foundry Magnetics and Gears Divisions
3. Mr. Anil Haridass - Executive Director and Chief Executive Officer -Forgings and Bill Forge divisions (CEO w.e.f. 1st September 2021)
4. Mr. Hari Krishnan - Chief Executive Officer - Forgings and BillForge Divisions (upto 31st August 2021)
5. Mr. K. Jayaprakash - Chief Financial Officer
6. Mr. Pankaj Goyal - Company Secretary and Compliance Officer
After closure of the Financial Year Mr. Anil Haridass demitted hisexecutive responsibilities and stepped down as Whole-time Director and Chief ExecutiveOfficer - Forgings and Bill Forge Divisions of the Company with effect from 22ndFebruary 2022. He therefore ceased to be a KMP of the Company and now re-designated asNon-executive Director of the Company with effect from 22nd February 2022.
After Mr. Anil Haridass demitted his executive responsibilities theBoard of Directors of the Company on recommendation of the Nomination and RemunerationCommittee have appointed Mr. Hari Krishnan (then advisor) as Chief Executive Officer -Forgings and Bill Forge Divisions of the Company with effect from 22ndFebruary 2022.
Employees' Stock option Scheme (esos)
The Company has in force the following Employees Stock Options Schemes:
a) Mahindra CIE Automotive Limited - Employees' Stock Option Scheme(ESOS-2007)
b) Mahindra CIE Automotive Limited - Employees' Stock Options Scheme2015 (ESOS-2015)
Voting rights of the shares issued to employees under above ESOS areeither exercised by the employees directly or through their appointed proxies.
During the year there have been no material changes to these schemesand no stock options were granted to the employees under the said schemes.
Both the schemes are in compliance with the SEBI (Share Based EmployeeBenefits) Regulations 2021 ("SBEB Regulations"). The Certificate issued by theSecretarial Auditor of the Company to the effect that the Schemes have been implemented inaccordance with the said Regulations and the resolution passed by the members will beplaced before the members at the ensuing Annual General Meeting.
The information as required to be disclosed in relation to ESOS underthe Companies Act 2013 and the details of the ESOS being implemented as specified bySEBI under the SBEB Regulations is uploaded on the website of the Company and isaccessible at the web-link:\https://www.mahindracie.com/investors/downloads/documents.html#other-documents-and-disclosures
The said information is also provided in the Note No. 36 of the Notesto Standalone Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors KMPs andemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aregiven in Annexure IV to this Report.
Further as required under provisions of Section 197(12) of theCompanies Act 2013 read with Rule 5(2) & 5(3) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended a statement including thenames and other details of the top ten employees in terms of remuneration drawn and thename of every employee who were in receipt of remuneration not less than Rs 10200000/-per annum during the year ended 31st December 2021 or employees who wereemployed for a part of the Financial Year and were in receipt of remuneration of not lessthan Rs 850000/- per month during any part of the said year is annexed as Annexure Vto this report.
During the year the Company had no employee who was employedthroughout the Financial Year or part thereof and was in receipt of remuneration which inthe aggregate or as the case may be at a rate which in the aggregate is in excess ofthat drawn by the managing director or whole-time director or manager and holds by himselfor along with his spouse and dependent children not less than 2% of the equity shares ofthe company.
The relationship between the Management and Worker's Union continued toremain cordial.
The Management Discussion and Analysis gives an overview of thedevelopments in Human Resources/ Industrial Relations during the year.
L. BOARD AND COMMITTEES
Retirement by rotation
Mr. Ander Arenaza (DIN: 07591785) and Mr. Anil Haridass (DIN: 00266080)are liable to retire by rotation and being eligible have offered themselves forre-appointment at the 23rd Annual General Meeting (AGM) of the Company.
changes in Board
There were no changes in the Composition of the Board of Directors ofthe Company during the financial year ended 31st December 2021.
After closure of the Financial Year Mr. Zhooben Bhiwandiwala (DIN:00110373) resigned as Director of the Company with effect from 22nd February2022. The Board of Directors of the Company placed on record its appreciation for Mr.Bhiwandiwala's contribution as Director of the Company during his association with theCompany.
Further Mr. Anil Haridass (DIN: 00266080) resigned as Whole-timeDirector w.e.f. 22nd February 2022 and has continued on the Board asNon-Executive Director of the Company.
Further the Board at its meeting held on 22nd February2022 on recommendation of the Nomination and Remuneration Committee appointed Mr. PuneetRenjhen (DIN: 09498488) as Additional Director of the Company who holds the office as anAdditional Director upto the ensuing Annual General Meeting of the Company and thereaftersubject to the approval of the Members at the said AGM as a Director liable to retire byrotation.
Further the Board of Directors on recommendation of nomination andremuneration committee have approved re-appointment of Mr. Ander Arenaza Alvarez (DIN:07591785) and Mr. Manoj Mullassery Menon (DIN: 07642469) as Whole-time Directors(Executive Directors) of the Company for a period of 3 (Three) years with effect from 13thSeptember 2022 and 17th October 2022 respectively and have recommended thesame to the members for their approval at the ensuing AGM.
Detailed profile of the Directors seeking appointment/ re-appointmentalong with other necessary details as may be required are provided in the Notice of 23rdAnnual General Meeting of the Company.
Declaration of the independent Directors
All the Independent Directors have confirmed that they meet thecriteria as mentioned in Regulation 16(1)(b) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Section 149(6) of the Companies Act 2013.The Independent Directors have also confirmed that they are not aware of any circumstanceor situation which exist or may be reasonably anticipated that could impair or impacttheir ability to discharge their duties with an objective independent judgement andwithout any external influence. Further the Board after taking thesedeclaration/disclosures on record and acknowledging the veracity of the same opined thatthe Independent Directors are persons of integrity and possess the relevant expertise andexperience fulfils the conditions specified in the Listing Regulations and the Act forappointment of Independent Directors and are Independent of the Management.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors based on the representation received from the Operating Management and afterdue enquiry confirm that:
a) in the preparation of the annual accounts for the financial yearended 31st December 2021 the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year ended on 31st December 2021 and of the profit and loss of theCompany for that financial year ended on that date.;
c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concernbasis;
e) the directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively during the financial year ended 31st December 2021;
f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively during the financial year ended 31st December 2021.
Board Committee and Annual General Meeting
A calendar of Meetings is prepared and circulated in advance to theDirectors.
The Board of Directors of the Company met six times during theFinancial Year ended 31st December 2021 on 19th February 2021 29thApril 2021 18th May 2021 21st July 2021 14thOctober 2021 and 9th December 2021. The 22nd Annual GeneralMeeting of the Company was held on 29th April 2021 through Video Conferencing.
Details of meetings of the Board its Committees and the AGM along-withattendance of Directors at these meetings are included in the Report on CorporateGovernance which forms part of the Annual Report.
Meeting of independent Directors
The Independent Directors of the Company met on 19thFebruary 2021 and 9th December 2021 without the presence of the ChairmanExecutive Directors other Non-Independent Director(s) and any other Managerial Personnel.
During the year under review the Nomination and Remuneration Committeeand Independent Directors 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 fromall the Directors of the Company through electronic platform provided by an IndependentAgency covering various aspects on performance evaluation of the Board Committees ofBoard Independent Directors Non-Independent Directors and the Chairman. A reportaggregating the responses of 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 wereshared with respective 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 theperformance of non-independent Directors and the Chairman.
Performance Evaluation of the Board and Committees of Board
The report of the feedback received from all the Directors onperformance evaluation of Board and Committees of Board was shared with the Chairman ofthe Company and the Chairman of the respective Committees. The Board reviewed the reportsand evaluated its own performance and performance of the Committees of the Board.
The Independent Directors at their meeting separately evaluated theperformance of the Board. For details please refer to the Report on Corporate Governancewhich forms part of the Annual Report.
Familiarisation program for independent Directors
The details of program for familiarization of Independent Directorswith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company and related mattersare given in the Report on Corporate Governance. The familiarisation program and otherdisclosures as specified under Regulation 46 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is available on the website of the Company at the link:
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency theCompany has adopted the following Policies which inter alia includes criteria fordetermining qualifications positive attributes and independence of a Director.
i) Policy on Appointment of Directors Key Managerial Personnel andSenior Management Employees and succession planning;
ii) Policy for the remuneration of Directors Key Managerial Personneland other employees of the Company.
Salient features of these policies are enumerated in the CorporateGovernance Report which forms part of the Annual Report.
During the year under review the Policy for the remuneration ofDirectors Key Managerial Personnel and other employees of the Company was amended toinclude "Stock Appreciation Benefit" as one of the component in the RemunerationStructure of the Company. There was no change in the Policy on Appointment of DirectorsKey Managerial Personnel and Senior Management Employees and succession planning.
The Policies mentioned above are also uploaded on the website of theCompany and is accessible at the web- link:http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
Committees of the Board
Your Company has duly constituted the Committees required under theCompanies Act 2013 read with applicable Rules made thereunder and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
The Committee comprises of four independent 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
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 the Audit Committee were accepted by theBoard during the financial year under review.
Details relating to Audit Committee and other Committees of the Boardis provided in the Corporate Governance Report which forms part of the Annual Report.
Your Company believes in attainment of highest levels of transparencyin all facets of its operations and maintains an unwavering focus on imbibing goodCorporate Governance practices. Your Company continues to strengthen its governanceprinciples to generate longterm value for its various stakeholders on a sustainable basisthus ensuring ethical and responsible leadership both at the Board and at the Managementlevels.
A Report on Corporate Governance and a Certificate from the Mr. SachinBhagwat Practicing Company Secretary (ACS Number - 10189 CP Number - 6029) andSecretarial Auditor of the Company regarding the compliance with the conditions ofCorporate Governance as stipulated in the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report.
The Vigil Mechanism as envisaged in the Companies Act 2013 the Rulesprescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is implemented through the Company's Whistle Blower Policy to enable thedirectors employees and all stakeholders of the Company to report genuine concerns toprovide for adequate safeguards against victimisation of persons who use such mechanismand make provision for direct access to the Chairman of the Audit Committee. The detail ofthe Policy 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 prohibitionand redressal) Act 2013
The Company has in place an Anti-Sexual Harassment Policy in line withthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this Policy.
During the year under review there was no complaint of discriminationand harassment including sexual harassment received by the committee.
The Board has constituted a Risk Management Committee which comprised 3members as at the end of the financial year namely Mr. Manoj Mullassery Menon - ExecutiveDirector (Chairman of the Committee) Mr. Ander Arenaza Alvarez - Executive Director andMr. Alan Savio D Silva Picardo - Independent Director. The Committee also has inviteesfrom Senior Management team. The other details and terms of reference of the Committee arecovered under the Corporate Governance report which forms part of the Annual Report.
In accordance with the requirement of the Act and Listing Regulationsthe Company has developed and implemented a Risk Control and Management Policy whichestablishes general framework for action as well as the procedures and responsibilitiesto control and manage the risks which the Company must face efficiently and effectively.The risk management system of the Company ("RMS") allows it to reasonably ensurethat all significant risks both financial and non-financial including those which in theopinion of the Board may threaten the existence of the Company are prevented identifiedassessed subjected to ongoing control and reduced to the defined levels of risk appetiteand tolerance and are approved by the risk management committee and ultimately by theBoard.
The Risk Management Committee Audit Committee as well as the Boardreviews the risks and RMS periodically. The Company has established procedures toperiodically place before the Board the risk assessment and minimisation procedures beingfollowed by the Company and steps taken by it to mitigate the Risks.
Important element of risk is provided in the Management Discussion andAnalysis.
N. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
To integrate Environment Social and Governance (ESG) principals intobusiness strategy business module and day to day operations for creating shared value forcompany as well as society at large.
Safety and Health
We are committed to provide a safe & healthy work environmentacross all manufacturing plants and offices. The management have put in place strongprocesses and procedures across all the plants and have systems to continuously monitorits adherence. The safety culture is a journey and management through frequentcommunication and training is strengthening the safety culture across the Organization andkeep reinforcing the discipline. The Company's plants continue to improve well-being ofits personnel by organising occupational health examination periodic health check-ups andworkplace monitoring. The Company has put-in place protocols regarding safe running ofplants in adherence with the Covid-19 guidelines issued by relevant authorities in thegeographies in which we operate. These protocols are reviewed regularly and updated inline with the guidelines issued by the authorities.
The Company has put-in place safety management system across all ourplants. These systems are in line with the requirements of ISO 45001 standard. While mostof our plants have received the ISO 45001 certification remaining plants will completeand achieve the certification in due course of time.
The Company has robust environment management system in place to ensureall environmental risks and opportunities associated with our operations are taken care.These systems are in line with requirements of ISO-1 4001 stand ard. While most of ourplants ha ve received the ISO-14001 certification remaining plants will complete andachieve the certification in due course of time.
The Company ensures strict compliance with all the statutoryrequirements and has taken several steps under its sustainability drive to contributetowards better environment. The focus continues on water and energy conservationincreasing the proportion of green energy in the overall energy consumption and reductionin generation of waste. The Business Responsibility Report elaborated the specific effortstaken by the Company in environment protection including various projects in the areas ofwater energy and waste.
Business responsibility report
The Business Responsibility Report (BRR) of the Company for theFinancial Year 2021 forms part of the Annual Report as required under Regulation 34(2)(f)of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Conservation of energy technology Absorption and Foreign exchangeearnings and outgo
The information pertaining to energy conservation technologyabsorption and foreign exchange earnings and outgo as required under section 134(3)(m) ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 areprovided in Annexure VII to this Report.
Corporate Social Responsibility (Csr)
Your Company has constituted CSR Committee in accordance with Section135 of the Companies Act 2013. The CSR Committee comprises of Mr. Kadambi Narhari(Chairman) Mr. Dhananjay Mungale Mr. Manoj Menon and Mr. Anil Haridass.
During the year the Company was required to spent Rs 42.31 million inaccordance with Section 135(1) of the Companies Act 2013. The Company has spent Rs 22.56million on the CSR projects commenced during the Financial Year. The unspent amount of Rs19.75 million is allocated to the three Ongoing CSR projects implementation of whichshall be continued in
CY-2022. Further the Company had unspent amount of Rs 45.01 millionfor the previous financial years. Out of this the Company have spent Rs 26.91 Million onthe CSR Projects commenced during the previous financial years and the unspent amount ofRs 18.10 million is allocated to the ongoing CSR Projects of previous yearsimplementation of which shall be continued in CY-2022.
The Corporate Social Responsibility Committee had formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) which wassubsequently adopted by it and is being implemented by the Company. The CSR Policyincluding a brief overview of the projects or programs undertaken are hosted on theCompany's website and is accessible at the web-link:http://www.mahindracie.com/images/pdf/resources/Governance/csr-policymcie.pdf
A brief overview of the projects or programs undertaken by the Companyis also provided in Business Responsibility Report under Principle 8.
During the year under review the CSR Policy of the Company was amendedin line with the amendments made by the Companies (Amendment) Act 2019 the Companies(Amendment) Act 2020 and the Companies (Corporate Social Responsibility Policy) AmendmentRules 2021 by amending definitions viz. meaning of CSR Ongoing Project etc. andincluding a statement containing the approach and direction given by the Board ofDirectors taking into account the recommendations of its CSR Committee including Guidingprinciples for Selection Implementation Monitoring of activities and formulation of theAnnual Action Plan.
In accordance with the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 the Annual Report on CSR Activities inter-alia providing brief outlineof the CSR Policy CSR activities undertaken by the Company during the year and the reasonfor not spending the entire CSR amount is provided is annexed herewith as Annexure VI.
Merger by absorption of Mahindra Vehicle Manufacturers Limited (MVML)with Mahindra & Mahindra Limited ("M&M")
The Scheme of Merger by Absorption of MVML with Mahindra &Mahindra Limited ("M&M") and their respective Shareholders ("theScheme") as approved by Hon'ble National Company Law Tribunal was made effective bythe parties to the Scheme from 1st July 2021. As a result 43344512 Equityshares of Rs 10 each representing 11.44% of paid-up equity share capital of the Companyheld by MVML stand vested in M&M with effect from 1st July 2021.
Pursuant to the SEBI (Substantial Acquisition of shares and Takeover)Regulations 2011 and SEBI (Prohibition of Insider Trading) Regulations 2015 necessarydisclosure were submitted to stock exchanges. With aforesaid merger of MVML M&M hasbecome a Promoter of the Company w.e.f. 1st July 2021. There is no change inPromoter and Promoter Group shareholding in the
Company post the above transfer and it stands at 72.19% of the paid-upequity capital of the Company as on 31st December 2021.
Issue of Shares
During the year under review the Company has issued and allotted40273 equity shares of face value of Rs 10/- each pursuant to exercise of options by theemployees under the Company's Employee Stock Option Scheme - 2015.
Compliance with the provisions of Secretarial Standard 1 andSecretarial Standard 2
The Company have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively. Duringthe year under review the Company was in compliance with the Secretarial Standards i.e.SS-1 and SS- 2 relating to "Meetings of the Board of Directors" and"General Meetings" respectively.
Compliance with Downstream Investment conditionalities
The Company is a Foreign Owned and Controlled Company within themeaning of Foreign Exchange Management (Transfer or Issue of Security by a Person Residentoutside India) Regulations 2017 ("FDI Regulations"). All the DownstreamInvestments made by the Company are in compliance with the conditionalities of DownstreamInvestment stipulated in the FDI Regulations.
During CY2021 the Company has obtained a certificate form theStatutory Auditors of the Company for compliance with the FDI Regulations in respect ofthe downstream investment made by the Company during CY2020 and except for delays infilings necessary intimations/forms with RBI/DPIIT/SIA in relation to investments made inprior year(s) the Auditors have affirmed compliance with downstream investmentconditionalities by the Company.
Pursuant to Section 92(3) read with Section 134(3)(a) of the CompaniesAct 2013 copies of the Annual Returns of the Company prepared in accordance with Section92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules2014 are placed 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 DisclosureRequirements) Regulations 2015
In accordance with the provisions of Regulation 30 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has framed aPolicy for determination of Materiality for disclosure of events or information. The samehas been hosted 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.
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasformulated a dividend distribution policy which became effective from 1stJanuary 2018 stipulating factors to be considered in case of Dividend declaration. Thesaid policy was amended during the year under review. The main purpose of the proposedamendment is to amend the Financial Parameters that shall be considered while declaringdividend. The Company has included the parameters which can be considered for InterimDividend and Final Dividend if any. Further the amendment provides that going forwardthe Dividend pay-out if any will be upto 25% of Consolidated Profit After Tax of theCompany for the corresponding financial year. Apart from above the Company has madecertain changes in other parameters mainly to provide clarity in respect of each of theparameter by improvising the language. Further the amendments have provided for a basicformat change of the Policy by paraphrasing the contents under appropriate heading.
The updated policy forms part of this report as Annexure
The same has also been hosted on the website of the Company and isaccessible at the web-link: https://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
None of the Executive Directors (Whole-time Director or ManagingDirector) were in receipt of any commission from the Company or any remuneration from theSubsidiaries of the Company.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions/ events relating to theseitems during the year under review:
1. Issue of equity shares with differential rights as to dividendvoting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of theCompany under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts orTribunals which impact the going concern status and the Company's operation in future.
4. No application was made or any proceedings is pending under theInsolvency and Bankruptcy Code 2016 during the year in respect of the Company.
5. There has been no change in the nature of business of your Company.
6. There was no one-time settlement of loan obtained from Banks orFinancial Institutions.
7. Voting rights which are not directly exercised by the employees inrespect of shares for the subscription/ purchase of which loan was given by the Company(as there is no scheme pursuant to which such persons can beneficially hold shares asenvisaged under section 67(3) (c) of the Companies Act 2013).
Your Directors wish to place on record their sincere appreciation tothe Company's Customers Investors Vendors and to the Bankers for their continued supportduring the year.
The Directors also wish to place on record their appreciation for thededication and contribution made by employees at all levels and look forward to theirsupport in future as well.
|For and on behalf of the Board of Directors ||shriprakash shukla |
|Mahindra cie Automotive Limited ||chairman |
|Date: 22nd February 2022 ||DIN: 00007418 |
|Place: Pune || |