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Menon Bearings Ltd.

BSE: 523828 Sector: Engineering
NSE: MENONBE ISIN Code: INE071D01033
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VOLUME 3213
52-Week high 127.05
52-Week low 70.00
P/E 16.92
Mkt Cap.(Rs cr) 402
Buy Price 0.00
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Sell Price 0.00
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OPEN 75.00
CLOSE 74.95
VOLUME 3213
52-Week high 127.05
52-Week low 70.00
P/E 16.92
Mkt Cap.(Rs cr) 402
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Menon Bearings Ltd. (MENONBE) - Director Report

Company director report

To

The Members

Your Directors feel great pleasure in presenting 27th Annual Report of yourCompany comprising the Audited Financial Statements for the year ended 31stMarch 2018.

FINANCIAL HIGHLIGHTS :

(Rs.in lakhs)

Particulars For the Year ended 31st March 2018 For the Year ended 31st March 2017
1 Total Revenue (Net) 14678.20 12422.18
2 Profit before Depreciation & Amortization Expenses Finance Cost and Tax 3833.98 3383.82
3 Less : Depreciation and Amortization Expenses 407.69 512.57
Finance Cost 192.78 117.34
4 Profit before Tax 3233.51 2753.91
5 Less: Provision for Tax 1126.16 844.04
6 Profit after Tax 2107.35 1909.87
7 Other Comprehensive Income 28.68 14.02
8 Balance of Profit as per last Balance Sheet 5026.38 3945.38
9 Balance Available for Appropriation 7162.41 5869.27
10 Bonus Shares issued - 93.40
11 Rate of Paid Dividend 125% 100%
12 Dividend Paid 700.50 560.40
13 Tax on Dividend 142.61 114.08
14 Transfer to General Reserve 75.00 75.00
15 Balance of Profit carried to Balance Sheet 6244.31 5026.38

The Good and Service Tax (GST) has been implemented with effect from 1stJuly 2017 which replaces Excise Duty and other input taxes. As per IND AS 18 the revenuefor the year 31st March 2018 is reported net of GST.

REVIEW OF OPERATIONS:

During the year under review the Company has registered a turnover of Rs. 14678.20Lakhs (previous year Rs. 12422.18) and Net Profit after Tax of Rs. 2107.35 Lakhs(previous year Rs. 1909.87 Lakhs).

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENTSRELATES AND THE DATE OF THE REPORT:

The Company continued to operate in the business of manufacturing of "AutoComponents" and there was no change in business activities. No material changes orcommitments affecting the financial position of the Company occurred between end of thefinancial year and the date of this report.

DIVIDEND:

The Company's overall performance during the year under review was satisfactory. Basedon the performance your directors had the pleasure of declaring payment of 1stinterim dividend of Re.0.75 per equity share and 2nd interim dividend of Re.0.50 per Equity Share (previous year interim dividend Re. 1.00 per Equity Share being100% of the paid -up Equity Share Capital of the Company) for the Financial Year ended on31st March 2018. This absorbed total cash outflow of Rs. 843.11 Lakhs(previous year Rs. 674.48 Lakhs) including Corporate Dividend Distribution Tax of Rs.142.61 Lakhs (previous year Rs. 114.08 Lakhs).

Your Directors have pleasure in recommending payment of final dividend of Rs. 0.25(25%) per equity share (of Re. 1/- each) on the Company's Equity Share Capital. The finaldividend if approved shall be payable to those members whose names appear on the Registerof Members as on the date of Annual General Meeting i.e. 21st July 2018 .

In terms of the provisions of Investor Education and Protection Fund (AccountingAudit Transfer & Refund) Rules 2016 / Investor Educations and Protection Fund(Awareness and Protection of Investors) Rules 2001 Rs. 532235 /- being unpaid andunclaimed dividend for the F.Y 2009-10 were transferred during the year to IEPF.

Further the unpaid and unclaimed dividend amount lying with the Company for F.Y. 2010 -11 is due to transfer to the IEPF on 7th October 2018.

SHARE CAPITAL OF THE COMPANY:

During the year under review there was no change in paid up share capital of theCompany.

CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY:

There was no change in the nature of business during the Financial Year under review.

PUBLIC DEPOSITS:

During the year under review the Company has not accepted any deposits within themeaning of Section 73 and 76 of the Companies Act 2013 ("the Act") read withCompanies (Acceptance of Deposits) Rules 2014.

EXTRACT OF ANNUAL RETURN:

An extract of Annual Return in Form MGT 9 is appended to this Report as "AnnexureI."

DIRECTORS AND KMP:

During the year under review following Directors resigned from the Board of theCompany:-

• Mr. Sachin Menon (Non Executive Director DIN: 00134488) - w.e.f. 04thMay 2017.

• Mr. B S Ajitkumar (Independent Director DIN: 00205336) -w.e.f. 11thNovember 2017.

• Mrs. Nazura Ajaney (Independent Director DIN: 06947881) - w.e.f. 15thFebruary 2018.

The Board express its appreciation towards the contribution made by them as Director ofthe Company.

As recommended by Nomination & Remuneration Committee Mr. Gajendra Vasa (DIN No.00461425) has been appointed as an Additional (Independent) Director of the Company for aterm of 5 consecutive years w.e.f. 30th December 2017 subject to the approvalof members of the Company.

As recommended by Nomination & Remuneration Committee Mrs. Kailash A Nevagi (DINNo. 03011076) has been appointed as an Additional (Independent Women) Director for a termof 5 consecutive years w.e.f. 16th April 2018 subject to the approval ofmembers of the Company.

The Board recommends the appointment of Mr. Gajendra Vasa and Mrs. Kailash A Nevagi asIndependent Directors on the Board of Company.

In accordance with the provisions of Section 152 of the Act read with rules made thereunder and the Articles of Association of the Company Mr. Nitin Menon Chairman &Joint. Managing Director (DIN: 00692754) of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for re-appointment.

Further the tenure of Mr. Nitin Menon as Vice Chairman & Joint Managing Director ofthe Company expired on 31st March 2018. Upon recommendation of the Nomination& Remuneration Committee of the Company the Board of Directors of the Company at itsmeeting held on 23rd January 2018 re-appointed him as Vice Chairman &Joint Managing Director of the Company for a further period of 5 years w.e.f. 1stApril 2018 to 31st March 2023 and approved the payment of remuneration to himfor a period of 3 years w.e.f. 1st April 2018 to 31st March 2021on such terms and conditions as set out in resolution no.9 of the Notice of AGM dated 3rdMay 2018 subject to the approval of members of the Company.

The tenure of Mr. R. D. Dixit being Chairman & Managing Director of the Companyexpired on 31st March 2018.Upon recommendation of the Nomination &Remuneration Committee of the Company the Board of Directors of the Company at itsmeeting held on 23rd January 2018 re-appointed him as Chairman & ManagingDirector of the Company for a further period of 5 years w.e.f. 1st April 2018to 31st March 2023 and approved the payment of remuneration to him for aperiod of 3 years w.e.f. 1st April 2018 to 31st March 2021 on suchterms and conditions as set out in resolution no.10 of the Notice of AGM dated 3rdMay 2018 subject to the approval of members of the Company.

Your Board recommends the re-appointment of Mr. Nitin Menon and Mr. R. D. Dixit.

As stipulated under Regulation 36(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") and SecretarialStandards on General Meetings (SS-2) issued by the Institute of Company Secretaries ofIndia (ICSI) brief resume of the Directors proposed to be appointed/re-appointed isannexed to the Notice convening the 27th Annual General Meeting.

As stipulated under the Clause (B) of Part II of Section II of Schedule V to the Actthe details of directors appointed/re-appointed are annexed to the Notice convening 27thAnnual General Meeting.

The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Act and Regulation 16(1)(b) of the Listing Regulations.

ANNUAL PERFORMANCE EVALUATION :

Pursuant to the provisions of the Act a formal annual evaluation needs to be made bythe Board of its own performance and that of its Committees and Individual directors.Schedule IV to the Act states that the performance evaluation of the independent directorsshall be done by the entire Board of Directors excluding the director being evaluated.The Board works with the Nomination and Remuneration Committee to lay down the evaluationcriteria.

The Board has carried out evaluation of its own performance of all the directorsindividually as well as the working of its Audit Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee of the Company. The Board has devisedquestionnaire to evaluate the performances of each of Executive Non-Executive andIndependent Directors. Such questions are prepared considering the business of the Companyand the expectations that the Board have from each of the Directors. The evaluationframework for assessing the performance of Directors comprises of the following key areas:

i. Attendance at Board Meetings and Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance;

iv. Providing perspectives and feedback going beyond information provided by themanagement.

MEETINGS OF THE BOARD:

The Board meets at regular intervals to discuss and decide on Company's / businesspolicy and strategy apart from other Board businesses. A tentative annual calendar of theBoard and Committee Meetings is informed to the respective Directors in advance tofacilitate them to plan their schedule and to ensure their meaningful participation in themeetings. However in case of a special and urgent business need the Board's approval istaken by passing circular resolutions as permitted by the law which are confirmed in thesubsequent meeting of the Board of Directors.

The notice of meeting of the Board of Directors and Committees are given well inadvance to all the Directors of the Company. Usually meetings of the Board are held inKolhapur Maharashtra. The agenda of the Board / Committee meetings is circulated 7 daysprior to the date of the meeting as per Secretarial Standard -1(SS-1) issued by ICSI. Theagenda for the Board and Committee meetings includes detailed notes on the items to bediscussed at the meeting to enable the Directors to take an informed decision.

During the year under review the Board of Directors met 4 (Four) times the details ofwhich are given in the Report on Corporate Governance forming part of this Annual Report.The intervening gap between two consecutive meetings was within the period prescribed bySS-1 issued by ICSI and the Act.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(3) of the Companies Act 2013 the Board ofDirectors state that:

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;

b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year 31stMarch 2018 and of the profit of the company for that period;

c. they have 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. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

COMMITTEES OF THE BOARD:

During the year the Committees of the Board were re-constituted in accordance with theprovisions of the Companies Act 2013 and Listing Regulations there are currently 5(Five) Committees of the Board which are as follows:

1. Audit Committee;

2. Stakeholders' Relationship Committee;

3. Nomination and Remuneration Committee;

4. Corporate Social Responsibility Committee;

5. Internal Complaint Committee.

The Composition of the Committee's as on the date of Board's Report :

Name of Committee Name of the Committee members Category Chairman / Member
Mr. M. L. Shinde Independent Chairman
Audit Committee Mr. R. D. Dixit Executive Member
Mr. Gajendra Vasa Independent Member (w.e.f.19*1 Apr.2018)
Mrs. Kailash A Nevagi Independent Member (w.e.f.19*1 Apr.2018)
Nomination and Mr. M. L. Shinde Independent Chairman
Remuneration Mr. Gajendra Vasa Independent Member (w.e.f. 23rd Jan.2018'
Committee Mrs. Kailash A Nevagi Independent Member (w.e.f.19th Apr.2018)
Corporate Social Mr. Nitin Menon Executive Chairman (w.e.f.19*1 Apr.2018)
Responsibility Mr. R. D. Dixit Executive Member
Committee Mr. M L Shinde Independent Member
Stakeholders Mr. Gajendra Vasa Independent Chairman (w.e.f.19thApr.2018)
Relationship Mr. Nitin Menon Executive Member
Committee Mr. R. D. Dixit Executive Member
Mr. R. D. Dixit Executive Chairman (w.e.f.3rd May 2018)
Internal Complaint Miss Neha Harolikar Employee Member
Committee Mr. Jayavant Jadhav Employee Member
Mr. Sachin Patil Employee Member

Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the Report on Corporate Governance a part of this AnnualReport.

AUDIT COMMITTEE AND ITS COMPOSITION:

The Audit Committee is duly constituted as per the provisions of Section 177 of theCompanies Act 2013 and Regulation 18 of the Listing Regulations.

The Audit Committee comprises of Mr. M. L. Shinde Mr. Gajendra Vasa Mrs. Kailash ANevagi Independent Directors and Mr. R. D. Dixit Chairman and Managing Director of theCompany.

Mr. M. L. Shinde is the Chairman of Audit Committee and Mr. Anup Padmai CompanySecretary and Compliance Officer of the Company acts as the Secretary to the AuditCommittee.

The Audit Committee of the Company reviews the reports to be submitted with the Boardof Directors with respect to auditing and accounting matters. It also supervises theCompany's internal control and financial reporting process.

WHISTLE BLOWER POLICY / VIGIL MECHANISM:

The Company has adopted Vigil Mechanism / Whistle Blower Policy as per the provisionsof Section 177 of Companies Act 2013 and Regulation 22 of the Listing Regulations to dealwith the instance of fraud and to provide adequate safeguards against victimization ofdirectors or employees or any other person who avail the mechanism and which also providesdirect access to the Chairman of the Audit Committee in exceptional cases. The details ofthe Vigil Mechanism is explained in the Report on Corporate Governance and is also postedon the website of the Company at :

http://static1.squarespace.com/static/54df3692e4b0d9caed7742ae/ty55681f95e4b0f3550bf6e656/1432887

189523/Whistle+Blower+Policy.pdf.

We affirm that during the financial year 2017-18 no employee or director was deniedaccess to the Audit Committee.

PARTICULARS OF REMUNERATION:

Pursuant to provisions of Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 detailsof ratio of remuneration of each director to the median remuneration of employee's of thecompany are appended to this report as "Annexure -II"

Further the information as required as per the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) and Rule 5 (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is appended to this report as"Annexure III".

REMUNERATION POLICY:

Pursuant to the provisions of Section 178 of the Companies Act 2013 and Regulation 19of the Listing Regulations and on recommendation of the Nomination and RemunerationCommittee the Board of Directors have adopted a Policy on criteria for selection andappointment of Directors Senior Management Personnel and their remuneration. The salientfeatures of the Remuneration Policy are stated in the Report on Corporate Governance partof this Annual Report.

SUBSIDIARIES ASSOCIATE AND JOINT VENTURE COMPANIES:

As on 31st March 2018 the Company does not have any Subsidiary Associateor Joint Venture Companies and hence preparation of Consolidated Financial Statements andstatement containing salient features of subsidiary in Form AOC 1 as per the provisions ofSection 129 of the Companies Act 2013 is not applicable to the Company.

STATUTORY AUDITORS AND BRANCH AUDITORS:

The Company had appointed M/s. ARNA & Associates (formerly known as M/s.Rahulprasad Agnihotri & Co.) (FRN: 122293W) Chartered Accountants Kolhapur asStatutory Auditors of your Company who holds office

as such from conclusion of 26th AGM until the conclusion of 31stAGM of the Company. However pursuant to provisions of Section 139 of the Act suchappointment of Statutory Auditors is subject to ratification by the members of the companyat every AGM held after the 26th AGM.The Company has received a consent letterfrom the Auditors that they are willing to act as Statutory Auditors of the Company andtheir appointment is within limits as per the provisions of Section 139 of the Act andthey also satisfy the criteria as provided under Section 141 of the Act.

Your Directors as recommended by the Audit Committee recommends for the ratificationof appointment of M/s. ARNA & Associates Chartered Accountant Kolhapur as StatutoryAuditors of the Company in the ensuing Annual General Meeting and to fix theirremuneration for F.Y 2018-19.

Further M/s. Rajesh Lohia & Co. Chartered Accountants Kolhapur the BranchAuditors has resigned from the company w.e.f. 15th March 2018. The Board ofDirectors of the Company vide circular resolution no. BM/1 dated 06th April2018 took note of resignation of Branch Auditors and has assigned the duty to M/s. ARNA& Associates existing Statutory Auditors of the Company to conduct the audit of allbranches of the company and also approved the revised remuneration of Rs. 204500/-(Rupees Two Lakhs Four Thousand Five Hundred only) plus applicable taxes and reimbursementof actual out of pocket expenses for the financial year ended 31st March 2018.

No adverse remarks/ comments/observations are made by the Statutory Auditors in theirreport for the year ended 31st March 2018.

During the year under review the Statutory Auditors had not reported any fraud underSection 143(12) of the Act therefore no detail is to be disclosed as required underSection 134 (3)(ca) of the Act.

COST AUDITORS:

As per the provisions of Section 148 of the Act read with Companies (Audit andAuditors) Rules 2014 the Board of Directors of the Company has appointed M/s. C. S.Adawadkar & Co. Cost Accountants Pune (FRN: 100401) as Cost Auditors of the Companyto conduct audit of cost records for the Financial Year 2018-19 at a remuneration of Rs.125000/- (Rupees One Lakh Twenty Five Thousand Only) plus applicable taxes and out ofpocket expenses subject to approval of shareholders in the ensuing Annual GeneralMeeting.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Act read with Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 and as recommended by the AuditCommittee M/s. Manish Ghia & Associates Company Secretaries Mumbai are appointed asthe Secretarial Auditors of the Company for F.Y. 2018 - 19.

The Secretarial Audit Report received from M/s. Manish Ghia & Associates CompanySecretaries Mumbai for the year ended 31st March 2018 is annexed as"Annexure -IV" and forms part of this Report.

There are no qualifications reservations adverse remarks or disclaimers made by theSecretarial Auditors in their report dated 26th April 2018.

INTERNAL AUDIT:

Pursuant to the provisions of Section 138 of the Act read with Companies (Accounts)Rules 2014 the Board on recommendation of the Audit Committee re-appointed Mr. AbhayGolwalkar Chartered AccountantsKolhapur as Internal Auditor of the Company. The InternalAuditor submits his reports on quarterly basis to the Audit Committee.

Based on the report of internal audit management undertakes corrective actions intheir respective areas and thereby strengthens the controls. Significant auditobservations and corrective actions thereon are presented to the Audit Committee of theBoard.

INTERNAL FINANCIAL CONTROL:

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to Company Policies safeguardingof assets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and timely preparation of reliable financial disclosures.

The Audit Committee evaluates the efficiency and adequacy of financial control systemin the Company its compliance with operating systems accounting procedures at alllocations of the Company and strives to maintain the Standard in Internal FinancialControl.

RISKS AND AREAS OF CONCERN:

The Company has laid down a well defined Risk Management Policy covering the riskmapping trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor bothbusiness and non-business risks. The Board periodically reviews the risks and suggestssteps to be taken to control and mitigate the same through a properly defined framework.

REPORT ON CORPORATE GOVERNANCE:

Pursuant to Regulations 34 read with Schedule V of the Listing Regulations thefollowing have been made a part of the Annual Report and are enclosed / annexed to thisreport:

• Management Discussion and Analysis

• Report on Corporate Governance

• Declaration on Compliance with Code of Conduct

• Auditors' Certificate regarding compliance of conditions of Corporate GovernanceCORPORATE SOCIAL RESPONSIBILITY INITIATIVE:

Pursuant to the provisions of Section 135 of the Act read with Companies (CorporateSocial Responsibility) Rules 2014 the Company has constituted Corporate SocialResponsibility (CSR) Committee and framed a CSR Policy. As part of its initiatives underCSR the Company has identified various projects. These projects are in accordance withSchedule VII to the Act.

The details as per the provisions of Rule 8 of Companies (Corporate SocialResponsibility) Rules 2014 and reasons for failure to spend the prescribed CSRexpenditure is annexed herewith as "Annexure V.".

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All the related party transactions transacted during the year were in the ordinarycourse of business and were on arm's length basis and the same are reported in the Notesto the Financial Statements.

The particulars of contracts or arrangements entered with related parties referred toin Section 188(1) of the Act prescribed in Form AOC - 2 of the Rule (8) of the Companies(Accounts) Rules 2014 is appended as "Annexure VI " of this Annual Report.

In accordance with the provisions of Regulation 23 of Listing Regulations the Companyhas formulated the Related Party T ransaction Policy and the same is uploaded on theCompany's website at

https://static1.squarespace.com/static/54df3692e4b0d9caed7742ae/t/56f8c9391bbee011fb4f9f08/1459145073393/Related+Party+Transaction+Policy.pdf

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The details of loans guarantee or investment made by the Company under the provisionsof Section 186 of the Act are provided in the Notes to the financial statements.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

There was no order passed by any regulator or court or tribunal which impacts thegoing concern status of the Company or will have bearing on company's operations infuture.

INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013 :

The Company has constituted an Internal Complaint Committee as required under Section 4of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. During the year no complaint was filed before the said Committee.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the provisions of Section 134 (3) (m) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 details regarding Conservation of Energy Technologyabsorption Foreign exchange earnings and outgo is given as in "Annexure VII"ofthis Annual Report.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their gratitude for the continued co-operationand patronage extended by the esteemed customers both in OEM and Replacement Marketsegments. The Directors would also like to place on record their sincere appreciation forthe continued co-operation guidance support and assistance extended during the yearunder report by our bankers customers suppliers and Government agencies. The Board ofDirectors wishes to express its appreciation for the valuable contribution made by theemployees at all levels during the year under report.

BY ORDER OF THE BOARD OF DIRECTORS
R.D.Dixit
Place : Kolhapur Chairman & Managing Director
Date : 3rd May 2018 DIN :00626827