Minda Corporation Ltd.
|BSE: 538962||Sector: Auto|
|NSE: MINDACORP||ISIN Code: INE842C01021|
|BSE 00:00 | 28 Feb||106.75||
|NSE 00:00 | 28 Feb||106.95||
|Mkt Cap.(Rs cr)||2,425|
|Mkt Cap.(Rs cr)||2425.36|
Minda Corporation Ltd. (MINDACORP) - Director Report
Company director report
Your Directors have pleasure in presenting the 34th (Thirty Fourth) Annual Report onthe business and operations of the Company together with the audited financial statementsfor the financial year ended March 312019.
(Amount Rs in Million)
The financial statements for the year ended March 312019 and March 312018 have beenprepared after giving effect to the scheme of amalgamation. For details refer Notes toAccounts forming part of this Annual Report.
The financial statements have been prepared as per the IND-AS prescribed by theInstitute of Chartered Accountants of India (ICAI).
Standalone Financials: During the year under review your Company has achieved aturnover of Rs 23708 Million against Rs 19969 Million during previous year registering agrowth of 19% over the previous year. The Company reported a Net Profit of Rs 1606 Millionas against Rs 1026 Million earned during previous year registering a growth over 57%.
Consolidated Financials: During the year under review your Company has achieved aconsolidated turnover of Rs 30920 Million against Rs 26350 Million during previous yearregistering a growth of 17% over the previous year. The Company reported a Net Profit ofRs 1692 Million as against Rs 1427 Million earned during previous year registering agrowth over 19%.
The Operational Performance of the Company has been extensively covered in theManagement Discussion and Analysis which form part of this Directors' Report
SIGNIFICANT CORPORATE DEVELOPMENTS
Amalgamation of five wholly owned subsidiaries with Minda Corporation Ltd.
During the year the Company had initiated a Scheme of Amalgamation (the"Scheme") involving merger of five wholly owned subsidiaries i.e MindaManagement Services Limited Minda SAI Limited Minda Automotive Solutions Limited MindaAutoelektrik Limited and Minda Telematics and Electric Mobility Solutions Private Limited("Transferor Companies") into the Company. In this regard the HonourableNational Company Law Tribunal ("NCLT") New Delhi Bench has approved the Schemevide its order dated July 19 2019. The scheme shall be effective upon filing of thecertified copy with the Registrar of Companies Delhi.
Amalgamation of the Transferor Companies into and with the Company shall result inconsolidation of the businesses. The Amalgamation is expected to be beneficial as it wouldcreate greater synergies among the businesses and would enable them to have access towider financial resources increase the managerial efficiencies lowering of coststructure and higher transparency.
All assets and liabilities of the transferor companies shall be transferred to Companyat book value as on the designated Appointed Date of April 012018.
The Transferor Companies are wholly owned subsidiary companies of Company therefore nonew equity shares shall require to be issued and the entire share capital of theTransferor Companies shall be cancelled and extinguished.
Dilution of equity stake in Furukawa Minda Electric Private Limited (Formerly known asMinda Furukawa Electric Private Limited (Joint Venture)
During the year under review the investment of the Company in its joint venture companyFurukawa Minda Electric Private Limited (Formerly Known as Minda Furukawa Electric PrivateLimited) has been reduced and the present shareholding of the Company in the said JV is25%. The shareholding of Japanese joint venture partner has been increased to 75%.
Credit Rating assigned by India Ratings & Research (Ind-Ra)
During the year under review the India Ratings & Research (Ind-Ra) have upgradedcredit rating to Minda Corporation Limited to 'IND AA-' from 'IND A+' which is as under:
In line with the Dividend Distribution Policy the Board of Directors of your Companyhas recommended a final dividend of Rs 0.45/- (i.e. 22.5%) per equity share (Face Value Rs2/- each) for 2018-19. The dividend proposal is subject to the approval of members at theensuing Annual General Meeting scheduled to be held on September 26 2019. This is inaddition to the interim dividend of Rs 0.25/- (i.e. 12.5%) per equity share declared bythe Board in its meeting held on February 07 2019.The total dividend for FY 2018-19aggregates to Rs 0.70/- (i.e.35%) per equity share as against Rs 0.60/- (i.e. 30%) perequity share paid for the last year.
DIVIDEND DISTRIBUTION POLICY
In line with Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations) (Second Amendment) Regulations 2016 your Company has formulated a DividendDistribution Policy which is available at the Company's website i.e.
QUALIFIED INSTITUTIONAL PLACEMENT (QIP)
On 21st May 2018 the Company issued and allotted 17910645 equity shares of Rs 2/-each to eligible Qualified Institutional Buyers (QIB) at issue price of Rs 173.47 perequity share aggregating to Rs 310.69 Crore under Qualified Institutional Placement.
The paid up Equity Share Capital as on 31st March 2019 was 227222285 Equity Shareof Rs 2/- each which includes allotment of 17910645 equity shares of Rs 2/- each toeligible Qualified Institutional Buyers (QIB) at issue price of Rs 173.47 per equity shareaggregating to Rs 310.69 Crore under Qualified Institutional Placement.
Upon the Scheme coming into effect and with effect from the Appointed Date i.e.Appointed Date- April 012018 the authorized share capital of the Transferee Company ofRs 692000000/- [Rupees Sixty Nine Crore and Twenty Lacs Only] (divided into 250.000.000 equity shares of Rs 2/- (Rupees Two only) each and 240000 0.001% CumulativeRedeemable Preference Shares of Rs 800/- (Rupees Eight Hundred only) each) shall standenhanced to an aggregate amount of Rs 1577000000/- (Rupees One Hundred Fifty SevenCrore Seventy Lacs only) and the authorized share capital of the Transferee Company shallbe reclassified as divided into 692500000 equity shares of Rs 2/- (Rupees Two only)each aggregating to Rs 1385000000/- (Rupees One Hundred Thirty Eight Crore Fifty Lakhonly) and 240000 preference shares of Rs 800/- (Rupees Eight Hundred only) eachaggregating to Rs 192.000. 000. Accordingly Clause V of the Memorandum of Association ofthe Transferee Company shall stand modified accordingly.
TRANSFER TO RESERVES
Your Directors have recommended the transfer of Rs 106 Million to the General Reservefrom the profits of the Company for the Financial Year under review as against Rs 70Million transferred in the previous year.
EMPLOYEE STOCK OPTION SCHEME 2017
Your Company with the objective of introducing a long term incentive tool to attractmotivate retain talent and reward loyalty formulated Minda Corporation Limited EmployeeStock Option Scheme 2017 ("ESOP 2017") for grant of a maximum of 5341840 stockoptions to the eligible employees of the Company. During the year 201617 the Nominationand Remuneration Committee of the Company has granted 2700000 stock options to theeligible employees of
Minda Corporation Limited and its subsidiaries. A certificate from the Auditors of theCompany that the Scheme has been implemented in accordance with the applicable SEBIGuidelines and the resolution passed by Members would be placed at the Annual GeneralMeeting for inspection by Members. There is no material change in the scheme the same isin compliance with the applicable regulations. The necessary disclosure pursuant toRegulation 14 of the SEBI (Share Based Employee Benefits) with regard to Employee StockOption Scheme of the Company is available at Company's website i.e
The Company has neither invited nor accepted any deposits from the public fallingwithin the preview of section 73 of the Act read with the Companies (Acceptance ofDeposits) Rule 2014 during the year. There is no unclaimed or unpaid deposit lying withthe Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
'Management's Discussion and Analysis Report (MD&A)' for the year under review asstipulated under Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatesection forming part of this Annual Report.
Your Company follows the highest standards of Corporate Governance best practices. Itadheres to and has implemented the requirements set out by SEBI's Corporate Governancenorms. A separate section on Corporate Governance forms a part of the Directors' Report.
A certificate confirming the compliance of conditions of Corporate Governance asstipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015from Sanjay Grover & Associates practicing Company Secretaries is forming part ofthe Annual Report.
Further your Company Minda Corporation has been recognised with "Golden PeacockAward -Special Commendation" by Institute of Directors (IOD) for Good CorporateGovernance for 2017-18.
BUSINESS RESPONSIBILITY REPORT
As stipulated under Regulation 34 of the SEBI Listing Regulations the BusinessResponsibility Report describing the initiatives taken by the Company from environmentalsocial and governance perspective forms part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Companies Act 2013 ("the Act") and Indian AccountingStandard (Ind AS) 110 on Consolidated Financial Statements read with Ind AS 28 investmentin associate and joint ventures and Ind AS 112 on disclosure of interest in otherentities the audited consolidated financial statement is provided in the Annual Report.
The performance of the Company on consolidated basis is also discussed at length in theManagement Discussion and Analysis which form part of this Directors Report.
DIRECTORS / KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Mr. Laxman Ramnarayan Director of the Company retires byrotation and being eligible offers himself for re-appointment.
Mr. Ashok Minda has been re-appointed as Chairman & Group CEO of the Company w.e.fAugust 01 2019 for a period of 3 years as recommended by the Nomination &Remuneration Committee and approved by the Board of Directors in their meeting held on May28 2019 subject to the approval of shareholders.
Mr. Ashok Kumar Jha has been re-appointed as Independent Director of the Company w.e.fNovember 14 2019 for a period of 5 years as recommended by the Nomination &Remuneration Committee and approved by the Board of Directors in their meeting held on May28 2019 subject to the approval of shareholders.
Mr. Laxman Ramnarayan has been appointed as Executive Director of the Company w.e.fSeptember 01 2019 for a period of 3 years as recommended by the Nomination &Remuneration Committee and approved by the Board of Directors in their meeting held onAugust 12 2019 subject to the approval of shareholders.
Brief resumes of Mr. Ashok Minda Mr. Ashok Kumar Jha and Mr. Laxman Ramnarayan natureof their expertise in functional areas and the name of the companies in which they holdthe Directorship and the Chairmanship/Membership of the Committees of the Board asstipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Companies Act 2013 and applicable Secretarial Standards are given in the noticeconvening the Annual General Meeting.
Further the Mr. Avinash Parkash Gandhi and Mr. Rakesh Chopra have been re-appointed asIndependent Directors of the Company w.e.f April 01 2019 with the approval ofshareholders through Postal Ballot on March 26 2019. Mr. Avinash Parkash Gandhi hascompleted the age of 75 years however he has been re-appointed with the approval ofshareholders through Special Resolution pursuant to Regulation 17(1 A) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Further the Board of Directors in their meeting held on May 28 2019 has appointed Mr.Rakesh Chopra Independent Director of the Company on the Board of Minda KTSN PlasticSolution GmbH & Co. K.G Germany an unlisted material subsidiary of the Companypursuant to Regulation 24(1) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations to the effect that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 readwith Regulation 16 of SEBI (Listing obligations and Disclosures Requirements) Regulations2015. In the opinion of the Board Independent Directors fulfill the conditions specifiedin the Act Rules made there under and Listing Regulations.
Board Evaluation Pursuant to the corporate governance requirements as prescribed in theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligationsand
Disclosure Requirements) Regulations 2015 the Board of Directors has carried out anannual evaluation of its own performance Board Committees and of individual directors.
In a separate meeting of independent directors held on March 14 2019 performance ofnon-independent directors performance of the Board as a whole performance of theCommittee(s) of the Board and performance of the Chairman was evaluated taking intoaccount the views of other directors.
Performance evaluation of independent directors was done by the entire Board excludingthe independent director being evaluated.
BOARD AND COMMITTEE MEETINGS
During the year under review 6 (Six) Board Meetings 7 (Seven) Audit Committee Meetingswere convened and held apart from other Committee's meetings of the Company. The detailsof all the meetings are given in the Corporate Governance Report. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013.
The calendar of Board and Committee Meetings were prepared and circulated in advance tothe Directors.
COMMITTEES OF THE BOARD
As on March 31 2019 the Board had 6 (six) Committees viz: Audit Committee Nominationand Remuneration Committee Stakeholder Relationship Committee Corporate SocialResponsibility Committee Risk Management Committee and Securities Issue Committee. Adetailed note on the composition of the Board and its committees is provided in theCorporate Governance Report section of this Annual Report.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
Pursuant to the provisions of section 134(3)(e) and Section 178(3) of the CompaniesAct 2013 and the SEBI Listing Regulations the policy of the Company on Directors'appointment and remuneration including the criteria for determining qualificationpositive attributes independence of directors and other matters are given on the websiteof the Company at www.sparkminda.com
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and no material departure was made for the same. The financial statements ofthe Company for the financial year ended March 312019 have been prepared in accordancewith Ind AS as prescribed under Section 133 of the Companies Act 2013 (the"Act") read with the relevant rules made thereunder and other accountingprinciples generally accepted in India;
b) Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for the period ended on March 312019;
c) Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) The annual financial statements have been prepared on a going concern basis;
e) Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively;
f) Proper systems had been devised to ensure compliance with the provisions of allapplicable laws and were adequate and operating effectively.
NATURE OF BUSINESS
There has been no change in the nature of business of your Company during the yearunder review.
CODE OF CONDUCT
The Company has in place a comprehensive Code of Conduct ("the Code")applicable to Directors Independent Directors and Senior Management Personnel. The Codegives guidance and support needed for ethical conduct of business and compliance of law. Acopy of the Code is available on the Company's website at the link:
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the financial year endedon March 31 2019 were on an arm's length basis and in the ordinary course of businessunder Section 188(1) of the Act and the Listing Regulations. Details of the transactionswith Related Parties are provided in the accompanying financial statements in compliancewith the provision of Section 134(3)(h) of the Act. The policy on Related PartyTransactions as approved by the Board may be accessed on the Company's website at thelink:
PARTICULARS OF INVESTMENTS MADE LOANS GIVEN GUARANTEES GIVEN AND SECURITIES PROVIDED
Pursuant to Section 134(3)(g) of the Companies Act 2013 particulars of loansguarantees or investments and securities provided under Section 186 of the Companies Act2013 along with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the standalone financial statement (Please referto Note 2.3 2.4 2.12 to the standalone financial statement).
CORPORATE SOCIAL RESPONSIBILITY
Your Company has the policy of giving back to the society and has carried a host of CSRactivities this year. In line with the requirement
of Section 135 of the Companies Act 2013 your Company having a Corporate SocialResponsibility Committee. The details of Committee is provided in Corporate GovernanceReport. The CSR Policy of the Company is available on its website at the link:
Spark Minda Foundation (A wholly owned subsidiary of the Company) a non-profit Companyregistered under Section 8 of the Companies Act 2013 is the implementing agency forimplementation of CSR activities. A robust system of reporting and monitoring has been putin place to ensure effective implementation of planned CSR initiatives.
During the year the Company has spent Rs 14.70 Million on CSR activities as annexedherewith Annexure-I to this report.
A detailed discussion on CSR Projects and initiatives are included as a separatesection in the Annual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith at Annexure-IIto this Report.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in form MGT 9 is annexed herewith as Annexure-III tothis Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The percentage increase in remuneration ratio of remuneration of each director and keymanagerial personnel (KMP) (as required under the Companies Act 2013) to the median ofemployees' remuneration as required under Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 form part of Annexure-IV to this Board's Report.
The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in a separate exhibitforming part of this report and is available on the website of the Company.
The Annual Report and accounts are being sent to the shareholders excluding theaforesaid exhibit. Shareholders interested in obtaining this information may access thesame from the Company website or send a written request to the Company.
In accordance with Section 136 of the Companies Act 2013 this exhibit is availablefor inspection by shareholders at the Registered Office of the Company during businesshours on all working days 21 days before the Annual General Meeting and copies may bemade available on request.
STATUTORY AUDITORS AND REPORT
At the Annual General Meeting held on September 22 2016 B S R & Co. LLPChartered Accountants (ICAI Firm Registration No. 101248 W/W-100022) were appointed asStatutory Auditors of the Company to hold office till the conclusion of the Annual GeneralMeeting to be held in the calendar year 2021. Pursuant to Section 40 of CompaniesAmendment Act 2017 made effective from 7th May 2018 ratification of appointment of BS R & Co. LLP Chartered Accountants as statutory auditors of the Company at everyAnnual General Meeting by members is no longer necessary till the conclusion of the AnnualGeneral Meeting to be held in the calendar year 2021 . The appointment of B S R & Co.LLP Chartered Accountants as statutory auditors of the Company is placed forratification alongwith approval of remuneration at the ensuing AGM.
All observations made in the Audit Report on Standalone Financial Statements andConsolidated Financial Statements are self-explanatory and do not call for any furthercomments under Section 134 of the Companies Act 2013. The Auditors Report to theshareholders for the year under review does not contain any adverse qualification. Nofrauds have been reported by the Auditors under Section 143(12) of the Companies Act 2013requiring disclosure in the Board's Report.
The Standalone and Consolidated Financial Statements of the Company for the year endedMarch 312019 were earlier approved by the Board of Directors at its meeting held on May28 2019. Those Standalone and Consolidated Ind AS Financial Statements have beenre-presented by the Company so as to give effect to the schemes of amalgamation approvedby the Honourable National Company Law Tribunal New Delhi Bench vide its order dated July19 2019 with effect from appointed date April 1 2018 for merger. As a result theStandalone and Consolidated Financial Statements have been revised by the Company to giveeffect to the said schemes of amalgamation and accordingly the auditors have issued theiraudit report on the revised Financial Statements.
SECRETARIAL AUDITORS AND REPORT
Sanjay Grover & Associates Company Secretaries (Firm Registration No-P2001DE052900) were appointed to conduct the secretarial audit of the Company for thefinancial year 2018-19 as required under Section 204 of the Companies Act 2013 and Rulesmade there under. The Secretarial Audit Report for financial year 2018-19 forms part ofthe Annual Report as Annexure-V to this Directors' Report. The Secretarial AuditReport does not contain any qualification reservation or adverse remark.
The Board of Directors has appointed Chandra Wadhwa & Co. Cost Accountants as CostAuditors (Firm Registration No. 00239) for conducting the audit of cost records of theCompany for the financial year 2018-19 pursuant to Section 148 of the Companies Act 2013.
In accordance with the provisions of section 148 of the Act read with the Companies(Audit and Auditors) Rules 2014 since the remuneration payable to the Cost Auditor forFY 19-20 is required to be ratified by the members the Board recommends the same forapproval by members at the ensuing AGM
Equity Shares of your Company are listed presently at National Stock Exchange of IndiaLimited (NSE) and BSE Limited (BSE). The Annual Listing fees for FY 2019-20 have been paidto the concerned Stock Exchanges.
During the year under review the Company has complied with the provisions of theapplicable Secretarial Standards issued by Institute of Companies Secretaries of India.The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand such systems are adequate and operating effectively.
SUBSIDIARIES JOINT VENTURE AND ASSOCIATES
Pursuant to Section 129 of the Companies Act 2013 a statement in the prescribedForm-AOC-1 relating to subsidiaries and Joint Ventures for the year ended on March 312019 has been attached with the Consolidated Financial Statements of the Company for thefinancial year ended March 312019.
The Financial Statements of the subsidiaries shall be made available to theshareholders seeking such information and shall also be available for inspection at itsRegistered Office.
The Policy for determining material subsidiaries as approved may be accessed on theCompany's Website in investor section: https://sparkminda.com/wp-content/uploads/2019/03/Policv-on-Material- Non-Listed-Subsidiary.pdf.
INTERNAL FINANCIAL CONTROL
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
The Board of Directors in their meeting held on May 28 2019 has constituted RiskManagement Committee pursuant to the provisions of SEBI (Listing obligations andDisclosures Requirements) Regulations 2015 to assess risk and to make mitigationprocedures. The Risk Management Policy can be accessed on the Company's website at thelink: https://sparkminda.com/wp-content/uploads/2018/04/Risk-ManagementPolicy.pdf.
This policy forms part of the internal control and corporate governance process of theCompany. Basically the aim of this policy is not to eliminate risks rather to mitigatethe risks involved in the Company activities to maximize opportunities and minimizeadversity by considering the following:-
Identification of risk define ownership with clearly defined roles andresponsibilities;
Balance between the cost of managing risk and the anticipated benefits;
Contributing to more efficient use/allocation of capital and resources;
To encourage and promote an pro-active approach towards risk management;
Identifying any unmitigated risks and formulating action plans for its treatmentthrough regular review.
Minda Corporation strongly believes that our employees are the key assets of theorganizations growth and success. As HR plays the role of the strategic business partnerit continues to invest in a wide variety of activities that ensure that the capabilitymotivation and individual needs of the employees are met. The Company has a strong andcontinuous focus on the safety and security of its workplace. Various initiatives weretaken during the year to ensure positive and safe work environment. The Human resourcesworks continuously to cater to resolving any grievances of the employees.
The Company continued its policy of handholding new employees via a strong orientationand induction program and focus on hiring the right person for the right job. Our talentsourcing strategies include employee referrals direct applications through the careersection of our website campus placements and channel partners.
During the year the HR took multiple measures to strengthen the skills of employees.Detailed sessions were held with the employees to help them clarify their roles andresponsibilities and built cross functional teams to define their key performanceindicators and outline the expectations and goals of the Company. Large numbers ofopportunities were created for the employees for role enhancement and growth within theCompany. Human Resource Department continuously focuses on employee engagement andmotivation which further helps in achieving strategic objective of the organization. Withthe establishment of new structure the functions re-defined their systems and processesto synchronize the maximum utilization of resources.
Communication platforms like town halls workshops and other were created to ensureeffective and transparent communication within the Company. During the year we maintaineda very cordial relationship with all the employees. There was no loss of production onaccount of any industrial unrest.
During the year under review your Company has received many awards and recognitionswhich have been mentioned in Award section of this Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company is committed to the highest standards of ethical moral and legal businessconduct. Accordingly Vigil Mechanism/ Whistle Blower Policy was formulated which providesa robust framework for dealing with genuine concerns & grievances. The Policy providesfor adequate safeguard against victimization of employees who avail the mechanism and alsoprovides direct access to the Chairperson of the Audit Committee. Specifically employeescan raise concerns regarding any discrimination harassment victimization any otherunfair practice being adopted against them or any instances of fraud by or against yourCompany.
The same has also been displayed on the website of the Company and the link for thesame is: https://sparkminda.com/wp-content/ uploads/2018/04/Whistle-Blower-Policy.pdf.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE POLICY
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 ('Act') and Rules made there-under your Companyhas constituted Internal Complaint Committees (ICC). The Company has zero tolerance forsexual harassment at workplace. While maintaining the highest governance norms theCompany has also appointed external independent persons who have requisite experience inhandling such matters. During the year the Company has not received any complaint ofsexual harassment.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year 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 ESOP referred to in this Report.
3. Neither the Executive Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.
4. No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
APPRECIATIONS AND ACKNOWLEDGMENTS
We thank our customers vendors business associates investors and bankers for theircontinued support during the financial year. We also place on record our sincereappreciation for the enthusiasm and commitment of Company's employees for the growth ofthe Company and look forward to their continued involvement and support.
ANNEXURE I - TO DIRECTORS' REPORT
ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES
1. A brief outline of the Company's CSR policy including overview of projects orprogrammes undertaken and a reference to the weblink to the CSR policy and projects orprogrammes.
a. The Company's focus areas are Education & Skill Development Health &Wellness and Environmental Sustainability. The projects undertaken are within the broadframework of Schedule VII of the Companies Act 2013. A detailed discussion on Company'sCSR Policy and Activities is provided in 'CSR and Sustainability' section of AnnualReport.
b. CSR Policy can be viewed at the following link:
2. Composition of the CSR Committee:
3. Average net profit of the Company for immediately preceding three financial years:
Rs 731.18 Million (Before taking impact of post-amalgamation financials).
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above):
Rs 14.62 Million
5. Details of CSR spent during the financial year:
a. Total amount spent for the financial year: Rs 14.70 Million
b. Amount unspent if any: NIL
c. Manner in which the amount spent during the financial year is detailed below:
(Rs in Million)
6. In case the Company has failed to spend the two per cent of the average net profitof the last three financial years or any part thereof the Company shall provide thereasons for not spending the amount in its Board report:
7. The CSR Committee of the Company hereby confirms that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company.
ANNEXURE II - TO DIRECTORS' REPORT
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO[Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014]
A. CONSERVATION OF ENERGY:
a) Steps taken or impact on conservation of energy
Security Division/Die-Casting Division:-
Implementation of EnMS (Energy Management system) in MCL -N for judicial andeffective usage of energy.
Replacement of Air Handling Units with VRV for reduction in Energy Usage
Usage of energy efficient motors and VFD's on assembly lines
Online monitoring of energy usage and consumption
Quarterly load balancing done controlling usage of electricity
Oxylene used in place of Phosphating (No heating required)
Power savings through open access (installed 2MW project)
Installation of Magnetic resonator on natural gas line
Introduced LED in plant and shop-floor
Conversion of Chip MF Elect to Gas
Briquetting machine is used to convert chips into briquette and then melted infurnace resulting into less consumption of energy
Reduce Air consumption through reduced air pressure as per requirement offixtures
VFD installation in OEM compressor 1004 Conveyer 1005 STP Pump Air Coolersand ETP
Servo controller system PDC
Less efficient Air-conditioning replaced with 5 star air-conditioner and VRV'S
Temperature Controlling in Utility 1004
Implementation of IE3 motors
Implementation of servo system
Control of cooling tower fan with temperature requirement
Maintaining PF at Unity
Wiring Harness Division:-
130 Nos. 54 watt tube lights replaced with LED 18 watt tube lights in plant-02.Energy saved KWH/ yearly- 8871.0. Cost saved: Rs 93140/annum.
360 Nos. T5 25 watt tube lights replaced with LED Tube lights. Energy saved2169.0 KWH/year Cost saved: Rs227782/annum.
Power factor maintained at 1.00 throughout the year.
Boundary light 250 watt changed with 40 watt LED light. KWH saved 1286.0KWH/year. Cost saved: Rs13948/annum.
VFD Mounted on semi-auto machines in LPC area. Energy saved 8501 KWH/year Costsaved: Rs89259/annum.
Old ceiling fan replaced with energy efficient fan 7084.0 KWH/year Cost saved:Rs74382/annum.
Ordinary window AC replaced with Energy saver star rating. Energy saved5118.0Kwh/year Cost saved: Rs53737/annum.
Ordinary Split AC replaced with Energy Saver rating. Energy saved11828.0KWH/year Cost saved: Rs124192/ annum.
Use of product display halogen light in place of LED Light.
Auto cut A.C at lunch time for half hour and also auto off AC in evening at 6.00pm.
Replacement of tube lights with CFL.
Starter Motor and Alternator Division:-
Hydraulic machine Upgraded with PLC based with Sleep Time for Hydraulic Motoroff during Idle time total 6 nos. 3 Installed 3 in process.
Air washer On/ off Controller installed to optimize the Running Time.
Air Line modified air Leak arrested to run 30 KW compressor instead of 45 Kw(before modification 30 KW Compressor is in stand by now 45 Kw compressor is Stand by).
Ro Plant Running time reduced from 24 hrs. to 8 hrs. by capacity increase (3.5hp motor installed in Ro plant Running hrs. reduced by 16 hrs.).
Air Conditioner Operating time reduced by 2 hrs./day during the office hours.
Plan to Installed VFD in Air washer to optimize the Energy consumption (18.5 kWmotorX4 motor installed in air Washer).
b) The steps taken by the Company for utilizing
alternate sources of energy
Plan to install solar plant in all locations to reduce usage of primary sourceof energy.
Switch over from LPG to Natural Gas in phased manner.
Use of energy efficient PNG fired oven with patented technology to reduceconsumption.
Replaced FRP Sheet into Polycarbonate and increased the quantity (60 No's) ofFRP body type Turbo-ventilator for better ventilation and maximum utilization of sunlight.
The use of Solar Power started is some of the plants for lighting and fans foroffice and store area.
Transparent sheet and Glass windows have been fixed at roof to use natural daylight in day time. In day light ceiling light are off between 10:30 AM to 4:30 PM inwiring harness plant.
c) The capital investment on energy conservation equipment
The Company has made a capital investment of Rs 83.03 Lacs on energy conservationduring the year the details of which are provided below:-
B. TECHNOLOGY ABSORPTION:
i) Research & Development (R&D) - FORM 'B'
1. Specific R&D areas in which R&D carried out by the Company
During recent times there are increasing technology trends upcoming regulationsincreasing quality and reliability requirements increasing cost reduction pressures fromcustomers the Company has increased its focus on product reliability and innovation. Fordomestic as well as International customers Company focused on developing products whichmeet the changing emission regulations i.e. BS IV to BS VI Cost innovations to get entryinto new vehicle segments mainly Construction all terrain vehicles and Agriculturevehicles. Company is developing mechatronic & electronic products and co-developmentwith customers on R&D projects. Some of the areas where R&D effort was put are:-
Intellectual Property Rights
Filed 20 new patent applications for new concepts in various Product and Processdesign in 2018-19. Highlight was the granting of first patent in Japan for Key LessIgnition Switch cum steering Lock
Fuel tank caps meeting BS VI regulations design activities started for major twowheeler OEMs
Bayonet type Fuel Tank Cap with high pressure valve meeting BSVI norms forScooter designed and validated.
Sealed Ignition switch for ATV - Product validated and regular supplies started.
New concept Steering lock for Triumph - Under development.
Glove Box Lock with Latch for Polaris Slingshot.
Ignition switch cum steering lock with integrated connector & multi-functionmodule.
New concept for Ignition Switch cum Steering Lock integrated with Cableactuation Mechanism developed - under validation.
New Product line of Mechanical control Cables added with complete plant and Labtesting facilities set up in Pant Nagar.
The electronics & mechatronics share in vehicle is increasing at a rapid pace.Highly reliable microcontroller based solutions enable the advanced safety & securityrequirements of the vehicle. Company is also focusing on electronic mechatronic andBiometric systems. We have set up a world class facility called Spark Minda TechnicalCentre (SMIT) in Pune with an objective to have state of the art centralized facility forSoftware & Hardware design and Electronics reliability testing. Most of theMechatronic and Electronic developments are happening with active role of SMIT.
The various products we have developed/under development in Electronics/Mechatronicsarea are:-
Electronic/ Mechatronic Products
Semi-Automatic smart key system integrated with cable actuation.
Automatic Steering Lock.
Semi-Automatic smart key system for Scooter.
Smart Glove Box Lock and Seat Latch
Automatic Steering Lock for Bolt Mobility - Netherlands.
Electronic Fuel Tank Cap - Received order from Polaris and under development.
Semi-Automatic smart key system developed for Scooter. Field Testing on vehicleunder progress.
Smart Rotavator Control Unit (Blue Eye 4.2) for assisting the farmers tooptimally control engine speed during seeding.
Reverse Speed Alert System for tractors based on a regulatory requirement
Electronic Flashers for commercial vehicles and tractors
EV subsystem related products
BLDC Motor Controller
Telematics related products
Intelligent Transport solution (with passenger information system)
Telematics solutions for shared mobility and fleet tracking
The focus on product innovation also calls for focus in process innovation. The rapidchanging product technologies regulatory requirements cost reduction pressures has madeus develop low cost highly reliable SPMs through in house capability development. Some ofthe new initiatives in ME include:-
Second generation of Automatic Lock barrel assembly line developed withsubstantial cost and space saving - 3 Nos. developed & deployed. 5 (five) such SPMsdeveloped.
Automatic Soldering Process (SPM) for Active Antenna assembly process.
Precise fuel tank cap breathing & leakage testing systems designed &developed for all types of Fuel Tank Cap systems currently being used across the world.
Addition of wide array of analytical test machines for Reliability improvementin products validation Laboratory.
Complete Testing & Validation facility of Mechanical Control cables set upfor our New Product line.
In Tooling development started efforts for Yield improvement Tool Qualityimprovement & Tool life improvement.
Structural & Process simulations software for Zinc & Aluminium castingspurchased to improve the Tooling development - Cast Designer.
100% fitment function & appearance testing of parts made on assembly linesthrough robust End of line testing fixtures designed & developed In house.
Battery cable with Aluminium cable prototype developed and offered to OEM's: OneOEM has revised the drawing for one project with Aluminium Cable. 2 Vehicles were builtbut the project is slowed down as the OEM's are busy in implementation of BSVI.
Exploring welding process of the terminal to Aluminium cable with Komax: Weldingfeasibility analysis done. This is linked to Aluminium cable project only. The weldingprocess and its advantages were explained to the customer but no further actions is takenas of now till customer revives the project.
Proto-type developed for Fuse blow indicator: Trial planned on vehicle with anOEM. The Trial was successfully conducted on the vehicle and further improvement has beendone on the solution. SMIT is also working on a solution called PCB Junction Box.
PCB Based Junction Box project initiated by SMIT and a design partner fromoverseas country Identified. The idea of overseas design partner is dropped because ofunagreeable terms. SMIT is now developing the solution and a functional prototype is made.The demonstration to OEM's will start after the Demo Kit is ready.
New Stackable Ring terminal for earth connection is under design phase. Same isproposed to an OEM. Provisional patent filed for the design.
Sealing design improved to eliminate rework of starter motor.
2. Benefits derived as a result of above R&D
Seeing MCL's competencies customers like Honda Yamaha Polaris BajajTriumph KTM etc. are codeveloping with Company starting from R&D stage. Company hasco - developed a new FT cap for one of its major customer.
Company's focus & competence building on Electronic & Mechatronic systemhas given good confidence to Customers - Received orders for Semi-Automatic smart keysystem integrated with cable actuation for Automatic Steering Lock. Working with YamahaJapan for Marine system security development.
The new products for Off road segment have resulted into business from ATVsConstruction Vehicles & Tractor manufacturers.
Cost innovations at the Company has resulted in increase in orders fromcustomers like Hero Moto Corp Royal Enfield HMSI Suzuki TVSM and Yamaha.
Company's competency in developing fuel tank caps meeting BS VI regulations hasresulted in getting business from majority of Indian & Japanese customers for FT Caps.
Company has already started supplies for Mechanical Control Cables for KawasakiIndia and Okinawa. Samples under development for customers like Yamaha RE TVSM and HeroMotor Corp.
Aluminium cable solution can reduce weight and cost of wiring harness. Theterminal design has been done in-house based on benchmarking for a customer.
Welding of terminal instead of crimping can help in overcoming creep problem ofaluminium which can occur in crimping.
Fuse blow indicator is a system in which the driver will get immediateintimation if there is any fuse blow for critical circuit. This is meant for the criticalfunction where the driver will not notice anything till the system has reached extremelevel of mal function (e.g Radiator fan). This system will help driver to take actionimmediately when the fuse blows.
PCB Based junction box is next generation Power distribution system which willbecome predominant in high content vehicles like Passenger and Utility Vehicles.
Stackable Ring terminal is a simple solution for complex grounding.
Reduction in Warranty and improves customer satisfaction.
3. Future Plan of Action
Focus on reliability will further increase to ensure Zero defect in completeproduct life cycle - Zero defect initiative drive started across the Group and Zero defectproduct policy will be adopted as our winning mantra.
For markets like India & ASEAN cost innovation is happening through usage ofalternative materials like Zinc to Aluminium or Zinc to Plastic. Company is also workingon increasing the Tool life from 2 times to 3 times to reduce the recurring cost as theuse of Aluminium increases (having one fifth tool life as compared to Zinc tools).
More focus will be there in automating the assembly lines to reduce process costdue to ever increasing manpower cost & increase reliability. Fixed cost will bereduced by putting more focus on implementing low cost flexible automation on assemblylines.
More focus on investments on R&D and Technology to further improve qualitydeliver greater customer satisfaction strengthening future competitiveness and bring ininnovative products & new technologies including green & smart technologies.
Company is working with all the major OEM's also on ROHs REACH & ELVcompliance to improve environment friendliness of our products.
Competency is being created for design and development of PCB based JunctionBox: Project Identified Partner Identified Customer Engagement planned to start in thisfinancial year.
Functional Prototype Ready.
Development of FI system connectors for 2W: OBD II Connector Water-ProofConnectors.
Localization plan ready development started as per the plan. Capabilityenhancement plan is to engage with external experts.
Focus on patents to enhance innovation culture in the Company.
Application of TPV TPU: Currently working on blend of NBR and PVC to replaceNeoprene material whose cost is increasing. Proposal submitted to the OEM and currentlyunder review.
4. Expenditure on Research and Development
(Rs in Million)
* Based on pre-amalgamation turnover.
ii) Technology absorption adaptation and innovation
1. Efforts in the brief made towards technology absorption adaptation andinnovation:-
a) Technology mapping being done by benchmarking with competitor products engineers'participation to various technical conferences & exhibitions. Patent landscaping beingdone on regular basis to see the technology trends.
b) Structured Reward & Recognition policies have been implemented to create cultureof innovation.
c) State of art electronic competency centre (SMIT) put up at Pune for next generationelectronic & mechatronic products. The centre is focused on developing advance enggsolutions in hardware software and does reliability testing of electronic products.
d) Technical consultants (Subject matter experts) hired to guide engineers on varioustechnical areas like materials processes mechanisms & Patents.
e) Technical Tie-ups with premier institute in India for project based solution likeIIT Delhi IIT Chennai & CECRI Karaikudi.
f) Technical standards manuals & check sheets being made/updated on regular basisto build strong knowledge base of product & process technology.
g) Engineers being regularly trained on high end design software structural simulationsoftware & process simulation software new technologies in tool & die makingrapid prototyping techniques. Built rapid prototyping facility in-house throughinstallation of 3D printer.
h) As part of group initiative Project (Current business- technology and product gap)there is continuous mechanism for product benchmarking prioritizing and development ofthe project which is reviewed at different levels.
i) Engagement with overseas Design houses for joint development of technologyproduct-line like PCB Junction Box.
j) Several projects running with SMIT for new productline development: Fuse BlowIndicator. PCB Bases Junction Box Wireless Modules vehicle-Networking.
k) 24V Alternator with 55A output developed in 5" frame size.
l) 12V Alternator with 55A output developed in 4" frame size.
2. Benefits derived as a result of above efforts e.g. product improvement costreduction product development import substitution etc.:-
a) Company considered as preferred original component supplier by most of OEM's &most of the OEM's are involving Company from concept design stage.
b) The innovative product offerings have resulted into Import substitutions for Indian2 Wheeler OEMs in the products like immobilizers magnetic shutter modules multifunctionlocks etc. Also customers are seeking solutions from Company for upcoming technicalsafety & regulatory requirements.
c) Company indigenous technologies low cost products use of design simulations &rapid prototyping techniques to reduce product development cycle have resulted in increasein business from Indian & export customers.
d) There is increased amount of focus on patent and regular training on patents isbeing conducted to spread awareness for patent search and patent filing which enhancesinnovation culture in the organization.
e) The above initiative has brought focus on product benchmarking and global technologytrend which helps in identifying the focus area for technology/ product development.
3. In case of imported technology (imported during the last 5 years reckoned from thebeginning of the financial year) following information may be furnished:-
a) Technology imported -
No Technology was imported during last 5 years. All the Technologies and Products weredeveloped by the Company on its own.
b) Year of Import - Not applicable
c) Has technology been fully absorbed? - Not applicable
d) If not fully absorbed areas where this has not taken place reasons there for andfuture plans of action - Not applicable.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
i) EXPORT ACTIVITIES
Various initiatives taken to increase exports; development of new export markets forproducts and services -
ii) TOTAL FOREIGN EXCHANGE USED AND EARNED
Foreign Exchange Used:-
(Rs in Million)