Your Directors are pleased to present 33rd Annual Report together with the auditedfinancial statements for the financial year ended March 31 2018.
The Company's financial performance for the year ended March 31 2018 is summarizedbelow: -
(Rs. in Lacs)
|Particulars ||Year ended March 31 2018 ||Year ended March 31 2017 |
|Total Income ||106087.07 ||93535.88 |
|Profit before Finance Cost & Depreciation ||7692.46 ||6679.28 |
|Depreciation ||(1818.70) ||(1719.62) |
|Finance Cost ||(432.73) ||(550.42) |
|Profit before Taxation ||5441.03 ||4409.24 |
|Provision for Taxation (Deferred& Current) ||(1282.00) ||(953.88) |
|Profit after Taxation ||4159.03 ||3455.36 |
|Surplus brought Forward ||24286.77 ||20869.88 |
|Surplus carried to Balance Sheet ||26264.96 ||24286.77 |
Your Directors have pleasure to recommend a dividend of 60% i.e. Rs. 1.20/- on equityshare of Rs. 2/- each for the financial year ended March 31 2018. The dividend ifapproved by the members in the ensuing Annual General Meeting would absorb Rs. 1200 lacs(Rs. 1000 lacs for Final Dividend for FY 16-17) out of the distributable profitsavailable.
During FY 2017-18 total income of the Company was Rs. 1061 Crore as compared to Rs.935 Crore in FY 2016-17 registering an increase of 13.48%.
Profit before tax and profit after tax were Rs. 54.41 Crores and Rs. 41.59 Croresrespectively during the year as against Rs. 44.09 Crores and Rs. 34.55 Crores respectivelyin the previous year.
CAPACITY UTILIZATION & PLANT OPERATIONS
All four units of the Company located at Waghodia in Gujarat Bawal as well asDharuhera in Haryana and Haridwar in Uttarakhand are running well and continue to operateat a satisfactory level of efficiency.
INCREASE IN SHARE CAPITAL CONSEQUENT TO ISSUE OF BONUS SHARE
In pursuit of approval granted by the members of the Company at their 32nd AnnualGeneral Meeting held on June 30 2017 Committee of Board of Directors at their meetingheld on July 13 2017 had allotted one Bonus Equity Share of Rs. 2/- each fully paid upfor every one Equity Share of Rs. 2/- each fully paid up as on the record date July 122017 aggregating to 50000000 Equity Shares of Rs. 100000000 to the members of theCompany. Accordingly the paid up capital increased from Rs. 100000000 to Rs.200000000 on July 13 2017.
APPOINTMENT/ CESSATION OF DIRECTORS OR KMP
In terms of Section 152 and other applicable provisions if any of the Companies Act2013 (the Act') Mr. Sudhir Kumar Munjal retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment.
Your Board recommends reappointment of Mr. Sudhir Kumar Munjal as Director as well asthe Managing Directorforthe period of five years at the ensuing 33rd Annual GeneralMeeting in terms of Section 152196197 and other applicable provisions if any of theAct.He in the opinion of the Nomination and Remuneration Committee and the Boardfulfills the conditions for reappointment specified in the Act and rules made there under.
It is also proposed to seek approval of the members by way of Special Resolution attheir ensuing 33rd Annual General Meeting to the reappointment of and remuneration payableto Mr. Sudhir Kumar Munjal as a Managing Director of the Company for the period of 5 yearsfrom October 29 2018 to October 28 2023.
Brief resume and other details of Mr. Sudhir Kumar Munjal who is proposed to bere-appointed as a Director of your Company have been furnished in the ExplanatoryStatement to the Notice of the ensuing Annual General Meeting.
Pursuant to the applicable provisions of the Act and Regulation 17 (10) and otherapplicable regulations if any of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (LODR') performance of the Board as a whole andindividual Directors was evaluated by the Board seeking relevant inputs from all theDirectors. The Nomination and Remuneration Committee (NRC) reviewed the performance of theindividual Directors. A separate meeting of Independent Directors was also held to reviewthe performance of Non-Independent Directors performance of the Board as a whole andperformance of the Chairperson of the Company.
The performance of the Board and individual Directors was found satisfactory.
Your Company is focusing on quality right from new product development stage such asdesign of processes manufacturing of tools fixtures & dies to ensure qualityoutput. This is the attribute of your Company which has enabled it to sustain as aconsistent quality producer over the years.
Your Company continued to focus on operational improvement. Continuing focus onmanaging optimal levels of inventory sound business performance operating efficienciesin various segments of business and cost saving drive across the organization have helpedit generating good cash flow from operations notwithstanding headwinds blowing inautomobile sector and sluggish macro-economic environment throughout the year.
Your Company was able to raise the short-term/long term funds needed for its workingcapital related requirements & term loans for new capital expenditure at competitiverates. Your Company continues to enjoy excellent credit ratings for both long and shorttenure borrowings and maintains impeccable debt-servicing track record which helps itretain excellent rapport with all of its bankers.
The Company is committed to maintain the highest standards of corporate governance andadheres to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under the LODR forms an integral part of this report. Therequisite certificate from the Auditors of the Company confirming compliance with theconditions of corporate governance is attached to the report on Corporate Governance.
TRANSFER TO GENERAL RESERVE
During the FY under review no amount has been transferred to General Reserve of theCompany.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review your Company has transferred unpaid/ unclaimed dividendamounting to Rs. 6.59 Lacs for FY 2009-10 to the Investor Education and Protection Fund(IEPF) of the Central Government of India.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee (CSR Committee') has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy')indicating the activities to be undertaken by the Company which has been approved by theBoard.
The amount required to be spent on CSR activities during the year under report inaccordance with the provisions of Section 135 of the
Act was Rs. 76.54 lacs and the Company has spent Rs. 70.00 lacs during the currentfinancial year.
The Company was in a process to recognize the appropriate CSR project for spending onthe CSR expenditure to contribute towards the society and hence the Company could spendonly to the extent of Rs. 70 lacs and could not spend Rs. 6.54 lacs out of Rs. 76.54 lacsto be spent towards CSR expenditure.
The requisite details (in a matrix form) on CSR activities pursuant to Section 135 ofthe Act read with Companies (CSR Policy) Rules 2014 are annexed as Annexure A tothis Report.
POLICY RELATING TO ANTI SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has placed a policy to treat women employees with dignity and nodiscrimination against them plus zero tolerance towards any sexual abuse to abide byletter and spirit requirements of the Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013 and rules framed there under andredressal of complaints of sexual harassment at work place. All employees (permanentcontractual temporary and trainees) are supposed to adhere to and conduct themselves asprescribed in this policy. During the year under review no complaint was reported to theBoard and accordingly the Company has no information to report on filing and disposal ofthe cases pursuant to Section 22 of the said Act.
Your Company has neither accepted nor renewed any deposits within the meaning ofSection 73 of the Act read with the Companies (Acceptance of Deposits) Rules 2014 asamended from time to time.
PARTICULARS OF LOANS GUARANTEES SECURITIES AND INVESTMENTS
The Company has not given any guarantees or securities within the meaning of theprovisions of Section 186 of the Act.
However the aggregate of loans and advances granted as also investments made if anyare within the limits of Section 186 of the Act.
STATEMENT ON THE DECLARATION GIVEN BY INDEPENDENT DIRECTORS PURSUANT TO SECTION 149(6)OF THE ACT
The Company has received declaration from all independent Directors of the Company tothe effect that they meet criteria of independence as stipulated u/s 149(6) of the Act andapplicable regulations of LODR.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the Directors would like tostate that: a) In the preparation of the annual accounts financial year ended March 312018 the applicable accounting standards have been followed along with proper explanationrelating to material departures; if any
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2018 and of the profitand loss of the Company for the financial year ended March 31 2018 under review;
c) The Directors 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) The Directors have prepared the annual accounts for the financial year ended March31 2018 on a going concern basis;
e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) The Directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188 OF THE COMPANIES ACT 2013
There were no related party transactions entered into during the financial year underSection 188 of Companies Act 2013.
Further during FY 2017-18 there were no materially significant related partytransactions entered into by your Company with the Promoters Directors Key ManagerialPersonnel or other designated persons which might have potential conflict with theinterest of the Company at large.
HOLDING / SUBSIDIAY / ASSOCIATE / JOINT VENTURE COMPANY
Thakur Devi Investments Private Limited is a holding company of the Company holding74.81% Equity Share Capital of the Company. The Company will make relevant disclosureduring the year in case of change in the current status if any.
Subsequent to the end of Balance sheet date as at March 31 2018 the Company hasacquired 55% shareholding of Indutch composites Technology Pvt. Ltd. of face value of Rs.10/- each for a consideration of Rs. 5.20 Cr. By virtue of this investment IndutchComposites Technology Pvt Ltd has become a subsidiary of the Company.
AUDIT COMMITTEE RECOMMENDATIONS
During the year The Board has accepted all recommendations of Audit Committee andaccordingly no disclosure is required to be made in respect of non-acceptance of anyrecommendation of the Audit Committee by the Board.
INTERNAL FINANCIAL CONTROL
The Corporate Governance Policy guides the conduct of the affairs of your Company andclearly delineates the roles responsibilities at each level of its key functionariesinvolved in governance. Your Company has in place adequate internal financial controlswith reference to the Financial Statements. During the year under review no reportablematerial weakness in the operation was observed. Regular audit and review processes ensurethat such systems are reinforced on an ongoing basis.
Your Company's assets are adequately insured against multiple risks from fire riotearthquake terrorism and other risks which are considered necessary by the Management.
As an additional coverage a Public Liability Insurance Policy is also in place tocover public liability/ties if any arising out of any industrial accidents. We have alsocovered the Directors' and Officers' liability under the Companies Act to meet with anyeventuality.
RATINGS FOR BORROWING
ICRA the rating agency has reaffirmed AA- with stable outlook for the long termratings for bank facilities and A1+ the short term rating for short term bank facilitiesand commercial paper of your Company vide letter dated July 05 2017. The aforesaid ratingare valid till June 30 2018.
(i) Statutory Auditors
The auditors K.C. Mehta & Co. Chartered Accountants retire at the conclusion ofensuing Annual General Meeting. They have furnished their consent and requisitecertificate pursuant to the Act and rules mentioned there under in respect of theirproposed reappointment pursuant to Section 139 of the Act for upcoming financial year2018-19 & onwards.
(ii) Internal Auditors
M/s Mukund & Rohit Chartered Accountants Vadodara have been appointed asInternal Auditors of the Company in terms of Section 138 of the Companies Act 2013 andrules and regulations made thereunder for the Financial Year 2018-19 by the Board ofDirectors upon recommendation of the Audit Committee.
(iii) Secretarial Auditors
Pursuant to provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s Devesh
Vimal & Co. Company Secretaries in practice to undertake the Secretarial Audit ofthe Company for FY 2018-19. The Secretarial Audit Report for the financial year endedMarch 31 2018 is annexed herewith marked as Annexure C to this Report. TheSecretarial Audit Report does not contain any qualification reservation or adverseremark.
EXPLANATIONS/COMMENTS ON STATUTORY AUDITORS' REPORT & SECRETARIAL AUDITORS' REPORT
Neither the Statutory Auditors nor the Secretarial Auditors of the Company in theirrespective reports have made any qualifications reservations adverse remarks ordisclaimers. Accordingly no explanations/ comments thereon are required to be furnished.
The composition of the Audit Committee is in line with the provisions of Section 177 ofthe Act read with Regulation 18 of LODR. The Chairman of the Audit Committee is anIndependent Director. The Audit Committee of the Board provides reassurance to the Boardon the existence of an effective internal control environment that ensures the efficiencyand effectiveness of the operations of the Company and safeguarding of assets and adequacyof provisions for all liabilities. The details of meetings and their attendance areincluded in the Corporate Governance Report.
NOMINATION AND REMUNERATION COMMITTEE
The composition of the Nomination and Remuneration Committee (NRC) is in line with theSection 178 of the Act read with Regulation 19 of LODR. The committee determines overallCompany's Policy on remuneration packages and other terms and conditions of theappointment of the Executive Directors and senior management of the Company as well assitting fees to the Non Executive Directors of the Company and also to approve payment ofremuneration to Managing Director and Whole Time Directors as decided by the members ofthe Company and recommends to the Board of Directors for their consideration and approval.The details of meetings and their attendance are included in the Corporate GovernanceReport.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The composition of the Stakeholders Relationship Committee (SRC) is in line with theSection 178 of the Act and Regulation 20 of LODR. The Committee looks after thestakeholder's grievances and redress of investor's complaints related to transfer ofshares non receipt of balance sheet non receipt of dividend etc. The details of meetingsand their attendance are included in Corporate Governance Report.
REPORTING OF FRAUDS
There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and rules framed thereunder either to the Company or to the CentralGovernment.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 annexed to this report as Annexure B.
CODE OF CONDUCT
The Company has laid down a comprehensive Code of Conduct (Code') for the Boardand senior management personnel of the Company.
The Company has received affirmations from Board members as well as senior managementconfirming their compliance with the said Code for FY 2017-18.
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices anddealing with stakeholders.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has a vigil mechanism/whistle blower policy to deal with instance of fraudand mismanagement if any. In staying true to our values of strength performance andpassion and in line with our vision of being one of the most respected companies in Indiathe Company is committed to the high standards of Corporate Governance and stakeholder'sresponsibility.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading pursuant toSEBI (Prohibition & Insider Trading) Regulation 2015 with a view to regulate tradingin securities by the Directors and designated employees of the Company.
The Code requires pre-clearance for dealing in the Company's shares and prohibits thepurchase or sale of Company shares by the Directors and the designated employees while inpossession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window' is closed. The Board is responsible forimplementation of the code. All Directors and the designated employees have confirmedcompliance with the code.
Five meetings of the Board of Directors were held during the financial year 2017-18.Details of the composition of the Board and its committees and of the meeting heldattendance of the Directors of such meeting and other relevant details are provided in theCorporate Governance Report.
RISK MANAGEMENT POLICY
The composition of the Risk Management Committee is not applicable to your Company.However the Company has adopted a Risk Management policy in accordance with theprovisions of the Act and Regulation 17 (9) of LODR. It establishes various levels ofaccountability and overview within the Company while vesting identified managers withresponsibility for each significant risk.
DETAILS OF SIGNIFICANT & MATERIAL ORDERS IMPACTING THE GOING CONCERN STATUS/COMPANY'S OPERATIONS IN FUTURE
No significant material orders have been passed by the regulators or courts ortribunals impacting the going concern status of the Company or Company's operations infuture.
THE INFORMATION REQUIRED PURSUANT TO SECTION 197 READ WITH RULE 5 OF THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 IN RESPECT OF EMPLOYEESOF THE COMPANY.
Remuneration of KMP and sitting fees paid to Independent Directors are provided in AnnexureB i.e. Extract of Annual Return Form No. MGT- 9. There was no employee of the Companyexcept Executive Directors employed through out the year who was in receipt of theremuneration exceeding Rs. 1.02 Crore per annum.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the year under review as stipulated underRegulation 34 (2)(e) of LODR is enclosed as Annexure E and forms part of thisreport.
Industrial relations have remained cordial throughout the year in the Company at all ofits units.
ENVIRONMENT HEALTH SAFETY AND SOCIAL RESPONSIBILITY
Your Company is committed in maintaining the highest standards of environmentcompliances and therefore adopted a systematic approach towards environment management byembedding a vision of being an 'Injury Free' and Zero Environment Incident'organisation. Over the past many years your Company has been progressing well in terms ofreducing injury frequency rates and has improved the safety records.
Your Company is environment-conscious and committed to making a positive contributionto the communities where it operates. The Company has been proactively pursuing measuresand reaching out to the communities surrounding the areas of its operations by extendingsupport and lending a helping hand to some very credible social institutions that arecommitted to address social causes.
Your Company has been certified for Occupation Health and Safety (OHSAS) 18001:2007from Bureau Veritas during FY 2016-17 which is valid for upto 01st May 2019.
CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION AS WELL AS FOREIGN EXCHANGE EARNINGS ANDOUTGO
The Company thanks to its collaborations and outward looking approach is constantlyabsorbing new technology. This is contributing towards both improving the manufacturingprocess and improving our reputation with our customers as we bring technology in ourproducts.
Information in respect of Conservation of energy & foreign exchange earnings andoutgo is enclosed in Annexure F.
COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors senior management and theirremuneration.
The requisite details as required under Section 134 (3)(e) and Section 178(3) & (4)of the Act are annexed as Annexure G to this report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY IFANY DURING THE PERIOD FROM MARCH 31 2018 TO THE DATE OF THE REPORT
There has been no material change/ commitment affecting the financial position of theCompany during the period from the end of the financial year on March 31 2018 to the dateof the Report.
STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS
In terms of clause no. 9 of revised SS-1 (Revised Secretarial Standards on Meetings ofBoard of Directors effective from 01.10.2017) your Directors state that the Company hasbeen compliant to applicable Secretarial Standards during the year under review.
The Board of Directors express their sincere thanks to all of its Stakeholdersincluding inter alia Suppliers Vendors Investors and Bankers and appreciation to allits customers for their consistent abiding support throughout the year.
Your Company also records its appreciation of the contributions made by employees atall levels. Their commitment cooperation and support are indeed the backbone of allendeavors of the Company.
The Company would like to acknowledge Government of India Customs and ExciseDepartments Income Tax Department Industrial
& Labour Departments Government of Gujarat Government of Haryana Government ofUttarakhand and other government agencies for the support; the Company has been receivingover the years and is looking forward to their continued support/guidance in times tocome.
| ||For and on behalf of the Board of Directors |
| ||Munjal Auto Industries Limited |
| ||Sudhir Kumar Munjal |
|Date : May 282018 ||Chairman & Managing Director |
|Place : Waghodia Vadodara ||DIN : 00084080 |