Munjal Auto Industries Limited
Your Directors have pleasure in presenting the Company's 32nd Annual Reporttogether with the Audited Financial Statements for the year ended March 31 2017.
The Company's financial performance for the year ended March 31 2017 is summarizedbelow: -
| || ||(Rs. in Lacs) |
|Year ended March 31 ||2016-2017 ||2015-2016 |
|Sales & Other Income ||93289.78 ||97162.76 |
|Profit before Finance Cost & Depreciation ||6370.29 ||4931.18 |
|Depreciation ||(1741.27) ||(1666.10) |
|Finance Cost ||(547.63) ||(794.29) |
|Profit before Taxation ||4081.39 ||2470.79 |
|Provision for Taxation (Deferred &Current) ||(904.72) ||(463.18) |
|Profit after Tax ||3176.66 ||2007.61 |
|Surplus brought Forward ||18008.12 ||16843.02 |
|Surplus carried to Balance Sheet ||21184.78 ||18850.63 |
Your Directors have pleasure to recommend a final dividend of 100% i.e. Rs. 2/- onequity share of Rs. 2/- each for the fiscal year ended 31st March 2017. Thedividend if approved by the Members in the ensuing Annual General Meeting would absorbRs.1000 lacs exclusive of Dividend Distribution Tax (Rs.700 lacs for Interim Dividend forFY 15-16) out of the distributable profits available.
The Register of Members and Share Transfer Books will remain closed from June 26 2017to June 30 2017 (both days inclusive).
The Company was able to maintain sales turnover of Rs. 922.50 Crore during the year.Profit before tax and profit after tax were Rs. 40.81 Crores and Rs. 31.77 Croresrespectively during the year as against Rs. 24.71 Crores and Rs. 20.08 Crores respectivelyin the previous year.
Your Company's sales are marginally down this year mainly due to impact ofdemonetization on the customer industry.
CAPACITY UTILIZATION & PLANT OPERATIONS
All four units of the Company at Waghodia in Gujarat Bawal as well as Dharuhera inHaryana and Haridwar in Uttarakhand are running well and continue to operate at asatisfactory level of efficiency.
NO CHANGE IN SHARE CAPITAL
The paid up equity capital as on March 31 2017 stands at Rs. 10 Crore consisting of 5Crore Equity Shares of Rs.2/- each with no change as compared to previous year.
ISSUE OF BONUS SHARES
Your Directors at their meeting held on 22nd May 2017 have recommended aBonus Issue of shares in the ratio of one fully paid up Bonus Equity share of Rs. 2/- eachfor every one fully paid up equity share of Rs.2/- each as on the record date to bedetermined. The Bonus Issue is subject to the approval of members at the ensuing AnnualGeneral Meeting.
APPOINTMENT/ CESSATION OF DIRECTORS OR KMP
In terms of section 152 and other applicable provisions if any of the Companies Act2013 (the Act') Mr. Anuj Munjal retires by rotation at this Annual General Meetingand being eligible offers himself for re-appointment.
Your Board recommends re-appointment of Mr. Anuj Munjal retiring at the forthcomingAGM of Company in terms Section 152 of the Act who in opinion of the Board fulfills theconditions for reappointment specified in the Act and rules made thereunder.
Pursuant to Section 134(3)(p) and other applicable provisions if any of the Act andRegulation 17(10) and other applicable regulations if any of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (LODR') the performanceof the Board as a whole and individual Directors was evaluated by the Board seekingrelevant inputs from all the Directors. The Nomination and Remuneration Committee (NRC)reviewed the performance of the individual Directors. A separate meeting of IndependentDirectors was also held to review the performance of Non-Independent Directorsperformance of the Board as a whole and performance of the Chairperson of the Company.
The performanceof the Board as awhole and even Directors individually was found to besatisfactory.
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 andadhere 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.
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 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 Rs. 66.30 lacs out of Rs. 82.46 lacs to be spent towards CSR expenditure and couldnot spend Rs. 15.96 lacs in terms of Section 135 of the Act.
The requisite details (in a matrix form) on CSR activities pursuant to Section 135 ofthe Act and as per Annexure attached to the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 are annexed as Annexure A to this Report.
POLICY RELATING TO ANTI SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has in place 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 there under and redressal ofcomplaints of sexual harassment at work place. All employees (permanent contractualtemporary and trainees) are supposed to adhere to and conduct themselves as prescribed inthis Policy. During the year under review no complaint was reported to the Board.
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.
PARTICULARS OF LOANS GUARANTEES SECURITIES OR 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 the applicable accounting standards havebeen followed along with proper explanation relating 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 at the end of the financial year and ofthe profit and loss of the Company for the year 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 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 withinthe meaning of section 188 of Companies Act 2013.
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. Neither the Company has anysubsidiary/associate/joint venture Company nor any other Company has become subsidiary/Associate/ Joint Venture Company of the Company during the year.
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 whichit has been taken to cover public liability/ties if any arising out of any industrialaccidents. We have also covered the Directors' and Officers' liability under the Act tomeet with any eventuality.
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 01 2016. The aforesaid ratingare valid till June 29 2017.
The auditors Vakil Jain & Hindocha Chartered Accountants retire at the ensuingAnnual General Meeting. Pursuant to Section 139 of the Act read with the Companies (Auditand Auditors) Rules2014 and in line with recommendation made by Audit Committee theBoard of Directors has recommended appointment of K C Mehta & Co. CharteredAccountants Vadodara as Auditors in place of Vakil Jain & Hindocha CharteredAccountant to the members in forthcoming Annual General Meeting. They have furnished theirconsent and requisite certificate pursuant to the Act in respect of their proposedappointment.
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 2017-18 by the Board ofDirectors upon recommendation of the Audit Committee.
Pursuant to provisions of section 204 of the Act read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has appointed M/sDevesh Vimal & Co. Company Secretaries in practice to undertake the Secretarial Auditof the Company for FY 2017-18. The Secretarial Audit Report for the financial year endedMarch 31 2017 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. It also approves 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 read with Regulation 20 of LODR. The Committee looks after thestakeholders grievances and redressal of investors' 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 Auditors under Section 143(12) ofthe Act and Rules framed thereunder either to the Company or to the Central Government.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in form MGT-9 is annexed herewith as Annexure B.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to themembers of the Board and all employees in the course of day to day business operations ofthe Company. The code laid down by the Board is known as "code of businessconduct" which forms an Appendix to the Code.
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 and indealing with stakeholders. All the Board Members and the Senior Management personnel haveconfirmed compliance with the Code. All Management personnel are being providedappropriate training in this regard.
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 stakeholdersresponsibility.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading incompliance with SEBI (Prohibition & Insider Trading) Regulation 2015 with a view toregulating trading in 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 shares of the Company by the Directors and the designated employeeswhile in possession of unpublished price sensitive information in relation to the Companyand during the period when the Trading Window' is closed. The Board is responsiblefor implementation of the code. All Directors and the designated employees have confirmedcompliance with the code.
Four meetings of the Board of Directors were held during the year. Details of thecomposition of the Board and its committees and of the meeting held attendance of theDirectors of such meeting and other relevant details are provided in the CorporateGovernance 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 AnnexureD 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. 60 Lacs per annuam.
MANAGEMEMNT 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 itsall units.
ENVIRONMENT HEALTH SAFETY AND SOCIAL RESPONSIBILITY
Your Company is committed in maintaining the highest standards of environmentcompliances and therefore has adopted a systematic approach towards environment managementby embedding 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 2012-13 which is valid for three years. Your Company iscommitted to safety and occupational health as well as compliance with applicable safetyand occupational health legislation regulations and other requirements. All incidents/accidents are investigated and analysed to prevent reoccurrence and improve upon safetyrecord.
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 latest possibletechnology in our products.
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 Committee inplace 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 31ST MARCH 2017 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 31st March2017 to the date of the Report.
The Company would like to thank all of its Stakeholders including inter aliaSuppliers Vendors Investors and Bankers and appreciation to all its customers for theirconsistent 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 |
| ||Munjal Auto Industries Limited |
| ||Sudhir Kumar Munjal |
|Date : May 222017 ||Chairman & Managing Director |
|Place : Gurugram ||DIN : 00084080 |