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Munjal Showa Ltd.

BSE: 520043 Sector: Auto
BSE 00:00 | 14 Jun 160.80 -1.20






NSE 00:00 | 14 Jun 160.65 -1.15






OPEN 163.00
VOLUME 11221
52-Week high 176.45
52-Week low 86.20
P/E 20.94
Mkt Cap.(Rs cr) 643
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 163.00
CLOSE 162.00
VOLUME 11221
52-Week high 176.45
52-Week low 86.20
P/E 20.94
Mkt Cap.(Rs cr) 643
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Munjal Showa Ltd. (MUNJALSHOW) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 35th Board Report on the businessand operations of the Company together with the Audited Financial Statements for thefinancial year ended March 31 2020.


The salient features of the Company's financial performance for the year ended March31 2020 are as follows:

(Rs. In lakhs)

Year Ended 31.03.20 Year Ended 31.03.19
Sales and other Income (Net of GST) 131277.29 169269.32
Profit before Interest Depreciation & Tax 7925.32 11158.80
Finance Cost 42.53 10.32
Depreciation 2037.66 2594.18
Profit before Tax 5845.13 8554.30
Tax Expenses
-Current tax 1466.89 2793.61
-Deferred tax 124.54 (498.81)
Total Tax Expense 1591.43 2294.80
Profit after Tax 4253.70 6259.50
Other comprehensive income net of taxes 108.39 10.77
Total Comprehensive Income 4362.09 6270.27
Surplus brought forward including items of other comprehensive income 30355.01 28254.47
Profit available for appropriation 34717.10 34524.74
Dividend payment 1799.78 1799.78
Dividend Tax 369.95 369.95
Transfer to General Reserve 2000.00 2000.00
Surplus available including items of other comprehensive income 32547.37 30355.01


The Company has achieved a sales turnover (Net of GST) including other income of Rs.131277.29 lakhs as compared to Rs. 169269.32 lakhs in the previous year. The profitbefore tax in the current year was at Rs. 5845.13 lakhs as compared to Rs. 8554.30 lakhsin the previous year.

The State of affairs of the Company is detailed in the "Management Discussion& Analysis Report" annexed as Annexure-A and forms part of this report.


The Company's financial discipline and prudence is reflected in the credit ratingsascribed by CRISIL rating agency as given below:

Long-Term Rating AA/Negative
Short-Term Rating CRISIL A1+
( crores)
INR 68.5 Long-Term Loans AA/Negative
INR 30 Cash Credit AA/Negative
INR 43.5 Letter of Credit CRISIL A1+
INR 2.25 Bank Guarantee CRISIL A1+
INR 6 Commercial Paper CRISIL A1+


The Board has transferred an amount of Rs. 2000/- lakhs to General Reserve for thefinancial year ended March 31 2020 before recommending the dividend. The balance amountof Rs.32547.37 lakhs (Previous year Rs. 30355.01 lakhs) will be retained as surplus inthe statement of Profit and Loss.


Your Directors are pleased to recommend a dividend of 225% (i.e. Rs.4.50 per equityshare of Rs. 2/- each fully paid up) on the paid-up Equity Share Capital of the Companyfor the financial year ended March 31 2020 amounting to Rs. 1799.78 lakhs. In view ofthe changes made under the Income-tax Act 1961 by the Finance Act 2020 dividends paidor distributed by the Company shall be taxable in the hands of the Shareholders. YourCompany shall accordingly make the payment of the Final Dividend after deduction of taxat source. The dividend if approved by the shareholders at the 35th AnnualGeneral Meeting shall be payable to the shareholders registered in the books of theCompany and the beneficial owners whose names are furnished by the depositories as on theRecord Date i.e. August 28 2020.


The authorized share capital of the Company is Rs. 150000000 (Rupees Fifteen Croresonly) divided into 75000000 (Seven Crores Fifty Lakh) equity shares of face value ofRs. 2(Rupees Two) each. The paid-up Share Capital of the Company as on March 31 2020 wasRs. 79990000 (Rupees Seven Crore Ninety-Nine Lakhs Ninety Thousand only) divided into39995000 equity shares of face value of Rs. 2(Rupees Two) each. The Company hasreceived in-principle approval on 07.01.2020 for listing of 14000 equity shares on theexchanges which were earlier kept in abeyance.

During the year under review the Company has not issued any shares with differentialvoting rights nor granted any stock options or sweat equity shares. The Company has notissued or repaid any Debentures Preference Shares Bonds and Security during thefinancial year. None of the Directors of the Company hold any shares or security of theCompany except Mr. Surinder Kumar Mehta who holds 2000 equity shares of the Companyjointly with his wife Mrs. Santosh Mehta. The Company does not have any Debentures orPreferential Shares as on March 31 2020.


Cash and cash equivalent as at March 31 2020 was Rs. 304.20 lakhs. The Companycontinues to focus on judicious management of its working capital. Receivablesinventories and other working capital parameters were kept under strict check throughcontinuous monitoring.


The Company has neither given any guarantee nor provided any security covered under theprovision of Section 186 of the Companies Act 2013 ("the Act"). The Company hasmade investments in Mutual funds Alternative Investments Funds Commercial Papers &Market linked debentures and has given loans/advances to its vendors in the ordinarycourse of business. The details of investments made and loans given are provided in Noteno. 5A and 5B of the financial statements for the year ended March 31 2020.


Your Company has been practicing the principles of good Corporate Governance over theyears. The Company has complied with the Corporate Governance requirements as stipulatedunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI (LODR) Regulations 2015)). A separate section on Corporate Governance andManagement Discussion & Analysis Report along with a Certificate of the Auditors ofyour Company confirming the compliance of Corporate Governance is annexed as Annexure-Band forms an integral part of this Report.

In terms of Regulation 17(8) of SEBI (LODR) Regulations 2015 a Certificate signed byChief Executive Officer and Chief Financial Officer is annexed as Annexure-C and forms anintegral part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all theDirectors and members of Senior Management of your Company. The Board of Directorssupports the broad principles of Corporate Governance. In addition to the basic governanceissues the Board also lays strong emphasis on transparency accountability and integrity.


During the Financial Year under review your Company has transferred unpaid/ unclaimeddividend amounting to Rs. 6.45 lakhs for financial Year 2011-12 to the Investor Educationand Protection Fund (IEPF) of the Central Government of India.

Further the Company has also transferred Rs. 3.87 lakhs on September 03 2019 forfinancial year 2018-19 being the dividend declared on shares already transferred to IEPF.


Pursuant to Section 139 of the Act read with the Companies (Audit and Auditors) Rules2014 the Members of the Company in 32nd Annual General Meeting approved theappointment of M/s Deloitte Haskins & Sells LLP Chartered Accountants (ICAIRegistration No. - 117366W/W-100018) as the Statutory Auditors of the Company for theperiod of 5 years who shall hold office up to the conclusion of the 37thAnnual General Meeting of the Company.

There are no qualifications reservation adverse remark observations comments ordisclaimer given by the Auditors in their Report. The Report given by the StatutoryAuditors M/s Deloitte Haskins & Sells LLP Chartered Accountants on the financialstatements of the Company for the financial year 2019-20 is part of the Annual Report andself explanatory.

Further no fraud has been reported by the Statutory Auditors and the SecretarialAuditor to the Audit Committee in terms of Section 143(12) of the Act during the financialyear.


Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company had appointed M/s SatyenderKumar & Associates a proprietorship firm of Company Secretary to conduct theSecretarial Audit of the Company for the financial year 2019-20. The Report given by theSecretarial Auditor is annexed as Annexure-D and forms an integral part of this report.There are no qualifications reservation adverse remark observations comments ordisclaimer given by the Auditors in their Report.

The Board has re-appointed M/s Satyender Kumar & Associates Company Secretary (COPNo. 5189) as the Secretarial Auditors of the Company for the financial year 2020-21. YourCompany had received their written consent that the appointment will be in accordance withthe applicable provisions of the Act and rules framed thereunder.


The details pursuant to Section 134(3)(m) of the Act read with Rule 8 of the Companies(Accounts) Rules 2014 regarding Conservation of Energy Technology Absorption and ForeignExchange earnings & outgo is annexed as Annexure-E and forms an integral part of thisreport.


In terms of provisions of Section 92 134(3)(a) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 the extract of annual return of theCompany in Form MGT 9 may be accessed on the Company's website i.e.


The statement of particulars of employees as per Section 197 of the Act read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forthe year ended March 31 2020 is annexed as Annexure-F and forms an integral part of thisreport.


In terms of provisions of Section 135 of the Act and the Companies (Corporate SocialResponsibility Policy) Rules 2014 the Corporate Social Responsibility (hereinafterreferred as 'CSR') Committee has formulated a CSR Policy indicating the activities to beundertaken by the Company. The constitution of CSR Committee is disclosed in CorporateGovernance Report which forms an integral part of Annual Report.

The CSR policy may be accessed on the Company's website i.e. uploads/2020/07/CSR-Policy.pdf

As part of its initiatives under CSR the Company has undertaken projects in the areasof Education Health Water and Sanitation. These projects are largely in accordance withSchedule VII of the Act and CSR Policy of the Company. The annual report on CSR activitiesas required under the Companies (CSR Policy) Rules 2014 is set out as Annexure-G andforms an integral part of this report.

Munjal Showa Limited considers corporate social responsibility as an integral part ofits business activities and endeavors to utilize the allocated CSR budget for the benefitof the society.

The Company has incurred the CSR expenditure of Rs. 192.47 lakhs during the financialyear 2019-20 being about 107% of Rs. 180.19 lakhs to be spent during the financial year.The CSR activities of the Company are approved by the Board and few new initiatives havebeen proposed that may be considered in future. For the subsequent years the Companyendeavors to spend the budgeted CSR expenditure in accordance with the statutoryrequirements.


There are no material changes and commitments affecting the financial position of theCompany that have occurred between the end of financial year and the date of the report.


We believe that "waste is a precious resource kept in a wrong place". Wefurther believe that "there is no waste as per the law of the nature" Hence fromthe solid waste like Iron & Steel from old scrap machines we are collecting the rawmaterial and we are manufacturing "Lean and Low cost" machines with a philosophyof Easy to run Easy to maintain Easy to clean and Zero accident by meeting all thequality and productivity standard. Everything is done in-house starting from design up tofinishing of the machine. This concept of reuse of metallic waste is highly appreciated byCII ACMA and international experts of our Japanese Collaborator. By Regular training forworkers and staff to prevent accident related to mechanical electrical chemicalphysiological and psychological safety the Company has made "Zero incidents" asacceptable standard. Hazard Identification and Risk Assessment (HIRA) is our primary focusto mitigate and prevent the abnormalities. Because of our dedicated and committed effortsin continual improvement of Safety Health and Environment area we had received twoNational Awards from Ministry of Labour and Employment Government of India for safety.The Company is a regular member of Haryana Environment Management Society.

The Company has started Green Vendor Development Programme (GVDP) since 2009-10. Theaim of the project is to conserve water and energy minimize generation of wasteterminate hazardous chemicals with non-hazardous chemicals minimize carbon foot print andgenerate pollution prevention awareness throughout the plant and to achieve 100 percentlegal compliance. The Company is rigorously improving to create a better place for ournext generation.


The Company has taken up the journey of Total Productive Maintenance (TPM) with thehelp of JIPM (Japan Institute of Plant Maintenance) Japan and CII TPM Club India. Majorobjectives of TPM are to increase (PQCDSME) Productivity to improve Quality to reduceCosts to ensure in time Delivery to increase Safety to increase profitability to buildMorale and to protect environment by formation of small cross functional work groups andto improve overall Plant efficiency. The other objectives are to procure and installmaintenance free plant and machinery; and to achieve zero defects zero break down zerolosses and zero accidents. In nutshell TPM is to identify 21 types of Losses &converts them into Profit. We are able to reduce Repair & Maintenance Cost.

We have achieved TPM Excellency Award "Category A" for Gurugram and ManesarPlants in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance.We have been awarded by JIPM TPM Excellence Consistency Award for both Gurugram &Manesar Plants in the year 2013. Now we have started TPM Journey in our Haridwar Plantalso & we had TPM Kick-Off Ceremony in November 2015.


We have clubbed TPM with lean manufacturing system. Through Lean we are able to focus& control 7 types of wastes. Our Company has conducted Lean Manufacturing System(Value Stream Mapping) Workshop through JMAC Japan. We have converted huge &complicated machines by using TPM & Lean Concepts. These machines consume very lessElectricity occupy less space take very less inputs like consumables manpower toolsoils compressed air less set-up time less cycle time etc. These machines are 10SMachines (Safe Simple Small Slim Speed Smart Sturdy Superb Sushil & Sunder)and help us in reducing Cost of manufacturing. So far we are able to manufacture more than850 machines In-house with Lean TPM concept inclusive of many CNC Machines.


Your Company's manufacturing facilities are located at Gurugram Haridwar and Manesarand we continue to maintain and uphold the prestigious ISO/TS 16949:2009 ISO 14001:2015and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certificationsfrom reputed leading Indian and International Certification Institutions. Thesecertifications help in continuous improvements besides emphasis being laid on preventionof defects reduction of wastes prevention of near misses and to ensure maximizedcustomer delight.


The shares of your Company are listed on the National Stock Exchange of India Limited(NSE) and BSE Limited (BSE) and pursuant to Clause C(9)(d) of Schedule V of SEBI (LODR)Regulations 2015 the annual Listing fees for the year 202021 has been paid to them wellbefore the due date i.e. April 30 2020. Annual Custody/Issuer fee for the year 2020-21has been paid by the Company to the depositories viz. NSDL and CDSL.


Promoting Human Resources management is the strength of our Company and over a periodof time we have changed our vision of employees from "Human ResourcesManagement" to "Human Capital Management".

Your Company believes that employees form the fulcrum of growth and differentiation forthe organization. The Company recognizes that people are its principal assets and that itscontinued growth is dependent upon the Company's ability to attract and retain qualitypeople. The total headcounts were 2531 at the end of the year as compared to 3097 of theprevious year. The Company encourages longterm commitment to the Company by rewarding itspeople for the opportunities they create and the value generated for customers andshareholders. The Company conducts several employee engagement and training Programmes toupgrade the skills of the workforce and generate specialist in quality maintenance andmanufacturing. As desired by the Government of India we have started NEEM Scheme and NAPSScheme in order to enhance the technical skill level of our unemployed youths.

Many initiatives have been taken to support business through organizational efficiencyprocess change support and various employee engagement Programmes which have helped theorganization achieve higher productivity levels. A significant effort has also beenundertaken to develop leadership as well as technical/ functional capabilities in order tomeet future talent requirement.


The Company has a Risk Management Policy to identify evaluate business risks andopportunities. This framework seeks to create transparency minimize adverse impact on thebusiness objectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting.

The Company regularly conducts a study to develop a comprehensive 360 view on theopportunities risks and threats to the business. These include areas such as markettrends new competition changing customer preferences disruptions in supplies productdevelopment talent management etc.

The Board has identified following risks:

Intensifying Competition Declining margins Imposition of strict environmental /safety / regulatory regulations Increase in raw material/component prices Dependence onCollaborators Over dependence on limited user segment base Economic downturn Risk ofnatural or manmade disasters Product liability / recall Single vendor dependence forcritical components Investment risks in expansion projects Sales Catering only toDomestic Market Over Dependence on few customers base Retention & development ofpersonnel and Inappropriate addressing of customer grievances. We through qualitativeproducts and brand image import only in case of cost advantage regular improvement inproductivity controls over overhead and Labour cost through a robust control ofapprovals internal audit of environmental safety and regulatory compliance localizationof components insurance TS 16949 certification TPM certification regular developmentof alternate vendors where only single source capturing customer complaints and responseto them have effective risk mitigating plans.


The Company has established a vigil mechanism for the Directors and Employees of theCompany by adopting the Whistle Blower Policy to report about the genuine concernsunethical behaviour fraud or violation of Company's Code of Conduct. Your Company herebyaffirms that no Director/ Employee have been denied access to the Chairman of the AuditCommittee. The details of the Whistle Blower Policy is explained in the CorporateGovernance Report which form an integral part of this Report and is also posted on thewebsite of the Company.

The website link is given below:



During the year all the recommendations made by the Audit Committee were accepted bythe Board.


There is no change in the nature of the business of the Company during the FinancialYear 2019-20.


During the financial year 2019-20 Mr. Ashok Kumar Munjal and Mr. Shigeki KobayashiDirectors were liable to retire by rotation and being eligible had offered them forre-appointment before the shareholders at 34th Annual General Meeting (AGM) ofthe Company. The shareholders confirmed their appointment at the 34th AGM ofthe Company.

At the 34th AGM of the Company the members confirmed the appointment of Ms.Geeta Anand as Non-Executive Independent Director of the Company to hold office for a termof five (5) consecutive years with effect from November 03 2018.

Mr. Yasuhiro Yamamoto Non-Executive - Non Independent Director is liable to retire byrotation at the 35th AGM and being eligible he has offered himself forre-appointment.

At the 34th AGM of the Company the members approved the variation in theterms of appointment of Mr. Yogesh Chander Munjal Managing Director and Mr. ShigekiKobayashi Joint Managing Director of the Company w.e.f. September 01 2019. The Board hasproposed variation in the terms of appointment of Mr. Shigeki Kobayashi Joint ManagingDirector of the Company before the members at the 35th AGM of the Company.

Pursuant to the provisions of the SEBI (LODR) Regulations 2015 and the Act theprofiles of all the Directors seeking re-appointment/variation in terms of appointment atthe ensuing Annual General Meeting have been provided in the Notice of 35thAGM of the Company.

All Independent Directors have given individual declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Act and SEBI (LODR)Regulations 2015. All the Independent Directors have registered themselves under databank of Independent Directors created and maintained by Indian Institute of CorporateAffairs.

All Directors of the Company have also given declarations that they are not debarredfrom holding the office of Director by virtue of any SEBI order or any other suchstatutory authority as required under the Circular dated 20th June 2018 issued by BSELimited and National Stock Exchange of India Limited.

The Company appreciates the dedicated and valuable guidance given by all the Directorsof the Company.


The Company has several Committees which have been established in compliance with therequirement of the relevant provisions of applicable laws and statutes. As on March 312020 the Board has five committees: The Audit Committee Nomination and RemunerationCommittee Corporate Social Responsibility Committee Share Transfer/ StakeholdersRelationship Committee and Risk Management Committee (non-mandatory committee). A detailednote on the composition of the Board and its committees is provided in the CorporateGovernance Report which forms integral part of the Board Report.


During the financial year 2019-20 no Company became or ceased to be a Subsidiary/JointVenture/Associate of the Company.


Pursuant to the provisions of the Act and SEBI (LODR) Regulations 2015 the Board hascarried out an annual performance evaluation of its own the Directors individually aswell as its committees on the criteria as recommended by the Nomination and RemunerationCommittee of the Company. The manner in which the formal annual evaluation has beencarried out has been explained in the Corporate Governance Report which forms an integralpart of this report. The performance evaluation was found satisfactory.


The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection and appointment of Directors Senior Management Personnelincluding Key Management Personnel and affixing their remuneration. The salient featuresof the Nomination and Remuneration Policy are mentioned below:

• The Nomination and Remuneration Policy of the Company is designed to attractmotivate improve productivity and retain manpower by creating a congenial workenvironment encouraging initiatives personal growth team work and inculcating a senseof belongingness and involvement besides offering appropriate remuneration packages andsuperannuation benefits.

• The Committee shall comprise at least three (3) Directors all of whom shall benon-executive Directors and at least half shall be Independent.

• The Nomination and Remuneration Committee shall meet at least once in a year.

• Quorum of the meeting shall be either two members or one-third of the members ofthe committee whichever is greater including at least one independent director inattendance.

• The Role of the Committee includes: Periodically reviewing the size andcomposition of the Board to have an appropriate mix of executive and independent Directorsto maintain its independence and separate its functions of governance and management andto ensure that it is structured to make appropriate decisions with a variety ofperspectives and skills in the best interests of the Company;

• Formulate the criteria for determining qualifications positive attributes andindependence of a Director and recommend to the Board relating to the remuneration forthe Director key managerial personnel and other employees.

• Establishing and reviewing Board KMP and Senior Management succession plans inorder to ensure and maintain an appropriate balance of skills experience and expertise onthe Board and Senior Management.

• The Board as per the criteria approved by the Nomination and RemunerationCommittee shall carry out evaluation of performance of its own its committees andindividual Directors.

During the Financial Year 2019-20 certain modifications in the policy were made andapproved by the Board of Directors in their meeting held on May 30 2019 pursuant toamendments in SEBI (LODR) Regulations 2015. The revised Nomination and RemunerationPolicy is available on the website of the Company at: uploads/2020/07/NRC-Policy Updated24.07.2020.pdf

The details of remuneration under Section 197 of the Companies Act 2013 paid toDirectors are given in point no. IV of Corporate Governance Report which forms integralpart of this Report.


The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors.

The Board Diversity Policy is available on our website at: uploads/2016/02/Boards-Diversitv-Policv.pdf


A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe financial year four (4)

Board Meetings were convened and held on May 30 2019 July 312019 November 06 2019and January 28 2020. The details of Board members who have attended the meetings aregiven in the Corporate Governance Report forming part of this Report. The intervening gapbetween two consecutive Board Meetings was within the maximum limit as prescribed underthe Act and SEBI (LODR) Regulations 2015. (Please refer point no. I & II of CorporateGovernance Report)


Your Directors make the following statement in terms of Section 134(3)(c) & (5) ofthe Act which is to the best of their knowledge and belief and according to theinformation and explanations obtained by them:

a. In the preparation of the annual accounts for the Financial Year ended March 312020 the applicable accounting standards had been followed and no material departureswere made from the same;

b. Appropriate accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end financial year ended March 31 2020 andof the profits of your Company for that period;

c. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of yourCompany and for preventing and detecting fraud and other irregularities;

d. The annual accounts have been prepared on a going concern basis;

e. They have laid down Internal Financial Controls to be followed by the Company andthat such Internal Financial Controls are adequate and were operating effectively and

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


All transactions entered into with Related Parties as defined under the Act and SEBI(LODR) Regulations 2015 during the financial year 2019-20 were in the ordinary course ofbusiness and on an arm's length pricing basis and do not attract the provisions of Section188 of the Act. Hence requirement of Form AOC-2 as required under Section 188(1) of theAct is not applicable to the Company.

All transactions with related parties were placed before Audit Committee and committeehas also given omnibus approval for repetitive and foreseen transactions. The Board alsonoted these related party transactions on quarterly basis. The details of related partytransactions are given in note number 32 of Audited Financial Statements.

The Company has developed a policy on Related Party Transactions. The policy on RelatedParty Transactions as approved by the Board is uploaded on the Company's website and thelink of such policy is given below:


The provisions of Section 148 of the Companies Act 2013 is not applicable to theCompany so the Company is not required to maintain cost records under the aforesaidsection.


The Company has a comprehensive system of internal control to safeguard the Company'sassets against any loss from unauthorized use and ensure proper authorization of financialtransactions.

The Company has internal control systems commensurate with the size and nature of thebusiness and has experienced personnel positioned adequately in the organization to ensureinternal control processes and compliances. The Company takes abundant care in designingreviewing and monitoring regularly the working of internal control systems and theircompliances for all important financial internal control processes. The Audit findings arereported on quarterly basis to the Audit Committee of the Board headed by a Non-executiveIndependent Director.

The Company has robust ERP systems based on SAP platform. This ensures high degree ofsystems-based checks and controls.

The Company maintains a system of internal controls designed to provide a high degreeof assurance regarding the effectiveness and efficiency of operations the reliability offinancial controls and compliance with laws and regulations.

The Act has introduced under Section 143(3)(i) stating that the statutory auditors ofthe Company shall include in his audit report whether the Company has adequate internalfinancial controls system in place and the operating effectiveness of such controls inaddition to the reporting by Board of Directors in director's responsibility statement.The concept of reporting on internal financial controls is still new in India. This newreporting requirement has thrown up many challenges. The Company has developed theinternal financial control processes and that was vetted by the internal auditors duringthe year. The same has also been verified by the statutory auditors and who have reportedthat all the material Internal financial controls exist during the financial year 2019-20.

The Company has developed a compliance tool for the purpose of legal compliance of allthe applicable Acts to the Company.


The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards issued by the Institute of Company Secretaries ofIndia and that such systems are adequate and operating effectively.


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. Details relating to deposits covered under Chapter V of the Act - The Company didnot invite/accept any deposit within the meaning of Chapter V of the Act and the rulesmade thereunder.

2. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

sexual harassment of women at workplace


The Company has in place an Policy on prevention of Sexual Harassment at workplace inline with the requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013. Internal Complaints Committee (ICC) has been setup to redress complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this policy.

Your Directors further state that during the year under review no complaints werereceived pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

Various workshops and awareness Programmes w.r.t. prevention of sexual harassment hasbeen carried out during the F.Y. 2019-20.


We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (LODR) Regulations 2015mandated the formulation of certain policies for all listed companies. All our corporategovernance policies are available on website of the company i.e.

Policy Web-link
Policy for Determination of Materiality of Information or Events


Boards Diversity Policy


Corporate Social Responsibility Policy


Vigil Mechanism / Whistle Blower Policy


Nomination and Remuneration Policy


Records and Archives Management Policy


Related Party Transaction Policy


Code of Conduct for Regulating Monitoring and Reporting of Trading by Designated Persons



Code of Conduct for Directors and Senior Management Personnel


Policy on prevention of Sexual Harassment at workplace



Your Directors place on record their appreciation of the co-operation and supportextended to the Company by Government of India State Governments of Haryana andUttarakhand other local authorities bankers suppliers customers and other stakeholderswhose continued support has been a source of strength to the Company. The continueddedication and sense of commitment shown by the employees at all levels during the yeardeserve special mention.

The Directors also place on record their appreciation for the valuable assistance andguidance extended to the Company by Showa Corporation Japan and for the encouragement andassurance which our collaborator has provided from time to time for the growth anddevelopment of the Company.

The Directors also take this opportunity to express their deep gratitude for thecontinued co-operation and support received from its valued shareholders.

Management Discussion and Analysis Report

Industry Structure and Development

The Indian auto industry is recognised as a 'sunrise industry' as it has emerged as oneof the fastest growing sector over last few years.

The automobile industry in India is the world's fourth largest. India was the world'sfourth largest manufacturer of cars and seventh largest manufacturer of commercialvehicles in 2019. Indian automotive industry (including component manufacturing) isexpected to reach ' 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Indianautomobile industry received Foreign Direct Investment (FDI) worth US$ 23.89 billionbetween April 2000 and December 2019. Five per cent of total FDI inflow in India went toautomobiles sector.

Over the last decade the automobile components industry has registered a CAGR of 10.06per cent and reached US$ 56.52 billion in FY19-20 while export grew at CAGR of 8.34 percent during FY14-FY19 to touch US$ 15.17 billion in FY19-20. The auto components industryaccounted for 2.3 per cent of India's Gross Domestic Product (GDP) and 25 per cent to itsmanufacturing GDP providing employment to 50 lakh people in 2019-20.

Domestic automobile production increased at 2.36 per cent CAGR between FY16-FY20 with26.36 million vehicles manufactured in the country in FY20. Overall domestic automobilessales increased at 1.29 per cent CAGR between FY16-FY20 with 21.55 million vehicles beingsold in FY20.

Automobile export grew 14.50 per cent in FY19. It is expected to grow at a CAGR of 3.05per cent during 20162026. The government of India expects automobile sector to attract US$8-10 billion in local and foreign investment by 2023.

2019 was a challenging year for the auto industry which witnessed headwinds due to theslowing economy in last 6 years. This steep drop had caused operational hardships for manycompanies and production plans had to be reevaluated through the year to adjust to marketrequirements. Some improvement in consumer sentiment was witnessed during this festiveseason however the automobile industry has not recovered from demand contraction.

The government has come out with a few measures to help bring the industry out of thislull including a reduction in the corporate tax rate to 22% pumping of liquidity toboost the economy increase in depreciation rate by 15% for vehicle purchase and alsoprovided assurance that a scrappage policy is in the works. These interventions certainlyprovided some positive push to the subdued demand.

Government has been discussing a scrappage policy for removing old vehicles from theroad. However a scrappage policy without any incentive will not support scrappage anddemand generation. SIAM has proposed that Government announces an incentive-based vehiclescrappage policy for removal of the old and polluting vehicles registered between 1stApril 1995 and 31st March 2005 from the Indian roads. The incentive could be in the formof 50% rebate on GST 50% rebate on the road tax and 85% of the scrap value to induce thecustomers to scrap their vehicles.

Market Size

The Indian auto-components industry can be broadly classified into the organised andunorganised sectors. The organised sector caters to the Original Equipment Manufacturers(OEMs) and consists of high-value precision instruments while the un-organised sectorcomprises low-valued products and caters mostly to the aftermarket category.

Opportunities and Threats

• India is emerging as global hub for auto component sourcing

• Relative to competitors India is geographically closer to key automotivemarkets like the Middle East & Europe

• In December 2018 India pitched to boost its exports in auto components in themarket of China.

• In September 2015 Automotive Mission Plan 2016-26 was unveiled which targets afourfold growth for the sector

• Strong support for R&D & product development by establishing NATRiPcenters

• 100 per cent FDI allowed under automatic route for auto component sector

• In January 2019 The Government of India lowered the custom duty on import ofparts and components of electric vehicles to 10- 15 per cent.

• Reduction in excise duties in motor vehicles sector to spur the demand for autocomponents

Auto component manufacturers are afraid of the government's aggressive plans forelectric vehicles and it seems this transition is not in harmony with the future goals ofthe industry. Usually an internal combustion engine (ICE) of most of the cars works onmore than 2000 moving parts but the engine of an electric vehicle doesn't require morethan 20 similar parts/components.

Familiar with the imminent shift many SMEs in the auto components industry arereluctant to invest in the electric vehicle expansion plans.

No doubt an environment of fear is eclipsing the industry. But it is equally true thatthe industry is all set to become the third-largest in the world by 2025 andglobalization is considered auspicious rather than a menace.

Despite this a few of the industry players believe that the newer technology isapartheid to an age-old industry which is still enjoying a growth momentum. They assumethat once electric vehicles start replacing petrol/diesel based automobiles; there will bea sudden fall in the demand of auto components such as cylinder blocks filterstransmitters plugs etc.

Government Initiatives

The Government of India's Automotive Mission Plan (AMP) 2006-2016 has come a long wayin ensuring growth for the sector. Indian Automobile industry is expected to achieve aturnover of $300 billion by the year 2026 and will grow at a rate of CAGR 15 per cent fromits current revenue of $74 billion.

As per the Union Budget 2019-20 government moved GST council to lower the GST rate onelectric vehicles from 12 per cent to 5 per cent. Also to make electric vehicleaffordable to consumers our government will provide additional income tax deduction of '1.5 lakh (US$ 2115) on the interest paid on loans taken to purchase electric vehicles.

Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help theautomotive industry to grow and will benefit Indian economy in the following ways: -

• Contribution of auto industry in the country's GDP will rise to over 12 per cent

• Around 65 million incremental number of direct and indirect jobs will be created

• End of life Policy will be implemented for old vehicles Achievements

Following are the achievements of the government in the past four years:

• In April-September 2019 365282 units of passenger vehicles were exported fromIndia.

• The FAME - India Scheme formulated by Department of Heavy Industry led to acontinuous increase in registered OEMs and vehicle models. Also the scheme enhanced thesales of electric vehicles and about 261507 electric/hybrid vehicles were supported underthe scheme up to December 6 2018. In February 2019 the Government of India approved theFAME-II scheme with a fund requirement of ' 10000 crore (US$ 1.39 billion) for FY20-22.

• Under National Automotive Testing and R&D Infrastructure Project (NATRiP)various facilities including passive safety labs comprising of crash core facility andcrash instrumentations including dummies were established at ICAT-Manesar & ARAI-Pune

• To give a fresh thrust to e-mobility in public transport Department of HeavyIndustry announced the launch of public & shared mobility based on electricpowertrain.

Road Ahead

The rapidly globalizing world is opening up newer avenues for the transportationindustry especially while it makes a shift towards electric electronic and hybrid carswhich are deemed more efficient safe and reliable modes of transportation. Over the nextdecade this will lead to newer verticals and opportunities for auto-componentmanufacturers who would need to adapt to the change via systematic research anddevelopment.

National Electric Mobility Mission Plan aims at achieving sales of 6-7 million units ofhybrid and electric vehicles by 2020. As per Automobile Component ManufacturersAssociation (ACMA) forecasts automobile component exports from India are expected toreach US$ 80 billion by 2026.

The Indian auto-components industry is set to become the third largest in the world by2025. Indian auto-component makers are well positioned to benefit from the globalizationof the sector as exports potential could be increased by up to US$ 30 billion by 2021.

Product Wise Performance

All products of the Company come under single primary business segment i.e. ShockAbsorber. Its variants are Front Forks Rear Cushions Struts and Gas Spring/Rear DoorLifters etc. Therefore requirement for analyzing segment- wise or product wiseperformance does not arise.


The auto component manufacturing industry in India is pegged at 3.5 lakh crore in FY2018 and the industry is poised to grow 4 times by 2026. However in the absence of awell-defined road map for the automobile industry the future of the auto componentsegment looks bleak with disastrous consequences for many of the players. The industrywill not witness growth if it continues to follow a business as usual scenario.

The possible transition of the automobile industry towards hybrids and electricvehicles will lead to disruption in the overall automotive market landscape which willalso influence the product portfolios of auto component manufacturers.The alignment andthe pace of this alignment to the anticipated new automotive landscape will be key forauto component manufacturers to stay relevant survive disruption and grow over the nextmultiple years.

This alignment will see the rationalization of the product portfolio and evenconsolidation in different product segments in the auto component manufacturing pace.Recent move of Bosch to hive off its starter and generator division to SEG indicates thatthe company anticipates pressure on the legacy components in the realm of adoption of newtechnology and also regulatory push to embrace stringent emission norms in the mobilitysector.

Thousands of auto component makers and aftermarket players risk shutting down in thenext 8-10 years as they are ill-prepared for a future where new and disruptivetechnologies like electric vehicles and autonomous or self-driving cars take over theroads. As new ideas and technologies in the automobile sector come to the fore every daythe $51 billion Indian auto component industry is waiting for the government or one of itsagencies to draw up a detailed road map on the future of mobility. Unless there is someclarity on the automakers' technology play in India and the development of the ecosystemthat goes along with it through some well-defined policies and notifications both theauto and component makers will continue to live in a state of uncertainty.

Nearly 50% of the domestic auto component players are either making engine parts or thetransmission drive which will have no place in an electric car which runs on batteries.There is also a question mark on the kind of batteries that will ultimately survive;whether it will be lithium-ion or something else will depend mostly on the cost of thebattery and its safety features. The CAF norms and BSVI implementation will further pushautomobile companies to embrace technology that restricts emission and this will pave wayfor newer technology like ISG and BSG that are likely to replace alternator and generatorin the automobile. The mandatory requirement to enhance safety features and premiumizationof mass selling cars will also lead to the migration of electrical architecture from 12Vto 48V.

Risks and Concerns

The outbreak of the Novel Corona Virus (COVID-19) is fast spreading its tentaclesacross the world and is having a major impact on all aspects of society including theautomotive industry. The corona virus (COVID-19) outbreak is causing widespread concernand economic hardship for consumers businesses and communities across the globe.

The global pandemic caused by the novel corona virus comes at time when both the Indianeconomy and the automotive industry were hoping for recovery. COVID-19 will impact allstakeholders in the value chain who will experience both short and medium term impact.This could range from shortage of raw material shifting of production to other countriesliquidity crunch to delays in availability of models deferred launches and shrinkage inconsumer demand.

The India automotive industry has already seen difficult past few quarters and thispandemic led lockdown couldn't have been more ill-timed. However a planned and concertedresponse both immediate and medium to long term will ensure a V shape recovery.

Imports share a significant share of our key inputs. This pandemic has led todisruption in supply chain management that may impact business goals of the Company. Wehave been engaged in exploring alternative vendors for key inputs and also focusing onexploring new opportunities in sales.

The Company is taking all necessary measures in terms of mitigating the impact ofchallenges being resilient in order to sail through the current situation. It is focusedon controlling the fixed costs maintaining liquidity and closely monitoring the supplychain to ensure that the manufacturing facility operate smoothly.

The Indian auto industry is poised to become the 4th largest automobile market globallyovertaking UK and Germany after China US and Japan and India is currently world secondlargest two-wheeler manufacturer. Stringent environment regulations and compliance withenvironment sustainability agenda have forced the government and stakeholders to go beyondthe conventional ICE platforms and offer electric powertrains by 2030 putting pressure onOEMs to develop Electric Powertrains for future roll out. As the technology evolvesdemand for connected features is also bound to increase as this will be key to OEsplatform differentiation. Component manufacturers will be forced to explore technology andcapability development across digital and hardware integration to remain relevant.

The survival of the Indian auto component manufacturers will be largely dependent onhow soon and effectively able to adapt and transform business models in line with theindustry disruption. Suppliers of Auto component will have to reimagining their businessmodels and assess where they are and where they want to play in line with theircompetencies and their appetite to endure disruption. The industry will give severalopportunities for component manufacturers defining where to play and how to play will bedependent on the component manufacturers in line with their long term strategy and abilityto respond to changes.

Irrespective of the position that players take the Industry would need to focus on thefollowing areas to be future- ready:

- Focus on R&D and Technology through M&As JVs and technical collaborationsboth within component industry as well as software developers;

- Focus on addressing skill gap development through increased industry and academiainteraction as well as investment in training and certifications;

- Inability to timely ramp-up production to meet market demand and planned growth;

- Loss of Customer Satisfaction and brand image due to quality issues;

- Supply Chain Disruptions;

- Rising fuel prices;

- Higher interest rates;

- Monsoon dependency.

The Company has a well-established risk management policy and procedures based on whichrisks are identified and assessed across its business units and operations. To manage andmitigate the risks mitigation plans are embedded in the various initiatives that themanagement has already executed. These plans are reviewed periodically by the RiskManagement Committee of the Company. For better mitigation of Risk the Company has made aRisk Management Committee. The Committee periodically reviews the concerned risks. TheCompany reviews the effectiveness of the mitigation strategies and their implementationprocess.

Internal Control System and its Adequacy

Your Company maintains adequate internal control systems commensurate with the natureof its business and size and complexity of its operations.The Company has implemented aSAP ERP (Enterprise Resource Planning) system. The financial authority at variousmanagement levels is clearly defined in the delegation of powers. These are regularlytested for their effectiveness by Statutory as well as Internal Auditors. In the highlynetworked IT environment of the Company validation of IT Security receives focusedattention from IT specialists and Statutory Auditors. Your Company has appointed reputedfirm of Chartered Accountants for internal audit functions consisting of experienced andprofessionally qualified team. The Internal Auditor reports directly to the Board throughAudit Committee. The internal auditor has covered the area of internal financial Controlsreconciliation of GST inputs Checking of TDS compliances and GST compliances. The AuditCommittee reviews the adequacy and effectiveness of the Company's internal controlenvironment and monitors the implementation of audit recommendations.

Discussion on financial performance with respect to operational performance

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the Indian Accounting Standards (IndAS) prescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia. The financials have been prepared considering the above requirements of applicablelaws.

The Company has achieved turnover (net of GST) of Rs. 128820 lakhs as against Rs.166929 lakhs during the previous year and contracted 22.55 percent. The profit before taxwas Rs. 5845 lakhs as against Rs. 8554 lakhs of previous year. The decreases in profitbefore tax was 21.67 percent and profit after tax was lower by 32.04 percent at Rs. 4253lakhs as against Rs. 6259 lakhs in the previous year.

Material Development in Human Resources/ Industrial Relations including number ofpeople employed

The strategic purpose of Human Resources is to be a catalyst and change agent forcreating the Human Capital transformation required to ensure sustained businessoutperformance while simultaneously addressing the needs of its multiple stakeholders(starting with customers and employees) and strengthening the core values of the Company.In the long run the ultimate metric for success is continuous improvement in the totalfactor productivity while addressing the business imperatives of cash cost competenceand confidence. The emphasis has been on aligning all the HR levers towards achievingthese goals.

Focus continued to be on the Talent Management and Leadership Development processeswhich included Development Centers Individual Development Planning e-learningup-skilling programs Leadership Lifecycle programs and Action-Learning Projects etc.

The Company's strength of employees stood at 2531 as on March 31 2020.

Cautionary Statement

Certain statements in the Management Discussion and Analysis Report describing theCompany's objectives projections estimates expectations or predictions may be"forward looking statements" within the meaning of applicable securities lawsand regulations. Actual results could differ from those expressed or implied. Importantfactors that could make a difference to the Company's operations include raw materialavailability and prices cyclical demand and pricing in the markets exchange ratevariations global economic social & demographic factors changes in Governmentregulations tax regimes economic developments within India and the countries in whichthe Company conducts business and other incidental factors.