Your Directors are pleased to present the Thirty Seventh Annual Report along with theaudited financial statements for the financial year ended 31 st March 2019:
|PERFORMANCE || ||(Rs. in Lakhs) |
|FINANCIAL RESULTS ||2018-19 ||2017-18 |
|Total Income ||86220.74 ||76438.16 |
|PBIDT ||8181.57 ||7588.35 |
|Profit Before Tax (PBT) ||5771.62 ||5703.07 |
|Less: Provision for Tax ||1927.54 ||1876.84 |
|Profit After Tax (PAT) ||3844.08 ||3826.23 |
|Add: Profit brought forwarded from previous year ||6230.63 ||5893.00 |
|Other Comprehensive Income ||-25.02 ||-46.19 |
|Total Comprehensive Income available for Appropriation ||10049.69 ||9673.04 |
|Appropriations: || || |
|General Reserve ||2500.00 ||2500.00 |
|Dividend on Equity Shares ||870.01 ||783.01 |
|Distribution Tax on Dividend ||178.84 ||159.40 |
|Surplus Carried to Balance Sheet ||6500.84 ||6230.63 |
Your Directors recommend a dividend of 50% (Rs. 1/- per share) for the financial year2018-19. Payment of dividend is subject to the approval of shareholders at the ensuingAnnual General Meeting.
TRANSFER TO RESERVES
Your Directors have recommended a transfer of Rs. 2500 Lakhs to General Reserve for thefinancial year 2018-19.
During the year the Company recorded Revenue from Operations by way of Net Sales ofRs. 856.27 Crores as against Rs. 744.54 Crores in 2017-18 an increase of about 15%. OurExports business registered a growth of 54% compared with previous year and stood at Rs.89.96 Crores.ProfitAfter Tax made during the year is Rs. 38.44 Crores as against Rs. 38.26Crores in 2017-18 a marginal increase compared with previous year. The production duringthe year was 92533 MT compared to the previous year's 86098 MT.
During the year the Commercial Vehicle industry registered a strong growth in the firsthalf of the year however the growth rate in the second half of the year moderated mainlydue to revised axle load norms liquidity crunch and political uncertainty leading up tothe elections. The Commercial Vehicle sector is expecting to grow in the year 2019-20 dueto pre-buying in the 2nd and 3rd quarter of the year ahead of theimplementation of BSVI norms from 1st April 2020. The Tractor industry witnessed a doubledigit growth for the third consecutive year but the pace was slowest in the last threeyears due to deficient northeast monsoon uneven rainfall distribution and dry conditions.The growth was marred due to weak sentiment in the later part of the year as sales slippedto negative in the 4th quarter of the year. The Tractor industry expects a flat tomoderate growth in the year 2019-20 with the indication of normal monsoon. The long termoutlook remains positive for the Automotive Industry with most major global players havinga base in India for manufacturing global sourcing and engineering.
CONSOLIDATED FINANCIAL STATEMENTS
The Company has prepared Consolidated Financial Statements of Nelcast Limited and itssubsidiary NC Energy Limited as at 31st March 2019 in accordance with theprovisions of Section 129(3) of the Companies Act 2013 SEBI Listing Regulations and theIndian Accounting Standards prescribed by the Institute of Chartered Accountants of India.As required by the Listing Regulations the audited Consolidated Financial Statements arecirculated with the Annual Report.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURES
In terms of Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 the salient features of the financial statements of subsidiarycompany is set out in the prescribed form AOC-1 which is annexed with this report asAnnexure-B. The Company will make available the audited annual accounts and relatedinformation of its subsidiary upon request by any of its shareholders. The annualaccounts of the subsidiary company will also be kept for inspection by any member at theRegistered Office of the Company and its subsidiary company. The consolidated financialstatements presented by the Company which form part of this annual report includefinancial results of its subsidiary company.
QUALITY AND CUSTOMER SATISFACTION
The Company adheres to IATF 16949 quality standards and continuously strives to achieveworld class quality by strictly adhering to the quality norms. The Company has also beenawarded ISO 14001 & OSHAS 18001 certifications for implementing Health Safety &Environmental Management Systems.
The Company is a supplier to several leading OEM customers like Tata Motors AshokLeyland TAFE Eicher Tractors (TMTL) Volvo-Eicher Commercial Vehicles SAME TractorsEscorts Tractors Daimler India Caterpillar etc. Tier I customers like AutomotiveAxles American Axles Dana Rane Madras Rane-TRW ZF India Simpson & Co. etc. andExport customers like Meritor American Axles Daimler Dana Comer ZF Industries etc.the Company is closely working with several of our customers in terms of new productdevelopment improvement in quality etc. to improve our products.
The Company has not accepted any public deposits during the year and as such no amounton account of principal or interest on deposits from public was outstanding as at 31stMarch 2019.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In compliance with the provisions of Section 149 read with Schedule IV of the ActMr.D.Sesha Reddy Mr. R. Mohan Reddy and Mr. A. Balasubramanian have been recommended tobe reappointed as Independent Directors of the Company for the second term of 5 (five)consecutive years not liable to retire by rotation by the Nomination and RemunerationCommittee and Board of Directors at their respective meetings held on 27th May2019 with effect from 6th August 2019. the Act and the Rules made there In theopinionoftheBoard theyfulfill under for re-appointment as Independent Directors for thesecond term and are independent of the management. Details of the proposal for appointmentof independent directors are mentioned in the Explanatory statement under sec 102 of theCompanies Act 2013 of the Notice of the 37th Annual General Meeting.
Mr. P. Deepak Director is due to retire by rotation and being eligible offers himselffor reappointment. Mr. P. Deepak Managing Director Mr. P. Vijaya Bhaskar Reddy Dy.Managing Director & CFO and Mr. S.K. Sivakumar Group - Chief Financial Officer &Company Secretary hold the office of Key Managerial Personnel.
Declaration of Independent Directors
The Independent Directors have fulfilled the criteria of Independence as defined underSection 149(6) and requisite declarations in terms of Section 149(7) of the Companies Act2013 have been received.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES
The provisions of Section 178(1) of the Companies Act 2013 relating to constitution ofNomination and Remuneration Committee are applicable to the Company and hence the Companyhas devised a policy relating to appointment of Directors payment of managerialremuneration Directors qualifications positive attributes independence of Directors andother related matters as provided under Section 178(3) of the Companies Act 2013. Thesaid policy is posted in the Company's website www.nelcast.com
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard of Directors to the best of their knowledge and ability confirm that:
a) in preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanations relating to material departures;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are 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 ended31 stMarch 2019 and of the profit of the Company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
The Company has been pro-active in following the principles and practices of goodCorporate Governance. The Company has taken adequate steps to ensure that the conditionsof Corporate Governance as stipulated in the Listing Regulations are complied with letterand spirit. A certificate issued by the auditors of the Company regarding compliance ofconditions of Corporate Governance is also annexed to this report. The matters relating toCorporate Governance as per the Listing Regulations are attached to this report. Themanagement's discussion and analysis report as required by the Listing Regulations is alsoannexed which forms part of this report.
RELATED PARTY TRANSACTIONS
All transactions entered by the Company with related parties were in the ordinarycourse of the business and at Arm's Length basis. There are no materially significantrelated party transactions made by the Company with Promoters Key Managerial Personnel orother designated persons which may have potential conflict with interest of the Company atlarge. The details of the transactions with related parties are given in the financialstatements. The Related Party Transaction Policy is posted in the website of the Company.
During the year four meetings of the Board of Directors were held. The details of themeetings are furnished in the Corporate Governance Report which is attached to thisreport.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and Employees to report their concerns about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides direct access to the Chairman of the Audit Committee. It isaffirmed that no personnel of the Company have been denied access to the Audit Committee.
REMUNERATION POLICY OF THE COMPANY
The Company has adopted a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to Section 178(3) of the Companies Act 2013 andas per the Listing Regulations. The Company affirms remuneration is as per theremuneration policy of the Company. The said policy is posted in the websitewww.nelcast.com of the Company.
PARTICULARS OF EMPLOYEES RELATED DISCLOSURES
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company will be provided uponrequest. In terms of Section 136(1) of the Companies Act 2013 the reports and accountsare being sent to the members and others entitled thereto excluding the information onemployees' particulars which is available for inspection by the members at the Registeredoffice the Company up to the date of ensuing Annual General Meeting. The Disclosurespertaining to remuneration and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annexure forming part of the AnnualReport. Having regard to the provisions of Section 136(1) read with its relevant provisionof the Companies Act 2013 the Annual Report excluding the aforesaid information is beingsent to the members of the
Company. The said information is available for inspection at the Registered Office ofthe Company during working hours and any member interested in obtaining such informationmay write to the Company Secretary and the same will be furnished without any fee and freeof cost.
At the Annual General Meeting of the Company held on 3rd August 2017 M/s.K.Nagaraju & Associates Chartered Accountants (Firm Registration No.002270S) wereappointed as Statutory Auditors of the Company for a term of 5 (five) consecutive yearsfrom conclusion of 35 th Annual General Meeting till the conclusion of the 40thAnnual General Meeting. They have confirmed that their appointment is in accordance withSection 139 read with Section 141 of the Companies Act 2013.
The Company has appointed M/s. L.D. Reddy & Co. Practicing Company Secretaries toconduct Secretarial Audit for the year 2018-19. The Secretarial Audit Report for thefinancial year ended 31st March 2019 is annexed with this report in Annexure-D.
As per Section 148 and other applicable provisions if any of the Companies Act 2013read with Companies (Audit & Auditors) Rules 2014 the Board of Directors of yourCompany has appointed M/s. Jayaram & Associates Cost Accountants as the Cost Auditorsof the Company for the year 2019-20 on the recommendations made by the Audit Committee.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details are provided in the Management Discussion and Analysis Report attached tothis report.
The Internal Auditors reviews the efficiency and effectiveness of the systems andprocedures. The Audit Committee approves and reviews the internal audit plan for the year.
The Directors have devised proper systems and processes for complying with therequirements of applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems were adequate and operating effectively.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedwith this report in Annexure-E.
The employee relations have remained cordial throughout the year and industrial harmonywas maintained. Measures for the safety training and development of the employeescontinued to receive top priority. The Directors wish to place on record theirappreciation of the valuable contribution made by the employees of the Company at alllevels towards the performance and growth of the Company.
RISK MANAGEMENT POLICY
The Company has an adequate Risk Management Policy commensurate with its size andoperations.
Risk Management is an essential element in achieving business goals and derivingbenefits from market opportunities. The Risk Management includes identifying types ofrisks and its assessment risk handling monitoring and reporting.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013. The details of the investments made by Company aregiven in the financial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR Policy of the Company and details about the initiatives taken by the Company onCSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules2014 have been disclosed as part of this report in Annexure-C. Further details ofcomposition of the Corporate Social Responsibility Committee and other details areprovided in the Corporate Governance Report which forms part of this report.
INTERNAL COMPLAINTS COMMITTEE
The Company has in place a policy for prevention prohibition and redressal againstsexual harassment of women at the workplace to protect women employees and enable them toreport sexual harassment at the workplace. An Internal Complaints Committee has also beenconstituted for this purpose. No complaints were received during the year.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and under regulation 25 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an evaluation of its own performance performance of the Directors as well asthe evaluation of the working of its Committees.
The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Board itsCommittees and Directors. Directors were evaluated on aspects such as attendance andcontribution at Board/ Committee Meetings and guidance/ support to the management outsideBoard/ Committee Meetings.
Areas on which the Committees of the Board were assessed includeddegree fulfillmentofkey responsibilities adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of NonIndependent Directors was carried out by the Independent Directors who also reviewed theperformance of the Board as a whole. The Nomination and Remuneration Committee alsoreviewed the performance of the Board its Committees and of the Directors.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT FOREIGNEXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption researchand development foreign exchange earnings and outgo as required under Section 134(3)(m)of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 isgiven in the Annexure-A forming part of this Report.
The Directors place on record their sincere appreciation for the dedicated efforts ofthe employees and co-operation of associates suppliers and customers. We also express oursincere thanks to Company's Bankers namely State Bank of India Standard Chartered BankThe Hongkong and Shanghai Banking Corporation Ltd. Kotak Mahindra Bank Ltd. and HDFC BankLtd. for their trust and continued support.
| ||For and on behalf of the Board |
|Place: Chennai ||D. Sesha Reddy |
|Date : 27th May 2019 ||Chairman |