Your Directors are pleased to present the Thirty Ninth Annual Report along with theaudited financial statements for the financial year ended 31st March 2021:
|PERFORMANCE || ||(Rs. in Lakhs) |
|FINANCIAL RESULTS ||2020-21 ||2019-20 |
|Total Income ||61985.13 ||58035.49 |
|PBIDT ||5127.15 ||6185.81 |
|Profit Before Tax (PBT) ||1228.79 ||3080.77 |
|Less: Provision for Tax ||324.61 ||-519.74 |
|Profit After Tax (PAT) ||904.18 ||3600.51 |
|Add: Profit brought forwarded from previous year ||9004.16 ||6500.84 |
|Other Comprehensive Income ||86.99 ||-48.34 |
|Total Comprehensive Income || || |
|Appropriation available for Appropriations: ||9995.33 ||10053.01 |
|General Reserve ||- ||- |
|Dividend on Equity Shares ||- ||870.01 |
|Distribution Tax on Dividend ||- ||178.84 |
|Surplus Carried to Balance Sheet ||9995.33 ||9004.16 |
Your Directors recommend a dividend of 10% ('0.20/- per share) for the financial year2020-21. Payment of dividend is subject to the approval of shareholders at the ensuingAnnual General Meeting.
TRANSFER TO RESERVES
No transfer to the General Reserves has been proposed for the financial year 2020-21.
The paid up quity share capital as on 31st March 2021 was Rs.1740.02 Lakhs.
During the year the Company recorded Revenue from Operations by way of Net Sales ofRs.610.96 Crores as against Rs.566.76 Crores in 2019-20 an increase of about 8%. OurExports business registered a growth of 12% compared with previous year and stood atRs.126.29 Crores. Profit After Tax made during the year is Rs.9.04 Crores as againstRs.36.01 Crores in 2019-20. The production during the year was 55706 MT compared to theprevious year's 52175 MT.
The reduction in Profit was primarily due to the impact of the Covid-19 pandemic andthe associated mitigation measures undertaken especially in the first two quarters of theyear. There were also some additional costs due to the initial ramp-up of phase-2 of thePedapariya plant which was commissioned in September 2020.
The automotive industry in India has been witnessing a slowdown over the last threeyears and the challenges in 2020-21 were amplified by the outbreak of Cov-SARS-2 viruswhich spread rapidly around the globe and was declared a global pandemic. To battle theCovid-19 pandemic lockdowns and various other restrictions were imposed by the Centraland State Governments which resulted in temporary suspension of operations of the entireindustry. The Medium & Heavy Commercial Vehicle industry was severely impacted in thefirst half of the year and despite a recovery in the second half the Total IndustryVolume declined by 21% for the full financial year 2020-21. The Tractor industry bouncedback strongly starting in the second quarter and recorded an excellent growth of 27%.
The Commercial Vehicle industry expects a moderate growth in the current year. Drivenby the infrastructure spend proposed in the budget for the financial year 2021-22 and thegrowth in e-Commerce there is moderate growth forecast for the current year led by salesof Tippers & ICVs. The sales of Multi-Axle Vehicles for haulage are expected torecover gradually as demand picks up and freight prices increase. The medium-term outlookappears very positive as the scrappage policy introduced by the Government of India takesshape. The Tractor industry expects a strong growth in the year 2021-22 also due to goodrainfall in the previous year and normal monsoon expected in the current year. As Indiaexperiences the second wave of Covid-19 infections and is possibly at risk of a thirdwave there is a possibility of some impact to the industry in the first half of the year.However the long-term outlook remains positive for the Automotive Industry with mostmajor global players having a base in India for manufacturing 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 2021 in accordance with theprovisions of Section 129(3) of the Companies Act 2013 and SEBI Listing Regulations andprepared in accordance with the Indian Accounting Standards prescribed by the Institute ofChartered Accountants of India. As required by the Listing Regulations the auditedConsolidated Financial Statements are circulated 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-A. The Company will make available the audited annual accounts and relatedinformation of its subsidiary upon request by any of its shareholders and it has alsobeen placed on the website of the Company. The annual accounts of the subsidiary companywill also be kept for inspection by any member at the Registered Office of the Companyand its subsidiary company. The consolidated financial statements presented by theCompany which form part of this annual report include financial results of itssubsidiary company.
QUALITY AND CUSTOMER SATISFACTION
TThe Company adheres to IATF 16949 quality standards and continuously strives toachieve world class quality by strictly adhering to the quality norms. The Company hasalso been awarded ISO 14001 & ISO 45001 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 International Tractors (ITL) Daimler India Caterpillar etc. Tier Icustomers like Automotive Axles American Axles Dana Rane Madras Rane-TRW ZF Indiaetc. and Export customers like Meritor American Axles Daimler Dana Comer ZFIndustries etc. The Company is closely working with several of our customers in terms ofnew product development 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 2021.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Corporate Governance Report annexed to this Board's Report contains the compositionof the Board of Directors of the Company.
Directors appointed during the year
Ms. Maheswari Mohan (DIN: 07156606) was appointed as an Additional (Non-Executive &Independent) Director of the Company with effect from 30th November 2020. Onrecommendation of the Nomination and Remuneration Committee the Board of Directors haveproposed appointment of Ms. Maheswari Mohan as a Non-Executive and Independent Directornot liable to retire by rotation for a period of five (5) years from 30thNovember 2020 to 29th November 2025. In the opinion of the Board Ms. MaheswariMohan fulfils the conditions specified in the Companies Act 2013 and Rules madethereunder for appointment as Independent Director and is independent of the management ofthe Company. The resolution seeking shareholder's approval for her appointment forms partof the Notice.
Mr. P. Deepak Director is due to retire by rotation and being eligible offers himselffor reappointment.
Mr. P. Deepak Managing Director and Mr. S.K. Sivakumar Chief Financial Officer &Company Secretary hold the office of Key Managerial Personnel.
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. During the year under review a separate meeting of independentdirectors was held on 10th February 2021.
Composition of all the committees are furnished in the Corporate Governance Reportwhich is attached to this report.
MEETINGS OF THE BOARD AND COMMITTEES
During the year four meetings of the Board of Directors were held. The details of themeetings of the Board and its Committees are furnished in the Corporate Governance Reportwhich is attached to this report.
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 on the Company's website www.nelcast.com.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(3)(c) 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 had beenfollowed along with proper explanations relating to material departures if any;
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 ended 31stMarch 2021 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.
CERTIFICATE FROM COMPANY SECRETARY IN PRATICE
L. Dhanamjaya Reddy Practicing Company Secretary has issued a certificate as requiredunder the Listing Regulations confirming that none of the directors on the Board of theCompany has been debarred or disqualified from being appointed or continuing as directorof companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority.The certificate is enclosed with this section as Annexure-B.
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34 of the Listing Regulations the Business ResponsibilityReport for the year 2020-21 describing the initiatives taken from an environment socialand governance perspectives in the prescribed format is given as Annexure-C to thisReport and is also available on the Company's website viz. www.nelcast.com.
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 on the Company's websitewww.nelcast.com.
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 behaviour 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 on the Company's websitewww.nelcast.com.
PARTICULARS OF EMPLOYEES AND 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 forms part of this report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this Report.
In terms of Section 136(1) of the Companies Act 2013 the Annual Report and financialstatements are being sent to the members and others entitled thereto excluding theaforesaid information. The said information is available for inspection by the members atthe Registered office of the Company during business hours on working days of the Companyup to the date of ensuing Annual General Meeting and any member interested in obtainingsuch information may write to the company secretary and the same will be furnished.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
In terms of Section 134(5)(e) of the Act the term Internal Financial Control means thepolicies and procedures adopted by a company for ensuring orderly and efficient conduct ofits business including adherence to company's policies safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords and timely preparation of reliable financial information. The Company has inplace adequate internal financial controls.
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 35th 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 2020-21. The Secretarial Audit Report for thefinancial year ended 31st March 2021 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 2021-22 on the recommendations made by the Audit Committee.
The Company 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
As required under Section 92(3) and 134(3)(a) of the Act and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 (as amended) an extract of AnnualReturn in Form MGT-9 is available on the Company's website www.nelcast.com.
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
Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 17(9) of SEBI(LODR) Regulations 2015 the Company has implemented a mechanism for risk management andhas formulated a Risk Management Policy. The company has devised its risk managementpolicy commensurate with its size and operations. The Policy provides for identificationof risks and mitigation measures. The Risk Management Policy includes identifying types ofrisks and its assessment risk handling monitoring and reporting. Your Company maintainsan adequate and effective Internal Control System commensurate with its size. The internalcontrol system is supplemented through an extensive internal audit program besidesperiodic review by the Management and the Audit Committee. Risk Management policy may beaccessed on the Company's website www.nelcast. com.
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-E. Further details ofcomposition of the Corporate Social Responsibility Committee and other details areprovided in the Corporate Governance Report which forms part of this report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee has also been constituted for this purpose.During the year under review there were no cases filed pursuant to the above Act.
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 during the yearthe Board has carried out an evaluation of its own performance performance of theDirectors as well as the 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 and contribution at Board/Committee Meetings and guidance/ support to the management outside Board/ CommitteeMeetings.
Areas on which the Committees of the Board were assessed included degree of fulfilmentof key 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 ofNon-Independent Directors was carried out by the Independent Directors who also reviewedthe performance 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-F 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 : 31st May 2021 ||Chairman |