NRB BEARINGS LIMITED
Your Directors have pleasure in presenting their Fifty Second Annual Report togetherwith Audited Accounts for the year ended 31st March 2017.
1. Financial Results
| ||Consolidated ||Standalone |
|Year ended ||31.03.2017 ||31.03.2016 ||31.03.2017 ||31.03.2016 |
| ||Rs.lakhs ||Rs.lakhs ||Rs.lakhs ||Rs.lakhs |
|Revenue from operations (Net) ||72759.38 ||67493.69 ||70869.94 ||65919.68 |
|Profit before tax ||7790.94 ||6389.29 ||7020.21 ||6381.53 |
|Provision for taxation || || || || |
|Current (net) ||2200.03 ||2124.65 ||1886.33 ||1849.16 |
|In respect of earlier years ||(42.13) ||(25.26) ||(44.77) ||(25.26) |
|Deferred tax ||95.19 ||(28.06) ||75.13 ||(40.67) |
|Profit after taxation ||5397.72 ||4199.87 ||5103.52 ||4598.30 |
|Add: Balance brought forward ||13990.14 ||12303.39 ||17042.04 ||14826.90 |
| ||19387.86 ||16503.26 ||22145.56 ||19425.20 |
|Appropriation: || || || || |
|Dividend ||1385.69 ||1429.15 ||1356.92 ||1356.92 |
|Tax on distributed profits ||218.67 ||290.94 ||249.66 ||276.24 |
|Tax on preference dividend ||0.12 ||18.03 || || |
|General Reserve ||-- ||-- ||-- ||-- |
|Debenture Redemption Reserve ||1250.00 ||750.00 ||1250.00 ||750.00 |
|Capital Redemption Reserve ||25.00 ||25.00 ||-- ||-- |
|Profit & Loss Account ||16508.38 ||13990.14 ||19288.98 ||17042.04 |
| ||19387.86 ||16503.26 ||22145.56 ||19425.20 |
On 13th February'2017 Directors have declared interim dividend of Rs.1.40/-per equityshare of Rs.2/- (Rs.1.40 per share for previous year) payable to members/beneficial ownersas per the Register of Members as applicable aggregating Rs. 1356.92 lakhs. The Directorshave not recommended any final dividend and decided that the interim dividend be treatedas final.
FY2016-17 has been a mixed year starting off on an encouraging note with newgovernment initiatives supporting infrastructure projects and industrial growth beingannounced a near normal monsoon giving a boost to the rural economy and consumer demandpicking up in the first half year. Q3 saw the demand upheaval caused by demonetization inthe domestic markets heightening the uncertainties in the global environment arising fromBrexit weak growth in China and subdued global trade. Fortunately Q4 saw the liquiditypressures abating and the government driving implementation of BS IV emission norms andGST and its increased spend on upgradation of infrastructure resulting in demand revivingwith expectations that GDP growth will be 7% for the year.
Though the private sector investment cycle has not yet gained strength and the bankingsystem is weighed down by high NPAs and low business confidence the Indian economyoutlook is optimistic considering prospects of a near normal monsoon increased governmentspends recovery in export demand for the Indian automotive industry. Consumer sentimenthas improved and there has been demand growth in the high value 4-wheeler segments ofpassenger cars driven by new model launches and in the farm equipment/off highway segmentowing to the good monsoon. BS IV norms replacement of aging fleets and pick up ininfrastructure demand and improving farm outputs contributed to growth in 2/3 wheelers andCVs. Your Company aggressively pushed sales in the domestic market and successfullyincreased overall sales in spite of flattish export sales to achieve its highest eversales turnover of Rs.70870 lacs (previous year Rs.65919 lacs) domestic sales up by9% to Rs.57578 Lacs (previous year Rs.52926 lacs) and exports of Rs.13292 lacs (previousyear Rs.12993 lacs). Profit after tax has improved to Rs.5104 lacs (previous year Rs.4598lacs) with lower material consumption and lower charge on employee benefit costs andfinance costs.
Over the past ten years India has emerged as one of the most preferred locations inthe world for manufacturing high quality auto components and vehicles of all kinds. TheIndustry has to be equally relentless in its pursuit of economies of scale and in scope ofdesign and engineering of automobiles and components while also pursuing low costmanufacturing destinations. AMP 2026 states the Government promises to help the IndianAutomotive industry to focus on its strengths and improve its competitiveness in selectsegments and achieve the target of 12% contribution to National GDP and make India firstin the world in production /sale of small cars 2 & 3 wheelers tractors and buses and3rd in passenger vehicles and heavy trucks.
Your Company is investing in and building its R&D capabilities to develop productlines with improved performance and margins working on eliminating waste from operationsby continuously reviewing and streamlining its production processes.
The company has been rated by Crisil A1+ for short term and AA- (stable) for long termborrowings.
The Company continues to focus on judicious management of its working capital.Receivables inventories and other working capital parameters are continuously monitored.
a. Public Deposits
The Company has not taken fixed deposits during the year. There are no unclaimeddeposits.
b. Non convertible debentures
During the year the non convertible debentures aggregating Rs.50 crores were issued onprivate placement basis in October 2016. The funds raised have been utilized forconverting short term loans into long term.
c. Particulars loans guarantees or investments
During the year under review the company has not advanced any fresh loans or givenguarantees or made investments other than NRB Thailand Ltd's loan inclusive of interestaggregating USD.384406.80 as on 31st October2016 was rescheduled to be repaid in monthlyinstalments from November 2016 to February 2019 alongwith interest @ 6.5% p.a. as approvedby the Board.
Details of loans guarantees and investments covered under the provisions of section186 of the Companies Act 2013 are given in the notes to the financial statements.
The Board of Directors has on the recommendation of the Nomination & RemunerationCommittee appointed Mr.Rustom Desai as Additional Director of the Company in the categoryof independent Directors w.e.f. 23rd January 2017 and Mr.S C Rangani as AdditionalDirector (Executive Director & Company Secretary) w.e.f. 24th January 2017. In thecase of Mr.Rustom Desai the notice for the forthcoming Annual General Meeting (AGM)includes his appointment as independent Director under the Companies Act 2013 for aperiod of five years w.e.f. 23rd January 2017 and for Mr.S C Rangani for a period of oneyear w.e.f. 24th January 2017.
All independent Directors have given declarations that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and theprovisions of the Listing Agreement.
Mr.D S Sahney retires by rotation pursuant to Article 111 of the Articles ofAssociation and is eligible for reappointment.
On the expiry of his term on 30th September 2016 Mr.T S Sahney gave up his Executiveposition and operational role in favour of Ms.H S Zaveri currently re-designated as ViceChairman & Managing Director. Considering his Founder status and recognizing his wideexperience and knowledge Mr T S Sahney continues as Chairman of the Board in NonExecutive capacity.
Familiarisation Programme for Independent Directors
In order to familiarize the Independent Directors with the business the Company makesa presentation covering nature and scope of business nature of industry in which Companyoperates profitability and future scope. Regularly at meetings updates are given to theBoard.
The Board has carried out an annual performance evaluation of its own performance andthe Directors individually. The manner in which the evaluation has been carried out hasbeen explained in the Corporate Governance Report. The independent Directors have also metseparately on 21st March 2017
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors senior management and theirremuneration. The remuneration policy is posted on the company's websitewww.nrbbearings.com. Details of remuneration paid to Executive Directors and KMP and theIndependent Directors form part of the Corporate Governance Report attached to thisReport.
During the year 5 Board meetings and 6 Audit committee meetings were convened and held(details in Corporate Governance Report). The intervening gap between the meetings wasless than four months. The date for the next meeting is fixed in advance at the previousmeeting both for board and committee meetings.
As of 31st March 2017 the Company has three subsidiaries viz. SNL Bearings Ltd NRBBearings (Thailand) Ltd and NRB Bearings Europe GmbH. The consolidated results include theworking of these subsidiaries.
SNL Bearings Ltd (SNL) in which your Company holds 73.45% equity has reported PAT ofRs.658.95 lacs (previous year Rs.567.76 lacs). Despite the challenging environment in theIndian economy post demonetization and implementation of new BIS-IV emission norms SNLachieved sales growth of 11.5% from increased sales volumes from existing and new OEMcustomers. Profit before tax (PBT) has increased by 16.5% from Rs.991.71 lakhs (Previousyear) to Rs.850.83 lakhs on account of higher volumes helped by global decline incommodity prices. SNL expects to further capitalize on growth opportunities during thecurrent year and enhance profitability with emphasis on improving quality andproductivity.
NRB Bearings (Thailand) Ltd (NRBT) a wholly owned subsidiary has increased its salesby 18% to THB 160.59 million (Rs 29.87 crores) (previous year THB 136.52 million Rs.25.39 crores). The share of manufacturing revenues out of total revenues has increasedto 72% at THB 115.25 million (Rs.21.44 crores) (previous year 70% at THB 95.58 million)and trading revenues are 28% at THB 45.35 million (Rs.8.44 crores) (previous year 30% atTHB 40.93 million). Consequently the Company's EBITDA has grown from THB 13.39 million toTHB 27.82 million (Rs.5.17 crores). The company has made a maiden profit for the year atTHB 4.55 million (Rs.0.85 crores) mainly due to higher manufacturing volumes and lowerexchange losses. New business is being finalized with global Japanese customers andmanufacture of new products as well as enhanced production of needle rollers plannedduring FY 2017-18 will help in further improving the financial results during the comingyears.
NRB Bearings Europe GmbH a wholly owned subsidiary was set up to support increasingexports to Europe. The Company provides marketing and customer support services. Theincome during the year is EURO 228739 (Rs.1.58 crores) and the resultant profit after taxis EURO 5914 (Rs. 4.08 lacs).
Pursuant to section 129 (3) read with rule 5 of Companies (Accounts) Rules 2014details of financialstatements of subsidiary companies has been given in Annexure 1(AOC1) forming part of this statement.
7. Conservation of energy technology absorption foreign exchange earnings andoutgo
Information pursuant to Section 134(3)(m) of the Companies Act 2013 and Rule no.8 ofCompanies (Accounts) Rules 2014 has been given in the Annexure 2 forming part ofthis report.
8. Industrial Relations/Vigil Mechanism and Whistle Blower Policy
During the year the Company maintained cordial relations with the workmen's unions atall plants. Wage agreements relating to Waluj Thane and Jalna plants have expired in theprevious year. Settlement was signed with the union at Hyderabad plant in conciliationwith joint Commissioner of Labour on 27.04.2016. The wage increase has been linked withproductivity improvements (18.5%) with a penalty for non achievement of quality andproductivity as agreed. The new agreement is effective for three years w.e.f. 01.04.2016and the total financial impact for FY 2016-17 is estimated at Rs.1.2 crores.
At Chikalthana workmen's settlement (155 nos) has been signed in August 2016 with wageincrease linked to productivity improvement of 19% and penalties for non achievement. Thesettlement effective for 3 years w.e.f. 1st July 2016 and the total financial impact forFY 2016-17 is estimated at Rs.109 lacs.
Our people approach is reflected in the team work and the implementation of the numberof initiatives involving employees and their families to share and promote organizationalvalues. Regular training programmes are conducted for imparting understanding of bearingand engineering principles modern manufacturing practices and in attitudinal andbehavioural aspects.
The Company has a Vigil Mechanism and Whistle Blower Policy which provides for adequatesafeguards to employees using such mechanism. It also allows direct access to the AuditCommittee in appropriate cases. Details of the same are posted on the website of theCompany.
Your Company hereby affirms that no complaints were received during the year.
9. Safety Health and Environment
The Company is committed to establish and maintain safe working environment thatpromotes good health and high performance of the employees and simultaneously takesmeasures to protect the environment. We also ensure that safety behavior is welldemonstrated by our employees while working on the shop floor by using personal protectiveequipments as required.
Companyhasbeenaccreditedwithinternationallyacclaimedcertificationviz. ISO14001:2004 toidentify and control environmental impact and constantly improve the environmentalperformance; OHSAS: 18001:2007 occupational health and safety management systems; andISO/TS: 16949:2009 for Quality Management Systems.
The commitment towards the environment preservation extends beyond regulatorycompliances as per MPCB norms and ambient air and noise levels waste monitoring throughETP/STP treatment is being done. Initiatives are taken across the Company to conservenatural resources reduction & recycling of wastes; and adherence to emission norms.
There have been numerous initiatives by NRB towards safety and environment awarenessamong employees:
1. Awareness on environment preservation and protection through regular monitoring ofenvironment parameters and employees engagement activities like tree plantation anddrawing competitions.
2. "Safety first and always first" is the highest priority of the Company ofpublic employees plant equipment and business associates ensuring compliance with allstatutory rules and regulations as an on-going process.
Special initiatives have been taken up such as mock drills up-gradation of Fireprotection systems safety training to employees reporting of near-miss incidents andfirst aid awareness. We strive to achieve "Zero-Accident Tolerance".
3. Setting up of Solar Lights and LED lights to replace existing CFLs in factorypremises and air ventilators on factory roof to save electricity improve air quality andprotect usage of natural resources.
4. Significant reductions have been achieved across all locations in minimizing therequirement of electricity use of less petrochemicals grease turpentine etc.Turpentine has been replaced with stansol to prevent vapour spreading for improved healthof employees.
5. Water conservation through re-use of waste water and rain water harvesting at plants capacity to harvest upto 50 lac ltrs rain water every year to increase ground waterlevels.
6. Vermiculture for making Vermicompost as nutrient-rich organic fertilizer and soilconditioner.
7. Strict policy for non-consumption of tobacco and intoxicating materials to protectthe mental and physical health of employees. Regular awareness programs like "VyasanMukti" & "Yoga Classes" conducted to educate employees to get rid ofevils of intoxication and stressful work life; and embrace good health and work-lifebalance.
10. Corporate social responsibility
In line with the activities specified in schedule VII relating to the provisions ofsections 135 of the Companies Act 2013 your company has been focusing on :
Promotion of education
Promoting gender equality and empowering woman
Employment enhancing vocational skills
Ensuring environmental sustainability ecological balance protection of flora andfauna animal welfare conservation of natural resources
In terms of the above the Company has been contributing for primary educationsecondary education (study of sciences maths and engineering) and to engineeringcolleges. The company also has an appropriate proportion for smaller NGOs (Auroville UnityFund) and natural disasters and calamities (during the year the company contributedtowards transportation of drinking water by Railway tankers to Latur Marathwada) andsupports social causes and impactful projects.
The Company has continued its support to the Ashoka University which is devoted totransforming Indian higher education based on the principles of multidisciplinaryeducation delivered by exceptional faculty members and providing ivy-league qualityeducation at an affordable price. The liberal education helps develop intellect nurturecritical thinking and provides specialisation with a broader foundation of knowledge.
The Company extended further support to Aseema an NGO to encourage expression andcreativity in the children studying in municipal schools in Mumbai and make the curriculummore meaningful and fun. Aseema's centre at Igatpuri set up for development of tribalchildren learning needs also provides vocational training to help them join mainstreamsociety.
The company supported social causes like Indian Cancer Society Akshay Patra Foundationfor mid-day meal for school children and at Jalna the de-silting project undertaken bylocal self help groups to improve water bodies in the area.
NRB has always believed in and worked towards "inclusive growth'- improving thequality of life of the people in the communities where we operate and has on a regularbasis conducted Blood Donation camps across locations to help the society case of anyemergency and Hyderabad & Chikalthana plants have organized "Summer WaterCamps" to provide water to the needy and poor people in the scorching heat. As partof its "Go Green" policy NRB has initiated tree planting drives in and aroundits factories.
The average of the last 3 years profits works out to Rs.6424 lacs and @ 2% the amountto be spent by the Company on CSR activities works out to Rs.128.48 lacs during FY2016-17. The Company has actually spent Rs.128.90 lacs during FY 2016-17 on the identifiedactivities. The requisite format for such expenditure has been enclosed asAnnexure 3 tothe Directors' Report.
11. Corporate governance
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aManagement Discussion and Analysis Corporate Governance Report and Auditors' Certificateregarding compliance of conditions of Corporate Governance are made part of the AnnualReport. Details of Board meetings held during the year under review and the composition ofthe various committees are included therein.
The Code of Conduct for Directors and Senior Management personnel of the Company asapproved by the Board has been affirmed on an annual basis by all the Directors and theSenior Management personnel of the Company.
The relevant certification on the various matters specified under Regulation 17(8) ofSEBI (LODR) Regulations 2015 has been done by the Vice Chairman & Managing Directoras CEO and the CFO of the Company.
Members desirous of receiving the full Report and Accounts of the subsidiaries will beprovided the same on receipt of a written request from them or on submission of theire-mail IDs for forwarding documents through electronic mode. This will help saveconsiderable cost in connection with printing and mailing of the Report and Accounts. Thismeasure would be in line with the MCAs Green initiative for paperless communications. Thesame shall also be kept for inspection by any Members at the registered office of theCompany and of the respective subsidiary Company concerned and shall also be posted on theweb site of the Company viz.www.nrbbearings.com.
12. Directors' responsibility statement
In accordance with Section 134 of the Companies Act 2013 the Directors state that:
i. in the preparation of annual accounts all applicable accounting standards have beenfollowed and no material departures have been made from the same;
ii. accounting policies selected were consistently applied. Reasonable and prudentjudgements and estimates have been made so as to give a true and fair view of the state ofaffairs of the Company as on 31st March 2017 and of the profit of the Company for theaccounting year ended on that day;
iii. proper and sufficient care for maintenance of adequate accounting records has beentaken in accordance with the provisions of the Act so as to safeguard the assets of theCompany and to prevent and detect fraud and other irregularities;
iv. the Annual Accounts have been prepared on a going concern basis.
v. the internal financial controls to be followed by the Company have been laid downand are adequate and were operating effectively.
vi. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and all such systems were adequate and operating effectively.
13. Related Party transactions (RPT)
All RPT that were entered into during the financial year were on an arms length basisand were in the ordinary course of business. There are no materially significant RPT bythe Company with promoters Directors personnel or other designated persons which mayhave a potential conflict with the interest of the Company at large.
All RPT are placed before the audit committee as also the board for approval. Priorapproval of the audit committee is obtained on a quarterly basis for transactions whichare foreseen and repetitive in nature. The compliance of the transfer pricing norms inrelation to such transactions is certified by the tax advisors.
The policy on RPTs as approved by the board is uploaded on the Company's website. Formfor disclosure of particulars of contracts has been enclosed as Annexure 4.
Appointment of M/s Deloitte Haskins & Sells Chartered Accountants as Auditors wasapproved till the conclusion of the Annual General Meeting to held for FY ending 31 March2017.
The Audit committee and the Board of Directors recommends the appointment of M/s.Walker Chandiok & Co. LLP Chartered Accountants (Firm No. 001076N/N500013) and theyare proposed to be appointed as statutory auditors in place of retiring auditors M/s.Deloitte Haskins & Sells. to hold office until the conclusion of the annual generalmeeting to be held for the Financial Year ending 31st March 2020 subject to annualratification by the Shareholders.
A certificate from the auditors has been received to the effect that their appointmentif made would be within the limits prescribed under section 139 of the Companies Act2013.
The Board places on record its appreciation of the services rendered by the retiringauditors during their long tenure & association with the Company.
Pursuant to the Rules issued by MCA under Companies (Cost records and Audit) AmendmentRules 2014 your company is subject to cost audit during the year FY 2016-17 and M/s.RNanabhoy & Co Cost Accountants was appointed to undertake the same. The cost auditreport for the year ended 31st March 2017 was filed with MCA on 9th September 2016.
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr.U C Shukla Practicing Company Secretary to undertake the Secretarial Auditof the Company. The report is annexed as Annexure 5.
Explanation or Comments on disqualifications reservations adverse remarks ordisclaimers in the auditors' reports
There have been no disqualifications reservations adverse remarks or disclaimers inthe auditors' the comment in the Independent Auditor's certificate on corporate governanceand in the Secretarial Audit Report:
i. During the period August 262016 to January 22 2017 the strength of IndependentDirectors was below the requisite strength of 50% of the Board but was remediedwithin a period of 6 months.
ii. Delay in filing private placement offer letter for NCDs with SEBI though filedwith Stock Exchanges in time.
15. Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure 6.
16. Particulars of employees
The information required pursuant to section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided upon request. In terms of Section 136 of the Actthe Report and Accounts are being sent to the Members excluding this information.
The Directors wish to convey their appreciation for the tremendous support of ourworkforce- both unionized and shown by our customers. The Directors also wish to thank theshareholders management and the confidence suppliers bankers and all other businessassociates for the continuous support given by them to the Company and their confidence inits management.
| ||On behalf of the Board || |
| ||(Ms) H S Zaveri ||S C Rangani |
|Mumbai: May 26 2017 ||Vice Chairman & Managing Director ||Executive Director & Co.Secretary |