NRB BEARINGS LIMITED
Your Directors have pleasure in presenting their Fifty-fourth Report together with thestandalone and consolidated Audited Financial Statements for the year ended March 312019.
With deep and profound sorrow your Directors inform you that our beloved Chairman Mr.Trilochan Singh Sahney ceased to be a Director of the Company due to his sad demise onOctober 16 2018. Mr. Trilochan Singh Sahney the Founder Promoter was the Chairman andManaging Director of the Company for over four decades since Company's inception in1965.Your Directors place on record their sincere appreciation for the invaluable guidanceprovided by Mr. Trilochan Singh Sahney to the Company during his tenure with the Company.
1. Financial Results
| || |
|Year ended ||31.03.2019 ||31.03.2018 ||31.03.2019 ||31.03.2018 |
| ||Rs. lacs ||Rs. lacs ||Rs. lacs ||Rs. lacs |
|Revenue from operations (Net) ||96484.73 ||87390.70 ||94020.99 ||84843.10 |
|Profit before tax ||15709.92 ||13530.51 ||14268.11 ||12030.96 |
|Provision for taxation || || || || |
|Current (net) ||4049.35 ||4163.52 ||3725.31 ||3739.98 |
|In respect of earlier years || ||- || || |
|Deferred tax ||670.76 ||76.83 ||665.88 ||99.64 |
|Profit after taxation ||10821.54 ||9072.92 ||9876.92 ||8191.34 |
|Add: Balance brought forward ||20892.83 ||14635.93 ||22922.42 ||17558.68 |
|Add: Other Comprehensive Income for the year ||(27.44) ||67.14 ||(25.79) ||55.56 |
| ||31686.93 ||23775.99 ||32773.55 ||25805.58 |
|Appropriation: || || || || |
|Dividend ||1163.07 ||1356.92 ||1163.07 ||1356.92 |
|Tax on distributed profits ||211.80 ||276.24 ||211.81 ||276.24 |
|General Reserve ||- ||- || ||- |
|Debenture Redemption Reserve ||- ||1250.00 || ||1250.00 |
|Capital Redemption Reserve || || || ||- |
|Outside basis Tax || ||- || ||- |
|Profit & Loss Account ||30313.06 ||20892.83 ||31398.67 ||22922.42 |
| ||31686.93 ||23775.99 ||32773.55 ||25805.58 |
Considering the profits for the year under review your directors are pleased torecommend a dividend of 130 per cent i.e. Rs. 2.60 per equity shares of Rs. 2.00 (Rs. 2.60per share for the previous year including interim dividend of Rs. 1.40 per share) whichshall be payable to the members/beneficial owners as applicable aggregating to Rs. 3038lacs inclusive of tax.
3. Material changes and commitments if any affecting the financial position of theCompany
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the close of the financial year on March 31 2019 towhich the financial statements relate and the date of this Report.
4. State of Company's Affairs Operations and Outlook:
Your Company's growth at 10.81 per cent is comparable with the industry. Global demandin the European and US markets has helped exports grow by 17.50 per cent. During the yearunder review on a consolidated basis your Company recorded net revenue from operations ofRs. 96485 lacs with a growth of 10.41 per cent over Rs. 87391 lacs for the last fiscal.The Company recorded a net profit of Rs.10990 lacs an increase of 18.3 per cent over Rs.9290 lacs for the last fiscal on a consolidated basis.
On a standalone basis your Company recorded net revenue from operations (net of exciseduty) of Rs. 94020.99 lacs with a growth of 10.81 per cent over Rs. 84843.10 lacs of thelast fiscal. The Company recorded a net profit of Rs. 9876.92 lacs an increase of 20.5per cent over net profit of Rs. 8191.34 lacs for the last fiscal.
The Indian economy witnessed robust industrial growth during FY 2018-19 and themomentum is expected to continue next year as well. The Index of Industrial Production(IIP) with base 2011-12 for the April-January period for 2018-19 registered a 4.4 per centincrease over the corresponding period for the previous year.
The automobile industry in India is currently the world's fourth largest and the Indianautomotive industry (including component manufacturing) is expected to reach Rs.16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two- wheelers dominate theindustry and made up 81 per cent share in the domestic automobile sales. Domesticautomobile production increased at 7.08 per cent CAGR between FY 2013-18 with 29.09million vehicles manufactured in the country in FY 2018. During April 2018-March 2019automobile production at 30.91 million vehicles increased by approx. 7 per cent.
In FY19 commercial vehicles recorded the fastest pace of growth in domestic sales at17.55 per cent year-on-year followed by three-wheelers at 10.27 per cent year-on-year.The passenger vehicle sales in India crossed the 3.3 million units in FY18 and is furtherexpected increase to 10 million units by FY20. Automobile exports grew 15.54 per centduring April 2018-February 2019.
The auto-components industry accounts for 2.3 per cent of India's Gross DomesticProduct (GDP). The auto components sector has been observing robust growth and turnover isanticipated to reach US$ 200 billion by FY26. India's exports of auto components couldaccount for as much as 26 per cent of the market by 2021.
The Indian economy is likely to sustain the rebound in FY2019-20 and growth isprojected to be approx. in the 7.5 per cent range. Improving macroeconomic fundamentalssupported by the implementation of reform measures shall help foster an environment toboost investments and ease banking sector concerns. Together these augur well for ahealthy growth path for the economy. Favourable government policies such as Auto Policy2002 Automotive Mission Plan 2016-2026 National Automotive Testing and R&DInfrastructure Projects (NATRiPs) have helped the Indian auto components industry achieveconsiderable growth. The government has also extended the FAME Scheme from September 2018to March 2019. India is emerging as global hub for auto component sourcing. Acost-effective manufacturing base keeps costs lower by 10-25 per cent relative tooperations in Europe and Latin America. Relative to Chinese suppliers India isgeographically closer to key automotive markets like the Middle East and Europe.
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 Company has raised an amount of Rs. 300000000/- (Rupees Thirtycrores only) by way of non-convertible debentures issued on a private placement basis forgeneral corporate purposes.
c. Particulars Loans Guarantees or Investments
As on March 31 2019 the outstanding principal amount from its wholly owned subsidiaryNRB Bearings (Thailand) Limited is THB 80.00 million and outstanding Interest is THB 12.82million which has been paid on April 2 2019.
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.
During the year under review Mr. Satish Rangani was appointed as an ExecutiveDirector of the Company for a period of one (1) year with effect from January 24 2019vide a special resolution passed by the shareholders through postal ballot on April 262019 which was also approved by the Board of Directors at its meeting held on January 172019 upon the recommendation of the Nomination and Remuneration Committee.
Mr. Satish Rangani was also appointed as an Additional Director by the Board ofDirectors with effect from January 24 2019 and shall hold office up to the date of theensuing Annual General Meeting. However the Company has received a notice from a memberproposing the appointment of Mr. Rangani as a Director and such appointment has beenrecommended by the Nomination and Remuneration Committee. Accordingly it is proposed toappoint Mr. Rangani as a Director of the Company liable to retire by rotation.
Ms. Vishakha R.M. was appointed as an Additional Director (Independent Director) by theBoard of Directors at its meeting held on November 2 2018 upon the recommendation of theNomination and Remuneration Committee for a term of five (5) consecutive years with effectfrom November 2 2018. The Company has received a notice from a member proposing theappointment of Ms. Vishakha as a Director and such appointment has been recommended by theNomination and Remuneration Committee. Accordingly it is proposed to appoint Ms. Vishakhaas an Independent Director of the Company for a term of five (5) consecutive years witheffect from November 2 2018.
Mr. Tashwinder Singh was appointed as an Independent Director of the Company on August11 2014. His first term as an Independent Director ends on August 10 2019. Consideringhis active participation and invaluable advice during Board/ Committee proceedings theNomination and Remuneration Committee has recommended and the Board of Directors at itsmeeting held on May 29 2019 has approved his appointment for a second term of five (5)consecutive years. Accordingly it is proposed to appoint Mr. Tashwinder Singh as anIndependent Director for a second term of five (5) consecutive years with effect fromAugust 10 2019.
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 Regulation16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Thecomposition of the Board duly meets the criteria stipulated in Section 52 of the CompaniesAct 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
In accordance with the Companies Act 2013 and the Articles of Association of theCompany Mr. D. S. Sahney retires by rotation and being eligible offers himself forre-appointment.
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 by the Company's Senior Management in areas of operations industry and regulatorytrends competition and future outlook. The familiarization programme is posted on thewebsite of the Company at www.nrbbearings.com.
The Board has carried out an annual performance evaluation of its own performance andthat of its Committees and Director the Directors individually. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
The process endorsed the confidence of the Directors in the ethical standards of theCompany and its strategies for growth. In the coming year the Board intends to enhancefocus on exploring new drivers for continuing growth.
The Independent Directors have also met separately on March 13 2019.
The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy for selection and appointment of Directors senior management and theirremuneration. As part of its policy the company strives to ensure that the remuneration toDirectors Key Managerial Personnel and Senior Management involves a balance between fixedand incentive pay reflecting short and long term performance objectives appropriate tothe working of the Company and its goals. The remuneration policy is posted on the companywebsite www.nrbbearings.com. Details of remuneration paid to Executive Directors and KMPand the Independent Directors form part of the Corporate Governance Report attached tothis Report.
During the year five (5) Board meetings were convened and held (details in CorporateGovernance Report). The intervening gap between the meetings was less than one hundred andtwenty (120) days. The date for the next meeting is fixed in advance at the previousmeeting both for board and committee meetings.
As of March 31 2019 the Company has three subsidiaries viz. SNL Bearings Limited NRBBearings (Thailand) Limited and NRB Bearings Europe GmbH.The consolidated results includethe working of these subsidiaries.
SNL Bearings Limited (SNL) in which your Company holds 73.45 per cent equity hasreported profit after tax of Rs. 814.36 lacs (previous year Rs. 822.02 lacs) lower by0.93 per cent in spite of higher volumes on account of higher operational andadministrative costs. Dividend at Rs.5/- per share has been maintained at same level aspaid in previous year. Net Sales during the year at Rs.4064 lacs are higher by 3.46 percent over the previous year. SNL is working on projects to improve its financial resultsin FY2019-20 by enhancing operational efficiencies and scaling up manufacturingcapacities.
NRB Bearings (Thailand) Limited (NRBT) a wholly owned subsidiary has increased itssales by 23 per cent to THB 237.81 million (approx. Rs. 51.60 crores) (previous year THB193.23 million - approx. Rs. 40.19 crores). The share of manufacturing revenues out oftotal revenues has increased to at THB 195.63 million (approx. Rs. 42.45 crores) (previousyear at THB 144.25 million) and trading revenues are at THB 42.18 million (previous yearat THB 48.98 million). Consequently the Company's EBITDA has grown from THB 39.10 millionto THB 41.38 million (approx. Rs. 8.97 crores). The Company has recorded a jump in profitof almost 24 per cent for the year at THB 19.60 million (approx. Rs. 4.25 crores) from THB15.82 million (approx. Rs. 3.29 crores) in previous year mainly due to highermanufacturing volumes and lower exchange losses.
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 337919 (Rs. 2.62 crores) and the resultant profit aftertax is EURO 12546 (Rs. 9.7 lakhs).
Pursuant to section 129 (3) read with rule 5 of Companies (Accounts) Rules 2014details of financial statements of subsidiary companies has been given in Annexure 1(AOC1) forming part of this statement.
8. Business Risk Management
The Company has in place an enterprise risk management framework to identify risks andminimize their adverse impact on business and strives to create transparency which in turnenhances the Company's competitive advantage. The Company has identified the risksassociated with its operations and an action plan for mitigation has been identified.
9. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
Information pursuant to Section 134 (3) (m) of the Companies Act 2013 and Rule 8 ofCompanies (Accounts) Rules 2014 has been given in the Annexure 2 forming part ofthis report.
10. Industrial Relations/Vigil Mechanism and Whistle Blower Policy
During the year the Company maintained cordial relations with the workmen's unions atall plants. Last year 2018-19 overall relations with the workmen and Union at all plantshave been cordial and harmonious. There was no major issue /dispute between management andUnion except at Jalna Plant where minority union namely New Panther Kamgar Sena has notaccepted wage agreement signed on December 13 2017 between management and All MarathwadaKamgar Union. The matter is pending before the Industrial Tribunal Jalna.
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 attitudinal and behavioralaspects.
The Company has a Vigil Mechanism and Whistle Blower Policy which provides for adequatesafeguards to employees using such mechanism. It also allowed direct access to the Auditcommittee in appropriate cases. Details of the same given in Annexure 3 formingpart of this report are posted on the website of the Company.
Your Company hereby affirms that no complaints were received during the year.
11. Safety Health and Environment
The Company is committed to establishing and maintaining 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.
Your Company has been accredited with internationally acclaimed certification viz. ISO14001:2004 to identify and control environmental impact and constantly improve theenvironmental performance; OHSAS: 18001:2007 occupational health and safety managementsystems; and ISO/TS: 16949:2009 for Quality Management Systems. Your Company has beenrecently audited and recommended for certification in all the above areas under theupdated certification viz. ISO 14001:2015 ISO 9001:2015 and IATF 16949:2016.
The commitment towards the environment preservation extends beyond regulatorycompliances andambient air and noise levels and waste monitoring through ETP/STP treatmentis being carried out. Initiatives are taken across the Company to conserve naturalresources by reduction and recycling of wastes and adherence to emission norms.
During the year there have been numerous initiatives by NRB towards safety andenvironment awareness among employees:
1. Awareness on environment preservation and protection through regular monitoring ofenvironment parameters and employees engagement activities like environment sensitizationprograms drawing competitions tree plantation and landscape development are undertakenin association with local government bodies and NGOs. More than 500 trees were planted atour manufacturing units at different locations.
2. "Safety first and always first" is the highest priority of the Company.The Safety policy inter alia ensures safety of public employees plant equipment andbusiness associates ensuring compliance with all statutory rules and regulations as anon-going process.
Special initiatives have been taken up such as theme base walk leading and laggingindicators mock drills up- gradation of fire protection systems safety training toemployees including top management organizing safety awareness week Women's daycelebration reporting of near-miss incidents and first aid across the plant. NRB strivesto achieve "Zero-Accident Tolerance".
3. To save energy we have adopted some projects by implementing energy efficient motorswhich can consume less energy.
To minimize the risk with respect to use of LPG gas of 10 MT in bullet storage we havereplaced the bullet with manifold at our Chikalthana Plant.
4. To keep track on the health condition of employees we conduct health check programevery year which give us preliminary information about the health of all employee. We havecontrolled all hazardous processes which could have impact on the health of employees.
5. Water conservation through re-use of waste water and rain water harvesting at plants- capacity to harvest upto 50 lacs litres rain water every year to increase ground waterlevels.
6. 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.
12. 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
Promotion of social business projects
Ensuring environmental sustainability ecological balance protection of floraand fauna 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 has continued its support to IIT-Bombay which is a renowned and reputedinstitute for engineering studies.
The Company has continued its support to the Ashoka University which is devoted totransforming Indian higher education based on the principles of multi disciplinaryeducation 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 also extended support to 321 Foundation. They are currently present inHyderabad Bangalore and Mumbai and offer two (2) year-long programs to school teachers/Management staff with their training skills to achieve their goal of creating modelschools. They train teachers through a systematic program with workshops coachingsessions prestige and motivation events.
The Company supported social causes and impactful projects like Akshay Patra formid-day meal for school children and the Light of Life Trust and the Navjeevan society forresearch and rehabilitation of mentally retarded.
The Annual Report on CSR activities in pursuance of the Companies (Corporate SocialResponsibility Policy) Rules 2014 is annexed herewith as Annexure 4.
During the year under review the Company has spent an amount of Rs. 182.00 lacs on CSRprojects.
13. Corporate Governance
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Management Discussion and Analysis Report Corporate Governance Report and Auditors'Certificate regarding compliance of conditions of Corporate Governance are made part ofthe Annual Report. Details of Board meetings held during the year under review and thecomposition of the various committees are included therein.
The Code of Conduct for Directors and Senior Management of the Company as approved bythe Board has been affirmed on an annual basis by all the Directors and the SeniorManagement personnel of the Company.
The relevant certification on the various matters specified under Regulation 17(8) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been done bythe Vice Chairman & Managing Director and the Chief Financial Officer of the Company.
During the year under review the Company has complied with all the applicableSecretarial Standards.
All pecuniary relationships or transactions of the Non-executive directors vis-a-visthe Company along with criteria for such payments and disclosures on remuneration ofDirectors along with their shareholding are disclosed in Form MGT-9 which forms a part ofthis Report.
There are no relationships between the Directors inter-se except between Ms. HarshbeenaZaveri and Mr. D. S. Sahney. Mr. Sahney is the brother of Ms. Harshbeena Zaveri.
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 Green initiative for paperless communications. The sameshall also be kept for inspection by any members at the registered office of the Companyand of the respective subsidiary Company concerned and shall also be posted on the website of the Company viz.www.nrbbearings.com.
14. 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 March 31 2019 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.
15. Related Party transactions (RPT)
All RPT that were entered into during the financial year were on an arm's length basisand were in the ordinary course of business. There are no materially significant RPT bythe Company with promoters directors key managerial personnel or other designatedpersons other than the same.
All RPT are placed before the audit committee as also the board for approval. Priorapproval of the audit committee is obtained on periodic basis for transactions which areforeseen 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. FormAOC-2 for disclosure of particulars of contracts has been enclosed as Annexure 5.
16. Auditors Statutory Auditors
Appointment of M/s Walker Chandiok & Co. LLP Chartered Accountants as statutoryauditors was approved at the Annual General Meeting held on August 9 2018 for a term offive (5) years upto March 31 2023.
A certificate from the auditors has been received to the effect that their appointmentis within the limits prescribed under section 139 of the Companies Act 2013.
Pursuant to the Rules issued by Ministry of Corporate Affairs under Companies (Costrecords and Audit) Amendment Rules 2014 your Company is subject to cost audit during theyear and M/s. R Nanabhoy & Co. Cost Accountants was appointed to undertake the same.
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 SecretarialAudit of the Company. The report is annexed as Annexure 6.
Explanation or Comments on disqualifications reservations adverse remarks ordisclaimers in the auditors' reports
There have been no disqualifications reservations adverse remarks or disclaimers inany ofthe auditors' reports.
17. Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure 7.
18. 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.
19. Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.
20. Change in nature of business
During the year under review there was no change in the nature of the business carriedon by the Company.
21. Disclosure under Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013
In accordance with the provisions of the Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has set up four (4)Internal Complaints Committees (ICC) to redress complaints. During the year under review 1complaint was received and resolved.
The Directors wish to record their appreciation of the contribution made by employeesat all the levels by their hard work solidarity and support and for the confidence andloyalty shown by our customers. The Directors also wish to thank the shareholderssuppliers bankers and all other business associates for the continuous support given bythem to the Company and for their confidence in its management.
| ||On behalf of the Board |
| ||Harshbeena Zaveri ||Satish Rangani |
| ||Vice Chairman & Managing Director ||Executive Director |
|Place: Mumbai || || |
|Date: May 29 2019 || || |