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NRB Bearings Ltd.

BSE: 530367 Sector: Engineering
NSE: NRBBEARING ISIN Code: INE349A01021
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NSE 00:00 | 20 Nov 194.45 -1.80
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OPEN 199.25
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VOLUME 38140
52-Week high 200.05
52-Week low 127.50
P/E 18.68
Mkt Cap.(Rs cr) 1,886
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 199.25
CLOSE 196.00
VOLUME 38140
52-Week high 200.05
52-Week low 127.50
P/E 18.68
Mkt Cap.(Rs cr) 1,886
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

NRB Bearings Ltd. (NRBBEARING) - Director Report

Company director report

To

The Members

NRB BEARINGS LIMITED

Mumbai

Your Directors have pleasure in presenting their Fiftythird Annual Report together withAudited Accounts for the year ended 31st March 2018.

1. Financial Resultss

Consolidated

Standalone

Year ended 31.03.2018 31.03.2017 31.03.2018 31.03.2017
Rs. lakhs Rs. lakhs Rs. lakhs Rs. lakhs
Revenue from operations (Net) 85507.11 72554.03 83056.21 70669.11
Profit before tax 13528.93 7531.93 12030.96 6757.66
Provision for taxation
Current (net) 4163.52 2216.22 3739.98 1886.33
In respect of earlier years -- (42.12) (44.76)
Deferred tax 76.83 52.68 99.64 (16.81)
Profit after taxation 9070.72 5165.36 8191.34 4932.90
Add: Balance brought forward 14634.84 12241.24 17558.67 15387.60
Add: Other Comprehensive Income for the year 67.00 91.40 55.56 94.76
23772.56 17498.00 25805.57 20415.26
Appropriation:
Dividend 1356.92 1332.64 1356.92 1356.92
Tax on distributed profits 276.24 271.72 276.24 249.66
General Reserve -- -- -- --
Debenture Redemption Reserve 1250.00 1250.00 1250.00 1250.00
Capital Redemption Reserve -- 25.00 -- --
Outside basis Tax -- 16.20 -- --
Profit & Loss Account 20890.40 14634.84 22922.41 17558.67
23772.56 17498.00 25805.57 20415.26

2. Dividend

On 20th March'2018 Directors have declared interim dividend for financial year 2017-18of Rs.l.40/-per equity share of Rs.2/- (Rs.1.40 per share for previous year) paid to themembers/beneficial owners as per the Register of Members as on 3rd April 2018 aggregatingRs. 1633.16 lacs. Further to the declaration of Interim Dividend Directors recommend thefinal dividend of Rs. 1.20 per Equity Share of Rs. 2/- (previous year Interim dividend ofRs.1.40/- was confirmed as final dividend) payable to members/ beneficial owners as perthe Register of Members as applicable aggregating to Rs.1402.14 lacs.

3. Operations/Outlook

FY 2017-18 started on a weak note with the market trimming purchases in anticipation ofGST which was to become effective 1st July 2017. Thereafter the good monsoons gave aboost to the rural economy the global environment turned positive and with the increasedgovernment spend on infrastructure upgradation consumer demand revived resulting inmanufacturing activity accelerating. During the year all vehicle segments witnessedrobust growth in double digits except the passenger car segment which showed growthalbeit at a lower rate. Overall industry growth has been 15% with growth in productiondriven by economic activity. Your company growth at 17% has been higher than industrygrowth with passenger car commercial vehicle and farm equipment segments growing faster.Global

demand in the European & American automotive markets helped exports grow by 32% toRs 169 crores ( previous year Rs 133 crores) and domestic sales up by 13% to Rs 650 crores(previous year Rs 576 crores). Improved overall sales at Rs 819 crores (previous year Rs708 crores ) have also helped improve Profit after tax (PAT) to Rs 81.9 crores (previousyear Rs 49.32 crores) - the highest ever achieved by the company.

As the private sector investment cycle gains strength with the expected growth indemand in almost all segments of the Indian automotive industry aided by the "Makein India'' initiative with its boost for manufacturing for defence aerospace etc andconcrete measures to improve 'ease of doing business' India has emerged as one of themost preferred locations in the world for manufacturing high quality auto components andvehicles of all kinds. The Indian automotive industry and the bearings industry areexpected to be major beneficiaries of this expected growth.

Globally elevated crude prices rising protectionism and geopolitical risks remain athreat during FY 2018-19. The Indian economy outlook is optimistic considering IMDforecasts of a second year of normal monsoon average inflation down to 4.5% interestrates remaining soft increased government spends for expanding the public transportsystems and building dedicated freight corridors for movement of farm produce and goodsfrom and to the rural areas. Strong FDI inflows continuing at $ 60 billion and continuingIIP growth momentum have led to expectations that GDP growth will rise to 7.4 % and 7.8%in the next two years from the FY18 estimate of 6.7%. Growth estimates for 2018-19projected by the Company after assessing demand forecasts with all major OEMs alsohighlight the optimism about another year of good all round growth.

To retain India's position as one of the most preferred locations in the world formanufacturing high quality auto components the bearings industry has to be equallyrelentless in its pursuit of economies of scale and in scope of design and engineering ofautomobiles and components while also pursuing low cost manufacturing processes. YourCompany continues to invest in building its R&D capabilities to develop not onlyproduct lines with improved performance and margins and at its Innovation Centre onidentifying and developing disruptive manufacturing processes for long term competitiveadvantage

4. Finance

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 not raised the funds by way of non convertibledebentures/ any private placement issues.

c. Particulars loans guarantees or investments

During the year under review the company has advanced fresh loan of THB 80 million toits wholly owned foreign subsidiary NRB Bearings (Thailand) Ltd @ 6.5% interest scheduledto be repaid as a bullet payment in April 2019. The Board has also approved furtherinvestment of THB 36.67million (approx. INR 7.25 crores) in the Equity Capital of NRBBearings (Thailand ) Ltd on Rights basis 1:3 - one additional share for every three sharesheld at par. This will support the subsidiary to further expand its business as plannedfor FY 2018-19. As on March 31 2018 the outstanding principal amount is USD 1283508 andoutstanding Interest is USD 151811.

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.

5. Directors

The Board of Directors has on the recommendation of the Nomination & RemunerationCommittee re-appointed Mr. S C Rangani as Additional Director (Executive Director &Company Secretary) w.e.f. 24th January 2018. In the case of Mr. S C Rangani the noticefor the forthcoming Annual General Meeting (AGM) includes his appointment as ExecutiveDirector & Company Secretary under the Companies Act 2013 for a period of one yearw.e.f. 23rd January 2018.

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 Familiarisation Programme for IndependentDirectors

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.

Board evaluation

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 process endorsed the Board Membersconfidence in the ethical standards of the Company and its strategies for growth. In thecoming year the Board intends to enhance focus on exploring new drivers for continuinggrowth.

The independent Directors have also met separately on 28th March 2018

Remuneration policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a 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 KMP's and Senior Management involves a balance between fixed and incentive payreflecting short and long term performance objectives appropriate to the working of theCompany and its goals. The remuneration policy is posted on the company website www.nrbbearings.com. Details of remuneration paidto Executive Directors and KMP and the independent Directors form part of the CorporateGovernance Report attached to this Report.

Meetings

During the year 6 Board meetings and 4 Audit committee meetings were convened and held(details in Corporate Governance Report). The intervening gap between the meetings wasless than 120 days. The date for the next meeting is fixed in advance at the previousmeeting both for board and committee meetings.

6. Subsidiaries

As of 31st March 2018 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. 822.02 lacs (IND AS) (previous year Rs. 661.60 lacs IND AS) an increase of 24% onaccount of higher volumes and helped by lower tax rates. Dividend at Rs 5 per share hasbeen enhanced by 67% over the dividend of Rs 3 per share paid in previous year. Net Salesduring the year at Rs. 3831 lacs are higher by 14% over the previous year. With India'sindustrial production displaying a welcome growth revival supported by the globaleconomic recovery and with the Government's thrust on rural spending and infrastructurecreation there is optimism that there will be continued growth in the automotive segmentsduring the current year. SNL expects to further capitalize on the positive environment byenhancing operational efficiencies and scaling up manufacturing capacities.

NRB Bearings (Thailand) Ltd (NRBT) a wholly owned subsidiary has increased its salesby 22% to THB 193.23 million (Rs. 40.33 crores) (previous year THB 158.82 million -Rs.30.35 crores). The share of manufacturing revenues out of total revenues has increasedto at THB 130.00 million (Rs.27.13 crores) (previous year at THB 115.25 million) andtrading revenues are at THB 63.23 mill (Rs.13.20 crores) (previous year at THB 45.35million). Consequently the Company's EBITDA has grown from THB 27.82 million to THB 40.89million (Rs.8.17 crores). The company has recorded a jump in profit for the year at THB15.82 million (Rs.3.30 crores) from THB 4.55 million (Rs. 0.87 crores) in previous yearmainly due to higher manufacturing volumes and lower exchange losses. New business isbeing finalized with global Japanese customers and manufacture of new products as well asenhanced production of needle & other rollers planned during FY 2018-19 will help infurther improving the financial results during the coming years.

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 208122 (Rs.1.58 crores) and the resultant profit after taxis EURO 6725 (Rs. 5.41 lacs).

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.

7. Conservation of energy technology absorption foreign exchange earnings and outgo

Information pursuant to Section 134 (3) (m) of the Companies Act 2013 and Rule no. 8of Companies (Accounts) Rules 2014 has been given in the Annexure 2 forming part of thisreport.

8. Industrial Relations/Vigil Mechanism and Whistle Blower Policy

During the year the Company maintained cordial relations with the workmen's unions atall plants. There have been settlements with the Workmen Unions at Thane Waluj and JalnaPlants all with wage increases linked to productivity improvements multi machine workingand with penalties for non-achievement of quality and productivity as agreed. Thesettlements all valid for 3 years will expire between July and November 2020 and involvea financial impact of Rs. 10.3 crores annually from FY 2018-19. These settlements withcommitted productivity increases of 18-20% were an enabling factor in the management drivefor higher outputs during FY 2017-18 and are expected to help sustain the higher outputsduring FY 2018-19.

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 andbehavioral aspects.

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 forming part ofthis report are posted on the website of the Company.

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.

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. Company has been recentlyaudited and recommended for ISO 14001:2015 ISO 9001:2015 and IATF 16949:2016.

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 by 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 environment sensitizationprograms drawing competitions tree plantation and landscape development are some of thekey initiatives undertaken last year in association with local government bodies and NGOs.1000 + trees were planted at our 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 mock drills up-gradation of Fireprotection systems safety training to employees organizing safety awareness weekconducting regular mock drills reporting of near-miss incidents and first 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. Waluj Plant has installed / replaced 300 LED lights asa energy saving initiative achieving significant saving in energy cost.

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 skillsPromotion of social business projects

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 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 also extended support to 321 Foundation. They are currently present inHyderabad Bangalore and Mumbai and offer 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 & motivation events.

The company supported social causes and impactful projects like Indian Cancer SocietyAkshay Patra Foundation for mid-day meal for school children and the H. M. SeervaiMemorial Trust.

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. As part of its "Go Green"policy NRB has initiated tree planting drives in and around its factories.

The average of the last 3 years profits works out to Rs.6815.67 lacs and @ 2% theamount to be spent by the Company on CSR activities works out to Rs. 136.31 lacs during FY2017-18. The Company has actually spent Rs. 143.16 lacs during FY 2017-18 on theidentified activities. The requisite format for such expenditure has been enclosed asAnnexure 4 to the Directors' Report.

11. Corporate governance

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Management 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 ofthe 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 Directorand 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. This

measure would be in line with the MCAs Green initiative for paperless communications.The same 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

2018 and of the profit of the Company for the accounting 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. In March 2018 based on valuation byregistered valuers the board approved sale of residential fiat in Company owned propertyat Carmichael Road Mumbai 400 026 to the Vice- Chairman & Managing Director. Thereare no materially significant RPT by the Company with promoters Directors key managerialpersonnel or other designated persons 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. Formfor disclosure of particulars of contracts has been enclosed as Annexure 5.

14. Auditors Statutory Auditors

Appointment of M/s Walker Chandiok & Co. LLP Chartered Accountants as auditors wasapproved to fill the casual vacancy till the conclusion of the Annual General Meeting tobe held for Financial Year ended 31st March2018.

The Audit Committee and the Board of Directors recommends the appointment of M/s.Walker Chandiok & Co. LLP Chartered Accountants (Firm No. 001076N/N500013) asstatutory auditors to hold office until the conclusion of the annual general meeting tobe held for the Financial Year ending 31st March 2023.

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.

Cost Auditors

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 and M/s. R Nanabhoy& Co Cost Accountants was appointed to undertake the same. The cost audit report forthe year ended 31st March 2017 was filed with MCA on 11th September 2017.

Secretarial Audit

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 6.

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' reports.

15. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure 7.

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.

17. Acknowledgement

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
(Ms) H S Zaveri S C Rangani
Mumbai: May 21 2018 Vice Chairman & Managing Director Executive Director & Co.Secretary