PPAP Automotive Limited
Your directors have pleasure in presenting the Twenty Seventh AnnualReport of PPAP Automotive Limited ("Company") along with the audited financialstatements and the auditors' report thereon for the year ended 31st March2022.
Financial highlights and state of Company's affairs
The financial performance of the Company for the year ended 31stMarch 2022 on a standalone and consolidated basis is summarized below:
(Rs. in lacs)
|Particulars || ||For the year ended || || |
| ||Standalone || ||Consolidated || |
| ||31st March 2022 ||31st March 2021 ||31st March 2022 ||31st March 2021 |
|Revenue from Operations (net of excise) ||40907.21 ||32118.27 ||42191.73 ||32219.75 |
|Other Income ||199.65 ||264.93 ||99.78 ||209.51 |
|Profit / loss before Depreciation Finance Costs Exceptional items and Tax Expense ||4104.59 ||3635.65 ||3610.31 ||3347.98 |
|Less: Depreciation / Amortization / Impairment ||2895.09 ||2632.44 ||2946.85 ||2646.67 |
|Profit / loss before Finance Costs Exceptional items and Tax Expense ||1209.50 ||1003.21 ||663.46 ||701.31 |
|Less: Finance Costs ||598.30 ||369.35 ||650.53 ||378.30 |
|Profit / loss before Tax Expense ||611.20 ||633.86 ||12.93 ||323.01 |
|Less: Tax Expense (Current & Deferred) ||152.38 ||150.25 ||91.77 ||113.26 |
|Profit / loss for the year ||458.82 ||483.61 ||(78.84) ||209.75 |
|Other Comprehensive Income / loss ||(11.58) ||73.69 ||(11.01) ||78.10 |
|Total ||447.24 ||557.30 ||(89.85) ||287.85 |
The Board of Directors of the Company are pleased to recommend a finaldividend of ' 1.5 per equity share (15%) of face value of ' 10 (Rupees ten) each subjectto the approval of shareholders at the ensuing Annual General Meeting ("AGM").
In terms of the provisions of the Income Tax Act 1961 as amended bythe Finance Act 2020 dividend paid or distributed by a company on or after 1stApril 2020 is taxable in the hands of the shareholders. The tax shall be deducted at therates prescribed under the Income Tax Act 1961 as amended which varies based upon thecategory and residential status of the shareholder. Shareholders are requested to updatetheir residential status KYC including PAN with their depository participants in case ofshares held in demat mode and with the Registrar and Share Transfer Agent of the Companyin case the shares are held in physical mode for determining the applicable rate of taxdeducted at source.
Transfer to reserves
During the year under review no amount has been transferred to generalreserve of the Company.
Change in the nature of business
During the year under review there was no change in the nature ofbusiness of the Company.
The authorized share capital of the Company is ' 200000000 ('Twenty Crores) comprising of 20000000 (Two Crores) equity shares of ' 10 each. Theissued subscribed and paid-up share capital of the Company is ' 140000000 (' FourteenCrores) comprising of 14000000 (' One Crore Fourty Lakhs) equity shares of ' 10 each.During the year under review there is no change in share capital of the Company.
Your Company has not accepted any deposit within the meaning ofprovisions of Chapter V of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 for the year ended 31st March 2022.
The Company has technical collaborations with Tokai Kogyo Co. LimitedJapan; Nissen Chemitec Corporation Japan; and Tokai Kogyo Seiki Co. Limited Japan.
The technology partners of your Company have extended their continuoussupport in terms of new product development innovations design latest technologyquality productivity safety etc. as per the needs of your Company.
The annual return of your Company as on 31st March 2022 inaccordance with section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 is available on your Company's websiteat https://www. ppapco.in/assets/pdf/annual_reports/Annual_return_MGT-7.pdf.
Meetings of the Board of Directors
The Board of Directors met five times during the financial year2021-22 the details of which are given in the corporate governance report that forms partof this annual report. The intervening gap between every two meetings during the yearunder review were in compliance with the period prescribed under the Companies Act 2013and the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations").
The purpose of audit committee is to oversee the quality and integrityof accounting auditing and financial reporting processes including reviewing of theCompany's statutory and internal audit reports. The audit committee is provided withall the necessary documents and information to carry out its function effectively. All themembers of the audit committee have the requisite financial legal and managementexpertise.
The details of composition of the audit committee its terms ofreference and the number of meetings held during the year under review are given in thecorporate governance report that forms part of this annual report.
Directors and key managerial personnel
In accordance with the provisions of the Companies Act 2013 and interms of Articles of Association of the Company Mrs. Vinay Kumari Jain (DIN: 00228718)Director of the Company retires by rotation and being eligible offer herself forre-appointment at the 27th Annual General Meeting.
Mr. Abhishek Jain (DIN: 00137651) Chief Executive Officer and ManagingDirector of the Company was reppointed by the shareholders in the last AGM w.e.f. 1stApril 2022.
Mrs. Celine George Independent Direction was reappointed by theshareholders in the last AGM for second term of five consecutive year w.e.f. 16thApril 2022 upto 15th April 2027.
Mrs. Sonia Bhandari Company Secretary of the Company has resignedw.e.f. 18th September 2021.
The Board of Directors upon recommendation of Nomination andRemuneration Committee appointed Mrs. Shivani Sehgal as Company Secretary of the Companyw.e.f. 12th November 2021.
Mrs. Shivani Sehgal Company Secretary of the Company has resignedw.e.f. 25th April 2022.
The Board of Directors upon recommendation of Nomination and
Remuneration Committee appointed Ms. Pankhuri Agarwal as CompanySecretary of the Company w.e.f. 13th May 2022.
The disclosure as required under the provisions of the Companies Act2013 read with Secretarial Standards issued by Institute of Company Secretaries of Indiaand Listing Regulations forms part of the Notice convening AGM.
Declaration by independent directors
The Company has received declarations from all the independentdirectors of the Company confirming that they meet with criteria of independence asprescribed under section 149(6) of the Companies Act 2013 and the Listing Regulations.Further all the Independent Directors have registered their names in the data bankmaintained and managed by Indian Institute of Corporate Affairs.
During the year the Independent Directors of your Company had nopecuniary relationship or transactions with your Company other than sitting fees accruedto them for attending meetings of the Board and its committee(s).
The terms and conditions of appointment of the Independent Directorsare placed on the website of the Company under the link:https://www.ppapco.in/assets/pdf/policies/Template_for_appointment_ofJndependent_Director.pdf
Directors' responsibility statement
In terms of and pursuant to section 134(3)(c) of the Companies Act2013 as amended from time to time in relation to the financial statements for the yearended 31st March 2022 to the best of their knowledge and belief yourDirectors confirm the following:
i. that in the preparation of annual accounts for the financial yearended 31st March 2022 the applicable accounting standards have been followedalong with proper explanations relating to material departures if any;
ii. that the directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a "true and fair view" of the state of affairs of the Company asat 31st March 2022 and of the profit and loss of the Company for the financialyear ended 31st March 2022;
iii. that the proper and sufficient care has been taken for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
iv. that the annual accounts for the financial year ended 31st March2022 have been prepared on a "going concern basis";
v. that the internal financial controls are adequate and are operatingeffectively; and
vi. that proper systems to ensure compliance with the provisions of allapplicable laws are adequate and operating effectively.
Compliance with secretarial standards
Your Company has complied with the applicable secretarial standardsissued by the Institute of Companies Secretaries of India (SS-1 and SS-2) respectivelyrelating to meetings of the Board and its committees and general meetings.
Evaluation of the Board's performance
Pursuant to the provisions of the Companies Act 2013 and the ListingRegulations the Board of Directors has carried out annual evaluation of its ownperformance Directors Chairman and its committees. The manner in which the evaluationhas been carried out is given in the corporate governance report that forms part of thisannual report
Nomination and remuneration policy
The remuneration paid to the Directors is in accordance with thenomination and remuneration policy formulated in accordance with section 178 of theCompanies Act 2013 and Regulation 19 of the Listing Regulations (including any statutorymodification(s) or re- enactment(s) thereof for the time being in force).
The nomination and remuneration policy is available on the website ofthe Company at https://www.ppapco.in/assets/pdf/policies/Nomination_Remuneration_Policy.pdf.
The salient aspects covered in the nomination and remuneration policyhave been given hereunder:
In accordance with the nomination and remuneration policy thenomination and remuneration committee has inter alia the following responsibilities:
1. Ensure appropriate induction and training program: The committeeshall ensure that there is an appropriate induction and training program in place for newDirectors Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) andreview its effectiveness.
2. Formulating the criteria for appointment as a Director: Thecommittee shall formulate criteria and review it on an ongoing basis for determiningqualifications skills experience expertise qualities attributes etc. required to bea Director of the Company.
3. Identify persons who are qualified to be Directors / IndependentDirectors / KMPs / SMPs: The committee shall identify persons who are qualified to becomeDirectors / Independent Directors / KMPs / SMPs and who satisfy the criteria laid downunder the provisions of the Companies Act 2013 Rules made thereunder the ListingRegulations or any other enactment for the time being in force.
4. Nominate candidates for Directorships subject to the approval of theBoard: The committee shall recommend to the Board the appointment of potential candidatesas Non-Executive Director or Independent Director or Executive Director as the case maybe.
5. Evaluate the performance of the Board: The committee shall determinea process for evaluating the performance of the Board Director Chairman and Committeesof the Board on an annual basis.
6. Remuneration of Managing Director / Directors: The committee shallensure that the tenure of Executive Directors and their compensation packages are inaccordance with applicable laws and in line with the Company's objectivesshareholders' interests and benchmarked with the industry.
7. Review performance and compensation of Independent Directors: Thecommittee shall review the performance of Independent Directors of the Company. Thecommittee shall ensure that the Independent Directors may receive remuneration by way ofsitting fees for attending the meetings of Board or committee(s) thereof provided thatthe amount of such fees shall be subject to ceiling / limits as provided under theCompanies Act 2013 and Rules made thereunder or any other enactment for the time beingin force.
8. Review performance and compensation of KMPs / SMPs: The committeeshall ensure that the remuneration to be paid to KMPs / SMPs shall be based on theirexperience qualifications and expertise and governed by the limits if any prescribedunder the Companies Act 2013 and Rules made thereunder or any other enactment for thetime being in force.
9. Directors' and Officers' Insurance: The committee shallensure that the insurance taken by the Company on behalf of its Directors KMPs / SMPseither for indemnifying them against any liability or any other matter as may be deemedfit the premium paid on such insurance shall not be treated as part of the remunerationpayable to any such personnel.
10. Succession plans: The committee shall address and reviewsufficiently in advance the succession plans in order to ensure smooth transition andmaintain an ideal balance of skills experience and expertise on the Board.
11. Evaluation of Independent Director: For every appointment of anindependent director the Nomination and Remuneration Committee shall evaluate for thebalancing the holistic set of skills knowledge wisdom and experience on the Board.Based on such evaluation prepare the role and responsibilities qualifications andcapabilities required of an incoming independent director. The person recommended to theBoard for appointment as an independent director shall have the capabilities identified insuch description. To identify suitable candidates the Committee may:
a) use the services of an external agencies
b) consider candidates from a wide range of backgrounds having dueregard to diversity and
c) consider the time commitments of the candidates.
Particulars of employees
The information required under section 197 of the Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force) in respect of Directors / employees of the Company annexed asAnnexure-D' to this report.
Subsidiary joint venture and associate companies
During the year 2021-22 no company has become or ceased to besubsidiary joint venture or associate of the Company.
The Company has two subsidiary companies and a joint venture company.Elpis Components Distributors Private Limited and PPAP Technology Limited (formerly PPAPTechnology Private Limited) are wholly owned subsidiary companies of the Company. PPAPTokai India Rubber Private Limited is a joint venture company of the Company.
A statement containing the salient features of the financial statementsof subsidiary / associate / joint venture company as per section 129(3) of the CompaniesAct 2013 is part of the consolidated financial statements. The audited financialstatements of the wholly owned subsidiary companies have been placed on the website of theCompany.
Corporate governance report
Your Company is committed to maintain high standards of corporategovernance and adhere to the corporate governance requirements set out under the ListingRegulations. The Company constantly strive to evolve and follow up on the corporategovernance guidelines and its best practices.
The compliance report on corporate governance and a certificate fromM/s NKJ & Associates Company Secretaries regarding the compliance of the conditionsof corporate governance as stipulated under Chapter IV of the Listing Regulations isannexed to this annual report.
Management discussion and analysis report
As required under Regulation 34(2) of the Listing Regulations adetailed management discussion and analysis report is annexed to this annual report.
Business responsibility and sustainability report
The Company has provided Business responsibility and sustainabilityreport (BRSR) based on the National Guidelines on Responsible Business Conduct describinginitiatives undertaken from an environmental social and governance perspective.
Material changes and commitments affecting financial position betweenend of the financial year and date of report
There has been no material change and commitment affecting thefinancial performance of the Company which occurred between the end of the financial yearof the Company to which the financial statements relate and the date of this report
Particulars of loans guarantees and investments
During the year under review your Company has not given any loan orguarantee which is covered under the provisions of section 186 of the Companies Act 2013.However details of investments made during the year are given under Note no. 7 of thestandalone financial statements of the Company.
Related party transactions
During financial year 2021-22 all contracts / transactions entered byyour Company with related parties under section 188(1) of the Companies Act 2013 were inthe ordinary course of business and on an arm's length basis. During financial year2021-22 your Company has not entered into any contracts / arrangements / transactionswith related parties which could be considered material' in accordance with itspolicy on materiality of related party transactions. Thus there are no transactionsrequired to be reported in Form AOC-2.
The details of the related party transactions as per Ind AS-24 are setout in Note no. 40 to the standalone financial statements of the Company.
Auditors and Auditor's report
O P Bagla & Co. LLP (Registration No. 000018N / N500091) CharteredAccountants New Delhi has been reappointed as the statutory auditors of the Company atthe 23rd AGM held on 23rd August 2018 for the period of five yearsi.e. up to the conclusion of the 28th AGM to be held in the year 2023. Pursuantto section 139 and 141 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 O P Bagla & Co. LLP has furnished a certificate of theireligibility and consent as the Auditors of the Company.
Statutory auditors' report
The Auditors' report does not contain any qualificationreservation(s) or adverse remark(s). The notes on financial statements referred to in theauditors' report are selfexplanatory and do not call for further comments.
Pursuant to the provisions of section 204 of the Companies Act 2013and rules framed thereunder M/s NKJ & Associates Practicing Company Secretaries wereappointed as secretarial auditors of the Company for the financial year 2021-22.
The secretarial audit report for the financial year 31stMarch 2022 in form MR-3 is attached as Annexure- B' to this report.
Further in terms of the provisions of the Circular No. CIR/CFD/CMD1/27/2019 dated 8th February 2019 issued by Securities and Exchange Boardof India ("SEBI") the Company has obtained the annual secretarial compliancereport for the year ended 31st March 2022 thereby confirming compliance ofthe applicable SEBI Regulations and circulars / guidelines issued thereunder on behalf ofthe Company.
Secretarial auditors' report
The report of secretarial auditors part of this annual report does notcontain any qualification(s) reservation(s) or adverse remark(s) or disclaimer in thesaid report.
The Board of Directors on recommendation of the audit committeeappointed M/s Rakesh Singh & Co. Cost Accountants (Registration No. 000247) as costauditors to audit the cost accounts of the Company for the financial year 2022-23 pursuantto the provisions of section 148 of the Companies Act 2013. The remuneration payable tothe cost auditors is required to be ratified by the shareholders at the AGM. Accordinglyresolution ratifying the remuneration payable to M/s Rakesh Singh & Co. CostAccountants (Registration No. 000247) shall be placed for the approval of theshareholders at the 27th AGM.
The Company has maintained the necessary accounts and records asspecified by the Central Government under subsection (1) of Section 148 of the CompaniesAct 2013.
The Company had filed the cost audit report for financial year 2020-21on 1st September 2021 in compliance under the Companies (Cost Records andAudit) Amendment Rules 2014.
Reporting of frauds by auditors
During the year under review the auditors of the Company have notreported to the audit committee under section 143(12) of the Companies Act 2013 anyinstances of fraud committed against the Company by its officers and employees.
Corporate social responsibility
Your Company has been taking initiatives under Corporate SocialResponsibility (CSR) for the society at large. The Company has a well-defined policy onCSR as per the requirement of section 135 of the Companies Act 2013.
During the year your Company thrives to constantly contribute towardsthe betterment of the local community in which it operates and the upliftment of themarginalised section of our society through "Vinay and Ajay Jain Foundation" aregistered trust for focused implementation of CSR activities of the Company majorly inthe field of environment education and health.
The CSR Policy is also available on the website of the Company and canbe accessed by web link https://www.ppapco.in/assets/pdf/policies/Corporate_Social_Responsibility_Policy.pdf CSR report pursuant to section134(3)(o) of the Companies Act 2013 and Rule 9 of the Companies (Corporate SocialResponsibility) Rules 2014 annexed as Annexure- C' to this report.
The Company has established risk management framework that enablesregular and active monitoring of business activities for identification assessment andmitigation of potential internal or external risks. The respective functional / businesshead(s) are entrusted with the responsibility of identifying mitigating and monitoring ofrisk in their respective areas. Risk management forms an integral part of the managementand is an ongoing process integrated with the operations.
The Company has a risk management policy for identification of elementsof risk if any which in the opinion of the Board may threaten the existence of thecompany. The Company's risk management processes focus on ensuring that risks areidentified promptly and mitigation action plan is formulated and executed timely.
Policy on sexual harassment of women at workplace
The Company values the dignity of individuals and strives to provide asafe and respectable work environment to all its employees. The Company is committed toproviding an environment which is free of discrimination intimidation and abuse.
Your Company has in place a policy on prevention of sexual harassmentat workplace. This policy is in line with the requirements of the Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013. The Companyhas constituted Internal Complaints Committees at various locations as per requirement ofthe Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal)Act 2013 for redressal of complaints relating to sexual harassment against woman atworkplace.
During the year under review the Company has not received anycomplaint on sexual harassment.
Details of significant and material orders passed by the regulators orcourts or tribunals impacting the going concern status and Company's operations infuture
No significant and material orders have been passed during the yearunder review by the regulators or courts or tribunals impacting the going concern statusand Company's operations in future.
Details on internal financial controls related to financial statements
Your Company has a robust and well embedded system of internalcontrols. This ensures that all assets are safeguarded and protected against loss fromunauthorized use or disposition and all financial transactions are authorized recordedand reported correctly.
The internal auditors evaluate the efficacy and adequacy of theinternal control system its compliance with operating systems and policies of the Companyat all the locations of the Company. Based on the report of internal audit function theprocess owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereonare reported to the audit committee.
The Company has an effective and reliable internal financial controlsystem commensurate with the nature of its business size and complexity of itsoperations.
This also identifies opportunities for improvement and ensures goodpractices imbibed in the processes that develop and strengthen the internal financialcontrol systems and enhance the reliability of Company's financial statements.
The audit committee reviews the internal audit plan adequacy andeffectiveness of the internal control system.
Whistle blower policy
Your Company is committed to highest standards of ethical moral andlegal business conduct. Accordingly the Board of Directors have formulated whistle blowerpolicy which is in compliance with the provisions of section 177(9) of the Companies Act2013 and Regulation 22 of the Listing Regulations.
The whistle blower policy provides a vigil mechanism for the Director /employee to report without fear of victimization any unethical behavior suspected oractual fraud violation of the code of conduct of the Company etc. which are detrimentalto the organization's interest and reputation. The mechanism protects whistle blowerfrom any kind of discrimination harassment victimization or any other unfair employmentpractice.
The Directors and employees in appropriate or exceptional cases havedirect access to the Chairman of the audit committee.
The said policy is placed on the website of the Company atwww.ppapco.in.
Conservation of energy technology absorption foreign exchangeearnings and outgo
The information as required under section 134(3)(m) of the theCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 relatingto conservation of energy technology absorption foreign exchange earnings and outgoannexed as Annexure- D' to this report.
The Directors place on record their appreciation for the hard work andvaluable contribution made by every member of PPAP family.
Your Directors are thankful to your technology partners suppliers aswell as vendors our shareholders business associates banks financial institutions fortheir continued support and for the confidence reposed in the Company.